Emergent BioSolutions(EBS) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Total revenues for Q3 2024 were $294 million, a 9$105 million, or 36% of revenues, an improvement of $85 million versus the prior year [19] - Year-to-date revenue was$849 million, up 10% versus the prior year, driven by U.S. government and international medical countermeasures [24] - Year-to-date adjusted EBITDA was $162 million, an improvement of$188 million versus the prior year [24] - Net debt was reduced to $551 million, a$206 million reduction since the beginning of 2024 [17] Business Line Performance - NARCAN sales were $95 million in Q3 2024, with year-to-date volumes up 7$11 million, a decrease versus the prior year due to timing of deliveries [21] - Smallpox MCM sales were $133 million, including deliveries of ACAM2000 and VIGIV contract options to the U.S. government [21] - Other product sales, including BAT, were$30 million, and Bioservices revenues were $14 million [21] Market Performance - NARCAN volumes increased year-to-date, driven by strong demand in the U.S. public interest channel and expanded categories like business and retail channels [11][31] - The company received FDA approval for ACAM2000 to include the mpox expanded indication, strengthening its smallpox portfolio [11][36] - The company secured over$500 million in medical countermeasure contract modifications for Anthrax MCM, Smallpox MCM, and BAT [18] Strategic Direction and Industry Competition - The company is transitioning from the stabilization phase to the turnaround phase of its multi-year plan, focusing on operational improvements and profitable growth [7][8] - The company is strategically focusing on international expansion and line extensions of current products, such as NARCAN, to drive future growth [39] - The company is leveraging its unique position in medical countermeasures to engage with U.S. and international governments, responding to public health threats like mpox and Ebola [35][37] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the bipartisan support for the company's mission to combat public health threats like opioid overdoses and biodefense [13] - The company raised its 2024 revenue and adjusted EBITDA guidance, reflecting strong performance and improved financial stability [9][25] - Management highlighted the importance of maintaining competitive pricing for NARCAN while leveraging its brand and distribution capabilities to sustain market leadership [57][58] Other Important Information - The company successfully refinanced its debt, closing a $250 million term loan with Oak Hill Advisors and a$100 million asset-backed revolving credit facility with Wells Fargo [10][16] - The company resolved legacy compliance and legal matters, including a 50 million settlement with Janssen Pharmaceuticals [15] - The company appointed Dr. Simon Lowry as Head of R&D and Chief Medical Officer, and promoted Jessica Perl to General Counsel and Corporate Secretary [12] Q&A Session Summary Question: Long-term gross margin outlook for NARCAN - The company expects NARCAN gross margins to stabilize around the current level of 50%, with ongoing efforts to improve cost of goods sold [45] Question: New growth opportunities and asset acquisitions - The company is focused on both internal growth opportunities, such as NARCAN line extensions and geographic expansion, and external business development deals that align with its capabilities [47][51] Question: Factors impacting NARCAN guidance and competitive dynamics - NARCAN guidance was adjusted due to competitive pricing pressures and discontinued RX NARCAN sales, but volumes remain strong with 7% year-to-date growth [55][59] - Pricing in the NARCAN market has stabilized, with the majority of sales still coming from the public interest market [61][63] Question: Smallpox contract deliveries and future revenue recognition - A significant portion of the 400 million Smallpox contract will be recognized in 2025, with some revenue expected in Q4 2024 [65] Question: Asset sales and future site utilization - The company is evaluating further asset sales and site utilization, with a focus on reducing operating expenses while maintaining manufacturing capabilities [70][72] Question: Long-term EBITDA potential - The company has significantly reduced operating expenses and streamlined its site network, positioning itself for improved profitability, though specific 2025 guidance was not provided [74][75]