Good day and thank you for standing. Welcome to the Emergent BioSolutions Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to the company.

Thank you, Victor, and good afternoon, everyone. My name is Bob Burrows, VP and IRO for the company. Thank you for joining us today as we discuss the operational and financial results for third quarter 2022. As is customary, today's call is open to all participants, and the call is being recorded and is copyrighted by Emergent BioSolutions. In addition to today's press release, there is a series of slides accompanying this webcast available to all webcast participants. Turning to slides 3 and 4. During today's call, we may make projections and other forward-looking statements related to our business, future events, our prospects or future performance. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. Any forward-looking statement speaks only as of the date of this conference call, and except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events or circumstances. Investors should consider this cautionary statement as well as the risk factors identified in our periodic reports filed with the SEC when evaluating our forward-looking statements. During today's call, we may also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding Emergent's operating performance. Please refer to the tables found in today's press release regarding our use of adjusted net income, adjusted EBITDA and adjusted gross margin and the reconciliations between our GAAP financial measures and these non-GAAP financial measures. Turning to slide 5. The agenda for today's call will include Bob Kramer, President and Chief Executive Officer, who will comment on the current state of the company; and Rich Lindahl, Chief Financial Officer, who will speak to the financials for 3Q 2022. Rich will also discuss the updated 2022 guidance. This will be followed by a Q&A session where additional members of the executive leadership team are present and available as needed. Finally, for the benefit of those who may be listening to the replay of the webcast, this call was held and recorded on November 8, 2022. Since then, Emergent may have made announcements related to topics discussed during today's call. And with that introduction, I would now like to turn the call over to Bob, whose comments begin with slide 7. Bob?

Thank you, Bob, and good afternoon, and thank you all for joining the call. Today, we'll provide an update on our business, including significant recent developments, as well as thoughts on the road ahead for Emergent. Let me first begin with our medical countermeasures business, which, as you all know, is a cornerstone of our strategy. We continue to work closely with the US government to deliver medical countermeasures focused on dangerous public health threats in line with our country's biodefense priorities. Case in point, last month, we shipped the first doses of TEMBEXA to the US government under the BARDA procurement contract, our second delivery is scheduled to occur in the next few weeks. This product continues to expand our smallpox franchise and further diversifies our medical countermeasure portfolio. I'm incredibly proud of the team for the seamless integration and management of the TEMBEXA acquisition. The collaborative work that's been accomplished in support of integrating this product into our portfolio, including being able to ship product to our customer in short order, following the closing of the acquisition has been remarkable. We also continue to work with the FDA on the BLA filing for AV7909. We've responded to additional information requests and as a result, we now anticipate a PDUFA date of July of 2023. Meanwhile, we're continuing to deliver AV7909 to the Strategic National Stockpile under the existing 18-month procurement contract thereby ensuring product availability while the FDA reviews our BLA submission. Next, let me talk about our smallpox vaccine program in the status of the government's contract option for ACAM2000. We're currently in discussions with the Department of Health and Human Services and specifically the administration for strategic preparedness and response regarding the fiscal year 2022 procurement option. In prior years, the government has exercised its procurement…

Thank you, Bob. Good afternoon, everyone. We appreciate you joining the call. Please turn to Slide 10 as I begin my commentary today. Overall, our financial performance in the third quarter was mixed. On the positive side, total revenues were in line with our quarterly guidance, as our Products segment continued to deliver solid contributions and the CDMO services business was a modest top line contributor. Late in the third quarter, we closed on the TEMBEXA acquisition and in October began shipping doses to the US government. We also further advanced several programs in our R&D portfolio. At the same time, our profitability measures remain pressured primarily by underutilization of our CDMO capacity, as we continue to re-baseline that part of our business and incremental costs we are incurring to address the Camden warning letter and further strengthen our systems, processes and culture of quality and compliance in our manufacturing plants and across the enterprise. Looking ahead, as Bob mentioned, we are adjusting our forecast to reduce the expected full year contribution of our ACAM2000 smallpox vaccine. While we remain in active discussion with the US government, as of today, this year's option exercise under our 10-year procurement contract has not yet occurred. For the reasons Bob shared, we believe the US government remains committed to its prior smallpox preparedness strategy and the maintenance of the domestic production capability that has been established. However, since the timing of the exercise is uncertain, we are adjusting our ACAM guidance to remove the revenues associated with the option exercise. Importantly, I would note that this change is partially offset by the inclusion of TEMBEXA revenues in our updated forecast. With that, let's turn to the numbers. As indicated on Slides 11 and 12, highlights in the third quarter include total revenues of…

[Operator Instructions] Our first question will come from the line of Jessica Fye from JPMorgan. Your line is open.

Great. On ACAM, I know you've removed it from this option from guidance this year. How would you handicap the possibility of an order by year end? And do you think the government might just be skipping this year's option, or do you think there's risk they might not exercise future options? And then second on the Anthrax vaccines. Can you elaborate on the timeline you project to resolving the warning letter? Any reason to think that this could impact the full licensure of AV7909? Thank you.

Yes. Thanks Jess. Appreciate the questions and participating in the call. So, let me address the ACAM question first. So, it's really difficult to handicap the likelihood of working through and having conversations with HHS by the end of the year. Obviously, we are --- as both Rich and I have acknowledged we're in active discussions with them. We hope to have resolution soon, but it's really difficult to predict. I think it's important to remember a couple of things. First of all, the government has reaffirmed the importance of preparing for a smallpox event, both to us as well as publicly through statements where they've expressed their commitment to the preparedness strategy including protection against smallpox. I think as I included in my prepared remarks it's pretty obvious that ACAM2000 provides the government with a vaccine that is easy to administer with a single dose, domestically manufactured, cost-effectively stockpiles, and even by the government's recent words including the Assistant Secretary for Prepared Response, they referred to ACAM as the first line of defense to vaccinate Americans in the event of an accidental or intentional release of smallpox. So, we know it's a priority for them. Just we hope to resolve this soon but it's really too early to speculate. I think we'll be updating folks as soon as we make progress. And hopefully, that's in short order. On the AV7909 front, the warning letter implication just to be clear with Camden. Camden is one of the sites where we use to fill and finish AV7909 in addition to a third-party contract service provider. So, we don't see significant risk right now in terms of the supply chain for AV7909. I think the extension of the PDUFA date for AV7909 was primarily driven by some additional analysis on the data that we provided to the FDA. And now that we've provided that to them they simply like more time to digest and understand the analysis that we performed and gave to them.

All right. Thank you. Our next question comes from the line of Keay Nakae from Chardan. Your line is open.

Great. Bob is there any pushback in the negotiations by the government for the ACAM option extension?

Yes, Keay, thanks for the question. I wouldn't characterize it as pushback Keay. And clearly they have stated the need and reemphasize the priority of protecting American civilians from the potential threat of smallpox. So, I think it's now a matter of timing and allocation of funding to support their continued procurement. But, well, we are advancing those discussions as quickly as we can, and we'll keep you updated as we make progress and we have appropriate updates.

Okay. That said, the OUS sales for ACAM are encouraging. Should we think of this as one-time in nature, or could this lead to recurring sales of this magnitude or greater going forward?

Yeah. So as you know we've had over the last several years, our interest from international governments to continue their stockpiling strategies much like the US government has, but at a smaller scale to protect a segment of their civilian population and military personnel from the threat of smallpox. So we expect that to continue. I think the bump in 2022 was primarily the result of foreign governments acquiring access to ACAM for potential use as it relates to the monkeypox threat. And while ACAM is not indicated or approved for use against monkeypox that's really a government decision based on their risk-benefit analysis. So is that something that's sticky going forward? It could be Keay, but it's really too early to tell based on the state of the monkeypox threat.

Okay, great. And then finally at Camden. You got the warning letter. I'm sure it's spelled out very specific deficiencies in other areas of concern. How would you characterize how far along you are towards remediating those defined concerns?

Yeah. It's a great question and thanks for asking it. We are doing a lot in Camden across -- well across the site as well as other sites to strengthen our profile and culture of quality compliance. And while there's a lot more work to do that are ongoing, I'm really pleased with the fact that as an example there are tangible benefits and proof that we're making progress including things like harmonizing our quality management systems across the enterprise. We've implemented to the credit of Coleen Glessner and her team, executive level governance reviews on a periodic basis across Camden, as well as the other manufacturing sites. We are supplementing our quality and compliance teams with additional resources and expertise. And we have a very disciplined and robust process to measure and monitor progress against all of the work streams that were incorporated into our warning letter response to the FDA. And as I acknowledged in my prepared remarks, we are now in a regular cadence of updating the FDA on progress. So there are some very simple, quantitative measures that we're following and tracking. And then there are some more simple qualitative measures including the fact that this week as an example, we've initiated Integrity in Action week across our network in the enterprise, which we're really reinforcing the importance of prioritizing behaviors supportive of a culture of quality and compliance that we aspire to achieve. So overall we're making good progress. It's a long road ahead, but I'm pleased and satisfied with what we're doing so far.

Bob, does the capacity constraint and the lifting of that is that more dependent on you folks feeling you've got things corrected the way you want, or is there still some resolution of the warning letter by the FDA that kind of green lights increased capacity utilization?

Yeah. I think as we talked about on the last call Keay, it's a great question first of all. But as we talked about in the call last time in the last quarter, we're taking a very disciplined measured approach to turning up, and growing and looking to our opportunities in the CDMO area in general, but specifically in Camden, which was the subject of the warning letter. So our growth, if you will is going to be measured and determined by our internal quality and compliance profile and progress not based on opportunities that we see, because the opportunities are out there today. We're not acting upon them, because we're again focused on making sure that we thoroughly address all of the issues that were identified by the FDA and that we made commitments to in our response to the FDA warning letter. So it's more of an internal measure metric, Keay as opposed to the kind of FDA mandated actions.

Got it. Thanks.

Thank you. One moment for our next question. Our next question comes from the line of Boris Peaker from Cowen. Your line is open.

Hey. Thanks for taking my question. This is Nick on for Boris. I just have a quick question on NARCAN. You mentioned previously today that there are some jurisdictions that have an automatic over to NARCAN, I mean, over to a generic from NARCAN. Is this a process that occurs over time, or is this like an automatic process where they quickly like within a couple of months take over the generic fully or is this like a one to two year thing? And then we'll continue to see this impact over the next couple of years? And then for the jurisdictions that don't have this automatic switch, are you seeing decreased usage of NARCAN, or is this still like a NARCAN is still kind of taking control over the generic? Thanks.

Yeah. Thanks, Nick. Appreciate the question. So what we expected to see and what we in fact have seen beginning in December of last year, and then certainly in January of this year, with the formation of the generic market and the entrant of the generic product is in the retail market. So, the retail pharmacies, there is almost an automatic switch in all states and jurisdictions at the pharmacy level, to automatic switching to generic product and preference over the branded product. So that's already happened. My comment was really around in the public interest market. So, in the state and local and even some federal jurisdictions where we have a very active commercial support program on working, with states and local governments for procurement of NARCAN that's where we see us holding on to significantly greater market share than in that retail space. And we've said from day one that, when the generic market was formed we expected the retail market to switch to generic in a kind of 90% market share, 10% branded ratio right away. However, in the public interest market space, we expected to maintain the majority of the market share, which, in fact, we have. Hopefully, that helps?

Yes, definitely. Thank you. And then just a second question on TEMBEXA. Is the currently delivered product, is that product that was previously stockpiled by Chimerix, or is this additional drug that's been manufactured by Emergent?

Yes, great question. So this was product that was manufactured under Chimerix's ownership that, whose title was transferred as part of our acquisition. And my comment was really in my prepared remarks and acknowledgment Nick that both the Emergent team and that Chimerix team did just a remarkable job at number one, getting the product to where it needed to be in order to ship it to BARDA under the procurement contract as quickly as we did. So it was a lot of work done under behind the scenes to make this integration work effectively and kudos to both organizations to work collaboratively to make it happen.

Okay. Thanks for taking my questions.

One moment for next question. Our next question will come from the line of Christopher Sakai from Singular Research. Your line is open.

Hi, This is Asim [ph] for Chris. I was wondering if you can give us some flavor for TEMBEXA's growth going forward. There was a significant contribution this quarter. But long-term how you are expecting growth both in terms of top line and bottom line from the revenue stream?

Yes, Asim, thanks for the question. So under the current contract with BARDA that by the way still sits with Chimerix. It's going through a novation process. The base period of performance we expect to deliver on those procurement deliveries in calendar year 2022. We'll talk more about future deliveries under the contract as part of our 2023 guidance, when we talk about that ahead of the JPMorgan conference in early January.

I think early in the call probably I missed it. You said that for AV7909, the PDUFA is now July 2023. This is the first time you've gotten this PDUFA date or the PDUFA date has been changed from the previous date?

So I'm going to call my colleague Adam, he's closer to whether this was the first PDUFA date given or an amended PDUFA date. Adam, do you want to weigh in?

Sorry, Bob, I was on mute. Yes and the tool correct me here but the original date was earlier. I think this is a recent change. So when we had submitted it based on some questions in some feedback this has been modified. So this was not the original.

Okay. And finally on the share repurchase program, is there any authorization left if you can remind us?

Yes. Rich, you want to field that one? I think you addressed that in part in your prepared remarks that maybe to reiterate the comment?

Yes. So, the original authorization was for a total of $250 million against, which we have purchased $188 million and that authorization is expiring later this week.

Okay. Perfect. Thank you so much.

[Operator Instructions] Our next question will come from the line of Brandon Folkes from Cantor. Your line is open.

Hi. Thanks for taking my questions. Just one for me. Can you maybe just give us some context about what you're seeing in terms of NARCAN pricing in the public interest channel and obviously guidance was very good. But just how is NARCAN pricing holding up in a public interest channel? A – Bob Kramer: Yes. Thanks, Brandon. So as we've discussed and acknowledged, the price per carton in the public interest market, has been under some pressure given the entrant of the generic product. It's holding its own from a market share perspective on units. But on the price freight per carton, it's clearly under pressure. Not so much, Brandon is what we've experienced in the retail market where it has been under significant pressure. But clearly, there is pressure on the public interest market. We haven't really disclosed what our average selling price is. But as you will remember, prior to the formation of the generic market, NARCAN was discounted already 40%, discount to the average wholesale selling price of $125 in the retail market making it $75 per dose. So it has gone down from that number, but we're not really disclosing what the new price point is.

Thanks, Bob. Actually, one follow-up, if I may. The October report from the GAO about HHS leading to address the Strategic National Stockpile requirements at inventory risk. Can you just talk about your take on that? And maybe what climate you're seeing in Washington in terms of, committing more spending to address those risks versus maybe cutting back on some legacy holdings initiative National Stockpile? Thank you. A – Bob Kramer: Great question, Brandon. So the GAO report, I think highlighted a couple of inconsistencies in terms of, is the government following through and executing on the commitments required to maintain and replenish stockpiles of critically needed medical kind of measures, consistent with their strategies? In some cases, they have, in some cases they fallen a bit short. I think, they pointed to funding on an annual basis, as being a critical element and supporting element of the need to again follow through on those strategic initiatives, whether they’d be anthrax vaccine or smallpox vaccine related. So, I think the GAO report was a helpful reminder that, if the government sets a strategy that it has to have the appropriate congressionally approved funding to support the execution of those strategies. And as we've talked about, when you look at the critical role that these public-private partnerships play in terms of following through and executing strategies related to public health threat preparedness, this is at the center of the priority. Those private-public partnerships work when there is clearly transparent communications. There is certainty and there is collaboration and it's worked well for us over the years. The fact that the government has not followed through yet on their exercise of ACAM2000. As I said in my prepared remarks, it's disappointing, but I'm confident that we'll work through in the near-term and be able to report good outcomes here going forward.

Great. Thank you for taking my questions.

Thank you. And I'm not showing any further questions in the queue. I'd like to turn the call back over to Robert Burrows for any closing remarks.

Thank you, Victor. And with that, ladies and gentlemen, we now conclude the call. Thank you for your participation. Please note, an archived version of today's webcast, as well as the PDF version of the slides used during today's call will be available later today and accessible through the Investors landing page on the company website. Thank you once again and we look forward to speaking with all of you in the future. Have a good night.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.