Good day, and thank you for standing by. Welcome to the Q3 2025 Emergent BioSolutions Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand your conference over to your first speaker today, Frank Vargo, Vice President and Treasurer. Please go ahead.

Good afternoon, everyone. Thank you for joining today as Emergent discusses their operational and financial results for the third quarter of 2025. As is customary, today's call is open to all participants. The call is being recorded and is copyrighted by Emergent BioSolutions. In addition to today's press release, there are a series of slides accompanying this webcast available to all webcast participants. Turning to Slide 2. During today's call, Emergent may make projections and other forward-looking statements related to their business, future events, prospects or future performance. These forward-looking statements are based on their current intentions, beliefs and expectations regarding future events. Any forward-looking statements speaks only as of the date of this conference call, and except as required by law, Emergent does not undertake to update any forward-looking statements to reflect new information, events or circumstances. Investors should consider this cautionary statement as well as the risk factors identified in Emergent's periodic reports filed with the SEC when evaluating their forward-looking statements. During today's call, Emergent may also discuss 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. Turning to Slide 3. The agenda for today's call will include Joe Papa, President and Chief Executive Officer, who will provide an update on the company's transformation plan and highlight key results; and Rich Lindahl, EVP and Chief Financial Officer, who will provide details on the third quarter and year-to-date 2025 financial results as well as provide an update on full year 2025 guidance. Joe Papa will conclude by discussing the company's business performance and key catalysts for growth, followed by Q&A. Finally, for the benefit of those who may be listening to a replay of this webcast, this call was held and recorded on October 29, 2025. Since then, Emergent may have made announcements related to topics discussed during today's call. And with that, I would now like to turn the call over to Joe Papa. Joe?

Thank you, Frank, and hello, everyone. Welcome to Emergent's third quarter 2025 earnings call. This is Joe Papa, CEO of Emergent, and I'm joined today by Rich Lindahl, our Chief Financial Officer. I will start by providing third quarter highlights, and then Rich will review the third quarter financials. I'll return to review key business catalysts to drive growth. We'll close with a Q&A session. Turning to Slide #5. The Emergent team's aspiration is to be the leader in solving public health crisis around the world. As part of our mission to protect and save lives, we develop and deliver highly complex products that address some of the world's most pressing threats. Based on the efforts of our team, we had another great quarter and are on track to exceed our initial 2025 revenue and adjusted EBITDA guidance. Year-to-date, we have secured 11 contract modifications and product orders for our biodefense business while maintaining our market leadership position in the nasal naloxone category. We have a durable biodefense business. Model has a North America-based supply chain for our products with manufacturing in the U.S. or in USMCA-compliant facility. Finally, we believe our differentiated capabilities in plasma and hard-to-manufacture products position us to be a strategic long-term partner for our customers. Turning to Slide 6. Emergent was founded 25 years ago, and our business is unlike traditional pharmaceutical companies. In fact, we have the most diversified biodefense and naloxone product portfolio. It is focused on addressing the global health -- public health threats of smallpox, anthrax, mpox, Ebola, botulism and even opioid overdose emergency situations. Just yesterday, we released a new survey finding that reinforce bioterrorism remains a significant concern to informed public policy leaders. Turning to Slide 8. We are making great progress with our multiyear transformation. During 2025, we…

Thanks, Joe. Good afternoon, everyone. We appreciate you joining the call. We're off to a strong start in the second half of 2025. Our third quarter revenue came in at $231 million, exceeding the upper end of our guidance range by $21 million, driven by sequential growth of NARCAN and the addition of 4 new contract modifications. Through the third quarter, we continue to see year-over-year improvements in both gross margin and adjusted EBITDA margin, highlighting the efficiency of our business that delivered 38% adjusted EBITDA margin this past quarter. To further highlight our strong performance, net income for the third quarter was $51 million. Year-to-date net income was $107 million and year-to-date earnings per share was $1.89. Year-to-date performance has also exceeded our internal expectations. We're raising our total revenue guidance to a range of $775 million to $835 million, a $5 million improvement at the midpoint. And we're increasing our adjusted EBITDA guidance to a range of $195 million to $210 million, a $15 million increase at the midpoint as compared to our prior forecast. The profitability and cash generation of our company has allowed us to focus on creating opportunities to generate additional shareholder value. In the third quarter, we deployed cash towards both equity and debt repurchases, taking advantage of opportunistic pricing. Even with these actions, our cash position and leverage ratio remained in a strong and stable position. Both of our business segments outperformed in the quarter. And importantly, we saw no disruption from external macro factors that may be pressuring the rest of biopharma. We continue to play a vital role as a trusted partner to both the U.S. government and our international partners with growing demand for our medical countermeasures as nations prioritize preparedness and response capabilities. Please turn to Slide 12 to…

Thank you, Rich. Turning to Slide 20. Let's begin with our naloxone business. Our entire Emergent organization is proud of the tangible impact that NARCAN has on saving many lives from opioid overdoses in the United States and Canada. Next month, we will recognize the 10-year anniversary from the U.S. FDA approval of the prescription, NARCAN Nasal Spray, and we will highlight the tremendous work that is going to expand access through its over-the-counter availability in 2023. And with ongoing efforts to expand NARCAN access, adding KLOXXADO into our NARCANDirect platform for ease of purchasing, combined with the over $50 billion in opioid litigation settlement dollars, we believe that our portfolio will continue to align with the overall naloxone market growth expectations. Moving to Slide #21, I'd like to review the key results from our recent biodefense survey. There is significant bipartisan support favoring biothreat preparedness. The bottom line is that amongst policy opinion leaders, the perceived risk of bioterror threats is high and bioterrorism even outpaces concerns about nuclear risk. This is because biological attacks are viewed to be more feasible, more imminent and those surveyed were concerned about the overall preparedness. This quarter, we have secured 4 new U.S. government contracts worth approximately $155 million combined. We also successfully secured an incremental $29 million of MCM product orders with an international government partner. International sales have been a key growth driver in 2025 and represent 34% of our MCM sales year-to-date, which is meaningfully higher from prior years. On the public health front, the Emergent team was in continuous communication with our Ebanga commercial partner, Ridgeback Biotherapeutics. Ridgeback, along with other organizations and local health authorities, directly supported efforts during the recent Ebola outbreak in the Democratic Republic of Congo. This outbreak, which is one of several over…

[Operator Instructions] Our first question comes from the line of Jess Fye from JPMorgan.

I have several. First, what drove the strong year-over-year growth in other products specifically? Second, with international driving 34% of MCM orders year-to-date, can we think of these orders as recurring? Are they part of multiyear contracts? Or are they one-off orders? And can you remind me how the gross margin on international MCM orders compares to the gross margin associated with U.S. MCM sales? Then for NARCAN, you mentioned OTC sales and Canadian sales fell year-over-year. What are you seeing in each of those segments of the business? And should we consider any impact from the government shutdown to the NARCAN business this quarter? And what about the MCM business?

Okay. There's quite a bit there, Jess. Thank you for the questions. Rich, you want to take the first part about the other category in terms of what's there?

Yes. So a lot of it is driven by contracts and grants with the Ebanga program having significant activity this year. And that's really probably the major driver there.

I think the second question you had about our international contracting and is that a recurring revenue base or the onetime. We've worked very diligently over the last 18 months where we made some investments in our international platform to reach out and get more international revenue and sales. And I'm glad to say that, that is paying off, and we are seeing that. So we view this as part of a concentrated program and activity. Admittedly, any given contract is for a set amount of product in a set amount of time. But we clearly see the international opportunity is one that will be a growth opportunity for us in the future. So probably the best answer is these products are certainly part of a specific order for a specific quantity at a specific time, but we do view this as being an international growth opportunity, especially as we know the European Union and other parts of the world are continuing to ramp up their capabilities in this entire area of biodefense and Strategic National Stockpile that they're setting up. And our team has been delighted to try to help them as they get ready for this European Union Stockpile program on Strategic National side. We're trying to help them think through that type of process. On the next part of your question, I think, was international gross margin. And one of the things I can say is our international gross margins higher. The answer to that is yes. And one of the issues that we have is that we have committed to the U.S. government and that they help us with our funding for our programs and our products that they would -- U.S. government would get what we refer to as most favored nation pricing. So as…

Yes. Our next question comes from Raghuram Selvaraju from H.C. Wainwright & Co.

This is Eduardo on for Ram. I was hoping to get a little update on the Rocketvax collaboration, if you have any -- anticipate any meaningful catalysts over the next 12 months?

Sure. Just a reminder for everybody, earlier in the year, we agreed with Swiss Rockets, the parent of Rocketvax to work with them on 4 project opportunities. They are making good progress on the first product that we've acknowledged, they do have funding for the Phase I of that -- research of that product. They are now obtaining the initial quantity of clinical trial material to get that trial started. Our expectation that trial will start sometime in the early part of 2026. And I remind you what we believe is really important with the Rocketvax technology is that it is different than the mRNA technology. It's not mRNA, but it is a fast to develop technology, but it uses live attenuated virus technology, vaccine technology. And by doing that, it could be developed quickly, similar to mRNA. However, there's durability in the immune response because they use a live attenuated version. So that's why we're excited about it because it falls under something called Project NextGen as the U.S. government is looking for the next virus outbreak, how can it be controlled? And they view this type of technology as being potentially important to that next wave of outbreaks, whatever pandemic it may be. So yes, Rocketvax in progress. We're working with them. There's still a lot of work to be doing, but they have the funding for the Phase I starting sometime in 2026.

Is there another question you'd like to ask?

Sure. Yes. Could I get -- just kind of curious more on the MCM products this time. Which of the products do you think is going to be the principal driver of U.S. government contract-based revenue going forward? And do you have any ideas what -- why that might be?

Yes. I think the advantage that we have in Emergent is we have the most diversified product portfolio in the biodefense world. And we all recognize that the biodefense category is -- we're living in an increasingly dangerous world. And the technology, as we showed in our survey in biodefense is something that could be very quickly rolled out by some terrorist group. So we think it's important that we are prepared. I think it really comes down to -- for us, it's just having the diversity of the portfolio so that we're ready for any potential activity, and we work very closely with BARDA, Strategic National Stockpile, Department of Defense to ensure that whatever happens that we're prepared to help them and we're working very closely with them. And as I said, we meet with them on a regular basis to get prepared. So I don't know if I want to pick out any singular product. I think they're all important to us. And I think what's probably the most important thing about when you think about Emergent is the diversity we have, whether it be products for smallpox, whether it be a vaccine or a therapeutic, products for anthrax, whether it be the vaccine or therapeutic, products for botulism. We've got products of mpox. We have all of them. And I think that's what really truly sets us apart from the other players in the space. Clearly, in the new category, do we like the opportunity with TEMBEXA? Do we see the continuing outbreaks of Ebola? Yes, those are important things for us as well, and I think they'll drive a big part of our future. Thank you for the question.

Thank you for your question. This concludes the question-and-answer session. I would now like to turn it back to Joe Papa, CEO, for closing remarks.

Well, thank you, everyone, for joining us today. We very much appreciate your interest in our company. Please reach out if there's any other additional questions, but we're excited about what Emergent is accomplishing this year. I think we're well on our way to have another good year for us and another great quarter and very much thanks to all people working at Emergent for all the work they've done to help us have a very strong year-to-date. Thank you, everyone, for joining us today. Have a great day.

Thank you, and thank you for your participation in today's conference. This does conclude the program. You may now disconnect.