Emergent Biosolutions Inc Stock

Good afternoon, everyone. Welcome to the Emergent presentation. Emergent is a very unique health care company, a unique business model. We partner with governments around the world on biodefense, which is an important area, especially in this increasingly dangerous world we live in.

We make products for some of the most difficult product areas that have significant barriers to entry. For example, we make a vaccine for smallpox, once again, one of -- the #1 viral biodefense or bioterrorist threats. We also make a product for anthrax, the #1 bacterial problem or bioterrorist threat. And we also make a product, the most lethal toxin out there, botulism, which is also considered to be one of the most important bioterrorist threats. And of course, today, in the news, you also see about Ebola. We have a product that's in development and scale up for Ebola as well in terms of a therapeutic treatment.

So as you can see, these products are very difficult to make. They're very dangerous products and we have significant barriers to entry, for example, when you're trying to create a live attenuated virus vaccine, you need to obviously make products that are going to be safe for all the employees that deal with them, but also obviously very helpful for the patients that potentially use the product. It's important to think about a company like Emergent relative to the longevity of our product portfolio.

Let me talk about specifically -- try to advance the slides. I'm going to be making some forward-looking comments, and you'll see my safe harbor statements there to refer you to our SEC filings. Go to the next slide. Next slide, please.

You can see our team, our experienced and trusted management team has decades of experience in health care and specifically experienced in this area of biodefense. And the other area in which we play in beyond that is we're the #1 player in opioid overdose treatments with our NARCAN product. So we lead the world when it comes to the biodefense area with the #1 portfolio of products, and we also lead in the area of opioid overdose with the #1 brand for opioid overdose treatment, NARCAN. Those are the two areas that we play in, important areas to be clear, in terms of looking at public health threats around the world. And our team is very much focused on continuing to protect and save lives as our mission.

If I go to my next slide, you'll see the portfolio. The portfolio is the most diverse biodefense medical countermeasure portfolio and also has the naloxone product, specifically NARCAN and then also KLOXXADO. We are, as I said, the leader, we've been doing the biodefense world for 25-plus years, and we have a very durable business model. We make the product initially for governments around the world, especially in the United States. But beyond making it for them initially, we also do much of the testing of the potency, the stability of these products.

So there's an ongoing preparation that we provide, not only making the product, but then also servicing the product, which is important for governments as they stockpile products, they need to know that, that product in their stockpile is potent and has a durable supply chain just in case any actual crisis develops, we make those products. We are prepared. We help the governments prepare for these types of products and issues around the world. And hopefully, we'll never need them, but it's like a fire extinguisher, making sure you have the product on hand just in case something goes wrong.

If I go to my next slide, it's the manufacturing partnerships that -- we make products. I joined the company in 2024, and we've streamlined this network of manufacturing sites, to be clear. We've got two primary hub sites. One of it is in Lansing, Michigan. It's making our BioThrax and CYFENDUS product and another one in Winnipeg, Canada that makes many of our plasma purification products like BAT, ANTHRASIL and also the other products we make there. We also make our ACAM active substance that we make -- a fill/finish facility in Rockville, Maryland that is also available. We've got access to a large drug substance facility, all as part of our streamlined manufacturing network. So capabilities we have. We have capabilities in drug substance or API. We have capabilities in fill/finish, and we also have the capability to work with live attenuated virus and even can do lyophilization of that product, if need be.

We started in 2024 when I joined, on my next slide, please, a multi-year turnaround of the company. It actually started as I joined, but there were some activities already ongoing in '23. We -- this multi-year turnaround is based on 3 phases. First phase is stabilization, where we needed to stabilize the company and really focus on creating a lean, efficient, customer-focused organization. We took out operating expense out of the business, order of magnitude about $250 million of operating expenses taken out of the business. We settled legacy litigation. We streamlined our manufacturing facilities, and we divested some unprofitable assets and products. That helped us to move our EBITDA from negative in 2023 to approximately $183 million positive EBITDA in 2024. So a very significant turnaround in the business and that was something we are continuing today.

Our turnaround phase where we are today is all about where can we invest for the future of our company. We're investing right now for growth in some key products. We've got a product TEMBEXA, which is a therapeutic for smallpox. We've got a product raxibacumab, a therapeutic for anthrax. And we have Ebanga, which is a product for Ebola. Obviously, Ebola is top of mind today as we think about what's happening in the news with Ebola outbreaks in Africa.

Beyond that, we are also investing for international growth because we think that's another important opportunity to take our portfolio today and to diversify that by selling it to other countries around the world. And that's what we do today. First quarter of 2026 we reported. It was a very strong quarter for us. It was ahead of our expectations, both on revenue and EBITDA. It was slightly down from a year ago in that there was a one-time order received in the first quarter of 2025 that did not repeat. But on balance -- if I go to the next slide, please. The next slide, please. On balance, though, it was ahead of our expectations, both on revenue and EBITDA. Revenue was $156 million, EBITDA, $36 million.

Importantly, improved our cash balance. We're generating significant cash to $160 million versus -- up $11 million versus last year. And we also are continuing to work to improve our capital allocation. We refinanced our term loan to 2031, so extending the maturity of our term loan, while we also continued our share repurchase program. And indeed, on the business side, we were successful in gaining 4 contracts that extended our growth during the first quarter of 2026.

NARCAN, we also introduced some new innovation. We introduced a carrying case. Carrying case is perfect for those young adults that carry a backpack. It's something they can clip on to their backpack, which, unfortunately, if one of their friends overdoses on an opioid, they have the ability to help that person right away. And every second counts when you have an opioid overdose because once a person overdoses, they stop breathing, once they stop breathing, you need to do something quickly or else the person will die. So that's an important part of the carrying case.

We also realized many of our customers are using large quantities, as like first responders. So we came out with a multiple pack, 6 count, 24 count. We think that's going to help our most important customers that use it every day to help people to also have a large quantity to make it more efficient.

We also did some new business development in the first quarter. We licensed in a product from Substipharm. We'll make the active ingredient for them. They can sell that product around the world, and that's what -- they needed somebody that can make active ingredient. We have that capability. It's a live attenuated virus, we have that drug substance capability. But beyond that, they needed some expertise. They got that expertise from us as we're going to make the product, active ingredient, but then we also have the ability to take that product and potentially have it available for the U.S. government. So that's why we think that's an important opportunity. We also added another business development program in our Canadian facility with SAB.

If I go to my next slide just looking at the medical countermeasures, biodefense specifically. I mentioned we are seeking to diversify the business. We, in the first quarter of 2026, have about 37% of our business from outside the U.S. That's an important diversification. Historically, about 15% of our business came from outside the U.S. This time, it's now up to 37%. So it's an important way for us to diversify what we're trying to do with our business going forward.

In addition to that, we did receive 4 additional contract awards. We received a $140 million contract grant from the Canadian government for a number of products in Canada. We also were able to get a VIG contract with the U.S. government for $54 million and a $21 million, BioThrax, to supply to the U.S. government Department of War. All this designed to ensure that we continue to partner with governments all around the world to make sure that we help them prepare for an uncertain future in what is increasingly a dangerous world out there.

If I go to my next slide, it's about naloxone, our NARCAN product and what we're doing there. What's the issue with opioid overdoses? Unfortunately, while they are declining, the number of overdose deaths, they still exist with significant numbers. Historically, there were approximately about 100,000 overdose deaths, most of them in the area of opioids. That number has come down, the latest numbers in 2025 was approximately 50,000 opioid overdose deaths. So it's still a major problem. It's come down to be clear, but it's still a major problem.

We think a big part of the success in bringing that number is what we've been doing with our NARCAN product. We made our product available by working with the U.S. government to make it an over-the-counter product. So the product can be sold without a prescription. We believe that was really important to make sure we'd have it more accessible to the population just in case there was a problem.

And as I said, it's just like -- in our minds, it's just like a fire extinguisher. You want it in every home. Hopefully, you never need it. But if you do, it can save lives. And that's what we're looking at for what we do with our NARCAN product and make it available over the counter, make it more accessible. And indeed, if we are able to do that by making it not just in the home but also, as I said before, put it on -- in a carrying case that you can clip on to a backpack. We think things like that will just make it more accessible at the time of need, which is what we think will help bring down the overall opioid overdose deaths. That's where we sit today.

We also think the other driving force for increasing the amount of volume -- unit volume for opioid overdoses is that not only are people dying, but we're also seeing a large amount of funds that are coming in settlements from large pharma companies that sold opioid products. They've now settled class action lawsuits. There's about $50 billion coming into the marketplace of settlement funds. Those funds are going direct to the states from the large pharma companies, and we believe that will be an important part of -- from a pharmaceutical expense area. That settlement funds will come to the states, the states will use that for education and for treatment of opioid overdoses, of which we believe NARCAN will receive a certain amount of funding there.

And that's going to happen over the next 10 years. So ballpark, $50 billion next 10 years, approximately $5 billion a year coming into the settlements there of funds that will help the states to reduce the number of opioid overdose deaths. So we're excited about being able to help the states to do that.

If I go to my next slide, let's just look at some other financial metrics for the first quarter. I think what you can see certainly is that, number one, it exceeded our expectations, both on revenue and EBITDA. And we've got strong management of our operating expense. It was about down $10 million from last year. All of that designed to improve our overall performance of our company as we face the opportunities in front of us in terms of continuing to protect and save lives by bringing out our products for the opioid overdose and to help governments around the world to prepare for public health threats like the biodefense area.

Also, if you look at my next page, it looks at what we're doing specifically on some of the other financial metrics. I mentioned cash, we improved our cash versus a year ago by $11 million, improved liquidity by $11 million. Importantly, though, if you look at what we've done on debt reduction, the debt reduction is down $110 million from a gross point of view and $122 million on net debt. We think that's an important metric for us to reduce the risk of our company by bringing down the overall amount of debt. And as you can see from leverage from a year ago, which was 2.7x a year ago, is now down to 2.4x.

So we're making good progress in reducing the debt levels of our company, generating cash and then importantly, generating the business that we get from governments around the world. So we're excited about what it means for us as a company and as we think about the future as we are turning around the company. To be clear, some quarters are going to be stronger than other quarters. We've said that on our earnings calls. But we think directionally, we're making good progress in first stabilizing the company and now investing for the turnaround phase of our company.

If I go to the next page, it looks at our debt refinancing. I mentioned briefly before, we closed a $150 million new term loan in our company. It will bring down our interest expense by approximately 200 basis points. It will help us to preserve the liquidity in our company, and it allows us to extend the maturity of our debt stack until 2031 in terms of this term loan. So all good reasons. And by -- what I was saying previously, it gives a little bit more flexibility on some of the debt covenants as we think about the future.

As we think about what are we going to do in the future of our company, how are we going to allocate capital? If I go to my next page, please. The capital allocation priorities for us are very straightforward, very clear. First and foremost, we want to fund growth. Our MCM business has an international growth opportunity. We're going to continue to fund that as well as investing in our own internal R&D business development for the products that I mentioned previously, products like raxibacumab for anthrax, TEMBEXA for smallpox and Ebanga for Ebola, all cases of us investing in the future of our company.

Beyond that, we're looking at our debt, to refinance and reduce our total quantum of debt. And we've made good progress, as I mentioned to you before, we're going to continue to look to reduce our total quantum of debt. And then finally, we initiated a share repurchase program last year. We're happy to announce we continue to move forward with our share repurchase program and our market cap continues -- where we are today, we're going to continue to repurchase shares. We think the overall value of our company is being understated by the market as we sit here today.

If I move to the next page. One more, please. This is where we are focused for the future in terms of what we think are multiple growth opportunities. First and foremost, the #1 for us is to look as we enter the turnaround phase, where can we invest for growth. I mentioned before, we've got 3 products that are important to us. TEMBEXA for the treatment of smallpox. It's -- we're now beginning to test it, not for smallpox only, but also now for Mpox, that has started. We have Ebanga for Ebola and then raxibacumab for anthrax. And then those are all things that are happening as we sit here today. We're also investing in new innovations, such as NARCAN for carrying case and multipacks. And then we're investing for international expansion, all important to us.

Beyond that, we're looking at what can we do for business development. Since I joined, we've done a couple of different transactions. We did KLOXXADO. It gave us the high strength of naloxone. We invested in Rocketvax. Rocketvax is a next-generation technology for a live attenuated virus vaccine opportunity. And that funding is being -- that product program is being funded by NIH for the Phase I portion. And then we've just recently invested in a Japanese encephalitis virus vaccine, where we're making the raw materials as a drug substance, but then potentially look to sell it to the U.S. government in the future.

More to say here on this next page. This is just a look at our pipeline, where products are. I talked about the Ebanga, TEMBEXA and raxibacumab. We also have other candidates in different stages, and we're also looking at the opportunity for pandemic flu, all opportunities that we think are going to be important at some point in the future, a lot more -- we're working here to look to additional products that we can add to this portfolio in 2026 and beyond.

Final slide, if I look at my just closing comments here, where do I summarize? We're going to continue to invest and deliver on a multi-year transformation plan of our company. As I mentioned, we've already moved successfully through stabilization. By stabilization, we reduced our operating expense of the company. We also settled some of the legacy litigation that was a part of our company. We've improved the operating performance of our company. We increased our cash flow generation. We think all important metrics for what we were thinking about for the future.

Beyond that, we're going to continue to operate a lean, efficient, customer-focused organization. We continue to work to decrease debt, to decrease our interest expense, we'll look to repurchase our shares based on where we are today, and we're looking to continue to grow and diversify our business and importantly, investing for that growth today, thinking about the future of tomorrow. Those are all the things that we're looking to do while we have an ongoing commitment to how we are focusing on patient safety, quality, and making sure everything we do is in a very compliant manner.

Thank you very much for the opportunity to talk today about Emergent BioSolutions and our opportunities for the future. Thank you. Have a good day, everyone.

Good day and thank you for standing by. Welcome to the Q1 2026 Emergent BioSolutions Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Frank Vargo, Vice President, Treasurer.

Good afternoon, everyone, and thank you for joining us as Emergent discusses its operational and financial results for the first quarter of 2026. As is customary, today's call is open to all participants. It's being recorded and is copyrighted by Emergent BioSolutions. In addition to today's press release, a slide presentation accompanying this webcast is available to all webcast participants.

Turning to Slide 2. During today's call, Emergent may make projections and other forward-looking statements related to its business, future events, prospects or future performance. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events.

Any forward-looking statements speak 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 these forward-looking statements.

During today's call, Emergent may also discuss certain non-GAAP financial measures that include adjustments to GAAP figures to provide additional transparency regarding the company's operating performance. Please refer to the tables included in today's press release.

Turning to Slide 3. The agenda for today's call includes remarks from Joe Papa, President and Chief Executive Officer, who will provide an update on the company's leadership in public health preparedness, business performance and key highlights. Rich Lindahl, EVP and Chief Financial Officer, will then review the first quarter 2026 financial results and provide an update on full year 2026 guidance. Joe will conclude with a discussion of the company's key catalysts for growth, followed by a question-and-answer session.

Finally, for the benefit of those who may be listening to the replay of this webcast, this call was held and recorded on April 30, 2026. Since that time, Emergent may have made announcements related to topics discussed during today's call.

With that, I would now like to turn the call over to Joe Poppa. Joe?

Thank you, Frank, and good afternoon, everyone. Welcome to our first quarter 2026 earnings call. This is Joe Popa, and I'm joined today by Rich Lindahl, our Chief Financial Officer.

Let's turn to Slide 5. Our aspiration at Emergent is to be the leader in solving public health threats around the world. Over the last 25 years, we have built what we believe is the most diverse biodefense product portfolio in the world.

Our medical countermeasures address anthrax, smallpox, mpox, Ebola, Botulism and complications from smallpox vaccination, alongside the leading branded naloxone franchise with our NARCAN Nasal Spray, which has a decade of trusted brand leadership. We believe in our unique position within the industry to demonstrate just how public-private partnerships are critical to national security.

Turning to Slide 6. Since implementing our multiyear transformation plan in 2024, we have stabilized and rightsized the company in order to provide Emergent with a strong foundation for future growth. 2026 marks a pivotal year of our transformation as we invest in high-growth opportunities.

I'm pleased to note that this process is now well underway. We are focusing on segment revenue growth and improved operating performance. We are generating strong cash flow for continued investment in internal R&D and quality capabilities. We have identified product acquisition opportunities that address unmet medical needs and have the potential for sustainable long-term revenue growth.

Debt reduction will remain a priority for us. In 2025, we reduced our net debt levels by approximately 22%, and we have planned for further improvement on our balance sheet and credit ratings. Collectively, these activities are about putting in place the foundations for creating sustainable long-term value creation.

Let's move to Slide 8, we'll take a look at our first quarter highlights. Thanks to the great efforts of our Emergent team our first quarter results are evident in both our top and bottom-line performance. We reported first quarter revenue of $156 million, which exceeded the high end of our guidance range and was ahead of internal expectations.

Adjusted EBITDA came in at $36 million, also above our internal expectations, representing a 23% margin. It's driven by continued efforts to deliver a lean and operationally efficient customer-centric business model. For example, net working capital improved by over $100 million since Q1 2025. We improved our cash balance by $11 million versus the prior year to $160 million, and our total liquidity increased to $260 million. Our strong cash position enabled the repayment of $110 million in debt last year.

On the capital allocation side, we continue to create value. In April, we announced the refinancing of our prior term loan, which enabled us to secure a more favorable interest rate. We also amended our revolver to $50 million and established a new delayed draw term loan facility for $75 million. We also continued our share repurchase program, buying back $9 million in shares in the first quarter. Since the start of the share repurchase program in 2025, Emergent has repurchased approximately $34 million of shares.

Turning to our business performance. Overall, MCM performed very well, reflecting increased global demand and strategic diversification in our international markets, which now represent 37% of our total MCM revenue. We received four contracted product orders in the quarter.

With respect to the naloxone business, we continue to maintain the share leadership. We command a competitive pricing strategy and recently launched our newest product offering, the NARCAN Nasal Spray carrying case and a multipack configuration, both of which are already performing very well in the first month of launch.

We believe on Slide 9, the world is an increasingly dangerous place and public health preparedness in the face of potential threats is critical. We are proud of our long-standing partnership with the government of Canada. And in Q1, we announced a $140 million multiproduct agreement. We also executed $54 million legal award with ASPR and approximately $21.5 million delivery order to supply BioThrax to the Department of War.

Our MCM business represents an important driver of our future growth. And with the added flexibility from our recent financing, we see multiple opportunities to acquire high-growth and complementary products to our MCM portfolio.

Our mission on Slide 10 to protect to save lives is answered every day with the work we do to drive access, awareness and availability of life-saving naloxone. We are in lockstep with U.S. public interest customers, the Canadian health officials, retail customers and all the communities in need. We're keeping pulse on the staggering overdose death rates and ensuring our best efforts to help combat the thousands of lives lost each month.

We believe over-the-counter access to NARCAN should be more publicly accepted and normalized, just as other life-saving emergency tools are like defibrillators or fire extinguisher for that matter. Just in the news this week, this national intention on opioid settlement funds of over $50 billion, which supports state, local municipalities, tribes and other entities to help turn the tide in the detrimental effects of the opioid crisis.

The produced settlement alone released over $5 billion for the state for education and naloxone purchase. There's a tremendous amount of work left to be done to expand access and awareness to naloxone and to ultimately bring the number of overdose deaths down to zero. Federal state programs also continue to support naloxone funding and services through the SOR and substance use block grants.

We just announced a new awareness effort with naloxone, NARCAN for professional baseball player, Davis Schneider. Davis Schneider shares his personal story in his late brother's honor. Our goal is to raise the awareness of NARCAN and help save lives from opioid poisoning, so no more families feel the same heartbreak.

Additionally, we recently announced a partnership with British Columbia to supply NARCAN Nasal Spray for the province's take-home naloxone program. This order called an additional investment of CAD 18 million by the government of British Columbia.

In the U.S., the U.S. public interest channel performed in line with our expectations for the quarter. U.S. FDA approved our NARCAN Nasal Spray carrying case and multi-pack options, delivering on our promise to offer new line extensions to patients and customers. We will continue to engage the public across the country, especially in college campuses with our ready-to-rescue campaign to help drive adoption where young adults made the efforts.

Since 2016, Emergent has delivered more than 100 million doses of NARCAN Nasal Spray to people, communities and businesses across the U.S. and Canada to help save lives for opioid poisonings.

On Slide 11, we are pleased to share that part of our durable and sustainable footprint we are now expanding our Canton manufacturing site in Massachusetts. Our new strategic partnership with Substipharm Biologics enables us to restart the manufacturing of the Canton facility to support the Japanese encephalitis vaccine.

Emergent entered into a U.S. distribution agreement with Substipharm to support the product opportunity with the U.S. government following U.S. FDA approval. This opportunity establishes our new approach to external manufacturing partnerships, moving beyond a fee-for-service CDMO approach to one that allows us to share the product's potential success.

In addition, just yesterday, we announced a second strategic manufacturing partnership with SAB Biotherapeutics to advance their type 1 diabetes autoimmune candidate. This work will be led by our Winnipeg team. We're excited for the ability to partner with such a dynamic company.

Let's hear from Rich, who will run through our financial results. Rich?

Thank you, Joe, and good afternoon, everyone. Thank you for joining our call today. We started fiscal year 2026 with a strong first quarter with revenue exceeding the top end of our guidance. We've also advanced key strategic priorities and improved our cash and liquidity position versus the prior year.

Execution of our 2026 turnaround plan is well underway as we work toward our near-term financial and operational goals, building on the stabilization and rightsizing actions completed over the last two years. We also expect the refinancing announced two weeks ago to provide strategically important balance sheet flexibility, lowering interest costs, extending maturities and adding access to incremental capital to support both operational execution and our longer-term growth initiatives.

Turning to Slide 13. Our first quarter results were in line with our expectations and reflect continued progress on execution. Total revenue for the first quarter of 2026 was $156 million, which came in above the high end of our prior Q1 revenue guidance of $135 million to $155 million.

As a reminder, on our last earnings call, we pointed out that our 2025 results benefited from a large international order that we do not currently expect to repeat in 2026. That order contributed approximately $60 million of revenue and $50 million of adjusted EBITDA to our first quarter 2025 results and significantly influences the year-over-year comparisons of these metrics.

Beginning in 2026, we are adding back non-cash stock compensation to our adjusted EBITDA. This is consistent with our peers and provides a more comparable view of profitability on a cash basis. It also aligns with the covenant calculations under our new debt agreement. In the first quarter, adjusted EBITDA and adjusted EBITDA margin were $36 million and 23%, respectively, reflecting the quarterly revenue profile. Adjusted gross margin was 52%, reflecting the fixed -- high fixed cost nature of our operations.

We also maintained strong cost discipline. Operating expenses were $57 million in the first quarter of 2026, down $10 million year-over-year, and R&D spend declined by about 1/3 compared to the first quarter of 2025. Total revenue was $156 million, supported by a solid contribution from naloxone as we continue to maintain a market leadership position.

The MCM portfolio performed above our expectations, driven by U.S. government order timing and shipments. International MCM revenue was 37% of total MCM revenues in the quarter, representing continued strong demand and diversification beyond the U.S. government.

On Slide 16, we highlight the sustained improvements across our quarterly financial metrics. Liquidity and cash both improved by $11 million year-over-year, and we reduced net debt by $122 million or approximately 22% versus the first quarter of 2025.

As a result, we continue to see improvement in our net leverage ratio, which was 2.4x adjusted EBITDA at 1Q '26 versus 2.7x at the first quarter of '25. This level gives us meaningful financial flexibility as we evaluate capital allocation priorities to further strengthen our long-term growth profile. This observation provides a good segue to our April 2026 debt refinancing transaction, which is highlighted on Slide 16.

Also noted there, we decreased our total term loan debt by $100 million versus the first quarter of 2025. And we increased finance capacity with the addition of a new fully committed delayed draw term loan of $75 million.

As Joe noted earlier, the April 2026 debt refinancing was an important milestone for Emergent. First, it strengthens our ability to preserve liquidity to support ongoing operations and advance long-term strategic initiatives. Second, it lowers our interest expense, freeing cash flow that can be redeployed into value-creating investments that support growth. Finally, it meaningfully extends our maturity profile and improves covenant terms. Taken together, these actions help establish a stronger financial foundation to support durable long-term growth.

Turning to capital allocation. We have several strategic growth priorities in place for 2026, growing international MCM, internal R&D investments and business development. Continued debt management will remain an important part of our turnaround in 2026. As noted, the April 2026 refinancing provides us with meaningfully greater financial flexibility and supports our long-term strategic growth plan.

As a reminder, we have a $50 million share repurchase program through March 31, 2027, and we continue to utilize it, repurchasing 900,000 shares for $9 million during the first quarter of 2026. As of the end of the first quarter, $46.5 million of authorized repurchase capacity remains available under this program. At current valuation levels, we believe disciplined repurchases can be an attractive way to create shareholder value, and they reflect our confidence in Emergent's long-term prospects.

One final note on our March 31 balance sheet. We previously disclosed that $50.4 million of contingent consideration could be owed to Ridgeback Bio in the second quarter of this year, assuming continued progress under our contract with BARDA. As we now expect those conditions will be met, we have reported that amount as an accrued acquisition obligation under current liabilities.

On Slide 19, we highlight our revenue and profitability guidance. We are maintaining our full year total revenue guidance of $720 million to $760 million. Commercial revenues are expected to be flat to slightly up with volume offsetting anticipated price adjustments, and we expect NARCAN to maintain its leading market share.

MCM revenues are consistent with prior guidance of flat to slightly down with a significant contribution from international sales. Adjusted gross margin is expected to be between 45% and 47%, reflecting product mix and expected pricing dynamics.

We are updating our adjusted EBITDA guidance to account for the non-cash stock compensation add-back, and we, therefore, expect full year adjusted EBITDA to be in the range of $155 million to $175 million. And for the second quarter, we expect total revenue to be between $170 million and $185 million.

In summary, we have fully commenced the turnaround phase of our multiyear plan, and we are executing with focus and urgency. We delivered solid revenue and profitability in the first quarter, in line with our internal expectations. Our term loan refinancing extended maturities out to 2031 and enhanced our financial and operational flexibility. We also returned capital to shareholders through share repurchases during the quarter and $46.5 million of authorized repurchase capacity remained available through March of 2027.

And with that, I'd like to turn the call back over to Joe for a 2026 business outlook update and closing remarks before we go into Q&A. Joe?

Thanks, Rich. Moving to Slide 21. Let me now walk through what we see as the key growth drivers we have, both near term and strategic. We entered 2026 with a stronger cash and liquidity position, further reinforced by the April refinancing.

We are well positioned to invest in sustainable long-term growth via four levers: organic growth through internal R&D investments in TEMBEXA, Ebanga, and Raxibacumab; number two, line extensions for NARCAN; number three, growing the MCM business internationally; and number four, accelerating business development opportunities like projects such as KLOXXADO, like now we just announced the Japanese encephalitis vaccine and more for the future.

Moving to our pipeline assets on Slide 22. TEMBEXA, Ebanga, and Raxibacumab are all approved with incremental development programs underway. As I previously mentioned, we look forward to serving as the distributor of the Substipharm Biologics Japanese encephalitis vaccine for the U.S. government opportunity following FDA regulatory approval. Finally, we're pleased to share that just this week, ACAM2000 received Singapore Health Sciences Authority expanded approval to include PO.

On Slide 23, to close, Q1 2026 has been a steady and successful continuation of the turnaround efforts in these past two years. We believe we have made significant headway and now have the opportunity to pursue growth both organically and inorganically. We have successfully stabilized the business. We have divested non-core assets. We have dramatically reduced our debt while returning capital to shareholders.

Today, we are investing for segment revenue growth, investing in promising internal R&D pipeline, expanding our international MCM footprint and pursuing accretive external opportunities all through a position of improved financial strength. All the while, we are committed to patient safety, quality and compliance across the operations.

With that, operator, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Jessica Fye with JPMorgan.

I had a question on your longer-term perspective on the naloxone franchise. I know you talked about that business being like flat to slightly up for 2026. How should we think about it taking like a -- maybe like a several year time horizon?

Sure. Thanks for the question. The way we're looking at NARCAN is a couple of things that are happening. Number one, we're excited about our ability to launch new innovations with NARCAN. We do have just the launch opportunity that we have with the carrying case. We think that's perfect for college campuses. We also looked at the multipack. We think the multipack will be a more efficient way to deliver the naloxone NARCAN for especially high-volume users.

We do think there's still some significant upside internationally, especially in Canada. And we're also looking at the Q2, Q3 as being an upside from where we are in Q1 simply because of the seasonality of our business. We know that like, for example, Q2 is the fiscal year-end for about 70% of the states. So, we think there is some upside there in the near term. And so, there's always going to be a little bit of seasonality.

Beyond that, though, clearly, getting to the longer-term part of your question, we do think the market is going to continue to grow because unfortunately, there's still so many deaths that are occurring because of opioid overdoses. So, we do expect to see continued dollar spent there by the federal government.

We saw that in 2026 budget for the U.S. government, the SOR grants and the other grants that are coming from the federal government has either increased or at least stayed stable. So, there's continued bipartisan support for this area of overcoming opioid overdoses. So we do expect that.

And then on top of that, the other reason we expect the volume to go up is just simply the class action settlements by large pharma companies are about $50 billion all that, we think, especially now that Purdue just settled this week, I guess it was, with about $5 billion of their settlement funds coming in. Those funds are to be directed towards things like educational programs of states and local municipalities and/or the use or purchase of procurement of naloxone.

So, we think for those reasons, the market will grow. We expect to hold on to the leading market position. We're going to stay competitive on pricing. So, we can't exactly say where pricing is going to go. But that's the reason why we said for the full year, flat to up slightly, and that's how we're looking at the future.

Volume growth, we'll continue to be market leader. And then obviously, we'll have to be competitive on price. And that's really how we've talked about the future. Volume growth, hold market share and expect to be competitively priced, and that's how we're thinking. So thanks for the question.

Yes. And then maybe switching to the MCM business as you kind of drive the international side there. Can you just remind us how to think about the margin you keep on international MCM sales and kind of how that compares to the U.S. legacy MCM business?

Sure. Well, I'll start, Rich, you may want to add to it. I guess the first and foremost thing is that one of the things that we've agreed to, especially with the current administration is that we offer a most favored nation pricing type of arrangement to the U.S. government.

So, our price has to be by agreement with the U.S. government. We have to give them the lowest price which means by definition, our prices for other countries around the world will be slightly higher, depending on the product, of course. So, we think that, obviously, as we develop more international business will help us as well on the gross margin.

As I said, this year, for the first quarter, about 37% of our MCM revenue came from international. So, we think that's a big powerful part of how we're thinking about what's happening on the margin side.

But Rich, anything you want to add?

Yes. I think logically, Jess, the fact that we're offering the U.S. most favored nation pricing, and therefore, we have higher prices on the international MCM business, that drives higher margins. And so, you should assume that the international sales are above the average for the MCM segment in total.

Operator, next question. Operator, are there any more questions?

Your next question comes from Raghuram Selvaraju with H.C. Wainwright.

Firstly, I wanted to ask about the tie-up with SAB and if we should be thinking about this as an indication of interest in the type 1 diabetes space strategically or if this is really more of a contractual business arrangement and not indicative of a broader strategic shift?

Secondly, I was wondering if you could comment on the evolving geopolitical situation generally and how you see that potentially driving international demand for MCM products under the Emergent banner?

And lastly, I was wondering if at this juncture, you could comment on the scope and footprint of the manufacturing operations at Emergent and if you feel that those are optimally rightsized for the company going forward?

Okay. I'm going to try to make sure I get all of them, but please remind me if I'm missing any, Ram. First, on SAB, we're delighted to partner. They're a great company. They have a specific area of focus on the diabetes side. What we're focused on really is our technology and the technology that we have in Winnipeg that is perfectly situated to help them to advance their product.

So, we view it as very much an alignment of our capability and what we had in Winnipeg with what they're looking for. And it was really -- it wasn't as much disease category as it was an alignment around our technology, what they are looking for and how we can quickly expedite their operations and their products. So, it was really more of a technology than it was a therapeutic area approach.

The second question, I think, is really about the international and what's happening out there and what we refer to as increasingly dangerous world. And you know, you've seen it in your reports. It is a more dangerous world that we live in. And I think the world has very appropriately worried about the risk of nuclear weapons, and we hear about every day in the news.

But one of the things that we believe, and I think you might also believe is that while nuclear weapons are absolutely a terrible risk, the risk of bioterror is maybe as risky, if not worse, in the sense that nuclear weapons will be terrible, devastating to a location or whatever could happen. However, bioterrorism once it get started, it's very difficult to stop. So -- and it's perhaps even easier to do a bioterrorist activity in terms of the speed at which you can do it and the cost at which you can do it than it is nuclear weapons.

So we believe it's a dangerous world. We believe bioterrorism could -- once it gets started, it can be devastating to society. And that's why we think it's really important to continue to work with the U.S. government and other governments around the world to make sure that everyone is prepared for these types of risks as we think about the future because one bad actor gets their hands on anthrax spores or smallpox and the results can be devastating. So that's really -- we certainly think the world is more dangerous and what we have to be prepared for it.

The last question on the manufacturing footprint. We've streamlined our footprint to be clear. However, we still have the ability to source all of our products, our existing products and our ability to ramp up our Canton facility, we think is a great opportunity to bring some additional drug substance capabilities for very difficult products.

We have the ability there to work with live virus and Category B live viruses there. So, bring drug substance capability and bring that capability into the U.S. And we look around the country to see who else has that kind of capabilities, not a lot of it. So, we think having some additional capabilities for the U.S. is important.

It's important for this particular product, but it's also going to be important for other development candidates and/or products that the U.S. government, BARDA, Strategic National Stockpile are looking for. So we do think expanding the footprint and bringing Canton back online with additional capacity and expansion is an absolutely worthwhile endeavor, and we're delighted to get started with that as we speak.

I think I got three -- all three of them, but did I leave anything out, Frank? Okay, I'll take that as we got all of it. Operator, do we have any other questions?

Yes, we do. Your next question comes from the line of Rishi Parekh with JPMorgan.

Most of my questions have been asked, but just out of curiosity, as you think about all the international opportunities that you're working on, is there any way to quantify what the backlog of those opportunities look like as they try to or attempt to leverage your technology? And how should we just think about that margin potential as you continue to ramp on that backlog?

Sure. So do we have ongoing discussions on international opportunities to bring additional products to the market on the MCM product? The answer is absolutely yes. Those are ongoing discussions.

It's a little bit harder to answer the backlog question because some of those projects take six months, some two years. I mean there's a process that we get involved with. But there's no doubt there's incremental interest for some of our products. So for example, in Europe, there used to be another manufacturer of an anthrax vaccine. Our knowledge is that, that manufacturer is no longer operating. So anybody who is looking for an anthrax vaccine, in many ways, Emergent is a place to go for it.

So we do think there are some developing opportunities. We're working on continuing to reinforce those. And we're doing it not just in Europe, we're doing in the Middle East, we're doing in Asia. We're really trying to make sure that wherever the demand is, wherever countries look at this risk of bioterrorism, biodefense, we're going to be there with our products.

And as I said earlier in the presentation, we have the leading portfolio of products, whether it's in smallpox, whether it be a vaccine for smallpox, therapeutic for smallpox, whether you need vaccine for anthrax or a therapeutic for anthrax, whether you need something for botulism, something for Ebola, we've got it.

So we're looking to continue to work with all those governments around the world in terms of making sure we have products that we're working through our backlog as we've answered before, anything that we sell outside the U.S., by definition, is going to have a higher price and therefore, a higher margin since the relative cost will be the same. So, we're excited what that means.

And the fact that normally, our business on international for MCM historically has been in the mid-teens as a percentage of business. The fact now that we're operating in the first quarter at about 37%. I think last year was about 34% by recollection. You can see that we're making good progress with this international expansion footprint that we put in place in 2024 and 2025.

Your next question comes from the line of Alex Kelsey with Wells Fargo.

Rich, I think I missed it when you were talking about the accrued acquisition obligation. Can you just mention again what exactly that's related to? And then maybe more importantly, is that a cash outflow that we should expect in 2026?

Yes. Thanks for the question, Alex. That relates to the Ebanga program. And so this is under our acquisition of the rights to Ebanga from Ridgeback Bio. Once we were awarded the BARDA contract back in 2023, we disclosed that part of that arrangement was ultimately a payment to Ridgeback Bio, assuming that we continue to make progress under the contract, and that's going to be a cash outflow in the second quarter.

Alex, thank you for the question. Operator, any additional questions?

And at this time, I'm showing no further questions. I would now like to turn it back to Joe Papa for closing remarks.

Thank you, operator. Thank you, everyone, for joining us on the call today. I'd like to thank all of our investors, customers and employees for your strong and continued support of our company, and we look forward to providing further updates throughout the year. Thank you, and have a great day, everyone. Thanks for joining us. Have a great day, everyone.

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

Good day, and thank you for standing by. Welcome to the Q4 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 the conference over to your first speaker today, Frank Vargo, Treasurer. Please go ahead.

Good afternoon, everyone. Thank you for joining today as Emergent discusses their operational and financial results for the fourth quarter and full year 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, their prospects or future performance. These forward-looking statements are based on their 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, 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 2025 business performance and multiyear transformation plan highlights; and Rich Lindahl, EVP and Chief Financial Officer, who will provide details on the fourth quarter and full year 2025 financial results, as well as provide an update on full year 2026 guidance. Joe Papa will conclude by discussing the company's key catalysts for growth followed by Q&A.

Finally, for the benefit of those who may be listening to the replay of this webcast, this call was held and recorded on February 26, 2026. 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 good afternoon, everyone. This is Joe Papa, CEO of Emergent. I am joined by our CFO, Richard Lindahl. I'll start with our multiyear transformation plan progress and top line business results. Rich will walk through the fourth quarter and full year 2025 financials and provide our 2026 guidance before I return to our business outlook and growth drivers, and we'll end with a Q&A.

Turning to Slide 5. Over the past 2 years, our Emergent team has made substantial progress executing on our multiyear transformation plan, strengthening our financial position through great operating results, strategic divestitures, margin improvements and deleveraging through debt repayments. In 2025, we also returned capital to shareholders through share repurchases and resolved a legacy historical matter with the New York Attorney General's office. I'm proud of the excellent work by our Emergent team for staying focused on our mission to protect and save lives. In 2026, our priorities are clear: invest in revenue growth drivers across both the MCM and the naloxone segments by advancing our internal pipeline and pursuing targeted bolt-on acquisitions and external opportunities that leverage our infrastructure and scale.

Turning to Slide 7. In 2025, we delivered strong results, adjusted EBITDA of $205 million, primarily driven by our lean, efficient customer-focused business model, year-end cash of $205 million and net leverage was reduced to 1.9x from 3.3x in December of 2024. We secured biodefense contracts in the U.S. and ex U.S. with international sales representing 34% of our full year medical countermeasures revenue. In quarter 4, we maintained market leadership across our naloxone business while dealing with the U.S. government shutdown, which created uncertainty for some of our public interest customers.

Let's look at our MCM business on Slide 8. Our work in biodefense preparedness remains strong with numerous contract awards and product orders with the U.S. government and international deliveries made to over 20 countries. And just announced today, we have executed a series of new multiyear agreements with the government of Canada valued at CAD 140 million to deliver critical medical countermeasures.

And now on to our naloxone business on Slide 9. CTC data continues to show a meaningful decline in U.S. opioid overdose death from 2022 to '23 peak. We believe access to naloxone, especially our NARCAN Nasal Spray 4 milligram as a standard of care remains essential to sustaining this progress. As the market leader in nasal naloxone across the public interest channel, we continue to invest in access, awareness and innovation across our NARCAN Nasal Spray product line, to include convenient carrying case designed to be compact, discrete and easy to carry.

Our consumer survey of more than 500 adults reinforced the critical need for this solution. The survey found 74% of consumers prefer a carrying case over standard packaging. And among college students, the population identified as one of the highest risk groups for opioid misuse. This preference rises to 81%.

Additionally, we received FDA approval for 2 multi-use configurations of NARCAN Nasal Spray offering both a 6-count and a 24-count multipack option designed to meet the needs of partners distributing higher volumes of naloxone.

As opioid overdose death rates are declining nationally, we believe in the critical role OTC NARCAN plays in saving lives. Many from the field want to know what is the real-world impact of naloxone and opioid overdose reversal and saving lives. New York State offers compelling evidence of its effectiveness. A peer-reviewed analysis from 2023 to March 2025 found that naloxone administration saved more than 6,500 lives and over 200,000 years of life in the New York State alone. It's worth noting that recent legislation signed by the New York Governor now requires certain private employers to stock an opioid antagonist. Our efforts are aligned as we work hard to ensure businesses are equipped and prepared to respond to an opioid overdose emergency.

We are also very proud of our ongoing work to support Canada and their efforts to help save lives. There have been recent shifts across British Columbia and other provinces to prioritize nasal naloxone access, and we look forward to continued engagement across Canada. We cannot afford to lose thousands of innocent lives to opioid crisis, and we believe our work in collaboration with all stakeholders is essential to reducing the number of lives lost to 0.

Now I'd like to turn the call over to Rich to walk through the quarter 4 financial results.

Thanks, Joe. Good afternoon, everyone, and thank you for joining us today. We're excited to share the strong progress we made in 2025 and the continued momentum we're carrying into 2026. 2025 was a year of meaningful advancement for Emergent, one where our transition from stabilization to turnaround gained real traction. Our resilient and strategically positioned portfolio designed to protect against global public health threats delivered sustainable revenue, expanded profitability and powerful cash generation. These foundational strengths are positioning us for long-term value creation and giving us financial flexibility to pursue attractive growth opportunities.

Throughout the year, we achieved substantial financial improvements. Adjusted EBITDA rose to $205 million, a $22 million or 12% year-over-year increase. Gross margin expanded by an impressive 900 basis points, and we reduced operating expenses by $140 million versus 2024. These results are further highlighted by the improvement of adjusted net income per share from a loss of $0.23 in 2024 to earnings of $1.53 in 2025. These outcomes reflect the strong potential and enhanced competitiveness of our business.

We also significantly strengthened cash generation, reducing both net debt and net leverage while returning capital to shareholders. Our lean disciplined operating model continues to support solid profitability and robust cash flow, creating meaningful optionality as we invest in the business and drive shareholder value.

Turning to Slide 11. Our fourth quarter performance was generally as expected, although the impacts on public interest customers that Joe described led to lower-than-anticipated Commercial segment revenues. Total revenues were $149 million, with MCM tracking squarely to guidance. NARCAN performance was temporarily impacted by softer demand amid the prolonged government shutdown and near-term market uncertainty. Factors we view as transient and not reflective of the long-term growth potential in this category.

Adjusted EBITDA of $11 million or an 8% margin landed at the high end of our guidance. Adjusted gross margin improved 300 basis points to 43%, driven by product mix and continued operational efficiency. Operating expenses decreased 10% year-over-year, underscoring our ongoing commitment to disciplined cost management.

Slide 12 reflects a year of strong execution. Total revenues were $743 million, remembering that 2024 included $115 million of settlement and divested revenue. And despite the revenue decline versus 2024, adjusted EBITDA landed at the high end of guidance, again, up $22 million or 12% year-over-year and expanding by 1,000 basis points. Gross margin improved 900 basis points, and operating expenses decreased $140 million or 37%. Even in a lower revenue environment, we delivered meaningful improvements in profitability, reinforcing the solid foundation and operating discipline we've established during the first phase of our multiyear transformation.

Slide 13 highlights the durability of our revenue base. Total revenue of $743 million reflects steady performance across MCM, complemented by increasing international momentum, where global MCM sales represented 34% of total revenue and continue to be a growth catalyst. As expected, U.S. government orders moderated and established a new baseline of demand going forward.

Naloxone's full year performance reflected pricing dynamics and the California market impact, along with temporary disruptions that amplify seasonality impacts during the year. Importantly, we continue to invest in NARCAN's brand strength, product extensions, commercial capabilities and customer support, reinforcing the long-term health of this franchise. Other revenue of $60 million aligned to expectations, reflecting the absence of prior onetime items and divested facility revenue.

Slide 14 showcases the significant improvement across our financial metrics. We ended 2025 with total liquidity of $305 million, including $205 million in cash and $100 million of undrawn revolver capacity, and this is after making a substantial $100 million voluntary prepayment on our term loan. Operating cash flow grew 190% to $171 million. Net leverage improved to 1.9x from 3.3x in the prior year, and adjusted net income per share rose to $1.53, reversing a loss in 2024. These results reflect not only strong operating execution, but also increasing financial flexibility that enhances our ability to drive shareholder value.

On Slide 15, we highlight the significant steps taken to optimize our capital structure. During 2025, we paid down $110 million of gross debt, a combination of the $100 million voluntary prepayment against our term loan and the repurchase of $10 million principal amount of our unsecured bonds. These efforts reduced our total debt to $590 million and net debt to $384 million, a 32% and 49% reduction from year-end 2023, respectively. As a result of these efforts, 2025 ending net leverage of 1.9x improved substantially from 5.7x in the first quarter of 2024. This progress illustrates how our enhanced cash-generating profile supports both accelerated deleveraging and continued investment in growth initiatives, all while maintaining healthy liquidity.

Slide 16 outlines our consistent capital allocation priorities, growth, debt reduction and shareholder returns. In 2025, we strengthened our portfolio through the additions of KLOXXADO and Rocketvax and continued investing in our internal R&D pipeline and international MCM capabilities. Debt repayment remains a key focus. In addition to our $100 million term loan prepayment, we used $8.7 million of cash to repurchase and retire $10.3 million principal amount of our unsecured bonds. And we advanced shareholder returns by repurchasing 3.1 million shares under our stock buyback program. As announced today, our Board has approved a new $50 million authorization through March 31, 2027. We will remain opportunistic with additional share repurchases based on market conditions.

Please turn to Slide 17. Throughout 2025, we consistently raised guidance and full year results for adjusted net income, adjusted gross margin and adjusted EBITDA exceeded the midpoint of our October outlook, while net income was below the range due to the loss on debt extinguishment. Overall, these outcomes demonstrate our strong execution and proactive cost management even in a lower revenue environment.

Slide 19 presents our initial 2026 outlook with total revenues expected in the range of $720 million to $760 million. MCM revenue is expected to be flat to slightly down with continued strength in international demand. Of note, 2025 benefited from an exceptionally strong $60 million international customer order, which we do not currently forecast to repeat in 2026. Commercial revenues are expected to be flat to slightly up with volume offsetting anticipated price adjustments. And we expect NARCAN to maintain its leading market share. Adjusted gross margin is expected to land between 45% and 47%, reflecting product mix and expected pricing dynamics.

Adjusted EBITDA is anticipated to be between $135 million to $155 million. To put this guidance in context, note that the onetime international order I just referenced contributed $50 million of adjusted EBITDA in 2025. Net income is expected to be between a loss of $30 million and a loss of $10 million with adjusted net income between $25 million and $45 million. We anticipate a healthy start to the year with first quarter revenue of $135 million to $155 million. Of note, we also expect that revenues in the first half of the year will represent about 40% of the full year total.

In closing, please turn to Slide 20. 2025 year was a year of consistent execution, expanding profitability and material progress towards our transformation goals. Our lean and focused operating model delivered higher gross margins, stronger profitability and robust cash flow, fueling debt reduction and shareholder returns. With net leverage below 2x, strong liquidity and meaningful operating momentum entering 2026, we are well positioned to build on this progress and drive compelling long-term value for our shareholders.

With that, I'll now turn the call back to Joe.

Thank you, Rich. Turning to Slide 22. 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 present public health threats like smallpox, anthrax, Botulism and Ebola. As a market leader in nasal naloxone, we are deeply steeped in the evolving nature of the opioid crisis. We believe every medicine cabinet, first aid kit and person should have NARCAN on hand.

On to our medical countermeasure biodefense [ work for ] today in the future, the risk of bioterror and public health threats is rising. Our proprietary survey insights show how policy leaders view bioterror as easier to carry out than nuclear attacks. Fortunately, we have a strong bipartisan support for U.S. leadership in biodefense.

On Slide 23, you'll see a summary of the government funding in several international commitments which demonstrate stability and provides Emergent with an opportunity to engage meaningfully with our customers and partners. Of note, U.S. government spend is rising in 2026 across all major federal programs, including BARDA, Project BioShield, Strategic National Stockpile, and State Opioid Response Grants, reinforcing a strong and sustained commitment to U.S. preparedness.

International investment is also rising with the EU's HERA program and NATO allies boosting their readiness budgets. It's also worth noting that more than $50 billion in U.S. class action opioid settlement dollars, which is an additional funding stream, will be available to address the opioid crisis over the next 8 to 10 years.

Moving to Slide 24. In 2026, we outlined our outlook on future growth and cash deployment. Our plan remains on track to selectively invest the cash we are generating from our profitable business segments into 2 key initiatives: organic internal growth and inorganic initiatives through business development and external partnerships. We'll continue to invest in international MCM expansion efforts geographically and pursue naloxone innovation opportunities.

Slide 25 takes a closer look at our life cycle initiatives with TEMBEXA, Ebanga and raxibacumab, as well as the pipeline focus areas.

In summary, on Slide 26, we achieved many key milestones in the fourth quarter and throughout 2025, including operating performance, cash generation and debt reduction. We are confident in our ability to execute on our core business and long-term growth initiatives while ensuring continued improvement in operational profitability. As we advance our transformation, we remain committed to the highest standards of quality, ethics and compliance, and we look forward to the years ahead.

Operator, let's please open up the line for questions.

[Operator Instructions] I am showing no questions at this time. I would now like to turn the call back to Joe Papa, CEO, for closing remarks.

Thank you, everyone, for joining us today. I think that the presentation was clear, straightforward and answered questions that people had anticipated. So we very much appreciate everyone's attendance today. Thank you very much. Look forward to speaking with many of you in the near future. Thank you. Have a great day, everyone.

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

Great. Welcome, everyone. My name is Jess Fye. I'm a biotech analyst at JPMorgan. And we're continuing our 44th Annual Healthcare Conference today with Emergent.

First, you're going to hear a presentation from the company, and then we're going to have some Q&A. So for those of you in the room, if you want to ask a question, just raise your hand, someone will bring you a microphone for the webcast. And alternatively, for those listening online, you can submit questions via the portal, and I can read them off the iPad up here. So with that out of the way, let me pass it over to Emergent's CEO, Joe Papa.

Thank you. Good afternoon, everyone. Welcome to the Emergent presentation. It's my pleasure to talk to those of you here today in the room and those on the webcast. Emergent is a 25-year-old company. Our mission is to protect and save lives. We have -- in 2024, started a multiyear turnaround plan. And it's my pleasure today to update you on our progress of where we are with that turnaround plan and just what we see for the future.

So let me go to the -- this is just our safe harbor statement. So I'll be making some comments today that I'll refer you to our SEC filings for any additional information and risk factors for you.

So what is the overview of Emergent? Emergent is a company, as I mentioned, 25 years old. We have 2 primary business areas that we focus on. The first is what I refer to as biodefense. We have the leading portfolio of biodefense products. All told, we have about 11 biodefense products. We protect against very serious threats, and we work with the U.S. government and other governments around the world, protect with vaccines and therapeutics for areas like smallpox, anthrax, botulism, Ebola. So some really serious problems that potentially could be out there as threats. We do the products that work to make sure that those products are available in any time of need. So that's the first area.

Our second area is we treat opioid overdoses. We are the market-leading company with a product called NARCAN for the treatment of opioid overdoses.

So let me go to this next page here and -- let's talk more about some of the specifics of the business. First and foremost, we view that we live in an increasingly dangerous world. We want to help governments, both the U.S. and around the world, prepare for today and tomorrow's threats. As we think about the business, we are focused on really making sure we have a diversified business. So we have both the opioid overdose products as well as the biodefense products. But we purposely, over the last several years, have looked to improve our diversification. We've increased our focus on countries around the world outside of the U.S. And indeed, today, we're about 30% rest of the world, about 70% U.S. revenue in terms of what we do for our medical countermeasure products. And as I mentioned, we have 11 products, 900 employees that are focused on making sure that we help protect against serious global health threats around the world. That's the company.

This is our team. We have an experienced and trusted management team. We have over 100 years of individual experience in the health care pharma space. We built an experienced team and delighted to have a chance to work with this team. Myself, I spent over 40 years in the pharmaceutical industry, about 15 years with a company called Novartis, 10 years with Perrigo, and then 7 years with what started as Valeant and turned into Bausch Health and Bausch and Lomb, and I joined Emergent about 2 years ago to help with the turnaround efforts and join the team.

If I go to the concept of what I mentioned at the onset, is we're in the very early stages of a multiyear turnaround. We've been at this approximately 2 years. Our plan is to first stabilize the company, which we did in 2024 and 2025. The next phase beyond that is a turnaround phase. And then ultimately, in 2026 and beyond, we're focused on transforming the company.

Let me spend a few minutes on the stabilization phase and what we accomplish and what we're trying to do. First and foremost, our goal was to streamline the organization. We divested about $150 million of sites and products to help us to improve the overall performance of our business. We reduced operating expenses. We reduced operating expenses about $250 million. We also, as a result of these actions and deciding where to invest in the business, we were able to increase our adjusted EBITDA. In 2023, it was negative. 2024 was $183 million. And our projection for 2025, we haven't announced yet, is somewhere in the $195 million to $210 million. So we made some really nice progress in the overall turnaround of the business starting in 2024, but still, clearly, there's a lot more to do. We've also had the need to restructure our debt and to reduce debt since 2023. We've actually reduced our total debt by about $275 million from where we started. So a lot of good work was done by the team to make that happen.

Now in 2025, '26, we're focused on the next phase of the turnaround, and that's all about where can we make investments for growth. What are the opportunities? And it really breaks down to a couple of different areas. Number one, for growth, we're looking at investing for organic growth. That is for some of the leading products we have, products that are therapeutic products for anthrax, therapeutic products for smallpox. We have a product for Ebola called Ebanga. Those are areas that we're investing today for the future.

The other area that I mentioned briefly, I'll talk about is we're investing for geographic growth. We're looking to expand our geographic footprint. We made some investments in '24 and '25, and that's helped us to significantly increase our sales and revenue outside of the U.S.

And then finally, we're looking at inorganic growth in terms of what can we do for business development. And that's the concept of where we can invest for the turnaround phase. And then finally, in 2026 and beyond, our view is we're going to transform the company to have a long-term, sustainable, durable, profitable company for the future, and that's what we're looking to do with the transformation phase of our company.

So if I talk now specifically about medical countermeasures, we have the most diverse biodefense medical countermeasure business in terms of what we do in terms of the product portfolio, as I mentioned, 11 products. We addressed the #1 viral threat, which is smallpox. We have a vaccine and the therapeutic for smallpox. We address the #1 bacterial threat from a terrorist point of view, and that's for anthrax. We addressed the #1 most toxic compound is Botulism and we have a solution for that. And the focus areas that we go after are all based on having some specific conversation with the U.S. government in terms of what are they looking to do and we work with them directly to do the R&D that's required for these products, submit the products, get approval and then work very closely to stockpile our products with the U.S. government, and as I mentioned, other governments around the world. So that's how we do it.

We think it's a very durable business because if you think about what we do, we clearly make these products. They're difficult to make, of course. But beyond making the product, we also put together services for the governments that we work with, so that we can also do the potency testing for these products. We also look at stability testing for these products. That incremental testing really makes us a part of the ecosystem of the U.S. government. And we think that's an important part of why these products are very durable.

And by the way, it's unlikely that any governments around the world want to have multiple players putting together an anthrax product, which means that you have to have access to anthrax spores, which are potentially very lethal and could cause significant problems if 1 of them was to have a problem in a lab or heaven forbid, somebody takes it and develops into a terrorist weapon. So those are the reasons why we think we have a very durable business, and that helps us as we think about the future of what we do at Emergent and importantly, what products we're looking at for the future.

If I ask you about your concerns and areas of terrorist threats, 1 of the ones that probably would come to your mind is, of course, the nuclear threat. And that's obviously clearly a big issue and 1 that we're all very sensitized to. But if I wanted to share with you what we've also found out, 1 of the things we've done is talk to 250 experts in policy and talk to them about the information about terrorism and bioterrorism and 65% of the policy opinion leaders say the threat is rising in terms of being worried about terrorism. And as I mentioned, I think we're in an increasingly dangerous world. But some of the other things that have come out of the information is that many of them believe a biologic threat is even more worrisome than a nuclear threat. Obviously, we all understand the nuclear threat, but a biologic threat could be, in fact, very difficult for us. They're easier to carry out. They're faster to carry out, they're less expensive to carry out. And if some dictator around the world wanted to create problems, a biologic threat could be -- create chaos. So we believe it's important that we are prepared.

And as you can see from the data here that nearly 9 in 10 of the experts believe it's important for the U.S. to take a leadership position and making sure that we are prepared. And the good news, the very good news, I believe, is that fortunately, we have bipartisan congressional support for the U.S. to maintain a leadership position in biodefense. So we think that's an interesting point, an important point. It's not often that you're in health care, and you can say that we have bipartisan support for 1 of our pillars. In fact, we believe that the Emergent company, we have bipartisan support, both for the biodefense side of our business and for the importance of controlling the fentanyl overdose problem. So we're excited to be part of 2 really important areas and ones that do have bipartisan support.

If I go to the next page, what I think we wanted to share here is really talking about our presence of our products in this increasingly dangerous world. We've streamlined our manufacturing facilities. We have 2 main facilities: 1 in Lansing, Michigan; the other 1 is in Winnipeg, Canada, and then we have a couple of other facilities, in both the Boston, Massachusetts area and the Washington, D.C. area that help us. But we have streamlined the facilities. We're down to those 2 major hub facilities and then some additional supplemental facilities. But we still remain capable of delivering all of our products in the U.S. through either manufacturing here in the U.S. or our Winnipeg facility is a U.S. MCA compliant facility that ensures that we're okay with any tariff implications or other activities.

An interesting fact for us at Emergent is that you may have heard that the U.S. administration is already concerned about ensuring that we provide to the U.S. government a most favored nation pricing. And I'm delighted to say that Emergent is ahead of the schedule in that. We know that all of our products that we price, we give the U.S. government a most favored nation pricing versus what we charge other governments around the world. So we're way ahead in that score.

One of the other questions that often comes up is, and we've mentioned about what we're doing ex U.S. We do believe that this crisis or concerns about terrorist threats are not just U.S.-based. There are increasing concerns in Europe, in Asia. So what we've done is work very diligently to ensure that we would help other countries around the world with their needs for making sure that they have the available products. And as I mentioned before, we've now increased our revenue from outside the U.S. from about a 15% area to somewhere in that 34% area. So a significant improvement in what we do to make sure that we are diversifying our business. That's, we think, is important.

I think we all know that the -- what we're doing in the U.S., but we also know that Europe is also looking at increasing their preparedness. They're actually looking to -- U.S. to help them with this whole concept of a strategic national stockpile. And our team is helping the European leaders as well as they think what needs to get done. And importantly, notwithstanding a government shutdown last year, we were able to deliver and gain access to contract modifications with the U.S. government to ensure that we are always ready to supply products to them that they needed for the stockpile. And we take the chance to meet regularly with individuals from BARDA, strategic national stockpile, and the Department of War.

Our other business is also a very important business is what we do for opioid overdose and it truly is an epidemic, so much so that President Trump signed an executive order in December of 2025, designating illicit fentanyl and its core precursor chemicals as weapons of mass destruction. So you can see how these businesses are coming together in terms of what we do for biodefense but also what we do for the opioid overdose issue. So we believe it's important. We're doing everything we can to help in the area. The data is significant.

If you think about what's happening, there's too many people dying from overdoses. In 2023, the number of people dying from overdose is about 100,000 people. In 2024, it declined to about 80,000. And we know of those 80,000, about 80% are dying from opioids specifically. So it's a big issue. We believe that the availability and the steps that Emergent took to work with the FDA to make the product, NARCAN available over the counter was an important part, increasing access and reducing the deaths. And we believe that the facts are that if somebody overdoses, you have a limited amount of time to make sure that you help them to prepare to get treatment. And we do that by trying to increase access.

In our world, the way we view this is that we believe we've got to help the society until there's no more opioid overdose deaths. In fact, if we can have one NARCAN at every person's home, just like a fire extinguisher, we help you never need it, but it would be available if somebody needs an overdose on the product. We think that would be an appropriate opportunity for us as we think about the future.

Earlier today, we made an announcement that we continue to look for innovation in the NARCAN opportunity. We are delighted to say that we announced today that we launched and we just got approval from the FDA to have a NARCAN pack. It's a backpack. You can imagine that you can clip this onto a backpack and what that will give the patients, especially potential user -- need -- people that need the product, better access to the product, especially if you think of college students, if something unfortunately happens to a friend or relative, they all have product available, they can save the life. We think that's an important part of helping to lower the overall death rate to opioid overdoses.

So we're delighted to announce that innovation today. We just did a release. We just got it approved by the FDA. We think it can help. We think it's another part of leading and being an innovator in opioid overdoses what can we do? We're going to continue to try to innovate and come up with new solutions.

As we think about the future, I talked about 2026, and some of the things we're doing to invest in growth. We've got a number of different things that we're advancing in terms of looking to see how we can grow the totality of our business, everything that we're doing, not just in 1 part of the business, but clearly in the biodefense but also in the NARCAN business. One thing we did last year is we announced a partnership with Rocketvax. They're a Swiss pharmaceutical company. They have some very interesting technology that's a very fast development of vaccine for viruses. What makes them really unusual is that they're very fast to develop, but they also deliver immunity that last, because they are live attenuated virus vaccine. So we think it's a really important part and that particular project is getting some funding from the NIH for next-generation technology.

We also announced last year an agreement with Hikma for KLOXXADO. KLOXXADO is a higher dose of naloxone. We think that's important because it's good to have as a leader, the most wide offering of products for patients in the space. So we're continuing to advance that. We also -- I mentioned before, we're looking at continuing to expand our geographic reach by looking at international opportunities.

And then finally, we've got a very strong cash position. It allows us to pay down some debt that I mentioned before. But beyond that, it gives us an opportunity to enable us to look for business development opportunities for the future. And look at what other things can we bolt on so we could sell 1 more product to the U.S. government or have 1 other product available for first responders. Those are the things that we continue to look at and I'll talk about that.

But before I do that, let me talk a little bit about what does our pipeline look like because it's important for the future. This is just a quick focus on some of the products I mentioned before. Ebanga for Ebola is 1 particular product. It's a very concerning threat to the society. There -- fortunately, it's very rare. But interestingly, it's very predictable. We are seeing an outbreak in Africa of Ebola, almost on an annual basis, believe it or not. It seems to be an outbreak since COVID. It's been about 1 outbreak a year almost in terms of the number of outbreaks we're seeing.

Now fortunately, it's been contained, that's been contained in Africa. But we're 1 patient away from getting on an airplane that doesn't know they have the problem and causing an international disaster. So we want to make sure we continue to work on the Ebola product to help us be prepared for any potential downstream problem that could occur, both here in the U.S. and in Africa.

TEMBEXA, I mentioned as well, it's a therapeutic product for smallpox. We believe that -- certainly the vaccines are important, but you also need to have therapeutic products for that. It's already approved, so you don't have the regulatory risk of the approval, but we are working on validation and getting additional product available for that. So much so that we also started a new trial, MOSA trial, with the opportunity we see with TEMBEXA, in Africa to check for the use of it in mpox as a therapeutic. So we're starting some additional clinical trial works there in Africa. And raxibacumab, I mentioned before also, it's a therapeutic monoclonal antibody for the treatment of anthrax. So a lot of different initiatives in front of us. All things that we think are exciting for the future of our organic growth opportunity.

And just to continue my comment about the streamlining of our manufacturing footprint, we just got approval last month -- or November, I think it was, for the use of manufacturing of our raxibacumab at our facility in Winnipeg. Just talking more about how we're going to continue to streamline what we're doing as a company in terms of making sure we have good flexibility in our facilities and keep the operating costs to a minimum.

Let me talk a little bit about financials. I think they are important in terms of what we're doing that show the performance of what we've done. As you can see, revenues did come down. This is the third quarter, September 30, 2025, data that we presented. Third quarter has come down. Part of that is because we made some active decisions to divest some parts of our business that we're specifically unprofitable. And as we did that, revenue did come down. So we did shrink. But if you look at what happened to adjusted EBITDA, both on the margin and also in the total dollars, you can see some very nice results. Adjusted EBITDA margin went from 19% in '24 to 33% in 2025, predominantly because we've been able to streamline our facility. And you can also see improved liquidity year-over-year by approximately $100 million and operating cash flow also improving. So we had some really nice wins in what we're doing on our financials and how we're looking at the future.

Also, earlier this week, we announced that we made a $100 million voluntary term loan pay down. We did that at the end of December. Once again, this is just with the intent of reducing our leverage, and we've made nice progress in that. Since 2023, we've paid down $270 million -- $275 million of debt repayment just in the last 2 years. So we're delighted what's happened. At 1 point, our net leverage was about 9.9x. I'm delighted to say it's now down to about 2x. So it gives us a lot more flexibility to think about the future of our business and then importantly, opportunities for investing in internal R&D as well as the bolt-on opportunities for the future.

For 2026, our capital allocations are very straightforward. We're looking at growth investments on where can we invest, as I mentioned before, for things like international growth, internal R&D, and then also the business development. We'll continue to look at debt repayment. We've reduced our net debt to somewhere right around the -- where the gross debt is around -- a little less than $600 million. Net debt is down another couple of hundred million dollars. So we've made a nice reduction in that net debt and net leverage right around that 2.0x thereabouts. So we've made really good progress there.

And we continue to look to say, what can we do for the future as well as beyond that, we've repurchased some of our bonds and I said we've made a debt pay down, and we're also looking at a share repurchase program because we still believe that, that share repurchase program, our share price today does not reflect the value that we think this share price has, so we're going to continue to look at share repurchase. That's a 1-year program that runs through March of 2026.

As a reminder, I wanted to share with you the full year 2025 revenue and profitability guidance that we presented on October 29, 2025. These are the guidance range that we've showed. And therefore, you can see some of the progression we've made in each of the numbers starting back from March of 2025 through the October date. We'll be presenting our full year numbers on or about the end of February, early March of 2025 (sic) [ 2026 ].

So let me conclude. In summary, we are on track with our turnaround -- the turnaround phase of a multiyear plan. We've completed a stabilization. We're on track with turnaround and ultimately, we look to get to transformation. We reduced our debt just in the last week in December of -- by $100 million. We've increased our gross margin and operating margin for our business by following through on some of the actions we took in 2024 to streamline operations, reduce operating expense. We're continuing to execute on all the key turnaround actions to drive our business forward to strengthen our performance, strengthen what we're looking at. We're going to continue to pursue organic growth, both from the expansion of the international platform and also the new products and look at inorganic growth opportunities to bolt on some additional growth for the future. And while we do that, we also have a continuing commitment to the highest standards of patient safety, quality and compliance across the enterprise. That's what we plan to do.

We look forward to -- if you have any question, trying to answer questions, but we're excited about the future and what it means for Emergent -- what it means for all the Emergent stakeholders. Thank you for your attention today.

Great. Thanks for the presentation. And as a reminder for everyone in the room, if you have a question, just raise your hand, someone will bring you a microphone. But I'll go first. So -- maybe starting with the MCM and Commercial segments, what's the best way to think about the revenue trajectory in 2026? And what are the kind of the drivers behind each of those franchises?

Sure. So we're going to be somewhat limited to what we can say about 2026 until we do the guidance, of course. But I would say the following. What we know is that we -- in terms of -- start with MCM. We're in an increasingly dangerous world and the U.S. government wants to stay with programs for the biodefense side of the business. We expect to continue to make sure that we can provide the solutions that the U.S. government is looking for in the biodefense world. And we have important products that our expectation is there will be continued demand for them.

Just to give you some sense of 2025 was an interesting year with new administration but also the government shutdown. Notwithstanding that, we had projected we'd get about 6 contract modifications during the year from the U.S. government. In fact, we ended up with about 11 contract modifications, which we think is a good positive indicator about the future interest and our expectations. Some of those are shipped in 2025. Some of them are 2026 delivery. So we're excited about what that means for the future. As it would relate to -- if you want me to go to the naloxone as well? Or you want to stay on MCM, your choice.

We can go to Naloxone.

Naloxone, we think it's continuing to be a problem. It's -- we're still seeing too many deaths out there. We take it very serious that we're not going to rest until we can find that number down to zero, essentially. So we're looking at all the ways that we can make naloxone, NARCAN, our product brand, more available, and that will include everything that we can with the -- what we're trying to do with making sure it's in first aid kits, making sure it's in homes because we think that, that's availability, that access is what's going to save lives. And so we're going to keep working on that.

The data we see is it suggests that the overall naloxone unit volume is going to grow somewhere in the mid-single-digit rate. That's our expectations of how we would expect to see it for the future. We're going to continue to track it and give updates. So we expect that we'll continue to be a leader in the NARCAN/naloxone market. And we also think having the presence of the KLOXXADO, I didn't talk much about it, but that's the high strength. It will also give us a chance to continue to have a product offering that makes it easier for our customers. So we aren't going to talk specifically about it, but we think there's overall certainly unit volume growth in the naloxone market for the future.

Okay. And the mid-single digits you talked about for naloxone, that's kind of the overall naloxone market, including competition and your products.

Yes. I want to be very clear. That is the overall market unit volume growth. I'm not really addressing the price, and I'm not really adjusting our share, but we do expect to be the leader.

Okay. What do you see as kind of thinking just OTC NARCAN specifically, what do you see as the main opportunities and challenges?

So for over-the-counter, NARCAN, what we view as the important opportunity is the more access we can get, the more product we can get, whether it's through the retail stores or through the Amazons of the world, e-commerce of the world, those are the ways that we just want to get more of it -- make it more available. We're working very closely with all the retailers and also with the e-commerce segments of the business to try to get the product out there.

It's an area that there's a little bit of concern by individuals that say, well, my son or daughter doesn't need that or we don't need that. But the reality is you never know when somebody is going to experiment. People shouldn't experiment with drugs, but sometimes they do and you just never know if something is going to be laced with a fentanyl product. So we want to make sure that we get rid of any concerns. In fact, just say, let's have it available, you hope your house never starts on fire, but you want to have a fire extinguisher. So we're looking to try to do that type of approach with consumers and parents, especially just to make sure that they can help protect their children and/or other friends, family members, et cetera, to make sure the product is available if you need it because with the unfortunate problem of opioid overdoses, once you overdose, you have limited time until you will die. So we got to make sure the product is available easily available. So those are the things we're working on with all the retailers, with all the e-commerce players to get more product out there on the OTC side.

The good news, though, is that we're making progress. The other thing we see -- we think this kit that we just talked about is another way to have that clip on to a backpack and people will know they have it in case they need it.

And what about in the public interest segment for NARCAN? What are the kind of opportunities and challenges there?

Yes. The public interest segment is the largest segment by far. It's somewhere in the 75%, 80% of the totality of the naloxone market. So it is an important segment. We have specific programs with states where we do a couple of things for them. We clearly go out and try to talk to the individual, decision-makers on the state about our product, about the NARCAN brand, about the trust that consumers have in the NARCAN brand because they've heard about it, they know about it. But beyond that, we also go out and try to help some of the states with the ability to find the funding for this -- for the NARCAN product by helping them find the funding, it helps them to get additional product into the state, into the places that need the product. So we're looking to do those things as well in terms of helping them find funding to ensure that product is available. And certainly, we have the distribution capabilities that -- we have a very automated distribution capability, so we can make the product available. We don't see any concerns about our ability to supply for the -- now or the future.

And -- how do you think about the competitive landscape for naloxone? Like how do you see that evolving? And what differentiates your products from generics and branded competitors?

Sure. The way we see it that what is NARCAN. NARCAN has a brand name, a trusted brand name, 1 that people know, they've heard about, and we think that's an important part when the NRC hopefully, is not something you need to buy and replace on a chronic basis. It's something you're buying once to have available in case something happens. So having the trusted brand name, NARCAN, we think it's important. There's not to diminish any of the generic products, but we think having the trusted brand name of NARCAN is important.

Number two, making sure that we can continue to help find sources of funding for the naloxone and NARCAN product, that's something we help them define that funding. I think I didn't mention it, but there is some opioid litigation settlements by big pharma, something on order of magnitude of $50 billion coming to the states over the next 5 to 10 years. That's a big part of funding, we think that will be available to help make sure that we reduce the overall opioid overdose deaths.

So those are things that we're trying to do to help -- help differentiate our product. Of course, we also have distribution capabilities. We shipped about 18,000 different distribution points. We think that helps make it easier to do business with Emergent and NARCAN, with a specific NARCAN direct program that we think is part of the story there to make it easier for the customers that need the product.

Maybe just more specifically on competition. Are there any known new branded or generic competitors you see entering the space in the near term?

Yes. We keep pretty close ties to what's happening there, but I can tell you I don't have complete visibility to that question. But so far, from what we've seen, we haven't seen any new or any suggestion that there's a new player coming. We're certainly managing the current situation. We're not trying to price identical to the generic players. We're trying to be comparatively close to them in the ballpark and then allow the differences and advantages of the NARCAN to allow us to hold on to market share. But we're not trying to match pricing. We're just trying to be competitive on pricing.

Okay. Coming back to the MCM business. You highlighted that 34% of MCM orders, I think, in the first 9 months of '25 were from outside of the U.S.

Yes.

Is that sustainable? Or maybe put it more specifically, can we think of that as kind of the new floor for the mix of international and maybe it goes up from there, but shouldn't dip from there? Or how do we think about that?

Well, there's always going to be some variations, some seasonality that will occur, but we are specifically focusing on the knowledge that this issue that we have has -- it's increasingly dangerous world, not just for the U.S., it's for every country in the world. And therefore, we want to make sure that we have products already today, how can we help those other allied governments with the problem. So we put together initiatives in '24 and '25, that specifically focused on what we can do to differentiate ourselves and have products available. The products are already available. And quite frankly, it makes it a lot easier for those countries to come to Emergent. We've already got the product developed. So we can do it relatively quickly for them. But these are multiyear initiatives.

They don't happen overnight. You work with them, you build a relationship and you understand what their needs are by country, and we've been doing it now for 25 years. We're going to continue to do it going forward, but they're not going to happen overnight, but we absolutely have a focus on getting more from customers in diverse environment business so that we get more from other countries outside of the U.S. So -- it's good that we believe that we can help those countries, and we stand ready to help them when they need it.

You highlighted how the company is kind of on the turnaround plan seeing margin improvement. What are the levers for potential margin improvement in '26?

Yes. Thanks for the question. I think we have made significant progress, as Joe noted, on our cost structure, which was a result of really focusing in the product set, focusing in the manufacturing network to get more streamlined, more efficient. We've taken a lot of cost as a result out of G&A as well. So I think that we feel pretty good about the progress we've made. We're not looking for material additional cost reductions at this point, but we are keeping a very disciplined approach to how costs come back into the system as we move forward. I think really the biggest lever on margin improvement is when you look at the top line. So we're continuing to look for areas of growth. And as we see revenue increase, I think you'll see that flow disproportionately to margin expansion in the bottom line.

So, I guess, as you kind of continue the transformation plan, what are the kind of the key operational or structural milestones you're hoping to achieve this year to kind of ensure long-term sustainability and shareholder value creation?

Yes. For us, it comes to build off what Rich was saying, it comes down to what can we do for growth. The story for 2026 is really all about investing for growth, where can we make investments for growth that will yield those long-term sustainable, durable growth. That's really what comes down. So look to us to have more to say about what we do for -- I mean, as simple as the innovation I talked about with having the backpack kit for NARCAN as an example. Look to us to have more innovation on what we do with TEMBEXA, and the clinical trial we're doing for mpox as an example.

Look to us to talk about what else we're doing with raxibacumab. What can we do with Ebanga for Ebola. Those are the internal ones. The external portion of what we're doing as well is growing outside the U.S. We'll have more to say about those initiatives as we get contracts for supplying Country A with product B. Those are things -- the other things you can look at in terms of the milestone.

And then importantly, and I mentioned it briefly, but I want to talk about it again. We think another important opportunity for us is to bolt on 1 more product that we can ship and sell to either the U.S. government or governments around the world or to the first responders that need products. So let's add 1 more product because if we can do that, it makes your P&L very efficient and leverages your P&L in terms of you don't need a lot of incremental operating expense once you have the up and running business. So we're looking to find another way to add that 1 more product, as I said, either through our own organic R&D or through business development. And I will say that we've had a great chance over the last couple of days at the JPMorgan conference to meet with a lot of different players to talk about opportunities where we can bring our expertise that we have, how to deal with U.S. government and other governments around the world and the regulatory we know, the scientific know-how we have to help them solve their problems and potentially partner together with a lot of other companies. So look to us to continue to try to advance that way.

Great. I think that's about it for our time. So we'll stop there. Thank you.

Thank you very much for your questions.

Thank you.

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 continue to make strategic investments for the long-term growth while creating significant value for our stakeholders. We are achieving operating margin improvements and evaluating best options to advance top line growth while maintaining our attractive cost structure.

On Slide 9, we provide a more detailed look at the third quarter, included exceeding our internal guidance on both the top and bottom line. Third quarter revenues of $231 million were $21 million above the high end of our Q3 guidance range of $180 million to $210 million. Our profitability continues to improve. And year-to-date, we have already achieved the high end of our full year adjusted EBITDA guidance range with $194 million generated as of the third quarter. Both the revenue and profitability of the business exceeded our internal management expectations and the analyst consensus.

Based on the year-to-date performance, we are increasing our adjusted EBITDA guidance range, $195 million to $210 million, up from $175 million to $200 million. Our liquidity remains very strong. We now have access to $346 million in financial capacity to invest in additional growth and capital deployment. This includes $246 million of balance sheet cash and our undrawn revolver. We are pleased with the significant collection of cash for accounts receivable even during the first days in Q4. We are selectively deploying our capital to create stakeholder value.

Our net leverage improved to approximately 2x net debt to adjusted EBITDA, down from 3.3x in the third quarter of 2024. In the third quarter of 2025, we also repurchased some Emergent bonds and continued with our share repurchase program where we have spent $15.8 million of our $50 million 12-month program. We are excited by the progress in the MCM segment with 4 new contract modifications added in the third quarter. We also see upside from our international customers, which represent 34% of our MCM sales year-to-date, which is up from the mid- to high teens in past years. Our leadership in naloxone remains strong, and we are committed as ever to combating the opioid overdose epidemic and saving lives. With 2 months left in the year, we feel very good about our 2025 performance and are actively working to establish additional growth drivers for 2026 and beyond.

On Slide 10, we summarize the strong performance of our naloxone business year-to-date. We remain the leader in the naloxone category amongst public interest customers, and we are benefiting from a stabilized U.S. pricing market for naloxone. Quarter-over-quarter, NARCAN unit volume grew by 13% and revenue grew by 9%. This sequential growth reaffirms that we have moved past the onetime first quarter events. In fact, NARCAN demand remains strong. We expect continued growth of the entire market, which may provide a tailwind to our business.

Now I'd like to turn the call over to Rich to walk through the third quarter financials.

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 review our third quarter financials. I'll start by noting that the prior year comparisons fully reflect our restructuring actions from early 2024. Highlights of the quarter include total revenues of $231 million. As a reminder, third quarter 2024 benefited from a partial quarter of now divested revenues from RSDL and the Camden facility. Adjusted EBITDA margin of 38%, an increase of 200 basis points versus the prior year, underscoring our continued strong profitability in our -- with our efficient platform. Adjusted gross margin of 61% improved 200 basis points year-over-year, driven by a more favorable product mix, the expansion of strategic global partnerships and a leaner cost structure stemming from our divestitures and restructuring initiatives. And finally, operating expenses of $52 million were $38 million lower compared to the prior year. Of note, you can see that our SG&A spend declined roughly 50% from last year. Additional third quarter revenue details can be found in the appendix.

Turning to Slide 13, I'll walk through our performance for the first 9 months of 2025. Total revenues were $594 million, a decline compared to the prior year, reflecting the divestitures, the J&J onetime settlement in 2024 and strategic pricing actions taken on NARCAN. Adjusted EBITDA was $194 million or 33% of total revenues, an improvement of approximately $32 million and 1,400 basis points year-over-year. This outcome illustrates our strong operating leverage, the impact of our restructuring actions as well as a favorable product mix in 2025, driven by international MCM sales. Adjusted gross margin of 57% improved 1,100 basis points compared to the prior year. This expansion was driven by product mix and continued operational efficiencies stemming from the 2024 initiatives. Operating expenses totaled $176 million, a $133 million reduction from the prior year. Most of this reduction came from a $112 million decline in SG&A, while we preserved critical R&D capabilities to support long-term growth.

Moving on to Slide 14. For the first 9 months of 2025, total revenue was $594 million, driven by total product sales of $545 million. As noted, 2024 includes revenue associated with onetime events and divested assets. The table in the upper right corner of Slide 14 normalizes 2024 revenue for these items.

With that, let's break down performance by key product lines. Naloxone nasal spray revenue totaled $188 million, reflecting improved sequential momentum from the second and third quarters. Anthrax medical countermeasure revenue was $61 million based on the timing of government procurement orders. Smallpox revenue was $231 million, an increase of $30 million or 15%, reflecting deliveries under multiyear contracts and increased international orders. Lastly, other revenues were $49 million. As a reminder, last year's revenues included $50 million from the Janssen settlement as well as the Camden facility revenue prior to its divestiture in August '24. Normalizing for these items, other revenues grew $25 million year-over-year due to increased services demand in our Winnipeg facility, along with C&G revenue related to our Ebanga development program.

Turning to Slide 15. I'm pleased to report continued progress in strengthening our financial position. For the third quarter of '25, total liquidity was $346 million compared -- comprised of $246 million of cash and $100 million of undrawn revolver capacity. Liquidity improved $96 million year-over-year. As of September 30, our gross debt was $693 million, down about $7 million versus prior year, driven by our unsecured bond repurchases during the quarter. Total net debt in Q3 2025 was $448 million, a $103 million or 19% reduction. Our net leverage remained in the 2x adjusted EBITDA range at the end of the third quarter as we both increased profitability and reduced gross debt. We also collected significant accounts receivable from late September MCM deliveries in early October despite the current U.S. government shutdown, further enhancing our operating cash flow. This outcome further reinforces the importance of our business.

Please turn to Slide 16. Our capital allocation priorities are focused on 3 key areas: growth, debt repayment and share repurchases. First, we're investing in both organic and inorganic opportunities to strengthen our core businesses and drive future revenue expansion. Some important tailwinds include increasing international revenue from our medical countermeasures segment and our stronger balance sheet, which enables business development. We remain very judicious stewards of shareholder capital and continue to evaluate opportunities to advance internal R&D projects. Next, we continue to prioritize debt repayment to strengthen our balance sheet and improve financial flexibility.

Beginning in August, we initiated a $30 million bond repurchase program and during the quarter, retired $6.9 million in principal amount of unsecured bonds for $5.8 million of cash. We are also committed to creating shareholder value through the 12-month $50 million share repurchase program we announced in March 2025. In the third quarter, we repurchased another 1.1 million shares for $8.9 million, bringing us to $2.3 million repurchased year-to-date for $15.8 million or an average price of $7 per share. We remain opportunistic with buybacks in future quarters as we evaluate market conditions and other factors.

Transitioning to Slide 17, we are updating our full year '25 guidance by raising the midpoint of our revenue and profitability metrics. Further details are as follows: total revenues of $775 million to $835 million, an increase of $5 million at the midpoint; adjusted EBITDA in the range of $195 million to $210 million, an improvement of $15 million at the midpoint. We're also raising our adjusted gross margin guidance to a range of 52% to 54%, a 200 basis point improvement over our prior guidance at the midpoint. Based on the strong performance year-to-date across our segments, we're also raising the midpoint of our medical countermeasures products revenue guidance while maintaining our prior guidance range for commercial products.

Segment revenue guidance is as follows: MCM product sales of $450 million to $475 million. We continue our enduring partnership with the U.S. government, which is further evidenced by the 11 contract modifications we've received year-to-date for our medical countermeasure products. Commercial products, including KLOXXADO, in the range of $265 million to $300 million. Year-to-date, commercial product sales were $188 million with stable pricing across the U.S. public interest channel. Our performance in 2025 reinforces our market-leading position in the opioid overdose reversal space.

In closing, on Slide 18, we're continuing the turnaround phase of our multiyear plan with solid performance in the first 9 months of 2025. Our 2025 revenue outlook remains focused on our core business across both the medical countermeasures and commercial segments. Of note, international sales now represent 34% of the company's MCM segment, which is up meaningfully from the high teens in prior years. We are closely monitoring this trend and making targeted investments to facilitate this growth. Our partnership with the U.S. government and international customers remain strong as evidenced by the 11 contract modifications year-to-date.

Our gross margins and profitability have continued to improve throughout the year, and we're generating positive operating cash flow while enhancing our liquidity position. Our leverage ratio is stable at approximately 2x adjusted EBITDA. Looking ahead, our plan remains consistent. We're pursuing strategic growth investments while actively seeking opportunities to deliver value to our shareholders.

I'll now turn the call back to Joe to discuss our business outlook and catalysts. Joe?

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 the last 5 years was a stark reminder of the continued frequency and threat of the Ebola virus disease. Global readiness and resilience are key to being prepared for the next potential outbreak. Earlier this year, we announced our continued collaboration with BARDA to advance Ebanga development towards supplying treatment, ensuring we are prepared against Ebola.

On Slide 22, we outlined our outlook on future growth and cash deployment. Our plan is to invest the cash we are generating from our profitable business segments into 2 growth tracks. First, exploring government collaborations for new biodefense products. The second is to identify value-creating external commercial programs that align strategically with our current business model and capabilities.

In summary, on Slide #25, we have adjust -- we have outperformed our top line and adjusted EBITDA guidance expectations in the third quarter. We are raising our full year revenue guidance while also raising our adjusted EBITDA guidance to $195 million to $210 million. Throughout 2025, our operating margin and cash flow have grown significantly as we execute our multiyear turnaround plan.

In conclusion, we have a unique and diversified biodefense portfolio. We are proud leaders addressing the overdose epidemic through our life-saving naloxone products. We will take additional steps to generate value for all our stakeholders, and we will strive the highest standards of quality, ethics and compliance across the entire Emergent enterprise.

And with that, I look forward to taking your questions. Operator, can you please open up the line for questions.

[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 a result of that, they usually get the best price and other countries pay a little bit more. It's not a big margin difference, but there is a little bit better pricing for the U.S. government and that they helped us with the development of our products.

The next question I believe was NARCAN and Canada and what's happening there. We're making good progress. We talked about a number of different project agreements that we have with the Canadian provinces, and we're making good progress there. I would say that's something that's going to be variable in any given quarter in terms of when the sales happen in the third quarter, the fourth quarter or next year, but we're making very good progress. Canada is recognizing that they've got issues with opioid overdoses and they're looking to us to help them satisfy some of that demand out there. So we're making good progress there. There is going to be some variability quarter-over-quarter in terms of when the order gets shipped in third quarter, fourth quarter or first quarter, but we are very happy with the relationship we have with the Canadian government.

Final question I think you had was government shutdown. And I can tell you firsthand, the U.S. government employees that we work with at the Strategic National Stockpile of BARDA, Department of Defense continue to work every day, and they're going above and beyond to call of duty in terms of what they're doing, notwithstanding the shutdown. And I can tell you firsthand, Rich and myself and the rest of our team had a meeting with the highest levels of BARDA, Department of Defense and the Strategic National Stockpile just last week. So everything we see is they continue to move forward on these important strategic initiatives that in terms of what the biodefense really represents in the U.S. is an important must-do activity. So they keep working hard, and we're obviously there to support them in any way we can. I think I got all that, Jess, but -- operator, next question.

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.