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What changed in Emergent BioSolutions Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Emergent BioSolutions Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+625 added−640 removedSource: 10-K (2025-03-04) vs 10-K (2024-03-08)

Top changes in Emergent BioSolutions Inc.'s 2024 10-K

625 paragraphs added · 640 removed · 425 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

134 edited+67 added−69 removed119 unchanged
Biggest changeAt the same time, we have achieved a number of positive milestones in our core products business, including the receipt of approximately $250 million of USG orders for ACAM2000 ® (discussed more fully below), VIGIV CNJ-016 ® and BAT ® , the FDA approvals of CYFENDUS ® and NARCAN ® over-the-counter, new long-term contracts for RSDL ® and Ebanga™ and the growth of NARCAN ® Nasal Spray . 4 PRIMARY PRODUCTS AND PRODUCT CANDIDATES Government - MCM Products The current portfolio of our Government - MCM business consists of the following products: GOVERNMENT - MCM PRODUCTS Product Indication(s) Regulatory Approvals, Licensures or Clearances ACAM2000 ® , (Smallpox (Vaccinia) Vaccine, Live) Vaccine for active immunization against smallpox disease for persons determined to be at high risk for smallpox infection.
Biggest changeWe also achieved a number of positive milestones in our core products business during fiscal year 2024, including the receipt of approximately $223 million of new USG orders across ACAM2000 ® (discussed more fully below), VIGIV CNJ-016 ® and BAT ® , as well as securing the exercise of an additional option for Ebanga™ and the continued growth of OTC NARCAN ® Nasal Spray.
United States, Canada, Ukraine, Singapore BioThrax ® (Anthrax Vaccine Adsorbed) Vaccine for active immunization for the prevention of disease caused by Bacillus anthracis in persons 18 through 65 years of age. BioThrax ® is approved for: 1. Pre-exposure prophylaxis of disease in persons at high risk of exposure. 2.
United States, Canada, Singapore, Ukraine BioThrax ® (Anthrax Vaccine Adsorbed) Vaccine for active immunization for the prevention of disease caused by Bacillus anthracis in persons 18 through 65 years of age. BioThrax ® is approved for: 1. Pre-exposure prophylaxis of disease in persons at high risk of exposure. 2.
Commercial Products Our current Commercial portfolio consists of the following products: COMMERCIAL PRODUCTS Product Indication(s) Regulatory Approvals NARCAN ® (naloxone HCI) Nasal Spray Emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression. United States, Canada Description of Commercial Products NARCAN ® Nasal Spray.
Commercial Product Our current Commercial portfolio consists of the following product: COMMERCIAL PRODUCTS Product Indication(s) Regulatory Approvals NARCAN ® (naloxone HCI) Nasal Spray Emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression. United States, Canada Description of Commercial Product NARCAN ® Nasal Spray.
Government Contracting Our status as a USG contractor means that we are subject to various statutes and regulations, including: • the Federal Acquisition Regulation ("FAR") and agency-specific regulations supplemental to FAR, which comprehensively regulate the award, formation, administration and performance of government contracts; • the Defense Federal Acquisition Regulations ("DFARs") and agency-specific regulations supplemental to DFARs, which comprehensively regulate the award, formation, administration and performance of DoD government contracts; • the Department of State Acquisition Regulation which regulates the relationship between a Department of State organization and a contractor or potential contractor; • business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Act, the Procurement Integrity Act, the False Claims Act and the Foreign Corrupt Practices Act; 15 • export and import control laws and regulations, including but not limited to the Export Administration Regulations and International Traffic in Arms Regulations; and • laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.
Government Contracting Our status as a USG contractor means that we are subject to various statutes and regulations, including: • the Federal Acquisition Regulation ("FAR") and agency-specific regulations supplemental to FAR, which comprehensively regulate the award, formation, administration and performance of government contracts; • the Defense Federal Acquisition Regulations Supplement ("DFARS") and agency-specific regulations supplemental to DFARS, which comprehensively regulate the award, formation, administration and performance of DoD government contracts; • the Department of State Acquisition Regulation which regulates the relationship between a Department of State organization and a contractor or potential contractor; • business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Act, the Procurement Integrity Act, the False Claims Act and the Foreign Corrupt Practices Act; • export and import control laws and regulations, including but not limited to the Export Administration Regulations and International Traffic in Arms Regulations; and • laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.
For example, the California Consumer Privacy Act of 2018 ("CCPA"), which came into effect on January 1, 2020, requires covered companies that process personal information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt out of certain data sharing with third parties and provides a new private right of action for data breaches.
For example, the California Consumer Privacy Act of 2018 ("CCPA"), which came into effect on January 1, 2020, requires covered companies that 22 process personal information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt out of certain data sharing with third parties and provides a new private right of action for data breaches.
We make available, free of charge on our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") as soon as reasonably practicable after we electronically file those reports with, or furnish them to, the SEC.
We make available, free of charge on our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to 24 Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") as soon as reasonably practicable after we electronically file those reports with, or furnish them to, the SEC.
We work closely with our suppliers for these specialty programs and operate under long-term agreements. INTELLECTUAL PROPERTY We actively seek to protect intellectual property related to our assets, including patent rights, trademark rights, trade secrets and proprietary confidential information, through defense and enforcement of existing rights and pursuit of protection on new and arising innovations.
We work closely with our suppliers for these specialty programs and operate under long-term agreements. 14 INTELLECTUAL PROPERTY We actively seek to protect intellectual property related to our assets, including patent rights, trademark rights, trade secrets and proprietary confidential information, through defense and enforcement of existing rights and pursuit of protection on new and arising innovations.
Products designated as orphan drugs may be eligible for special grant funding for R&D, FDA assistance with the review of clinical trial protocols, potential tax credits for research, an exemption from the application fee for marketing applications and a seven-year period of orphan drug exclusivity after marketing approval.
Products designated as orphan drugs may be eligible for special grant funding for R&D, FDA assistance with the review of clinical trial protocols, potential tax credits for research, an exemption from the application fee for marketing applications and potentially a seven-year period of orphan drug exclusivity after marketing approval.
The FDA's regulations also require, among other things, the investigation and correction of any deviations from CGMP or failures to follow the QSR and the maintenance of applicable documentation by the sponsor and any third-party manufacturers involved in producing the approved, cleared, or otherwise authorized product. Regulation Outside of the U.S.
The FDA's regulations also require, among other things, the 20 investigation and correction of any deviations from CGMP or failures to follow the QSR and the maintenance of applicable documentation by the sponsor and any third-party manufacturers involved in producing the approved, cleared, or otherwise authorized product. Regulation Outside of the U.S.
Manufacturers and other entities involved in the manufacture and distribution of cleared, approved, or otherwise authorized products are required to register their establishments with the FDA, and in some instances state agencies, and they are subject to periodic unannounced inspections by the FDA for compliance with CGMPs and/or QSRs and other requirements.
Manufacturers and other entities involved in the manufacture and distribution of cleared, approved, or otherwise authorized products are required to register their establishments with the FDA, and in some instances state agencies, and they are subject to periodic unannounced or announced inspections by the FDA for compliance with CGMPs and/or QSRs and other requirements.
Hiring and Talent Management We focus on building leaders at every level with the requisite scientific, technical and professional skills to develop and deliver products and services that protect life. We have consistent talent processes and systems across the company including performance management, training and development and succession planning.
We focus on building leaders at every level with the requisite scientific, technical and professional skills to develop and deliver products and services that protect life. We have consistent talent processes and systems across the company including performance management, training and development and succession planning.
Our revenues are derived from a combination of the sale and procurement of our product/product candidate portfolio (described below), the provision of our bioservices to external customers, and non-dilutive contract and grant funding for research and development ("R&D") projects from various third-party sources.
Our revenues are derived from a combination of the sale and procurement of our product/product candidate portfolio (described below), the provision of our bioservices to external customers, and non-dilutive contract and grant funding for research and development ( “ R&D ” ) projects from various third-party sources.
Medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk and the level of control necessary to assure the safety and effectiveness of each medical device. Medical devices deemed to pose lower risks are generally placed in either Class I or II.
Medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk and the level of control necessary to assure the safety and effectiveness of each medical device. Medical devices deemed to pose lower risks 19 are generally placed in either Class I or II.
In the Canadian market, NARCAN ® (naloxone HCl) Nasal Spray is sold directly to federal, provincial and local governments and agencies for use by first responders, public health and harm reduction agencies, and indigenous communities. In addition, NARCAN ® Nasal Spray is sold to businesses and consumers online and through pharmacies nationwide.
In the Canadian market, NARCAN ® (naloxone HCl) Nasal Spray is sold directly to federal, provincial and local governments and agencies for use by first responders, public health and harm reduction agencies, and indigenous communities. In addition, NARCAN ® Nasal Spray is sold to businesses online and through pharmacies nationwide.
There have been recent legislative proposals to reduce the duration of the 12-year reference product exclusivity period, but none has been enacted to date. Moreover, many states have enacted laws that address pharmacy practices involving biosimilar products. Post-Approval Requirements.
There have been recent legislative proposals to reduce the duration of the 12-year reference product exclusivity period, but none has been enacted to date. Moreover, many states have enacted laws that address pharmacy substitution practices involving biosimilar products. Post-Approval Requirements.
The FDA also regulates the export of medical devices from the U.S., and medical devices that are not authorized to be legally marketed in the U.S. are subject to FDA export requirements. 20 Manufacturing Requirements The FDA's statutory provisions and regulations require that drugs be manufactured in FDA-registered facilities and in accordance with CGMPs.
The FDA also regulates the export of medical devices from the U.S., and medical devices that are not authorized to be legally marketed in the U.S. are subject to FDA export requirements. Manufacturing Requirements The FDA's statutory provisions and regulations require that drugs be manufactured in FDA-registered facilities and in accordance with CGMPs.
On September 3, 2019, we announced the award by the USG of a contract valued at up to approximately $2 billion over 10 years for the continued supply of ACAM2000 ® vaccine into the SNS, assuming all contract options are exercised.
On September 3, 2019, we announced the award by the USG of a contract valued at up to approximately $2.0 billion over 10 years for the continued supply of ACAM2000 ® vaccine into the SNS, assuming all contract options are exercised.
During the FDA's review of the application, the FDA will also typically inspect one or more clinical sites to ensure compliance with GCPs as well as the facility or facilities at which the candidate is manufactured to ensure compliance with current good manufacturing practices ("CGMPs").
During the FDA's review of the application, the FDA will also typically inspect one or more clinical sites to ensure compliance with GCPs as well 17 as the facility or facilities at which the candidate is manufactured to ensure compliance with current good manufacturing practices ("CGMPs").
As a result of the FDA’s announcement, the scope of orphan drug exclusivity and other issues relating to the FDA’s implementation of the Orphan Drug Act with respect to previously approved and future products may be the subject of further litigation or legislation. Vaccine and Therapeutic Product Lot Protocol.
As a result of the FDA’s announcement, the scope of orphan drug exclusivity and other issues relating to the FDA’s implementation of the Orphan Drug Act with respect to previously approved and future products may be the subject of litigation or legislation. Vaccine and Therapeutic Product Lot Protocol.
Before a medical device can be placed on the market in the EU compliance with the requirements of the Medical Devices Regulation (EU) 2017/745 must be demonstrated in order to affix the CE Mark to the product.
Before a new medical device can be placed on the market in the EU compliance with the requirements of the Medical Devices Regulation (EU) 2017/745 must be demonstrated in order to affix the CE Mark to the product.
Teva launched its generic naloxone nasal spray in the U.S. In 2021, Padagis Pharmaceuticals also has a generic version of an intranasal naloxone spray based on NARCAN ® Nasal Spray approved by the FDA. Padagis launched its generic naloxone nasal spray.
Teva launched its generic naloxone nasal spray in the U.S. in 2021. Padagis Pharmaceuticals also has a generic version of an intranasal naloxone spray based on NARCAN ® Nasal Spray approved by the FDA. Padagis launched its generic naloxone nasal spray in 2022.
Abbreviated New Drug Applications and Section 505(b)(2) New Drug Applications . Most drug products obtain FDA marketing approval under a full NDA for innovator products, or an abbreviated new drug application ("ANDA") for generic products.
Abbreviated New Drug Applications Under Section 505(j) and Section 505(b)(2) New Drug Applications . Most drug products obtain FDA marketing approval under a full NDA for innovator products, or an abbreviated new drug application ("ANDA") for generic products.
DHS granted SAFETY Act designation and certification for BioThrax ® and RSDL ® in 2006 and has continued to renew those determinations. Any future renewals of the SAFETY Act designation and certification for BioThrax ® and RSDL ® products may not provide adequate protection from all claims made against us. Product Development for Therapeutics and Vaccines Pre-Clinical Testing.
DHS granted SAFETY Act designation and certification for BioThrax ® in 2006 and has continued to renew those determinations. Any future renewals of the SAFETY Act designation and certification for BioThrax ® products may not provide adequate protection from all claims made against us. 16 Product Development for Therapeutics and Vaccines Pre-Clinical Testing.
In June 2019, we announced a contract award by HHS valued at approximately $535.0 million over 10 years for the continued supply of VIGIV into the SNS for smallpox preparedness. VIGIV has also been procured by a limited number of foreign governments.
In June 2019, we announced a contract award by HHS valued at approximately $535.0 million over 10 years for the continued supply of VIGIV CNJ-016 ® into the SNS for smallpox preparedness. VIGIV CNJ-016 ® has also been procured by a limited number of foreign governments.
In the U.S. market, NARCAN ® (naloxone HCl) Nasal Spray is sold directly to state and local governments and used by first responders, including: police, firefighters and emergency medical teams. In addition, NARCAN ® Nasal Spray is sold to consumers online and through retailers nationwide.
Commercial Product In the U.S. market, NARCAN ® (naloxone HCl) Nasal Spray is sold directly to state and local governments and used by first responders, including: police, firefighters and emergency medical teams. In addition, NARCAN ® Nasal Spray is sold to consumers online and through retailers nationwide.
VIGIV is the only polyclonal antibody therapeutic licensed by the FDA and Health Canada to address certain complications from replicating virus smallpox vaccination. The principal customer for VIGIV is the USG, specifically HHS.
VIGIV CNJ-016 ® is the only polyclonal antibody therapeutic licensed by the FDA and Health Canada to address certain complications from replicating virus smallpox vaccination. The principal customer for VIGIV CNJ-016 ® is the USG, specifically HHS.
It has also procured and stockpiled many of our related products for potential use in the event of a PHT emergency, including BioThrax ® , ACAM2000 ® , Anthrasil ® , BAT ® , VIGIV and raxibacumab products. Funding for BARDA is provided by annual appropriations by Congress.
It has also procured and stockpiled many of our related products for potential use in the event of a PHT emergency, including BioThrax ® , ACAM2000 ® , Anthrasil ® , BAT ® , VIGIV CNJ-016 ® and raxibacumab products. 15 Funding for BARDA is provided by annual appropriations by Congress.
NARCAN ® Nasal Spray also faces branded competition: Kloxxado TM (naloxone HCl) nasal spray 8mg, a branded product developed by Hikma Pharmaceuticals, Inc., Amphastar Pharmaceuticals, Inc.'s naloxone injection product, Teleflex Medical Inc.'s Intranasal Mucosal Atomization Device and Zimhi TM (naloxone), a branded injectable product developed by Adamis and RiVive™ a 3mg naloxone nasal spray formulation intended for use in opioid overdose reversal by Harm Reduction Therapeutics.
NARCAN ® Nasal Spray also faces branded competition: Kloxxado TM (naloxone HCl) nasal spray 8mg, a branded product developed by Hikma, Rextovy TM, (naloxone HCL nasal spray 4 mg), a branded product developed by Amphastar Pharmaceuticals, Inc. and its naloxone injection product, Teleflex Medical Inc.'s Intranasal Mucosal Atomization Device and Zimhi TM (naloxone), a branded injectable product developed by Adamis and RiVive™ a 3mg naloxone nasal spray formulation intended for use in opioid overdose reversal by Harm Reduction Therapeutics.
BioThrax ® and CYFENDUS ® vaccines are currently the only two anthrax vaccine approved by the FDA for prevention of anthrax disease, and CYFENDUS ® and BioThrax ® are the only anthrax vaccines procured by the USG for the SNS to date.
CYFENDUS ® and BioThrax ® vaccines are currently procured, primarily by the USG, for prevention of anthrax disease. BioThrax ® and CYFENDUS ® vaccines are currently the only two anthrax vaccines approved by the FDA for prevention of anthrax disease, and CYFENDUS ® and BioThrax ® are the only anthrax vaccines procured by the USG for the SNS to date.
CYFENDUS ® ( Anthrax Vaccine Adsorbed, Adjuvanted) (known as AV7909 prior to FDA approval in July 2023). CYFENDUS ® vaccine was approved by the FDA for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis in persons 18 through 65 years of age when administered in conjunction with recommended antibacterial drugs.
CYFENDUS ® (Anthrax Vaccine Adsorbed, Adjuvanted) (referred to as investigational product AV7909 prior to FDA approval in July 2023). CYFENDUS ® vaccine was approved by the FDA for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis in persons 18 through 65 years of age when administered in conjunction with recommended antibacterial drugs.
We obtain Alhydrogel ® adjuvant 2%, used to manufacture CYFENDUS ® and BioThrax ® vaccines, from a single-source supplier for which we currently have no alternative source of supply. However, we maintain stored supplies of this adjuvant in quantities we believed to be sufficient to meet our expected manufacturing needs.
We obtain Alhydrogel ® adjuvant 2%, which is used in the manufacture of CYFENDUS ® and BioThrax ® vaccines, from a single-source supplier for which we currently have no alternative source of supply. However, we maintain stored supplies of this adjuvant in quantities we believe to be sufficient to meet our expected manufacturing needs.
HUMAN CAPITAL We value our employees and the contributions each of them makes to achieving our mission to protect and enhance life. We strive to create an environment that is professionally and personally rewarding by offering challenging work and projects for individual and team contribution, and opportunities for professional and personal development.
HUMAN CAPITAL We value our employees and the contributions each of them makes to achieving our mission to protect and save lives. We strive to create an environment that is professionally and personally rewarding by offering challenging work and projects for individual and team contribution, and opportunities for professional and personal development.
TEMBEXA ® Argentina, Australia, Brazil, Canada, Chile, China, EU, Hong Kong, India, Israel, Japan, Mexico, New Zealand, Norway, Russia, Singapore, Switzerland, Taiwan, Turkey, Ukraine, United Kingdom, U.S. CNJ-016 ® U.S. 11 Commercial Products.
TEMBEXA ® Argentina, Australia, Brazil, Canada, Chile, China, EU, Hong Kong, India, Israel, Japan, Mexico, New Zealand, Norway, Russia, Singapore, Switzerland, Taiwan, Turkey, Ukraine, United Kingdom, U.S. CNJ-016 ® U.S.
Data Privacy Laws A number of states in the U.S. have passed or introduced bills, which, if passed, impose operational privacy requirements on U.S. companies similar to the requirements reflected in the General Data Protection Regulation ("GDPR") in the EU ("State Consumer Privacy Laws"). As of December 31, 2023, State Consumer Privacy Laws were effective in five U.S. states.
Data Privacy Laws A number of states in the U.S. have passed or introduced bills, which, if passed, impose operational privacy requirements on U.S. companies similar to the requirements reflected in the General Data Protection Regulation ("GDPR") in the EU ("State Consumer Privacy Laws"). As of December 31, 2024, State Consumer Privacy Laws were effective in eight U.S. states.
The Public Readiness and Emergency Preparedness Act ("PREP Act") creates liability immunity for manufacturers of MCMs when the Secretary of HHS issues a declaration related to a specific disease, condition or public health threat.
The Public Readiness and Emergency Preparedness Act ("PREP Act") creates certain liability protections for manufacturers of MCMs when the Secretary of HHS issues a declaration related to a specific disease, condition or public health threat.
Additionally, we have a centralized R&D organization and an enterprise-wide governance approach to managing our portfolio of R&D projects. Commercial Products Segment In the U.S. and international markets, our Commercial business primarily focuses on sales of NARCAN ® (naloxone HCl) Nasal Spray.
Additionally, we have a centralized R&D organization and an enterprise-wide governance approach to managing our portfolio of R&D projects. Commercial Product Segment In the U.S. and Canadian markets, our Commercial business primarily focuses on sales of NARCAN ® (naloxone HCl) Nasal Spray.
We anticipate that the direct disposition of the plasma and close out activities will be completed before July 31, 2025. In addition to domestic USG sales, Anthrasil solution has been sold to several foreign governments, including the Canadian government. BAT ® [Botulism Antitoxin Heptavalent (A, B, C, D, E, F, G) – (Equine)].
We anticipate that the direct disposition of the plasma and close out activities will be completed before July 31, 2025. In addition to domestic USG revenue, Anthrasil solution has been sold to several foreign governments. BAT ® [Botulism Antitoxin Heptavalent (A, B, C, D, E, F, G) – (Equine)].
The manufacturing processes for devices must likewise be performed in compliance with the applicable portions of the QSR, which covers the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
These processes must be performed in compliance with the applicable portions of the QSR, which covers the methods and the facilities and controls for the manufacture, testing, production, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
Orphan drug exclusivity will not bar approval of the same drug marketed by a different manufacturer under certain circumstances, including if the company with orphan drug exclusivity is not able to meet market demand, grants consent to the FDA’s approval of the subsequent product or the subsequent product is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care. 19 In September 2021, the U.S.
Orphan drug exclusivity will not bar approval of the same drug marketed by a different manufacturer under certain circumstances, including if the company with orphan drug exclusivity is not able to meet market demand, grants consent to the FDA’s approval of the subsequent product or the subsequent product is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care.
In connection with the divestiture, the Company entered into a Transition Services Agreement (“TSA”) with Bavarian Nordic to help support its ongoing operations. Under the TSA, the Company provides certain transition services to Bavarian Nordic, including information technology, finance and enterprise resource planning, research and development, human resources, employee benefits and other limited services.
In connection with the divestiture, the Company entered into a Transition Services Agreement (the “Bavarian Nordic TSA”) with Bavarian Nordic to help support its ongoing operations. Under the Bavarian Nordic TSA, the Company provided certain transition services to Bavarian Nordic, including information technology, finance and enterprise resource planning, research and development, human resources, employee benefits and other limited services.
Potential Sanctions For all FDA-regulated products, if the FDA finds that a manufacturer has failed to comply with applicable laws and regulations, or that a product is ineffective or poses an unreasonable health risk, it can institute or seek a wide variety of enforcement actions and remedies, including but not limited to: • restrictions on products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on distribution or use of a product; • requirements to conduct post-marketing studies or clinical trials; • warning letters or untitled letters; • withdrawal of the products from the market; 21 • refusal to approve pending applications or supplements to approved applications that are submitted; • recall of products; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • refusal to permit the import or export of our products; • product seizure; and • injunctions or the imposition of civil or criminal penalties.
Potential Sanctions For all FDA-regulated products, if the FDA finds that a manufacturer has failed to comply with applicable laws and regulations, or that a product is ineffective or poses an unreasonable health risk, it can institute or seek a wide variety of enforcement actions and remedies, including but not limited to: • restrictions on products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on distribution or use of a product; • requirements to conduct post-marketing studies or clinical trials; • warning letters or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approved applications that are submitted; • recall of products; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • refusal to permit the import or export of our products; • product seizure; and • injunctions or the imposition of civil or criminal penalties. 21 Health regulatory authorities in other countries have similar rules and regulations although the specifics vary from jurisdiction to jurisdiction.
We will be responsible for manufacturing, selling and distributing Ebanga TM (ansuvimab-zykl) in the U.S. and Canada and Ridgeback will serve as the global access partner. In July 2023, the Company announced it was awarded a 10-year contract by BARDA, valued at up to a maximum of $704 million, for advanced development, manufacturing scale-up, and procurement of Ebanga™. Raxibacumab injection.
We will be responsible for manufacturing, selling and distributing Ebanga TM (ansuvimab-zykl) in the U.S. and Canada and Ridgeback will serve as the global access partner. In July 2023, we announced we were awarded a 10-year contract by BARDA, valued at up to a maximum of $704 million, for advanced development, manufacturing scale-up, and procurement of Ebanga™.
Section 505(b)(2) NDAs often provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products.
Section 505(b)(2) NDAs often provide an alternate path to FDA approval for new or improved formulations, new strengths, new routes of administration or new uses of previously approved products.
ACAM2000 ® vaccine, which is licensed by the FDA and recently licensed by Health Canada, remains the primary smallpox vaccine stockpiled by the USG and offers key features for public health mass vaccination programs that are critical, including a single dose vaccination schedule and multi-dose vial presentation.
ACAM2000 ® vaccine, which is licensed by the FDA for smallpox and mpox, and is licensed in Australia, Canada and Singapore for smallpox, remains the primary smallpox vaccine stockpiled by the USG and offers key features for public health mass vaccination programs that are critical, including a single dose vaccination schedule and multi-dose vial presentation.
TEMBEXA ® faces competition from TPOXX ® (tecovirimat), an oral therapy for the treatment of smallpox disease that was approved by the FDA in July 2018 and is currently procured by the USG for the SNS. TPOXX ® is also approved in Canada and the EU.
In December 2023, TEMBEXA ® received approval by Health Canada. TEMBEXA ® faces competition from TPOXX ® (tecovirimat), an oral therapy for the treatment of smallpox disease that was approved by the FDA in July 2018 and is currently procured by the USG for the SNS. TPOXX ® is also approved in Canada and the EU.
Food and Drug Administration (FDA) Nonprescription Drugs Advisory Committee and the Anesthetic and Analgesic Drug Products Advisory Committee unanimously voted in favor (a total of 19 votes) that the benefit-risk profile of NARCAN ® Nasal Spray was supportive of its use as a nonprescription opioid overdose reversal agent.
On February 15, 2023, the FDA Nonprescription Drugs Advisory Committee and the Anesthetic and Analgesic Drug Products Advisory Committee unanimously voted in favor (a total of 19 votes) that the benefit-risk profile of NARCAN ® Nasal Spray was supportive of its use as a nonprescription opioid overdose reversal agent.
ACAM2000 ® vaccine faces competition from JYNNEOS TM vaccine, which is licensed by the FDA for the prevention of smallpox and mpox disease in adults 18 years of 12 age and older determined to be at high risk for smallpox or mpox infection.
ACAM2000 ® vaccine faces competition from JYNNEOS TM vaccine, which is licensed by the FDA for the prevention of smallpox and mpox disease in adults 18 years of age and older determined to be at high risk for smallpox or mpox infection. JYNNEOS ® vaccine is also approved in Switzerland, Singapore and Mexico.
On December 5, 2023, ACAM2000 ® vaccine received a Notice of Compliance from Health Canada for its Extraordinary Use New Drug Submission (EUNDS) for the indication of active immunization against smallpox disease for persons determined to be at high risk for smallpox infection.
On December 5, 2023, ACAM2000 ® vaccine received a Notice of Compliance from Health Canada for its Extraordinary Use New Drug Submission (EUNDS) for the indication of active immunization against smallpox disease for persons determined to be at high risk for smallpox infection. ACAM2000 ® is also licensed in Australia and Singapore for the smallpox indication.
We have rights to formulations of naloxone used in NARCAN ® Nasal Spray from Indivior PLC (f/k/a Opiant Pharmaceuticals Inc.). The primary customers for NARCAN ® Nasal Spray are state health departments, local law enforcement agencies, community-based organizations, substance abuse centers, federal agencies, and consumers. We completed two important product life cycle improvements in 2020.
We have rights to formulations of naloxone used in NARCAN ® Nasal Spray from Indivior PLC (f/k/a Opiant Pharmaceuticals Inc.). The primary customers for NARCAN ® Nasal Spray are state health departments, local law enforcement agencies, community-based organizations, substance abuse centers, federal agencies, and consumers.
In 2021, AV7909 was granted orphan drug designation by the FDA. Studies have shown that CYFENDUS ® elicits a stronger immune response using fewer doses than BioThrax ® vaccine, which is expected to allow patients to reach a protective level of immunity more rapidly.
In 2021, AV7909 was granted orphan drug designation by the FDA. In July 2023, we received BLA approval for CYFENDUS ® from the FDA. Studies have shown that CYFENDUS ® elicits a stronger immune response using fewer doses than BioThrax ® vaccine, which is expected to allow patients to reach a protective level of immunity more rapidly.
ITEM 1. BUSINESS OVERVIEW We are a global life sciences company focused on providing innovative preparedness and response solutions addressing accidental, deliberate and naturally occurring public health threats ("PHTs"). Our solutions include a product portfolio, a product development portfolio, and a Bioservices portfolio.
ITEM 1. BUSINESS OVERVIEW We are a global life sciences company focused on providing innovative preparedness and response solutions addressing accidental, deliberate and naturally occurring Public Health Threats (“PHTs”). Our solutions include a product portfolio, a product development portfolio, and a contract development and manufacturing (“CDMO”) services portfolio.
The FDA may impose a temporary or permanent clinical hold, or other sanctions, if it believes that a clinical trial is not being conducted in accordance with the FDA requirements or presents an unacceptable risk to the clinical trial subjects. 17 Good Clinical Practice.
The FDA may impose a temporary or permanent clinical hold, or other sanctions, if it believes that a clinical trial is not being conducted in accordance with the FDA requirements or presents an unacceptable risk to the clinical trial subjects. Good Clinical Practice and International Conference on Harmonization ("ICH") Guidelines.
United States, Canada, France (where it is known as BaciThrax ® ), Germany, Italy, the Netherlands, Poland, Singapore and UK CYFENDUS ® (Anthrax Vaccine Adsorbed Adjuvanted) Previously known as AV7909, approved by the FDA for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis in persons 18 through 65 years of age when administered in conjunction with recommended antibacterial drugs.
United States, Canada, France (where it is known as BaciThrax ® ), Germany, Singapore CYFENDUS ® (Anthrax Vaccine Adsorbed Adjuvanted) Vaccine for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis in persons 18 through 65 years of age when administered in conjunction with recommended antibacterial drugs.
Department of Health and Human Services (“HHS”), exercising and funding the third of nine annual contract term extension options (the “Third Option Exercise”) for Emergent to supply ACAM2000 ® to the SNS.
Department of Health and Human Services (“HHS”), exercising and funding the third of nine annual contract term extension options (the “Third Option Exercise”) for Emergent to supply ACAM2000 ® to the SNS. The Third Option Exercise is valued at approximately $120 million.
The period of performance under the Third Option Exercise required Emergent to deliver doses of ACAM2000 ® into the SNS by June 30, 2023 and the Company achieved delivery in this period. ANTHRASIL ® .
The period of performance under the Third and Fifth Option Exercise required Emergent to deliver doses of ACAM2000 ® into the SNS by June 2023 and September 30, 2024, respectively, and the Company achieved delivery in these periods. ANTHRASIL ® .
Belgium* VIGIV CNJ-016 ® [Vaccinia Immune Globulin Intravenous (Human)] Treatment of complications due to vaccinia vaccination, including: • Eczema vaccinatum • Progressive vaccinia; • Severe generalized vaccinia; • Vaccinia infections in individuals who have skin conditions; and • Aberrant infections induced by vaccinia virus (except in cases of isolated keratitis). VIGIV is not indicated for postvaccinial encephalitis.
United States, Canada VIGIV CNJ-016 ® [Vaccinia Immune Globulin Intravenous (Human)] Treatment of complications due to vaccinia vaccination, including: • Eczema vaccinatum • Progressive vaccinia; • Severe generalized vaccinia; • Vaccinia infections in individuals who have skin conditions; and • Aberrant infections induced by vaccinia virus (except in cases of isolated keratitis).
T his vaccine candidate is a recombinant, vesicular stomatitis virus vectored, monovalent vaccine encoding the surface glycoprotein precursor gene of Marburg virus. The development program is partnered with Auro Vaccines and is currently in IND-enabling stage. NIAID is funding Auro Vaccines program with contract options through Phase 1 development. EBS-SUDV.
The development program is partnered with Auro Vaccines and is currently in IND-enabling stage. NIAID is funding Auro Vaccines program with contract options through Phase 1 development. Phase 1 GMP material is expected to be manufactured in 2025. EBS-SUDV. This vaccine candidate is a recombinant, vesicular stomatitis virus vectored, monovalent vaccine encoding the surface glycoprotein precursor gene of Sudan virus.
The types of PHTs we are currently addressing are focused on the following four categories: • chemical, biological, radiological, nuclear and explosives ("CBRNE"); • emerging infectious diseases ("EID"); • public health crises (such as the opioid crisis); and • acute, emergency and community care.
The types of PHTs we are currently addressing are focused on the following four categories: • chemical, biological, radiological, nuclear and explosives (“CBRNE”); • emerging infectious diseases (“EID”); • emerging health crises; and • acute, emergency and community care.
All phases of clinical studies must be conducted in conformance with the FDA’s bioresearch monitoring regulations and Good Clinical Practices ("GCP") which are ethical and scientific quality standards for conducting clinical trials. Marketing Approval – Biologics, Drugs and Vaccines Biologics License Application/New Drug Application .
All phases of clinical studies must be conducted in conformance with the FDA’s bioresearch monitoring regulations and Good Clinical Practices ("GCP"), which include applicable ICH Guidelines and are collectively ethical and scientific quality standards for the conduct and reporting of clinical trials in human subjects. Marketing Approval – Biologics, Drugs and Vaccines Biologics License Application ("BLA")/New Drug Application ("NDA") .
Companies with which we compete to provide bioservices include, among others: Lonza Group Ltd., Catalent, Inc., Thermo Fisher Scientific, Curia Global, Inc., Resilience, Grand River Aseptic Manufacturing, Berkshire Sterile Manufacturing, Jubilant HollisterSteirVetter Pharma, and FUJIFILM Diosynth Biotechnologies.
Companies with which we compete to provide bioservices include, among others: Lonza Group Ltd., Catalent, Inc., Thermo Fisher Scientific, Curia Global, Inc., National Resilience, Grand River Aseptic Manufacturing, Berkshire Sterile Manufacturing, Jubilant HollisterSteirVetter Pharma, and FUJIFILM Diosynth Biotechnologies. We also compete with in-house research, development and support service departments of other biopharmaceutical companies.
The declaration for smallpox, mpox, and other orthopox expires on December 31, 2032. Support Anti-Terrorism by Fostering Effective Technology Act of 2002. The Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (“SAFETY Act”) was enacted to create certain liability limitations for Qualified Anti-Terrorism Technologies (“QATTs”) for claims arising out of, related to, or resulting from an act of terrorism.
Support Anti-Terrorism by Fostering Effective Technology Act of 2002. The Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (“SAFETY Act”) was enacted to create certain liability limitations for Qualified Anti-Terrorism Technologies (“QATTs”) for claims arising out of, related to, or resulting from an act of terrorism.
For the FDA to approve an interchangeable biosimilar product, it must conclude that the product is biosimilar to the reference product, can be expected to produce the same clinical result as the reference product in any given patient, and—for a product that is administered more than once to an individual—alternating or switching between the proposed interchangeable product and the reference product would not create an increased risk in terms of safety or diminished efficacy compared to using the reference product only.
For the FDA to approve an interchangeable biosimilar product, it must conclude that the product is biosimilar to the reference product, can be expected to produce the same clinical result as the reference product in any given patient, and—for a product that is administered more than once to an individual—alternating or switching between the proposed interchangeable product and the reference product would not create an increased risk in terms of safety or diminished efficacy compared to using the reference product only. 18 FDA will not accept a biosimilar application until four years after the date of first licensure of a biological product licensed under section 351(a) of the PHSA, and FDA will not approve a biosimilar application until 12 years after such date of first licensure.
WEVEE VLP vaccine is a recombinant VLP vaccine. The development program is in partnership with NIAID Vaccine Research Center (VRC), who has already completed a Phase 1 clinical trial of the trivalent vaccine, in addition to a monovalent Phase 1 clinical study of the VEEV VLP component only. Description of Services Bioservices .
The development program is in partnership with NIAID Vaccine Research Center (VRC), who has already completed a Phase 1 clinical trial of the trivalent vaccine, in addition to a monovalent Phase 1 clinical study of the VEEV VLP component only. Description of Services Bioservices Our Bioservices are based on our established development and manufacturing infrastructure, technology platforms and expertise.
Our updated priority issues are: • Top Priorities ◦ Talent Attraction, Engagement & Development ◦ Ethics & Compliance ◦ Product Quality & Patient Safety ◦ Sustainable Innovation ◦ Product Affordability & Accessibility ◦ Responsible Supply Chain 24 • Relative Priorities ◦ Carbon Emissions ◦ Climate Policy and Risk Management ◦ Clinical Trial Practices ◦ Diversity, Equity and Inclusion ◦ Employee Health and Safety ◦ Energy Use and Efficiency ◦ Environmental Policy and Management ◦ ESG Oversight ◦ Supplier Product Quality, Reliability and Compliance ◦ Waste Management Sustainability and Environmental Management We recognize that our operations have an impact on our local and global communities from the waste we generate, the energy we source, and the water we discharge.
They are as follows: • Top Priorities ◦ Talent Attraction, Engagement & Development ◦ Ethics & Compliance ◦ Product Quality & Patient Safety ◦ Sustainable Innovation ◦ Product Affordability & Accessibility ◦ Responsible Supply Chain • Relative Priorities ◦ Supplier Product Quality, Reliability and Compliance ◦ Clinical Trial Practices ◦ Employee Health and Safety ◦ Climate Impact ◦ Sustainability and Corporate Responsibility Oversight Corporate Responsibility for Environmental Management We recognize that our operations have an impact on both local and global communities from the energy we source, the waste we generate, and the water we discharge.
For example, the Inflation Reduction Act of 2022 (the “IRA”), was signed into law on August 16, 2022. As written, the IRA will, among other provisions, give HHS the ability and authority to directly negotiate with manufacturers the price that Medicare will pay for certain single-source drugs that account for 22 high Medicare spending.
For example, the Inflation Reduction Act of 2022 (the “IRA”), among other provisions, gives HHS the ability and authority to directly negotiate with manufacturers the price that Medicare will pay for certain single-source drugs that account for high Medicare spending.
The Company has 2 patent families relating to the TEMBEXA ® product including but not limited to, those listed in the Orange Book: 8,962,829, 9,303,051, 9,371,344, 10,112,909, and 10,487,061. The latest expiring United States composition of matter patents expires in 2034. TROBIGARD ® atropine sulfate, obidoxime chloride auto-injector.
The Company has two patent families relating to the TEMBEXA ® product including but not limited to, those listed in the Orange Book: 8,962,829, 9,303,051, 9,371,344, 10,112,909, and 10,487,061. The latest expiring United States composition of matter patents expires in 2034. VIGIV CNJ-016 ® (Vaccinia Immune Globulin Intravenous (Human)).
Our raxibacumab product is indicated for the treatment of adult and pediatric patients with inhalational anthrax in combination with appropriate antibacterial drugs and for prophylaxis of inhalational anthrax when alternative therapies are not available or appropriate. RSDL ® (Reactive Skin Decontamination Lotion Kit) .
Our raxibacumab product is indicated for the treatment of adult and pediatric patients with inhalational anthrax in combination with appropriate antibacterial drugs and for prophylaxis of inhalational anthrax when alternative therapies are not available or appropriate. 8 TEMBEXA ® (brincidofovir) tablets and oral suspension.
EUAs are subject to additional conditions and restrictions, are product-specific, and terminate when the EUA is revoked or the EUA declaration is terminated because the Secretary of HHS has determined that the circumstances that led to the emergency determination have ceased or because the authorized use has been approved. 16 Under PAHPRA, the USG may purchase certain MCMs for the SNS prior to FDA approval, licensure or authorization, under certain circumstances.
EUAs are subject to additional conditions and restrictions, are product-specific, and terminate when the EUA is revoked or the EUA declaration is terminated because the Secretary of HHS has determined that the circumstances that led to the emergency determination have ceased or because the authorized use has been approved.
Regulations Governing Reimbursement The marketing practices of U.S. pharmaceutical manufacturers are also subject to federal and state healthcare laws related to government funded healthcare programs. In the U.S., certain of our products are reimbursed under federal and state health care programs such as Medicaid, Medicare, Tricare, and or state pharmaceutical assistance programs. Many foreign countries have similar laws.
In the U.S., certain of our products are reimbursed under federal and state health care programs such as Medicaid, Medicare, Tricare, and/or state pharmaceutical assistance programs. Many foreign countries have similar laws.
Health regulatory authorities in other countries have similar rules and regulations although the specifics vary from jurisdiction to jurisdiction. Fraud, Abuse and Anti-Corruption Laws The U.S. and most other jurisdictions have detailed requirements that apply to government and private health care programs, and a broad range of fraud and abuse laws, transparency laws, and other laws.
Fraud, Abuse and Anti-Corruption Laws The U.S. and most other jurisdictions have detailed requirements that apply to government and private health care programs, and a broad range of fraud and abuse laws, transparency laws, and other laws.
A grant of an orphan designation is not a guarantee that a product will be approved. Orphan drug exclusivity (afforded to the first applicant to receive approval for an orphan designated drug for a particular rare disease or condition) generally prevents FDA approval of another sponsor’s application for the same drug for the same indication.
Orphan drug exclusivity (afforded to the first applicant to receive approval for an orphan designated drug for a particular rare disease or condition) generally prevents FDA approval of another sponsor’s application for the same drug for the same indication for seven years after approval of the product that received such exclusivity.
Following the acquisition, the 10-year contract with BARDA, valued at up to $680.0 million, to supply up to 1.7 million tablet and suspension formulations of TEMBEXA ® was novated to the Company.
Following the acquisition, the 10-year contract with BARDA, valued at up to $680.0 million, to supply up to 1.7 million tablet and suspension formulations of TEMBEXA ® was novated to the Company, which contract was modified in September 2024 to execute additional procurement options valued at approximately $67.4 million.
The IRA will also require manufacturers of certain Part B and Part D drugs to issue to HHS rebates based on certain calculations and triggers (i.e., when drug prices increase and outpace the rate of inflation).
The IRA will also require manufacturers of certain Part B and Part D drugs to pay to HHS rebates based on certain calculations and triggers (i.e., when drug prices increase and outpace the rate of inflation). The Medicare Drug Price Negotiation Program may affect future Medicare reimbursement for certain of our products.
Alternatively, the ANDA or 505(b)(2) NDA applicant may submit a statement that there are no relevant patents or that a method-of-use patent does not claim a proposed indication or other condition of use for which the applicant is seeking approval. 18 If the RLD’s NDA holder or patent owner initiates patent litigation to enforce an Orange Book-listed patent within 45 days after receiving notice of a paragraph IV certification, the FDA generally is prohibited from approving the application until 30 months from the date of receipt of the paragraph IV notice, although this stay may terminate earlier depending upon the resolution of the litigation, if the court issues an order terminating the stay, or if the patent owner or exclusive patent licensee consents to approval of the application before the expiration of the stay.
If the RLD’s NDA holder or patent owner initiates patent litigation to enforce an Orange Book-listed patent within 45 days after receiving notice of a paragraph IV certification, the FDA generally is prohibited from approving the application until 30 months from the date of receipt of the paragraph IV notice, although this stay may terminate earlier depending upon the resolution of the litigation, if the court issues an order terminating the stay, or if the patent owner or exclusive patent licensee consents to approval of the application before the expiration of the stay.
EU, UK BAT ® Canada, China, EU, Japan, Mexico, Republic of Korea, United Kingdom, U.S. BioThrax ® Australia, Brazil, Canada, EU, India, Malaysia, Saudi Arabia, Singapore, United Kingdom, U.S. CYFENDUS ® U.S. RSDL ® Australia, EU, United Kingdom, U.S.
Anthrasil ® Australia, Canada, Egypt, EU, Israel, Lebanon, Republic of Korea, Qatar, Saudi Arabia, Singapore, Turkey, United Kingdom, United Arab Emirates, U.S. U.S. EU, UK BAT ® Canada, China, EU, Japan, Mexico, Republic of Korea, United Kingdom, U.S. BioThrax ® Australia, Brazil, Canada, EU, India, Malaysia, Saudi Arabia, Singapore, United Kingdom, U.S. BaciThrax ® France CYFENDUS ® U.S.
Human clinical trials typically are conducted in the following three sequential phases. ▪ Phase 1 involves introduction of the drug into healthy human subjects to assess safety, metabolism, pharmacokinetics, pharmacological actions, side effects and early evidence of effectiveness. ▪ Phase 2 involves studies to assess the efficacy of the drug in specific, targeted indications, explore tolerance, optimal dosage, and safety. ▪ Phase 3 trials must assess clinical efficacy and safety in a larger number of healthy subjects or patients, are intended to permit the FDA to evaluate the overall benefit-risk relationship of the product, and provide adequate information for drug labeling.
Human clinical trials typically are conducted in the following three sequential phases. ▪ Phase 1 studies involve introduction of the drug into human subjects (usually healthy, but in some circumstances may include patients) to assess safety, metabolism, pharmacokinetics, pharmacological actions, side effects and early evidence of effectiveness. ▪ Phase 2 involves studies to assess the efficacy of the drug in specific, targeted indications to explore preliminary efficacy, tolerance, optimal dosage, and safety. ▪ Phase 3 involves pivotal trials to assess clinical efficacy and safety in a larger number of healthy subjects or patients.
Because the safety and efficacy of RLDs have already been established by the brand company (sometimes referred to as the innovator), the FDA does not require ANDA applicants to independently demonstrate safety and efficacy of generic products.
Because the safety and efficacy of RLDs have already been established by the brand company (sometimes referred to as the innovator), the FDA does not generally require ANDA applicants to provide preclinical and full clinical data to establish safety and effectiveness.
The approval of a supplemental BLA or certain subsequent BLAs does not give rise to a new date of first licensure, and, consequently, does not yield an additional period of reference product exclusivity. from the date of first licensure of a biological product approved under section 351(a), Moreover, reference product exclusivity does not affect the timing of FDA’s acceptance or approval of a competing sponsor’s section 351(a) BLA containing the sponsor’s own pre-clinical data and data from adequate and well‑controlled clinical trials to demonstrate the safety, purity, and potency of its product.
Moreover, reference product exclusivity does not affect the timing of FDA’s acceptance or approval of a competing sponsor’s section 351(a) BLA containing the sponsor’s own pre-clinical data and data from adequate and well‑controlled clinical trials to demonstrate the safety, purity, and potency of its product.
Additionally, the Federal Trade Commission and many state attorney generals are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data.
Although similar to state consumer privacy laws, these consumer health data laws impose restrictions and obligations beyond state consumer privacy laws. Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data.
A PREP Act declaration is intended to provide liability immunity from claims under federal or state law for loss caused by, arising out of, relating to, or resulting from the administration or use of a covered MCM. The only statutory exception to this immunity is for actions or failures to act that constitute willful misconduct.
The PREP Act is intended to provide liability immunity from claims under federal or state law for loss caused by, arising out of, relating to, or resulting from the administration or use of a covered MCM. The scope of protection will be defined by the specific PREP Act declaration.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThere are a number of risks related to our strategic acquisitions, divestitures and collaborations that could impact our business, financial condition, operating results and cash flows, including: • We may not be successful in identifying, structuring or acquiring businesses and products to drive our growth. • Our failure to successfully integrate acquired businesses and/or assets into our operations and our ability to realize the benefits of such acquisitions. • Our failure to realize the full benefits from the sale of our travel health business to Bavarian Nordic. 27 There are a number of risks associated with our common stock, including, but not limited to: • Our business or our share price could be negatively affected as a result of the actions of stockholders. • The price of our common stock has been and remains subject to extreme volatility.
Biggest changeThere can be no assurance that the SAFETY Act, Public Readiness and Emergency Preparedness Act (the "PREP Act"), or other liability protections will be sufficient to limit or avoid product liability, and defending such cases requires significant resources. • Our ability to maintain sufficient cash flow from our operations to pay our substantial debt, both now and in the future. • Restrictions on the operation of our business and limitations on cash available for investment in our business operations as a result of our current indebtedness. • Our ability to comply with the covenants under our Revolving Credit Facility, Term Loan Facility, Senior Unsecured Notes and any other debt agreements to which we may be a party. • We may not be successful in identifying, structuring or acquiring businesses and products to drive our growth. • Our failure to successfully integrate acquired businesses and/or assets into our operations and our ability to realize the benefits of such acquisitions. • Our failure to realize the full benefits from our divestitures. • Our business or our share price could be negatively affected as a result of the actions of stockholders. • The price of our common stock has been and remains subject to extreme volatility.
All of our development and procurement contracts with the USG are terminable at their convenience with these potential consequences. In addition, our USG contracts grant the USG the right to use technologies developed by us under the government contract or the right to share data related to our technologies, for or on behalf of the USG.
All of our development and procurement contracts with the USG are terminable at their convenience with these potential consequences. In addition, our contracts with the USG grant the USG the right to use technologies developed by us under the government contract or the right to share data related to our technologies, for or on behalf of the USG.
Significant delays in product manufacturing or development and our ability to ramp up production to meet the needs of our customers could cause delays in recognizing revenues, which would harm our business, financial condition, operating results and cash flows. The majority of our products and product candidates are biologics. Manufacturing biologics, especially in large quantities, is complex.
Significant delays in product development or manufacturing and our ability to ramp up production to meet the needs of our customers could cause delays in recognizing revenues, which would harm our business, financial condition, operating results and cash flows. The majority of our products and product candidates are biologics. Manufacturing biologics, especially in large quantities, is complex.
Among other things, HITECH makes HIPAA's security standards directly applicable to “business associates,” or independent contractors or agents of covered entities that create, receive or obtain protected health information in connection with providing a service for or on behalf of a covered entity; • the Physician Payments Sunshine Act and its implementing regulations require certain manufacturers of drugs, biologics, medical devices and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report certain payments and transfers of value made to U.S. physicians, prescribers and teaching hospitals, as well as ownership or investment interests held by physicians, and their immediate family members; and • state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; state, local and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, obtain pharmaceutical agent licensure, and/or otherwise restrict payments that may be made to health care providers and entities; and state, local and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to health care providers or entities, or marketing expenditures.
Among other things, HITECH makes HIPAA's security standards directly applicable to “business associates,” or independent contractors or agents of covered entities that create, receive or obtain protected health information in connection with providing a service for or on behalf of a covered entity; • the Physician Payments Sunshine Act and its implementing regulations require certain manufacturers of drugs, biologics, medical devices and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report certain payments and transfers of value made to U.S. physicians, prescribers and teaching hospitals, as well as ownership or investment interests held by physicians, and their immediate family members; and 37 • state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; state, local and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, obtain pharmaceutical agent licensure, and/or otherwise restrict payments that may be made to health care providers and entities; and state, local and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to health care providers or entities, or marketing expenditures .
The term “remuneration” has been interpreted broadly and may constrain our marketing practices, educational programs, pricing policies and relationships with health care providers or other entities, among other activities; • the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent 37 claims for payment by a federal health care program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability, including mandatory treble damages and significant per-claim penalties. • the U.S. federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statement, in connection with the delivery of, or payment for, health care benefits, items or services.
The term “remuneration” has been interpreted broadly and may constrain our marketing practices, educational programs, pricing policies and relationships with health care providers or other entities, among other activities; • the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal health care program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability, including mandatory treble damages and significant per-claim penalties. • the U.S. federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statement, in connection with the delivery of, or payment for, health care benefits, items or services.
For all FDA-regulated products, if the FDA finds that a manufacturer has failed to comply with applicable laws and regulations, or that a product is ineffective or poses an unreasonable health risk, it can institute or seek a wide variety of enforcement actions and other remedies, including but not limited to: • restrictions on such products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on distribution or use of a product; • requirements to conduct post-marketing studies or clinical trials; • warning letters or untitled letters; • refusal to approve pending applications or supplements to approved applications that are submitted; • delay in or refusal to approve, clear or authorize pending PMA applications, 510(k) premarket submissions, or de novo authorization requests; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • refusal to permit the import or export of our products; • product seizure; and • injunctions or the imposition of civil or criminal penalties.
For all FDA-regulated products, if the FDA finds that a manufacturer has failed to comply with applicable laws and regulations, or that a product is ineffective or poses an unreasonable health risk, it can institute or seek a wide variety of enforcement actions and other remedies, including but not limited to: 35 • restrictions on such products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on distribution or use of a product; • requirements to conduct post-marketing studies or clinical trials; • warning letters or untitled letters; • refusal to approve pending applications or supplements to approved applications that are submitted; • delay in or refusal to approve, clear or authorize pending PMA applications, 510(k) premarket submissions, or de novo authorization requests; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • refusal to permit the import or export of our products; • product seizure; and • injunctions or the imposition of civil or criminal penalties.
Government contracts customarily contain provisions that give the USG substantial rights and remedies, many of which are not typically found in commercial contracts, including provisions that allow the USG to: • terminate existing contracts, in whole or in part, for any reason; • unilaterally reduce or modify contracts or subcontracts; • decline, in whole or in part, to exercise an option to purchase product under a procurement contract or to fund additional development under a development contract; 29 • decline to renew a procurement contract; • claim certain rights to facilities or to products, including intellectual property, developed under the contract; • require repayment of contract funds spent on construction of facilities in the event of contract default; • take actions that result in a longer development timeline than expected; • direct the course of a development program in a manner not chosen by the government contractor; • suspend or debar the contractor from doing business with the government or a specific government agency; • pursue civil or criminal remedies under acts such as the False Claims Act and False Statements Act; and • control or prohibit the export of products.
Government contracts customarily contain provisions that give the USG substantial rights and remedies, many of which are not typically found in commercial contracts, including provisions that allow the USG to: • terminate existing contracts, in whole or in part, for any reason; • unilaterally reduce or modify contracts or subcontracts; • decline, in whole or in part, to exercise an option to purchase product under a procurement contract or to fund additional development under a development contract; • decline to renew a procurement contract; • claim certain rights to facilities or to products, including intellectual property, developed under the contract; • require repayment of contract funds spent on construction of facilities in the event of contract default; • take actions that result in a longer development timeline than expected; • direct the course of a development program in a manner not chosen by the government contractor; • suspend or debar the contractor from doing business with the government or a specific government agency; • pursue civil or criminal remedies under acts such as the False Claims Act and False Statements Act; and • control or prohibit the export of products.
If, in connection with any future inspection, regulatory authorities find that we are not in substantial compliance with all applicable requirements, or if they are not satisfied with the corrective actions we take, our regulators may undertake enforcement action against us, which may include: • warning letters, untitled letters, and other communications; • product seizure or withdrawal of the product from the market; • restrictions on the marketing or manufacturing of a product; • suspension or withdrawal of regulatory approvals or refusal to approve pending applications or other marketing submissions, or supplements to approved applications; • fines or disgorgement of profits or revenue; and • injunctions or the imposition of civil or criminal penalties.
If, in connection with any future inspection, regulatory authorities find that we are not in substantial compliance with all applicable requirements, or if they are not satisfied with the corrective actions we take, our regulators may undertake enforcement action against us, which may include: • warning letters, untitled letters, and other communications; • product seizure or withdrawal of the product from the market; • restrictions on the marketing or manufacturing of a product; 40 • suspension or withdrawal of regulatory approvals or refusal to approve pending applications or other marketing submissions, or supplements to approved applications; • fines or disgorgement of profits or revenue; and • injunctions or the imposition of civil or criminal penalties.
The market price of our common stock may be influenced by many factors, including, among others: • contracts, decisions and procurement policies by the USG affecting our anthrax vaccines and our other products and product candidates; • the success of competitive products or technologies; • results of clinical and non-clinical trials of our product candidates; • announcements of acquisitions, financings or other transactions by us; • litigation or legal proceedings; • public concern as to the safety of our products; • termination or delay of a development program; • the recruitment or departure of key personnel; • variations in our product revenue and profitability; and • the other factors described in this “Risk Factors” section.
The market price of our common stock may be influenced by many factors, including, among others: • contracts, decisions and procurement policies by the USG affecting our anthrax vaccines and our other products and product candidates; • the success of competitive products or technologies; • results of clinical and non-clinical trials of our product candidates; 53 • announcements of acquisitions, financings or other transactions by us; • litigation or legal proceedings; • public concern as to the safety of our products; • termination or delay of a development program; • the recruitment or departure of key personnel; • variations in our product revenue and profitability; and • the other factors described in this “Risk Factors” section.
A number of factors could cause interruptions, including: • equipment malfunctions or failures; 30 • technology malfunctions; • cyber-attacks; • work stoppages or slowdowns; • civil unrest and protests, including by animal rights activists; • injunctions; • damage to or destruction of our manufacturing equipment, or of one or more of our facilities; • findings and recommendations of health authorities or qualified persons in connection with facility inspections; • ongoing supply chain interruptions; and • product contamination or tampering.
A number of factors could cause interruptions, including: • equipment malfunctions or failures; • technology malfunctions; • cyber-attacks; • work stoppages or slowdowns; • civil unrest and protests, including by animal rights activists; • injunctions; • damage to or destruction of our manufacturing equipment, or of one or more of our facilities; • findings and recommendations of health authorities or qualified persons in connection with facility inspections; • ongoing supply chain interruptions; and • product contamination or tampering.
If we are unable to locate or establish alternative suppliers, our ability to manufacture our products and product candidates could be adversely affected and could harm our revenues, cause us to fail to satisfy contractual commitments, lead to a termination of one or more of our contracts or lead to delays in our clinical trials, any of which could be costly to us and otherwise materially harm our business, financial condition, operating results and cash flows.
If we 45 are unable to locate or establish alternative suppliers, our ability to manufacture our products and product candidates could be adversely affected and could harm our revenues, cause us to fail to satisfy contractual commitments, lead to a termination of one or more of our contracts or lead to delays in our clinical trials, any of which could be costly to us and otherwise materially harm our business, financial condition, operating results and cash flows.
Accordingly, any damage to, or disruption or destruction of one or more of our facilities could impede our ability to manufacture our products, and our product candidates and our ability to provide manufacturing and development services for external customers, result in losses and delays, including delays in the performance of our contractual obligations or delays in our clinical trials, any of which could be costly to us and materially harm our business, financial condition, operating results and cash flows.
Accordingly, any damage to, or destruction of, or disruption at one or more of our facilities could impede our ability to manufacture our products, and our product candidates and our ability to provide manufacturing and development services for external customers, result in losses and delays, including delays in the performance of our contractual obligations or delays in our clinical trials, any of which could be costly to us and materially harm our business, financial condition, operating results and cash flows.
These provisions include: • the classification of our directors; • limitations on changing the size of our board of directors; • limitations on the removal of directors; • limitations on filling vacancies on the board of directors; 53 • advance notice requirements for stockholder nominations of candidates for election to the board of directors and other proposals to be voted on at meetings of stockholders; • the inability of stockholders to act by written consent; • the inability of stockholders to call special meetings; and • the ability of our board of directors to designate the terms of and issue a new series of preferred stock without stockholder approval.
These provisions include: • the classification of our directors; • limitations on changing the size of our board of directors; • limitations on the removal of directors; • limitations on filling vacancies on the board of directors; • advance notice requirements for stockholder nominations of candidates for election to the board of directors and other proposals to be voted on at meetings of stockholders; • the inability of stockholders to act by written consent; • the inability of stockholders to call special meetings; and • the ability of our board of directors to designate the terms of and issue a new series of preferred stock without stockholder approval.
Issues that could delay or prevent successful integration or cost synergies of an acquired business or products include, among others: • retaining existing customers and attracting new customers; • retaining key employees; • diversion of management attention and resources; • conforming internal controls, policies and procedures, business cultures and compensation programs; • consolidating corporate and administrative infrastructures; • successfully executing technology transfers and obtaining required regulatory approvals; • consolidating sales and marketing operations; 52 • identifying and eliminating redundant and underperforming operations and assets; • assumption of known and unknown liabilities; • coordinating geographically dispersed organizations; • managing tax costs or inefficiencies associated with integrating operations; and • risks associated with intellectual property rights related to an acquisition or collaboration, including but not limited to, license rights, freedom-to-operate, litigation, and loss of proprietary confidential information, know-how, and trade secrets.
Issues that could delay or prevent successful integration or cost synergies of an acquired business or products include, among others: • retaining existing customers and attracting new customers; • retaining key employees; • diversion of management attention and resources; • conforming internal controls, policies and procedures, business cultures and compensation programs; • consolidating corporate and administrative infrastructures; • successfully executing technology transfers and obtaining required regulatory approvals; 51 • consolidating sales and marketing operations; • identifying and eliminating redundant and underperforming operations and assets; • assumption of known and unknown liabilities; • coordinating geographically dispersed organizations; • managing tax costs or inefficiencies associated with integrating operations; and • risks associated with intellectual property rights related to an acquisition or collaboration, including but not limited to, license rights, freedom-to-operate, litigation, and loss of proprietary confidential information, know-how, and trade secrets.
As part of state settlements, including in Florida, Texas, Rhode Island, and West Virginia, Teva has agreed to supply Medication- Assisted Treatment 43 (“MAT”) and generic opioid overdose reversal agents, like naloxone, to states at no cost in lieu of additional monetary compensation. The terms of these product donation agreements stretch 10 to 15 years.
As part of state settlements, including in Florida, Texas, Rhode Island, and West Virginia, Teva has agreed to supply Medication- Assisted Treatment (“MAT”) and generic opioid overdose reversal agents, like naloxone, to states at no cost in lieu of additional monetary compensation. The terms of these product donation agreements stretch 10 to 15 years.
If our employees or agents engage in marketing of an unapproved/uncleared product or the unapproved/uncleared use of an approved/cleared product, we could be subject 41 to civil or criminal investigations and monetary and injunctive penalties, which could adversely impact our ability to conduct business in certain markets, negatively affect our business, financial condition, operating results and cash flows, and damage our reputation.
If our employees or agents engage in marketing of an unapproved/uncleared product or the unapproved/uncleared use of an approved/cleared product, we could be subject to civil or criminal investigations and monetary and injunctive penalties, which could adversely impact our ability to conduct business in certain markets, negatively affect our business, financial condition, operating results and cash flows, and damage our reputation.
The market for current products can also depend on what resources can be devoted to marketing or selling products, or how companies are positioned to adapt more quickly to new technologies, respond to scientific advances or patient preferences and needs, initiate or withstand substantial price competition and/or procure third-party licensing and collaborative arrangements.
The market for current products can also depend on what resources can be devoted to marketing or selling products, or how companies are positioned to adapt more quickly to new 42 technologies, respond to scientific advances or patient preferences and needs, initiate or withstand substantial price competition and/or procure third-party licensing and collaborative arrangements.
If our operations are found to be in violation of any of these laws, we may be subject to significant civil, criminal and administrative penalties, damages, fines, individual imprisonment, integrity obligations, exclusion from government funded health care programs, such as Medicare and 38 Medicaid, and the curtailment or restructuring of our operations.
If our operations are found to be in violation of any of these laws, we may be subject to significant civil, criminal and administrative penalties, damages, fines, individual imprisonment, integrity obligations, exclusion from government funded health care programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.
Our decisions to allocate our R&D, management and financial resources toward particular product candidates or therapeutic areas may not lead to the development of viable commercial products and may divert resources from better business opportunities. Similarly, our decisions to delay or terminate product development programs could also cause us to miss valuable opportunities.
Our decisions to allocate our R&D, management and financial resources toward particular product candidates or therapeutic areas may not lead to the development of viable commercial products and may divert 33 resources from better business opportunities. Similarly, our decisions to delay or terminate product development programs could also cause us to miss valuable opportunities.
There is also a risk that our communications with governments about our unapproved/uncleared products, such as in the procurement context, could be considered promotion of an unapproved/uncleared product or unapproved/uncleared use of an approved 40 product. Therefore, there is a risk that we could be subject to enforcement actions if found to be in violation of such laws or regulations.
There is also a risk that our communications with governments about our unapproved/uncleared products, such as in the procurement context, could be considered promotion of an unapproved/uncleared product or unapproved/uncleared use of an approved product. Therefore, there is a risk that we could be subject to enforcement actions if found to be in violation of such laws or regulations.
There can be no assurance that we will be able to secure follow-on product procurement contracts with the USG upon the expiration of any of our existing procurement contracts. 28 A significant portion of our revenue is substantially dependent upon product procurement contracts with the USG and foreign governments for our MCMs and other commercialized products.
There can be no assurance that we will be able to secure follow-on product procurement contracts with the USG upon the expiration of any of our existing procurement contracts. A significant portion of our revenue is substantially dependent upon product procurement contracts with the USG and foreign governments for our MCMs and other commercialized products.
Although we maintain and follow strict procedures to ensure the maximum possible integrity for our federal pricing calculations, the process for making the required calculations is complex, involves some subjective judgments and the risk of 39 errors always exists, which creates the potential for exposure under the false claims laws.
Although we maintain and follow strict procedures to ensure the maximum possible integrity for our federal pricing calculations, the process for making the required calculations is complex, involves some subjective judgments and the risk of errors always exists, which creates the potential for exposure under the false claims laws.
As we continue to expand our commercialization activities outside of the United States, we are subject to an increased risk of violating, and must dedicate additional resources towards avoiding inadvertently conducting activities in a manner that violates, the U.S. Foreign Corrupt Practices Act (the "FCPA"), the U.K.
As we continue to expand our activities outside of the United States, we are subject to an increased risk of violating, and must dedicate additional resources towards avoiding inadvertently conducting activities in a manner that violates, the U.S. Foreign Corrupt Practices Act (the "FCPA"), the U.K.
If we become aware that our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are obligated to resubmit the corrected data for a period not to exceed twelve quarters from the quarter in which the data originally were due.
If we become aware that our reporting for a prior 38 quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are obligated to resubmit the corrected data for a period not to exceed twelve quarters from the quarter in which the data originally were due.
NARCAN ® (naloxone HCl) Nasal Spray may also face additional generic and branded competition in the future. Political or social factors may delay or impair our ability to market and sell our products and may require us to spend significant management time and financial resources to address these issues.
NARCAN ® (naloxone HCl) Nasal Spray may also face additional generic and branded competition in the future. 43 Political or social factors may delay or impair our ability to market and sell our products and may require us to spend significant management time and financial resources to address these issues.
Our systems and information are also potentially vulnerable to cyber security incidents through user error, phishing scams, or malfeasance, as well as cyber security incidents involving our employees, business partners, collaborators or other third parties, any of which may expose sensitive data to unauthorized persons.
Our systems and information are also potentially vulnerable to cybersecurity incidents through user error, phishing scams, or malfeasance, as well as cyber-security incidents involving our employees, business partners, collaborators or other third parties, any of which may expose sensitive data to unauthorized persons.
Compliance with current or future laws and regulations in this area can require significant costs and we could be subject to substantial fines and penalties in the event of noncompliance. In addition, the risk of contamination or injury from these materials cannot be completely eliminated.
Compliance with current or future laws and regulations in this area can require significant costs and we could be subject to substantial 31 fines and penalties in the event of noncompliance. In addition, the risk of contamination or injury from these materials cannot be completely eliminated.
Many countries, including the United States, restrict the export or import of products to or from certain countries through, for example, bans, sanction programs, and boycotts. Such restrictions may preclude us from supplying products in certain countries, 42 which could limit our growth potential.
Many countries, including the United States, restrict the export or import of products to or from certain countries through, for example, bans, sanction programs, and boycotts. Such restrictions may preclude us from supplying products in certain countries, which could limit our growth potential.
In addition to our product sales, our ability to generate revenue is dependent on a number of factors, including the success of our development programs, the USG's interest in providing development funding for or procuring certain of our product candidates, and the commercial viability of our acquired or developed 32 product candidates.
In addition to our product sales, our ability to generate revenue is dependent on a number of factors, including the success of our development programs, the USG's interest in providing development funding for or procuring certain of our product candidates, and the commercial viability of our acquired or developed product candidates.
If one or more legal matters were resolved against us or an indemnified third party in a reporting period for amounts above management’s expectations, our financial condition and operating results for that reporting period could be materially adversely affected.
If one or more legal matters were resolved against us or an indemnified third party in a reporting period for amounts above management’s 46 expectations, our financial condition and operating results for that reporting period could be materially adversely affected.
Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed, or to conditions of approval, or contain 34 requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product.
Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed, or to conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product.
Violations of the FDCA and other statutes, including the False Claims 35 Act, relating to the promotion and advertising of prescription products may lead to investigations and enforcement actions alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.
Violations of the FDCA and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription products may lead to investigations and enforcement actions alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.
Additionally, the FDA may revoke orphan drug designation if the FDA determines that the request for designation contained an untrue statement of material fact, omitted 44 material information, or the FDA subsequently finds that the drug in fact had not been eligible for orphan drug designation at the time of submission of the request for designation.
Additionally, the FDA may revoke orphan drug designation if the FDA determines that the request for designation contained an untrue statement of material fact, omitted material information, or the FDA subsequently finds that the drug in fact had not been eligible for orphan drug designation at the time of submission of the request for designation.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As a result, when we are party to such interest rate swaps, we are subject to the risk that the counterparty to one or more of these contracts defaults on its performance under the 49 contract.
As a result, when we are party to such interest rate swaps, we are subject to the risk that the counterparty to one or more of these contracts defaults on its performance under the contract.
The number of claims, legal proceedings and government investigations involving us, and the alleged magnitude of such claims, proceedings and government investigations, has generally increased over time and may continue to 46 increase.
The number of claims, legal proceedings and government investigations involving us, and the alleged magnitude of such claims, proceedings and government investigations, has generally increased over time and may continue to increase.
Because we currently do not pay dividends, investors will benefit from an investment in our common stock only if it appreciates in value. 54 We currently do not pay dividends on our common stock.
Because we currently do not pay dividends, investors will benefit from an investment in our common stock only if it appreciates in value. We currently do not pay dividends on our common stock.
If we are unable to satisfy USG requirements for the release of our products or product candidates, our ability to supply such products and product candidates to authorized buyers would be impaired until such time as we become able to meet such requirements, which could materially harm our future business, financial condition, operating results and cash flows.
If we are unable to satisfy regulatory authority and/or USG requirements for the release of our products or product candidates, our ability to supply such products and product candidates to authorized buyers would be impaired until such time as we become able to meet such requirements, which could materially harm our future business, financial condition, operating results and cash flows.
Difficulties manufacturing COVID-19 product candidates for certain Bioservices customers and the November 2021 termination of the termination of the Center for Innovation in Advanced Development and Manufacturing agreement with BARDA for COVID-19 vaccine development and manufacturing caused us to suffer considerable reputational and financial damage and resulted in the instigation of stockholder litigation and government investigations described elsewhere in this Annual Report.
Difficulties manufacturing COVID-19 product candidates for certain Bioservices customers and the November 2021 termination of the Center for Innovation in Advanced Development and Manufacturing agreement with BARDA for COVID-19 vaccine development and manufacturing caused us to suffer considerable reputational and financial damage and resulted in the initiation of stockholder litigation and government investigations described elsewhere in this Annual Report.
If we cannot offer a competitive compensation package to attract and retain the qualified personnel necessary for the continued development of our business, we may not be able to maintain our operations or grow our business. 55 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
If we cannot offer a competitive compensation package to attract and retain the qualified personnel necessary for the continued development of our business, we may not be able to maintain our operations or grow our business. 54 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services, which could result in reduced demand for our products or additional pricing pressures.
The market price of our common stock could fluctuate significantly for many reasons, including in response to the risks described in this “Risk Factors” section, or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as we ll as industry conditions and general financial, economic and political instability.
The market price of our common stock could fluctuate significantly for many reasons, including in response to the risks described in this “Risk Factors” section, or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability.
Sales of generic versions of NARCAN ® Nasal Spray at prices lower than our branded product or provided at no cost by Teva, Padagis and Amneal (pending approval) have the potential to erode our sales and could impact our product revenue related to NARCAN ® Nasal Spray.
Sales of generic versions of NARCAN ® Nasal Spray at prices lower than our branded product or provided at no cost by Teva, Padagis and Amneal have the potential to erode our sales and could impact our product revenue related to NARCAN ® Nasal Spray.
From time to time, we may experience deviations in the manufacturing process that may take significant time and resources to resolve and, if unresolved, may affect manufacturing output and could cause us to fail to satisfy customer orders or contractual commitments, lead to a termination of one or more of our contracts, lead to delays in our clinical trials, result in litigation, or other restrictions on the marketing or manufacturing of a product, any of which could be costly to us, damage our reputation and negatively impact our business.
From time to time, we may experience deviations in the manufacturing process, including as a result of regulatory action, that may take significant time and resources to resolve and, if unresolved, may affect manufacturing output and could cause us to fail to satisfy customer orders or contractual commitments, lead to a termination of one or more of our contracts, lead to delays in our clinical trials, result in litigation, or other restrictions on the marketing or manufacturing of a product, any of which could be costly to us, damage our reputation and negatively impact our business.
Additionally, certain of our products, namely BioThrax ® and RSDL ® , are under the SAFETY Act, which provides certain product liability limitations for qualifying anti-terrorism technologies for claims arising from or related to an act of terrorism.
Additionally, certain of our products, namely BioThrax ® , are under the SAFETY Act, which provides certain product liability limitations for qualifying anti-terrorism technologies for claims arising from or related to an act of terrorism.
Certain of our products are approved as drug products under the provisions of the FDCA, which may render it susceptible to potential competition from generic manufacturers via the Hatch-Waxman Act and ANDA process. Other of our products may be susceptible to challenges by entry of biosimilars through the route established under the Biologics Price Competition and Innovation Action of 2009.
Certain of our products are approved as drug products under the provisions of the FDCA, which may render them susceptible to potential competition from generic manufacturers via the Hatch-Waxman Act and ANDA process. Other of our products may be susceptible to challenges by entry of biosimilars through the route established under the Biologics Price Competition and Innovation Act of 2009.
The complaints, allege, among other things, that we made materially false and misleading statements regarding our procedures and quality controls relating to vaccine production, in violation of federal securities laws.
The complaints alleged, among other things, that we made materially false and misleading statements regarding our procedures and quality controls relating to vaccine production, in violation of federal securities laws.
While the Company has experienced non-material cyber incidents involving third-party vendors, the Company’s continued use of third parties in its business yields the potential for material cyber security incidents that may harm business operations.
While the Company has experienced non-material cyber incidents involving third-party vendors, the Company’s continued use of third parties in its business yields the potential for material cybersecurity incidents that may harm business operations.
Cyber security incidents could lead to the loss of trade secrets or other intellectual property or the public exposure of personal information, including sensitive personal information, of our employees, clinical trial patients, customers and others. Responding to any such threats may also be expensive and time-consuming.
Cybersecurity incidents could lead to the loss of trade secrets or other intellectual property or the public exposure of personal information, including sensitive personal information, of our employees, clinical trial patients, customers and others. Responding to any such threats may also be expensive and time-consuming.
Failure to meet potency, stability or other specification requirements could result in delays in distributions, recalls or other consequences. In November 2022, three lots of our RSDL ® kits was recalled due to leakage (the "November 2022 Recall"), which could cause the product not to perform as effectively as intended.
Failure to meet potency, stability or other specification requirements could result in delays in distributions, recalls or other consequences. In November 2022, three lots of RSDL ® kits were recalled due to leakage (the "November 2022 Recall"), which could cause the product not to perform as effectively as intended.
For example, multiple purported class action lawsuits have been filed against us and certain of our current and former senior officers in the United States District Court for the District of Maryland seeking unspecified damages on behalf of a putative class of persons who purchased or otherwise acquired shares of our common stock during various date ranges.
For example, in 2021, multiple purported class action lawsuits were filed against us and certain of our current and former senior officers in the United States District Court for the District of Maryland seeking unspecified damages on behalf of a putative class of persons who purchased or otherwise acquired shares of our common stock during various date ranges.
We purchase certain supplies used in our manufacturing processes from non-exclusive, or single sources due to quality considerations, costs or constraints resulting from regulatory requirements. We depend on certain single-source suppliers for key materials and services necessary to manufacture the majority of our products and certain product candidates.
We purchase certain supplies used in our manufacturing processes from non-exclusive, or single sources due to quality considerations, costs or constraints resulting from regulatory requirements. We depend on certain single-source suppliers for key materials, manufacturing and other services necessary to produce and release the majority of our products and certain product candidates.
Department of Agriculture and the DoD, as well as regulatory authorities in Canada. PRODUCT DEVELOPMENT AND COMMERCIALIZATION RISKS The product candidates that we work on for our Bioservices customers may not be safe or effective and even if they are, we may be unable to manufacture sufficient quantities to meet demand.
Department of Agriculture and the DoD, as well as regulatory authorities in Canada. PRODUCT DEVELOPMENT AND COMMERCIALIZATION RISKS The product candidates that we work on internally or for third-party customers may not be safe or effective and even if they are, we may be unable to manufacture sufficient quantities to meet demand.
If the USG’s demand for and/or funding for procurement of CYFENDUS ® , BioThrax ® , ACAM2000 ® and/or TEMBEXA ® are substantially reduced, our business, financial condition, operating results and cash flows would be materially harmed. We derive a substantial portion of our current and expected future revenues from USG procurement of CYFENDUS ® .
If the USG’s demand for and/or funding for procurement of these products are substantially reduced, our business, financial condition, operating results and cash flows would be materially harmed. We derive a substantial portion of our current and expected future revenues from USG procurement of CYFENDUS ® .
The Company's failure to maintain compliance with CGMP requirements at our manufacturing facilities has hindered and could continue to hinder our ability to continue manufacturing for our own products and for Bioservices customers, which could adversely affect our business, financial condition, operating results and cash flows.
The FDA conducts periodic inspections of our manufacturing facilities for compliance with CGMP requirements. The Company's failure to maintain compliance with CGMP requirements at our manufacturing facilities has hindered and could continue to hinder our ability to continue manufacturing for our own products and for Bioservices customers, which could adversely affect our business, financial condition, operating results and cash flows.
We rely on PREP Act protection for BioThrax ® , raxibacumab, ACAM2000 ® , Anthrasil ® , BAT ® and VIGIV products, and SAFETY Act protection for BioThrax ® and RSDL ® products in addition to our insurance coverage to help mitigate our product liability exposure for these products.
We rely on PREP Act protection for BioThrax ® , raxibacumab, ACAM2000 ® , CYFENDUS ® , Anthrasil ® , BAT ® and VIGIV CNJ-016 ® products, and SAFETY Act protection for BioThrax ® in addition to our insurance coverage to help mitigate our product liability exposure for these products.
Additionally, there has been recent heightened federal governmental scrutiny over the manner in which manufacturers set prices for their marketed products.
There has been continued heightened federal governmental scrutiny over the manner in which manufacturers set prices for their marketed products.
In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the health care system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval.
In the United States and foreign jurisdictions, there have been a number of policy, legislative and regulatory changes and proposed changes regarding the health care system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any approved products.
Debt financing can have significant adverse consequences for our business, including: 48 • requiring us to dedicate a substantial portion of cash flows from operations to payment on our debt, which would reduce available funds for other corporate initiatives; • increasing the amount of interest that we have to pay on debt with variable interest rates, if market rates of interest increase, to the extent we are unable to offset such risk through our hedging instruments; • subjecting us, as under our Senior Secured Credit Facilities and the indenture governing the Senior Unsecured Notes, to restrictive covenants that reduce our ability to take certain corporate actions, acquire companies, products or technology, or obtain further debt financing; • requiring us to pledge our assets as collateral, which could limit our ability to obtain additional debt financing; • limiting our flexibility in planning for, or reacting to, general adverse economic and industry conditions; and • placing us at a competitive disadvantage compared to our competitors that have less debt, better debt servicing options or stronger debt servicing capacity.
Debt financing can have significant adverse consequences for our business, including: • requiring us to dedicate a substantial portion of cash flows from operations to payment on our debt, which would reduce available funds for other corporate initiatives; • increasing the amount of interest that we have to pay on debt with variable interest rates, if market rates of interest increase, to the extent we are unable to offset such risk through our hedging instruments; 48 • subjecting us, as under our Senior Secured Credit Facilities and the indenture governing the Senior Unsecured Notes, to restrictive covenants that reduce our ability to take certain corporate actions, acquire companies, products or technology, or obtain further debt financing; • requiring us to pledge our assets as collateral, which could reduce financial flexibility; and • increasing our exposure to adverse economic and industry conditions, furthering disadvantaging us against our competitors that have less debt, better debt servicing options or stronger debt servicing capacity.
An EUA terminates when the EUA is revoked or the emergency declaration underlying the EUA terminates. An EUA is not a long-term alternative to obtaining FDA approval, licensure, clearance, or other marketing authorization for a product. An EUA has not been granted for TROBIGARD ® .
An EUA terminates when the EUA is revoked or the emergency declaration underlying the 39 EUA terminates. An EUA is not a long-term alternative to obtaining FDA approval, licensure, clearance, or other marketing authorization for a product.
Some of the risks associated with procurement, maintenance and enforcement of intellectual property rights include changes in patent laws or administrative patent office rules, evolving criteria and eligibility of obtaining patent protection on particular subject matter, the validity and enforceability of our intellectual property rights, the potential scope of coverage of our intellectual property rights, and/or the availability or strength of legal remedies in a particular country to defend and enforce intellectual property rights.
Some of the risks associated with procurement, maintenance and enforcement of intellectual property rights include changes in patent laws or administrative patent office rules, evolving criteria and eligibility of obtaining patent protection on particular subject matter, the validity and enforceability of our intellectual property rights, the potential scope of coverage of our intellectual property rights, and/or the availability or strength of legal remedies in a particular country to defend and enforce intellectual property rights. 44 Other risks include associated costs, such as costs of patent prosecution and maintenance and costs associated with post-grant challenges.
Disruption at, damage to or destruction of, our manufacturing facilities could impede our ability to manufacture anthrax vaccines, our ACAM2000 ® vaccine or our other products or product candidates, as well as impact the delivery of bioservices, which would harm our business, financial condition, operating results and cash flows.
Damage to, destruction of, or any disruption at our manufacturing facilities could impede our ability to manufacture our products or product candidates, as well as impact the delivery of bioservices to third parties, which would harm our business, financial condition, operating results and cash flows.
In addition, in the past we have derived a substantial portion of our revenues from sales of ACAM2000 ® vaccine to the USG.
In addition, we derive a substantial portion of our revenues from sales of ACAM2000 ® vaccine to the USG.
If we cannot successfully defend ourselves against future claims that our products or product candidates caused injuries and if we are not entitled to indemnity by the USG, or the USG does not honor its obligations to us under the PREP Act or SAFETY Act, or if the liability protections under the PREP Act and SAFETY Act are not adequate to cover all claims, we may incur substantial liabilities.
Although BioThrax ® is designated and certified under the SAFETY Act, the law may not provide adequate protection from claims made against us. 47 If we cannot successfully defend ourselves against future claims that our products or product candidates caused injuries and if we are not entitled to indemnity by the USG, or the USG does not honor its obligations to us under the PREP Act or SAFETY Act, or if the liability protections under the PREP Act and SAFETY Act are not adequate to cover all claims, we may incur substantial liabilities.
In addition, many institutional investors are increasingly focused on environmental, social, and corporate governance ("ESG") factors. These investors may be seeking enhanced ESG disclosures or to implement policies adverse to our business. There can be no assurances that stockholders will not publicly advocate for us to make corporate governance changes or engage in certain corporate actions.
In addition, certain institutional investors may continue to focus on sustainability and corporate responsibility factors. These investors may be seeking enhanced ESG disclosures or to implement policies adverse to our business. There can be no assurances that stockholders will not publicly advocate for us to make corporate governance changes or engage in certain corporate actions.
For example, we performed recoverability tests on certain asset groups within the Bioservices reporting unit during the three months ended June 30, 2023, and allocated and recognized a non-cash impairment charge of $306.7 million during the three months ended June 30, 2023 related to certain Bioservices long-lived assets.
For example, we performed recoverability tests on the Bayview and Rockville asset groups within the Bioservices reporting unit during the three months ended June 30, 2024, and recognized a non-cash impairment charge of $27.2 million during the three months ended June 30, 2024 related to certain Bioservices long-lived assets.
Under certain and narrow circumstances, MCMs may be procured by government entities prior to approval by the FDA or other regulatory authorities, a practice which we follow in connection with certain MCMs, including TROBIGARD ® (and CYFENDUS ® , prior to its approval by the FDA) in the United States.
Under certain and narrow circumstances, MCMs may be procured by government entities prior to approval by the FDA or other U.S. regulatory authorities, a practice which we followed in connection with CYFENDUS ® prior to its approval by the FDA.
While the IRA is still subject to rulemaking (with more information to come via guidance documents from the responsible federal agencies), the IRA, as written, will, among other changes, give HHS the ability and authority to directly negotiate with manufacturers the price that Medicare will pay for certain high-priced drugs.
While the IRA is still subject to rulemaking (and currently is being implemented through guidance documents from the responsible federal agencies), the IRA, as written, among other changes, gives HHS the ability and authority to directly negotiate with manufacturers the price that Medicare will pay for certain high-priced drugs.
The expansion of our international operations increases our risk of exposure to credit losses. As we continue to expand our business activities with foreign governments in certain countries that have experienced deterioration in credit and economic conditions or otherwise, our exposure to uncollectible accounts will rise.
As we continue to expand our business activities with foreign governments in certain countries that have experienced deterioration in credit and economic conditions or otherwise, our exposure to uncollectible accounts will rise.
To market or sell our products in foreign jurisdictions under normal circumstances, we generally need to obtain separate regulatory approvals and comply with numerous and varying requirements or use alternative “emergency use” or other exemptions from general approval and import requirements.
We currently have market authorization under the mutual recognition procedure to sell BioThrax ® in France and Germany. To market or sell our products in foreign jurisdictions under normal circumstances, we generally need to obtain separate regulatory approvals and comply with numerous and varying requirements or use alternative “emergency use” or other exemptions from general approval and import requirements.
There can be no assurance that we will be able to realize in full the expected benefits of the transaction. If we are unable to or do not realize the expected strategic, economic, or other benefits of the transaction, it could adversely affect our business and financial position.
There can be no assurance that we will be able to realize in full the expected benefits of these transactions, including as to whether any milestone payments will be received. If we are unable to or do not realize the expected strategic, economic, or other benefits of these transactions, it could adversely affect our business and financial position.
A significant business disruption or a breach in security resulting in misappropriation, theft or sabotage with respect to proprietary or confidential business or employee information could result in significant financial losses, legal, business or reputational harm to us, compromise our business prospects and our commitments to the USG or other customers, any of which could materially and adversely affect our business, financial condition and operating results. 47 W e face product liability exposure, which could cause us to incur substantial liabilities and negatively affect our business, financial condition and results of operations.
A significant business disruption or a breach in security resulting in misappropriation, theft or sabotage with respect to proprietary or confidential business or employee information could result in significant financial losses, legal, business or reputational harm to us, compromise our business prospects and our commitments to the USG or other customers, any of which could materially and adversely affect our business, financial condition and operating results.
There can be no assurance that we will be eligible to file a shelf registration statement or to have such a shelf registration statement become effective after such period, which may inhibit our ability to access the capital markets to raise funds. If we raise funds by issuing equity securities, including through our ATM Program, our stockholders may experience dilution.
There can be no assurance that we will have such a shelf registration statement become effective in the future, which may inhibit our ability to access the capital markets to raise funds. If we raise funds by issuing equity securities, including through a new shelf registrations statement, our stockholders may experience dilution.
Our profitability has been substantially dependent on product sales, which historically have fluctuated significantly from quarter to quarter, and we expect that they will continue to fluctuate significantly based primarily on the timing of our fulfillment of orders from the USG.
We may not maintain profitability in future periods or on a consistent basis. Our profitability has been substantially dependent on product sales, which historically have fluctuated significantly from quarter to quarter, and we expect that they will continue to fluctuate significantly based primarily on the timing of our fulfillment of orders from the USG.
Other risks include associated costs, such as costs of patent prosecution and maintenance and costs associated with post-grant challenges. For example, such costs include inter partes review proceedings in the United States and oppositions in Europe, as well as costs associated with litigating and enforcing patent and trademark rights.
For example, such costs include inter partes review proceedings in the United States and oppositions in Europe, as well as costs associated with litigating and enforcing patent and trademark rights.
The commercial success of our product candidates can depend on many factors, including accomplishing the following in an economical manner: • successful development, formulation and CGMP or Quality System Regulation ("QSR") scale-up of manufacturing that meets FDA and/or foreign regulatory requirements; • successful program partnering; • successful completion of clinical or non-clinical development; • receipt of marketing approvals, clearances, or other authorizations from the FDA and equivalent foreign regulatory authorities; • establishment of commercial manufacturing processes and product supply arrangements; • training of a commercial sales force for the product; • successful registration and maintenance of relevant patent and/or other proprietary protection; • competitive pricing and market access; and • acceptance of the product by potential government and other customers.
The commercial success of our product candidates can depend on many factors, including accomplishing the following in an economical manner: • successful development, formulation and CGMP or Quality System Regulation ("QSR") scale-up of manufacturing that meets FDA and/or foreign regulatory requirements; • successful program partnering; • successful completion of clinical or non-clinical development; • receipt of marketing approvals, clearances, or other authorizations from the FDA and equivalent foreign regulatory authorities; • establishment of commercial manufacturing processes and product supply arrangements; • training of a commercial sales force for the product; • successful registration and maintenance of relevant patent and/or other proprietary protection; • competitive pricing and market access; and • acceptance of the product by potential government and other customers. 32 In particular, the success of NARCAN ® (naloxone HCl) Nasal Spray, including in over-the-counter form, is subject to commercial availability of the product and our ability to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force us to restrict or delay efforts to seek regulatory approval in the United Kingdom for our product candidates, which could significantly and materially harm our business.
However, reliance-based or recognition-based regulatory decisions are not eligible under this procedure. 41 Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force us to restrict or delay efforts to seek regulatory approval in the United Kingdom or elsewhere for our product candidates, which could significantly and materially harm our business.
In June 2022, the FDA approved the ANDA and Padagis launched its prescription generic naloxone nasal spray. On July 18, 2023 the FDA approved an Rx-to-OTC switch of Padagis' product. In March 2023, Amneal Pharmaceuticals, Inc. (“Amneal”) announced that the FDA had accepted for review Amneal’s ANDA for generic naloxone nasal spray.
In June 2022, the FDA approved the ANDA and Padagis launched its prescription generic naloxone nasal spray. On July 18, 2023, the FDA approved an Rx-to-OTC switch of Padagis' product. In April 2024, the FDA approved an ANDA filed by Amneal Pharmaceuticals, Inc. (“Amneal”) for generic naloxone nasal spray.
The failure to remedy any remaining objectionable conditions at Emergent's manufacturing facilities, or any additional failures to maintain compliance with CGMP requirements at any of our manufacturing facilities, could adversely affect our business, financial condition, operating results and cash flows.
The failure to remedy any objectionable conditions at Emergent's manufacturing facilities, any additional failures to maintain compliance with CGMP requirements at any of our manufacturing facilities, or any administrative or regulatory action or recommendation to take any such action by the FDA could damage our reputation and adversely affect our business, financial condition, operating results and cash flows.
We are unable to sell any products and product candidates that fail to satisfy certain testing specifications. For example, we must provide the FDA with the results of certain tests, including potency tests, before certain lots are released for sale. Potency testing of each applicable lot is performed against qualified control lots that we maintain.
For example, we must provide the FDA with the results of certain tests, including potency tests, before certain lots are released for sale. Potency testing of each applicable lot is performed against qualified control lots that we maintain.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+2 added−2 removed5 unchanged
Biggest changeThe Company engages outside consultants to review both its Cybersecurity posture, and maturity, and perform for a cyber assessments of the Company’s manufacturing/operational technology environments. The Company has a process in place to oversee and identify material risks from cybersecurity threats associated with its use of any third-party service provider, na mely its Third-Party Risk Management Assessment Process.
Biggest changeThe Company proactively reviews threats landscape, impacts to the company, and address any gaps where necessary. Also, we maintain security operations metrics and incident response plan and conduct tabletop exercises. The Company engages outside consultants to review both its Cybersecurity posture, and maturity, and perform for a cyber assessments of the Company’s manufacturing/operational technology environments.
The purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities relating to the Company’s compliance with laws, regulations, and industry standards that, if breached, may cause significant business, regulatory, or reputational damage to the Company, including oversight of the Company's: • Compliance with good (“x” = manufacturing, clinical, laboratory, pharmacovigilance, storage, distribution etc.) (GxP) and medical device Quality Systems Regulations (QSR); • Healthcare compliance, anti-corruption, privacy and data security landscape, medical product safety, supply chain, employee health and safety, political expenditures and lobbying activities, and government contracting; • Enterprise Risk Management program; • Cyber and information security risks.
The purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities relating to the Company’s compliance with laws, regulations, and industry standards that, if breached, may cause significant business, regulatory, or reputational damage to the Company, including oversight of the Company's: • Compliance with good (“x” = manufacturing, clinical, laboratory, pharmacovigilance, storage, distribution etc.) (GxP) and medical device Quality Systems Regulations (QSR); • Healthcare compliance, anti-corruption, privacy and data security landscape, medical product safety, supply chain, employee health and safety, political expenditures and lobbying activities, and government contracting; • Enterprise Risk Management program; and • Cyber and information security risks.
The Chair or Vice-Chair of the Committee meet as necessary with the Chief Information Officer and the CISO to engage in a more detailed review of the Company’s cybersecurity and information security activities. The Committee charter also requires that the Committee ensure that Company management provides an annual cyber and information security update to the full Board.
The Chair or Vice-Chair of the Committee meet as necessary with the Chief Information Officer and the CISO to engage in a more detailed review of the Company’s cybersecurity and information security activities. The Committee charter also requires that the Committee ensure that Company management provides an annual cyber and information security update to the Board of Directors.
Current Committee members are: Zsolt Harsanyi, Ph.D., Sujata Dayal and Kathryn C. Zoon, Ph.D., all of whom are independent directors. 56 The Company's CISO is a Certified Information Systems Security Professional (CISSP) and Certified Information Security Manager (CISM), and is certified in Risk and Information Systems Control ® (CRISC).
Current Committee members are: Zsolt Harsanyi, Ph.D., Sujata Dayal and Kathryn C. Zoon, Ph.D., all of whom are independent directors. 55 The Company's CISO is certified in Risk and Information Systems Control ® (CRISC) and Certified Information Privacy Professional/United States (CIPP/US).
The Company has not incurred material cybersecurity incidents over the past three years The Company is not aware that any risks from cybersecurity threats, including because of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the company. The Company proactively reviews threats landscape, impacts to the company, and address any gaps where necessary.
The Company is not aware that any risks from cybersecurity threats, including because of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the company. The Company proactively reviews threats landscape, impacts to the company, and address any gaps where necessary. Also, we maintain security operations metrics, incident response plan and conduct tabletop exercises.
The CISO reports to the Quality Compliance Management Risk Committee twice per year and also reports to the Board twice per year.
The CISO reports to the Quality Compliance Management Risk Committee twice per year and also reports to the Board twice per year. The Company has not incurred material cybersecurity incidents over the past three years.
The Company’s Chief Information Security Officer (“CISO”) is responsible for assessing and managing the Cybersecurity risks with comprehensive oversight of information security functions with an emphasis on strategic leadership, governance, risk management and technical proficiency. Moreover, the Company’s CISO provides cyber security updates to the entire board of directors and the board's Quality Compliance Management Risk Committee (the "Committee").
Additionally, the Company maintains a cybersecurity insurance policy to help mitigate the impacts of potential cybersecurity incidents. The Company’s Chief Information Security Officer (“CISO”) is responsible for assessing and managing the Cybersecurity risks with comprehensive oversight of information security functions with an emphasis on strategic leadership, governance, risk management and technical proficiency.
In addition, the Company has: • Managed Security Service Provider (MSSP) that maintains 24 hours per day, 7 days per week, monitoring of the Company's environment; • Formed partnership with Cybersecurity Infrastructure Security Agency (CISA), to monitor the Company's external traffic and external facing web environment; • Performed an internal red campaign; • Been audited by internal and external auditors. 57
In addition, the Company has: • Managed Security Service Provider (MSSP) that maintains 24 hours per day, 7 days per week, monitoring of the Company's environment; and • Performed an internal phishing campaign and awareness program. 56
Full retraining on the ERM policy will occur every three years. The Company leverages the Committee of Sponsoring Organizations’("COSO") guidelines as the foundation for our ERM program and leverage external expertise. The Company proactively reviews threats landscape, impacts to the company, and address any gaps where necessary. Also, we maintain security operations metrics, incident response plan and conduct tabletop exercises.
Annually, we provide an ERM training to all participants in advance of the Company's annual ERA. Full retraining on the ERM policy will occur every three years. The Company leverages the Committee of Sponsoring Organizations’("COSO") guidelines as the foundation for our ERM program and leverage external expertise.
We utilize the NIST framework when assessing third parties. The framework covers 23 categories. When applicable, we may request if the third party vendor is SOC1/2, GDPRS, certified.
The Company has a process in place to oversee and identify material risks from cybersecurity threats associated with its use of any third-party service provider, namely its Third-Party Risk Management Assessment Process. We utilize the NIST framework when assessing third parties. The framework covers 23 categories. When applicable, we may request if the third party vendor is SOC1/2, GDPR, certified.
Removed
We are currently working on an all-employee awareness communication to further educate the full employee population about the ERM program, policy and intranet page. Timing for this communication is expected in first half of 2024. Annually, an ERM training will be provided to all participants in advance of the Company's annual ERA.
Added
As part of our ongoing Enterprise Risk Management ("ERM") enhancements, our ERM intranet page was launched in 2024 to centralize risk-related resources and policies. During the third quarter of 2024, a comprehensive reassessment of the Company's enterprise risks was conducted, with results thoroughly reviewed and communicated to executive leadership (VP and above) to align on key risks and strategic priorities.
Removed
Also, we maintain security operations metrics, incident response plan and conduct tabletop exercises.
Added
Moreover, the Company’s CISO provides cybersecurity updates to the entire board of directors and the board's Quality Compliance Management Risk Committee (the "Committee").

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changePrincipal locations include: Location Use Approximate square feet Owned/leased Operating Segment Lansing, Michigan Manufacturing operations, office and laboratory space. 336,000 Owned Products & Services Winnipeg, Manitoba, Canada Manufacturing operations, office and laboratory space. 160,000 (Owned); 15,800 (Leased) Owned/Leased Products & Services Gaithersburg, Maryland Laboratory space, office space and rental real estate. 173,000 (Owned); 11,547 (Leased) Owned/Leased Products & Services Canton, Massachusetts Manufacturing operations and warehouse space. 122,508 (Owned); 27,000 (Leased) Owned/Leased Products & Services Baltimore, Maryland (Bayview) Manufacturing facilities, office and laboratory space. 112,000 Owned Products & Services Elkridge, Maryland Warehouse space. 103,182 Leased Products & Services Baltimore, Maryland (Camden) Manufacturing facilities, office and laboratory space. 86,900 (Owned); 41,000 (Leased) Owned/Leased Products & Services Rockville, Maryland Manufacturing facilities, office and warehouse space. 84,295 Owned Products & Services San Diego, California Office space. 18,012 Leased Products Each property is considered to be in good condition, adequate for its purpose, and suitably utilized according to the individual nature and requirements of the relevant operations.
Biggest changePrincipal locations include: Location Use Approximate square feet Owned/leased Operating Segment Lansing, Michigan Manufacturing operations, office and laboratory space. 336,000 Owned Products & Services Winnipeg, Manitoba, Canada Manufacturing operations, office and laboratory space. 160,000 (Owned); 15,800 (Leased) Owned/Leased Products & Services Gaithersburg, Maryland Laboratory space, office space and rental real estate. 173,000 (Owned); 11,547 (Leased) Owned/Leased Products & Services Canton, Massachusetts Manufacturing operations and warehouse space. 47,000 (Owned); 27,000 (Leased) Owned/Leased Products & Services Baltimore, Maryland (Bayview) Manufacturing facilities, office and laboratory space. 112,000 Owned Products & Services Elkridge, Maryland Warehouse space. 103,182 Leased Products & Services Rockville, Maryland Manufacturing facilities, office and warehouse space. 84,295 Owned Products & Services Each property is considered to be in good condition, adequate for its purpose, and suitably utilized according to the individual nature and requirements of the relevant operations.
Our policy is to improve and replace property as considered appropriate to meet the needs of the individual operations. ITEM 3. LEGAL PROCEEDINGS See Item 8 of Part II, “Financial Statements and Supplemental Data — Notes to Consolidated Financial Statements" — Note 19, "Litigation." ITEM 4. MINE SAFETY DISCLOSURES Not applicable PART II 58
Our policy is to improve and replace property as considered appropriate to meet the needs of the individual operations. ITEM 3. LEGAL PROCEEDINGS See Item 8 of Part II, “Financial Statements and Supplemental Data — Notes to Consolidated Financial Statements" — Note 19, "Litigation." ITEM 4. MINE SAFETY DISCLOSURES Not applicable 57 PART II
ITEM 2. PROPERTIES We own and lease approximately 1.4 million square feet of building space for development and manufacturing, laboratories, fill/finish facility services, offices and warehouse space for the conduct of our businesses at 16 locations in North America and Europe. Properties that have been leased expire on various dates between 2024 and 2034.
ITEM 2. PROPERTIES We own and lease approximately 1.2 million square feet of building space for development and manufacturing, laboratories, fill/finish facility services, offices and warehouse space for the conduct of our businesses at 12 locations in North America and Europe. Properties that have been leased expire on various dates between 2025 and 2034.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed3 unchanged
Biggest changeAs of February 28, 2024, the closing price per share of our common stock on the New York Stock Exchange was $3.20 and we had 19 holders of record of our common stock. This number does not include beneficial owners whose shares are held by nominees in street name.
Biggest changeAs of February 25, 2025, the closing price per share of our common stock on the New York Stock Exchange was $7.21 and we had 41 holders of record of our common stock. This number does not include beneficial owners whose shares are held by nominees in street name.
The annual changes for the five-year period shown on the graph are based on the assumptions that $100 had been invested in Emergent BioSolutions Inc.'s common stock and each index on December 31, 2018, all fiscal years end December 31 st and all dividends were reinvested.
The annual changes for the five-year period shown on the graph are based on the assumptions that $100 had been invested in Emergent BioSolutions Inc.'s common stock and each index on December 31, 2019, all fiscal years end December 31 st and all dividends were reinvested.
The remaining information required by Item 5 is hereby incorporated by reference from our Definitive Proxy Statement relating to our 2024 Annual Meeting of the Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.
The remaining information required by Item 5 is hereby incorporated by reference from our Definitive Proxy Statement relating to our 2025 Annual Meeting of the Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.
Removed
Market Performance Company / Index 2018 2019 2020 2021 2022 2023 Emergent BioSolutions Inc. $ 100.00 $ 91.01 $ 151.15 $ 73.33 $ 19.92 $ 4.05 S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Russell 2000 $ 100.00 $ 125.52 $ 150.58 $ 172.90 $ 137.56 $ 160.85 S&P SmallCap 600 $ 100.00 $ 122.78 $ 136.64 $ 173.29 $ 145.39 $ 168.73 S&P Pharmaceuticals $ 100.00 $ 115.09 $ 123.75 $ 155.62 $ 168.77 $ 169.33 S&P Biotechnology $ 100.00 $ 117.11 $ 127.21 $ 142.64 $ 164.95 $ 171.29 ITEM 6. [RESERVED] 59
Added
Market Performance Company / Index 2019 2020 2021 2022 2023 2024 Emergent BioSolutions Inc. $ 100.00 $ 166.08 $ 80.57 $ 21.89 $ 4.45 $ 17.72 S&P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 Russell 2000 $ 100.00 $ 119.96 $ 137.74 $ 109.59 $ 128.14 $ 142.93 S&P SmallCap 600 $ 100.00 $ 111.29 $ 141.13 $ 118.41 $ 137.42 $ 149.37 S&P 500 Pharmaceuticals $ 100.00 $ 107.53 $ 135.21 $ 146.65 $ 147.13 $ 159.21 S&P 500 Biotechnology $ 100.00 $ 108.63 $ 121.80 $ 140.85 $ 146.27 $ 147.24 58 ITEM 6. [RESERVED] 59

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

132 edited+90 added−89 removed41 unchanged
Biggest changeThese decreases were partially offset by increases in revenue on the BARDA contract for the procurement of Ebanga TM , which was awarded in the current period, and TEMBEXA ® . 72 Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 RESULTS OF OPERATIONS Consolidated and Segment Operating Results: Year Ended December 31, (in millions, except %) 2022 2021 $ Change % Change Revenues: Commercial Product sales, net: NARCAN ® $ 373.7 $ 434.4 $ (60.7) (14) % Other Commercial Products 12.9 3.6 9.3 NM Total Commercial Product sales, net 386.6 438.0 (51.4) (12) % MCM Product sales, net: Anthrax MCM $ 290.1 $ 262.6 $ 27.5 10 % Smallpox MCM 234.4 266.7 (32.3) (12) % Other Products 55.1 56.6 (1.5) (3) % Total MCM product sales, net 579.6 585.9 (6.3) (1) % Services: Bioservices - Services 105.0 310.3 (205.3) (66) % Bioservices - Leases 4.9 305.2 (300.3) (98) % Total Services revenues 109.9 615.5 (505.6) (82) % Contracts and grants 41.4 134.2 (92.8) (69) % Total revenues $ 1,117.5 $ 1,773.6 $ (656.1) (37) % Operating expenses: Cost of Commercial product sales 160.3 187.2 (26.9) (14) % Cost of MCM product sales 264.3 195.4 68.9 35 % Cost of Bioservices 268.5 365.5 (97.0) (27) % Research and development 188.3 235.2 (46.9) (20) % Selling, general and administrative 339.5 348.7 (9.2) (3) % Goodwill impairment 6.7 41.7 (35.0) (84) % Amortization of intangible assets 59.9 58.5 1.4 2 % Total operating expenses 1,287.5 1,432.2 (144.7) (10) % Income (loss) from operations (170.0) 341.4 (511.4) NM Other income (expense): Interest expense (37.3) (34.5) (2.8) 8 % Other, net (11.7) (3.7) (8.0) NM Total other income (expense), net (49.0) (38.2) (10.8) 28 % Income (loss) before income taxes (219.0) 303.2 (522.2) NM Income tax provision (benefit) (7.4) 83.7 (91.1) NM Net income (loss) $ (211.6) $ 219.5 $ (431.1) NM NM - Not meaningful 73 Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 Revenues and gross margin Year Ended December 31, (dollars in millions) 2022 2021 % Change Total revenues $ 1,117.5 $ 1,773.6 (37) % Contracts and grants 41.4 134.2 (69) % Total segment revenues (1) $ 1,076.1 $ 1,639.4 (34) % Cost of Commercial Product sales 160.3 187.2 (14) % Cost of MCM Product sales 264.3 195.4 35 % Cost of Bioservices 268.5 365.5 (27) % Total cost of sales or services 693.1 748.1 (7) % Total segment gross margin (1) $ 383.0 $ 891.3 (57) % Total segment gross margin % (1) 36 % 54 % (1) We define total segment revenues, which is a non-GAAP financial measure, as our total revenues, less contracts and grants revenue, which is also equal to the sum of the revenues of our operating segments.
Biggest changeManagement believes that the assumptions and estimates related to the provision for income taxes are critical to the Company’s results of operations. 66 RESULTS OF OPERATIONS Consolidated and Segment Operating Results: Year Ended December 31, (in millions, except %) 2024 2023 $ Change % Change Revenues: Commercial Product sales, net: NARCAN ® $ 398.9 $ 487.5 $ (88.6) (18) % Other Commercial Products — 9.8 (9.8) (100) % Total Commercial Product sales, net 398.9 497.3 (98.4) (20) % MCM Product sales, net: Anthrax MCM 138.5 187.6 (49.1) (26) % Smallpox MCM 277.3 167.4 109.9 66 % Other Products 94.0 92.2 1.8 2 % Total MCM Product sales, net 509.8 447.2 62.6 14 % Services: Bioservices - Services 103.5 72.8 30.7 42 % Bioservices - Leases 1.4 5.7 (4.3) (75) % Total Services revenues 104.9 78.5 26.4 34 % Contracts and grants 30.0 26.3 3.7 14 % Total revenues $ 1,043.6 $ 1,049.3 $ (5.7) (1) % Operating expenses: Cost of Commercial Product sales (1) 185.9 210.3 (24.4) (12) % Cost of MCM Product sales (1) 219.4 305.6 (86.2) (28) % Cost of Bioservices (1) 276.0 189.5 86.5 46 % Research and development 70.7 111.4 (40.7) (37) % Selling, general and administrative 308.0 368.4 (60.4) (16) % Amortization of intangible assets 65.1 65.6 (0.5) (1) % Goodwill impairment — 218.2 (218.2) (100) % Impairment of long-lived assets 27.2 306.7 (279.5) (91) % Total operating expenses 1,152.3 1,775.7 (623.4) (35) % Loss from operations (108.7) (726.4) 617.7 85 % Other income (expense): Interest expense (71.0) (87.9) 16.9 19 % Gain on sale of business 24.3 74.2 (49.9) (67) % Other, net 12.5 8.9 3.6 40 % Total other income (expense), net (34.2) (4.8) (29.4) NM Loss before income taxes (142.9) (731.2) 588.3 80 % Income tax provision 47.7 29.3 18.4 63 % Net loss $ (190.6) $ (760.5) $ 569.9 75 % (1) Exclusive of intangible assets amortization NM - Not meaningful 67 Year Ended December 31, 2024 Compared with Year Ended December 31, 2023 Revenues and gross margin Year Ended December 31, (dollars in millions) 2024 2023 % Change Total revenues $ 1,043.6 $ 1,049.3 (1) % Contracts and grants 30.0 26.3 14 % Total segment revenues (1) $ 1,013.6 $ 1,023.0 (1) % Cost of sales or services Cost of Commercial Product sales $ 185.9 $ 210.3 (12) % Cost of MCM Product sales 219.4 305.6 (28) % Cost of Bioservices 276.0 189.5 46 % Total cost of sales or services $ 681.3 $ 705.4 (3) % Intangible asset amortization: Commercial Products $ 37.8 $ 38.6 (2) % MCM Products 27.3 27.0 1 % Total intangible asset amortization $ 65.1 $ 65.6 (1) % Total segment gross margin (1) $ 267.2 $ 252.0 6 % Total segment gross margin % (1) 26 % 25 % (1) We define total segment revenues, which is a non-GAAP financial measure, as our total revenues, less contracts and grants revenue.
The increase was primarily due to higher professional services fees related to general corporate initiatives, including organizational transformation consulting fees and legal remediation services fees as well as an increase in marketing expenses related to the launch of NARCAN ® OTC.
The increase was primarily due to higher professional services fees related to general corporate initiatives, including organizational transformation consulting fees and legal remediation services fees as well as an increase in marketing expenses related to the launch of OTC NARCAN ® .
The increase was primarily driven by higher sales of NARCAN ® OTC and branded NARCAN ® to U.S. public interest channels and Canadian retail, partially offset by the cessation of authorized generic NARCAN ® sales related to the termination of the Company's relationship with Sandoz and a reduction in commercial retail sales in the U.S.
The increase was primarily driven by higher sales of OTC NARCAN ® and branded NARCAN ® to U.S. public interest channels and Canadian retail, partially offset by the cessation of authorized generic NARCAN ® sales related to the termination of the Company's relationship with Sandoz and a reduction in commercial retail sales in the U.S.
NARCAN ® OTC may also be sold on consignment through third-party online retailers where revenues are recognized point in time when sold to the end customer. The Company pays these third-party online retailers selling commissions and fulfillment fees which are recorded as selling general & administrative expenses and cost of commercial product sales, respectively, in the Consolidated Statement of Operations.
OTC NARCAN ® may also be sold on consignment through third-party online retailers where revenues are recognized point in time when sold to the end customer. The Company pays these third-party online retailers selling commissions and fulfillment fees which are recorded as "Selling general and administrative expenses" and "Cost of Commercial Product Sales", respectively, in the Consolidated Statement of Operations.
Revenues from NARCAN ® OTC are recognized to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with such variable consideration is subsequently resolved.
Revenues from OTC NARCAN ® are recognized to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with such variable consideration is subsequently resolved.
Long-lived assets such as finite lived intangible assets and property, plant and equipment are not required to be tested for impairment annually, instead they are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Long-lived assets Long-lived assets such as finite lived intangible assets and property, plant and equipment are not required to be tested for impairment annually, instead they are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Our future capital requirements will depend on many factors, including (but not limited to): • the level, timing and cost of product sales and bioservices; • the extent to which we acquire or invest in and integrate companies, businesses, products or technologies; 82 • the acquisition of new facilities and capital improvements to new or existing facilities; • the payment obligations under our indebtedness; • the scope, progress, results and costs of our development activities; • our ability to obtain funding from collaborative partners, government entities and non-governmental organizations for our development programs; and • the costs of commercialization activities, including product marketing, sales and distribution.
Our future capital requirements will depend on many factors, including (but not limited to): • the level, timing and cost of product sales and Bioservices; • the extent to which we acquire or invest in and integrate companies, businesses, products or technologies; • the acquisition of new facilities and capital improvements to new or existing facilities; • the payment obligations under our indebtedness; • the scope, progress, results and costs of our development activities; • our ability to obtain funding from collaborative partners, government entities and non-governmental organizations for our development programs; and • the costs of commercialization activities, including product marketing, sales and distribution.
Significant judgments used for long-lived asset impairment assessments include identifying the appropriate asset groupings and primary assets within those groupings, determining whether events or circumstances indicate that the carrying amount of the asset may not be recoverable, determining the future cash flows for the assets involved and assumptions applied in determining fair value, which include, reasonable discount rates, growth rates, market risk premiums and other assumptions about the economic environment.
Significant judgments used for long-lived asset impairment assessments include identifying the appropriate asset groupings and primary assets within those groupings, determining whether events or circumstances indicate that the carrying amount of the asset may not be recoverable, determining the future cash 87 flows for the assets involved and assumptions applied in determining fair value, which include, reasonable discount rates, growth rates, market risk premiums and other assumptions about the economic environment.
Actual results may differ from these estimates under different assumptions or conditions. 83 Management believes the Company’s critical accounting policies and estimates are those related to revenue recognition, contingent consideration, and income taxes. Revenue Recognition The Company's product sales are recognized at a point-in-time generally upon delivery to the customer, depending on the performance obligation which the Company is delivering.
Actual results may differ from these estimates under different assumptions or conditions. Management believes the Company’s critical accounting policies and estimates are those related to revenue recognition, contingent consideration, and income taxes. Revenue Recognition The Company's product sales are recognized at a point-in-time generally upon delivery to the customer, depending on the performance obligation which the Company is delivering.
We also generate revenue for our Services segment through our Bioservices portfolio, which is based on our established development and manufacturing infrastructure, technology platforms and expertise. Our services include a fully integrated molecule-to-market bioservices business offering across development services, drug substance and drug product for small to large pharmaceutical and biotechnology industry and government agencies/non-governmental organizations.
We also generate revenue from our Services segment through our Bioservices portfolio, which is based on our established development and manufacturing infrastructure, technology platforms and expertise. Our services include a fully integrated molecule-to-market Bioservices business offering across development services, drug substance and drug product for small to large pharmaceutical and biotechnology industry and government agencies/non-governmental organizations.
As such, the key components of the business structure include the following four product and service categories: Anthrax - Medical Countermeasures (“MCM”) Products, NARCAN ® , Smallpox - MCM products and Emergent Bioservices (CDMO) services ("Bioservices"). In the fourth quarter of 2023, we realigned our reportable operating segments to reflect recent changes in our internal operating and reporting process.
As such, the key components of the business structure include the following four product and service categories: Anthrax - Medical Countermeasures (“MCM”) Products, NARCAN ® , Smallpox - MCM products and Emergent Bioservices (CDMO) services (“Bioservices”). In the fourth quarter of 2023, we realigned our reportable operating segments to reflect recent changes in our internal operating and reporting process.
Economic conditions, including market volatility and adverse impacts on financial markets, may make it more difficult to obtain financing on attractive terms, or at all. Any new debt funding, if available, may be on terms less favorable to us than our Senior Secured Credit Facilities or the Senior Unsecured Notes.
Economic conditions, including market volatility and adverse impacts on financial markets, may make it more difficult to obtain financing on attractive terms, or at all. Any new debt funding, if available, may be on terms less favorable to us than our Senior Unsecured Notes or our Senior Secured Credit Facilities.
The increase was primarily due to higher interest costs related to our syndicated borrowings and debt service costs attributable to the negotiation of the Fourth Amendment to Amended and Restated Credit Agreement, Waiver and First Amendment to Amended and Restated Collateral Agreement (the “Credit Agreement Amendment"), partially offset by reduced interest expense related to the termination of our interest rate swap hedging agreements.
The increase was primarily due to higher interest costs related to our syndicated borrowings and debt service costs attributable to the negotiation of the Fourth Amendment to Amended and Restated Credit Agreement, Waiver and First Amendment to Amended and Restated Collateral Agreement, partially offset by reduced interest expense related to the termination of our interest rate swap hedging agreements.
Fluctuations in revenues result from the timing of the exercise of annual purchase options, the timing and amount of USG purchases, the availability of governmental funding and timing of Company delivery of orders that follow. Smallpox MCM Smallpox MCM sales decreased $67.0 million, or 29%, to $167.4 million in 2023.
Fluctuations in revenues result from the timing of the exercise of annual purchase options, the timing and amount of USG purchases, the availability of governmental funding and timing of Company delivery of orders that follow. 79 Smallpox MCM Smallpox MCM sales decreased $67.0 million, or 29%, to $167.4 million in 2023.
The 2023 Services Segment Adjusted Gross Margin excludes the impact of restructuring costs of $8.4 million. OTHER REVENUE Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 Contracts and Grants Contract and grants revenue decreased $15.1 million, or 36%, to $26.3 million in 2023.
The 2023 Services segment adjusted gross margin excludes the impact of restructuring costs of $8.4 million . 81 OTHER REVENUE Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 Contracts and Grants Contract and grants revenue decreased $15.1 million, or 36%, to $26.3 million in 2023.
Segment adjusted gross margin %, which is a non-GAAP financial measure, is calculated as segment adjusted gross margin divided by revenues. The Company’s management utilizes segment adjusted gross margin and segment adjusted gross margin % for purposes of evaluating our ongoing operations and for internal planning and forecasting purposes.
Segment adjusted gross margin percentage, which is a non-GAAP financial measure, is calculated as segment adjusted gross margin divided by revenues. The Company’s management utilizes segment adjusted gross margin and segment adjusted gross margin percentage for purposes of evaluating our ongoing operations and for internal planning and forecasting purposes.
Segment adjusted gross margin %, which is a non-GAAP financial measure, is calculated as segment adjusted gross margin divided by revenues. The Company’s management utilizes segment adjusted gross margin and segment adjusted gross margin % for purposes of evaluating our ongoing operations and for internal planning and forecasting purposes.
Segment adjusted gross margin percentage, which is a non-GAAP financial measure, is calculated as segment adjusted gross margin divided by revenues. The Company’s management utilizes segment adjusted gross margin and segment adjusted gross margin percentage for purposes of evaluating our ongoing operations and for internal planning and forecasting purposes.
If an impairment indicator is present, we evaluate recoverability of assets to be held and used by a comparison of the carrying value of the assets with future undiscounted net 85 cash flows expected to be generated by the assets.
If an impairment indicator is present, we evaluate recoverability of assets to be held and used by a comparison of the carrying value of the assets with future undiscounted net cash flows expected to be generated by the assets.
Income taxes Income tax benefit of $7.4 million for the year ended December 31, 2022 decreased $36.7 million to a provision of $29.3 million for the year ended December 31, 2023. The effective tax rate was (4)% for the year ended December 31, 2023 as compared to 3% in 2022.
Income tax provision (benefit) Income tax benefit of $7.4 million for the year ended December 31, 2022 decreased $36.7 million to a provision of $29.3 million for the year ended December 31, 2023. The effective tax rate was (4)% for the year ended December 31, 2023 as compared to 3% in 2022.
For additional information on the Company's contingent 84 consideration, refer to Note 8, "Fair value measurements" in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K.
For additional information on the Company's contingent consideration, refer to Note 8, "Fair value measurements" in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K.
(“Emergent,” the “Company,” “we,” “us,” and “our”) is a global life sciences company focused on providing innovative preparedness and response solutions addressing accidental, deliberate, and naturally occurring Public Health Threats (“PHTs”). The Company's solutions include a product portfolio, a product development portfolio, and a contract development and manufacturing services ("CDMO") portfolio.
(“Emergent,” the “Company,” “we,” “us,” and “our”) is a global life sciences company focused on providing innovative preparedness and response solutions addressing accidental, deliberate, and naturally occurring Public Health Threats (“PHTs”). The Company's solutions include a product portfolio, a product development portfolio, and a contract development and manufacturing services (“CDMO”) portfolio.
Because returned product cannot be resold, there is no corresponding asset for product returns. For additional information on our revenues, refer to Note 13, "Revenue recognition" in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K.
As returned product cannot be resold, there is no corresponding asset for product returns. For additional information on our revenues, refer to Note 13, "Revenue recognition" in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K.
We are currently focused on the following four PHT categories: chemical, biological, radiological, nuclear and explosives (“CBRNE”); emerging infectious diseases (“EID”); public health crises; and acute, emergency and community care. We have a product portfolio of 12 products that contribute a substantial portion of our revenue and are sold to government and commercial customers.
We are currently focused on the following four PHT categories: chemical, biological, radiological, nuclear and explosives (“CBRNE”); emerging infectious diseases (“EID”); emerging health crises; and acute, emergency and community care. We have a product portfolio of 10 products that contribute a substantial portion of our revenue and are sold to government and commercial customers.
The decrease was primarily due to the sale of our development program for CHIKV VLP to Bavarian Nordic and reduction in related overhead costs driven by the headcount reductions, which were significant contributors to prior period R&D expense, partially offset by write-offs related to program terminations during the period. 67 Selling, General and Administrative Expenses Selling, general and administrative expenses increased $28.9 million, or 9%, to $368.4 million in 2023.
The decrease was primarily due to the sale of our development program for CHIKV VLP to Bavarian Nordic and reduction in related overhead costs driven by the headcount reductions, which were significant contributors to prior period R&D expense, partially offset by write-offs related to program terminations during the period. 76 SG&A Expenses Selling, general and administrative expenses increased $28.9 million, or 9%, to $368.4 million in 2023.
Significant New Accounting Pronouncements See Note 2, “Summary of significant accounting policies” in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K. 86
Significant New Accounting Pronouncements See Note 2, “Summary of significant accounting policies” in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K. 88
Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and financing, includes forward-looking statements that involve risks and uncertainties.
Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report includes information with respect to our plans and strategy for our business and financing, as well as forward-looking statements that involve risks and uncertainties.
We now manage our business with a focus on three reportable segments: (1) a Commercial Products segment consisting of our NARCAN ® and Other Commercial Products; (2) a MCM Products segment consisting of the Anthrax - MCM, Smallpox - MCM and Other Products and (3) a Services segment consisting of our Bioservices offerings.
We now manage our business with a focus on three reportable segments: (1) a Commercial Product segment consisting of our NARCAN ® ; (2) a MCM Products segment consisting of the Anthrax - MCM, Smallpox - MCM and Other Products and (3) a Services segment consisting of our Bioservices portfolio.
The Company considers several factors in the estimation process for the allowance for returns of NARCAN ® OTC, including inventory levels within the distribution channel and historical return activity, including activity for product sold for which the return period has passed, as well as other relevant factors.
For contracts with direct retailers, the Company considers several factors in the estimation process for the allowance for returns of OTC NARCAN ® , including inventory levels within the distribution channel and historical return activity, including activity for product sold for which the return period has passed, as well as other relevant factors.
The increase was primarily due to higher BAT ® product sales, partially offset by lower RSDL ® and Trobigard ® product sales due to timing. 70 Cost of Sales and Gross Margin Cost of MCM Product sales increased $41.3 million, or 16%, to $305.6 million in 2023.
The increase was primarily due to higher BAT ® product sales, partially offset by lower RSDL ® and Trobigard ® product sales due to timing. Cost of Sales, Intangible Asset Amortization and Gross Margin Cost of MCM Product sales increased $41.3 million, or 16%, to $305.6 million in 2023.
For drug product customers, we receive work in process inventory to be prepared for distribution. Research and Development Expenses ("R&D") We expense R&D costs as incurred.
For drug product customers, we receive work in process inventory to be prepared for distribution. 65 Research and Development (“R&D”) Expenses We expense R&D costs as incurred.
During the second quarter of 2023, we sold Vivotif ® and Vaxchora ® to Bavarian Nordic as part of our travel health business. 69 Cost of Sales and Gross Margin Cost of Commercial product sales increased $50.0 million, or 31%, to $210.3 million in 2023.
During the second quarter of 2023, we sold Vivotif ® and Vaxchora ® to Bavarian Nordic as part of our travel health business. 78 Cost of Sales, Intangible Asset Amortization and Gross Margin Cost of Commercial Product sales increased $50.0 million, or 31%, to $210.3 million in 2023.
Public or bank debt financing, if available, may involve agreements that include covenants, like those contained in our 3.875% Senior Unsecured Notes due 2028 (the “Senior Unsecured Notes”) and the Senior Secured Credit Facilities, which could limit or restrict our ability to take specific actions, such as incurring additional debt, making capital expenditures, pursuing acquisition opportunities, buying back shares or declaring dividends.
Public or bank debt financing, if available, may involve agreements that include covenants, like those contained in our Senior Unsecured Notes and our Senior Secured Credit Facilities, which could limit or restrict our ability to take specific actions, such as incurring additional debt, making capital expenditures, pursuing acquisition opportunities, buying back shares or declaring dividends.
The USG is the largest purchaser of our Government - MCM products and primarily purchases our products for the SNS, a national repository of medical countermeasures including critical antibiotics, vaccines, chemical antidotes, antitoxins, and other critical medical supplies. The USG primarily purchases our products under long-term, firm fixed-price procurement contracts, generally with annual options.
The U.S. government (“USG”) is the largest purchaser of our Government - MCM products and primarily purchases our products for the Strategic National Stockpile, a national repository of medical countermeasures including critical antibiotics, vaccines, chemical antidotes, antitoxins, and other critical medical supplies. The USG primarily purchases our products under long-term, firm fixed-price procurement contracts, generally with annual options.
We service both clinical-stage and commercial-stage projects for a variety of third-party customers, including government agencies, innovative pharmaceutical companies, and non-government organizations. In August 2023, we initiated an organizational restructuring plan (the “August 2023 Plan”) which included actions to reduce investment in and de-emphasize focus on our Bioservices business.
The Company offers services for both clinical-stage and commercial-stage projects for a variety of third-party customers, including government agencies, innovative pharmaceutical companies, and non-government organizations. In August 2023, the Company initiated an organizational restructuring plan (the “August 2023 Plan”) which included actions to reduce investment in and de-emphasize focus on its Bioservices business.
You should carefully review the "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" sections of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. BUSINESS OVERVIEW Emergent BioSolutions Inc.
You should carefully review the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. BUSINESS OVERVIEW Emergent BioSolutions Inc.
We define total segment gross margin, which is a non-GAAP financial measure, as total segment revenues less our aggregate cost of sales or services. We define total segment gross margin %, which is a non-GAAP financial measure, as total segment gross margin as a percentage of total segment revenues.
We define total segment gross margin, which is a non-GAAP financial measure, as total segment revenues less our aggregate cost of sales or services and intangible asset amortization. We define total segment gross margin percentage, which is a non-GAAP financial measure, as total segment gross margin as a percentage of total segment revenues.
We define total segment gross margin, which is a non-GAAP financial measure, as total segment revenues less our aggregate cost of sales or services. We define total segment gross margin %, which is a non-GAAP financial measure, as total segment gross margin as a percentage of total segment revenues.
We define total segment gross margin, which is a non-GAAP financial measure, as total segment revenues less our aggregate cost of sales or services and intangible asset amortization. We define total segment gross margin percentage, which is a non-GAAP financial measure, as total segment gross margin as a percentage of total segment revenues.
Cost of Services and Gross Margin Cost of Services decreased $79.0 million, or 29%, to $189.5 million in 2023.
Cost of Services, Intangible Asset Amortization and Gross Margin Cost of Services decreased $79.0 million, or 29%, to $189.5 million in 2023.
The decrease in expense was primarily attributable to a write-off of a tax indemnity receivable in the prior period that did not reoccur in the current period, favorable foreign exchange revaluations, higher interest income from rising interest rates during the year, income from the Transition Services Agreement with Bavarian Nordic and a gain on extinguishment of debt.
The change of $20.6 million, or 176%, was primarily attributable to a write-off of a tax indemnity receivable in the prior period that did not reoccur in the current period, favorable foreign exchange revaluations, higher interest income from rising interest rates during the year, income from the Transition Services Agreement with Bavarian Nordic and a gain on extinguishment of debt.
Revenues for these NARCAN ® OTC arrangements are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Estimates of variable consideration includes allowance for returns, specialty distributor fees, wholesaler fees and prompt payment discounts.
Revenues for these OTC NARCAN ® arrangements are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Estimates of variable consideration includes allowance for returns under direct retailer contracts, specialty distributor fees, wholesaler fees, prompt payment discounts and government rebates.
Commercial Products Segment: The majority of our Commercial product revenue comes from the following products: NARCAN ® • NARCAN ® (naloxone HCl) Nasal Spray, an intranasal formulation of naloxone approved by the FDA (including in over-the-counter form) and Health Canada for the emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression.
Commercial Product Segment: The majority of our Commercial product revenue comes from the following product: NARCAN ® • NARCAN ® (naloxone HCl) Nasal Spray, an intranasal formulation of naloxone approved by the United States Food and Drug Administration (“FDA”) (including in over-the-counter ("OTC") form) and Health Canada for the emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression.
As a result, the Company performed recoverability tests on certain asset groups within the Bioservices reporting unit and concluded that the impacted asset groups were not recoverable as the undiscounted expected cash flows did not exceed their carrying values. Asset groups are written down only to the extent that their carrying value is higher than their respective fair value.
As a result, the Company performed recoverability tests on those asset groups and concluded that the Bayview and Rockville asset groups were not recoverable as the undiscounted expected cash flows did not exceed their carrying values. Asset groups are written down only to the extent that their carrying value is higher than their respective fair value.
If our capital resources are insufficient to meet our future capital requirements, we will need to finance our cash needs through public or private equity or debt offerings, bank loans, collaboration and licensing arrangements, cost reductions, assets sales or a combination of these options.
If our capital resources are insufficient to meet our future capital requirements, we will need to finance our cash needs through public or private equity or debt offerings, bank loans, collaboration and licensing arrangements, cost reductions, assets sales or a combination of these options. If we raise funds by issuing equity securities, our stockholders may experience dilution.
For our commercial sales, other associated expenses include sales-based royalties, shipping, and logistics. Services - The primary expenses that we incur to deliver our Bioservices offerings consist of fixed and variable costs, including personnel, equipment, and facilities costs. Our manufacturing process includes the production of bulk material and performing drug product work for containment and distribution of biological products.
Services - The primary expenses that we incur to deliver our Bioservices offerings consist of fixed and variable costs, including personnel, equipment, and facilities costs. Our manufacturing process includes the production of bulk material and performing drug product work for containment and distribution of biological products.
For additional information on our uncertain tax positions and income tax expense, refer to Note 15, "Income taxes" to our consolidated financial statements included in this report. 65 RESULTS OF OPERATIONS Consolidated and Segment Operating Results: Year Ended December 31, (in millions, except %) 2023 2022 $ Change % Change Revenues: Commercial Product sales, net: NARCAN ® $ 487.5 $ 373.7 $ 113.8 30 % Other Commercial Products 9.8 12.9 (3.1) (24) % Total Commercial Product sales, net 497.3 386.6 110.7 29 % MCM Product sales, net: Anthrax MCM 187.6 290.1 (102.5) (35) % Smallpox MCM 167.4 234.4 (67.0) (29) % Other Products 92.2 55.1 37.1 67 % Total MCM product sales, net 447.2 579.6 (132.4) (23) % Services: Bioservices - Services 72.8 105.0 (32.2) (31) % Bioservices - Leases 5.7 4.9 0.8 16 % Total Services revenues 78.5 109.9 (31.4) (29) % Contracts and grants 26.3 41.4 (15.1) (36) % Total revenues $ 1,049.3 $ 1,117.5 $ (68.2) (6) % Operating expenses: Cost of Commercial product sales 210.3 160.3 50.0 31 % Cost of MCM product sales 305.6 264.3 41.3 16 % Cost of Bioservices 189.5 268.5 (79.0) (29) % Goodwill impairment 218.2 6.7 211.5 NM Impairment of long-lived assets 306.7 — 306.7 NM Research and development 111.4 188.3 (76.9) (41) % Selling, general and administrative 368.4 339.5 28.9 9 % Amortization of intangible assets 65.6 59.9 5.7 10 % Total operating expenses 1,775.7 1,287.5 488.2 38 % Loss from operations (726.4) (170.0) (556.4) NM Other income (expense): Interest expense (87.9) (37.3) (50.6) 136 % Gain on sale of business 74.2 — 74.2 NM Other, net 8.9 (11.7) 20.6 (176) % Total other income (expense), net (4.8) (49.0) 44.2 (90) % Loss before income taxes (731.2) (219.0) (512.2) NM Income tax provision (benefit) 29.3 (7.4) 36.7 NM Net loss $ (760.5) $ (211.6) $ (548.9) NM NM - Not meaningful 66 Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 Revenues and gross margin Year Ended December 31, (dollars in millions) 2023 2022 % Change Total revenues $ 1,049.3 $ 1,117.5 (6) % Contracts and grants 26.3 41.4 (36) % Total segment revenues (1) $ 1,023.0 $ 1,076.1 (5) % Cost of Commercial Product sales 210.3 160.3 31 % Cost of MCM Product sales 305.6 264.3 16 % Cost of Bioservices 189.5 268.5 (29) % Total cost of sales or services 705.4 693.1 2 % Total segment gross margin (1) $ 317.6 $ 383.0 (17) % Total segment gross margin % (1) 31 % 36 % (1) We define total segment revenues, which is a non-GAAP financial measure, as our total revenues, less contracts and grants revenue, which is also equal to the sum of the revenues of our operating segments.
The increase was related to work under the Ebanga TM program, partially offset by the wind-down of our other funded development initiatives. 74 Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 Consolidated and Segment Operating Results: Year Ended December 31, (in millions, except %) 2023 2022 $ Change % Change Revenues: Commercial Product sales, net: NARCAN ® $ 487.5 $ 373.7 $ 113.8 30 % Other Commercial Products 9.8 12.9 (3.1) (24) % Total Commercial Product sales, net 497.3 386.6 110.7 29 % MCM Product sales, net: Anthrax MCM 187.6 290.1 (102.5) (35) % Smallpox MCM 167.4 234.4 (67.0) (29) % Other Products 92.2 55.1 37.1 67 % Total MCM Product sales, net 447.2 579.6 (132.4) (23) % Services: Bioservices - Services 72.8 105.0 (32.2) (31) % Bioservices - Leases 5.7 4.9 0.8 16 % Total Services revenues 78.5 109.9 (31.4) (29) % Contracts and grants 26.3 41.4 (15.1) (36) % Total revenues $ 1,049.3 $ 1,117.5 $ (68.2) (6) % Operating expenses: Cost of Commercial Product sales 210.3 160.3 50.0 31 % Cost of MCM Product sales 305.6 264.3 41.3 16 % Cost of Bioservices 189.5 268.5 (79.0) (29) % Research and development 111.4 188.3 (76.9) (41) % Selling, general and administrative 368.4 339.5 28.9 9 % Amortization of intangible assets 65.6 59.9 5.7 10 % Goodwill impairment 218.2 6.7 211.5 NM Impairment of long-lived assets 306.7 — 306.7 NM Total operating expenses 1,775.7 1,287.5 488.2 38 % Loss from operations (726.4) (170.0) (556.4) NM Other income (expense): Interest expense (87.9) (37.3) (50.6) 136 % Gain on sale of business 74.2 — 74.2 NM Other, net 8.9 (11.7) 20.6 (176) % Total other income (expense), net (4.8) (49.0) 44.2 (90) % Loss before income taxes (731.2) (219.0) (512.2) NM Income tax provision (benefit) 29.3 (7.4) 36.7 NM Net loss $ (760.5) $ (211.6) $ (548.9) NM NM - Not meaningful 75 Revenues and gross margin Year Ended December 31, (dollars in millions) 2023 2022 % Change Total revenues $ 1,049.3 $ 1,117.5 (6) % Contracts and grants 26.3 41.4 (36) % Total segment revenues (1) $ 1,023.0 $ 1,076.1 (5) % Cost of sales or services Cost of Commercial Product sales $ 210.3 $ 160.3 31 % Cost of MCM Product sales 305.6 264.3 16 % Cost of Bioservices 189.5 268.5 (29) % Total cost of sales or services $ 705.4 $ 693.1 2 % Intangible asset amortization allocated to: Cost of Commercial Products $ 38.6 $ 42.9 (10) % Cost of MCM Products 27.0 16.9 60 % Cost of Services — 0.1 (100) % Total intangible asset amortization $ 65.6 $ 59.9 10 % Total segment gross margin (1) $ 252.0 $ 323.1 (22) % Total segment gross margin % (1) 25 % 30 % (1) We define total segment revenues, which is a non-GAAP financial measure, as our total revenues, less contracts and grants revenue.
The Company's NARCAN ® OTC customer contracts are fixed price contracts. For that majority of the Company's NARCAN ® OTC contract, the Company invoices and records revenue when the pharmacies and wholesalers receive product from the third-party logistics warehouse used by the Company, which is the point at which control is transferred to the customer.
For the majority of the Company's OTC NARCAN ® contracts, the Company invoices and records revenue when the customers receive product from the third-party logistics warehouse used by the Company, which is the point at which control is transferred to the customer.
MCM Products gross margin percentage decreased 22 percentage points to 32% in 2023. The decrease was largely due to lower sales volumes and higher shutdown related costs and inventory write-offs, coupled with an unfavorable product revenue mix which was weighted more heavily to lower margin products compared with the prior year.
The decrease was largely due to lower sales volumes and higher shutdown related costs and inventory write-offs, coupled with an unfavorable product revenue mix which was weighted more heavily to lower margin products compared with the prior year.
The decrease was driven by reduced production activities at the Company's Winnipeg and Camden facilities. The decreases were partially offset by an increase in production at our Canton facility for a Bioservices customer. Bioservices lease revenue increased $0.8 million, or 16%, to $5.7 million in 2023. The increase was related to a Bioservices customer at our Canton facility.
The decreases were partially offset by an increase in production at our Canton facility for a Bioservices customer. Bioservices lease revenue increased $0.8 million, or 16%, to $5.7 million in 2023. The increase was related to a Bioservices customer at our Canton facility.
These services, which we refer to as “molecule-to-market” offerings, employ diverse technology platforms (mammalian, microbial, viral and plasma) across a network of eight geographically distinct development and manufacturing sites operated by us for our internal products and pipeline candidates and third-party Bioservices.
These services, which the Company refers to as “molecule-to-market” offerings, employ diverse technology platforms (mammalian, microbial, viral and plasma) across a network of development and manufacturing sites operated by the Company for its internal products and pipeline candidates and third-party bioservices.
Gross margin % is calculated as gross margin divided by revenues. (2) Segment adjusted gross margin, which is a non-GAAP financial measure, is calculated as gross margin plus restructuring costs and non-cash items related to changes in fair value of contingent consideration and inventory step-up provision.
Gross margin percentage is calculated as gross margin divided by revenues. (2) Segment adjusted gross margin, which is a non-GAAP financial measure, for our MCM Products segment is calculated as gross margin plus intangible asset amortization, restructuring costs and non-cash items related to changes in fair value of financial instruments and inventory step-up provision.
Gross margin % is calculated as gross margin divided by revenues. (2) Segment adjusted gross margin, which is a non-GAAP financial measure, is calculated as gross margin plus restructuring costs and non-cash items related to changes in fair value of contingent consideration and inventory step-up provision.
Gross margin percentage is calculated as gross margin divided by revenues. (2) Segment adjusted gross margin, which is a non-GAAP financial measure, for our MCM Products segment, is calculated as gross margin plus intangible asset amortization, restructuring costs and non-cash items related to changes in fair value of financial instruments and inventory step-up provision.
This is partially offset by tax credits and favorable rates in foreign jurisdictions. 68 SEGMENT RESULTS COMMERCIAL PRODUCTS Commercial Products Year Ended December 31, (dollars in millions) 2023 2022 % Change Revenues $ 497.3 $ 386.6 29 % Cost of sales 210.3 160.3 31 % Gross margin (1) $ 287.0 $ 226.3 27 % Gross margin % (1) 58 % 59 % Segment adjusted gross margin (2) $ 287.0 $ 226.3 27 % Segment adjusted gross margin % (2) 58 % 59 % (1) Gross margin is calculated as revenues less cost of sales.
This is partially offset by tax credits and favorable rates in foreign jurisdictions. 77 SEGMENT RESULTS COMMERCIAL PRODUCTS SEGMENT Year Ended December 31, (dollars in millions) 2023 2022 % Change Revenues $ 497.3 $ 386.6 29 % Cost of sales 210.3 160.3 31 % Intangible asset amortization 38.6 42.9 (10) % Gross margin (1) $ 248.4 $ 183.4 35 % Gross margin % (1) 50 % 47 % Add back: Intangible asset amortization 38.6 42.9 (10) % Segment adjusted gross margin (2) $ 287.0 $ 226.3 27 % Segment adjusted gross margin % (2) 58 % 59 % (1) Gross margin is calculated as revenues less cost of sales and intangible asset amortization.
MCM PRODUCTS MCM Products Year Ended December 31, (dollars in millions) 2023 2022 % Change Revenues $ 447.2 $ 579.6 (23) % Cost of sales 305.6 264.3 16 % Gross margin (1) $ 141.6 $ 315.3 (55) % Gross margin % (1) 32 % 54 % Add back: Changes in fair value of contingent consideration 0.2 2.6 (92) % Restructuring costs 5.6 — NM Inventory step-up provision 3.9 51.4 (92) % Segment adjusted gross margin (2) $ 151.3 $ 369.3 (59) % Segment adjusted gross margin % (2) 34 % 64 % (1) Gross margin is calculated as revenues less cost of sales.
MCM PRODUCTS SEGMENT Year Ended December 31, (dollars in millions) 2023 2022 % Change Revenues $ 447.2 $ 579.6 (23) % Cost of sales 305.6 264.3 16 % Intangible asset amortization 27.0 16.9 60 % Gross margin (1) $ 114.6 $ 298.4 (62) % Gross margin % (1) 26 % 51 % Add back: Intangible asset amortization 27.0 16.9 60 % Changes in fair value of financial instruments 0.2 2.6 (92) % Restructuring costs 5.6 — NM Inventory step-up provision 3.9 51.4 (92) % Segment adjusted gross margin (2) $ 151.3 $ 369.3 (59) % Segment adjusted gross margin % (2) 34 % 64 % (1) Gross margin is calculated as revenues less cost of sales and intangible asset amortization.
Services gross margin increased $47.6 million, or 30%, to $(111.0) million in 2023. Services gross margin percentage increased 3 percentage points to (141)% in 2023. The increase was primarily driven by one-time costs and reserves related to the Janssen 71 Agreement in the prior year.
Services segment gross margin percentage increased 3 percentage points to (141)% in 2023 . The increase was primarily driven by one-time costs and reserves related to the Janssen Agreement in the prior year.
Fluctuations in revenues result from the timing of the exercise of annual purchase options in existing procurement contracts, the timing of USG purchases, the availability of governmental funding and timing of Company delivery of orders that follow. Other Product Sales Other Product sales decreased $1.5 million, or 3%, to $55.1 million in 2022.
Fluctuations in revenues result from the timing of the exercise of annual purchase options in existing procurement contracts, the timing of USG purchases, the availability of governmental funding and Company delivery of orders that follow. Other Product Sales Other Product sales increased $1.8 million, or 2%, to $94.0 million in 2024.
We assess whether such contingent consideration meets the definition of a derivative. Contingent consideration payments in an asset acquisition not required to be accounted for as derivatives are recognized when the contingency is resolved, and the consideration is paid or becomes payable.
Contingent consideration payments in an asset acquisition not required to be accounted for as derivatives are recognized when the contingency is resolved, and the consideration is paid or becomes payable.
Gain on sale of business Gain on sale of business was $74.2 million for the year ended December 31, 2023, which was attributable to the sale of our travel health business to Bavarian Nordic on May 15, 2023. Other, net Other, net decreased $20.6 million, or 176%, to an income of $8.9 million in 2023.
Gain on sale of business Gain on sale of business was $74.2 million for the year ended December 31, 2023, which was attributable to the sale of our travel health business to Bavarian Nordic on May 15, 2023. Other, net Other, net was $8.9 million in income in 2023 compared to $11.7 million in expense in 2022.
The Company, with the assistance of a third-party valuation firm, applied valuation methods to estimate the fair values for each of the assets within the different asset classes. For the intangible assets, an option pricing model was applied to estimate the assets' fair value.
The Company, with the assistance of a third-party valuation firm, applied valuation methods to estimate the fair values for each of the assets within the different asset classes.
Year Ended December 31, (in millions) 2023 2022 Net cash provided by (used in): Operating activities $ (206.3) $ (34.1) Investing activities 212.3 (381.3) Financing activities (535.7) 481.2 Effect of exchange rate changes on cash, cash equivalents and restricted cash (1.2) 0.5 Net change in cash, cash equivalents and restricted cash $ (530.9) $ 66.3 Operating Activities: Net cash used in operating activities increased $172.2 million in 2023.
Year Ended December 31, (dollars in millions) 2024 2023 Net cash provided by (used in): Operating activities $ 58.7 $ (206.3) Investing activities 125.2 212.3 Financing activities (190.0) (535.7) Effect of exchange rate changes on cash, cash equivalents and restricted cash — (1.2) Net change in cash, cash equivalents and restricted cash $ (6.1) $ (530.9) Operating Activities: Net cash provided by operating activities increased $265.0 million in 2024.
At-the-Market Equity Offering Facility We may, from time to time, sell up to $150.0 million aggregate gross sales price of shares of our common stock through Evercore Group L.L.C. and RBC Capital Markets, LLC, as sales agents, under the ATM Program that we entered into on May 18, 2023.
At-the-Market Equity Offering Facility In May 2023, the Company established an at-the-market equity offering program (the "ATM Program") pursuant to which the Company may, from time to time, sell up to $150.0 million aggregate gross sales price of shares of its common stock through Evercore Group L.L.C. and RBC Capital Markets, LLC, as sales agents.
Note 2, “Summary of significant accounting policies” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K describes the accounting policies and methods used in the preparation of the Company’s consolidated financial statements.
GAAP, which requires management to make estimates, judgments and assumptions that affect the amounts reported. Note 2, “Summary of significant accounting policies” of the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K describes the accounting policies and methods used in the preparation of the Company’s consolidated financial statements.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K (the "Annual Report").
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes and other financial information included elsewhere in this Annual Report on Form 10-K (the “Annual Report”).
Our R&D expenses consist primarily of: ▪ personnel-related expenses; ▪ fees to professional service providers for, among other things, analytical testing, independent monitoring or other administration of our clinical trials and obtaining and evaluating data from our clinical trials and non-clinical studies; ▪ costs of Bioservices for our clinical trial material; and ▪ costs of materials intended for use and used in clinical trials and R&D.
Our R&D expenses consist primarily of: ▪ personnel-related expenses; ▪ fees to professional service providers for, among other things, analytical testing, independent monitoring or other administration of our clinical trials and obtaining and evaluating data from our clinical trials and non-clinical studies; ▪ costs associated with technology transfer and scale up activities throughout the development stage, including internally and through third-party contract manufacturers; ▪ costs of Bioservices for our clinical trial material; and ▪ costs of materials intended for use and used in clinical trials and R&D.
We believe that these non-GAAP operating measures, when reviewed collectively with our GAAP financial information, provide useful supplemental information to investors in assessing our operating performance. NM - Not meaningful Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 Anthrax MCM Anthrax MCM sales increased $27.5 million, or 10%, to $290.1 million in 2022.
We believe that these non-GAAP operating measures, when reviewed collectively with our GAAP financial information, provide useful supplemental information to investors in assessing our operating performance. Year Ended December 31, 2024 Compared with Year Ended December 31, 2023 Anthrax MCM Anthrax MCM sales decreased $49.1 million, or 26%, to $138.5 million in 2024.
Total revenues decreased $68.2 million, or 6%, to $1.0 billion in 2023. The decrease was due to a decrease in MCM Products revenue of $132.4 million, Bioservices revenue of $31.4 million and Contracts and Grants revenue of $15.1 million, offset by an increase in Commercial Products revenue of $110.7 million.
The decrease was due to a decrease in MCM Product sales of $132.4 million, Bioservices sales of $31.4 million and Contracts and grants revenue of $15.1 million, offset by an increase in Commercial Product sales of $110.7 million. Total segment gross margin decreased $71.1 million, or 22%, to $252.0 million in 2023.
The decrease was largely due to a decrease in the per unit selling price in response to increased competition for generic NARCAN ® , partially offset by a decrease in royalty expense. Commercial Products Segment Adjusted Gross Margin is consistent with gross margin.
The increase was largely due to a decrease in royalty expense, partially offset by a decrease in the per unit selling price in response to increased competition for generic NARCAN ® . Commercial Products segment adjusted gross margin excludes the impact of intangible asset amortization of $38.6 million.
The increase was primarily due to higher sales of ACAM2000 ® , BAT ® and AIG, partially offset by lower sales of CYFENDUS ® , coupled with higher allocations to MCM Product COGS at our Bayview facility, shutdown costs and inventory write-offs. MCM Products gross margin decreased $173.7 million, or 55%, to $141.6 million in 2023.
The increase was primarily due to higher sales of ACAM2000 ® , BAT ® and Anthrasil ® , partially offset by lower sales of CYFENDUS ® , coupled with higher allocations to MCM Product COGS at our Bayview facility, shutdown costs and inventory write-offs.
Other Commercial Products (Sold to Bavarian Nordic as part of our travel health business in Mar 2023) • Vaxchora ® (Cholera Vaccine, Live, Oral), the first vaccine approved by the FDA for the prevention of cholera, which we sold to Bavarian Nordic as part of our travel health business; and • Vivotif ® (Typhoid Vaccine Live Oral Ty21a), a live attenuated vaccine for oral administration for the prevention of typhoid fever, which we sold to Bavarian Nordic as part of our travel health business. 60 MCM Products Segment: The majority of our MCM product revenue comes from the following products and procured product candidates: Anthrax - MCM Products • Anthrasil ® (Anthrax Immune Globulin Intravenous (human)), the only polyclonal antibody therapeutic licensed by the FDA and Health Canada for the treatment of inhalational anthrax in combination with appropriate antibacterial drugs; • BioThrax ® (Anthrax Vaccine Adsorbed), the only vaccine licensed by the United States Food and Drug Administration (“FDA”) for the general use prophylaxis and post-exposure prophylaxis of anthrax disease; • CYFENDUS ® (Anthrax vaccine adsorbed (AVA), adjuvanted), previously known as AV7909, which was recently approved by the FDA for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis in persons 18 through 65 years of age when administered in conjunction with recommended antibacterial drugs.
For additional information, refer to Note 3, “Divestitures” in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K. 60 MCM Products Segment: The majority of our MCM product revenue comes from the following products and procured product candidates: Anthrax - MCM Products • Anthrasil ® (Anthrax Immune Globulin Intravenous (human)), the only polyclonal antibody therapeutic licensed by the FDA and Health Canada for the treatment of inhalational anthrax in combination with appropriate antibacterial drugs; • BioThrax ® (Anthrax Vaccine Adsorbed), the only vaccine licensed by the United States Food and Drug Administration (“FDA”) for the general use prophylaxis and post-exposure prophylaxis of anthrax disease; • CYFENDUS ® (Anthrax vaccine adsorbed (AVA), adjuvanted), previously known as AV7909, which was recently approved by the FDA for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis in persons 18 through 65 years of age when administered in conjunction with recommended antibacterial drugs.
Sale of Travel Health Business to Bavarian Nordic On May 15, 2023, pursuant to the Purchase and Sale Agreement (the "Purchase and Sale Agreement"), by and between the Company, through its wholly owned subsidiaries Emergent International Inc. and Emergent Travel Health Inc., and Bavarian Nordic, the Company completed the previously announced sale of the Company's travel health business, including rights to Vivotif ® , the licensed typhoid vaccine; Vaxchora ® , the licensed cholera vaccine; the development-stage chikungunya vaccine candidate CHIKV VLP; the Company’s manufacturing site in Bern, Switzerland; and certain of its development facilities in San Diego, California.
Sale of Travel Health Business On May 15, 2023, the Company completed the sale of its Commercial Products segment's travel health business, including rights to Vivotif ® , the licensed typhoid vaccine; Vaxchora ® , the licensed cholera vaccine; the development-stage chikungunya vaccine candidate CHIKV VLP; the Company’s manufacturing site in Bern, Switzerland; and certain of its development facilities in San Diego, California.
The Company, with the assistance of a third-party valuation firm, applied valuation methods to estimate the fair values for each of the assets within the different asset classes to determine the amount of the impairment. R&D Expenses R&D expenses decreased $76.9 million, or 41%, to $111.4 million in 2023.
The Company, with the assistance of a third-party valuation firm, applied valuation methods to estimate the fair values for each of the assets within the different asset classes to determine the amount of the impairment. Interest expense Interest expense increased $50.6 million, or 136%, to $87.9 million in 2023.
We expect our R&D spending will be dependent upon such factors as the results from our clinical trials, the availability of reimbursement of R&D spending, the number of product candidates under development, the size, structure and duration of any clinical programs that we may initiate, the costs associated with manufacturing and development of our product candidates on a large-scale basis for later stage clinical trials, and our ability to use or rely on data generated by government agencies. 64 Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of personnel-related costs and professional fees in support of our executives, sales and marketing, business development, government affairs, finance, accounting, information technology, legal, human resource functions and other corporate functions.
We expect our R&D spending will be dependent upon such factors as the results from our clinical trials, the availability of reimbursement of R&D spending, the number of product candidates under development, the size, structure and duration of any clinical programs that we may initiate, the costs associated with manufacturing and development of our product candidates on a large-scale basis for later stage clinical trials, and our ability to use or rely on data generated by government agencies.
The Company used a quantitative assessment, utilizing an income-based (discounted cash flows) approach, Level 3 non-recurring fair value measurement, for our goodwill impairment testing. 63 FINANCIAL OPERATIONS OVERVIEW Revenues We generate Commercial Product revenues through sale of NARCAN ® Nasal Spray, which is sold commercially over-the-counter at retail pharmacies and digital commerce websites as well as through physician-directed or standing order prescriptions at retail pharmacies, health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies.
FINANCIAL OPERATIONS OVERVIEW Revenues We generate Commercial Product revenues through sale of NARCAN ® Nasal Spray, which is sold commercially over-the-counter at retail pharmacies and digital commerce websites as well as through physician-directed or standing order prescriptions at retail pharmacies, health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies.
The decrease was primarily due to a decrease in the MCM Products segment gross margin of $173.7 million, partially offset by increases in the Commercial Products segment gross margin and Bioservices segment gross margin of $60.7 million and $47.6 million, respectively.
Total segment gross margin percentage decreased 5 percentage points to 25%. The decrease was primarily due to a decrease in the MCM Products segment gross margin of $183.8 million, partially offset by increases in the Commercial Products segment gross margin and Bioservices segment gross margin of $65.0 million and $47.7 million, respectively.
Total segment gross margin and gross margin percentage excludes contracts and grants revenues because the related costs are R&D expenses. See "Segment Results" for an expanded discussion of revenues and gross profit. Unallocated corporate operating expenses Goodwill Impairment Goodwill impairment increased $211.5 million to $218.2 million in 2023.
Total segment gross margin and gross margin percentage excludes contracts and grants revenues because the related costs are R&D expenses. See “Segment Results” for an expanded discussion of revenues and gross profit. Unallocated corporate operating expenses R&D Expenses R&D expenses decreased $76.9 million, or 41%, to $111.4 million in 2023.
Between the adoption of the ATM Program and December 31, 2023, we sold 1.1 million shares of our common stock under the ATM Program for gross proceeds of $9.1 million, representing an average price of $8.22 per share.
During the second quarter of 2023, we sold 1.1 million shares of our common stock under the ATM Program for gross proceeds of $9.1 million, representing an average price of $8.22 per share. As of December 31, 2024, $140.9 million aggregate gross sales price of shares of the Company’s common stock remains available for issuance under the ATM Program.
The increase in net cash provided by investing activities was primarily due to the proceeds received from the sale of the travel health business during the second quarter of 2023 of $270.2 million, a decrease in payments for the acquisition of businesses of $243.7 million and a decrease of $64.2 million in capital expenditures, partially offset by an increase in milestone payments of $6.3 million for prior asset acquisitions.
The decrease in net cash provided by investing activities was primarily due to the proceeds received from the sale of the travel health business during the second quarter of 2023 of $270.2 million, partially offset by proceeds received in 2024 related to the RSDL ® Transaction and the sale of the Baltimore-Camden facility of $110.2 million, milestone payments received in 2024 related to an asset divestiture of $30.0 million, and a lower capital expenditures of $28.7 million.
The increase was due to an increase in selling, general and administrative expenses coupled with a decrease in revenues during the period. Amortization of Intangible Assets Amortization of intangible assets increased $5.7 million, or 10%, to $65.6 million in 2023.
The increase was due to an increase in selling, general and administrative expenses coupled with a decrease in revenues during the period. Goodwill Impairment Goodwill impairment increased $211.5 million to $218.2 million in 2023.
Variable manufacturing costs primarily consist of costs for materials and personnel-related expenses for direct and indirect manufacturing support staff, contract manufacturing operations, sales-based royalties, shipping and logistics. In addition to the fixed and variable manufacturing costs described above, the cost of product sales depends on utilization of available manufacturing capacity.
In addition to the fixed and variable manufacturing costs described above, the cost of product sales depends on utilization of available manufacturing capacity. For our commercial sales, other associated expenses include sales-based royalties, shipping, and logistics.
SERVICES Services Year Ended December 31, (in millions) 2023 2022 % Change Revenues $ 78.5 $ 109.9 (29) % Cost of services 189.5 268.5 (29) % Gross margin (1) $ (111.0) $ (158.6) 30 % Gross margin % (1) (141) % (144) % Add back: Restructuring costs $ 8.4 $ — NM Segment adjusted gross margin (2) $ (102.6) $ (158.6) 35 % Segment adjusted gross margin % (2) (131) % (144) % (1) Gross margin is calculated as revenues less cost of sales.
The 2023 MCM Products segment adjusted gross margin excludes the impact of intangible asset amortization of $27.0 million, restructuring costs of $5.6 million, non-cash items related to the changes in the fair value of contingent consideration of $0.2 million and the inventory step-up provision of $3.9 million. 80 SERVICES SEGMENT Year Ended December 31, (dollars in millions) 2023 2022 % Change Revenues $ 78.5 $ 109.9 (29) % Cost of services 189.5 268.5 (29) % Intangible asset amortization — 0.1 (100) % Gross margin (1) $ (111.0) $ (158.7) 30 % Gross margin % (1) (141) % (144) % Add back: Intangible asset amortization — 0.1 (100) % Restructuring costs 8.4 — NM Segment adjusted gross margin (2) $ (102.6) $ (158.6) 35 % Segment adjusted gross margin % (2) (131) % (144) % (1) Gross margin is calculated as revenues less cost of sales and intangible asset amortization.
Uncertainties and Trends Affecting Funding Requirements We expect to continue to fund our short-term and long-term anticipated operating expenses, capital expenditures and debt service requirements from the following sources: • existing cash and cash equivalents; • net proceeds from the sale of our products and bioservices; • development contracts and grant funding; • proceeds from the sale of our common stock through the ATM Program; and • our Senior Secured Credit Facilities and any replacement or other lines of credit we may establish from time to time.
Uncertainties and Trends Affecting Funding Requirements We expect to continue to fund our short-term and long-term anticipated operating expenses, capital expenditures and debt service requirements from the following sources: • existing cash and cash equivalents; • net proceeds from the sale of our products and Bioservices; • development contracts and grant funding; • proceeds from potential asset sales; and • our Term Loan Agreement and Revolving Loans.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe terminated our interest rate swaps in June 2023, and we are satisfied with the current fix-float mix of the Company's debt portfolio. Floating rate debt carries interest based generally on the eurocurrency rate, as defined in our senior secured credit agreement, as amended by the Credit Agreement Amendment, plus an applicable margin.
Biggest changeWe terminated our interest rate swaps in June 2023, and we are satisfied with the current fix-float mix of the Company's debt portfolio. Floating rate debt carries interest based generally on the secured overnight financing rate ("SOFR"), as defined in our Term Loan Agreement, plus an applicable margin.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For a discussion of additional risks arising from our operations, see “Item 1A—Business—Risk Factors” in this 2023 Annual Report. Market Risks We have interest rate and foreign currency market risk.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For a discussion of additional risks arising from our operations, see “Item 1A—Business—Risk Factors” in this 2024 Annual Report. Market Risks We have interest rate and foreign currency market risk.
We currently do not hedge all of our foreign currency exchange exposure and the movement of foreign currency exchange rates could have an adverse or positive impact on our results of operations. 87
We currently do not hedge all of our foreign currency exchange exposure and the movement of foreign currency exchange rates could have an adverse or positive impact on our results of operations. 89
Foreign Currency Exchange Rate Risk We have exposure to foreign currency exchange rate fluctuations worldwide and primarily with respect to the Euro, Canadian dollar, Swiss franc and British pound.
Foreign Currency Exchange Rate Risk We have exposure to foreign currency exchange rate fluctuations worldwide and primarily with respect to the Euro, Canadian dollar, Singapore dollar and British pound.
We have assessed our exposure to changes in interest rates by analyzing the sensitivity to our operating results assuming various changes in market interest rates. A hypothetical increase of one percentage point in the eurocurrency rate as of December 31, 2023 would increase our interest expense by approximately $4.2 million annually.
We have assessed our exposure to changes in interest rates by analyzing the sensitivity to our operating results assuming various changes in market interest rates. A hypothetical increase of one percentage point in the SOFR rate as of December 31, 2024 would increase our interest expense by approximately $2.5 million annually.

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