Newly appointed CEO Joe Papa outlined his vision for Emergent BioSolutions, which includes winding down two facilities and laying off 300 employees to save $80 million.
According to an AlphaSense transcript on Wednesday’s first-quarter earnings call, Papa said that going forward, the company will focus on its core products such as growing its over-the-counter opioid overdose nasal spray Narcan and its medical countermeasures business. Additionally, a new chief scientific officer position will be created to improve Emergent’s long-term product pipeline, he said.
“When I stepped into the role of CEO in February, I talked about a multiyear plan to stabilize, turn around and transform our company,” Papa said. The restructuring will improve Emergent’s balance sheet, the company added in a release.
Emergent’s restructuring includes closing down its drug substance manufacturing facility in Baltimore, and its vaccine and drug product site in Rockville, MD. In addition to laying off staffers, Emergent is also eliminating 85 open positions.
“We are confident that these efforts are an important step to achieving greater consistency in operating performance and improving future profitability,” Papa said.
Emergent also said that on Monday, the US Department of Health and Human Services is scaling back its 10-year contract with the company. The HHS is reducing the number of contracted smallpox vaccine doses from 9 million down to 3.5 million, according to an SEC filing. The deal, which was worth $2.2 billion, is now valued at $1.4 billion.
The company will be left with two “streamlined” facilities in Lansing, MI, and Winnipeg, Manitoba, and they are expected to offer “the most flexibility,” Papa said. The company has already received “multiple offers” on one site, he added.
The Baltimore site facing the chop has had multiple manufacturing woes. Most notably, there was a viral vector mix-up between Johnson & Johnson and AstraZeneca’s respective Covid-19 vaccines, leading to millions of doses being discarded. In August 2022, the facility also received an FDA warning letter noting concerns about hygiene and equipment maintenance. It scaled back operations at this facility about a year later.
Emergent has already made a series of personnel cuts in the past year. In August, it laid off 400 employees, and another 130 workers in January 2023. In December, the company had around 1,600 employees.
Overall, Emergent’s new restructuring will cost between $18 million and $21 million in the second half of the year. The company has $78.5 million in cash and cash equivalents, according to its earnings report.
As for its first-quarter earnings, revenue was up 86% to $300 million, compared to last year’s $164 million in the same period. Its bioservices division made $18.5 million, up 28% from last year. In January, the company secured a five-year supply contract with the US Department of Defense worth $235 million for an anthrax vaccine.