Emergent CEO Remarks from Q1’21 Earnings
Thank you, Bob, and good afternoon to everyone. Thank you for joining us. As you know, we have been in the news lately primarily related to our COVID-19 manufacturing activities. As a result and given that our core business continues to operate pretty much as planned, I will focus my prepared remarks around the news and let the core business speak for itself. My comments are summarized on Slide 7 in the deck accompanying this call.
The Executive Management Team and I remain committed to providing you with accurate information and open communications. I’d like to start by addressing our ongoing role and involvement in the urgent battle against COVID-19.
Since our founding, Emergent has been steadfastly committed to quality. That started in 1998 from the day we acquired our first manufacturing facility in Michigan and worked with the U.S. Department of Defense and FDA to make it state of the art. Over the last two decades we have dedicated ourselves to delivering on our mission to protect and enhance life through the quality of our products.
Prior to 2020, we were operating our Bayview facility as a clinical development site. We had been preparing to seek licensure from the FDA for the facility to transition it to a commercial-scale site. Then, the pandemic hit. Thousands of lives were being lost daily. We stepped up, along with the U.S. Government and our partners, to increase global vaccine production capacity. We took on the Herculean task of progressing Bayview from a facility originally designed to develop and manufacture fifty million doses of a single influenza vaccine to one capable of producing hundreds of millions of COVID-19 vaccines. This was a remarkable accomplishment, given the circumstances. But a necessary one given the severity of the pandemic.
There has been a lot of misinformation about what happened at Bayview. Before I discuss the details, I want to say that I take full responsibility and you have my commitment that we are doing everything we can to resolve these issues as quickly and safely as possible.
As you know manufacturing biologic products is difficult and complex, and there are many intricate and detailed steps required. In parallel with those steps are checks, tests, and fail safes. Product loss occurs for a variety of reasons, especially during the early stages of a scale up of a biologic product, as biologic processes and repeatability can be challenging. But the loss of a batch for viral contamination is extremely serious and we treated it as such. The FDA did as well, which is why they initiated in April of this year a for-cause inspection of the to-be-licensed facility. We had implemented multiple layers of disinfection and other protocols to lessen the inherent risk of cross-contamination. We believe that the batch was likely contaminated when one or more of these precautions did not function as anticipated resulting in the transmission of the AstraZeneca virus to the J&J production suite. Importantly, our rigorous safety and quality protocols worked as designed, identifying this contaminated batch to ensure that it never left our facility.
Much has been made about the choice to put two viral product candidates in one facility. Cross-contamination is a well-known risk when producing drug substance for multiple viral products in a single plant, which is exactly why there are so many fail safes and quality control measures. But the odds of one or more COVID-19 vaccines in development failing was extremely high which is why the government bet on multiple candidates. It’s easy to go back and second guess these decisions that were made in the early stages of the pandemic. At the time, no one knew how fast we could get to a clinically viable vaccine and which candidates would be most successful. We committed to manufacture Johnson & Johnson’s COVID-19 vaccine candidate at Bayview, and the U.S. Government reserved the remainder of our capacity and subsequently directed us to manufacture AstraZeneca’s COVID-19 vaccine candidate at the same facility.
Everyone should keep in mind that this rapid scale up of manufacturing had never been done before: we took a process that normally takes years and condensed it into months. We didn’t flinch at that challenge because that’s what this company is built for: we take on public health challenges that others won’t. What’s important now is getting an accurate account of the challenges we faced and using the lessons we learned to ensure that Emergent, the government and our other partners can best be prepared to get us out of this pandemic and ready for the next public health crisis.
We are disappointed that this situation has been reported in a way that may have eroded public trust in our ability to deliver. For things we should have done differently, my leadership team and I bear full accountability. But I take issue with the unfair criticism of the dedicated team of more than 400 Emergent professionals in Baltimore Bayview who have been working literally day and night for a year to make sure vaccine can be made available to the public. In all of this, they are no different from our front-line healthcare workers. None of us are perfect, and I take responsibility for our ultimate performance as a company.
I do want to acknowledge the many people who have sent messages of support and encouragement to our team and I appreciate that – those who have stuck with us, recognized the challenge we have taken to combat the pandemic, and are rooting for us to succeed. Because when Emergent succeeds, the public benefits. And that’s what we are all about.
We have welcomed the FDA’s involvement and the strength of their independent, scientifically rigorous review. They have issued their inspection findings and our team is expecting to submit within days a comprehensive response to those findings that is designed to meet or exceed the FDA’s standards. We appreciate constructive, on-going dialogue with Johnson & Johnson and their support as we work on a path forward. If the FDA is comfortable with the approach we propose, I am hopeful that we can soon return to producing the tens of millions of doses per month.
I’ll stop there and turn the call over to Rich who will take us through the results for the first quarter. Rich?