EBS
#So, as we've talked about, and obviously Building 55 was always intended for large-scale manufacturing, it's an extremely efficient building.
And as we've talked about in the past, we anticipate being able to leverage the efficiencies.
And as <UNK> indicated earlier, if the government is interested in long-term significant quantity purchases, we're willing to be aggressive on pricing.
We'll have to see how this all settles out with the follow-on contract, both procurement as well as development contract.
And when we reinitiate guidance, all of the answers to your questions will be baked into that.
But, right now, it's just premature to speculate on pricing and margins until we have those contracts negotiated.
The way it's structured in the RFP is the development, as well as procurement, is part of the base, and I think the initial dose quantities is 2 million doses with options to procure 12 million, up to 25 million dose regimens.
And a dose regimen is the number of doses in order to protect an individual.
And so, for NuThrax, it's a two-dose schedule, so that would be 50 million.
So, the way the contract is structured is development plus a preliminary procurement, and then options for additional procurement in that 12 million to 25 million dose range; so for us, 12 million to 50 million.
Yes.
So, they do go together.
There is specific numbers in the RFP with respect to the doses.
And again, there is a base contract, and the 2 million is in the base, so that will be part of the award as is currently structured.
We'll have to see what happens in the negotiations, of course.
And then, the options are just that.
They are options to procure additional doses of the products at the government's discretion.
That remains to be seen as part of the negotiations.
The soonest date it could be approved or available for purchase.
I'm not sure ---+ you're talking about approval.
So, as you know, there's this emergency use authorization process that's available for products that are in advanced development.
And so, we would anticipate within the next two to three years the product could be available for purchase under emergency use authorization.
The approval timeline, of course, is beyond that.
Yes.
I think the answer to that is we need to work that through with the government before we can give firm timelines within the plan.
Certainly the research and development expenses that we've reported that are attributable to the biosciences division, those obviously will no longer be incurred by Emergent after August 1.
However, if you're referring to the SG&A expenses and some of the other related costs, I wouldn't look at it as a straight elimination based on how those have been allocated or broken up between the two divisions.
Again, as soon as we work our way through these contract negotiations, we will come out with some updated guidance which will incorporate the new spending patterns, going forward.
Yes, I think the plan is to do a complete switchover for a host of reasons around why Building 55 is so much more effective, efficient, and favorable.
So yes, it'll be a complete switchover.
So, I think we are right now in the process of making that transition, so we see this as a very near-term transition from Building 12 to Building 55.
Let me start with Zika, and I'm actually going to ask <UNK> <UNK>, President of the Biodefense division, to address that.
As you know, it's in our Baltimore site, our ADM site.
<UNK>.
So, basically at this point, we've been awarded I think the only government contract related to Zika, and we're working very closely with BARDA developing a Zika vaccine with some technology that they provided to us.
And over really the next year, we're going to be doing some process development work, manufacturing vaccine that would be able to be tested in a Phase I study.
So, we're excited about that technology and looking forward to leveraging that ADM contact in the facility in [Baden].
On the EBITDA question, so if you go back to what we included in our presentation when we announced the intent to spin the Biosciences business back on August 6 of 2015, we included a page that summarized that, when you looked at the revenue that would go with Aptevo, as well as the cost savings through R&D and SG&A, we were projecting that, if the spin were to have been in place for all of calendar year 2014, we were estimating an EBITDA pickup of somewhere between $40 million and $50 million.
I guess the other data point I would remind you of, or provide you, is when we reported EBITDA for 2015, it was $130 million.
The initial guidance we gave in 2016, while that has now been postponed, was closer to $150 million, which would have incorporated a half a year of improvement in EBITDA as a result of the spin.
So, those are a couple of data points that I'd suggest you consider when you look at that question.
And obviously, as we look to resume guidance at the appropriate time, we will incorporate current thinking on EBITDA savings as a result of the spin.
We're going to resist the parsing out of partial guidance here on BioThrax, as well as the other Biodefense.
Again, I think we'd ask that you be a bit patient.
We expect to be able to work through these contract negotiations and discussions between now and the end of September.
And when we reinitiate guidance, it will incorporate all of the current thinking on all of the parts of the business, but, for now, we're not going to discuss or even give any partial guidance on pieces of the business.
We actually don't have sufficient visibility to give meaningful guidance to you and to the others on the call.
So, I think it is important that we all be patient.
Give us the latitude to work through this.
And as we track towards completion and get these contracts signed, we'll be in a much better place to provide you with the guidance that you need and that we want to give you.
But at this point, we just don't have adequate data to provide the kind of guidance that you would need.
The way I look at this, and you've been with the Company ---+ you've been following the Company for a while ---+ these transitions with the government have always been difficult.
You probably remember the last one.
It was a very difficult negotiation.
And in leading up to this, I think in the quarterly calls we had, I put out there that this is also going to be a difficult negotiation, and it's further complicated by the transition as we see it.
So, my belief is that the government remains firmly committed to the anthrax space.
They're continuing to target that 25 million lives.
BioThrax is the only available and licensed countermeasure by way of vaccines, both on a GUP and PEP indication.
NuThrax is the leading next-generation candidate in the queue, having passed a lot of the tests.
So, we do have a great deal of confidence, given the fact that we've been partnering with the government, both on the development side and the procurement side, including when we think of development, the completion of the Building 55 scale-up for the desired purpose of having additional capacity to address the anthrax threat.
So, there are a number of indicators out there.
You can look at the dose requirements, or the specifications of doses in the NuThrax contract, and prior statements by the government.
So, we have, and I personally have a high degree of confidence that this is absolutely the right move for the organization and that, with the passage of time, we'll have much better clarity to share with you on where things stand with both NuThrax and BioThrax.
So again, I appreciate the comment and the question.
I think, it's spot-on, but given our assessment of the landscape, we think this is the right move for the organization.
Thank you, Charlotte.
With that, ladies and gentlemen, we now conclude the call, and thank you for your participation.
Please note, an archived version of the webcast of today's call will be available later today and accessible through the Company website.
Thank you again.
We look forward to speaking with all of you in the future.
Goodbye.
