The Start—
March 29th, 2023– Step in the right direction–
As the opioid pandemic was raging through America, rising from 40,000 overdose deaths a year in 2012 to 107,543 in 2023, $EBS was crafting the first over-the-counter (meaning being able to be purchased without a prescription)NARCAN nasal spray drug. It got FDA approval, prompting a 70%+ move to the upside, from $7.70 to $13.70.
Usually, this fate is almost guaranteed after an FDA approval for a biotech guarantee. Still, for $EBS, due to its astounding debt, sitting at a mouth-jarring $1.4 billion, that move went south quickly. In the next month, they were down since the FDA approval.
To make their situation worse, $EBS had liabilities due in a year at $1.23 B and beyond a year at $553.7 million, with cash at $651.1 million and $158.4 million worth of receivables, creating a taunting deficit of $974 million at that time.
They still haven’t released the drug, but it will be available in pharmacies in mid-summer 2023.
February 21st, 2024– The Perfect Candidate For the Job—
After not making progress and staying stagnant while accumulating more debt, the big, game-changing move was made: Joseph C. Papa was hired as CEO. Joseph is a legend amongst legends in the biotech field with one hell of a resume. He was the first CEO at Perrigo, overseeing significant growth and increased shareholder value. He was also the CEO of Bausch Health, where he did the impossible, digging them out of a rabbit hole of controversies, debt, and drug pricing problems.
This makes him a very targeted and valuable CEO for a company like $EBS, which is in a similar financial position to Bausch. It’s even to be said that $EBS was in a better situation and more stable than Bausch when Bausch was under Papa’s reign, with Bausch’s debt-to-equity level much higher than EBS’s.
That said, $EBS moved 80% to the upside, but this was just the start of a new wave of upside.
March 28th, 2024– Narcan Everywhere—
On this date, on Emergent’s page, they expressed their constant efforts to push out its Narcan Nasal Spray and make it a readily available drug to help fight against the ever-growing opioid overdose epidemic. They are doing this through 5 steps.
1st to Expand Retail Availability: EBS is working with retail partners to increase the number of locations where NARCAN® is available. This includes pharmacies, grocery stores, and online retailers.
2nd Targeting Specific Locations: EBS is identifying and targeting locations where opioid overdoses are more likely to occur, such as workplaces, schools, and public gathering places. They are encouraging these locations to stock NARCAN for emergency use.
3rd Public Awareness Campaigns: EBS is conducting public awareness campaigns to educate people about the risks of opioid overdose, the importance of having NARCAN available, and how to use it.
4th Advocacy and Policy Support: EBS advocates for policies that support increased access to NARCAN, such as making it eligible for health savings accounts (HSAs) and flexible spending accounts (FSAs). They are also working with state Medicaid agencies to ensure coverage for NARCAN.
5th Partnerships: EBS is partnering with organizations like the National Safety Council to reach businesses and employers and raise awareness about the importance of having NARCAN readily available.
By taking these steps, EBS is actively working to make NARCAN more accessible and increase its use in preventing opioid overdose deaths, which has led to over 107,000 in 2023.
May 01, 2024– Proof To The Pudding–
The new CEO, Joseph C. Papa, immediately implemented his plan. On May 1st, he went all out, cutting over 300 employees and reducing the workforce from 2,500 to 2,200. This move was a massive cost reduction yearly and was planned to deliver $80 million in savings annually.
It didn’t stop there. As I write this, EBS has dropped to 1,600, which means they expect to save $240 million annually with all these employee cuts.
They also set down the blueprint for the next couple of years. To refinance, rebuild, and expand, The Transformative Plan. The first action plan was to eliminate as many costs as possible and their astounding debt. Then, they were to rebuild, meaning they would adopt more manufacturing sites, install more R & D, and continue to have a more extensive drug payroll. Then expand, meaning to really promote their drugs, especially the NARCAN opioid overdose nasal spray, out to the public.
Not only did this happen on this day, but the quarter was a HOME-run by all factors.
If you peek at the right-hand side, you’ll understand that immense growth in any stock is a good sign that it is on the correct trajectory.
Everything and anything was going according to plan here; they cracked a profit, sitting at a net income of $9 million, which sparked massive investor interest once again. Their adjusted EBITDA was the strongest at $66.9 million, with a 166% change, strengthening their case even further.
June 20th 2024— The sale–
They sold their Balitmore-Camden Manufacturing site to Bora Pharmaceuticals for $30 million. Not only was the sale grand, but it also transferred paid employees over to Nora from that manufacturing site, so it was a double-edged sword.
Another Great Move by Joseph C. Papa, strengthening his case!!
July 2nd 2024— Governmental Puppy–
$250+ Million from the U.S. government to supply them with four critical medical countermeasure products.
If you search for the best deals in the past year, this will be near the top of the list of them.
July 9th 2024— Transformative Plan Continuation–
Some words from the CEO himself: “We remain committed to reaching our target of more than $100 million in debt reduction this year while continuing to deliver vital medicines to our customers and patients, creating long-term and sustainable value for shareholders and working toward strengthening our balance sheet so that we have a healthier financial foundation to support our company’s future direction.”
In the SEC filing a day before, they said they would receive $50 million from Janssen by the third quarter of this year. This is a big deal!! Free cash flow!!
July 31st 2024— Selling–
Completes a deal of RSDL® to SERB pharmaceuticals for $75 million: more cash, more cash, less debt, less debt, less debt.
Shredding drugs that may be taking up storage space and manufacturing power can also cut costs. Overall, it is beneficial for the company.
August 6th 2024— 2nd Quarter Shenanigans
This quarter came out as mediocre as possible, which is pretty upsetting.
Back to losses stacking up pretty horribly, the same old $EBS. However, the full year is still staying pretty strong, with positive EBITDA and a revenue increase of 11%.
$EBS is still on the right track, but I veered off just a bit; the bigger picture is still there.
They also cut $50 million of debt this quarter, which is excellent progress nonetheless and probably the main factor they are intensively attacking.
Jumping to Present –August 14th 2024—
The outbreak of Mpox, recently named monkeypox, has raised several global public health concerns and focused attention on the vaccine market, where companies such as Emergent BioSolutions ($EBS) play a crucial role in public health safety. The dire need for vaccines that could fight this virus was felt due to the surge of Mpox cases in 2022, and $ EBS’s positioning in the market proved advantageous due to its already FDA-approved smallpox vaccine.
ACAM2000 is Emergent BioSolutions’ production of a vaccine developed for smallpox and approved by the FDA for emergency use against Mpox. That regulatory approval made $EBS a key supplier during the outbreak. The threat that this virus posed to at-risk populations spurred a very rapid scale-up by governments worldwide, including the U.S., in an attempt to stockpile vaccines. That surge in demand directly affected $EBS sales, developing into a major source of revenue generation for the company.
With FDA clearance for using ACAM2000 against Mpox, $EBS positioned itself at a critical juncture in global healthcare where preparation for infectious diseases became a priority among public health authorities. Being among the few providers of an approved vaccine means $EBS could fulfill urgent needs while positioning itself as a long-term player in the pandemic prevention and response market.
This demand correlated directly and positively with the performance of $EBS stock. As the orders for ACAM2000 surged, $EBS saw a significant rise in its stock price, driven by investor confidence in the company’s ability to meet the rising demands for vaccines. The continued spread of Mpox brought into view the preparedness needed in case of a pandemic and consequently shed light on firms like $EBS providing essential vaccine solutions.
The market for the Mpox vaccine, although still growing, is estimated at several hundred million dollars. With public health authorities seeking to increase their vaccine stockpiles, this market has considerable potential to continue growing. Consequently, the long-term ramifications for $EBS considering it plays a role in preparedness against both smallpox and Mpox-are relatively straightforward: public health bodies are very likely to continue investing in vaccines as protection against outbreaks of either virus.
But it isn’t only the outbreak of Mpox that has given $EBS such great success lately. It has a history of creating vaccines and treatments for infectious diseases and, therefore, has become a natural provider for governments in public health crises. Greater attention being paid to pandemic preparedness, which accelerated with the COVID-19 pandemic and now with Mpox, means $EBS will be relevant and in demand for years to come.
The short-term perspective of this Mpox outbreak was quite the hit on $EBS’s revenue and the stock price. Investors reacted quite well to how the company could meet the needs of a world health crisis in such a very short period. Only strengthening the position further was the FDA approval for ACAM2000 in Mpox. This immediate impact also extends to the possibility for long-term growth as governments continue to note the importance of keeping future infectious disease outbreak supplies on hand.
In total, the outbreak of Mpox has sent a clear signal of the importance of vaccine manufacturers such as Emergent BioSolutions. Due to its FDA-approved ACAM2000 vaccine, $EBS has met the growing demand for vaccines, which in turn has correlated with the performance of its stock. While the global market for Mpox and smallpox vaccines is expected to continue growing, $EBS’s role in providing critical vaccine solutions positions it well in ensuring preparedness against pandemics, setting up this company for continued growth over the next few years.
— -The Great Refinancing — — September 3rd 2024 — -
Emergent Biosolutions before this date had loans that were about to mature in mid-2025, which, if they didn’t pay off in time, would lead to a default, leading to MASSIVE financial implications.
This move was absolutely STELLER by $EBS simply due to the fact they successfully refinanced their debt that was due in 2025 to a loan debt of $250 million with Oak Hill Advisors, which gives them 4 more years and extended maturity to 2029!!!!!
This was such a relief because the sole reason the company reached such depths in the market was the looming threat of bankruptcy due to the inability to pay off its loan, which was very close to maturity.
Now, if $EBS can go on the same path that they were in the previous quarter before the last report, producing ~$50 million EBITDA, it could have this debt paid in just 5 quarters, giving it plenty of time to pay this one off.
It also gives them access to cash, which they could use as an emergency fund to keep them healthy in emergencies or unexpected events.
——-Takeaways——
$EBS is my biggest and will stay my biggest position.
I’m still holding. Despite its relatively low valuation, it’s well-equipped against world issues like the Opioid Pandemic, smallpox, monkeypox, COVID-19, and ANTHRAX.
This is the never-ending list of drugs on their payroll: NARCAN® Nasal Spray, Vaxchora®, and Vivotif®, which they sell to Bavarian Nordic to improve air travel safety; CYFENDUS®, ACAM2000®, VIGIV, and TEMBEXA®; BAT®, RSDL®, and Trobigard®.
By glancing at that list, people may instantly think this is a top biotech company near giants like Phizer, Moderna, and CRISPR.
They receive heavy governmental presence on their Opioid Narcan nasal spray, with the US trying to implement it everywhere, spreading the word through various campaigns and contracts.
Also, the EV/EBIT suggests pricing near $20+.
It’s always been a massive Pharmaceutical company. It’s just had a rough year financially, with an astounding amount of debt, but I expect it to recover, as it has already wiped away $200 million in the past year.
Their new and improved CEO has planned to cut over 50% of staff and eliminate unnecessary manufacturing site expenses.
What is there not to like, except for the iffy balance sheet they are solving with Joseph C. Papa at the helm?
If they can turn a profitable quarter and make immense progress in their debt, as they did two quarters ago, it will shoot back up to $20 rather quickly.
Now, $EBS is at $7.57, but if it could break out of this selling channel daily, we could see big moves to the upside, testing the $15 and $12 key levels.