There were lots of questions for Emergent BioSolutions CEO Robert Kramer after the troubled COVID-19 vaccine maker disclosed first-quarter earnings on Thursday afternoon. But there weren’t many answers.
And that was completely understandable considering the state of his company.
After all, Emergent is the target of a lawsuit by investors, is under investigation by Congress and may soon face scrutiny from the SEC. Emergent’s signature facility is in limbo and under review by the FDA. Meanwhile, many of its contracts are clouded in uncertainty.
So during a quarterly rite that had become an exercise in self-congratulation for Emergent, the company honchos were suddenly on the defensive.
“I want to say upfront that I take full responsibility,” Kramer said. “What’s important now is getting an accurate account of the challenges we face and using the lessons we learned to ensure that Emergent, the government and our partners can be best prepared to get us out of this pandemic.”
After recent manufacturing missteps, Emergent unveiled several executive changes on Thursday. Sean Kirk, the exec VP in charge of manufacturing and technical operations, has taken a “personal leave of absence,” Kramer said.
Syed Husain, senior VP of Emergent’s CDMO unit, is leaving “to pursue another opportunity,” Kramer said. Catherine Hanley has been promoted from within to take Husain's place on an interim basis.
Meanwhile, Mary Oates, who joined Emergent in November after 25 years at Pfizer, is now handling the contract manufacturer's response to the FDA’s list of concerns at the Baltimore Bayview plant which was recently shut down. After a recent inspection of Emergent's Baltimore site, FDA officials flagged a host of cleanliness and quality control issues, including its failure to properly investigate the mistakes that led to the discarded Johnson & Johnson COVID-19 vaccine doses.
The plant was producing COVID-19 vaccines for AstraZeneca and J&J before an error forced the company to discard 15 million doses of contaminated vaccines. Afterward, the U.S. turned vaccine operations at the plant over to J&J. The FDA and Emergent later agreed to halt production there.
Emergent’s stock is down 50% after hitting an all-time high in February, but the company's first-quarter financial numbers didn't quite illustrate the tumble.
“Our financial outcomes in the quarter clearly reflect the strength and durability of our diversified business, evidenced by a significant revenue growth and corresponding profitability,” said Emergent’s CFO Richard Lindahl.
Those numbers will soon change, Lindahl warned.
“These figures do not include certain adjustments that will be made during the second quarter to reflect the impact of recent events, including the U.S. government’s decision to ramp down production of the AstraZeneca COViD-19 vaccine at Bayview,” he said.
Still, if Emergent can address the FDA's concerns and get its plant into acceptable shape, the company could turn its fortunes around. The company plans to submit its response to the recent FDA findings “within days," Kramer said. Meanwhile, a source told Bloomberg that substance for more than 115 million doses of the J&J vaccine are sitting idle at the site and that 60 million are in vials ready to be shipped if the FDA signs off.
“That’s our number one goal,” Kramer said. “It’s J&J’s number one goal, all in furtherance of stabilizing and strengthening the supply chain for this much needed vaccine.”