Bob Burrows - VP, IR Dan Abdun Nabi - CEO Bob Kramer - President and COO Rich Lindahl - EVP, CFO and Treasurer Adam Havey - EVP, Business Operations.

Dana Flanders - Goldman Sachs Brandon Folkes - Cantor Fitzgerald & Co Yuko Oku - JPMorgan Keay Nakae - Chardan Capital Markets François Brisebois - Laidlaw Boris Peaker - Cowen and Company Lisa Springer - Singular Research.

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Emergent BioSolutions Inc Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Robert Burrows, Vice President of Investor Relations. You may begin..

Thank you, Soniya, and good afternoon, everyone. Thank you for joining us today, as we discuss the operational and financial results for the second quarter and six months of 2018 for Emergent BioSolutions. As is customary, today's call is open to all participants, and in addition, the call is being recorded and is copyrighted by Emergent BioSolutions.

Participating on the call with prepared comments will be Dan Abdun Nabi, Chief Executive Officer; Bob Kramer, President and Chief Operating Officer and Rich Lindahl, our newly appointed Chief Financial Officer. Other members of the senior team are present and available during the Q&A that will follow our prepared comments.

Before beginning, I will remind everyone that during today's call or either on our prepared comments or the Q&A session, management may make projections and other forward-looking statements related to our business, future events; our prospects or future performance.

These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate.

Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. Investors are therefore caution not to place undue reliance on any forward looking statement.

Any forward looking statements speaks only as of the date of this press release and except as required by law; we do not undertake to update any forward looking statement to reflect new information, events or circumstances.

Investor should consider this cautionary statement as well as risk factors identified in our periodic reports filed with the SEC when evaluating our forward-looking statements.

During our prepared comments as well as during the Q&A session, we may also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures, in order to provide greater transparency regarding Emergent's operating performance.

Please refer to the tables found in today's press release regarding our use of adjusted net income and EBITDA and the reconciliations between our GAAP financial measures and these non-GAAP financial measures. For the benefit of those who may be listening to a replay of the webcast, this call was held and recorded on August 2, 2018.

Since then, Emergent may have made announcements related to topics discussed during today's call. You're once again encouraged to refer to our most recent press releases and SEC filings, all of which may be found on the Investors home page of our website.

And with that introduction, I would now like to turn the call over to Dan Abdun Nabi, Emergent BioSolutions' CEO.

Dan?.

Thank you, Bob. Good afternoon, everyone and thank you for joining us. During our call today, I'll focus my remarks on recent trends in the public health threats, while Bob will discuss our progress in our global operation.

Rich will then summarize our financial performance for the second quarter and first half of the year and provide our financial guidance. As you saw from the press release this afternoon, our performance is solidly in line with expectations and we believe we remain on track to achieve targeted financial and operational goals for the year.

With that I'd like to highlight recent developments and trends in the public health threats, specifically in Europe and in the United States. During the June summit of the European Council CBRNE threats were a major topic, particularly in light of the recent nerve agent attacks in the United Kingdom.

The 28 EU Heads of State formally endorsed the strategy for dealing with CBRNE threats in Europe. This was published in the European Commission joint communication would stress the need to accelerate full implementation of the EU CBRNE action plan.

That plan contemplates that each member state will establish stockpiles of medical countermeasures and take steps to enhance access to and enable rapid deployment of those stockpiles.

The summit stressed the seriousness of these threats and urge member states to move expeditiously to implement plans that protect their populations, military forces and territories from the full spectrum of CBRNE threats. At the EU level, this is the highest possible political endorsement for stockpiling of CBRNE medical countermeasures.

The timing and funding of these stockpiles is now up to each member state, 24 of which are signatories to the joint procurement agreement, which established the joint procurement mechanism aimed at securing access to specific medical countermeasures and improved security of supply.

These developments support our view that the international public health threat market and need for preparedness solutions has growing momentum. In the United States, Congress continues to advance the reauthorization of the Pandemic All- Hazards Preparedness Act or PAHPA commonly referred to.

PAHPA was first enacted in 2006 to improve the nation's public health and medical preparedness and response capabilities for emergencies whether by deliberate, accidental or natural causes. It also established the office of the Assistant Secretary for Preparedness and Response or ASPR within HHS.

The original legislation created important new authorities for medical surge capacity, as well as for advanced development and acquisitions of medical countermeasures. Finally, it provided necessary resources for state and local emergency preparedness and response initiatives.

This five-year reauthorization of PAHPA which is now in its twelfth year will sustain and enhance key preparedness and response programs, and will allow for the shift of the Strategic National Stockpile or SNS from CDC to the ASPR.

This change is intended to align the oversight and operational control of the SNS with the broad emergency logistics and response mission of the ASPR. The legislation will also authorize resources for the development of medical countermeasures for pandemic influenza and emerging infectious diseases within BARDA.

In this regard, the legislation authorizes funding increases for BARDA, project Bioshield and the SNS.

The longevity of PAHPA and the willingness of Congress to increase program funding demonstrate the government's continued commitment to CBRNE preparedness and response and support our view that the domestic public health threat market is firmly established and growing.

To reinforce this view, last June the National Academies of Sciences published a result that was sponsored by the Department of Defense. The study's focus was to assess the changing nature of the bio defense threat in the age of synthetic biology.

The report concluded that synthetic biology expands the possibility for creating new biological weapons while decreasing the time required engineering such organisms.

The highest level of concern noted in the report included recreating known pathogenic viruses, making existing bacteria and viruses more dangerous and making bio chemicals via MC2 synthesis among others.

Based on the threat assessment, the study recommends that the DoD and its partners in the Chem-bio defense enterprise pursue ongoing and continue exploring nimble defense strategies that are applicable to a wide range of chemical and biological threats.

We're also seeing significant efforts by governments and NGOs to address the threats posed by emerging infectious diseases. Earlier this year the WHO updated its R&D blueprint list of priority diseases.

These are emerging diseases with potential to generate a public health emergency for which insufficient or no preventive and curative solutions exists. And for which there is an urgent need for accelerated research and development. The list includes Ebola, Marburg, Lassa fever, Nipah and Zika among others.

Aligned with these priorities BARDA and the Coalition for Epidemic Preparedness Innovations or SEPI are examples of organizations focused on advancing vaccines and therapeutics to address these threats.

SEPI is employing an innovative approach to funding vaccine development unlocking research and development potential early so that vaccines are ready for efficacy studies during an outbreak.

To that end, SEPI established a collaboration with emergent and Profectus BioSciences under which SEPI would provide funding to advanced development and manufacture of a vaccine against the Nipah virus. What we are seeing is that public health threats represent a major concern across the globe.

Domestic, international governments as well as NGOs are expanding their preparedness efforts. Given Emergent's 20 year track record of developing, manufacturing and delivering countermeasures, we are uniquely positioned to be a solutions provider in this field.

We leverage our decades of experience in contracting and partnering with governments, NGOs, academia and industry.

A broad portfolio of marketed medical countermeasures, operational and manufacturing capabilities including our center for innovation and advanced development and manufacturing, design research manufacturing of countermeasures during public health emergencies, and a robust pipeline that includes dual market product candidates.

When we established our 2020 growth plan, it was with a focus on addressing these global public health threats.

We're now halfway through that plan and are pleased with our growth trajectory driven by organic growth, acquisitions of revenue generating assets, a focus on externally funded R&D program and optimized business unit structure and perhaps of greatest importance, a strong experienced and dedicated team.

We look forward to advancing our efforts to address these public health threats and to updating you on our progress towards the achievement of our near and longer-term goals. I'll now turn the call over to Bob Kramer, our President and COO.

Bob?.

Thank you, Dan and good afternoon, everyone. And thank you for joining the call. For my comments today, I'm going to focus on the current state of our operations across each of the four business units.

And as a reminder, these units include vaccines and NI infectious, our antibody therapeutic business unit, devices and then our contract development and manufacturing or CDMO business unit. Let me begin with an update on the vaccine and NI infectious business during the second quarter.

This business unit consists of BioThrax and ACAM2000 As well as a portfolio of development programs notably new NuThrax plus our Zika and flu vaccines and the antimicrobial candidates.

During the quarter, we successfully delivered both delayed ACAM2000 doses from the first quarter, as well as those doses anticipated for the second quarter thus catching up the level anticipated at the beginning of the year.

We expect to complete all open delivery orders with the US government for ACAM2000 this year and further expect to advance discussions with the goal of a new contract in place by year-end 2018, thereby ensuring an uninterrupted supply of this critical countermeasure into our country's strategic national stockpile.

Similarly, we continue to engage in discussions with global customers who like the US government have previously procured ACAM2000 as part of a stockpiling strategy to protect their military and civilian populations against the threat of smallpox.

During the quarter, we also successfully delivered both the delayed BioThrax doses from the first quarter as well as those anticipated for the second quarter thus catching up to the level anticipated at the beginning of the year.

On the international front, we have an update on the successful completion of our mutual recognition program for market authorization of BioThrax across Europe, which we announced in mid April of this year.

As of today, BioThrax has now received official market authorization in four of the five concerned member states that were highlighted in our April press release.

We look to leverage the success across other EU countries as we execute on a longer-term goal of generating revenue from markets outside the US in excess of 10% of the total revenue by 2020.

For our next generation anthrax vaccine program, NuThrax, we continue to progress toward Emergency Use Authorization or EUA submission by the end of the year, an initiation of the Phase 3 trial in the first half of 2019.

Activities in the second quarter center around continued manufacturing of engineering runs, supporting the initiation of process validation which we anticipate completing this quarter. This is a key to supporting our EUA submission to the FDA which we anticipate fulfilling by the end of this year.

Regarding our various development initiatives in this business unit, both partnered and being conducted on our own, we continue to make progress in each case as we move these important programs along the clinical path. Next is the antibio therapeutic business unit.

This BU consists of four marketed products including Anthrasil, BAT, VIGIV and Raxibacumab, as well as a portfolio of development programs notably the flu and Zika hyper immune candidates.

During the quarter, we delivered units of all four antibody therapeutic products in our portfolio under existing contracts, as well as expanded sales to select international customers.

Of note, in response to the public health threat with an ongoing botulism outbreak in the Ukraine, we have been working closely with United Nations to deliver Bat, our botulism antitoxin treatment to ensure access to this critical only in-class medical countermeasure.

Next, we continue to make progress in transferring the manufacturer of Raxibacumab the monoclonal antibody therapeutically acquired from GSK last year to our Baltimore facilities. As stated in prior calls, GSK will continue to act as the CMO for this product until we complete the tech transfer.

Notably, we completed our FDA type C meeting during the quarter, an important milestone in supporting this project. In terms of other development initiatives, the Phase 2 trial for our FLU-IGIV candidate remains open and we stand ready to resume recruitment of patients for this important trial once the upcoming flu season has begun.

We're working to recruit a total population of 75 patients for this trial, which will be evaluating safety, pharmacokinetics and clinical benefit. We expect to complete the trial in 2019.

As for our Zika hyper immune candidate on the same platform, we just announced Tuesday of this week that we've launched our Phase 1 trial and are targeting completion in 2010. Next I'll turn to the devices business unit.

This business use includes RSDL and TROBIGARD as well as a portfolio of development programs notably the SIAN device in various auto-injector constructs stemming from Emergard platform.

We continue to deliver both RSDL and TROBIGARD against existing contracts with domestic and international customers and are actively working on expanding existing as well as adding new customers. During the quarter, we made progress on our SIAN and dual chamber or D4 auto injector development projects.

Specific to D4, we submitted a pre IND package to the FDA. Additionally, we continue to conduct a number of clinical studies on both RSDL as well as select auto injector based constructs where we're assessing a variety of alternative API's addressing other chemical threats.

Lastly, I'll turn to our contract development and manufacturing or CDMO business unit, which serves both internal as well as external customers. We continue to advance our pilot plant expansion at the CIADM facility, our Bayview site in Baltimore.

And again as a reminder this is a key component of our CIADM partnership through joint investment with the US government in establishing core capabilities in support of pandemic and emerging infectious disease response needs of our government customers.

We also initiated our Camden fill/finish expansion plan or investing up to $50 million over the next three years. This effort will enable continued success in growth in our CDMO business unit through the addition of capacity and capabilities aligned with the growing needs of our current and new commercial customers. Lastly.

This business unit will provide technical and manufacturing support in pursuit of a vaccine against the Nipah virus under a development consortium that includes Profectus BioSciences, the Coalition for Epidemic Preparedness Innovations or SEPI, as well as Emergent.

In summary, Emergent operations today continue to perform well as demonstrated by reliable, quality driven manufacturing operations in support of our supply chain needs, margin performance in line with expectations, continued progress of development candidates across the business unit portfolio, and growth driven investments in infrastructure including Bayview and Camden.

That concludes my prepared remarks.

And I'll now turn it over to rich who will take us through the numbers Rich?.

Thank you, Bob. Good afternoon, everyone, and thank you for joining the call. For my prepared comments today, I will walk through the P&L performance for the second quarter, as well as the year-to-date period. Then shift to the balance sheet and address the state of our capital structure.

Finally, I'll finish up with comments on full year and third quarter guidance. With that let's first look at our second quarter performance.

As you can see in our earnings press release, our second quarter results were very strong across the board, and reflect the impact of delivery timing of both BioThrax and ACAM shipments that is previously disclosed had shifted from the first quarter to the second quarter, As a result, we are now caught up to our original expectations through June.

Turning now to the numbers. Second quarter total revenues were $220 million substantially higher than the prior year, compared to the same period in 2017 second quarter 2018 revenue highlights are as follows. First product sales.

Product sales during the quarter were $180 million higher principally due to the catch up in BioThrax shipments as well as sales of a ACAM and Raxibacumab which as you know were both acquired in the fourth quarter of 2017. Additional contributions came from sales of our RSDL, Anthrasil and our nerve agent antidote auto injector device TROBIGARD.

Second, Contract Manufacturing Services. CMO revenues grew by over 46% to $24 million due primarily to the completion of certain contract manufacturing activities performed at our Canton Massachusetts facility which as you will recall came along with the acquisition of ACAM in October 2017. And third Contracts and Grants.

CNG revenue was $16 million, down 21% due to reduced R&D activities associated with select programs for which we receive development funding. Gross margin came in at 56% level with where we were in 2017. BioThrax accounted for 35% of total revenues while other product sales represented 47% of the total.

Total product sales accounted for 82% of revenue, and CMO 11%. The mix of product and CMO revenue continues to have an impact on our blended gross margin in any reporting period.

On a sequential basis, gross margin for the second quarter clearly showed a market improvement from the first quarter, driven by the significant increase in higher margin product sales. Turning to operating expenses. Gross R&D expand was $25 million, down 4%.

After adjusting for contracts and grants revenue, our net R&D expense was $8 million, or 4% of net. As a reminder, net revenue is calculated as total revenue less contracts and grants revenue.

As we look to further expand our product pipeline through select R&D investments, we continue to manage our discretionary investment in development programs that are not currently supported by third-party funding partners.

SG&A expenses for the quarter were $40 million, up $8 million and driven primarily by additional professional services and compensation related costs. As a percentage of total revenue, second quarter SG&A expenses were 18% versus 32% in 2017 and 34% in the first quarter of 2018.

We will continue to carefully manage our operating expenses as we grow the business and pursue our 2020 financial and operational goals.

For Q2, 2018, the provision for tax expense in the amount of $15.7 million includes a discrete benefit of $900,000 primarily related to stock compensation activity resulting in an effective tax rate of 24% in the quarter, which is in line with the improvement we estimated following the Tax Cuts and Jobs Act of late last year.

In terms of our profitability measures, second quarter net income was $50 million and adjusted net income was $55 million, both significantly up over 2017 and reflecting the sizeable contribution of the deliveries of BioThrax and increased profitability as a result of our acquisitions of ACAM and Raxibacumab.

Finally, second quarter EBITDA was $79 million, up over the $18 million in the same period in 2017. Turning to year-to-date performance. Through the first six months of 2018, our business is performing well and is right where we expect it to be at this point in the year. Here are some key highlights.

Total revenue of $338 million, an increase of $120 million, or 55% above prior year. Total product sales of $256 million, up $110 million, or 76%. This figure includes other products sales of $158 million, which is a $109 million increase over the prior year.

The increase in other product sales is almost entirely due to the incremental contribution of ACAM, Raxibacumab and TROBIGARD which did not have sales in the prior year period. CMO services revenue was up $16 million, or 47% versus the same period last year.

Gross margin was 52%, still below our target range but reflecting the blending effect of the lower gross margin realized in the first quarter of 2018.

Our net R&D expense was $21 million or 7% of net revenue, reflecting the continued controlled investments in our pipeline, principally in the antibody therapeutics as well as anti microbials portfolios we have in development.

Our total SG&A spend of $80 million is higher than prior year but as a percentage of total revenue is 24%, which is substantially below of 2017 at 31%. Our net income is $45 million versus $15 million and adjusted net income is $53 million versus $21 million, reflecting net and adjusted net income margins of 13% and 16% respectively.

And finally at mid-year 2018, we have generated over $82 million in EBITDA compared to $43 million in the first six months of 2017. Turning to the balance sheet. We are maintaining a strong liquidity position as we ended June with a $190 million of cash and a receivables balance of another $189 million.

We also have in place a credit facility that provides up to $200 million of borrowing capacity. Accordingly, we continue to have the capital resources necessary to both support our operations and pursue M&A opportunities. That completes a review of the quarter and year-to-date. Let me turn now to our guidance.

We have reaffirmed our full year 2018 financial guidance of total revenue between $715 million and $755 million. Pre-tax income of $120 million to $140o million. Net income of $95 million to $110 million; adjusted net income of $110 million to $125 million; and EBITDA between $175 million and $190 million.

As always, the outlook does not include estimates for potential new corporate development or other M&A transactions except for specific diligence related expenses required to support our ongoing M&A efforts.

Lastly, we have guided to third quarter total revenue of $165 million to $190 million reflecting continued deliveries of BioThrax, ACAM and the other product assets in our portfolio, as well as execution across our CDMO services business. That concludes my prepared remarks.

And I'll now turn the call over to the operator to begin the question-and-answer session.

Operator?.

[Operator Instructions] Our first question comes from Dana Flanders of Goldman Sachs. Your line is now open. .

Hi. Thank you very much for the questions. My first one here is just on Europe. Can you just elaborate a little bit on some of your comments that you opened up the call with? It sounds like there's some tangible evidence that's moving in the right direction.

I mean what are you expecting to see over the next 12 plus months to get that really going? How are you guys positioned there to really capitalize on that? And then I have a follow-up..

Yes. Thank you for joining the call this afternoon and for the question. It is really one of the most exciting developments in the public health threats landscape globally. It is really the first time we've seen such a strong statement by the EU Commission regarding the importance of stockpile maintenance, establishment and preparedness solutions.

And it's something candidly that our government affairs team has been actively involved in for quite a number of years. So we see this as a watershed event. Of course, the responsibility now shifts to each of the member states to determine how exactly they intend to implement it.

So we intend to engage with the various member states, understand what the requirements might be, understand the timing for their stockpile, for their stockpiling efforts and how they want to go about addressing the threats that exist within each of their particular jurisdictions.

As you can appreciate their priorities and their needs are going to be different, and their timelines are going to be a bit different. So what I would expect to see is a gradual expansion of the market based on each individual jurisdiction rolling forward with their unique plans. So stay tuned.

We don't have a lot of details on how this is going to actually unfold, but as we get into deeper conversation with member states we will have much better understanding for the policy directives that they'll be launching over the course of the next 12 to 24 months..

I guess the other thing, Dana, I would add to Dan's comments. As we've talked about and shared with you, we've been carefully monitoring the development of what we see as a maturing international market environment. We are preparing to make and have made some investments already and ramped up sales presence in carefully selected European countries.

And clearly with our expanded manufacturing infrastructure, we don't have any supply constraints or concerns. So we think we're well positioned to again capitalize on those opportunities that Dan mentioned as they mature..

Okay, great thanks for that color. And maybe just a follow up here. Can you just touch on what you're seeing on the M&A landscape? I know you guys are kind of teed up to do a deal. I haven't seen anything yet. Are there assets out there or prices too high, maybe just give us a little bit of a flavor on that front.

And then give us an update on how you are thinking about dual market opportunities. Thank you..

Sure. Thanks for the question. Yes, we do believe there are a number of opportunities out there. And as we've discussed with our shareholders and investors in the past, we have I think a robust funnel, everything from early negotiations, early identification of opportunities all the way through to later stage.

So my sense is we are confident that we'll be able to execute on the goal of an acquisition this year. And we're looking at products as well as business opportunities in the various business units. We are focused on expanding on the capabilities and the product offerings of the business units.

As we've said in the past, we're looking for revenue generators and targeting opportunities that can be an accretive to the business within about 12 months or so. So we continue to advance those efforts and remain confident that we can execute on an acquisition this year. In terms of dual market, it is a priority, it's not always available.

But to the extent that we can identify opportunities that have dual market capabilities and offerings for us, it is something that we would like as we talked about in terms of diversification of the business, get into those targeted commercial opportunities whether it's specialty clinics or specialty medical practices.

For us, that is a priorities we think about --I think about diversification of the operations in the business..

Thank you. Our next question comes from Brandon Folkes of Cantor Fitzgerald. Your line is open..

Hi, guys, thanks for taking my question. Could you talk about your margin profile going forward? I know it's obviously lumpy quarter-to-quarter based on product mix, but organically do you see that you have the operation leverage in your business to expand your margin between now and 2020 outside of business development? Thank you..

Yes, hi, Brandon. This is a Rich Lindahl. Thanks for the question. We do think there is an opportunity organically to improve our margins over time. I think there's a number of areas that we think are going to be potential there.

As you know, the gross margin reflects a mix of both our higher margin product sales, as well as our lower margin services revenue. So that's always going to be a factor.

I would point out that in the case of both our ACAM and Raxi products the margin does reflect some amount of drag from the non-cash intangible amortization expense that goes along with that in the first six months of the year that represented about a 150 basis points on the gross margin.

But as those product revenues grow we should see some scale efficiencies on that. And then in addition, we see a number of ways to improve margins by driving increased operating efficiencies, by increasing the capacity utilization in our facilities by bringing the production of Raxibacumab in-house and other items like that.

So I think we are confident that over time we'll drive margins up..

Thank you. Our next question comes from Jessica Fye, JPMorgan. Your line is now open..

Hi, this is Yuko on the call for Jessica. Thank you for taking our questions.

With the announcement of the expansion of the Baltimore fill/finish facility would you talk about the potential customer segment that you plan to target to fill that additional capacity?.

Yes, Yuko, thanks for joining the call. This is Bob. As we look to again strategically make investments in that fill/ finished business, we do that knowing that we have currently demand that exceeds our capacity today. So it's both looking at increasing the capacity for the customers that we serve today, as well as adding new capability.

And also being able to support a growing portfolio of our own internal products. So it's really a combination of all three that we're looking to achieve there..

Thank you. Our next question comes from Keay Nakae of Chardan. Your line is now open..

Yes, two questions. First wondering if you can give us a baseline for where international sales are today? And second question any updates on the timing to transfer Raxi to your facility..

Yes. So on the timing for Raxi transfer, why don't you talk about that Bob and then international maybe Rich you could handle that one..

Sure. Hi, Keay. How are you? So we expect to be able to complete the tech transfer of Raxi somewhere in that 2020 time period. Everything's going according to plan. We're making good progress. As we said, we continue to use GSK as the contract manufacturer for that product, while we do the tech transfer. So you should expect something in those timeframes.

.

Maybe Rich you can address the international or OE sales..

Sure. As you know, we've set a goal by 2020 of getting to at least 10% of our revenue coming from international sales. We're not there at this stage. We're below that level, but we're making steady progress towards that goal. And so watch for us to continue to move towards that goal over the next couple years. .

Thank you. Our next question comes from François Brisebois of Laidlaw. Your line is now open..

Hi, thanks for taking the question.

Just a couple here, in terms of the other bio defense you guys breakout at all what was maybe stronger or weaker in terms of revenue numbers?.

Yes. Bob actually which maybe you could talk about whether we actually break that out. I don't think we are breaking out the other product revenue so really describing BioThrax and the other products are lumped together under other product revenue -- other product sales..

That's right. I mean I think we're breaking out BioThrax which you can see in the schedule in the press release. All the other product sales suffice it to say that that ACAM is the largest contributor there, and then obviously we've gotten additional contribution this year which you really see in the year-over-year comparison in the first six months.

It's really and driven largely by the incremental impact of both ACAM Raxibacumab as well as some TROBIGARD as well. So that's kind of how I describe that..

Okay, great, thank you. And then just in terms of the process for ACAM to make sure that there's no break in production just for the follow-on contract.

Can you discuss how that comes around? How you guys get to the table and discuss this contract?.

Yes. So I'll start and maybe Bob you could add some additional color. It's pretty standard practice in terms of how the government goes about the contracting process.

It's very similar to the contracts that we've executed across the portfolio over the past many, many years but maybe a little bit greater granularity Bob in terms of the RFP and the response and all that..

Yes. So I think Franc by the way thanks for joining the call. I mean I think Dan's comments are spot-on and that it's going to be a fairly standard contract negotiation process. CDC will follow their requirements for procuring an RFP and publishing it, we will respond to it. We will enter into contract negotiations.

So as I said in my prepared remarks, we're focused right now on completing the deliveries of the current contract and those delivery orders and look forward to sitting down with government to have more substantial conversations around that follow on contract this quarter in preparation for getting something in placed by the end of the year. .

Okay, excellent.

And then just one last one, I don't know if I missed it but are you guys still comfortable with the [2020] billion top line goal?.

I think that remains the target for the company. That goal is something that we remain comfortable with and moving to achieve. .

Thank you. Our next question come Boris Peaker of Cowen. Your line is now open..

Good afternoon. Hello, can you hear me? Great. So I just maybe start with Zika vaccine.

Just curious what is the commercial potential for that vaccine? And with that be a seasonal vaccine or not?.

Thanks for the question. And it is something that we've been thinking a lot about in terms of what the market opportunity might be and what the target population is might be.

So from that manage point there is a lot of discussions that we've undertaken right now with the US government in term of how they think about preparedness for that emerging infectious disease.

In particular, I am speaking to some public health authorities about what is the age indication, the target age indication for the vaccine and what might be optimal. And when we think about it we also think about it beyond just US requirement but also potential global requirement.

So we haven't actually framed out at this juncture the entire commercial opportunity for us. Our thinking is in the formative stages but at the end of the day, we do believe that there is a significant commercial opportunity, the exact contours of it remain to be refined and will do so as we continue to develop this product and advance it..

Great and my second question are on the European opportunity of a body defense agents. I mean it sounds like a very exciting room for expansion.

And I'm curious are there any specific programs or products that have been procured in Europe that we could use as a reference for the timeline or the process that some of the --at least larger European countries use to buy such agents..

Yes, Boris, this is Bob. So you should expect that there will be in most of these more developed countries that the typical tender process that happens that we will respond to.

Our interest is again making sure that we stay informed and aligned as these countries mature their strategy for protecting their civilian and military populations from these chemical and biologic threats. And stand prepared to support the decisions that they make.

So again I think you should expect to have some visibility when they do and initiate tenders. The process could take 6 to 12 months, but we're standing side by side with these countries working with them to be responsive to their needs..

And I'll just add that many of the European countries have already procured a number of products in the portfolio. And again it's unique to each country as to what specific countermeasure they're looking for. So it's-- we're not starting from a standing start.

There will be some relationships that have already been established and it gives us an opportunity to further expand the relationships that we have established with a number of those customers..

Our next question comes from Lisa Springer of Singular Research. Your line is now open..

Thank you, good afternoon. My question regards the SEPI award the $25 million contract you announced in May.

Was that your first contract from that organization? Are there more opportunities in the future there? And are they likely to take the form of collaboration like this one did?.

Yes. Thanks for the question. We're going to ask Adam Havey, EVP of Operations to respond to that. He was involved in the discussions with SEPI and has the greatest detailed information around that.

Adam?.

Yes. Thank Lisa for the question. The short answer is this is our first contract and first go-around working with SEPI. We think there are other opportunities both for potential vaccines in our portfolio and different proof-of-concept ideas that we have, but also structuring deals like this one in partnership with other companies.

So I think it's just a start for us, and we're looking forward to what that organization is trying to drive, and it highly aligns with our mission and how we think about rapid response to emerging infectious diseases..

Thank you. And ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Robert Burrows for any closing remarks..

Thank you, Sonia. With that ladies and gentlemen, we now conclude the call. 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 and we look forward to speaking with all of you in the future. Good bye..

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day..