Emergent scaling back CDMO biz, reducing ops in MD and MA

Emergent BioSolutions will reduce operations at the troubled Bayview facility in Baltimore, Maryland among plans to step away from its CDMO business.

For the second quarter 2023, Emergent recorded sales of $338 million, up 39% on the same period last year.

This included $29 million in revenues received from Emergent’s role as a contract development and manufacturing organization (CDMO), a sector the firm says it has begun reducing investment in and de-emphasizing focus on.

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“Our decision to deemphasize growth in CDMO is both immediate and [has] near-term implications,” CFO Richard Lindahl said during his firm’s financial call.

“While we are committed to serving our existing customers, the change in growth expectations is the principal driver behind the CDMO asset impairment charge reported in the second quarter. Additionally, we are significantly reducing the operational footprint of our Bayview facility, which is a major contributor to the over $100 million of annualized savings we announced earlier today.”

The firm incurred a $307 million impairment charge in the quarter, related to fixed assets at its CDMO sites in Maryland, contributing to a net loss of $261 million.

Emergent’s Maryland sites include the Bayview drug substance plant and the Camden fill-finish facility, both in Baltimore. Bayview received a US Food and Drug Administration (FDA) Form 483 and a directive to stop production in April 2021 following an ingredient mix up that led to 15 million doses of COVID-19 vaccines for customers J&J and AstraZeneca being deemed unusable at the time.

Camden, meanwhile, received an FDA warning following an inspection in February 2022, which found a number of aseptic processes and maintenance issues.

“We’re focused on serving our existing customers and honoring the commitments that we’ve made to them,” Lindahl confirmed. “We’re not prepared to provide future year guidance for CDMO at this point in time, but we will certainly do that as we come out of this year and into next year.”

Along with reduced operations at Bayview, Emergent will reduce operations at its facility in Canton, Massachusetts and Rockville, Maryland in response to changes in the volume of US government procurements of medical countermeasures.