ebs-20201231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2020

For the transition period from to

Commission file number: 001-33137

EMERGENT BIOSOLUTIONS INC.

(Exact Name of Registrant as Specified in Its Charter)

400 Professional Drive, Suite 400

(Address of Principal Executive Offices)

(City) (State) (Zip Code)

Registrant's Telephone Number, Including Area Code: (240) 631-3200

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered

Common stock, $0.001 par value per share EBS New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of Securities Act. Yes☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer", "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check on):

Large accelerated filer☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2020 was approximately $4.2 billion based on the price at which the registrant's common stock was last sold on that date as reported on the New York Stock Exchange.

As of February 12, 2021, the registrant had 53.3 million shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement for its 2021 annual meeting of stockholders scheduled to be held in May 2021, which is expected to be filed with the Securities and Exchange Commission not later than 120 days after the end of the registrant's fiscal year ended December 31, 2020, are incorporated by reference into Part II, Item 5. and Part III of this annual report on Form 10-K. With the exception of the portions of the registrant's definitive proxy statement for its 2021 annual meeting of stockholders that are expressly incorporated by reference into this annual report on Form 10-K, such proxy statement shall not be deemed filed as part of this annual report on Form 10-K.

EMERGENT BIOSOLUTIONS INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED December 31, 2020

INDEX

PART I

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

PART II

Item 6. Selected Financial Data

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9A. Controls and Procedures

Item 9B. Other Information

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 14. Principal Accountant Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

Signatures

Exhibit Index

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K and the documents we incorporate by reference include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including statements regarding the future earnings and performance of Emergent BioSolutions Inc. or any of our businesses, our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management and the continued impact of the COVID-19 pandemic, are forward-looking statements. We generally identify forward-looking statements by using words like "will," "believes," "expects," "anticipates," "intends," "plans," "forecasts," "estimates" and similar expressions in conjunction with, among other things, discussions of financial performance or financial condition, growth strategy, product sales, manufacturing capabilities, product development, regulatory approvals or expenditures. 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. You should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. You are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events or circumstances.

There are a number of important factors that could cause our actual results to differ materially from those indicated by such forward-looking statements, including, among others:

•the full impact of the novel strain of coronavirus (SARS-CoV-2) causing COVID-19 disease (COVID-19), on our markets, operations and employees as well as those of our customers and suppliers;

•the availability of U.S. government (USG) funding for procurement of our products and certain product candidates;

•our ability to perform under our contracts with the USG including the timing of and specifications relating to deliveries;

•our ability to provide contract development and manufacturing (CDMO) services for the development and/or manufacture of product candidates of our customers at required levels;

•our ability and the ability of our contractors and suppliers to maintain compliance with current good manufacturing practices and other regulatory obligations;

•our ability to obtain and maintain regulatory approvals for our product candidates and the timing of any such approvals;

•the continued exercise of discretion by the Biomedical Advanced Research and Development Authority (BARDA) to procure additional doses of AV7909 (anthrax vaccine adsorbed with adjuvant) prior to approval by the U.S. Food and Drug Administration (FDA);

•the exercise of all remaining options under our contract for the procurement of ACAM2000® (Smallpox (Vaccinia) Vaccine, Live) and other government procurement contracts;

•the negotiation of further commitments or contracts related to the collaboration and deployment of capacity toward future commercial manufacturing under our CDMO contracts;

•the timing of our submission of an application for and our ability to secure licensure of AV7909 from the FDA within the anticipated timeframe, if at all;

•our ability to secure follow-on procurement contracts for our public health threat (PHT) products that are under procurement contracts that have expired or will be expiring;

•our ability to successfully appeal the patent litigation decision related to NARCAN® (naloxone hydrochloride) Nasal Spray 4mg/spray;

•our ability and the ability of our collaborators to enforce patents related to NARCAN Nasal Spray against potential generic entrants;

•our ability to develop safe and effective treatments for COVID-19 and obtain authorization for emergency use for or approval of such treatments by the FDA;

•our ability to identify and acquire companies, businesses, products or product candidates that satisfy our selection criteria;

•our ability to comply with the operating and financial covenants required by our senior secured credit facilities and our 3.875% Senior Unsecured Notes due 2028;

•the procurement of products by USG entities under regulatory exemptions prior to approval by the FDA and corresponding procurement by government entities outside of the United States under regulatory exemptions prior to approval by the corresponding regulatory authorities in the applicable country;

•the impact on our revenues from declines in sales of our vaccine products that target travelers due to the reduction of international travel caused by the COVID-19 pandemic;

•the success of our commercialization, marketing and manufacturing capabilities and strategy; and

•the accuracy of our estimates regarding future revenues, expenses, capital requirements and needs for additional financing.

The foregoing sets forth many, but not all, of the factors that could cause actual results to differ from our expectations in any forward-looking statement. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. You should consider this cautionary statement, the risk factors identified in the sections entitled “Risk Factor Summary” and “Risk Factors” in this annual report on Form 10-K and the risk factors identified in our other periodic reports filed with the Securities and Exchange Commission (SEC) when evaluating our forward-looking statements.

NOTE REGARDING COMPANY REFERENCES

References in this report to “Emergent,” the “Company,” “we,” “us,” and “our” refer to Emergent BioSolutions Inc. and its consolidated subsidiaries.

NOTE REGARDING TRADENAMES

BioThrax® (Anthrax Vaccine adsorbed), RSDL® (Reactive Skin Decontamination Lotion Kit), BAT® (Botulism Antitoxin Heptavalent (A,B,C,D,E,F,G)-(Equine)), Anthrasil® (Anthrax Immune Globulin Intravenous (Human)), VIGIV (Vaccinia Immune Globulin Intravenous (Human)), Trobigard® (atropine sulfate, obidoxime chloride), ACAM2000® (Smallpox (Vaccinia) Vaccine, Live), Vivotif® (Typhoid Vaccine Live Oral Ty21a), Vaxchora® (Cholera Vaccine, Live, Oral), NARCAN® (naloxone HCI) Nasal Spray and any and all Emergent brands, products, services and feature names, logos and slogans are trademarks or registered trademarks of Emergent or its subsidiaries in the United States or other countries. All other brands, products, services and feature names or trademarks are the property of their respective owners.

PART I

ITEM 1. BUSINESS

OVERVIEW

We are a global life sciences company focused on providing innovative preparedness and response solutions addressing accidental, deliberate and naturally occurring public health threats (PHTs). Our solutions include a product portfolio, a product development pipeline portfolio, and a portfolio of CDMO services. The types of PHTs we are currently addressing are focused on the following five categories:

•chemical, biological, radiological, nuclear and explosives (CBRNE);

•emerging infectious diseases (EID);

•travel health;

•emerging health crises; and

•acute/emergency care.

Our product portfolio comprises ten marketed products (vaccines, therapeutics, and drug-device combination products) that are sold to government and commercial customers. Our product portfolio also includes two product candidates, designated AV7909 (vaccine) and Trobigard Auto-Injector (drug-device combination), that are not approved by the FDA or any other regulatory health authority, but which are procured under special circumstances by certain government agencies.

Our product development pipeline portfolio consists of a diversified mix of both pre-clinical and clinical-stage product candidates, encompassing a mix of vaccines, therapeutics and drug-device combination products. In some cases, certain candidates are supported by external, non-dilutive funding sources (government agencies, non-governmental organizations, pharma/biotech innovators). Certain other candidates are supported solely by internal funding sources.

Our portfolio of CDMO services consists of three distinct but interrelated service pillars: development services (process and analytical development); drug substance manufacturing; and drug product manufacturing (fill/finish) and packaging. These services, which we refer to as "molecule-to-market" offerings, employ five technology platforms (mammalian, microbial, viral, plasma and gene therapy) across a network of nine geographically distinct development and manufacturing sites operated by us for our internal products and pipeline and CDMO services, for both clinical-stage projects and commercial-stage projects. We direct these CDMO services for a variety of third-party customers, including innovative pharmaceutical companies, government agencies and non-government organizations.

Our revenues are derived from a combination of the sale and procurement of our product portfolio and the provision of our CDMO services to external customers.

STRATEGY

Our current five-year strategic plan, 2020-2024, is focused on leveraging core competencies, relationships and operating systems we have developed over the last 22 years and driving growth across various segments of the PHT market. The strategic plan includes achievement of the following financial goals by the end of 2024:

•Total revenue of at least $2 billion; and

•Adjusted EBITDA margin of 27%-30%.

In pursuit of these goals, the strategic plan specifies employing five core strategies. They are:

Execute Core Business — We are focused on continuing to build our leadership positions across several markets in the PHT space. These include, but are not limited to, medical countermeasures (MCMs), opioid rescue and travel health. Additionally, our Core Business includes our growing CDMO services. We believe our diversified portfolio of products and services, combined with our quality development and manufacturing services across a spectrum of differentiated and complex manufacturing processes position us for continued growth across the PHT landscape. Additionally, we will continue to leverage our specialized government relations and contracting operations to negotiate long-term, profitable procurement and development agreements that enable us to protect and enhance lives around the world and that help ensure sustainability of our business.

Grow Through Mergers and Acquisitions (M&A) — We have successfully executed and integrated several product and facility acquisitions that have increased our diversification, allowed expansion into new markets, and provided a differentiated research and development (R&D) pipeline. We plan to continue to leverage our M&A and partnering strengths not only to solidify our leadership positions in the MCM market, but also to expand our businesses in PHT markets where the government is not the primary customer. We aim to accomplish this goal through a disciplined approach to acquiring accretive or clinical-stage assets and to forming partnerships that help us to achieve our strategic objectives.

Strengthen R&D Portfolio — We continue to focus on expanding and advancing our pipeline of drug and device product candidates across several categories, with the aim to launch and/or sell differentiated products that address unmet needs in the PHT space. We fund our pipeline by investing our own funds and through securing government contracts, grants, or other non-dilutive funding. We plan to grow our R&D pipeline to expand our portfolio of marketed and procured PHT products.

Build Scalable Capabilities — Achieving our 2024 strategic objectives requires an investment in infrastructure, internal governance and capabilities that help us realize the benefits of scale. This includes investing new capital into our development and manufacturing facilities, strengthening our global sales and procurement models, upgrading our technology and growing our commercial infrastructure. These, and other capabilities, are intended to help us operate in a more efficient, customer-focused manner, while better serving both government and non-government customers.

Evolve the Culture --- We are proud of our heritage and organization we have built, and further believe that the growth we are striving for requires continued improvement and refinement of the culture of the organization. We anticipate continuing to invest in development of our people and our culture consistent with our values. We are committed to attracting, developing, and retaining the best talent reflecting a diversity of ideas, backgrounds, and perspectives and seek to demonstrate that commitment through our talent development strategy, processes and company-wide programs.

OUR BUSINESS UNITS

We are organized into four business units:

•Three product business units: Vaccines, Devices, Therapeutics, and

•One services business unit: CDMO.

Vaccines

Vaccine Products

Our Vaccines business unit contains a portfolio of specialty vaccines that address existing and emerging PHTs consisting of the following products:

APPROVED VACCINES BUSINESS UNIT PRODUCTS

Product Indication(s) Primary Regulatory Approvals

ACAM2000® (Smallpox (Vaccinia) Vaccine, Live). ACAM2000 is a smallpox vaccine licensed by the FDA and is the primary smallpox vaccine designated for use in a bioterrorism emergency. ACAM2000 is also licensed in Australia and Singapore and is currently stockpiled both in the United States and internationally. Smallpox is a highly contagious disease caused by the variola virus. According to the Centers for Disease Control and Prevention (CDC), it is one of the most devastating diseases with a mortality rate as high as 30%. The vaccine stimulates a person's immune system to develop antibodies and cells in the blood and elsewhere that can then help the body fight off a smallpox infection if exposure to smallpox occurs.

On September 3, 2019, we announced the award by the USG of a contract valued at up to approximately $2 billion over 10 years for the continued supply of ACAM2000 into the Strategic National Stockpile (SNS), assuming all contract options are exercised. This multiple-year contract is intended to support the replacement of the smallpox

vaccine stockpile and included a one-year base period of performance in 2019 valued at approximately $170 million, and nine option years. The number of doses under the base period were delivered by year end 2019. On May 28, 2020, we announced the exercise by the U.S. Department of Health and Human Services (HHS) of the first contract option, valued at $176 million, to procure doses of ACAM2000. The number of doses under the first contract option were delivered by year end 2020. The actual number of ACAM2000 doses to be procured in the future is dependent on certain timing and tiered-pricing terms that are subject to the discretion of HHS.

BioThrax®(Anthrax Vaccine Adsorbed). BioThrax is the only vaccine licensed by the FDA for pre-exposure prophylaxis of anthrax disease in persons at high risk of exposure. BioThrax was granted orphan drug designation (market exclusivity) through 2022 (see "Regulation - Marketing Approval - Biologics, Drugs and Vaccines - Orphan Drugs"). BioThrax is also

approved by the FDA for post-exposure prophylaxis indication for BioThrax administered in combination with antimicrobial therapy. Anthrax is a potentially fatal disease caused by the spore-forming bacterium, Bacillus anthracis. Inhalational anthrax is the most lethal form of anthrax. In the United States, BioThrax is administered in a pre-exposure prophylaxis setting by intramuscular injection as a three-dose primary series over a six-month period. Per the U.S. label, booster doses are administered 6 and 12 months after completion of the primary series and at 12 month intervals thereafter. BioThrax is administered in a post-exposure prophylaxis setting in conjunction with recommended antibacterial drugs following suspected or confirmed Bacillus anthracis exposure. When we report the revenue associated with “anthrax vaccines”, it reflects the combined revenue from the procurement and sale of BioThrax as well as the product candidate AV7909 (described below).

In December 2016, we signed a follow-on contract with the CDC for the supply of up to approximately 29.4 million doses of BioThrax for delivery into the SNS, over a five-year period ending in September 2021.

Vaxchora® (Cholera Vaccine Live Oral). Vaxchora is a live attenuated cholera vaccine for oral administration and the first vaccine approved by the FDA for the prevention of cholera infection. Cholera is a potentially life-threatening bacterial infection that occurs in the intestines and causes severe diarrhea and dehydration. It has a low incidence in the United States and Europe, but a high incidence in Africa,

Southeast Asia, and other locations around the world. These areas have historically drawn travelers from the United States and Europe, so cholera can occur in patients who return to the United States or Europe from visits to these regions. Vaxchora is indicated for active immunization against cholera caused by the bacterium V. cholerae serogroup 01.

We have generally marketed Vaxchora to a subset of travelers primarily from the United States. Our sales of Vaxchora were disrupted in 2020 due to the broader disruption to travel caused by the COVID-19 pandemic, and we expect limited sales in 2021 due to that continuing disruption.

Vivotif® (Typhoid Vaccine Live Oral Ty21a). Vivotif is a live attenuated vaccine for oral administration to prevent typhoid fever. Typhoid fever is a potentially severe and occasionally life-threatening febrile illness caused by Salmonella enterica serotype Typhi, a bacterium that only lives in humans. It is usually acquired by consumption of water or food that has been contaminated by feces of an infected person. Travelers from North America and Europe going to Asia, Africa, and Latin America have historically been particularly at risk.

We have generally marketed Vivotif to a subset of travelers primarily from the United States and the European Union. Our sales of Vivotif were disrupted in 2020 due to the broader disruption to travel caused by the COVID-19 pandemic, and we expect limited sales in 2021 due to that continuing disruption.

Vaccine Product Candidates

The chart below highlights two of our leading vaccine pipeline product candidates:

Product Candidate Target Indication

Description of Procured Vaccine Product Candidate

AV7909 (anthrax vaccine adsorbed with adjuvant). We are developing AV7909, an anthrax vaccine product candidate based on anthrax vaccine adsorbed combined with an adjuvant. Studies have shown that AV7909 elicits a more rapid onset of immune response using fewer doses than BioThrax while still providing protective immunity in patients. AV7909 is expected to provide protection with a two-dose regimen (versus the BioThrax three-dose regimen) for

post-exposure prophylaxis of anthrax disease. In September 2016, we signed a combination development and procurement contract with BARDA, which included a five-year base period of performance to develop AV7909 for post-exposure prophylaxis of anthrax disease and to deliver to the SNS an initial two million doses, subsequently modified to three million doses in March 2017. The contract also includes procurement options for the delivery of an additional 7.5 million to 50 million doses of AV7909 into the SNS and options for an additional clinical

study and post marketing commitments. In 2019, we initiated and completed enrollment of a Phase 3 study; the 3,850 subject trial evaluating safety, immunogenicity and lot consistency was completed in 2020. In collaboration with us, the CDC filed with the FDA a pre-Emergency Use Authorization (EUA) submission package related to AV7909, which triggered BARDA to begin procurement of AV7909 in 2019. On May 15, 2019, we announced that BARDA had informed us that it would begin procuring AV7909 for delivery into the SNS and on July 30, 2019, BARDA exercised its first contract option valued at approximately $261 million to procure doses to be delivered to the SNS through June of 2020. On July 14, 2020, we announced the exercise by BARDA of

another contract option, valued at $258 million, to procure additional doses of AV7909 for delivery into the SNS over 12 months.We currently anticipate the submission of a biologics license application (BLA) for AV7909 to the FDA in 2021, although there can be no assurance it will be approved by the FDA.

When we report the revenue associated with "anthrax vaccines," it reflects the combined revenue from the procurement and sale of AV7909 as well as BioThrax (described above).

Devices

Device Products

Our Devices business unit contains a portfolio of device and drug-device combination products that address PHTs. The current portfolio consists of the following products:

APPROVED DEVICES BUSINESS UNIT PRODUCTS

Product Indication(s) Primary Regulatory Approvals

NARCAN® (naloxone HCl) Nasal Spray. NARCAN® (naloxone HCl) Nasal Spray, a product we obtained in connection with our acquisition of Adapt Pharma Inc. in 2018, is an intranasal formulation of naloxone approved by the FDA and Health Canada for the emergency treatment of known or suspected opioid overdose as demonstrated by respiratory and/or central nervous system depression. The primary customers for NARCAN Nasal Spray are state health departments, local law enforcement agencies, community-based organizations, substance abuse centers, federal agencies and consumers through pharmacies fulfilling physician-directed or standing order prescriptions. Recently, we completed two important product life cycle improvements that we expect will provide meaningful value for our customers. First, we launched the Generation II NARCAN Nasal Spray device, which has a claim for enhanced temperature excursions and storage below 25° C. Second, we gained FDA approval for an extension of the shelf life of NARCAN from 24 months to 36 months.

RSDL® (Reactive Skin Decontamination Lotion Kit). RSDL is the only medical device cleared by the FDA that is intended to remove or neutralize chemical warfare agents from the skin, including tabun, sarin, soman, cyclohexyl sarin, VR, VX, mustard gas and T-2 toxin. RSDL has also been cleared as a medical device by Health Canada, has a current European

Conformity (CE) mark under European Directives, and is licensed by the Israel Ministry of Health and by Australia's Therapeutics Goods Administration. To date, the principal customers for RSDL have been agencies of the USG, including the Department of Defense (DoD) and the National Guard. Our current contract with the DoD, awarded in September 2017, is a five-year contract valued at up to approximately $171 million to supply RSDL for use by all branches of the U.S. military. In addition to the DoD and other USG agencies, beginning in 2017, we made RSDL available for the first time for purchase by civilians in the United States. We have also sold RSDL to 35 foreign countries outside the United States since the device was cleared in 2003.

Device Product Candidates

The chart below highlights several of our pipeline product candidates in our Devices business unit.

Product Candidate Target Indication

We have also been developing a suite of drug-device combination product candidates in an auto-injector platform based on our proprietary technology; primarily for military and other government use.

Therapeutics

Therapeutics Products

Our Therapeutics business unit contains a portfolio of specialty antibody-based therapeutics that address various existing and emerging PHTs. The current portfolio consists of the following products:

APPROVED THERAPEUTICS BUSINESS UNIT PRODUCTS

Product Indication(s) Primary Regulatory Approvals

Anthrasil® [Anthrax Immune Globulin Intravenous (Human)]. Anthrasil is the only polyclonal antibody therapeutic licensed by the FDA for the treatment of inhalational anthrax. Anthrasil is licensed by the FDA for the treatment of inhalational anthrax in adult and pediatric patients in combination with appropriate antibacterial drugs. Anthrasil also received orphan drug designation for that indication, resulting in market exclusivity in the United States until March 2022. We currently have two contracts with HHS: a development and procurement contract that expires in April 2021, and a multiple award, indefinite delivery/indefinite quantity contract for the collection of anti-anthrax plasma, as well as the manufacture of such plasma into bulk drug substance and finished drug product and delivery of finished product into the SNS. This contract covers extended plasma storage, and the options for manufacturing and product delivery, which are available to be exercised by HHS through September 2023. In addition to domestic government sales, Anthrasil has been sold to several foreign governments, including the Canadian government.

BAT® [Botulism Antitoxin Heptavalent (A,B,C,D,E,F,G)(Equine)]. BAT is the only heptavalent antibody therapeutic licensed by the FDA and Health Canada for the treatment of botulism. BAT is licensed by the FDA for the treatment of symptomatic botulism following suspected or documented exposure to

botulinum neurotoxin serotypes A, B, C, D, E, F or G in adults and pediatric patients. It is also licensed in Canada pursuant to Health Canada’s EUND regulations. BAT is also approved in Singapore and Ukraine. BAT is the only heptavalent botulism antitoxin available in the United States and Canada for treating naturally occurring botulism in adults or pediatric patients. Botulinum toxin is a nerve toxin produced by the bacterium Clostridium botulinum that causes botulism, a serious paralytic illness. On May 8, 2020, we announced the finalization of a previously announced contract with HHS, valued at up to $550 million, if all options under the contract are exercised. The contract has two deliverables. The first deliverable, negotiated in September 2019 and valued at up to approximately $90 million, is to supply annual doses of BAT into the SNS for 10 years by converting existing bulk drug substance into final drug product. This deliverable also includes options for additional doses valued at up to approximately $94 million over 10 years. The second deliverable, valued at up to approximately $366 million, is for the production of additional doses of bulk drug substance over 10 years to maintain the plasma collection and production capability for botulism response planning. In addition to domestic government sales, BAT continues to be sold internationally, with deliveries to over 10 foreign governments in 2020.

Raxibacumab. Our raxibacumab product is the first fully human monoclonal antibody therapeutic licensed by the FDA for the treatment and prophylaxis of inhalational anthrax due to Bacillus anthracis. Our raxibacumab product is indicated for the treatment of adult and pediatric patients with inhalational anthrax in combination with appropriate antibacterial drugs and for prophylaxis of inhalational anthrax when alternative therapies are not available or appropriate. We assumed responsibility for a multi-year contract with BARDA from Human Genome Sciences, Inc. and GlaxoSmithKline LLC (collectively referred to as GSK) to supply the product to the SNS through November 2019. All deliveries under this contract are complete. We intend to submit a proposal for a follow-on contract with the USG to continue the supply of this medical countermeasure (MCM) to the SNS. In addition, we have initiated the process of transferring raxibacumab manufacturing from GSK to our facilities.

VIGIV [Vaccinia Immune Globulin Intravenous (Human)]. VIGIV is the only polyclonal antibody therapeutic licensed by the FDA to address certain complications from replicating virus smallpox

vaccination. VIGIV is being procured by the USG and delivered into the SNS. VIGIV is prepared using plasma collected from healthy, screened donors who have been immunized with our ACAM2000 vaccine or previously immunized with the DryVax vaccine. Vaccinia is not the virus that causes smallpox, but it is similar enough to elicit a protective immune response when used as a smallpox vaccine. Individuals who are susceptible to vaccinia may develop a specific type of reaction or infection from ACAM2000 or other similar replicating virus vaccines, and these patients may benefit from treatment with VIGIV. VIGIV is licensed by the FDA and Health Canada for counteracting complications that can be associated with replicating virus smallpox vaccination. Although VIGIV has been sold to foreign governments, to date, the principal customer for VIGIV has been the USG, specifically HHS. On June 3, 2019, we announced a contract award by HHS valued at approximately $535 million over 10 years for the continued supply of VIGIV into the SNS for smallpox preparedness.

Therapeutics Product Candidates

The chart below highlights several of our Therapeutics business unit pipeline product candidates:

Product Candidate Target Indication

Contract Development and Manufacturing

Our CDMO business unit is based on our established development and manufacturing infrastructure, technology platforms and expertise, as well as continuing capital expenditure projects to expand our capabilities.

Our CDMO portfolio consists of development services, bulk drug substance manufacturing, fill, finish, and packaging of final drug product, or "molecule-to-market" offerings. These services are provided for innovator biopharmaceutical companies, government agencies and non-government organizations. The biologics technology platforms consist of mammalian, microbial, viral, plasma and gene therapy.

We have nine development and manufacturing sites spread across multiple locations in the United States,

Canada and Switzerland. Five of these sites currently provide CDMO services to customers and the others are either ready now or in various stages of investment to advance them for servicing CDMO customers.

•Our Winnipeg and Gaithersburg sites house our development services expertise;

•Our Bayview, Lansing, Winnipeg, Bern and Canton sites house our drug substance expertise; and

•Our Camden, Winnipeg, Rockville and Hattiesburg sites house our drug product expertise.

We currently have over 50 CDMO customers. Below is a description of the largest CDMO arrangements awarded during 2020.

BARDA COVID-19 Public-Private Partnership.On June 1, 2020, we announced that we had been issued a task order under our existing Center for Innovation in Advanced Development and Manufacturing (CIADM) agreement with BARDA for COVID-19 vaccine development and manufacturing. The task order has a contract value of up to $628 million and includes the reservation of manufacturing capacity valued at $542.7 million and $85.5 million for accelerating the planned expansion of viral and non-viral drug product fill/finish capacity.

Johnson & Johnson COVID-19 Vaccine Arrangement.On July 2, 2020, we executed a large scale drug substance manufacturing agreement related to Johnson & Johnson's lead COVID-19 vaccine candidate for up to five years beginning in 2021. The first two years are valued at approximately $480 million, with the remaining three years providing optional flexible capacity to support volume commitments. This agreement was preceded by an agreement executed in April 2020 valued at approximately $135 million to provide CDMO services and capacity reservation to Johnson & Johnson.

AstraZeneca COVID-19 Vaccine Arrangement.On July 26, 2020, following BARDA direction to release capacity to AstraZeneca, we executed a large-scale drug substance manufacturing agreement related to AstraZeneca's COVID-19 vaccine candidate, valued at approximately $174 million through 2021, which followed an initial agreement, also executed in 2020, valued at approximately $87 million to provide CDMO services and capacity reservation to AstraZeneca.

We also have three capital investment projects in support of the growth of our CDMO business unit. First, we are nearing completion of a $50 million expansion at our Baltimore, Maryland - Camden drug product site, which was announced in 2018 of which approximately $7.5 million is funded by BARDA. Second, we are broadening our drug product capabilities at our Rockville, Maryland site, with $75 million in funding from BARDA. Third, we will be investing $75 million in our Canton, Massachusetts facility, to expand our viral-based service offering to include viral vector and gene therapy capabilities. Together, this represents a $200 million expansion of our manufacturing capability and capacity adding strength, diversity and durability to our network.

Marketing and Sales

Our product sales can be divided into two primary categories: i) sales to governments; and ii) commercial sales.

Government Procurement

For our Vaccines, Therapeutics and Devices business units, our largest customers are the USG and domestic non-government organizations. We also sell certain products to state governments, local governments and emergency management teams. In addition to U.S. sales, we sell our products to governments and non-governmental organizations outside of the United States, primarily to those governments and organizations with which the United States enjoys positive diplomatic relations. For our non-U.S. sales, we use a combination of our employees as well as third-party distributors and representatives to sell our products.

Commercial Sales

In addition to direct sales primarily to state and local governments as described above, NARCAN® Nasal Spray is sold commercially through physician-directed or standing order prescriptions at retail pharmacies and to first responders including police, firefighters and emergency medical teams.

Vivotif and Vaxchora are vaccines intended for use by travelers heading to regions where there is a risk of exposure to certain infectious diseases and, therefore, are sold to channels that address travel health. We sell to both wholesalers and distributors as well as directly to healthcare practitioners. The primary commercial customers of Vivotif and Vaxchora are private travel clinics, retail pharmacies and integrated hospital networks. Sales of these products were significantly reduced beginning in 2020 due to a sustained decline in international travel resulting from COVID-19 and we expect limited sales of these products in 2021 due to continuing travel disruptions.

Our CDMO business unit is supported by a dedicated group of sales and business development, marketing and customer experience, and commercial operations professionals qualified to represent our full breadth of service offerings to the global pharmaceutical and biotechnology industry and governments/non-government organizations.

Competition

Our products and any product or product candidate that we acquire or successfully develop and commercialize are likely to compete with current products and product candidates that are in development for the same indications. Specifically, the competition for our products and product candidates includes the following:

•AV7909 and BioThrax®. AV7909 and BioThrax are currently procured, primarily by the USG, for prevention of anthrax disease. While there are no vaccines, other than BioThrax, approved by the FDA for prevention of anthrax disease, and none other than AV7909 and BioThrax that are currently procured by the SNS, we face potential future competition for the supply of anthrax vaccines if the USG chooses to procure products or product candidates for any programs currently in development. Altimmune, Inc., GC Pharma, Blue Willow Biologics, and Greffex are each currently developing anthrax vaccine product candidates, which are in various stages of clinical development. Of the product candidates, Altimmune announced completion of enrollment of a Phase 1 trial in August, 2020 and Blue Willow Biologics announced FDA clearance to begin Phase 1 study in October 2019.

•NARCAN® (naloxone HCl) Nasal Spray. NARCAN®Nasal Spray is the first FDA-approved intranasal naloxone spray for the emergency reversal of opioid overdoses. Teva Pharmaceuticals Industries Ltd. and its Canadian affiliate (collectively, Teva) have filed applications for generic versions of an intranasal naloxone spray based on NARCAN®Nasal Spray with the FDA and Health Canada. Teva has not launched its generic product in either jurisdiction, but may launch at risk, despite our patent infringement litigation (described in more detail below) that is currently proceeding against them. NARCAN®Nasal Spray also faces branded competition from other injectable naloxone, auto-injectors and improvised nasal kits, including Amphastar Pharmaceuticals, Inc's. naloxone injection product and Kaléo's EVZIOTM (naloxone HCI injection) Auto-Injector and Teleflex Medical Inc's Intranasal Mucosal Atomization Device. NARCAN®Nasal Spray may face additional generic and branded competition in the future.

•ACAM2000®. ACAM2000® faces competition from JYNNEOSTM, which is licensed by the FDA for the prevention of smallpox and monkeypox disease in adults 18 years of age and older determined to be at high risk for smallpox or monkeypox infection. JYNNEOS is also approved in Canada and in the European Union under the trade names IMVAMUNE and IMVANEX, respectively. ACAM2000 remains the primary smallpox vaccine stockpiled by the USG and offers key features for public health mass vaccination programs that are critical, including a single dose vaccination schedule and multi-dose vial presentation.

While therapeutics generally do not compete directly with vaccines, our sales to the USG are dependent upon U.S. policy of stockpiling vaccines for emergency use. There is an approved smallpox therapeutic in the United States made by SIGA Technologies, Inc. (Siga) and in the event USG policy regarding smallpox vaccine and therapeutic stockpiling was to change, our sales could be adversely affected.

•Raxibacumab and Anthrasil®. Our raxibacumab product is the first FDA licensed fully human anthrax monoclonal antibody therapeutic and Anthrasil is the only polyclonal antibody therapeutic licensed by the FDA and Health Canada for the treatment of inhalational anthrax in adult and pediatric patients in combination with appropriate antibacterial drugs. However, Elusys Therapeutics, Inc. has obtained FDA licensure for Anthim® (obiltoxaximab) injection, a chimeric (or "partially human") antibody indicated for the treatment and prophylaxis of inhalational anthrax. Obiltoxaximab is also approved in Canada and the EU.

•BAT®. Our botulinum antitoxin immune globulin product is the only heptavalent therapeutic licensed by the FDA and Health Canada for the treatment of symptomatic botulism. Direct competition is currently limited.

•VIGIV. Our VIGIV product is the only therapeutic licensed by the FDA and Health Canada to address adverse events from smallpox vaccination with replicating virus smallpox vaccines. While direct competition in terms of the treatment of smallpox vaccination side effects is limited, SIGA has obtained FDA approval for TPOXX® (tecovirimat), an oral therapy for the treatment of smallpox disease TPOXX® is currently procured by the SNS. Chimerix is also developing brincidofovir, a nucleotide analog lipid conjugate for treatment of smallpox.

•RSDL®. In the United States, the RSDL Kit is the only medical device cleared by the FDA to remove or neutralize chemical warfare agents and T-2 toxin from the skin. Internationally, various Ministries of Defense have procured Fullers Earth, Dutch Powder and French Powder as a preparedness countermeasure for the decontamination of liquid chemical weapons from the skin.

•Vivotif®. Vivotif is the only FDA-approved oral typhoid vaccine. In the markets where Vivotif is licensed, it competes primarily with Sanofi Pasteur’s Typhim VI® vaccine, an injectable polysaccharide typhoid vaccine.

•Vaxchora®. In the United States, Vaxchora is the only FDA-licensed vaccine available indicated to prevent cholera. Vaxchora is subject to competition by Valneva's Dukoral® cholera vaccine in the EU.

We also compete for CDMO services with a number of biopharmaceutical product development organizations, contract manufacturers of biopharmaceutical products and university research laboratories.

•CDMO Services Business. Companies with which we compete for CDMO services include, among others: Lonza Group Ltd., Catalent, Inc., Thermo Fisher Scientific, FUJIFILM Dionsynth Biotechnologies. We also compete with in-house research, development and support service departments of other biopharmaceutical companies.

Geographical Reliance

For the years ended December 31, 2020, 2019 and 2018, the Company's revenue from U.S. customers as a percentage of total revenues were 93%, 90% and 91%, respectively.

MANUFACTURING OPERATIONS

Our development and manufacturing network allows us to deploy capabilities and capacity for clinical and commercial supply needs.

Supplies and Raw Materials

We currently rely on contract manufacturers and other third parties to manufacture some of the supplies we require for pre-clinical studies and clinical trials, as well as supplies and raw materials used in the production of our products. Typically, we acquire these supplies and raw materials on a purchase order basis and, when possible, in quantities we believe adequate to meet our needs. We obtain Alhydrogel® adjuvant 2%, used to manufacture AV7909 and BioThrax, from a single-source supplier for which we have no alternative source of supply. However, we maintain stored supplies of this adjuvant in quantities believed to be sufficient to meet our expected manufacturing needs. We also utilize single-source suppliers for other raw materials in our manufacturing processes.

We utilize single source suppliers for all components of NARCAN® Nasal Spray. It is manufactured by a third party, which operates a full service offering from formulation to final packaging. Materials for production of NARCAN® Nasal Spray, such as the naloxone active pharmaceutical ingredient and other excipients, along with the vial, stopper and device are produced around the world by other third parties and delivered to the primary manufacturer and

released to manufacturing following appropriate testing.

We rely on single source suppliers for our plasma collection to support the Anthrasil, VIGIV and BAT programs. We work closely with our suppliers for these specialty programs and operate under long term agreements. We order quantities of material in advance in quantities believed to be sufficient to meet upcoming demand requirements.

The rapid demand for COVID-19 vaccines and therapeutics in light of the current pandemic has caused significant demand for raw materials for the vaccine and therapeutics we are manufacturing. The USG has invoked the Defense Production Act to prioritize our ability to obtain some of these raw materials, but there is still competition from other manufacturers of COVID-19 vaccines and therapeutics that may limit our ability to manufacture on a timely basis.

INTELLECTUAL PROPERTY

We actively seek to protect intellectual property related to our Company's assets, including patent rights, trademark rights, trade secrets and proprietary confidential information, through defense and enforcement of existing rights and pursuit of protection on new and arising innovations. The duration of and the type of protection for patent rights depends upon many factors including the type of patent, the scope of its coverage, the availability of regulatory-related extensions or administrative term adjustments, the availability of legal remedies in a particular country, and the validity and enforceability of the patents. We are a party to various license agreements, including those under which we license patents, patent applications, trademarks, and other intellectual property rights. It is our policy to ethically consider the enforcement and defense of our intellectual property rights, and to respect the intellectual property rights of others. We are currently in litigation with Teva to enforce our patents related to NARCAN® Nasal Spray as described in greater detail below.

REGULATION

Regulations in the United States and other countries have a significant impact on our product development, manufacturing and marketing activities.

Government Contracting

Our status as a USG contractor means that we are subject to various statutes and regulations, including:

•the Federal Acquisition Regulation (FAR) and agency-specific regulations supplemental to FAR, which comprehensively regulate the award, formation, administration and performance of government contracts;

•the Defense Federal Acquisition Regulations (DFARs) and agency-specific regulations supplemental to DFARs, which comprehensively regulate the award, formation, administration and performance of DoD government contracts;

•the Department of State Acquisition Regulation (DOSAR) which regulates the relationship between a Department of State organization and a contractor or potential contractor;

•business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Act, the Procurement Integrity Act, the False Claims Act and the Foreign Corrupt Practices Act;

•export and import control laws and regulations, including but not limited to ITAR (International Traffic in Arms Regulations); and

•laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

USG agencies routinely audit and investigate government contractors for compliance with applicable laws and standards. These regulations can impose stricter penalties than those normally applicable to commercial contracts, such as criminal and civil liability and suspension and debarment from future government contracting. In addition, pursuant to various regulations, our government contracts can be subject to unilateral termination or modification by the government for convenience, detailed auditing and accounting systems requirements, statutorily controlled pricing, sourcing and subcontracting restrictions and statutorily mandated processes for adjudicating contract disputes.

The Project BioShield Act of 2004. The Project BioShield Act of 2004 (Project BioShield) was enacted to augment market incentives for companies pursuing the development of MCMs of which the government is the only significant market. Project BioShield provided $5.6 billion over 10 years to develop, purchase, and stockpile MCMs for use in a public health emergency

against Chemical, Biological, Radiological and Nuclear agents.

The Pandemic and All Hazards Preparedness Act of 2006 and Reauthorization Acts.The Pandemic and All Hazards Preparedness Act of 2006 (PAHPA) established a new, Assistant Secretary for Preparedness and Response (ASPR) within HHS; provided new authorities for a number of programs, including the creation of BARDA for the advanced research and development and procurement of MCMs for CBRN threats and emerging infectious diseases. The Pandemic All Hazards Preparedness Reauthorization Act of 2013 (PAHPRA) continued BARDA’s role and reauthorized Project BioShield funding through fiscal year 2018 and provided BARDA with additional appropriations to support advanced research and development. The Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 (PAHPAIA) reauthorized Project BioShield’s special reserve fund and authorized 10-year funding for product development. BARDA has used the incentives under Project BioShield and subsequent reauthorizations of it to build a robust pipeline of MCMs for multiple CBRN threat agents. It has also procured and stockpiled many of our related products for potential use in the event of a public health threat emergency, including BioThrax, ACAM2000, Anthrasil, BAT, VIGIV and raxibacumab.

Funding for BARDA is provided by annual appropriations by Congress. Congress appropriates annual funding for procurements of MCMs for the SNS (currently managed by ASPR) and for the National Institute of Allergy and Infectious Diseases (NIAID) to conduct biodefense research. This appropriation funding supplements amounts available under Project BioShield.

Emergency Use Authorization

As amended by Project BioShield and subsequent legislation, including PAHPRA and the 21st Century Cures Act, the FDCA permits the Secretary of HHS to authorize the introduction into interstate commerce of unapproved MCMs, or approved MCMs for unapproved uses, in the context of an actual or potential emergency that has been declared by designated government officials (known as “emergency use”). The types of emergencies that trigger these authorities include public health emergencies announced by the Secretary of HHS, military emergencies announced by the Secretary of Defense, domestic emergencies announced by the Secretary of Homeland Security, and the identification of a material threat pursuant to Section 319-F-2 of the PHSA that is sufficient to affect national security or the health and security of United States citizens living abroad. After one of the emergencies has been announced, the Secretary of HHS may authorize the issuance of, and the FDA Commissioner may issue, EUAs for the use of specific products based on criteria established by statute,

including that the product at issue may be effective in diagnosing, treating, or preventing serious or life-threatening diseases or conditions caused by (CBRN) threat agents when there are no adequate, approved, and available alternatives. EUAs are subject to additional conditions and restrictions, are product-specific, and terminate when the emergency determination underlying the EUA terminates.

Under PAHPRA,the USG may also, at its discretion, purchase critical biodefense products for the SNS prior to FDA approval after the filing of a pre-EUA application with the FDA. BARDA is currently procuring AV7909 from us pursuant to this authority, a product candidate which has not yet been approved by the FDA.

Public Readiness and Emergency Preparedness Act. The Public Readiness and Emergency Preparedness Act (PREP Act) creates liability immunity for manufacturers of MCMs when the Secretary of HHS issues a declaration for their manufacture, administration or use. A PREP Act declaration is intended to provide liability immunity from claims under federal or state law for loss arising out of the administration or use of a covered MCM under a government contract. The Secretary of HHS has issued PREP Act declarations identifying BioThrax, ACAM2000, raxibacumab, Anthrasil, BAT and VIGIV, as covered MCMs.

Support Anti-Terrorism by Fostering Effective Technology Act of 2002 (SAFETY Act). The SAFETY Act was enacted to create liability limitations for qualifying anti-terrorism technologies for claims arising from or related to an act of terrorism. BioThrax and RSDL are certified anti-terrorism products covered under the SAFETY Act. Although we are covered by the benefits of the SAFETY Act for BioThrax and RSDL, it may not provide adequate protection from all claims made against us.

Product Development for Therapeutics and Vaccines

Pre-Clinical Testing. We generally perform pre-clinical safety and efficacy testing on our product candidates before we initiate clinical trials.

Animal Rule. Conducting controlled clinical trials with human patients to determine efficacy may sometimes be unethical or unfeasible. Under the “Animal Rule,” under some circumstances, approval of product candidates can be based on clinical data from trials in healthy subjects that demonstrate adequate safety and immunogenicity as well as efficacy data from animal studies.

Investigational New Drug Application. Before clinical testing may begin, the results of pre-clinical testing and other available clinical data must be submitted to the FDA as part of an Investigational New Drug (IND) application. The data must provide an

adequate basis for evaluating both the safety and the scientific rationale for the initial clinical studies.

Clinical Trials. Clinical trials involve administration of a product candidate to healthy human volunteers orpatients under the supervision of a qualified physician under an FDA-reviewed protocol. Initial human clinical trials typically are conducted in the following three sequential phases.

•Phase 1 involves introduction of the drug into healthy human subjects to assess metabolism, pharmacokinetics, pharmacological actions, side effects and early evidence of effectiveness.

•Phase 2 involves studies to assess the efficacy of the drug in specific, targeted indications, explore tolerance, optimal dosage, and safety risks.

•Phase 3 trials must demonstrate clinical efficacy and safety in a larger number of patients, and permit the FDA to evaluate the overall benefit-risk relationship of the drug and provide adequate information for drug labeling.

Phase 4 studies may also be conducted following marketing approval to provide additional data related to drug use. The FDA may impose a temporary or permanent clinical hold, or other sanctions, if it believes that a clinical trial is not being conducted in accordance with the FDA requirements or presents an unacceptable risk to the clinical trial subjects.

Good Clinical Practice. All phases of clinical studies must be conducted in conformance with the FDA’s bioresearch monitoring regulations and Good Clinical Practices (GCP) which are ethical and scientific quality standards for conducting clinical trials.

Marketing Approval – Biologics, Drugs and Vaccines

Biologics License Application/New Drug Application. For large molecule products, such as vaccines, products derived from blood and blood components, and antibodies, all data obtained from a development program, including research and product development, manufacturing, pre-clinical and clinical trials, labeling and related information are submitted in a biologics license application (BLA) to the FDA and in similar regulatory filings with the corresponding agencies in other countries for review and approval. For small molecule drugs, this information is submitted in a new drug application (NDA) filing. The submission of an application is not a guarantee that the FDA will find the application complete and accept it for filing. The FDA may refuse to file the application and request additional information, in which case the application must be resubmitted. Most applications

are subject to a substantial application fee and, if approved, will be assessed an annual fee. Under the U.S. Food, Drug, and Cosmetic Act (FDCA), the FDA has the authority to grant waivers of certain user fees.

In reviewing a BLA or NDA, the FDA may grant approval, request more information or data, or deny the application if it determines the application does not provide substantial evidence of effectiveness and/or that the drug is not safe for use under the conditions of use in the proposed labeling. The FDA will also typically inspect one or more clinical sites to ensure compliance with GCPs as well as the facility or facilities at which the candidate is manufactured to ensure compliance with current good manufacturing practices (cGMPs).

We currently intend to submit a BLA to the FDA for AV7909 by the end of 2021.The receipt of regulatory approval may take many years, and typically involves the expenditure of substantial financial resources. Accordingly, there can be no assurances we will receive approval for AV7909 from the FDA. The FDA may also impose conditions upon approval or significantly limit the indications approved for a given product and/or require, as a condition of approval, enhanced labeling, packaging, post-approval clinical trials, expedited reporting of certain adverse events, pre-approval of promotional materials or restrictions on consumer advertising, which could negatively impact the commercial success of a product.

Abbreviated New Drug Applications and Section 505(b)(2) New Drug Applications. Most drug products obtain FDA marketing approval under an NDA for innovator products, or an abbreviated new drug application for generic products. Relevant to ANDAs, the Hatch-Waxman amendments to the FDCA established a statutory procedure for submission and FDA review and approval of ANDAs for generic versions of branded drugs previously approved by the FDA (RLDs)). Because the safety and efficacy of RLDs have already been established by the brand company (sometimes referred to as the innovator), the FDA does not require ANDA applicants to independently demonstrate safety and efficacy of generic products. However, a generic manufacturer is typically required to demonstrate bioequivalence (i.e. that their product performs in the same manner). Bioequivalence is established when there is an absence of a significant difference in the rate and extent for absorption of the generic product and the listed drug.

The third alternative is commonly referred to as a Section 505(b)(2) NDA, which enables the applicant to rely, in part, on the FDA’s findings of safety and efficacy of an existing product in support of its application. Section 505(b)(2) NDAs often provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products. Section 505(b)(2) permits the filing of an

NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. The applicant may rely upon the FDA’s findings with respect to certain pre-clinical or clinical studies conducted for an approved product. The FDA may also require companies to perform additional studies or measurements to support the change from the approved product. The FDA may then approve the new product candidate for certain label indications for which the referenced product has been approved, as well as for any new indication sought by the applicant.

In seeking approval for a drug through an NDA, including a 505(b)(2) NDA, applicants are required to list with the FDA certain patents of the applicant or that are held by third parties whose claims cover the applicant’s product. Upon approval of an NDA, each of the patents listed in the application for the drug is then published in the Orange Book. Any subsequent applicant who files an ANDA seeking approval of a generic equivalent version of a drug listed in the Orange Book or a 505(b)(2) NDA referencing a drug listed in the Orange Book must make one of the following certifications to the FDA concerning patents: (1) the patent information concerning the RLD has not been submitted to the FDA; (2) any such patent that was filed has expired; (3) the date on which such patent will expire; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted. This last certification is known as a paragraph IV certification.

If the RLD’s NDA holder or patent owners assert a patent challenge directed to one of the Orange Book listed patents within 45 days of the receipt of the paragraph IV certification notice, the FDA is prohibited from approving the application until the earlier of 30 months from the receipt of the paragraph IV certification, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable to the applicant. The ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the branded reference drug has expired.

Although NARCAN Nasal Spray is protected by patents covering its manufacture, formulation, distribution system and method of use, multiple third parties have filed ANDAs seeking FDA approval of generic versions of NARCAN Nasal Spray. Notwithstanding our patents, it is possible that once its application is approved, an ANDA filer could introduce a competing naloxone hydrochloride product before our patents expire if it is determined that it does not infringe our patents, or that our patents are invalid or unenforceable, or if such company or

companies decide, before applicable ongoing patent litigation is concluded, to launch a naloxone hydrochloride product at risk of being held liable for damages for patent infringement. As discussed herein, the FDA has approved the first ANDA for a generic version of NARCAN Nasal Spray.

Post-Approval Requirements. Any drug, biologic or medical device product for which we receive FDA approval will be subject to continuing regulation by the FDA, including, among other things, record keeping requirements, reporting of adverse experiences, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, cGMPs and restrictions on advertising and promotion. Adverse events that are reported after marketing approval can result in additional limitations being placed on the product’s distribution or use and, potentially, withdrawal or suspension of the product from the market. The FDA may also require post-approval clinical trials and/or safety labeling changes.

Facilities involved in the manufacture and distribution of approved products are required to be registered with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA for compliance with cGMP and other laws.

A company that is found to have improperly promoted unapproved or off-label uses or otherwise not to have met applicable promotion rules may be subject to significant liability under both the FDCA and other statutes, including the False Claims Act.

Vaccine and Therapeutic Product Lot Protocol. Because the manufacturing process for biological products is complex, the FDA requires for many biologics, including most vaccines and immune globulin products, that each product lot undergo thorough testing for purity, potency, identity and sterility. Several of our vaccines are subject to lot release protocols by the FDA and other regulatory agencies.

Marketing Approval – Devices

Devices may fall within the definition of a Medical Device or may be a Combination Product including both a device for delivery of a drug product and the drug product itself. Medical Devices are also subject to FDA clearance or approval and extensive regulation under the FDCA.

Medical devices are classified into one of three classes -- Class I, Class II or Class III - depending on the degree of risk and the level of control necessary to assure the safety and effectiveness of each medical device. Medical devices deemed to pose lower risks are generally placed in either Class I or II. Pre-market review and clearance by the FDA for Class I and II medical devices is accomplished through a

pre-market notification procedure, unless the device is exempt. Devices deemed by the FDA to pose the greatest risk, such as life-supporting or implantable devices, are generally placed in Class III.

Both before and after a medical device is commercially distributed, manufacturers and marketers of the device have ongoing responsibilities under FDA regulations. The FDA reviews design and manufacturing practices, record keeping, reports of adverse events, labeling and other information to identify potential problems with marketed medical devices. Device manufacturers are subject to periodic and unannounced inspection by the FDA for compliance with cGMP requirements.

A combination product is a product comprising of two or more regulated components (e.g., a drug and device) that are combined into a single product, co-packaged, or sold separately but intended for co-administration, as evidenced by the labeling for the products. Like their constituent products—e.g., drugs and devices—combination products are highly regulated and subject to a broad range of post marketing requirements including cGMPs, adverse event reporting, periodic reports, labeling and advertising and promotion requirements and restrictions, market withdrawal and recall.

The FDA also administers certain controls over the export of medical devices from the United States, as international sales of medical devices that have not received FDA approval are subject to FDA export requirements.

Regulation Outside of the U.S.

Currently, we maintain a commercial presence in the United States and Canada as well as certain other countries. In the European Union, medicinal products are authorized following a process that is similarly demanding as the process required in the United States. Medicinal products must be authorized in one of two ways, either through the decentralized procedure, which provides for the mutual recognition procedure of national approval decisions by the competent authorities of the European Union (EU) Member States or through the centralized procedure by the European Commission, which provides for the grant of a single marketing authorization that is valid for all EU member states. Each foreign country subjects medical devices to its own regulatory requirements.We are also subject to many of the same continuing post-approval requirements in the EU as we are in the United States (e.g., good manufacturing practices).

Potential Sanctions.

For all FDA-regulated products, if the FDA finds that a manufacturer has failed to comply with applicable laws and regulations, or that a product is ineffective or poses an unreasonable health risk, it can institute or seek a wide variety of enforcement actions and remedies, including but not limited to:

•restrictions on such products, manufacturers or manufacturing processes;

•restrictions on the labeling or marketing of a product;

•restrictions on distribution or use of a product;

•requirements to conduct post-marketing studies or clinical trials;

•warning letters or untitled letters;

•withdrawal of the products from the market;

•refusal to approve pending applications or supplements to approved applications that are submitted;

•recall of products;

•fines, restitution or disgorgement of profits or revenues;

•suspension or withdrawal of marketing approvals;

•refusal to permit the import or export of our products;

•product seizure; and

•injunctions or the imposition of civil or criminal penalties.

Health regulatory authorities in other countries have similar rules and regulations although the specifics vary jurisdiction to jurisdiction.

Fraud, Abuse and Anti-Corruption Laws

The United States and most other jurisdictions have detailed requirements that apply to government and private health care programs, and a broad range of fraud and abuse laws, transparency laws, and other laws. Relevant U.S. federal and state healthcare laws and regulations include:

•The federal Anti-Kickback Statute;

•The False Claims Act;

•The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health (HITECH) Act;

•The price reporting requirements under the Medicaid Drug Rebate Program and the Veterans Health Care Act of 1992;

•The federal Physician Payment Sunshine Act, being implemented as the Open Payments Program; and

•Analogous and similar state laws and regulations.

Failure to comply with these laws and regulations could subject us to criminal or civil penalties.

Our operations are also subject to compliance with the Foreign Corrupt Practices Act (FCPA) which prohibits corporations and individuals from paying, offering to pay, or authorizing the payment of anything of value to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity. We also may be implicated under the FCPA by the activities of our partners, collaborators, contract research organizations, vendors or other agents. As a public company, the FCPA also requires us to make and keep books and records that accurately and fairly reflect all of our transactions and to devise and maintain an adequate system of internal accounting controls. Our operations are also subject to compliance with the U.K. Bribery Act, which applies to bribery activities both in the public and private sector, Canada’s Corruption of Foreign Public Officials Act and similar laws in other countries.

Regulations Governing Reimbursement

The marketing practices of U.S. pharmaceutical manufacturers are also subject to federal and state healthcare laws related to government funded healthcare programs.

In the United States, certain of our products are reimbursed under federal and state health care programs such as Medicaid, Medicare, TriCare, and or state pharmaceutical assistance programs. Many foreign countries have similar laws.

Various U.S. federal health care laws apply when we or customers submit claims for items or services that are reimbursed under federally funded health care programs, including federal and state anti-kickback laws, false claims laws, and anti-self-referral laws, which may apply to federal and state-funded Medicaid and other health care programs and private third-party payers.

Failure to comply with these laws and regulations could subject us to criminal or civil penalties.

Additionally, drug pricing is an active area for regulatory reform at the federal and state levels, and significant changes to current drug pricing and reimbursement structures in the United States. continue to be enacted and considered.

Data Privacy Laws

A number of states in the United States have passed or introduced bills, which, if passed, impose operational requirements on U.S. companies similar to the requirements reflected in the General Data Protection Regulation (GDPR) in the EU. For example, the California Consumer Privacy Act of 2018 (CCPA), which came into effect on January 1, 2020, requires covered companies that process personal information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt out of certain data sharing with third parties and provides a new private right of action for data breaches. Additionally, the Federal Trade Commission and many state attorney generals are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data. The compliance and other burdens imposed by the EU's GDPR, CCPA and similar privacy laws and regulations may be substantial as they are subject to differing interpretations and implementation among jurisdictions. The restrictions imposed by such laws may require us to modify our data handling practices and impose additional compliance costs and burdens.

Other Industry Regulation

Our present and future business has been and will continue to be subject to various other laws and regulations. Various laws, regulations and recommendations relating to safe working conditions, laboratory practices, the experimental use of animals, and the purchase, storage, movement, import, export, use and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents used in connection with our product development, are or may be applicable to our officers, directors and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those filings are provided to us by those persons. In addition, we intend to make available on our website all disclosures that are required to be posted by applicable law, the rules of the SEC or the New York Stock Exchange listing standards regarding any amendment to, or waiver of, our code of business conduct and ethics. We have included our website address as an inactive textual reference only. The information contained on, or that can be accessed through, our website is not a part of, or incorporated by reference into, this Annual Report on Form 10-K.

HUMAN CAPITAL

We value the diversity of each of our employees and the contributions they make to helping us achieve our mission to protect and enhance life. We are

committed to working together toward our long-term aspiration to protect and enhance one billion lives by 2030. One of the five core objectives of our current 2020-2024 strategic plan is to evolve the culture of our organization consistent with our strategic objectives and our values. We strive to create an environment that is professionally and personally rewarding by offering challenging work and projects for individual and team contribution, and opportunities for professional and personal development. Another core objective of our current strategic plan is to build scalable capabilities; this objective includes continuing to invest in growing and developing leadership, innovation and engagement at all levels of our workforce. As of December 31, 2020, we had approximately 2,200 employees.

Health, Wellness and Safety

Employee safety and well-being is of paramount importance to us and was of particular focus in 2020 in light of COVID-19. In response to the pandemic, we adjusted our operations to ensure that only operation-critical development and manufacturing employees worked on-site, and we transitioned all other employees to remote work, providing productivity and collaboration tools and resources for them

Ensuring the health and safety of our on-site employees demanded increased attention. We provided personal protective equipment to them and implemented new safety protocols. These included re-engineered workplace designs that facilitate physical distancing, temperature screening and access to COVID-19 testing. Frequency and methods of communication between management and employees was increased with regular all-hands virtual meetings to discuss what we were doing as a company to combat COVID-19 in conjunction with our USG and private sector partners, and what we were doing to protect our workers.

In addition, we enhanced and promoted programs to support our employees’ physical and mental well-being. For example, in 2020 we provided supplemental paid time off to employees who were unable to work due to COVID-19 symptoms or diagnosis, or even to deal with family COVID issues. We arranged and paid for COVID-19 tests for people who work on-site. We also partnered with a leading provider of online mental health support and counseling to maintain and expand our employees’ access to offered mental health resources.

Hiring and Talent Management

In 2020, we hired approximately 700 new employees. More than 250 of these new hires were hired to work with numerous company employees in new roles working on our public-private partnership with the USG and other innovators related to

COVID-19. We have consistent talent processes and systems across the company including performance management, training and development and succession planning. We use the Gallup Q12 instrument to measure employee engagement progress on an annual basis.

Compensation and Benefits

Our programs support our pay-for-performance philosophy and enhance our total compensation package. Competitive bonuses and equity awards are granted subject to eligibility based on company and individual performance. We focus on results and behavior because we value how we do things as much as getting them done. We practice salary transparency whereby certain information is shared to enhance employees' transparency into the salaries they receive, which helps employees become more knowledgeable and confident their pay is fair and competitive. We recognize the need for ongoing skill enhancement and support continued learning through on-the-job assignments, training programs, tuition assistance, professional memberships and professional conference attendance. This past year, to thank employees for the extra-ordinary effort they gave during unprecedented times, leadership made a non-recurring special equity award with immediate vesting that was provided to all employees below the senior vice president level.

Diversity, Equity, and Inclusion Commitment

Diversity, equity and inclusion are integral parts of our culture. We are committed to attracting, developing, and retaining the best talent reflecting a diversity of ideas, backgrounds, and perspectives. Diversity drives innovation in the products and services we develop, in the way we solve problems, and in the way we serve the needs of an increasingly global and diverse customer and partner base. We recognize the value that diversity contributes to our global organization and the competitive advantage we can maintain by having a broad range of talents, perspectives, and ideas with a commitment to continuously improving our business. We ensure every employee is treated fairly and equitably. We are also a proud supporter of our military veterans. We value the diversity that each employee brings, and while we look for people who share our core values, we thrive on our differences. Employees come from different backgrounds and take on a wide variety of roles, but they are all working toward the same mission — to protect and enhance life.

Social, Environmental, and Community Responsibility

Our mission to protect and enhance life applies not only to the products and services that we deliver, but also to how we are cognizant of our social and

environmental responsibilities as well as serve the communities in which we live and work. Starting in 2012, we established a platform, that we call eGIVE (Give, Invest, Volunteer), that we have continued to expand since its inception. Through this platform, we have encouraged employees to make contributions to select charitable organizations and volunteer their time, which we have supported with paid time off to support socially responsible activities.

As our organization has grown, we have continually explored ways in which we can have impact at broader scale. To that end, in December 2020, we initiated a comprehensive enterprise-wide Environmental, Social and Governance (ESG) project to understand our current and desired ESG profile, engage internal and external stakeholders in the ESG conversation, identify priority ESG action items and issue our maiden sustainability report focused on our ESG initiatives by the end of 2021, consistent with our corporate strategy and our commitment to the communities in which we operate.

AVAILABLE INFORMATION

Our common stock is traded on the New York Stock Exchange under the ticker symbol “EBS.” Our principal executive offices are located at 400 Professional Drive, Suite 400, Gaithersburg, Maryland 20879. Our telephone number is (240) 631-3200, and our website address is www.emergentbiosolutions.com. We make available, free of charge on our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the Exchange Act) as soon as reasonably practicable after we electronically file those reports with, or furnish them to, the Securities and Exchange Commission (the SEC).

We also make available, free of charge on our website, the reports filed with the SEC by our executive officers, directors and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those filings are provided to us by those persons. In addition, we intend to make available on our website all disclosures that are required to be posted by applicable law, the rules of the SEC or the New York Stock Exchange listing standards regarding any amendment to, or waiver of, our code of business conduct and ethics. We have included our website address as an inactive textual reference only. The information contained on, or that can be accessed through, our website is not a part of, or incorporated by reference into, this Annual Report on Form 10-K.

ITEM 1A. RISK FACTORS

The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The occurrence of any of the following risks or of unknown risks and uncertainties may adversely affect our business, operating results and financial condition.

RISK FACTOR SUMMARY

The COVID-19 coronavirus pandemic could have a material adverse impact on our business, results of operations and financial performance.

In addition, there are a number of government contracting risks that could impact our business, financial condition, operating results and cash flows, including:

•Failure to receive FDA licensure of AV7909 in a timely manner or at all.

•Reduced demand for and/or funding for procurement of AV7909 and/or BioThrax or ACAM2000 and discontinuation of funding of our other USG procurement and development contracts.

•Failure to comply with laws and regulations pertaining to government contracts and resources required for responding to related government inquiries.

There are a number of product development and commercialization risks that could impact our business, financial condition, operating results and cash flows, including:

•The COVID-19 product candidates we are working on may not be safe or effective and we may be unable to manufacture sufficient quantities to meet demand.

•Clinical trials of product candidates are expensive and time-consuming, and their outcome is uncertain.

•We may fail to capitalize on the most scientifically, clinically or commercially promising or profitable product candidates.

There are a number of regulatory and compliance risks that could impact our business, financial condition, operating results and cash flows, including:

•Conditions associated with approvals and ongoing regulation of products may limit how we manufacture and market them.

•Failure to comply with various health care laws could result in substantial penalties.

•Failure to comply with obligations under U.S. governmental pricing programs may require reimbursement for underpayments and the

payment of substantial penalties, sanctions and fines.

•The authority to sell unapproved MCMs to certain government entities can be ambiguous and subject us to regulatory enforcement actions.

There are a number of manufacturing risks that could impact our business, financial condition, operating results and cash flows, including:

•Disruption at, damage to or destruction of our development and/or manufacturing facilities may impede our ability to manufacture our products, as well as deliver our CDMO services.

•Our operations, including our use of hazardous materials, chemicals, bacteria and viruses expose us to significant potential liabilities.

There are a number of risks related to reliance on third parties that could impact our business, financial condition, operating results and cash flows, including:

•The loss of sole-source suppliers or an increase in the price of inventory.

•If third parties do not perform as contractually required or as expected, we may not be able to obtain regulatory approval for or commercialize our product candidates.

There are a number of risks related to our strategic acquisitions and collaborations that could impact our business financial condition, operating results and cash flows, including:

•Our strategy of generating growth through acquisitions may be unsuccessful.

•Our failure to successfully integrate acquired businesses and/or assets into our operations and our ability to realize the benefits of such acquisitions.

There are a number of competitive and political risks that could impact our business, financial condition, operating results and cash flows, including:

•Development and commercialization of pharmaceutical products are subject to evolving private and public sector competition.

•NARCAN® Nasal Spray may be subject to potential branded and generic competition.

•Biologic Products may be affected by the approval and entry of follow-on biologics, or biosimilars in the United States and other jurisdictions.

There are a number of risks related to our intellectual property that could impact our business,

financial condition, operating results and cash flows, including:

•Failure to protect our intellectual property rights from patent infringement challenges.

•Failure to comply with obligations under our licenses with third parties.

•Potential loss of proprietary information and know-how, which carries the risk of reducing the value of our technology and products.

•Early competition from generic drugs.

There are a number of financial risks that could impact our business, financial condition, operating results and cash flows, including:

•Our ability to maintain sufficient cash flow from our operations to pay our substantial debt, both now and in the future.

•Our ability to obtain additional funding and be able to raise capital when needed.

There are a number of unique business risks that could impact our business, financial condition, operating results and cash flows, including:

•The potential for cyber security incidents to harm our ability to operate our business effectively in light of our heightened risk profile.

•Inherent product liability exposure due to our unique business.

There are a number of risks associated with our common stock, including, but not limited to:

•Our business or our share price could be negatively affected as a result of the actions of shareholders.

•Due to his substantial ownership percentage, our Executive Chairman has the ability to exert significant influence over us with respect to the election of the members of our Board of Directors and to delay or prevent a change of control of us.

•The price of our common stock has been and remains subject to extreme volatility.

The risk factors below contain more detailed descriptions of the risks identified above, which may materially harm our business, financial condition or results of cash flows.

GLOBAL PANDEMIC RISK

The COVID-19 coronavirus pandemic could have a material adverse impact on our business, results of operations and financial performance.

Our business, operations and financial condition and results have been and may continue to be impacted by the COVID-19 pandemic to varying degrees. The pandemic has presented a number of

risks and challenges for our business, including, among others, impacts due to travel limitations and government-mandated work-from-home or shelter-in-place orders; manufacturing disruptions and delays; supply chain interruptions, including challenges related to reliance on third-party suppliers; disruptions to pipeline development and clinical trials and decreased product demand for our travel health vaccines due to the significant reduction in international travel.Additional travel restrictions and other governmental measures may result in further disruptions or continued delays in delivery of supplies by our third-party contractors and suppliers.

We continue to implement a work from home policy, with our administrative employees working outside of our offices, and on-site staff restricted to only those required to execute certain manufacturing, laboratory and related support activities. Working remotely could increase our cybersecurity risk, create data accessibility concerns, and make us more susceptible to communication disruptions, any of which could adversely impact our business operations. In addition, as a result of state or local restrictions, our on-site staff conducting research and development may not be able to access our laboratories, and these core activities may be significantly limited or curtailed, possibly for extended periods of time.

We also face uncertainties related to our efforts and those of our collaborative partners to develop a potential treatment or vaccine for COVID-19, including uncertainties related to pre-clinical or clinical trials, the risk that such development programs may not be successful, commercially viable, or that EUA or regulatory approval will not be received from regulatory authorities.

In addition, the trading price of our common stock, and that of other biopharmaceutical companies, has been highly volatile due to the COVID-19 pandemic, especially as a result of investor concerns and uncertainty related to the impact of the pandemic on the economies of countries worldwide. These broad market and industry fluctuations, as well as general economic, political and market conditions, may negatively impact the market price of shares of our common stock.

The COVID-19 pandemic continues to rapidly evolve. The extent to which the pandemic further negatively impacts our business, supply chain, disrupts key clinical trials, diverts government funding away from our primary procured products and product candidates due to changes in government priorities and potential delays in the delivery of products to our customers will depend on future developments, which

are highly uncertain. The ultimate geographic spread of the disease, the duration of the pandemic, further travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease cannot be predicted with certainty.

GOVERNMENT CONTRACTING RISKS

We currently derive a substantial portion of our revenue from USG procurement of AV7909 and ACAM2000 and have historically derived a substantial portion of our revenue from USG procurement of BioThrax. If the USG’s demand for and/or funding for procurement of AV7909 and/or BioThrax or ACAM2000 is substantially reduced, our business, financial condition, operating results and cash flows would be materially harmed.

We derive a substantial portion of our current and expected future revenues from USG procurement of AV7909. As AV7909 is a product development candidate, there is a higher level of risk that we may encounter challenges causing delays or an inability to deliver AV7909 than with BioThrax, which may have a material effect on our ability to generate and recognize revenue.

The success of our business and our future operating results are significantly dependent on anticipated funding for the procurement of our anthrax vaccines and the terms of such sales to the USG, including the price per dose, the number of doses and the timing of deliveries. We have no certainty that funding will be made available for the procurement of our anthrax vaccines. If priorities for the SNS change generally or with respect to our anthrax vaccines, funding to procure future doses of AV7909 or BioThrax may be delayed, limited or not available, BARDA may never complete the anticipated full transition to stockpiling AV7909 in support of anthrax preparedness, and our future business, financial condition, operating results and cash flows could be materially harmed.

In addition, we currently derive a substantial portion of our revenues from sales of ACAM2000 to the USG. If priorities for the SNS change with respect to ACAM2000 or the USG decides not to exercise additional options under our ACAM2000 contract, our future business, financial condition, operating results and cash flows could be materially harmed.

Although a pre-EUA submission package related to AV7909 has been submitted to the FDA, we may not receive an EUA or eventual FDA licensure in a timely manner or at all. Delays in our ability to achieve a favorable outcome from the FDA could prevent us from realizing the full potential value of our BARDA contract

for the advanced development and procurement of AV7909.

In collaboration with us, the CDC filed with the FDA a pre-EUA submission package related to AV7909, which enables FDA review of data in anticipation of a request for an EUA. This submission triggered BARDA to exercise its first contract option (valued at approximately $261 million) in July 2019 to procure 10 million doses of AV7909 and another option in July 2020 to procure additional doses (valued at approximately $258 million) for inclusion into the SNS in support of anthrax preparedness.

We also plan to submit a BLA to the FDA related to AV7909 this year. Notwithstanding, the FDA may decide that our data are insufficient and require additional pre-clinical, clinical or other studies. If we are unsuccessful in obtaining an EUA and, ultimately, FDA licensure, in a timely manner or at all, we may not be able to realize the full potential value of the contract, which could have a material adverse effect on our future business, financial condition, operating results and cash flows. Furthermore, prior to FDA licensure, if we obtain an EUA, the EUA could be terminated if the emergency determination underlying the EUA terminates.

Our USG procurement and development contracts require ongoing funding decisions by the USG. Simultaneous reduction or discontinuation of funding of these contracts could cause our business, financial condition, operating results and cash flows to suffer materially.

The USG is the principal customer for our PHT-focused MCMs and is the primary source of funds for the development of most of our product candidates in our development pipeline, most notably our AV7909 procured product candidate. We anticipate that the USG will also be a principal customer for those MCMs that we successfully develop within our existing product development pipeline, as well as those we acquire in the future. Additionally, a significant portion of our revenue comes from USG development contracts and grants and, more recently, from reservation of CDMO capacity by BARDA via our public-private CDMO partnership. Over its lifetime, a USG procurement or development program may be implemented through the award of many different individual contracts and subcontracts. The funding for such government programs is subject to Congressional appropriations, generally made on a fiscal year basis, even for programs designed to continue for several years. For example, sales of AV7909 to be supplied under our development and procurement contract with BARDA are subject to the availability of funding, mostly from annual appropriations. These appropriations can be subject to political considerations, changes in priorities due to

global pandemics, the results of elections and stringent budgetary constraints.

Additionally, our government-funded development contracts typically give the USG the right, exercisable in its sole discretion, to extend these contracts for successive option periods following a base period of performance. The value of the services to be performed during these option periods may constitute the majority of the total value of the underlying contract. For example, the September 2016 contract award from BARDA for the development and delivery to the SNS of AV7909 for post-exposure prophylaxis of anthrax disease consists of a five-year base period of performance. The contract award also includes options for the delivery of additional doses of AV7909 to the SNS and options for an additional clinical study and post-marketing commitments. If levels of government expenditures and authorizations for public health countermeasure preparedness decrease or shift to programs in areas where we do not offer products or are not developing product candidates, or if the USG otherwise declines to exercise its options under our existing contracts, our revenues would suffer, as well as our business, financial condition, operating results and cash flows.

There can be no assurance that we will be able to secure follow-on procurement contracts with the USG upon the expiration of any of our current product procurement contracts.

A significant portion of our revenue is substantially dependent upon product procurement contracts with the USG and foreign governments for our PHT products. Upon the expiration of a procurement contract, we may not be able to negotiate a follow-on procurement contract for the particular product for a similar product volume, period of performance, pricing or other terms, or at all. The inability to secure a similar or increased procurement contract could materially affect our revenues and our business, financial condition, operating results and cash flows could be harmed. For example, the BARDA procurement contract for raxibacumab that we acquired in our acquisition of raxibacumab from Human Genome Sciences, Inc. and GlaxoSmithKline LLC, completed in November 2019. As another example, our development and procurement contract for AV7909 expires this year. We intend to negotiate a follow-on procurement contract for raxibacumab and intend to negotiate follow-on procurement contracts for most of our PHT products upon the expiration of a related procurement contract, but there can be no assurance that we will be successful obtaining any follow-on contracts. Even if we are successful in negotiating a follow-on procurement contract, it may be for a lower product volume, over a shorter period of performance or be on less favorable pricing or other terms. An inability to secure follow-on procurement

contracts for our products or procured product candidates could materially and adversely affect our revenues, and our business, financial condition, operating results and cash flows could be harmed.

The government contracting process is typically a competitive bidding process and involves unique risks and requirements.

Our business involves government contracts and grants, which may be awarded through competitive bidding. Competitive bidding for government contracts presents many risks and requirements, including:

•the possibility that we may be ineligible to respond to a request for proposal;

•the commitment of substantial time and attention of management and key employees to the preparation of bids and proposals;

•the need to accurately estimate the resources and cost structure that will be required to perform any contract that we might be awarded;

•the submission by third parties of protests to our responses to requests for proposal that could result in delays or withdrawals of those requests for proposal; and

•in the event our competitors protest or challenge contract or grant awards made to us through competitive bidding, the potential that we may incur expenses or delays, and that any such protest or challenge could result in the resubmission of bids based on modified specifications, or in the termination, reduction or modification of the awarded contract.

The USG may choose not to award us future contracts for either the development of our new product candidates or for the procurement of our existing products addressing PHTs and may instead award such contracts to our competitors. If we are unable to secure particular contracts, we may not be able to operate in the market for products that are provided under those contracts. Additionally, if we are unable to consistently win new contract awards over an extended period, or if we fail to anticipate all of the costs or resources that we will be required to secure and, if applicable, perform under such contract awards, our growth strategy and our business, financial condition and operating results and cash flows could be materially and adversely affected.

There are a number of laws and regulations that pertain to government contracts and compliance with those laws and regulations require significant time and cost, which could have a material adverse effect on our

business, financial condition, operating results and cash flows.

As a manufacturer and supplier of MCMs to the USG addressing PHTs, we must comply with numerous laws and regulations relating to the procurement, formation, administration and performance of government contracts. These laws and regulations govern how we transact business with our government clients and, in some instances, impose additional costs and related obligations on our business operations. For a detailed description of the most significant regulations that affect our government contracting business, see the prior discussion under "Regulation - Government Contracting".

We may be subject to government investigations of business practices and compliance with government acquisition regulations. USG agencies routinely audit and investigate government contractors for compliance with applicable laws and standards. Even though we take significant precautions to identify, prevent and deter fraud, misconduct and non-compliance, we face the risk that our personnel or outside partners may engage in misconduct, fraud or improper activities. If we are audited or investigated and such audit or investigation were to uncover improper or illegal activities, we could be subject to civil and criminal fines and penalties, administrative sanctions, including suspension or debarment from government contracting, and suffer significant reputational harm. The loss of our status as an eligible government contractor or significant fines or penalties associated with contract non-compliance or resulting from investigations could have a material adverse effect on our business.

The amount we are paid under our fixed price government procurement contracts is based on estimates we have made of the time, resources and expenses required for us to perform under those contracts. If our actual costs exceed our estimates, we may not be able to earn an adequate return or may incur a loss under these contracts, which could harm our operating results and materially reduce our net income.

Our current procurement contracts with HHS and DoD are generally fixed price contracts. We expect that additional future procurement contracts we successfully secure with the USG would likely also be fixed price contracts. Under a fixed price contract, we are required to deliver our products at a fixed price regardless of the actual costs we incur. Estimating costs that are related to performance in accordance with contract specifications is difficult, particularly where the period of performance is over several years. Our failure to anticipate technical problems, estimate costs accurately or control costs during performance of a fixed price contract could reduce the profitability

of such a contract or cause a loss, which could harm our operating results and materially reduce our net income.

Unfavorable provisions in government contracts, some of which may be customary, may subject our business to material limitations, restrictions and uncertainties and may have a material adverse impact on our business, financial condition, operating results and cash flows.

Government contracts customarily contain provisions that give the USG substantial rights and remedies, many of which are not typically found in commercial contracts, including provisions that allow the USG to:

•terminate existing contracts, in whole or in part, for any reason;

•unilaterally reduce or modify contracts or subcontracts;

•decline, in whole or in part, to exercise an option to purchase product under a procurement contract or to fund additional development under a development contract;

•decline to renew a procurement contract;

•claim certain rights to facilities or to products, including intellectual property, developed under the contract;

•require repayment of contract funds spent on construction of facilities in the event of contract default;

•take actions that result in a longer development timeline than expected;

•direct the course of a development program in a manner not chosen by the government contractor;

•suspend or debar the contractor from doing business with the government or a specific government agency;

•pursue civil or criminal remedies under acts such as the False Claims Act and False Statements Act; and

•control or prohibit the export of products.

Generally, government contracts contain provisions permitting unilateral termination or modification, in whole or in part, at the USG’s convenience. Under general principles of government contracting law, if the USG terminates a contract for convenience, the government contractor may recover only its incurred or committed costs, settlement expenses and profit on work completed prior to the

termination. If the USG terminates a contract for default, the government contractor is entitled to recover costs incurred and associated profits on accepted items only and may be liable for excess costs incurred by the government in procuring undelivered items from another source. All of our development and procurement contracts with the USG, are terminable at the USG's convenience with these potential consequences.

In addition, our USG contracts grant the USG the right to use technologies developed by us under the government contract or the right to share data related to our technologies, for or on behalf of the USG. Under our USG contracts, we may not be able to limit third parties, including our competitors, from accessing certain of these technology or data rights, including intellectual property, in providing products and services to the USG.

PRODUCT DEVELOPMENT AND COMMERCIALIZATION RISKS

The COVID-19 product candidates we are working on may not be safe or effective and, even if they are, we may not be able to manufacture sufficient quantities to meet demand.

We are developing two product candidates for the possible prophylaxis or treatment of COVID-19 and we are also providing CDMO services for the development and/or manufacture of multiple vaccine product candidates for customers. There can be no assurance that any of these product candidates will be safe or effective. There can also be no assurance that any of these product candidates will be authorized for emergency use or approval by the FDA or any other health regulatory authority. Even if these product candidates are safe and/or effective and receive authorization or approval by a health regulatory authority, the manufacturing processes for our CDMO COVID-19 programs are under development and will be complex. As a result, there can be no assurance that we will be able to produce any significant quantity of these products in a timely basis or at all, or negotiate further commitments under our existing CDMO contracts to manufacture vaccines against COVID-19, which could adversely affect our business, financial condition, operating results and cash flows.

Our growth depends on our success in developing and commercializing our product candidates. If we are unable to commercialize these product candidates, or experience significant delays or unanticipated costs in doing so, our business would be materially and adversely affected.

We have invested significant effort and financial resources in the development of our vaccines, therapeutics and medical device product candidates and the acquisition of additional product candidates.

In addition to our product sales, our ability to generate revenue is dependent on a number of factors, including the success of our development programs, the USG's interest in providing development funding for or procuring certain of our product candidates, and the commercial viability of our acquired or developed product candidates. The commercial success of our product candidates will depend on many factors, including accomplishing the following in an economical manner:

•successful development, formulation and cGMP scale-up of manufacturing that meets FDA or other foreign regulatory requirements;

•successful program partnering;

•successful completion of clinical or non-clinical development;

•receipt of marketing approvals from the FDA and equivalent foreign regulatory authorities;

•establishment of commercial manufacturing processes and product supply arrangements;

•training of a commercial sales force for the product;

•successful registration and maintenance of relevant patent and/or other proprietary protection; and

•acceptance of the product by potential government and other customers.

Clinical trials of product candidates are expensive and time-consuming, and their outcome is uncertain. We must invest substantial amounts of time and financial resources in these trials, which may not yield viable products. Failure to obtain regulatory approval for product candidates, particularly in the United States, could materially and adversely affect our financial resources, which would adversely affect our business, financial condition, operating results and cash flows.

Before obtaining regulatory approval for the marketing of our product candidates, we and our collaborative partners, where applicable, must conduct pre-clinical studies and clinical trials to establish proof of concept and demonstrate the safety and efficacy of our product candidates. Pre-clinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. Success in pre-clinical testing and early clinical trials does not ensure that later clinical trials will be successful, and interim results of such trials do not necessarily predict final results. An unexpected result in one or more of our clinical trials can occur at any stage of testing.

Pre-clinical and clinical testing for certain of our product candidates addressing CBRNE threats may face additional difficulties and uncertainties because they cannot ethically or feasibly be tested in human subjects. We therefore expect to rely on the Animal Rule to obtain regulatory approval for some of our CBRNE product candidates. The Animal Rule permits, in certain limited circumstances, the use of animal efficacy studies, together with human clinical safety and immunogenicity trials, to support an application for marketing approval. For a product approved under the Animal Rule, certain additional post-marketing requirements apply. For example, to the extent feasible and ethical, applicants must conduct post-marketing studies, such as field studies, to verify and describe the drug's clinical benefit and to assess its safety when used as indicated. It is possible that results from these animal efficacy studies may not be predictive of the actual efficacy of our product candidates in humans.

Prior to FDA approval of the countermeasure product candidates, the Secretary of HHS can contract to purchase MCMs for the SNS under Project BioShield under certain circumstances. Under PAHPRA, the USG may also, at its discretion, purchase critical biodefense products for the SNS prior to FDA approval after the filing of a pre-EUA application with the FDA. If our product candidates are not procured or funded under regulatory authority, they generally will have to be fully approved by the FDA through traditional regulatory mechanisms for distribution in the United States.

We may experience unforeseen events or issues during, or as a result of, pre-clinical testing, clinical trials or animal efficacy studies. These issues and events, which could delay or prevent our ability to receive regulatory approval for a product candidate, include, among others:

•our inability to manufacture sufficient quantities for use in trials;

•the unavailability or variability in the number and types of subjects for each study;

•safety issues or inconclusive or incomplete testing, trial or study results;

•drug immunogenicity;

•lack of efficacy of product candidates during the trials;

•government or regulatory restrictions or delays; and

•greater than anticipated costs of trials.

We may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable product candidates.

We continue to evaluate our product development strategy and, as a result, may modify our strategy in the future. In this regard, we may, from time to time, focus our product development efforts on different product candidates or may delay or halt the development of various product candidates. We may change or refocus our existing product development, commercialization and manufacturing activities based on government funding decisions. This could require changes in our facilities and our personnel. Any product development changes that we implement may not be successful. In particular, we may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable product candidates or choose candidates for which government development funds are not available. Our decisions to allocate our research and development, management and financial resources toward particular product candidates or therapeutic areas may not lead to the development of viable commercial products and may divert resources from better business opportunities. Similarly, our decisions to delay or terminate product development programs may also prove to be incorrect and could cause us to miss valuable opportunities.

REGULATORY AND COMPLIANCE RISKS

Our long-term success depends, in part, upon our ability to develop, receive regulatory approval for and commercialize product candidates we develop or acquire and, if we are not successful, our business, financial condition, operating results and cash flows may suffer.

Our product candidates and the activities associated with them are subject to extensive FDA regulation and oversight, as well as oversight by other regulatory agencies in the United States and by comparable authorities in other countries. This includes, but is not limited to, laws and regulations governing product development, including testing, manufacturing, record keeping, storage and approval, as well as advertising and promotion. In limited circumstances, governments may procure products that have not obtained regulatory approval. In all other circumstances, failure to obtain regulatory approval for a product candidate will prevent us from selling and commercializing the product candidate.

In the United States, to obtain approval from the FDA to market any of our future drug, biologic, or vaccine products, we will be required to submit an NDA or BLA to the FDA. Ordinarily, the FDA requires a company to support an NDA or BLA with substantial evidence of the product candidate’s effectiveness, safety, purity and potency in treating the targeted indication based on data derived from adequate and well-controlled clinical trials, including Phase 3 trials

conducted in patients with the disease or condition being targeted.

However, many of our MCM product candidates, for example, may take advantage of a different regulatory approval pathway under the FDA’s “Animal Rule.” Under the Animal Rule, efficacy must be demonstrated, in part, by utilizing animal models rather than testing in humans. We cannot guarantee that the FDA will permit us to proceed with licensure of any of our PHT MCM candidates under the Animal Rule. Even if we are able to proceed under the Animal Rule, product development can take a considerable amount of time, and the FDA may decide that our data are insufficient to support approval and require additional pre-clinical, clinical or other studies, refuse to approve our products, or place restrictions on our ability to commercialize those products. Furthermore, products approved under the Animal Rule are subject to certain additional post-marketing requirements. We cannot guarantee that we will be able to meet this regulatory requirement even if one or more of our product candidates are approved under the Animal Rule.

The process of obtaining these regulatory approvals is expensive, often takes many years if approval is obtained at all, and can vary substantially based upon the type, complexity and novelty of the product candidate involved. Changes in the regulatory approval process may cause delays in the approval or rejection of an application. There is a high rate of failure inherent in this process, and potential products that appear promising at early stages of development may fail for a number of reasons, and positive results from pre-clinical studies may not be predictive of similar results in human clinical trials. Similarly, promising results from earlier clinical trials of a product candidate may not be replicated in later clinical trials.

There are many other difficulties and uncertainties inherent in pharmaceutical research and development that could significantly delay or otherwise materially delay our ability to develop future product candidates, mostly related to clinical trials.

Failure to successfully develop future product candidates may materially adversely affect our business, financial condition, operating results and cash flows.

Once an NDA or BLA is submitted, the FDA has substantial discretion and may refuse to accept any application or may decide that our data are insufficient to support approval and require additional pre-clinical, clinical or other studies.

Unapproved and investigational stage products are also subject to FDA's laws and regulations governing advertising and promotion, which prohibit the promotion of both unapproved products and

unapproved uses of approved products. There is some risk that the FDA could conclude that our communications relating to unapproved products or unapproved uses of approved products constitute the promotion of an unapproved product or product use in violation of FDA laws and regulations. There is also a risk that a regulatory authority in another country could take a similar position under that country's laws and regulations and conclude that we have violated the laws and regulations related to product development, approval, or promotion in that country. Therefore, there is a risk that we could be subject to enforcement actions if found to be in violation of such laws or regulations.

Even if we or our collaborators obtain marketing approvals for our product candidates, the conditions of approvals and ongoing regulation of our products may limit how we manufacture and market our products, which could materially impair our ability to generate revenue.

Once approval has been granted, an approved product and its manufacturer and marketer remain subject to ongoing review and extensive regulation.

We and our collaborators must therefore comply with requirements concerning advertising and promotion for any of our product candidates for which we obtain marketing approval. Promotional communications with respect to FDA-regulated products are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved labeling. Thus, we will not be able to sell any products we develop for indications or uses for which they are not approved.

If we and our collaborators are not able to comply with post-approval regulatory requirements, we could have the marketing approvals for our products withdrawn by regulatory authorities and our ability to market any products could be limited, which could adversely affect our ability to achieve or sustain profitability. Further, the cost of compliance with post-approval regulations may have a negative effect on our operating results and financial condition.

Any product candidate for which we or our collaborators obtain marketing approval could be subject to restrictions or withdrawal from the market and we may be subject to substantial penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.

Any product candidate for which we or our collaborators obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other

regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to quality control and manufacturing, quality assurance and corresponding maintenance of records and documents, and requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the medicine.

Certain of our products are subject to post marketing requirements (PMRs), which we are required to conduct, and post marketing commitments (PMCs), which we have agreed to conduct. The FDA has the authority to take action against sponsors who fail to meet the obligations of a PMR, including civil monetary penalties and/or misbranding charges.

The FDA and other agencies, including the U.S. Department of Justice (DOJ) and the HHS Office of Inspector General (OIG), closely regulate and monitor the pre-approval and post-approval marketing and promotion of products to ensure that they are marketed and distributed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA, DOJ, and OIG impose stringent restrictions on manufacturers’ communications regarding unapproved products and unapproved uses of approved products and if we market unapproved products or market our approved products for unapproved indications, we may be subject to enforcement action. Violations of the FDCA and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription products may lead to investigations and enforcement actions alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.

In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturing partners or manufacturing processes, or failure to comply with regulatory requirements, may result in various penalties and sanctions. See the prior discussion regarding "Regulation - Potential Sanctions" above for a detailed list of the various potential penalties and sanctions to which we may be subject.

Non-compliance with EU requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with the EU and other legal and regulatory

requirements regarding the protection of personal information can also lead to significant penalties and sanctions. Non-compliance with similar requirements in other foreign jurisdictions can also result in enforcement actions and significant penalties.

Current and future legislation may increase the difficulty and cost for us and any collaborators to obtain marketing approval of and commercialize our product candidates and affect the prices we, or they, may obtain.

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the health care system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval. We expect that current laws, as well as other health care reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that we, or any collaborators, may receive for any approved products.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the ACA), passed in 2010 substantially changed the way health care is financed by both governmental and private insurers, and significantly impacted the U.S. biopharmaceutical industry. However, some provisions of the ACA have yet to be fully implemented and certain provisions have been subject to legal and political challenges, as well as efforts by the last Presidential administration to repeal or replace certain aspects of the ACA. More recently on January 28, 2021, however, President Biden issued an executive order to strengthen implementation of the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisions of the ACA, such as removing penalties as of January 1, 2019 for not complying with the ACA’s individual mandate to carry health insurance, delaying the implementation of certain ACA-mandated fees, and increasing the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D. Additionally, on December 14, 2018, a Texas U.S. District Court Judge ruled that the ACA is unconstitutional in its entirety because the individual mandate was repealed by Congress as part of the Tax Cuts & Jobs Act. That ruling is currently under review by the U.S. Supreme Court and a decision is expected this year. It is unclear how this decision, subsequent appeals, and other efforts to repeal and replace the ACA will impact the ACA and our business.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of up to 2% per fiscal year. These reductions went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030 under the CARES Act.

Additionally, there has been recent heightened federal governmental scrutiny over the manner in which manufacturers set prices for their marketed products. For example, there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. For example, the last Presidential administration released a “Blueprint”, or plan, to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing. We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services, which could result in reduced demand for

our product candidates or additional pricing pressures.

If we fail to comply with foreign, federal, state and local health care laws, including fraud and abuse and health information privacy and security laws, and antitrust laws, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely affected.

In the United States, certain of our products are reimbursed under federal and state health care programs such as Medicaid, Medicare, TriCare, and/or state pharmaceutical assistance programs. Many foreign countries have similar laws. Federal and state laws designed to prevent fraud and abuse under these programs prohibit pharmaceutical companies from offering valuable items or services to customers or potential customers to induce them to buy, prescribe, or recommend our product (the so-called “anti-kickback” laws). Exceptions are provided for discounts and certain other arrangements if specified requirements are met. Other federal and state laws, and similar foreign laws, not only prohibit us from submitting any false information to government reimbursement programs but also prohibit us, our employees, or any third party acting on our behalf from doing anything to cause, assist, or encourage our customers to submit false claims for payment to these programs. We are also subject to various federal, state and foreign antitrust and competition laws that prohibit certain activities that may have an impact against potential competitors. Violations of the various fraud and abuse and antitrust laws may result in severe penalties against the responsible employees and us, including jail sentences, large fines, and the exclusion of our products from reimbursement under federal and state programs. Some of the laws that may affect our ability to operate include:

•the federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer (or a party acting on its behalf) to knowingly and willfully solicit, receive, offer or pay remuneration, directly or indirectly, overtly or covertly, to induce, or in return for, either the referral of an individual, or the purchase, lease, prescribing or recommendation of an item, good, facility or service reimbursable by a federally funded health care program, such as the Medicare or Medicaid program. The term “remuneration” has been interpreted broadly and may constrain our marketing practices, educational programs, pricing policies and relationships with health care providers or other entities, among other activities;

•the federal False Claims Act imposes criminal and civil penalties, including through civil

whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal health care program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability, including mandatory treble damages and significant per-claim penalties.

•the U.S. federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statement, in connection with the delivery of, or payment for, health care benefits, items or services. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

•HIPAA, as amended by HITECH, and their respective implementing regulations mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common health care transactions, as well as standards relating to the privacy, security and transmission of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information. Among other things, HITECH makes HIPAA's security standards directly applicable to “business associates,” or independent contractors or agents of covered entities that create, receive or obtain protected health information in connection with providing a service for or on behalf of a covered entity;

•the Physician Payments Sunshine Act and its implementing regulations require certain manufacturers of drugs, biologics, medical devices and medical supplies for which payment is available under Medicare, Medicaid or the CMS to report certain payments and transfers of value made to U.S.

physicians and teaching hospitals, and ownership or investment interests held by physicians and their immediate family members. Beginning in 2022, applicable manufacturers will also be required to report information regarding payments and transfers of value provided to U.S. physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives; and

•state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; state, local and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, obtain pharmaceutical agent licensure, and/or otherwise restrict payments that may be made to health care providers and entities; and state, local and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to health care providers or entities, or marketing expenditures.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under the federal Anti-Kickback Statute, it is possible that some of our business activities could be subject to challenges under one or more of such laws. Moreover, recent health care reform legislation has strengthened these laws. For example, the ACA, among other things, amends the intent requirement of the federal Anti-Kickback Statute and criminal health care fraud statutes, so that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it. In addition, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

If our operations are found to be in violation of any of the laws described above or otherwise, we may be subject to penalties, including civil and criminal penalties, damages, fines, individual imprisonment, integrity obligations, exclusion from funded health care programs and the curtailment or restructuring of

our operations. Any such penalties could adversely affect our financial results. We continue to improve our corporate compliance program designed to ensure that our development, marketing, and sales of existing and future products and product candidates are in compliance with all applicable laws and regulations, but we cannot guarantee that this program will protect us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Efforts to ensure that our business arrangements with third parties will comply with health care laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving fraud and abuse or other health care laws and regulations. If our operations are found to be in violation of any of these laws, we may be subject to significant civil, criminal and administrative penalties, damages, fines, individual imprisonment, integrity obligations, exclusion from government funded health care programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If a third party fails to comply with applicable laws and regulations while acting on our behalf, we may also be subject to criminal, civil, and administrative penalties, including those listed above.

We are committed to conducting the development, sale and marketing of our applicable products and product candidates and all of our activities in compliance with all applicable laws and regulations, but certain applicable laws and regulations may impose liability even in the absence of specific intent to defraud. Furthermore, should an employee or third party acting on our behalf violate these laws without our knowledge, a governmental authority may impose civil and/or criminal sanctions on us.

The United States government, state governments and private payors regularly investigate the pricing and competitive practices of pharmaceutical companies and biotechnology companies, and many file actions alleging that inaccurate reporting of prices has improperly inflated reimbursement rates. We may also be subject to investigations related to our pricing practices. Regardless of merit or eventual outcome, these types of investigations and related litigation can result in:

•Diversion of management time and attention;

•Significant legal fees and payment of damages or penalties;

•Limitations on our ability to continue certain operations;

•Decreased product demand; and

•Injury to our reputation.

Moreover, an adverse outcome, or the imposition of penalties or sanctions for failing to comply with the fraud and abuse and antitrust laws, could adversely affect us and may have a material adverse effect on our business, results of operations, financial condition and cash flows.

If we fail to comply with our obligations under U.S. governmental pricing programs, we could be required to reimburse government programs for underpayments and could pay penalties, sanctions and fines.

The issuance of regulations and coverage expansion by various governmental agencies relating to the Medicaid rebate program will continue to increase our costs and the complexity of compliance and will be time-consuming. Changes to the definition of “average manufacturer price” (AMP), and the Medicaid rebate amount under the ACA and CMS and the issuance of final regulations implementing those changes has affected and could further affect our 340B “ceiling price” calculations. Because we participate in the Medicaid rebate program, we are required to report “average sales price” (ASP), information to CMS for certain categories of drugs that are paid for under Part B of the Medicare program. Future statutory or regulatory changes or CMS binding guidance could affect the ASP calculations for our products and the resulting Medicare payment rate and could negatively impact our results of operations.

Pricing and rebate calculations vary among products and programs, involve complex calculations and are often subject to interpretation by us, governmental or regulatory agencies and the courts. The Medicaid rebate amount is computed each quarter based on our submission to CMS of our current AMP and “best price” for the quarter. If we become aware that our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are obligated to resubmit the corrected data for a period not to exceed twelve quarters from the quarter in which the data originally were due. Any such revisions could have the impact of increasing or decreasing our rebate liability for prior quarters, depending on the direction of the revision. Such restatements and recalculations would increase our costs for complying with the laws and regulations governing the Medicaid rebate program. Price recalculations also may affect the “ceiling price” at which we are required to offer our products to certain covered entities, such as safety-net providers,

under the 340B/Public Health Service (PHS) drug pricing program.

In addition, if we are found to have made a misrepresentation in the reporting of ASP, we are subject to civil monetary penalties for each such price misrepresentation and for each day in which such price misrepresentation was applied. If we are found to have knowingly submitted false AMP or “best price” information to the government, we may be liable for civil monetary penalties per item of false information. Any refusal of a request for information or knowing provision of false information in connection with an AMP survey verification would also subject us to civil monetary penalties. In addition, our failure to submit monthly/quarterly AMP or “best price” information on a timely basis could result in a civil monetary penalty per day for each day the information is late beyond the due date. Such failure also could be grounds for CMS to terminate our Medicaid drug rebate agreement, under which we participate in the Medicaid program. In the event that CMS terminates our rebate agreement, no federal payments would be available under Medicaid or Medicare Part B for our covered outpatient drugs. Governmental agencies may also make changes in program interpretations, requirements or conditions of participation, some of which may have implications for amounts previously estimated or paid. We cannot assure that our submissions will not be found by CMS to be incomplete or incorrect.

In order for our products to be reimbursed by the primary federal governmental programs, we must report certain pricing data to the USG. Compliance with reporting and other requirements of these federal programs is a pre-condition to: (i) the availability of federal funds to pay for our products under Medicaid and Medicare Part B; and (ii) procurement of our products by the Department of Veterans Affairs (DVA), and by covered entities under the 340B/PHS program. The pricing data reported are used as the basis for establishing Federal Supply Schedule (FSS), and 340B/PHS program contract pricing and payment and rebate rates under the Medicare Part B and Medicaid programs, respectively. Pharmaceutical companies have been prosecuted under federal and state false claims laws for submitting inaccurate and/or incomplete pricing information to the government that resulted in increased payments made by these programs. Although we maintain and follow strict procedures to ensure the maximum possible integrity for our federal pricing calculations, the process for making the required calculations is complex, involves some subjective judgments and the risk of errors always exists, which creates the potential for exposure under the false claims laws. If we become subject to investigations or other inquiries concerning our compliance with price reporting laws and regulations, and our methodologies for calculating

federal prices are found to include flaws or to have been incorrectly applied, we could be required to pay or be subject to additional reimbursements, penalties, sanctions or fines, which could have a material adverse effect on our business, financial condition and results of operations.

EBS US Equity

EBS · 10-K · period ended 2020-12-31

ITEM 1. BUSINESS

ITEM 1A. RISK FACTORS

EBS US Equity☆

EBS · 10-K · period ended 2020-12-31

ITEM 1. BUSINESS

ITEM 1A. RISK FACTORS

EBS US Equity