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Emergent BioSolutions Inc. (NYSE:EBS)
Q4 2018 Earnings Conference Call
Feb. 21, 2019, 5:00 p.m. ET

Contents:

Prepared Remarks:

Operator

Good day, ladies and gentlemen and welcome to the Fourth Quarter 2018 Emergent BioSolutions Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. If anyone should require operator assistance, please press * then 0 on your touchtone telephone. I would now like to turn the conference over to Bob Burrows VP of Investor Relations. You may begin.

Robert Burrows -- Vice President of Investment Relations

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

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

Before beginning, I will remind everyone that during today's call either on our prepared comments or the Q&A session management may make projections and other forward-looking statements related to our business, future events, our prospects, or future performance. These forward-looking statements are based on current intentions, beliefs, and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations

Any forward-looking statements speak only as of the date of this conference call, and except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events, or circumstances. Investors should consider this cautionary statement, as well as the risk factors identified in our periodic reports filed with the Securities and Exchange Commission when evaluating our forward-looking statements.

During our prepared comments as well as during the Q&A session, we may also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding Emergent's operating performance. Please refer to the tables found in today's press release regarding our use of adjusted net income, EBITDA and adjusted EBITDA, and the reconciliations between our GAAP financial measures and these non-GAAP financial measures.

For the benefit of those who may be listening to a replay of the webcast, this call was held and recorded on February 21, 2019. Since then, Emergent may have made announcements related to topics discussed during today's call. You are, once again, encouraged to refer to our most recent press releases and the SEC filings, all of which may be found on the Investors home page of our website.

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

Dan Abdun-Nabi -- Chief Executive Officer

All right. Thanks, Bob. Good afternoon, everyone, and thank you for joining us. I'd like to begin with the previously announced senior leadership transition at Emergent. On January 4th, we announced that I will be retiring and that Bob Kramer will be assuming the role of President and CEO effective April 1, 2019. This will be my last quarterly earnings call and I'd like to thank you for your support of Emergent and of our management team throughout the years.

It's certainly been an honor to have contributed to the company's 20-year history of delivering products to protect those vulnerable to public health threats. It's been a privilege to lead and serve Emergent's talented team of employees. I'm confident that our efforts to realize our vision of becoming a Fortune 500 company recognized for protecting and enhancing life, driving innovation, and living our values will continue under Bob's leadership.

Bob has been a committed leader since he first joined the company in 1999 as Chief Financial Officer. As President and COO, Bob has extensive knowledge of all aspects of the company's operations and the ability to act decisively and strategically in the company's best interest, making him uniquely qualified to step into this role. I'm excited about Emergent's future and have full confidence in Bob's ability to lead the organization and to continue to create shareholder value.

So, with that, I'd like to turn the call over to Bob. I will remain available to answer your questions during the Q&A session. Bob?

Bob Kramer-- President and Chief Operating Officer

Thank you, Dan, and good afternoon and thank you all for joining us on the call today. Let me start by taking a moment to thank Dan. The company has clearly thrived under his leadership and I'm honored to take on the CEO role building on the momentum that we've gained over the last few years as we've executed against our strategic plan. I also look forward to leading a talented, experienced team as we continue to broaden our reach into the public health threats market, strengthen our product portfolio, server our customers and partners, and continue to create shareholder value all the while working to fulfill our mission to protect and enhance life.

My prepared remarks today, I'll briefly touch on our 2018 results and then transition to our outlook and priorities for this year, 2019 within each of the business units. Rich will follow with a walk-through of the fourth quarter and full year 2018 financial results as well as our forecast for 2019.

First, let's look at 2018. Our 2018 results reflect another strong year of financial and operational performance with year over year growth in revenues of 39%, growth in adjusted net income of 25%, and growth in adjusted EBITDA of 13%. In addition to achieving our financial goals for the year, we also accomplished a tremendous amount operationally and I'd like to highlight a few of those.

First, we submitted the Emergency Use Authorization filing for NuThrax as well as securing license share of BioThrax in six additional countries, increasing our pipeline of advanced stage clinical candidates to a total of four and securing non-diluted funding for certain other key programs. We put in place a financing package of up to $1.1 billion to support current and future M&A. And finally, we completed two acquisitions, PaxVax and Adapt, both of which have gotten off to a good start and we look forward to their continued growth in 2019. So, clearly, 2018 was an incredibly productive year which positions us for success as we implement plans for 2019.

For 2019, let me begin with a review of our forecast for the year. Financially, we expect year over year increases in total revenues of over 40% to approximately $1.1 billion, which is the midpoint of our revenue range. This is a significant company milestone as it would represent the achievement of our 2020 revenue growth goal of $1 billion one year in advance. We also anticipate a year over year increase in adjusted net income of over 40%. Our guidance for 2019 conflates the beginning of the transition BioThrax to NuThrax following EUA, as well as continuing supply of Acam2000 under a follow-on contract. As a result, it's important to note while the pacing of revenues is expected to be similar to prior years, the pacing for earnings will be substantially backend weighted and Rich will cover this in more detail in a few minutes.

Let me now turn to our operational priorities for the year across our four business units, starting with vaccines and anti-infectives, which is headed by Abby Jenkins. Our priorities for 2019 are the following. On the medical countermeasure side, we'd like to focus on the Anthrax franchise and Acam2000. In our Anthrax vaccine franchise, we'll continue to deliver BioThrax into the SNS under the existing contract while at the same time begin the transition to NuThrax. Specifically, we're in the process of winding down production of BioThrax and preparing our manufacturing infrastructure to support the transition to the next generation vaccine. In addition, we also plan to initiate NuThrax phase three clinical trial and secure emergency use authorization from the FDA, which will trigger the initiation of deliveries into the SNS. Rich will talk about this in more detail during his comments.

As to Acam, we expect to complete current active negotiations regarding a new multi-year procurement contract and to continue to deliver product into the SNS. We anticipate deliveries under the new contract to begin in the second half of the year.

On the travel health side, we continue efforts to fully integrate PaxVax team members, products, and programs into Emergent operations. We're also focused on growing sales of Vivotif global and Vaxchora in the US, preparing for the UE launch of Vaxchora in 2020, and advancing the Chikungunya Development Program to position for a phase three.

Next, the Antibody Therapeutic Business Unit, which is lead by Dr. Laura Saward. Here we're going to focus on delivering existing contracts to our Raxibacumab, BAT, VIGIV, and Anthrasil, as well as securing new contracts to ensure uninterrupted supply of these medical countermeasures. Next, to continue to execute on the tech transfer of Raxibacumab from GSK to Emergent facilities which will provide an FDA licensed anchor product in our CIADM manufacturing facility. And finally, focus on advancing our pipeline of products with a target to complete the phase 2 trial for FLU-IG for severe illness caused by influenza A infection in hospitalized patients.

Turning next to the Devices Division lead by Doug White, we'll be focused on the following priorities for this year. First, continuing to drive awareness, expand availability, and maintain the affordability of Narcan Nasal spray through a number of initiatives consistent with the Surgeon General's Advisory Statement from April of last year. Next, fulfilling the needs of customers in the US and internationally for RSDL and Trobigard. And lastly, further advancing the development of our devices pipeline, including investments in new delivery and treatment options for Opioid overdose, emergency response, and Opioid use disorder treatments.

Turning finally to the Contract Development and Manufacturing Organization, or CBMO, lead by Sean Kirk, we're going to be focused on the following priorities for 2019. First, expanding the operational efficiency and CBMO capabilities of our network. Next, continued growth in revenue generation via our external government and non-government client base. Next, completing enhancements to our Camden site where we're investing additional capacity and capability over the next three years. And lastly, continued successful execution of development and product manufacturing activities in support of our Emergent Development and Commercial products.

In summary, we believe that we've identified and begun to implement the appropriate priorities in each of our business units to achieve our 2019 plan. We remain confident in our ability to meet these goals as part of our ongoing long-term objective of diversified profitable revenue growth. We're also in the process of developing our 2025 strategy to continue to meet that objective and will provide updates on the timing of the announcement of that plan in the coming months.

As a take away for 2019 and beyond, we remain focused on growing organically, augmenting organic growth through prudent M&A, and finally achieving continuous improvement, focusing on innovation, as well as operational excellence throughout our enterprise.

That concludes my prepared remarks. I'll now turn the call over to Rich. Rich?

Rich Lindahl -- Chief Financial Officer

Thank you, Bob. Good afternoon, everyone, and thank you for joining the call. For my prepared comments today, I will walk through the P&L performance for the fourth quarter and full year periods, then shift to the balance sheet and address the state of our capital structure. I will then wrap up with comments on our reaffirmed 2019 forecast.

As a reminder, we provided all the numbers relating to our quarter and full year performance as well as the requisite reconciliation tables in the press release we issued this afternoon. Therefore, my goal today is to focus only on the highlights.

With that, let's first look at our fourth quarter performance. As has been the case for the last few years, we tend to report annual results that are backend weighted and 2018 was no different, with a particularly strong performance in the fourth quarter. Results for the fourth quarter of 2018 reflect both continued execution against our financial and operational goals, as well as the ongoing diversification of our business. Total revenues were $271 million, a 40% increase. Adjusted net income was $38 million, 1% increase versus the prior years. And adjusted EBITDA was $75 million, a 12% annual increase.

Let me look now at the year. Our financial performance for 2018 was like the fourth quarter very strong and consistent with the range we previewed in early January. Total revenues were $782 million, a 39% increase versus 2017. Adjusted net income was $120 million, a 25% increase from the prior year. And adjusted EBITDA was $199 million, a 13% increase versus 2017.

Digging into more details, let me highlight a few key contributing factors to the full year performance. BioThrax revenue up $278 million was consistent with prior year levels. Acam at $117 million was also a significant contributor reflecting continued deliveries against the contract we acquired with the business in late 2017. We expect to complete deliveries to the SNS under that prior contract in the first quarter, and we continue to negotiate a follow-on contract. Narcan, Vivotif, and Vaxchora all contributed to the other product sales line. As a reminder, we closed both the PaxVax and Adapt Pharma acquisitions in October 2018. Our CBMO business at nearly $100 million was well above prior years and a measurable contributor to total revenues.

To illustrate the ongoing diversification of our revenue mix, note that as a percentage of total revenue, BioThrax represented 36% in 2018 versus 51% in the prior year. And other products was 42% versus 24%. Combined product and CBMO gross margin of 54%, while still below our target range of about 60%, continues to reflect the influence of revenue mix and our ongoing efforts to diversify our revenue sources and customer channels.

Adjusted net income of $121 million reflecting adjustments for substantial acquisition-related costs as well as non-cash amortization and inventory stock up charges stemming from the PaxVax and Adapt acquisitions. An adjusted EBITDA of $199 million similarly reflects the significant non-cash adjustments resulting from the most recent acquisitions. Additionally, to finish the P&L, I want to note that we are for the first time showing amortization of intangible assets on its own line in the income statement. Thereby giving a clear presentation of gross profit and gross margin. Historically, amortization of intangible assets has been included in the cost to goods sold.

In terms of the balance sheet, we ended 2018 in a solid liquidity position as evidenced by cash of $112 million and accounts receivable balance of $263 million, which was driven by significant deliveries of product in December. At year-end 2018, we also had total debt of $795 million and total asset base in excess of $2 billion, a first for the company and yet one more example of the continued growth and expansion of Emergent.

In summary, the financial results for 2018 were clearly strong and position us for continued growth. To that end, let me transition to 2019.

And first, I'll touch on our 2019 forecast. Today, we reaffirm our full year guidance provided initially in January. This includes total revenue of $1.06-$1.14 billion, up 41% at the midpoint. Net income of $80-$110 million, up 47% at the midpoint. Adjusted net income of $150-$180 million, up 36% at the midpoint. EBITDA of $255-$285 million, up 74% at the midpoint. And adjusted EBITDA of $280-$310 million, up 47% at the midpoint. We are also reaffirming our Q1 2019 revenue forecast of $185-$205 million.

With that, let me take a moment to provide a bit more perspective on the year and how we anticipate it will progress. First and foremost, as in past years, we anticipate that our revenues and earnings will be heavily backend weighted in 2019. In terms of revenue, we anticipate that the first half versus second half distribution should be similar to the roughly 40/60 split experienced the past two years. To expand on Bob's earlier comments, as we move forward on the transition to NuThrax and work to finalize a new Acam contract, we expect that gross margin on second-half revenue will be greater than in the first half. Since our overall cost base is fairly evenly spread throughout the year, this resulting revenue mix means that our profitability on both a GAAP and adjusted basis will be significantly weighted to the second half of the year.

To wrap up, let me conclude with our financial priorities for 2019. They are straightforward and include the following. First, on key performance metrics, we expect to realize incremental improvements to our key metrics of gross margin, net R&D margin, SG&A margin, adjusted net income margin, and adjusted EBITDA margin. On integration, we will remain focused on ensuring successful completion of the integration of PaxVax and Adapt and realizing net positive results from these investments. Third, Capital Structure: we will maintain a solid credit profile and anticipate our net leverage ratio will trend toward our target range of 2-3 times net debt to adjusted EBITDA. And finally, on liquidity, we will ensure we have sufficient capital to both invest in the business as well as execute on attractive M&A opportunities should they arise.

That completes my prepared remarks and I'll now turn the call over to the operator to begin the question and answer session. Operator?

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, if you have a question at this time, please press * then 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the # key. To prevent any background noise, we ask that you please place your line on mute once your question has been stated.

Our first question comes from Brandon Folkes of Cantor Fitzgerald. Your line is now open.

Brandon Folkes -- Cantor Fitzgerald-- Analyst

Hi. Thank you for taking my question. Firstly, I wondered if you could just give us insight into the full quarter performer Narcan sales. And then secondly, how do you think about Narcan going forward the growth, particularly if a branded competitor came in? How do you see that affecting the price? And then secondly, you mentioned gross margin expansion. Is that just a function of mix, or are there deficiencies you expect to capture during the year? Thank you.

Bob Kramer-- President and Chief Operating Officer

Thanks, Brandon. This is Bob. So, let me tackle the Narcan question and then maybe Rich, you can comment further on the gross margin expansion pane. So, I'd say, Brandon, overall, we're really encouraged by the overall performance of the Narcan business, realizing that we're only a couple months into this. As we talked about on the call when we announced the transaction, we see a highly experienced team of professionals that we have transitioned now to the Emergent team from Adapt as being very experienced in this space and we're happy with the transition so far. We continue to focus on the overall awareness of the Opioid crisis as well as ensuring that accessibility to these products is promoted and driven, as well as being conscious of the affordability sensitivity in terms of looking for opportunities to increase coverage and reduce copays with the insurance companies.

And as we talked about on the call when we announced this, leveraging the strong state and local government expertise of the Adapt Pharma organization with Emergent strength at the federal level. We see that there is a significant opportunity there and it's already starting to show some progress with the number of co-RX states increasing from 5 to 8 already. We can talk more about that if you'd like. As well as at the federal level we've seen increased interactions by the company with the government on opportunities to drive availability and accessibility of naloxone to the patient groups who need it.

So, as you know, we participated in the advisory committee meetings with the FDA in December. It gave us the opportunity to discuss our thoughts on how expanded opportunities in the co-RX program could drive the availability of naloxone to more patients. We also had the opportunity to share with the advisory committee our investment in the capacity expansion so that we're prepared to meet a potential uptick in the overall demand for the product.

When it comes to your question about price and competition, we clearly expect additional competition in this space. We modeled it when we were doing the deal valuation on both six months ago. It's very difficult to predict exactly what that's going to look like. But, again, we think that as the government considers a number of initiatives, including co-prescription and eventually OTC, then we're well positioned with Narcan to compete in either of those spaces going forward.

And maybe with that, Rich, you can talk a little bit about your comments about gross margins or improvement and expansion.

Rich Lindahl -- Chief Financial Officer

Sure. So, yes, Brandon, I think a predominant factor in the improvement is the mix. We do see more product revenue in the year in 2019 than in 2018 relative to the more service-oriented revenue and the CBMO business. So, as you know, that product revenue comes with a higher margin profile, and that higher mix is improving the overall gross margin.

In addition to that, we do have an ongoing, continuous improvement program across the manufacturing operations which are also yielding some incremental improvements and some incremental profitability enhancements.

Brandon Folkes -- Cantor Fitzgerald-- Analyst

Great. Thank you very much.

Operator

Thank you. And our next question comes from Dana Flanders of Goldman Sachs. Your line is now open.

Dana Flanders -- Goldman Sachs -- Analyst

Hi. Thank you very much for taking my questions. My first one is just on Narcan. I believe the Teva 30-month stay is coming up. Can you just remind us from a timeline perspective just what we should be watching for this year on the legal front with generics? And then I have one quick follow-up.

Bob Kramer-- President and Chief Operating Officer

Sure, Dana. Thanks for joining the call. So, I'm going to ask Atul Saran to comment on the Teva element of your question.

Atul Saran -- Executive Vice President, Corporate Development and General Counsel

Hi, Dana. Thanks so much for your question. This is Atul. You are correct. The 30-month stay is coming up at the end of March and we are anticipating a trial sometime later this year. A trial date has not been set and we've had a discussion with the judge and the court. But we don't have that exact timing on the scheduling yet.

Dana Flanders -- Goldman Sachs -- Analyst

Okay. And just on Acam2000, does guidance reflect kind of an improved contract term or does guidance reflect what Acam has historically been doing since you acquired it?

Bob Kramer-- President and Chief Operating Officer

Sure. So, as we've talked about, Dana, we're in the middle of these negotiations right now. The guidance for 2019 represents our best estimates of the outcome of those negotiations, both in terms of the terms as well as the timing. So, that's really all we can say right now about the process other than the government seems fully engaged in the negotiations process and is committed to getting this done in a timely way.

Dana Flanders -- Goldman Sachs -- Analyst

Okay. And maybe just one other quick one. Just on gross margins, again, I know you had a very strong Q4. You also put up a big BioThrax number. So, any sense of just the magnitude of gross margin improvement we could see in '19? I assume taking a Q4 kind of runway is not the right method given the BioThrax number this quarter. But just any sense of the magnitude of improvement we could see. Thank you.

Bob Kramer-- President and Chief Operating Officer

Yeah. I'd be really careful about taking Q4 and extrapolating it going forward. Clearly, that was impacted by a fairly weighty mix of BioThrax revenue in there. I think you've interacted with us long enough to know that we continue to put a focus on operating efficiency, operational excellence, continuous improvement. So, while there are no one or two individual items that are going to drive that, we aim to increase the capacity utilization of the site that we operate and drive the gross margin improvement over time. So, I think I'll just leave it at that for now.

Dana Flanders -- Goldman Sachs -- Analyst

Okay. Thank you.

Operator

And our next question comes from Jessica Fye of JP Morgan. Your line is now open.

Jessica Fye -- JP Morgan -- Analyst

Hey, guys. Good evening. Thanks for taking my questions. Just going back to Narcan, can you talk about your latest expectations for that product's revenue in 2019, even just directionally relative to the 200-220 you gave when you announced the acquisition over the summer? Would you say you're feeling better about that, the same, anything change there? And when we think about the volume growth for Narcan, can you remind us what proportion of scripts the IQVIA data is capturing as we try to track that product growth? I'm also curious if you could tell us the average or blended price per pack that you're realizing for Narcan given a different retail price versus local government price.

Bob Kramer-- President and Chief Operating Officer

Sure. Thanks, Jess. So, I'll turn this over to Doug White, the head of the business unit for devices. Maybe he could comment on the IQVIA percent of scripts if we have that or even the blended price per package or per carton.

But in terms of the 2019 guidance that we initially gave when we announced the transaction, you're right. We were in the 200-220 range. I think we feel increasingly confident and encouraged about the state of the Narcan business. As I said in my prepared remarks, we'll probably see that operating at the higher end of that range. And we're pleased with the overall progress and transition that we've made under Doug's leadership and the Adapt team over the last three or four months.

So, Doug, anything to comment about the IQVIA data?

Doug White -- Senior Vice President, Devices Business Unit Head

I just want to clarify your question. Was your question specific to the IQVIA data that captures the majority of the retail RX sales? Is that that what you're asking?

Jessica Fye -- JP Morgan -- Analyst

That and sort of related to that, what proportion of the overall packages you're selling is that capturing? So, sort of implicit in that is a question about the not captured sales to municipalities, etcetera relative to what is going into retail.

Doug White -- Senior Vice President, Devices Business Unit Head

I understand. First, in terms of the retail measurement by IQVIA to the vast majority of volume that's going to the retail chains. And then secondly, the mix is approximately 50/50 between our public interest market and the retail. It's in that range.

Jessica Fye -- JP Morgan -- Analyst

Okay. Is there anything you can say on the kind of average price you're realizing when we blend those two?

Doug White -- Senior Vice President, Devices Business Unit Head

No. Just to confirm that we have not raised our price, our list price is $125 and that the pit price, the discounted price is $75 for a pack of two. But no, we were not commenting to the mix.

Jessica Fye -- JP Morgan -- Analyst

Okay.

Operator

Thank you. And our next question comes from Boris Peaker of Cowen. Your line is now open.

Boris Peaker -- Cowen & Company -- Analyst

Great. Thanks for taking questions. The first one I want to ask is on NuThrax. Can you just comment on what contracts and when we could expect them?

Bob Kramer-- President and Chief Operating Officer

Yeah. Boris, thanks. You were a little faint, but I think your question was really around the transition to NuThrax and the contracts that are in place to support that transition. So, I'll make a couple comments and then ask you either Abby or Adam to weigh in with additional color. So, as we've talked about for the last year or so, we see 2019 being the beginning of the transition for the Anthrax franchise from BioThrax to NuThrax. As you know, there are two contracts with the government in place today that support that transition. The one contract, which is a procurement contract for BioThrax, which is a five-year contract. And then the NuThrax contract is both a development as well as procurement contract for the next five years as well.

So, exactly the pace and the cadence for that transition from BioThrax to NuThrax during 2019 is yet to be determined. But there are contractual mechanisms and support in place to take care of that. And as I said in my opening remarks and comments, we're working through operationally the transition of the manufacturing facility in Lansing from a BioThrax only to a NuThrax transition later this year. So, we're slowing down production of BioThrax and we'll be increasing production of NuThrax as we work through this transition.

Abby, is there anything else you want to add?

Abigail Jenkins -- Senior Vice President, Vaccines & Anti-infectives Business Unit Head

No. I think you covered it well, Bob.

Boris Peaker -- Cowen & Company -- Analyst

And on the pricing, are they going to be similar, BioThrax to NuThrax? Or there is a premium for NuThrax over BioThrax?

Bob Kramer-- President and Chief Operating Officer

So, what's contemplated and actually already negotiated, Boris, is a pricing structure that's tiered. As we've commented in the past, there will be a lower price per dose under emergency use authorization deliveries as contemplated in the contract. There will be a step up in price per dose once NuThrax is licensed by the FDA. So, it's, again, tier pricing based on volume as well as tier pricing based on the stage of development for NuThrax.

Boris Peaker -- Cowen & Company -- Analyst

Got you. And my last question is for Narcan. I'm just curious. You have the convenience of nasal administration. I'm just curious, how important is that nasal administration because it seems to me that the person actually receiving the drug after an overdose is likely unconscious, so it doesn't really matter nasal administration versus any other route of administration?

Bob Kramer-- President and Chief Operating Officer

Yeah. So, I'll ask Doug to comment here in a minute, but one of the benefits in the features of Narcan nasal spray is its convenience. Its ease of use. It's incredibly easy to use by individuals like you and I. It requires no medical training. So, the application of the device is very easy to use, not intimidating at all. If you've watched the 60 Minutes program where it was featured, I think that gives you a pretty good indication of its ease of use and not training required to administer it.

Doug, anything to add?

Doug White -- Senior Vice President, Devices Business Unit Head

No, Bob. That pretty much covers it.

Boris Peaker -- Cowen & Company -- Analyst

Well, great. Thank you very much for taking my questions.

Operator

Thank you. Our next question comes from Samir Kandola of Wells Fargo Securities. Your line is now open.

Samir Kandola -- Wells Fargo Securities -- Analyst

Hi. Thanks for taking my questions. So, a few weeks ago, the DC police department announced they would buy approximately 50,000 Narcan kits. So, I was just wondering, how quickly do you expect them to replenish their supply? And then, do you expect other large police departments to do the same? I'm just wondering, could this be additional upside to Narcan estimates?

Bob Kramer-- President and Chief Operating Officer

Yeah. Thanks, Samir, for the question. And you're right. Those activities have occurred and continue to give us, again, encouragement on the overall performance of the business unit. Whether it's, again, at the state and local level or at the federal level. Doug, I don't know if you can comment on any other similar opportunities that near term.

Doug White -- Senior Vice President, Devices Business Unit Head

Well, just to be clear, we currently do have a large number of police departments that utilize Narcan nasal spray. Many are supplied through public health or directly. We continue to work with local state public health organizations to provide Narcan. In some cases, they're using federal funds to purchase Narcan and they will themselves distribute out to the different first responders and community groups. So, we do anticipate continuing that activity.

Samir Kandola -- Wells Fargo Securities -- Analyst

Okay. Got it. And then maybe a quick follow-up. So, Opiant Pharma, the company that developed Narcan nasal spray, I believe has another product that it's developing for Opioid overdose called nalmefene. I was just wondering; do you see this as a potential competitor to Narcan in the coming few years? I know it's early stage. And would you consider a partnership on it as a life cycle management strategy for Narcan? Thank you.

Doug White -- Senior Vice President, Devices Business Unit Head

This is Doug. Thanks for the question. We're well aware of the development of nalmefene. Just to be very clear, naloxone is a very effective drug to counteract the effects of an Opioid overdose, and that's very clear. There are some advantages to nalmefene in terms of how long it lasts, but we see the nalmefene opportunity more as a niche market segment not necessarily replacing the naloxone as the ultimate solution.

Samir Kandola -- Wells Fargo Securities -- Analyst

Got it. Thank you.

Operator

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

Keay Nakae -- Chardan Capital Markets -- Analyst

Thanks. Just a couple of questions about Acam. Just looking at the revenue numbers you gave us, did you deliver much Acam in Q4? Number two, if you're going to complete the existing contract in Q1, I guess my back of the envelope math is that's around maybe another $30 million or so of revenue? And number three, does that mean needing to finalize that contract in Q2 we won't see much revenue from Acam?

Bob Kramer-- President and Chief Operating Officer

Thanks for the question, Keay, and for joining the call. You're spot on with your Q1 back of the envelope number of about $30 million for 2019. We will, as I said, we're in active negotiations and discussions with the government about the follow-on contract for Acam. It's too early to predict the timing and the outcome of that yet. I think that is in part why we've made the comments that both Rich and I did on the call today about the fact that in 2019, that the revenue cadence will follow a similar profile to the last couple of years and it will be backend weighted. We'll see what the outcome of the negotiations are, but for right now, we're counting on the majority of the Acam revenue to be the second half of the year.

Keay Nakae -- Chardan Capital Markets -- Analyst

And just back to Q4, that mix of the other product, the $41 million or so. Anything meaningfully different there versus Q3?

Bob Kramer-- President and Chief Operating Officer

I don't believe so, but Rich, any color we can add there?

Rich Lindahl -- Chief Financial Officer

No. I don't think we've broken out a lot in the other product revenue line. Historically, we're really just going to be disclosing the significant drivers of revenue in any period, recognizing that we have diversified significantly away from only BioThrax, which historically was the primary component of revenue. So, you saw we disclosed Narcan revenue in the fourth quarter and then for the full year, Acam. Those were the significant drivers in addition to BioThrax for those periods.

Keay Nakae -- Chardan Capital Markets -- Analyst

Okay. Maybe just one last one really quick. Do you anticipate any OUS BioThrax revenue in 2019?

Bob Kramer-- President and Chief Operating Officer

Yeah. So, I think in terms of outside the US revenue, in general, Keay, we were still bullish on opportunities for the portfolio overall. So, not targeting it to BioThrax, but across the board with the medical countermeasure portfolio, we feel confident as we laid out in the 2016-2020 growth plan that we'd like more than 10% of our revenue to be based from customers outside the US. We're on pace and on track to meet or exceed that percentage. So, 2018 was a step forward. 2019 will be another step forward toward that 10% number. But I'm not going to comment on any individual product opportunity until it's realized and materialized, and then we'll share that with you.

Keay Nakae -- Chardan Capital Markets -- Analyst

Okay. Thanks a lot.

Operator

Thank you. And, again, ladies and gentlemen, if you do have a question at this time please press * then 1 on your touchtone telephone.

Our next question comes from Francois Brisebois of Laidlaw. Your line is now open.

Francois Brisebois -- Laidlaw -- Analyst

Thanks for taking the questions and congrats Dan on a great job over there. I just wanted to ask a little more about you mentioned Raxi as an anchor product. Can you just touch base on that again, what you meant by that?

Bob Kramer-- President and Chief Operating Officer

Yeah, Franc, thanks for the call and the question. So, my comment was really that with the completion of the tech transfer of Raxibacumab from GSK whose contract manufacturing that for us today, to our facility in Baltimore, our Bayview facility. We see that as the first FDA licensed product in that facility, and we referred to that historically as kind of an anchor product, being it's the first licensed product in that Bayview facility to go along with all the other development work that we're doing.

Francois Brisebois -- Laidlaw -- Analyst

Okay. Great. That makes sense. Most of my questions have been answered, but I was just wondering quickly was there a specific reason for displaying the amortization now that used to be part of the COGs on the income statement?

Rich Lindahl -- Chief Financial Officer

Yeah. This is Rich. That's just really as a... We thought it would be useful to investors to be able to separate out the non-cash amortization to get a clearer view of gross margin, just make that calculation more transparent and easier for folks.

Francois Brisebois -- Laidlaw -- Analyst

Understood. All right. Thank you very much.

Operator

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

Robert Burrows -- Vice President of Investment Relations

Thank you, Sonia. And with that, ladies and gentlemen, we now conclude the call. Thank you for your participation. Please note an archived version of the webcast of today's call will be available later today and accessible through the company website. Again, thanks very much and we look forward to speaking with all of you in the future. Goodbye.

Operator

Ladies and gentlemen, this concludes today's program. You may all disconnect. Everyone have a great day!

Duration: 46 minutes

Call participants:

Robert Burrows -- Vice President of Investment Relations

Dan Abdun-Nabi -- Chief Executive Officer

Bob Kramer-- President and Chief Operating Officer

Rich Lindahl -- Chief Financial Officer

Atul Saran -- Executive Vice President, Corporate Development and General Counsel

Doug White -- Senior Vice President, Devices Business Unit Head

Abigail Jenkins -- Senior Vice President, Vaccines & Anti-infectives Business Unit Head

Brandon Folkes -- Cantor Fitzgerald-- Analyst

Dana Flanders -- Goldman Sachs -- Analyst

Jessica Fye -- JP Morgan -- Analyst

Boris Peaker -- Cowen & Company -- Analyst

Samir Kandola -- Wells Fargo Securities -- Analyst

Keay Nakae -- Chardan Capital Markets -- Analyst

Francois Brisebois -- Laidlaw -- Analyst

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