Q4 2019 Earnings Call
Thank you for standing by welcome to the keys for the telephony 19.
National Young <unk> earnings Conference call.
Despite all participants are you noticing only mode. After just speaker presentation, there will be a question answer session.
During the session you will need to press star one on your telephone please be advised this country. This being recorded if you're a core any freighter assistance. Please press star zero I wouldn't like to hand conference over to your speaker today. So reports senior Vice President Investor Relations and corporate Affairs. Thank you. Please go ahead.
Thank you. Good morning, Thank you for joining us to discuss our fourth quarter 2019.
Oh.
Joining me on today's call or call can't finale, Chair, Chairman, President and CEO Endo, Blaise Coleman Executive Vice President and CFO, Hackberry Executive Vice President and Chief Commercial officer, her branded business and Dominic Cherico Executive Vice President and Chief commercial officer of our sterile in generics business.
We have prepared a slide presentation to accompany today's webcast and that presentation as well as other material are posted online and in the Investor section at Endo Dot com.
We'd like to remind you that any forward looking statements made by management are covered under the U.S. Private Securities Litigation Reform Act up 1995, and the applicable Canadian Securities laws.
Due to the changes risks and uncertainties described in today's press release and in our you ethic Canadian Securities filings.
In addition, during the course, let's call we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may be different from non-GAAP financial measures used by other companies.
Investors are encouraged to review Endos current reports on form 8-K furnished with the FCC today for Endos results were excluding these non-GAAP measures.
A reconciliation of non-GAAP financial measure to the most directly comparable GAAP financial measure is contained in our earnings press release issued prior to the call unless otherwise noted there.
I'd like to turn the call over Dr. Paul.
Thanks, Laura.
Good morning, and thank you for joining us for today's call [noise].
I hope you've had a chance to review the Companys earnings release issued earlier this morning.
As announced last week.
Ladies Coleman will succeed me as president and CEO become a member of the board.
The March six.
Continuing my role as chairman sport.
Over my five years, working with Blaze I've developed a great friendship and tremendous respect for his leadership and ability to drive cool strategic initiatives with.
[noise] his deep financial enterprise wide business document has been critical to our ability to execute towards our multiyear transformation strategy.
I am excited the had arranged over to blaze and I speak on behalf of the entire board of directors when I say like how the utmost confidence in his ability to lead end up into its next phase of world.
Please please say if your words.
Yes, thanks, so much Paul I'm honored and excited to lead can do and its next phase with a highly talented endo team that's sort of significant opportunities that in combination has potentially create shareholder value and help us become the company, we aspire to be over the long term. Thanks to you when the board.
I'm also very excited Mark Bradley will succeed me as executive Vice President and Chief Financial Officer.
Mark is currently into senior Vice President corporate development and Treasurer.
He spent over 25 years abroad financial corporate development experience, you'll get a chance to meet mark in the upcoming books now I'll turn it back to Paul to review, our fourth quarter 2019 earnings presentation.
Please [noise].
Beginning on slide two.
Here's a brief agenda for today's call.
Moving to slide three I'm pleased with our 2019 progress in this multiyear transformational journey.
We are seeing the positive impact investments in our core growth areas of sterile injectables in branded specialty portfolio, including the development needs for cellulite.
In 2019.
Our branded specialty portfolio and sterile injectable segment, both grew double digits.
This was led by our flagship products XIAFLEX in Boston strip, which grew by 24% and 17% respectively.
Full year 20 lighting [laughter] the U.S. FDA accepted our original BLE filing for CCH for Cellulite, and we have a PDUFA date of July 620, 20 [noise].
We've launched 14 products across the Sterling generics business.
At the end of the fourth quarter, we launched generic affinity for with 180 days of hatch Waxman exclusivity on three strengths.
I'm proud of the products, we've launched an innovative strategies that weve deployed to bring to the market.
As a result of the debt refinancing completed in March we successfully improve our financial flexibility by meaningfully reducing our nearest debt maturities and by amending and extending our revolving facility.
We received a favorable F.D. decision that vessel crescent cannot be used for full compounds like outsourcing facilities.
We want litigation against a generic manufacturer on adrenaline want the leader.
And as it relates to the opioid litigation we settled the track one opioid cases, what Cuyahoga in southern counties and in January this year, we announced the settlement with the steam to Oklahoma 8.7 $8.75 million.
We continue to be open type identifying and executing on a constructive path forward to resolve the pending opioid litigation.
But the can be no assurances that resolution will be achieved it is important to note that while settlement discussions remain ongoing we are prepared to litigate if necessary.
I understand but there are many questions on this topic. However, I'm sure you can appreciate we're limiting what we can say and we will have no comment at this time.
Turning to slide four.
You will see a snapshot of our segment revenues on a consolidated adjusted EBITDA for the fourth quarter.
Total revenues of $765 million and adjusted EBITDA of $346 million exceeded expectations.
Blaze will walk you through our financial performance later in our presentation.
Now moving to slide five.
The specialty products portfolio of our branded pharmaceutical segment continue with its strong performances with fourth quarter year over year revenue growth of 15%.
For the full year specialty products portfolio revenue exceeded $500 million with year over year revenue growth of 17 for 4%.
This performance was driven by strong execution across all products with in the specialty products portfolio.
Our design books franchise had another outstanding quarter of growth.
A franchise, so an acceleration in revenue growth of 27% compared to the fourth quarter of 2018, and 23% compare to the third quarter of 29 team.
Based on historical purchasing patterns fourth quarter tends to be the strongest quarter for XIAFLEX.
Overall the growth reflects continued strong underlying demand in both the perot he's disease and do buttress contracts are indications due to the investment and outstanding commercial execution behind XIAFLEX.
I am proud of the success of our disease awareness and consumer activation strategies.
We have resulted in a double digit increase in diagnosis rates for both proteus disease into purchase contractor.
Based on like you'd be a data we saw the diagnosis rate increased by an impressive 29% for cronies disease.
13% for do buttress contraction.
Despite these increases the diagnosis and treatment rates remain low.
Indicating the potential for future growth for both indications.
These consumer activation thing condition awareness capabilities, along with our commercial capabilities will be leveraged in the anticipated CCH for cellulite watch as well as other future products.
The specialty products portfolio fourth quarter revenue growth was offset by the year over year revenue decline in our established products portfolio.
Decline was primarily due to generic competition every so often resulted in a 2% year over year decline in our total branded pharmaceuticals segment revenue.
Based on the continued strong underlying growth in our specialty products portfolio.
We expect full year 2020, XIAFLEX revenues to grow approximately 20%.
The specialty products portfolio tab revenue growth of low to mid teens percentage and full year 20 branded pharmaceutical segment revenue growth to be in the low to mid single digit percentage range.
The 2020 guidance contemplates further erosion and competitive pressure to our established brands.
Moving onto RCC needs for cellulite product on slide 620, 20 will be an important here with our anticipated third quarter approval based on July six PDUFA date, and expect that launch in the fourth quarter, yes.
In 2019, we made significant progress preparing for the long term commercial success, thus CCH for cellulite by building awareness and critical relationships as well as refining our understanding of our target consumer and beginning to build our medical statics team.
In 2020.
We will build on this momentum as we continue to prepare for commercialization.
From a key opinion leader and healthcare professional standpoint.
We plan to attend approximately 25 conferences and a number of advisory boards in 2020.
We'll use the insight from these events to develop and refine our strategy.
Early experience in physician injector training programs.
The sale leadership tired and 2019 will focus on building the salesforce over several ways can twentytwenty.
This enables us to be with our investments while still optimizing launch readiness.
From a consumer activation standpoint, we will be implementing direct to consumer and HCP condition awareness campaigns and we will continue to focus on ongoing data generation in clinical studies, including durability dosing in injection technique.
[noise] turning to slide seven.
Our sterile injectable segment continues to deliver with revenues growth of 10 cents in the fourth quarter of 2019 compared to the fourth quarter of 2018.
This performance was driven by continued strong growth in valves and strict entered drilling.
For the full year Sterilant direct injectable segment revenues exceeded $1 billion.
Vasostrict revenues were $147 million in the fourth quarter of 2019.
A 21% increase compared to the same period than 2018.
Growth in Vasostrict was due to price and modest volume growth.
Adrenaline revenue was $46 million in the quarter up 10% compared to the same period and the prior year.
Primarily driven by volume.
Looking forward, we expect 2020 sterile injectables revenues to grow in the low to mid single digit percentage range with Vasostrict revenues expected to grow by mid teens percentage range.
The 2020 sterile injectables revenue growth range reflects the impact of anticipated competitive pressures on certain products during the year.
Turning to our generic pharmaceutical segment on slide eight.
The decline in revenues for the segment during the fourth quarter compared to the same period in 2018, primarily reflects the impact of anticipated competitive pressures on key products, which was partially offset by the benefit of certain product launches.
During the fourth quarter, we launched five products.
On the generic.
As we've noted before the environment remains active in dynamic, reflecting a high level of competition, which is primarily driven by new market entrants.
Not in mind, we are guiding for full year 2020 generic pharmaceuticals revenue to decline in the mid teens.
[music].
We expect the decline in the generic pharmaceutical segment relates to assume competitive pressures on products, including culture seen tablets, the authorized generic of coal Creek.
Additionally, 2020 guidance assumes that the timing of new product launches are weighted more heavily towards the second half of the year.
Moving to slide nine our international pharmaceutical segment performance reflects among other things the impact of ongoing generic competition on our.
Outside of the United States.
For the full year Twentytwenty.
We expect international pharmaceutical revenues, which are primarily in Canada to decline by the high teens percentage range.
The slide 10.
We ship focus to our diverse pipeline.
We've covered much of this earlier, but I want to point to a few items.
On CCH for Cellulite, our producer date is July 620, 20, and if approved we plan to launch the product in the fourth quarter of Twentytwenty.
As part of our JADAK generation plan, we have several real world CCGT studies in development focused on dosing.
Injection technique.
In responses in target patient populations as well as roll over studies on durability.
At this point, we've initiated XIAFLEX development programs for the treatment of plantar Fibromatosis and adhesive capsulitis.
We're currently running a phase one label expansion PK study on class Mclarens, a vasco precedent in healthy volunteers, which we believe will further advance our clinical work and help physicians.
We plan to launch 15 to 20 products in 2020 with industrial Injectables generics and international segments and have launched four products year to date, including Soaker fate oral suspension the authorized generic of Carafate.
Our sterile injectables pipeline to supplemented by our strategic relationships with their product parties, such as never car, which will potentially provide five differentiated 5.5 be to hospital in care based products.
We anticipate launching the first never Corp, and late Twentytwenty.
The table on the bottom on slide 10 shows some of our key disclosed future first to file or first to market opportunities.
Now, let me turn the call over to place to further discuss the Companys financial results and full year 2020 financial guidance.
Blaise.
Thank you Paul.
First on Slide 11, you will see a snapshot fourth quarter, GAAP and non-GAAP financial results.
Paul covered companies segment revenues earlier, so I will not review that again on a GAAP basis, we to dilute it no loss per share from continuing operations of 92 cents in the quarter compared to a law or $1.18 cents per share fourth quarter 2018.
GAAP loss from continuing operations in the fourth quarter 2019 was $208 million compared to a GAAP loss from continuing operations of $265 million during the same period in 2018.
On adjusted basis fourth quarter adjusted income from continuing operations of $171 billion was comparable to fourth quarter 2018, adjusted income from continuing operations of $175 million.
Adjusted diluted net income per share from continuing operations in fourth quarter 2019 was 74 cents compared to 75 cents in fourth quarter 2018.
Slide 12 provides a summary of Endos 2020 full year financial guidance.
We expect 2020 total revenues in the range of $2.72 billion to $2.92 billion adjusted EBITDA in the range of $1.22 billion to $1.32 billion, an adjusted diluted net income per share in the range of $2 in 15.
In sense to $2 in 40 cents.
There are several considerations that I review as you think about 2020 guidance first the midpoint of our revenue guidance range implies a low single digit percentage decline compared to 2019 revenue. This implied decline primarily <unk> rig primarily reflects the expected decline our generic pharmaceutical segment.
The established products portfolio of our branded pharmaceutical segment and our international pharmaceutical segment, primarily driven by anticipated 2020 competitive events for several of our key products and the expected timing of our new product launches that are skewed towards the second half of 2020.
This expected decline to significantly offset by the expected continued growth in our sterile injectable segment and our branded specialty products portfolio.
Secondly, our adjusted EBITDA guidance is reflective of our commitment to invest for the long term as we invest in our core areas of growth with the funding of the Ccxeight like commercial launch new investments and XIAFLEX lifecycle management opportunities and an increase in our sterile injectables new product development spend.
We believe that these strategic investments in our portfolio will generate long term value friend to as we move forward.
And finally, our 2020 guidance for adjusted diluted net income per share from continuing operations adjusted EBITDA and adjusted operating expenses, excluding opioid related legal.
Please note that the 2019 comparable adjusted EBITDA and adjusted EPS presented on Slide 14 also excludes opioid related legal expenses for comparability purposes with 2020 guidance.
The company's guidance is based on the following assumptions full year 2020, adjusted gross margin of approximately 66% to 67%.
Adjusted gross margin assumption mid point versus 2019, adjusted gross margin primarily reflects a shift in sales mix, including a reduction in revenues from authorized generics.
We expect adjusted operating expenses to be between 25% and 25 and half percent of revenues. This assumption reflects our continued investments in our core areas of growth for the long term mentioned earlier.
We expect adjusted interest expense of approximately $535 million to $545 million.
In terms of our adjusted effective tax rate, we expect our 2020 adjusted effective tax rate to be in the range of 13 and have to 14 half percent range.
Although we do not provide specific quarterly guidance consistent with 2019, we expect to split of total enterprise revenue adjusted EBITDA and adjusted earnings per share to be more heavily weighted towards the second half of 2020 due to our expected revenue and adjusted operating expense cadence.
The higher second half 2020 revenue reflects the expected timing of 2020, new product launches as well the impact of historical purchasing patterns in the branded specialty business.
In terms of adjusted operating expenses consistent with 2019, we anticipate the first quarter to be our highest quarter of spend in 2020, mainly due the timing of certain corporate related expenses.
We expect the first quarter of 2020, adjusted effective tax rate to be the highest quarterly rate well above our full year estimated adjusted effective tax rate range due to jurisdictional next.
Moving to slide 13. This is a summary of the segment and product specific guidance previously discussed.
Dancing on slide 14, wrapping up the financial discussion for the full year 2019, we had unrestricted cash flow prior to debt payment of $358 million, which is higher than what we guided to in November. This favorability resulted from higher adjusted EBITDA and lower than planned capital expenditures.
Yes, we ended 2019 with approximately $1.5 billion of unrestricted cash and a net debt to adjusted EBITDA leverage ratio of approximately 5.3 times.
As we look forward to 2020, we expect cash flow prior to debt payment in the range of approximately $50 million to $150 million. This assumes approximately $225 million and payments into the mesh qualified settlement fund and for mesh legal expenses approximately $60 million enough.
The made it other settlement payments, including payments related to the previously announced Lidoderm any trust and TRT product liability settlements and $80 million and opioid related legal expenses and previously announced opioid sense.
Now, let me turn it back over to Paul Paul.
Thank you Blaise.
Finally, moving to slide 15, including today's presentation as with any journey evolution is constant.
2016, we've executed against our strategic multiyear plan to transform endo.
Over the last three years, we've been laser focused on executing our strategy to simplify our business drive productivity improvements and leverage our culture as a differentiator, which has led to strong operating performance despite a challenging external environment.
Grateful to all of our team members for their commitment and hard work.
As I reflect on where we started I am proud of the company that we become I'm excited for Blaze as he leaves the company forward on its transformation journey and Im honored that in my role as chairman of the board I can continue to be actively involved in endos future.
Let me now turn the call back over to Laurie to manage our question and answer period Laurie. Thank you Paul in the interest of time, if you could limit. Your initial question allow us to get in as many as possible we would appreciate it.
I have the first question.
Your first question comes from the line of Gregg Gilbert from Suntrust. Your line is open. Please ask your question.
Thank you and good morning, Congrats to both of you guys incoming and outgoing.
Two part question I want to first ask about.
XIAFLEX development program, just wondering if you can comment on some timelines associated with those programs you announced and maybe talk more generally about how aggressive you're gonna.
Explore additional indications going forward versus your behavior in the past, where it's been a bit slower or less of a focus and then.
Paul I know you said you can't comment specifically on opioid litigation, so maybe I'll try to ask more generally it seems that settlement talks.
Others that seem to have gotten traction.
Tend to involve either the use of a ton of cash or.
In the case of for do announce.
The tool of bankruptcy. So I guess my question is do you see flexibility for companies to deal with this liability.
Without either of those things.
That's my attempted asking it more generally so thank you guys.
Great. Thank you I'm going to actually pass it over to Blaze and blazer.
We're back this for US sure Greg Thanks to those two questions on XIAFLEX as you as you noted we have we came out today and talked about our incremental investment into the lifecycle management of had asset and we're really excited about both the plants are doses of that uses cap lettuce and those are really promising opportunities move forward. We are what we're going to do.
That keeps us capsulitis, we plan to move into phase two sometime in 2020 and then we're also going to support the concept work on plantar Fibromatosis in the plan is to do that 2022.
That's where we are from a timeline standpoint in terms of your opioid question Greg at this stage.
We've been fairly clear on what our strategies, which is to remain open to a constructive resolution and defendants needed in terms of the tools and options that are available to people what may be needed what may not be needed.
We're we know what our strategy is.
We feel good about our flexibility that we have to deal with that and so that's exactly how we're going to move forward.
Thank you.
Yes.
Your next question comes from the line is Randall Stanicky from RBC capital markets. Your line is open.
Ablaze, congratulations again to you both.
Wanted to start on basis, correct, you guys have been putting up really strong growth, 21% in the fourth quarter guidance for 2020 is a mid to high teens, what's driving that how much is volume versus price because I thought you previously talked about being pretty well penetrated there.
And then the follow up to that as I think you know the settlement conference coming up this month with with Eagle trial in May can you walk through the timelines there and then.
Centrally when you could get your follow on product through F.D.A. in any IP associated with that thanks.
Yeah, Hey, Greg Thanks for the Randall Thanks for those two questions in terms of Asia SREC. When you look at the sequential growth from Q3 in Q4.
It actually is driven by volume that's not uncommon for us we do see spikes in volume in Q4, just based on events. So that is a volume driven.
Increase in terms of the sequential change you're seeing in terms of year over year in our guidance for 2020.
That is primarily price driven but there is volume growth there as well in the low single digits.
You are seeing from price standpoint is the annualization of our price increase in 2019. We also recently took a price action in the first quarter and also we are getting some favorable mix on our net contracting so the mix of our contracts and just how that's impacting that price. So that's where you're seeing in terms of days districts.
In terms of your other question on Eagle and that process. The timeline is we have a mandatory mediation hearing.
Early March and then we have the schedule in May so that's the timeline on on that and your question on follow on.
Paul do you want to comment on that real quick yes.
Hi, its Paul here I'm just to be clear, it's actually it's not a new product that we may you're probably I'm referencing leave the fact that we're running a a clinical trial, we've announced that phase one PK trial. That's a safety study we've learned a lot about the product over the years of development. So theres a way in which we can if successful if we can improve the way physicians and co.
It's been clinicians use that the property existing product that's going to be the goal. So that's what's happening with the other PK study. So thanks for the question.
Your next question.
Gary Nachman have minimal capital markets. Your line is open.
Hi, good morning, Rothsay on for Gary.
To what extent does your guidance incorporate potential competition from Memphis Star for Adrenalin, and how should we think about the rate of erosion for that product it and to start receiving approval sometime in the April timeframe.
Great. Thanks for the question, yes, so we don't normally comment on specific guidance around.
Products I will tell you that for 2020, we have contemplated different scenarios.
In terms of what we could see from competition standpoint on the adrenaline 30 on now.
And then in terms of the second part of your question Dominic I'm not sure. If you want to comment on that at all Gabby and in terms of the a competitor we understand.
That there's a second CRL.
But from a from a timing standpoint, we're not sure how that how that's going to play out.
Great. Thank you next question please.
Your next question comes from Glenn and the Saudis SVB Leerink.
Hi, Good morning. This is decent on for Ami. Thank you for taking my question I'm just on the generics segment. Maybe you can you talk about how are you seeing the marketplace shaping up in 2020 anything any meaningful shifts versus 29 team and then you know sort of notice that there is this segment will have some notable AG launches.
In 2019, our annualized for 2020 and he also seem to indicate some sizable generic launches weighted in the second half a 2020. So just curious if you can level set this with.
Sort of the mid teens declined guidance that.
Seems consistent with second half 19, but may imply a slight increase in erosion when looking at it on a year over year basis. Thank you.
Great. Thanks for the question and so all set this up and then turn over to Dominic just for context.
In terms of the industry and what we're seeing industry, we are generally seeing across the industry.
Some stabilization and pricing, but as we've always talked about this really is portfolio specific and so when you look at endo.
Right now between the competitive as we had in the full year 2019 at some of the competitive events that we expect potentially have in 2020.
Our seeing.
Some impact to our revenue year over year due to those due to those competitive events Dominic anything else that to that in terms of what we're saying I think that's right yeah great.
Next question. Please next question is from Chris Shaw from Jpmorgan.
Great. Thanks, very much just two questions here, maybe first on XIAFLEX I think you mentioned still low diagnosis rates, but we think about the durability of the type of growth you're seeing here can you maybe just update us in terms of where we stand in terms of actual diagnosis rates and XIAFLEX.
Attrition for the two indications and then my second question was on on 2020 Opex.
It seems like us quite a bit of work being done ahead of the CCH launch what do you think about kind of Opex beyond 2020 is this level of spend to reasonable proxy for expenses or should we be thinking about another step up in spend as we have to 21 and you're in that kind of full CCH launch mode. Thanks very much.
Great. Thanks, Chris I'm going to turn it over to talk to a Pat on the XIAFLEX question and I'll take the second.
Yes, Thanks place the as you cited the diagnosis rates for both indications are relatively low there in the 2% to 3% range.
For both indications that treatment rates for our peroni is or about 14% our actual penetration post decision to trade is approaching 60%. So its fluctuates between 57 and 58% on the peroni syndication further Dupont trends contracture indication the treatment rate is.
At higher with surgery falling falling into the mix, it's about a 30% treatment rate and the XIAFLEX penetration is about 25% and so we're trying to activate both upstream getting more patients diagnosed.
As Paul said in his comments, that's where the consumer activation strategy comes into play and of course, we're trying to improve our overall market penetration and so for all those reasons. We believe those are that's really driving the nice growth that we've seen over the last couple of years and Chris in terms of your go forward shaping around opex and what that might look like.
We're not going to give any specific comments around.
Anything beyond 2020, what I would tell you is that those decisions are always a portfolio and opportunity.
Driven.
Decisions, which means if the opportunities are there for us to drive topline and ultimately to put assesses a better positioned to grow EBITDA over time, we're going to make the investments that are required to do that whether that be on the CCH commercial cellulite commercial side of things already in the further development of some of our newly bought important opportunities around XIAFLEX lifecycle.
Management, or our and sterile injectables business. So those will be portfolio, an opportunity driven decisions at that time in terms of what we haven't frameless.
Thanks next question please.
Next question is from animals funding of Stifel. Your line is open.
Hi, This is Nick on friend well, thanks for taking your question.
Just two quick one to one are you seeing benefit from the investment another car in terms of products materializing.
Either this year or early next year.
And then for CCH.
We've seen some major growth across aesthetics categories recently.
Could you perhaps comment on recent developments in the broad cellulite market and how do you envision CCH positioned in the market. Thank you.
Great. Thanks, you asked the question so on the never car question I'll turn that the Dominic and then for the CCH question and the market profile will that Patrick that sounds good dumb Nic in terms of five the never.
Opportunity, we're really excited about what the what was the bringing to the table. We believe that our customers are looking for ready to use products and and that partnership will logical steps up well for that as as Paul mentioned, we have our first launch upcoming this year, we're really excited about that.
Yeah, and getting that thanks for your question on on CCH in as we look at the market. Its first of all the medical aesthetic market in general it's just a very attractive market for us, it's an all cash market and the way we view it with the potential to have up potentially the very first injectable treatment for cellulite, that's a very disruptive opportune.
Tony.
End of the marketplace, because we know that the injectable space is very well received by our physicians very well received by the consumers and with converging on an area of body contouring as well. So you see really two very attractive growth areas that we could.
Potentially come in and provide the first offering and in terms of innovation and there's really been some challenges in terms of a lack of innovation. So we're excited about potentially having that first injectable and we feel like from an addressable patient population.
Not only can this be a gateway therapy to bring more patients into medical aesthetic offices, but theres a lot of existing women, who are seeking treatment of this kind and so we believe that it could be upwards of a 6 million women, who could be potentially candidates for an injectable product for CCH. Our for sale excuse me next question. Please.
Next question is from below 80% of Barclays.
Hi, good morning, and thanks for taking questions Firstly blaze congratulations.
Maybe a couple of questions from me.
Blaze from you I.
I think when it think about the strategy for the company going ahead is anything that you think would one do you want to change on that we can expect to see a major shift in strategy.
Secondly, specifically on that I didn't want to bodes well.
Well you can you talk about pillar, our recent comments around GBL being a strategic channel and also more details beyond the comment too often greeley.
Slide five beta products and in a hospital setting and how does this dovetails into our guidance for the.
Lastly on the Generac side do you have any other major launches apart from the ones that you disclosed in the slight baked into the guidance and.
Gross margins in Gen rigs in the context off the one now franchise could we see a your own flat gross margins for this segment's principally thank you.
Well I see that one more question, yes, so we're going to our best attack.
All right. So thanks, let let's start with the strategy question I'll take that and then dominic's going to help out on the sterile injectable and little bit around what we're doing the channel strategy on Gpos hospitals, and then we'll try and wrap up on some of your gross margin question. So just in terms of strategy.
Listen at this point in time, we have a very normal cadence in the coffee of how often we reassessed strategies look or capital allocation priorities, we do that on a recurring basis theres going be no change in terms of that cadence with me stepping into the role for Paul I'm. So as we move forward and we make those assessments if there's anything for us to do differently.
Well communicate that when we make those decisions, but I wouldn't be very clear. There are focused right. Now is about our 2020 properties is nothing we could do that's more importance our future both in the near mid to long term that some of the goals. We have in front of us to 2020, so with that let me turn it over to dominance talk a little bit around our strategy going forward around.
GPL Hospital channel sure.
In terms of of of our channel access strategy, leveraging our relationships GP as Jos provide great contracting vehicle for us to get our proxy visible to customer really like about the health system in hospital market is that when you talk to one health system, you talked one health system and.
They retain both formulary and buy decision. So so we'd like that that that channel, particularly the way that are that our portfolio shape.
And then in terms of your job generic launch question. So we were not going to comment on specific products that are there. We have a couple of products. There that we plan to launch in 2020 that we feel really good about I'm not really attractive opportunities for us.
And then in terms of your gross margin I think there was a question on I have a right around potentially flat gross margin going forward for that segment, if I have that drive that right.
Right.
Okay, Yes, so listen again I'm, not we're not going to comment on anything going forward in terms of profile.
For for that segment or any other segments from to gross margins, but as we've talked about it is very much portfolio ended up as we move forward product mix to what we can get out of the pipeline opposite of what we're seeing on competitive front will be a big dictator of what our profile looks like from a gross margin standpoint next question. Please.
Next question from due to downtime from Vipers.
Thanks, So I had some questions on CCH and specifically wanted to get some additional detail on.
The sales infrastructure that you're putting in place give us some.
Color on total number of reps that you're going to have on the ground initially.
Then a peak.
How many doctors you're going to be targeting at least initially and then potentially at peak and then also regarding the launch can you give us some a window into your thinking on on pricing these of the other.
Aesthetic injectable products.
This is not a like a botox or filler where you are coming in every few months necessarily so it's a different kind of paradigm. So in that vein, how should we think about about pricing for CCH in cellular thank you.
Yes, thanks, Dave if those questions on CCH I'm going to I'm sure that to talk a little bit about what we're doing in terms of cost being prepared to launch this product successfully in and also.
Your question around pricing and durability, yeah. Thanks place. So is it as Paul mentioned in his comments will be a hiring and two waves.
So all in between sales managers and sales professionals and also having the opportunity to be able to address corporate accounts and having customer support we're all and will be somewhere in the neighborhood up between 80 and 90 on the ground and supporting a customer facing activities.
In terms of pricing.
We're not we're obviously not going to two to communicate pricing at this point, we have been pretty consistent as that we we do see the opportunity we understand that opportunity for value creation, but as an injectable within that body contouring space I think theres that theres a range that we're looking at I think we've been consistent in terms of wanting to be able to.
Pricing away that allows for wide scale adoption from both a consumers is as well as a physician and as we get closer launch of course will be communicating a specific price plan.
Next question please.
Next question is from all over his Raymond James Your line is open.
Hi, Good morning. This is that Cameron on for Elliot Thanks for taking the questions.
I just had two quick ones here on financials are the first is could you provide any expectations on EPS and EBITDA cadence over the course of the year.
And second would it be possible to provide a rough split between R&D NSG nay within your overall opex guidance and.
Maybe how those line items might trend over the course via thanks.
Great. Thanks, those questions so in terms of cadence.
Refer back to what we talked about is where we will see.
Sort of a higher EPS and higher EBITDA in the second half year versus the first year, we articulated what with the drivers of those were in terms of the breakout between R&D and asked you know.
What I would just tell you is that our R&D. This year is slightly higher than where we've been historically as percent of sales and then therefore, you can kinda back into the S. Union next question. Please.
Next question is from Davidson derived from Morgan Stanley.
Hi, This is Charlie on for David Thanks for taking the question I just had two questions here.
The first is lies the outlook for new product at lunch launches in 2020 relative to 2019.
And the second question is could you. Please provide updates on at the start litigation developments to watch with respect to base a straight and internally. Thank you.
Yeah. So just in terms of new product guidance, we don't provide specific.
Revenue guidance and then your second question I think it was on base district, which is actually Eagle.
And we mentioned earlier that's timeline here the two things that we've got four is there's a mandatory mediation hearing.
In March and then we have a trial scheduled in may of this year.
Next question question.
Ladies and gentlemen, once again to ask a question you want to press star one new policies from.
If there is no further questions Paul [noise].
Thanks Laurie.
[noise], so with that maybe just a second I got to maybe as I as I move forward to my my Ondeck space. The wife, I, just want to maybe take a step to address my team here first.
I have to just say how proud I am a patent Dominic guys great job Mark Bradley Congratulations as our next CFO is going to do great things Blaze is gonna be just tremendous remarkable remarkable person I'm. So proud of this entire organization.
That maletta, our general Counsel Chief legal officer, just great job Laurie. Thank you for everything you've done for us over last year year and Uh Huh.
Just to the research analyst we are leaving this team in remarkable hands that I'm. So proud of everybody here. So with that I just have to say that we appreciate your continued interest in support of Endo, We look forward on behalf of Blaze and our entire leadership team. We look forward to providing you with updates as we move forward. Thank you everyone for.
Joining us in today's call have a great day, everyone Bye bye.
Ladies and gents ladies agent.
Earnings call. Thank you for Pakistani you may now disconnect.
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