Q3 2020 Earnings Call
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Welcome to the wouldn't that companies Cisco 2023rd quarter Financial results Conference call. My name is Sherlyn I would be your operator for today's call. At this time all participants are in no listen only mode. Later, we will conduct a question and answer session. During the question.
To answer session. If you have a question. Please press Star then one on your Touchtone phone. Please note that this conference call is being recorded I would now I'll turn the call over to Robert Jaffe Investor Relations for when that Sir you may begin.
Good afternoon, everyone and thank you for joining us today to discuss blend that companies' fiscal 2023rd quarter financial results.
On the call today, or Tim crew, Chief Executive Officer, and John Kozloski, The company's Chief Financial Officer.
This call is being broadcast live at Www Dot net dot com playback will be available for three months online that's web site.
I would like to make the cautionary statement and remind everyone that all of the information discussed on todays call is covered under the safe Harbor provisions of the litigation Reform Act.
The company's discussion will include forward looking information, reflecting management's current forecast of certain aspects of the company's future and actual results could differ materially from those stated or implied.
In addition, during the course of this call we refer to non-GAAP financial measures that are not prepared in accordance with U.S. generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies.
Investors are encouraged to review and that's press release announcing its fiscal 2023rd quarter financial results for the company's reasons for including non-GAAP financial measures in its earnings announcement.
The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is also contained in the company's earnings press release issued earlier today.
This afternoon, Tim will provide brief remarks on the Companys financial results and the impact of the Corona virus on the company's operations as well as recent developments and associated initiatives.
Then John will discuss the financial results in more detail, including the Companys.
Fiscal 2020.
Financial guidance.
We will then open the call for questions with that said I will now turn the call over to Tim crew Tim.
Thanks, Robert and good afternoon, everyone. We hope you and your families are safe and well. These are as we all know highly unusual times with cobot 19 impacting all of us.
As a supplier medicines.
Is regarded as an essential services provider.
Vital to the health and welfare the population.
Accordingly, we have remained open during the crisis.
And our manufacturing plants Carmel, New York in Seymour, Indiana continue to operate at normal capacity.
With that in mind I'd like to begin some heartfelt thanks to first responders and essential service providers everywhere, along with all of that employees.
Who have responded with resilience and dedication to the significant challenges the pandemic.
Our employees have put forth extraordinary effort to make sure we continue to supply patients and customers without critically important medications.
We are proud to sharpen our plant production is not pulpwood these past weeks.
To aid that effort, we first focused on employees will be.
We follow CDC guidelines and implement it any number of other measures to enhance their safety.
For example.
We implemented processes and procedures for working remotely for those able to do so.
We have suspended all nonessential traveling on site visitors.
For our manufacturing R&D teams, we've enhanced our safety protocols and provided additional personal protective equipment.
And where possible, we stagnant rotated working shifts increase physical space and to facilitate social distancing.
We have provided additional paid time off and other benefits focused on our operating personnel to help them cope with Coca 19 related strains.
Finally, we are fortunate of course to already operates in a highly regulated including cgmp environment.
As a result of this environment and our redoubled efforts.
No impact to our employees in our business has been on hold so far relatively minor.
Well again, thank our employees, who made all does happen.
With that let's take a closer result at our fiscal 2023rd quarter financial results.
We reported net sales of $144 million, a record amount and were opposed to be look for oxy era.
The higher than expected sales were largely associated with coded 19.
With some patience appearing to purchase extra supplies, the medications and certain customers increasing their purchases of some of our products to dress such patient demand and avoid shortages.
Again, it's real your reference thus far our supply chain for products and key ingredients has only been modestly affected by challenges associated with Covidien 18.
Adjusted gross margin percentage for the third quarter was lower than we expected.
Largely due to sales mix into a lesser extent product price erosion.
As an aside I think it's fair to say that the recent past our sales and profitability has benefited from a flexible manufacturing capability.
Supply disruptions Austin provided opportunities for us to see temporary awards to help alleviate certain product shortages and often the margin of these sales were above our average.
More recently, however market opportunities were often for products with margins Apple blow our average.
We believe it's important to do apart to assist or intend them by continuing to provide critical medications for patients and customers. Even if the margins are low.
Overtime. However, we will continue to review opportunities to optimize our portfolio offering.
Turning briefly to our full year guidance.
We have revised several elements and outlook.
Primarily you have narrowed the range and held or sales mid point.
Which we raised last quarter.
But we have trimmed our adjusted EBITDA range.
This guidance is based on certain assumptions, including.
First the continuing durability of some funding and pots economies all sales.
You may recall that we previously indicated.
That we did not expect to see new competitors for these products for the balance of the current fiscal year.
This expectation remains on changed.
On the other him. Unfortunately, we now expect a lower level of sales for our recently launched in the Bruno India.
Demands this high margin products will be significantly reduced during the crisis.
Given the far fewer elective surgeries performed during the crisis.
We expect to see more meaningful sales once the koby 19 pandemic winds down.
Another item of note where guidance has a slightly reduced value of the new products launched throughout this year, excluding public comes on.
And finally, our business model embraces opportunistic commercialization agreements that complement or leverage our strengths and capabilities with those of our partners both here and abroad.
While we continue to progress many such opportunities are high touch approach to such agreements is obviously slowed somewhat during dependency.
Tom will discuss our financials as well as revised guidance in more detail shortly.
Regarding product launches.
In the first half of our fiscal year, we launched eight products and since January 1st we have launched the six additional products, including for penalty are nice gotten all solution.
Oh protocol solution generic Adderall XR.
She loves full solution and the Breanna.
For a total of 14 products fiscal year to date.
Over the next several months, we'll have several more products in the queue for lunch.
A portion of which we will commence marketing before June thirtyth.
However, given the current competitive environment and timing of operational readiness. The sales were new product launches for all of fiscal 2020, excluding over $50 million. The public comments all that we expect.
We'll be perhaps $6 million to $8 million lower than we expected it in our February guidance.
Most recently received FDA approval for three Andas.
The first is a triple combination of.
Phentermine Maliki pseudoephedrine hydrochloride.
And dextro must orphan hydrobromide suraj.
That's an awful.
In two milligram 30, milligram and 10 milligram, respectively per five them out.
We also received approval for clubs on oral suspension 2.5 milligram per ml.
These two product approvals are notable less due to their future.
Expected sales value, but for the fact, they both received first cycle review approvals 10 months from their submission date.
Only approximately 15% of and his review by the FDA currently achieved first cycle approvals.
Such approvals are encouraging sign for both the quality of our submission and the speed, we can get them to market.
In addition, the brunt phentermine file.
It was our first internal suspension dosage form approval.
We have other more valuable suspension products under development, which we look forward to commercialize in coming years.
A third recent approval was hydrophone hydrochloride all solution.
Legacy Anda filed several years ago at a time when market conditions were more favorable.
Given the current unfavorable market conditions, we are not currently planning to market the product.
Regarding our pipeline, we now have more than 20 products in development.
And about 17, andas pending at the FDA, including partnered products.
Plus another six or so products that are approved pending launch.
Turning to our Biosimilar insulin glargine and generic ads or product candidates.
Both these products opportunities are significant and together, possibly transformational.
Not only is the vessel market for each product quite large, but only a relatively small number players have the technical expertise and the requisite resources to develop and manufactured these complex products.
Fortunately, our strategic partners possess though.
And are committed to the product success.
As both products advance and we continue to assess the market dynamics in receptors, we are becoming increasingly optimistic.
Regarding insulin glargine.
You are set to speak with the FDA on June 920, 22 plan to discuss next steps for the products clinical advancement.
At the meeting yesterday will provide guidance regarding the ongoing development program.
Including the design and the endpoints of any additional human studies required some fine a biologics license application.
Subsequent approval of insulin Glargine was a biosimilar.
Turning to generic add there.
We now look to file in hand, a later this calendar year.
As the coated 19 situation impacted the ability of an overseas European clinical site to operate normally.
Nonetheless, we currently expect the pivotal PK trials to begin within three months.
Finally, it's worth noting whatever existing combination products generics will tend to be attending here is being studied by the world Health organization as a possible treatment for cobot 19.
We currently market the only approved and if its combination.
And our product isn't a solution for.
Well, we have been able to recent supply for demand that increase substantially on a percentage basis.
Absolutely Boeing so far is not significant.
The product is currently a modest contributed to sales.
However, should the medication prove effective as a treatment for certain cobot 19 patients, we gotta capacity and flexibility to ramp up production quickly.
No there are other solid dosage form showing tentative approval in DFT Orange book.
To sum up.
We are currently operating to the same production expectations as we were prior to the Cobot 19 public health crisis.
We reported excellent net sales were strong demand across multiple product categories.
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We introduced six new products since January 1st and expect to launch several more in the coming months.
We have held net sales guidance, but we have lowered our expectations for gross margin.
Based on emerging sales mix competitive pressure for certain products and suncoke at 19 related impacts on products like Sabrina.
As a result, we have trimmed our adjusted EBITDA guidance.
We continue to advance our pipeline sustainable large market opportunity products. We continue to work on additional opportunities to build strategic alliances with partners the complimentary products and capabilities.
And last as a company with its headquarters and all of its own R&D and finished dose manufacturing base to me Wes we are proud to be able to do our part not only to employee Americans, but also help support national security interest looking to expand the supply of domestic medicines.
With all that I turn the call over to John John.
Thanks, Tim and good afternoon, everyone.
As was mentioned earlier I will be referring to non-GAAP financial measures. The reconciliation of the GAAP to non-GAAP numbers can be found in today's press release.
Also in March of last year or supply agreement with Jerome Stevens for lever for rocks and expired. So in addition to providing year over year comparisons. All include some color comparing our third quarter financial results to our fiscal 2022nd quarter.
Now for the financial results on a non-GAAP adjusted basis.
For the 2023rd quarter net sales were 144.4 million compared with net sales for the third quarter of last year of $172.8 million.
Excluding leave with or Roxon net sales in Q3 of last year for 117.6 million.
Q3, net sales increased by 8.3 million over Q2 net sales of 136.1 billion largely due to the additional purchases by patients in customers that Tim mentioned earlier and to a lesser extent a partial quarter of sales from the launch of for new products during the call.
Peter.
Gross profit was 52.3 million for 36% of net sales compared with 77.0 million or 45% of net sales for the prior year third quarter.
Again, the third quarter of last year included significant sales of Lee with or Robertson, a product that had a higher than average gross margin.
Our gross margin percentage declined slightly in Q3 as compared with Q2, primarily due to sales mix. However, our gross profit dollars increased in Q3 by approximately $2 million compared with Q2.
Interest expense decreased 12.7 million from $17.0 million and last year's third quarter due to repayments of term a and term b loans as well as lower interest rates on the lower fixed interest rate on our senior convertible notes.
Net income was 11.7 million or 27 cents per diluted share compared with 26.6 million or 68 cents per diluted share for the fiscal 2019 third quarter.
In Q3, net income and adjusted EBITDA of 11.7 million and $36 million, respectively with consistent with Q2.
Turning to our balance sheet.
At March 30, Onest 2020.
Cash and cash equivalents totaled approximately $101 million.
Our outstanding debt at the end of the quarter was as follows.
Total debt was approximately $724 million and debt net of cash with 623 million.
And that secured debt was $537 million.
We continue to expect to be within our financial covenants up to the maturity date of the term eight loans.
Our term may loans mature in November of this year at maturity the outstanding balance will be approximately $42 million, our cash is more than adequate to pay off the term may loans in full.
Turning to our guidance, we've tightened the range for net sales and lowered our gross margin estimates for the full fiscal year.
We expect R&D and interest expense to be lower Ines DNA to increase.
As a result to these changes we've trimmed or estimated adjusted EBITDA for the full fiscal year.
Our guidance is as follows.
For net sales, we have tightened the range to 535 million to $545 million from 530 million to $550 million. The midpoint remains the same.
Adjusted gross margin as a percentage of net sales of approximately 37% to 39% down from approximately 39% to 41%.
Adjusted R&D expense and the range of 31 million to 32 million down from 34 million to 36 million.
Adjusted S. DNA expense, ranging from 65 million to 67 million up from 63 million to 66 million.
And interest expense in the range of 50 million to 51 million down from 51 million to $53 million.
The full year adjusted effective tax rate in the range of 21% to 22% unchanged.
Adjusted EBITDA in the range of 137 million to 147 million down from 145 million to 160 million.
And lastly capital expenditures to be approximately 15 million to $20 million down from 20 million to $25 million.
With that overview, we would now like to address any questions you may have operator.
Thank you we will now begin to question and answer session. If he would like to ask a question. You did you start by pressing Star then one on your Touchtone phone, if you're using a speaker phone you need to pick up your hands that first before pursuing any numbers.
Once again, if you'd like to ask a question. Please press Star then one on your Touchtone phone.
Our first question comes from Gary.
From BMO capital.
Yeah.
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Yes.
First Tim can you give a little more on what the biggest drivers are behind the pressure in gross margin more than you guys have had a have anticipated.
And how should that trend into next year, when hopefully cobot passes.
Yeah. So so this is John I'll I'll start with by saying that our gross margin percentage is down slightly compared to some of our expectations.
But again, our dollars had increased over Q2 to Q3 by 2 million.
Some of it was based on our overall sales mix as we saw sales have increased the above our original forecast and a lot of that was due to Kobe and some of them were for products that are that are higher volume, but have a slightly lower than average average margins and on top of that we did see.
He has some overall pricing pressure that's one of the reasons why we as.
We have reduced our guidance.
To between 37, and 39%, we're expecting Q4 to be be slightly higher, but but down from our original projections.
Okay and it is the lower EBITDA guidance just from gross margin or is there something else in there and maybe the SGN. A are you took that up a little bit. So you know talk about what that additional spend is going towards.
Is it commercial DNA related.
Gary It's Tim good evening.
Good afternoon, I guess, so the [noise].
One of the big moving parts for US as you look forward to the full year number in the fourth quarter.
His cocaine.
Or I should say Reno now in our in our portfolio. That's a branded like margin product with little expense to support a given its histories and that products coming down to.
Trivial numbers for the duration of the.
Of the pandemic. So that's probably the single biggest component of it. We also noted that some of our new product launches have been more competitive some more competitive showed up and they typically would have a bit higher gross margin than our average.
Than our average inline product portfolio piece. So those those two pieces are the ones that are kind of drift in this down but not significant in terms of total dollars, but they add up a million here in a million their results and the changes we've discussed.
Okay. So Gary this is John and for the SG Nay for the S. DNA some of that was.
Just a some additional legal expenses that we had in had in Q3 that a that came up slightly but for Q4 were thinking we'll have a more normalized rate.
Okay, and then just a couple more Jim can you tell us which products where stockpiled in the last quarter and you know just give us a sense of which buckets, there and and should all those reverse so the most part now going into the fiscal Fourq you and then.
And just what is the expected development plan for the insulin product just any sense that you had before you have that meeting with FDA, what you guys might need to do there. Thanks.
So the.
Additional sales that came from some of the customer in patient desires to.
Slow the number of visits to pharmacy, and and address potential shortages was fairly broad based in our portfolio not all customers ordered all products, but it was not really targeted to any particular area. The one exception to that I would say would be Penn top resolved, which is a very high volume product for us and it's.
Seeming to be a bit of an alternative these days to remitting.
And that probably because particularly low margin for us. So it's one of the mix issues that we referenced in.
In some of those sort of changes.
Wizard another question besides insulin.
So then as it relates to.
Great and so then as it relates to the insulin clinical plan as we say we're meeting there on.
June 9th we are excited to be able to sit down and get the f. Da's take of what we believed to be a very clean a profile from what we've generated so far what exactly they will require is.
Kind of the key component to our future expectations, if it goes well and they see things are way based on the data we provide we could be looking to file this product comfortably in calendar year twentytwenty to if the data packet is less persuasive to them.
Then or they have other sort of issues that they raise that could push things out perhaps a year.
We're feeling pretty good about our data package and of course this space with the billions and billions of dollars of expense with not a lot of lower cost alternatives out there.
Tend to get a great deal of.
Cover mental support to find ways to bring the affordable alternatives to market and so we're pretty optimistic regarding that meeting, but that meet the needs to occur in since we have that meeting we'll report back to everybody on on what we heard.
Okay, great. Thank you.
Thank you our next question.
Elliot Wilbur from Raymond James Your line is now open.
Okay I suppose this Lucas Lee on for Elliot. So the question I have is on silicon is being so I think you've indicated that we shouldn't expect any competition until at least June.
So I was wondering if there's anything you could share on the competitive outlook after that.
And as a follow up on the the BD front it seems like things been relatively quiet on that.
Partnering front I'm. So I was wondering if you could give us some general color on the deal environment.
That's companies are more or less willing to engage in discussions and whether you see more or fewer opportunities. These days. Thank you.
So thank you good evening the.
So finishing market remains stable to our ability to determine what is in the competitive pipelines. We we're not expecting as we noted in the call.
He competitors prior to the end of our fiscal year, we have not to set down to provide guidance in a full budget for twentytwenty. When we get there will sharpen that expectation again as we sit today. There is nothing that we're anticipating in the immediate near term.
We are hopeful that that position will maintain for a period of time, although pragmatically and realistically that will not sustain itself for any number of additional years.
As it relates to the BD environment, we're always working at it our Q remains a quite meaningful we've had no deals to necessarily announce a either because of materiality or awaiting a product launch we have been looking to start to raise the the sites on those BD transactions.
I think the market or the.
Firemen in terms of the global supply of generics still respond quite well to the partnering opportunities that we bring performed well with our partnerships were engaging those partnerships and we don't differentiate between internal product and external product in terms of how our R&D or supply chains.
Our commercial teams interact with those opportunities. So we feel pretty good about maintaining that pace that we've had.
Covert 19 I noted in my remarks has created some slowing of our ability to really engage a collaboratively and across functional away on the sites in the markets of those partners. So I think some of our dark horse candidates that we hope to bring forward in due course may have lost a month or two but in the scheme as all of us.
TG plan and.
The furniture fiscal planning perspective, we're remaining quite optimistic about our deal flow and BD side.
Thank you [noise].
Thank you. Our next question comes from Greg Gilbert from Suntrust. Your line is now [laughter].
Good afternoon.
Comment a bit.
Your ability to believe that.
Okay.
Yes, I know that you're more reliable.
On the BD, you've already covered that but it seems like DFT moving in a relatively normal pay something it seems like the supply chain pretty well.
I'm, a little concerned about the ability for the industry at every one of the pipeline filing you comment on.
Yes, good good evening, good afternoon again, Greg.
From a the supply chain perspective, as you note minimal disruptions from an F.D. review perspective, quite frankly than doing a great job applications that are in front of them in dealing with a requests to streamline our expedite some particular issue to help but bringing products to market.
On the clinical side, we have a bio study or clinical study clearly that requires a human interaction at the site that.
Needs to have people in fairly close proximity to each other and there was clearly a slowdown in that particular area.
We are seeing a clinical sites opening up again in Europe, where we often conduct some of our trials in our efforts. So we do not expected at this point to be sustained a slowdown, but we would note that over the last several weeks, we haven't been conducting clinical trials again, we don't expect it to persist for a long.
Period of time, but that is a bit.
On a forward looking relative to things were not experts in relative to the co. The 19 impacts. So again, we don't think it's going to be material over time, but it's certainly been a slowdown for now.
Okay on the operating expense side, many companies have talked about like you have.
Working at home and less travel et cetera, which has brought operating expenses now.
My question.
Why are we not seeing that with you or are we.
Other expenses are popping up and I do think about new ways to do business and how folks work is there an opportunity.
Reduced opex over time beyond code.
Yeah. This is John so we have in Q4, we do have expenses coming down compared to Q3.
Some of that is just in regards the timing of.
Overall milestones, but some of the is within our ESG today and as we move into into next fiscal year of course, those are things that we're currently evaluating and as we as we plan to have our next earnings call in August, we'll we'll be able to provide some insights into 2021.
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And then if I could add there Greg.
Yeah, we run fairly lean to begin with we've been through an exercise. This last year of picking a lot of expenses out of our operating.
Environment as we dealt with the loss of that larger products some quarters ago now.
Our salary expenses in our R&D expenses in our legal expenses are the vast vast majority of of how we spend money. We don't have the SG now you might see in a in a branded environment or you've got a lot of other sort of levers to pull perhaps in that expense line that is related to how you may generate revenue.
So while we certainly we'll see some travel savings [laughter] from the.
The situation and we're very proud of the factor operating quite a clearly we don't at the end of the they have a ton of what you'd call discretionary expenses.
That would clearly indicate an opportunity to.
Two to two Relook at this point in time, we are always looking for efficiencies in our plants. That's the kind of a bigger exercise for us and that is really unchanged to the new operating environment, rather the generic environment, where you need to find ways to make products faster it less expense on an ongoing basis.
Great. One last time, you close with the comment about the U.S.
Interest city of your model.
Other than fried.
How can that help you I understand legislation being floated.
On the subject, but how can that data to help you going forward.
And vibrant grim.
More complicated.
Another nothing to do it thank you.
Well exactly our our first positioning on our supply chain has always been on its reliability and we've demonstrated that over the many previous quarters right now I think quite frankly, the whole industry is doing pretty well. The coded 19 is not to our experience seen huge disruptions out there there's been some targeted issues.
But broadly speaking over time that a U.S. centric supply chain is we think position to continue to have reliable supply in a market that you know is always been.
Struggling at one point in time that one product or another with supply. So that's that's the foundation of where we sit.
However.
There are a lot of voices and constituencies that are starting to think about what is the appropriate strategic interests in a more domestic of supply chain.
We note that the percent of our portfolio that is obviously made in the U.S., but also sourced with a so called T. a compliant apiay is far higher in the industry average industry averages are probably.
25% to 30%, 40% I don't know.
And we're probably less than 25% of our supply comes from.
On a non t. a compliant environments, that's a bit of reflection, we have a bunch of older molecules are made in the Philadelphia plant before the rise of other Asian pharmaceutical capacities as well as a acquisition and K you that had you roots right. So our our positioning is fairly strong as it relates to.
T a compliant and U.S. based manufacturing and based on my conversations with a lot of political constituencies over the last several.
Weeks is I think something is going to happen what that looked like I don't know I want to make clear I do not think returning back the time of.
Primarily domestic supplied medicines, but I think you're likely to see some government programs are some incentives.
Appropriately to increase the potential for products like the ones, we make and I think whenever that happens or whatever whenever and wherever that happens we should have some marginal benefit. So pride is absolutely a part of it supply chain is the foundation of it in some optimism for some opportunity is a third party.
Thanks, a lot.
Thank you. Our next question comes from Matt Hewitt from Craig Hallum Capital. Your line is now [laughter].
Yes. This is Lucas spare now ski on for Matt here at Craig Hallum, or just a couple of questions here I guess first stuff going back to a new breanna or it sounds like you know the launch for that has slowed down in the very near term, but would you expect.
But to experience a strong ramp as soon as things begin to reopen and elective procedures come back or would you expect there to be maybe a little bit of a delay as people stills shy away from.
Going to the Doctor.
Well. Thank you the expectation on debris no is I would expect there will be a bit of a pent up demand we've.
I had this homeostasis of of such a elective surgeries because of that pent up demand I think what you realize as demand is likely to look normal even if it's a bit slower to reestablish itself will be so many delayed ones I think it's going to look more like normal demand to us.
We note that our product has been successfully transferred to our site incremental New York, we have plenty of CPI and we are optimistic that as this coated matter winds down, which we can't predict any better than the next person obviously.
But are pretty confident will return to a market that is reflective of our earlier expectations and from then we start working on reimbursement codes and seeing what opportunities the label provide us to.
Continue to drive utilization appropriately for for that market within its label. So we think this is a temporary slowdown we think we come back.
As a nation comes back and everything else in this sort of space.
And then going back to the you know the last question regarding domestic manufacturing how are things looking at your facilities from a capacity perspective today.
Well, our because capacity is quite adequate to to what we produce a capacity recall is always a bit fungible you add the machine you change your configuration and your capacity can.
Can grow the mixed the products and then make a difference, but we have more than adequate capacity for what we see in our internal launch plans.
From our internal products.
In the certainly intermediate terms and then of course, a number of our products come from partners have their own supply chain. So as it relates to our overall ambitions to grow our businesses.
We don't see capacity at this point in time to be a constraint.
Okay. Thank you very much that's all I had.
Thank you. Our next question comes from Scott Henry from Roth Capital. Your line is now open.
Thank you and good afternoon, and I apologize. If this has come out already I've been jumping around a little bit.
But did you disclose the nature of the asset impairment the 14 million dollar charge.
I know savvy had not so that was.
Regarding a partner product of ours on methylphenidate, a b. So we had talked.
Before on our February call that we expected sales for that product to be coming down and this quarter. We we had a a an event that would impair the.
Basically the future payments associated with that asset. So it was around the methylphenidate baby products.
As you know Thats a product that's a product these days with more than nine providers that.
Expanded the sort of competitive set about the time, we came to market will already be rated product and hasn't met our expectations.
Okay, great and.
I'm just curious G.
For your color on a I recognize that as a lot of patients are kinda stockpiling some of their medicines, which gave the boost in Q3 now. The question is do you think there just holding more inventory at home such that Q4 will be a normal quarter or will they work down.
Some of that inventory at their home.
Just in your opinion any color you can get.
So my view of that is the consumption of the generic medicines is pretty consistent in good times and that is sufficient it's affordable it's important to look to health.
So the the underlying consumption and it's important to note is not dramatically changing there've been some products that probably had some additional utilization as a result of the number of folks affected here, but across.
The United States population again, the differences and the underlying volumes I think is is largely a on a macro basis not not changing dramatically.
What did the apparently occur is as the crisis started building steam patients moved from 30 day prescriptions to 90 day prescriptions, we'll see that in some of the.
I would call Imus databases, but.
And as a result of patient spring in that product onto their shelves.
Some of those customers you just kind of restock their shelves in their warehouses.
It's my belief that.
That movement of inventory could have some adding in.
Waxing and waning I should say over the coming months and even quarters.
But it's not going to really change the underlying consumption right now.
If the ended the quarter the patients want to go back to another 90 days off the order. Another 90 days right. So it's kind of this quarter by quarter a rotation.
And we're not completely clear what will happen.
Relative to.
The sort of patient reactions in the customers the downstream restocking, but in general we think consumption is steady and there maybe a little bit noise from quarter to quarter relevant to those order patterns.
Okay, great. Thank you for the color on that a that you do it for me. Thank you for taking my question.
[noise] and speaker, thanks, showing no further questions in queue and they will turn it back to management for closing comments.
All right, it's Tim again, I'll close out with our customary shout out to all of our employees customers and partners working extra hard.
In challenging times to provide high quality low cost medicine for patients. We look forward to sharing a progress on our next call good evening.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect.
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