Q4 2020 Eagle Pharmaceuticals Inc Earnings Call
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Good morning, everyone. My name is Leo and I'll be your conference operator at this time I would like to welcome everyone to Eagle Pharmaceuticals fourth quarter and full year 2020 financial results and pipeline review call.
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After the Speakers' remarks, there will be a question and answer period.
At that time, if you have a question. Please press star one on your Touchtone phone.
As a reminder, this call conference call is being recorded today March 2nd 2021.
Now on my pleasure to turn the floor over to MS. Lisa Wilson Investor Relations for Eagle Pharmaceuticals. Please go ahead.
Thank you operator, welcome to Eagle Pharmaceuticals, fourth quarter, 2020 earnings and pipeline review call.
This is Lisa Wilson Investor Relations for Eagle Pharmaceuticals.
With me on today's call.
Our Eagle Chief Executive Officer, Scott tariff.
Chief Financial Officer, Brian Cahill.
President and Chief operating Officer, David Corak.
And Chief Medical Officer, Dr. Judith no cash it.
This morning, the company issued a press release detailing financial results for the three months ended December 31 2020.
This press release and a webcast of this call can be accessed through the investors section of the Eagle Web site at Eagle U S Dot com.
Before we get started I would like to remind everyone that any statements made on today's conference call that express a belief expectation projection forecast anticipation or intent.
Regarding future events and the company's future performance, maybe considered forward looking statements as defined by the private Securities Litigation Reform Act.
These forward looking statements are based on information available to Eagle Pharmaceuticals management as of today.
And involve risks and uncertainties, including those noted in this morning's press release and other filings with the SEC.
Such forward looking statements are not guarantees of future performance.
Actual results may differ materially from those projected in the forward looking statements.
Eagle Pharmaceuticals, specifically disclaims any intent or obligation to update these forward looking statements, except as required by law.
The telephone replay will be available shortly after completion of this call you'll find the dial in information in today's press release.
Archived webcast will be available for one year on our website at Eagle U S Dot com.
For the benefit of those who maybe listening to the replay or archived webcast. This call is held and recorded on March 2nd 2021.
Then eagle May have made announcements related to the topics discussed. So please reference the company's most recent press releases and SEC filings and with that I'll turn the call over to Eagle CEO Scott tariffs.
Thank you Lisa good morning, everyone and welcome to our conference call. Today. In addition to discussing our fourth quarter and full year 2020 earnings.
We'll also give updates on our products, including a review of Vasopressin Holvis DRAM Perm vaccine ran index is a nerve agent medical countermeasure Dave.
David Cornacchia, Eagle's, President and Chief operating Officer will provide an overview of the sym bio opportunity in Japan and discuss our agreement with <unk> technologies for vasopressin oldest ramp M vaccine Radisson ex.
You're from Eagles, Chief Medical Officer, Dr. Judith non cash in.
Who will walk you through our approach here. Our goal is that this expanded presentation will provide clarity on the status and path forward for each of these products.
Before we get all of that let me begin by saying that 2020 was a great earnings year for Eagle and one of our strongest.
<unk> 96 per share in the fourth quarter and $3 54 per share for the year, which is a significant 36% increase over 2019 levels.
We outperformed expectations and this performance is especially impressive given the headwinds presented by COVID-19.
As we reflect on.
Our commercial products our hospital related.
200, <unk> chemotherapy products.
For most of the year, our sales reps had no direct access to their customers within the hospitals and chemotherapy visits fell substantially due to the various constraints imposed.
Many customers were destocking during the year using their inventory capabilities to stock up on Covid related products.
Our earnings were driven by strong sales.
Which would have been even stronger without these challenges. We did however have some lower R&D expense that was deferred into 'twenty one.
We did have some pandemic related reductions in travel expense, but all in all we believe that we would've had an EBIT better earnings year had it not been for Covid.
As we continue to discuss the impact of Covid on the company Vasopressin is a clear example to negative impact.
Patent trial against Endo with scheduled for last May.
And had better and that occurred we believe we would've had a favorable decision by now which in turn would have generated more investor confidence. The trials now set to begin on July seven 2021.
On a 14 month delay from the original date.
Extremely important to note as we stated previously.
And those asserted patents claim a formulation with a P. H range of 3.7 to 3.9 hours.
Our proposed Anda product specifies a ph outside of that range, we are confident that our anda.
Which has been prioritized by FDA and also flagged as a COVID-19 priority will be approved in a reasonable timeframe and we still anticipate being on the market. This year.
We would obviously have loved the legal decision to bid in had been.
Livered by now, but unfortunately, we just have to wait but July 7th we'll be here quickly get this delay has affected people's perceptions about our stock and about our company.
Considering all the challenges brought on by the pandemic Eagle has done remarkably well our focus now is ensuring that the growth we experienced in 'twenty over 19 continues this year next year and beyond the key component to our planning for the futures to proactively.
<unk> Ming ourselves to withstand the impact of losing some revenue due to drilling on trended generics starting in December of 'twenty two.
We plan to accomplish this through a combination of organic growth, including vasopressin.
Sexy Bendamustine in Japan, as we advance our pipeline, including full the strength nerve ancient medical counter measures and by looking for product opportunities to in license or acquire such as our co promotion agreement with time or.
SM 88 product.
We are in the middle of our growth curve, we just had a big earnings year, it's very likely that we will continue this growth in 2021 as we expect to have the approval vasopressin in time to do so.
And the <unk> launch.
And the <unk> launch of that in 2022 will follow on is a strong growth year as well.
So what can we expect in 'twenty three and beyond it is clear that this is what that's on.
Minds of our investors that we speak to.
I wanted to make it very clear that our board and management teams at.
Every expectation that Eagle will continue to grow in 'twenty, three and 'twenty four and 'twenty five not only do we have a pipeline with the potential to deliver long sustainable growth.
But we also have managed our P&L and our cash extremely well on the last several years.
Our company is in excellent financial shape, we've been diligent in managing expenses.
Balance sheet is strong with more than 103 million net cash and cash equivalents at year end.
We now have bought back approximately $207 million of stock.
As of December 31st 2020 at a price a bit more than where we are today, but we think that will take care of itself. Once we launch vasopressin <unk> on other products.
The cash we expect to generate combined with our clean balance sheet and our ability to use equity as we've never done before provides us with the capability to augment our pipeline or replace it if it did not pan out through in licensing or acquisitions.
Whether it's organic or inorganic means we will still grow this company beyond 'twenty three.
Built a strong foundation for growth that starts with vasopressin continues with our February 2022 exclusive vaccine launch supported by royalties from some bio and beyond that to opportunities such as full the strength nerve agent per countermeasures and our stake in time SM 88 candidate for.
For pancreatic cancer.
What this all means is that we have the commitment and the financial flexibility to capitalize on strategic opportunities as they arise we feel confident that we have the visibility on our earnings capability and that we will be successful in extending the growth pattern in 2020, well into the future.
Let me talk about these programs in general now and then in a few minutes, you'll get a more detailed product overview.
I mentioned the delay of vasopressin trial earlier.
But there is another piece here, we had our post <unk> meeting with FDA just late last week.
It was very productive meeting and we have clear agreement on how to proceed we've already done quite a bit of work since the CRM and we have some more to do here, we hope to have all the data we need to submit by midyear.
These depression is a large and important program for us and one that we will we believe will drive growth. We are first to file for this polypeptide with brand sales of the product totaled more than $785 million annually.
This is a difficult product to get approval for but our goal remains to do so before the end of the year and then bring this lower price high quality product to the market as soon as possible.
Looking to 2022, and just 11 months from now we will be launching per sexy with its unique J code and four months of exclusivity.
As a reference for the size of this opportunity U S sales of Alimta in 2020 were nearly $1 $3 billion and since we are also approved for the multi use vital we have an even larger opportunity here.
If you look at vasopressin and <unk> together.
Eagle should be launching into about $2 billion of exclusivity.
Add to that the ramping up of Bendamustine sales in Japan through our partners from bio, which we anticipate will eventually bring royalties and milestones at 10% to $25 million per year together.
Together, vasopressin and sexy and sym bio will represent a consistent revenue stream all of which should contribute to meaningful growth and stockpiling of our already strong cash position.
Turning now to pull the strength, we have now followed 750 subjects for 140 to 280 days.
Our our intention is to commence a clinical trial in cancer patients that could lead to improved outcomes and specific breast cancer patients.
We have continued productive engagement with FDA and now have agreement for the clinical design and study endpoints.
Our goal is to develop a differentiated product with meaningful benefits to patients and physicians in consultation with FDA. We have agreed to continue the formulation work and on completion of that work will commence. This study we believe the new formulation work will provide a more efficient path to approval.
Together these assets make for a strong line up of programs to support growth and to fill the gap is the Bendamustine franchise diminishes. We truly believe our best years are ahead of us.
I think our speakers today are going to offer a lot of important context that will shed light on the complexities and the opportunities ahead.
With that I'll turn the call over to Brian Cahill to discuss our fourth quarter and full year financing.
Ryan.
Thank you Scott and good morning.
In the fourth quarter of 2020, total revenue was $49 $9 million compared to $48 $3 million in Q4 of 2019 full.
Full year 2020 revenue.
$187 $8 million.
$195 $9 million in 2019 and included a $5 million milestone payment from some bio on track of them.
Product sales for the fourth quarter.
Increased by $7 $5 million year over year totaling $22 9 million compared to $15 $4 million in Q4 of 2019.
This was primarily driven by a $4 $4 million increase in ran out of debt sales.
And a $2 $6 million increase in <unk> sales.
For the full year 2020 product sales decreased $1 $7 million from 2019.
Primarily driven by a decrease in sales within Deca, and they'll wrap so offset by an increase in sales for amdocs.
So product sales.
Were $10 $2 million in the fourth quarter compared to $7 $6 million in Q4 of 2019.
Eagle recognizes <unk> revenue on shipments by Eagle to wholesalers. The increase in sales was the result of an increase in market share as well as the normalization of wholesaler inventory levels following compression earlier in the year.
For the full year, <unk> sales totaled $27 $5 million as compared to $29 $7 million in 2019.
Based on IMS data Eagle is market share on the U S spent the most day sales.
It was 9% for the fourth quarter and 7% for the year.
Fourth quarter branded ex product sales were $7 9 million compared.
Compared to $3 $5 million in Q4 of 2019.
Orders for <unk> are cyclical.
Driven primarily by product ex free with few customers acquire dantrolene unless their stock is expiring.
For the full year, Ryan is ex sales totaled $28 $3 million as compared to only $13 million in 2019.
Q4, 2020 royalty revenue was $27 million compared to $32 8 million in the prior year quarter.
For the year 2020 royalty revenue totaled $110 $5 million compared to $112 9 million in 2019.
Royalty revenue in each of the periods discussed is primarily comprised of fintech on royalties.
As we've discussed in the past beginning on October one 2019 Eagle.
Eagle's royalty rate on Fintech increased from 25% to 30%.
And on October <unk> 2020, the rate increased again to 31%.
On October one 2021, it will increase from the final time to 32%.
Future royalty revenue will include royalties earned on sales of <unk>.
By some bio.
Gross margin was 75% during the fourth quarter of 2020.
As compared to 76% in the fourth quarter of 2019 gross margin was 76%.
During the full year 2020, as compared to 69% in 2019.
The increase in gross margin in 2020 was primarily related to an increase in product sales of <unk> in.
And a decrease in product sales of Fintech.
On the expense from R&D expenses were $9 $4 million for the fourth quarter compared to $11 $3 million in the prior year quarter.
Excluding stock based compensation and other cash and nonrecurring items R&D expense.
Quarter.
It was $8 $7 million.
The year over year decrease is largely attributable to lower spending for ran index for EHS, partially offset by increased spend related to vasopressin.
Excluding stock based compensation and other noncash and nonrecurring items R&D expense in 2020 was $27 $8 million.
We expect R&D spend in 2021 on a non-GAAP basis will be 26 million to $30 million.
The anticipated 2021 R&D spend.
Lutz.
Yeah, a 114 CMC initiatives.
The Rand is ex trials for the treatment of nerve agent exposure and acute radiation syndrome.
Yeah, a 111 I N D, enabling toxicology studies and CMC scale up activities.
And CMC analytical initiatives and launch preparedness for vasopressin.
We may adjust guidance higher as we gain more clarity on this on initiating.
Our clinical trial on full strength in the second half of 2021.
SG&A expenses in the fourth quarter of 2020 totaled $18 $2 million compared to $22 $5 million in the fourth quarter of 2019.
External legal spend associated with litigation on Pemetrexed.
A decrease of travel and entertainment and other expenses due to COVID-19, as well as differences in incentive pay account for most of the year over year decrease.
Excluding stock based compensation and other noncash and nonrecurring items fourth quarter 2020, SG&A expense was $11 $2 million.
Full year, SG&A expenses increased by $2 $2 million to $78 $6 million in 2020.
Compared to $76 $4 million in 2019 the.
The increase primarily reflects costs related to the collaboration with time and increases in stock compensation, partially offset by TD expenses, which decreased due to COVID-19 restrictions coupled with lower external legal fees.
Excluding stock based compensation and other noncash and nonrecurring items SG&A expense in 2020 was $59 million.
We expect our SG&A spend in 2021.
On a non-GAAP basis will be $56 million to $60 million per.
The year over year increase is largely attributable to external legal expenses related to the vasopressin P for litigation and a normalization of expenses impacted by COVID-19.
Net income for the fourth quarter was $8 $1 billion or 62 cents per basic and <unk> 60 per diluted share.
Compared to net income of $1 million or seven seven per basic.
And per diluted share in.
In the prior year period.
Net income for year ended 2020 was $12 million or <unk> 89 per basic and <unk> 87 per diluted share as compared to net income of $14 $3 million or $1 <unk> per basic and $1 <unk> per diluted share for 2019.
Adjusted non-GAAP net income for the fourth quarter of 2020 was $12 $8 million.
498 per basic and 96 cents per diluted share compared to adjusted non-GAAP net income of $6 $7 million or 49.
<unk> per basic and <unk> 48 per diluted share in the prior year quarter.
Adjusted non-GAAP net income for 2020 was $48 $7 million or $3 62 per basic and $3.54 per diluted share compared to adjusted non-GAAP net income of $36 $9 million or $2.68 per basic.
And $2 61.
For diluted share in 2019.
For a full reconciliation of non-GAAP net income to the most comparable GAAP financial measures. Please see the tables at the end of our press release.
2020 cash flow from operations was $49 $5 million for the year ended 2020.
While we hope the distribution of vaccines and falling infection rates signals coming end of the COVID-19 pandemic, we wanted to take the opportunity to discuss how we feel the crisis has impacted our business and may influence, our plans and guidance for 2021.
Our supply chain for ran is ex <unk> and Deca was uninterrupted all year as we continue to provide patients access to these important drugs.
While we believe that some of the year over year compression of the Bendamustine market as a result of reduced patient visits and while we're seeing this trend today, we're hopeful that it will abate in 2021.
Remote work and travel restrictions resulted in changes to our expense structure.
But we have included an expectation of a near term return to normal and our 2021 expense guidance.
We continue to be optimistic about both the near term and for the pandemic and our ability to continue to provide supply and access to patients for our approved products and to advance our pipeline. Despite these current challenges.
As of December 31, 2020, the company had $103 $2 million in cash on cash equivalents and $34 million in outstanding debt.
We had $69 $2 million on a net cash.
We had $51 $1 million and net accounts receivable.
$29 $9 million of which was due from Teva.
In the fourth quarter of 2020, we purchased an additional $4 million of Eagle's common stock for a total of $35 million of Eagle's common stock in 2020, as part of our $160 million share repurchase program.
From August 2016 through December 31, 2020, we have repurchased $206.9 million of our common stock.
I'll now turn the call over to David <unk>.
Who will review our external partnership opportunities. Thank you, Brian and good morning, everyone I'd like to briefly share with you how we seek to pursue external partnerships to help create value sym bio is a great example, on highly monetized our bendamustine franchise by licensing.
On the Japanese rights for our ready to dilute it rapid infusion injection products.
<unk> received a $12 5 billion upfront milestone payment with royalties on future net sales other license bendamustine products.
<unk> received approval for attract some ready to dilute form formulation and they launched it in January of 2021, we received a $5 million payment for this product approval.
So by other company is also currently conducting critical trial for rapid infusion product and it has a line extension traffic strategy, including new indications.
We received royalties and milestones based on sales and future indications building to $10 million to $25 million annually.
Our co promotion agreement with time for its oral SM 88 is another great example, on the way we create additional value for igo shareholders through strategic collaborations in this case, we will have the opportunity to monetize an asset at the time is developing to treat pancreatic cancer.
The way the deal ex structured.
We will take on 25% of our sales calls and exchange for which we are entitled to 15% of all net sales in the United States. We have a great deal of expertise in the oncology space and this collaboration has the potential to contribute to eagle's revenue stream, if SM 88 receives FDA approval.
It's also worth noting that we have an equity stake in the company and the time has the right to buy back our U S. Reits at any time for $200 million.
So as you can see we have multiple opportunities here to generate revenue for Eagle.
I'll Echo here, what Scott has indicated in his remarks earlier that we have the resources that are committed to identify and capitalize on important strategic alliances that makes sense for our long term growth.
Now I'll turn the call over to Judy.
Thank you David and good morning, everyone.
Starting with 10 sexy.
Check said.
In the United States lung cancer is the second most common cancer behind skin cancer.
There are two main types of lung cancer.
On the more common type is non squamous non small cell lung cancer, which accounts for 84% of all lung cancer diagnoses. According to cancer Dot net and American society of clinical oncology website.
This year more than 228000 adults in the U S will be diagnosed with this disease slide.
Slide 14.
Pemetrexed is FDA approved for the treatment of non squamous non small cell lung cancer as well as for mesothelioma.
Pemetrexed can be administered in an in patient or an ambulatory care setting.
Slide 10.
Let's look at the marketplace today.
Pemetrexed is currently marketed by Lilly under the name <unk>.
Lincare and is available in 100 milligram and 500 milligram.
<unk> single dose vials.
U S sales totaled roughly $1 $3 billion in 2020.
Eagle was the first to receive approval for this product using the five O five P. Two regulatory pathway.
And we see a sizable opportunity for our Pemetrexed.
Z presented in a 500 milligram liquid multi dose vial.
When you were granted a unique J code and have an initial period of exclusivity from February 1st through May 24th 2022.
Slide 16.
Our <unk> formulation has some key attributes that differentiate it from other available formulations, which are single dose powder formulations that require reconstitution.
For patients who may need two to three vials per their dose. This can be very time consuming for pharmacists or nursing.
And wastage occurs because they are not multi dose vial.
By contrast, our formulation has a critical advantage.
It is available in a 500 milligram liquid ready to be diluted multi dose vial.
It more convenient.
<unk> eliminates the reconstitution process wastage and the vial can be re use while under refrigeration for 28 days.
Slide 17.
We believe the medical community is eager to have access to our improved product in a survey of key opinion leaders performed by an outside research firm, 90% of respondents indicated.
They would prefer a liquid multi dose over a powder.
44 indicated that.
They have encountered moderate wastage with the current currently available formulations.
Our <unk> vaccine product is designed to address these issues.
Okay.
Moving to vasopressin.
Slide 19.
Let me add to what Scott said earlier and share some context about vasopressin and what the market looks like today.
There is a pressing injection is FDA approved to increase blood pressure in adult patients with peso dilatory shock as can occur following open heart surgery or sepsis, who remain hypotension.
Despite fluids and catecholamines.
Vasopressin is used in a hospital setting typically in intensive care.
Today Endo par market's day the strength.
In 2020 annual sales in the U S were roughly $786 million.
Or is the first to file and Inc. A.
Hey, Andy a referencing days our strength as Scott discussed earlier, we had our post CRA on meeting with the FDA last week.
It was very productive.
And we have clear agreement on how to proceed.
We recognize that we have more work to do.
And we have a plan in place and are diligently moving along this is an important product for us and for critically ill patients and we look forward to resubmitting to the agency.
Turning to slide 21.
I understand why we believe that our full investment product.
A 114 has so much potential I'd like to start with a brief overview of the therapeutic area focusing on the subtype of estrogen receptor positive human epidermal growth factor receptor two negative or HR positive her two negative.
Advanced breast cancer for which to pull that strength is indicating.
Yeah.
Breast cancer can be broken down into three biologic subgroups, which has a direct bearing on treatment choice one.
On those that express the estrogen receptor or E are positive.
To those that expressed the human epidermal growth factor receptor two her two positive.
Three.
Is that R. E are negative and her two negative and also do not express the <unk>.
Gesture on receptor.
They are negative.
Third to as triple negative breast cancer.
As you can see on this slide there are a number of treatment strategies for hormone sensitive breast cancer.
And Eagle, we are focusing specifically on selective estrogen receptor down regulators or steroids.
Which work to block estrogen effects.
<unk>, our anti estrogen that are pure receptor antagonist.
<unk> is the only available stern debt down regulate the estrogen receptor.
Slide 22.
Okay.
Paul that strength is an estrogen receptor antagonists with no agonist property.
<unk> is FDA approved for the treatment of advanced hormone related breast cancers.
Therapeutic effect, a full basket relies on its ability to inhibit the estrogen receptors in cancer cells by causing degradation and downregulation of the receptor itself.
As you know Eagle has done an enormous amount of rigorous scientific discovery work until that strength over the past several years with the goal of improving patient outcomes.
To date, we have conducted two clinical trials following 750 subjects.
Over 140 to 280 days, comparing our formulation to Bachelet decks, and we have analyzed thousands of collected data point.
We further thought out numerous experts and obtained feedback on our proposed approach to full strength delivering.
Based on Eagle internal work and clinical insight.
We see an opportunity to provide benefit to a significant population of patients by taking a new approach to fall back strength delivery.
Following some additional formulation work, we believe eagle new distinctive delivery system will address treatment challenges uncover through Eagle's research.
We have also reached agreement with FDA on the clinical study design and endpoints and plan to begin a clinical trial in patients harnessing the lessons learned from our in depth work and clinical insight.
We are very excited and proud of this creative development pathway and look forward to updating you on our continued progress.
Now moving to nerve agent medical counter measure.
Yes.
Slide 24.
Nerve agents are the most toxic of debt.
Known chemical warfare agents.
And the U S military continues to be concerned about the potential for a nerve agent attack on our military or civilian population.
Eagle sees this as an important opportunity to contribute.
We believe this has the potential to be a first of its kind neuroprotective treatment to combat neurological damage due to nerve agent exposure.
While rapid treatment with a currently available agents decreases the risk of mortality it does not ameliorate the risk of brain damage.
In 2018 Eagle entered into a cooperative research and development agreement with the U S Army Medical Research Institute of chemical defense to conduct an animal study to evaluate the neuroprotective effects of Ryan of debt in an accepted nerve agent.
Not all the film and model, which is on nerve agent poisoning challenge model.
The results of this study demonstrated a statistically significant reduction in brain damage secondary to nerve agent exposure in Ryan index treated animals compared with control.
Encouraged by this positive data, we see the potential to provide this product not only from military personnel.
Also for the strategic national stockpile for civilian use and for our allies abroad.
Currently we are initiating dose ranging animal studies investigating Ryan index administered intravenously as well as a new pro drug formulation.
111 delivered intramuscularly.
Slide 25.
We view the development of the next generation of Ryanodine receptor modulators that allow intra muscular or I am administration is critical.
I Am administration has several important benefits including.
Easier and more rapid and administration in emergency situations, both for military and civilian scenarios.
Point of care administration to patients in critical condition.
On the elimination for the need for IV infusion all.
All of which would make the product even more relevant for the treatment of this life threatening indication that demands quick action and countermeasure administration.
Ultimately, we believe and I am formulation is a better clinical approach.
Slide 26.
Okay.
Eagle believes in this program and has invested a great deal of effort in developing Ryan index.
This indication too.
Two separate rat Selman model study.
From concept study at MRI global and the G. L. P study conducted at the research laboratories of the U S Army Medical Research Institute of Chemical Defense.
Demonstrating that animals treated with Ryan index exhibited lower neuron on necrosis in brain cortical areas compared to animals treated with standard therapy alone.
These findings are very encouraging and will inform our work going forward, let's take a closer look at each of these studies.
Slide 27.
The proof of concept study was done with MRI global the histogram on the left indicate necrosis scores, which are measured on a four point scale with one being the lowest level of necrosis.
The frontoparietal cortex, which is located in the front region of the brain was examined in the study.
There were five treatment groups, including a control group.
Dantrolene IV was administered at a low and a high dose at two different time intervals 20 minutes and 50 minutes.
These results indicate that the timing of treatment is critical and sooner is better than later relative to the poisoning event.
In the 220 minute great both the high and the low dose group showed a significant decrease in the amount of neural necrosis compared with the other groups.
Selected by their lowering across the scores.
The greatest impact was seen at the higher dose at 20 minutes looking.
Looking at the right hand side of the slide the histopathology shows that there are more healthy neurons and lessen necrosis in the group that received dantrolene at 20 minutes versus the control group.
Slide 28.
Following the proof of concept rat study, we conducted a G. L. P study and the rats zone and model.
Good day received 30 milligrams per kilogram of dantrolene intravenously, while groups E&S received vehicle or failing respectively as vehicle on negative control.
We found illustrated here by histopathology from the frontoparietal cortex of the brain.
In the Dantrolene group group D minimal debt neurons, where president depicted by the black errors.
While in group E. The vehicle control group.
Exhibited varying degrees of necrotic neurons with only a few unaffected neurons shown by the white areas.
Group as the negative control growth showed a majority of unaffected right.
Yes.
Based on these data we are in the process on studying the so man model in larger species.
It might be more translatable to human physiology.
Slide 29.
We are continuing to engage the F D a to refine our regulatory path forward.
To demonstrate the efficacy of Ryan index in the treatment of neuronal damage due to nerve agent toxicity. We are planning further studies and so man models using the sign on MAU growth monkey as well as the Guinea pig.
FDA agrees with our model selection and has requested that we submit our pivotal non human Primate study for a special protocol assessment or spa prior.
Prior to its conduct.
We are working with MRI global to develop and characterize the nonhuman primate model.
And we will conduct preliminary pharmacokinetic and Pharmacodynamic studies in this model to better understand the efficacy and dose range Orion index in nerve agent poisoning.
Potentially our pivot on G. L. P study will be a PK PD evaluation Orion index in the characterized nonhuman primates zelman model to demonstrate efficacy and to predict human dosing.
In parallel we will continue developing our prodrug of D. A 111 for an intramuscular route of administration for that channel.
We will now open the call for questions.
Operator, Please go ahead.
At this time, if you'd like to ask a question press Star one now on your Touchtone phone that is star one on your Touchtone phone.
Withdraw yourself from the queue you May press the pound key.
We'll take a question from Randall <unk> of RBC capital markets.
Great. Thanks, guys and thanks for all of the extra detail. This morning. It's helpful. A couple of questions from me just first start off on Batesville strict a lot of focus here do does <unk> formulation changes or new patent issue impact at all Scott the way Youre thinking about the generic opportunity and specifically.
Do you expect approval to come before the July trial, and then if you can't get a deal done with Endo. It sounds like you're prepared to launch at risk based on your prepared comments around lunch prepared to spend but what would that look like that's the first question and then the second question I had is bigger picture that feeds into some of the.
Pipeline detail on commentary that you provided.
I want to go back just thinking about the growth of the business over the next three to five years. When you look when you sit down with the board and you talk about the most effective way to create value.
What does that entail.
Clearly excited about the pipeline, but you've also got net cash on the balance sheet.
How should we think about your capital deployment goals over the next one to two years and what is what is Eagle look like in three years is it.
Our critical care oncology diversified maybe just provide some commentary around that that'd be helpful. I know, that's a lot but.
Thank you Randall appreciate it good morning, everyone.
So when we let's start out.
Randall with vasopressin, so the new patents that were issued as of today, we don't see to be an impediment in any way to our plans and so that does not impact how we think about the launch and the opportunity.
As far as timing goes.
Nothing has changed significantly since our last communication, we had this meeting with the FDA.
Last week, we have this additional study we need to run.
On the exact timing of it is not.
Xactly known but it's near term.
And so what we said in our comments today would be that we would have the day to most likely completed prior to the first half of the year, we'll see exactly what that data is maybe we will have in <unk>.
Date, and a couple of weeks when we know more but we should certainly have the submission filed here in reasonable time.
The review time, you know, let's see but we have a priority review.
We have the Covid priority and FDA has been great. We really commend them they've been very communicative the back and forth has been wonderful.
Reiterated the priority and so the expectation is that we'll get through this last.
Study and we'll have the product approved by the end of the year.
And that will give us the opportunity to launch.
Does that answer the visa question as well.
Yeah, I mean, I guess the the other part of that what would the board are you prepared to launch at risk what would that look like.
Well, we would we would have if we need the approval in order to launch and when we have that.
Approval in hand, we have the opportunity to launch the product and that's what we're considering now we have to trial in July.
We won't have that approval before.
July 7th I can't see that happening that's going to be tight I mean, it's possible right depends on how quickly the FDA works with us it could be right around that time right, we'll have to see exactly what it is.
It would be nice to see the trial before we make the decision on go to the market but.
The best way, we can continue to explain it is that we have.
We have the expectation that we're going to be victorious in that trial were not extremely concerned about that we need to get the approval on once we have that in hand, we can go to the market.
I know people ask us about settlement.
Their obligation is to optimize the value of the asset per average shareholders.
We think the way to do that is to bring value into the company EBIT.
On value money and bring it bring a value to the company in the near term if it winds up being.
That settlement gets us to that place well so be it but ara goal is to optimize the asset and bring value to the company as soon as we can.
Okay.
Is that any any further color Brenda yeah no debt.
That's helpful and then on the.
Strategic outlook for the platform. How are you how are you thinking about that frugal.
Yeah, you know look we're very excited about our ability to grow I think we will we and our shareholders will be rewarded.
The way, we've managed our cash and our balance sheet, especially when you look at the cash flow debt. We expect to have from days of press in the launch in Japan.
And Penn Sexy.
That's about $2 billion of exclusivity that we'll be launching into the cash generation from these launches.
Pretty significant and I believe we continue to do a really good job managing our expenses and being prudent in the way we spend.
And at best.
That leaves us with a lot of opportunity to use equity debt cash.
And so we believe that we have all the capability in the world between the pipeline and external opportunities to continue the growth.
Maybe at this point I'll turn it over to David Who's on the line with US Who's heading up this function force, but before I do that you know how we look going forward is we still consider ourselves a hospital company. We have this great sales force. We have we can we can drop in products. So I think youll.
Continue to see us as an ecology and critical care company unless something major happens that we find an opportunity along the way, but David do you have any comments you'd like to make on on the transition is as we look to acquire.
Sure Scott Hello, Randall how are you Scott said basically our major focuses on oncology at acute care, we think that that's where we have a great deal of expertise and a lot of synergy.
We believe that with our infrastructure with a very little additional infrastructure will be able to add on other product or so.
Complementing each other each one of those businesses. So that's our that's our major focus obviously will look at market attractive this uniqueness of the opportunity.
The timing timing of the opportunity.
How risky is it to kind of get through the regulatory pathway et cetera.
So all of those are really careful considerations.
I'll do it you know we're looking at things so to be very prudent looking to add on to our pipeline.
Great I appreciate it guys. Thanks.
I think the summary, there is that as I stated we are quite focused on making sure we continue to grow and.
And we do believe that between the pipeline and the cash in the balance sheet and everything we've done to manage the company to this point that we find ourselves in a really great position to have the capability the firepower to go and make the moves that we need to.
In addition to the pipeline if need be and we are very aggressively looking and we're very focused on making sure we grow.
That's the message we need to deliver.
Yeah.
Yeah.
Our next question comes from Tim Lugo of William Blair. Your line is open.
Thanks for taking them.
Quick question.
Scott If you took a step back would you still use the anda pathway for the day, they give them a ph distances. It seems like a powerpoint to route.
Would also have been available.
And.
Theyre still in risk on those.
From the litigation.
Well on.
Hmm.
I need another iteration of work and filing.
So how are you totally.
Become confident that debt.
You know kind of total addressable market you lay out is available.
The company in 2022.
So it seems to me that there is plenty of growth.
On the next year.
Good question, Tim So let me try to take it maybe let me take the second 0.1st.
We're in three years into the development.
Based on precedent Anda.
And we have done a remarkable amount of work with our product Fortunately our product appears to be rather robust and the standing up really very well.
I don't believe the days of issues that we're facing per se or an issue with our product I think it's an issue about how FDA looks at peptides and polypeptides.
Having gone through now I guess to see our Els and just had a meeting with them last week, we are rather confident.
That there's an agreement with the agency of what we need to do to clean up the last work.
There is a study we need to run hopefully will be running at really soon.
We will know more in.
In the next.
A couple of weeks, but we have.
High confidence.
We're at the end of the road, we need to run a study that's the that's the post BRL meeting, we just had a few days ago and that we'll be able to file that drug.
By mid year.
And we also think the review time is relatively short based on the priorities that we have with the Anda and so nothing is definite and nothing is perfect.
Have.
You know confidence today that we will have the approval prior to year's end.
As far as the trial goes which is the other hurdle, we would need to ultimately get over you know we just don't view this as an overly complicated triangle.
It's relatively simple the claims are pretty specific about the ph range we.
We knew about.
That situation and we have a product that we.
We don't think.
Is within the range that would cause us any trouble.
That's why we've been aggressive in our view about launching and so from our standpoint with the knowledge that we have from three years of working on the litigation and on the Anda.
It's our belief that these two things are marrying up now and.
That our internal expectation is that we will prevail in the litigation and have an approval here soon.
Once we get through those two that it's our obligation to to maximize and to optimize.
The value of that asset for a shareholder so as we sit here, Tim we feel pretty confident.
In terms of day in day or NDA I will tell you. It's an interesting point you raised it feels a lot more like we've already developed a 505 two.
Hey.
We've performed as much work on this andas, we do typically on our fiber side be twos, we've been asked to do a lot which is fine.
We have the expertise of the company.
I don't think we would've done it differently, but I don't believe we realized when we filed the amount of work that would be required but we've dug in we have done it looks like we're at the end here and we expect to get the product to the market hopefully before the year is over.
Okay fair enough and poor.
Scott you're obviously.
Barry it's extremely familiar with the generic industry.
How would you.
Kind of.
Model or how would you project the generic bendamustine impact on been deck on go up so what kind of.
Degradation.
And understanding that.
Scott on both sides of that issue and.
We typically hear from an analyst's perspective.
Developers discussed how much tail that product has.
Yet generic.
Seem to always the grade the product more than developers expect.
Okay.
Very good point.
You know, obviously, where we are.
Cautiously optimistic.
We are still consistent with what we've been saying for the last couple of years and that is that we expect to lose about 30% to 40% of the value of the product. The unique aspect here is that each product is deemed to be a different product. There's three different CMS codes for one for trend and one for Bell rang.
So on one for Ben Deca, and so when we analyze the opportunity going forward.
We analyze each of those three products separately and Thats, how we get to this 30% to 40%.
Decline.
Having said that that's where the approval in Japan helps let's see where we wind up in 'twenty three but if we start to get to that $20 million ish amount of.
Revenue coming out of Japan, we've now picked up half with a loss in the United States through the Japanese.
Royalties and so that does not seem what's left to be a critical GAAP.
GAAP net we need to make up we think everything else, we have going on more than makes up and allow us to grow now in fairness as well.
Must be on as an entity.
Isn't growing any longer and we recognize that and you know our point is let's get data to the market and sexy.
Let's move to pipeline, along let's use the capabilities that we have to bring additional products into the company and we don't see any reason why we shouldnt be able to overcome that steady decline of.
And it seems like we should be able to do it but you're right. If it's if it winds up being more than we're projecting.
We just need to be more aggressive in the pipeline and how we build the company externally as well, but we're very confident that we'll get through all of it David is there anything else you wanted to add to the to.
So how we view the decline after after 'twenty two.
Yeah, I think he covered the points there Scott very well essentially what we do we do have.
Any codes, which is very important.
The other 10 minute infusion those will continue to be important as Scott said.
Basically you know continue to diversify with with our internal products and potentially some external opportunities as well.
<unk>.
We're confident in our abilities to do both.
Thank you for the detail and maybe just one last one obviously business development.
Becomes more of a focus as we approach 2022.
When should we expect to see kind of fruition of the BD discussions.
Obviously had a clean balance sheet for many years.
But.
We are still approaching 2022.
And it does seem like you.
There's still plenty of opportunities.
Yeah, we agree Tim if there's still there's still plenty of opportunity.
I mean clearly.
As you get closer to the end of next year, we need to be.
More focused and so we are doing quite a bit of work David has a great team.
We have our R&D team very focused on getting these products to the market through the clinic and we have another team working aggressively on looking at other opportunities to build the company, we're doing both and.
And my suspicion is.
Things will start to happen.
Before too long.
Alright, thank you.
Thank you Tim.
Our next question comes from David M sell them of Piper Sandler.
Hey, everyone. This is zach on for David Thanks for taking my questions. I know you already talked about this a little bit but just a couple more from me on stage. So strict on can you just provide any additional color on the latest Cri line, but qualitatively I think the SBA might be looking for on this latest study that you have.
I do and I know you've made from the mentioned before that a settlement could be on the table, but given the latest PRL.
Does that sort of push you in the direction towards a settlement at all a little bit further in that direction, especially given that it has already.
You mentioned that they're settling in is already settled with a number of other filers. Thanks.
Thanks Jack.
How can I describe this so we really can't give any more color.
On the CRA L.
These peptides these polypeptides theyre just complicated products to move through.
F D a and it's likely that the <unk>.
Filers behind us, they're going to need to do the same work that we're doing so it doesn't make any sense for us to give other people roadmap.
I don't know about the agreement that we have with the FDA and what we're doing but let's let's be clear we've already had our post TRL meeting of what we're trying to project here.
Is that we're confident that we're going to be able to run these last test.
Here.
Quickly.
Shortly and that again that we expect to have the data that we need to resubmit.
And we just believe that we'll have the a good likelihood strong likelihood of having the product approved.
This year.
And I don't think it's more difficult than that as far as we can see right now.
If something comes up our expectation.
Is that we're going to get this responded to an approved here on it.
Reasonably short time frame.
Let's see how that unfolds.
So no it doesn't push us any further to settlement, we think we're going to get we're going to get through this we.
We feel more confident obviously, having just had to post BRL meeting not only took place a few days ago.
Okay that helps there.
Yep Yep. Thank you.
And once again that is star one to ask a question, we'll move next to Brandon Folkes of Cantor Fitzgerald.
Hi, Thanks for taking my question Ben Yes. Thank you very much for what it is.
Right.
So I know.
At length on bad debt David.
I just wanted to.
Okay.
Comes across niche on very confident in getting this approved.
One thing I picked up and maybe it's just semantics, but you were a little bit more hedged than your timing today, saying sort of mid year.
The press release, which you sort of talked about responding shortly.
I mean did anything new come up in the FDA meeting that sort of drove that hedging in terms of timing or is it really just a function of when you got to sit down with your day.
And then maybe secondly on Pemetrexed.
You talked on wastage and some other points of differentiation.
Anything you can say at this stage how are you thinking about pricing strategy for Pemetrexed when it comes to market sort of kind of the.
Potential lifecycle extension.
Yeah, as we may have seen him at Deca.
Is it generic pricing premium generic anything you can say at this stage would be helpful. Thank you.
Thanks, Brandon So let me take the first one in terms of Perm Pemetrexed question over to David but in terms of the timing no I mean, it's not semantics day I didn't mean to.
In any way change the way we view it the work that we do.
On this particular topic is done external to the company.
So our ability to be able to determine exactly when the test is going to be run and when we get results as up to somebody else's timing in their labs, it's an outside vendor that does this force and since the details we're just.
Determined lately.
Late last week with the meeting with the FDA, we don't have an exact timeline and commitment with our vendor when the study could be done that's the only reason on not being as specific as to when we'll run the study and then we will get the results.
That work is being done this week.
We will have firm timelines on the next week or so at that point, we'll be able to be more specific as to when do you think we'll be able to refile and so when we say by mid year, we're trying to give ourselves enough of a hedge without having full understanding exactly when we'll be able to run.
The work that we need to be.
To finish up with it went to get this final reports to be able to put into the submission to the SEC.
That's all.
But we will be meeting with the team here over the next couple of days and you should get a much clearer timelines from our outside labs at that point.
Right.
Okay. So I think that sums that up and David you want to take the Pemetrexed question, Yeah, Yeah sure Brad and thanks for the question Brett we feel like we have a very strong competitive profile right between and between our ready to use in a multi dose vial and unique J code. Those are three major benefits right and the other thing that we're really good at.
Under the leadership of Mike Brad is our access to basic.
Basically the channels that will be most interested in our product.
So we think we have got a really good strategy has laid out a really good solid plan.
I think that I think there's going to be a very very nice large force right. The product is doing well.
One 3 billion roughly per year. So it's a huge brand we know people we know.
We're delivering something that the customers really want but the other three advantages that we have and we just saw that space really well.
Yes, I'll talk about pricing for competitive reasons as you know but.
We know how to get the job done in that particular segment on the market.
Yeah.
Great. Thank you very much.
Very helpful.
Okay.
And at this time I'd be happy to return the call to Scott tariff for any concluding remarks.
Well. Thank you first I want to thank the management team.
Who was on the call today, so pleased that everyone on the call had the time and the opportunity here from our key executives.
Very experienced detailed people I think we're well on our way to get the job done and to sum up I just wanted to reiterate that the board and the management team are extremely focused on making sure that this company grows and grows consistently in 'twenty three and beyond.
We'll use the strength of our balance sheet to capitalize on opportunities that we believe will benefit shareholders and I'm proud of the performance in the face of the Covid challenges.
And we will continue to put our energy into advancing our pipeline and to create the next generation of Gray Eagle products.
We're looking forward to getting basic price into the market. We're obviously working pretty hard at that that's job number one right now and you know.
We'll see how it goes but we're pretty confident and with that I'd just like to thank everybody for being on the call today. Thank you.
Yeah.
This does conclude today's conference you may now disconnect your lines and everyone have a great day.
Yeah.
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