Q1 2021 Teligent Inc (NEW JERSEY) Earnings Call

Good day, and thank you for standing by and welcome to the Telegent, Inc. First quarter 'twenty 'twenty 1 results conference call at this time, all participants on a listen only mode. After the speaker presentation and will be a question and answer session.

And I ask a question during the session you will need to press star 1 on your telephone if you require any further assistance. Please press star zero on.

And then I can and conference over to your speaker today.

Yeah, and that's executive Vice President and Chief Legal Officer. Please go ahead.

Thank you operator, and welcome to all of you and thank.

And for joining intelligence first quarter of 2021 earnings conference call.

Before we begin we want to draw your attention to our legal disclosure regarding forward looking statements.

During the course of this conference the company will make forward looking statements regarding future events, including statements about financial business clinical milestones and commercialization and plans and strategies anticipated in fiscal year 2021 and beyond.

We encourage you to review the company's past and future filings with the SEC and in particular, our recent annual report on form 10-K for the period ending December 31.

2020, which identify specific risk factors that may cause the actual results or events to differ materially from those described and the forward looking statements made.

You can find the SEC filings and he Edgar database at Www Dot FCC Dot Gov.

And the Investor Relations section of the company's website at Www Dot Telegent Dot com.

Please note and.

And any comments or statements made on today's call speak only as of today come on May 22021.

And may not be accurate at the time of any replay or transcript rereading.

I would like to now hand, the conference call over to Tim Sawyer, President and Chief Executive Officer of intelligent share.

Thank you Phil good morning.

And thank all of you for joining us today on intelligence first quarter, 2020.1 earnings call joining.

Joining me on this call and intelligence, Chief legal officer, and corporate Secretary.

And our Chief Financial Officer, Ernie EPS Antonio.

The first quarter proved to be a highly productive period for the company.

Our remediation efforts remain on track.

And as noted in this morning's earnings release, we are reiterating our prior guidance and we expect to inform the FDA.

On the state of our readiness sometime during the third quarter.

We also remain optimistic that as the effects of the pandemic and get them to recede.

Yeah, you can resume a more normalized pre pandemic.

And the inspection and schedule.

For those of you who could not join us for our recent 2020 yearend conference call I will first provide a brief overview intelligence recent accomplishments with respect to our improved financial condition remediation efforts and our ongoing response to pandemic.

Over the last several months, we've completed a series of financial arrangements.

And have dramatically improved the liquidity and balance sheet of our company and.

The net effect of these transactions as resulted in aggregate debt reduction of $118 million since June 32020.

We also amended our second lien credit agreement to provide an additional $4.6 million and financing to help support the company's ongoing liquidity.

And then completed and aftermarket equity offering during the first quarter 2021, raising gross proceeds of approximately $35 million.

With the support of our senior lenders and strategic and better partners intelligence has significantly improved its capital structure, enabling us to execute on.

On multiple business and operational initiatives throughout the remainder of 2021 and into the first quarter of 2020.2.

With respect to remediation.

As previously disclosed based on our current assessment, we believe intelligent and we'll be ready and 48, the FDA audits.

And inspection readiness during the third quarter of 2021, however, since we do not control the timing of the FDA re inspection of the facility we cannot predict a precise time range from the date when the FDA will perform the site inspection.

With respect to the COVID-19 pandemic.

During the public health emergency and state of emergency and order to continue to supply our products to the patients that pizza, we maintained our manufacturing operations and monitor conditions in order to date and a safe workplace for our employees.

While our non production employees have been working from home. During this time now that the public health emergency and state of emergency restrictions have abated. We are in the process of implementing each day is return to office protocol under which we will maintain social distance workspace and continued to sanitize on facilities.

In fact so.

Ernie and I together today are together each day.

And this earnings call from our corporate offices, and a socially distance manner.

And with actions taken and the second half of 2020 and the first quarter of 2021 and continued to strengthen our senior management problems and bring in additional advisory accounts onto our board of directors.

I'd like to take some time on today's call to note the strategic importance of these senior level appointments.

And why it should help us build positive and sustainable momentum going forward.

When investors think about the per intelligent story.

And perception.

The company is undergoing a rebuilding phase and that we as its new managers are largely cash.

And a set of older inherited and quality control issues, while that perception, maybe warranted over the short 1 I'd like to assure our investors that we're executing on our strategic plan to restore solid operational and financial performance over the next several years.

Central to this strategy disappointed key individuals who not only presents the requisite expertise to help them.

This turnaround.

And also understand the importance of building a culture.

And bill.

It's too long term success.

Under this new leadership paradigm intelligent is rebuilding its risk management and quality control systems, taking a holistic approach and so thats. The best practices, we adopt and quality control can be sustained and augmented as we re grow our core business and potentially enter a new venture.

<unk> to be absolutely clear and we do not view the scope of our remediation efforts at <unk>.

Volume addressing only short term quality control issues, rather our senior management is developing both tactical and strategic level to ensure that all of our operations and processes are being proactive and managed by a highly trained and motivated employees.

By laying this foundation of sustainable best practices throughout the entire particular low quality control, we expect to fully leverage the production capability of our asset base and the future and in doing so deliver significant value to our shareholders.

Now, let me hand, it over to Ernie for review of the first quarter financials.

And already.

Thank you Tim and good morning.

Consolidated net revenues for the first quarter of 2021 were $11.6 million versus $7.4 million and the first quarter of 2020.

Cost of revenues increased to $12.8 billion and the first quarter of 2021 and comparison to the $8.6 million and the first quarter of 2020. However.

However, gross profit percentage improved 5 percentage points to -10, 5 and Q1 and 2021 from minus $15.6 and Q1 of the prior year.

The increase in gross profit and the first quarter of 2021 was mainly attributable to higher sales offset by an increase and the inventory reserve increase absorption allocations due to lower contract volume and price erosion in light of COVID-19.

Selling general and administrative expenses and the first quarter of 2021 decreased by <unk> 4 million to $6.3 million.

And as compared to $6.7 million and the first quarter of 2020.

The decrease was primarily due to lower professional fees versus the first quarter of the prior year.

There was a negligible impairment charge and 24000 and the first quarter and impairment charge was also recorded and the first quarter of 2020 of $8.4 billion related to trademark and technology of $4.9 million and product acquisition cost of $3.5 million.

Product development and research expenses were $1.5 million and the first quarter of 2021 versus $1.8 million and the first quarter of 2012.

The change was primarily due to a decrease in personnel costs outside testing and pilot and pilot batch expenses, partially offset by an increase of $1.1 million and.

<unk> expenses, and an increase and clinical studies net income for the first quarter of 2021 was $2.2 million as compared to a net loss of $26.8 million per the first quarter of 2020.

The increase was primarily due to a 1 time noncash net gain and debt restructuring of $20.6 million offset by an increase and derivative liabilities of $1.9 million and $5 million increase on foreign exchange.

Loss I will now turn the session back to Tim Tim.

Thanks very much.

Noted on our fourth quarter conference call, we continue to make steady progress across multiple fronts of our business.

Our improved financial condition provides us added flexibility to pursue longer term strategic objectives focus on both quality control and business development initiatives.

In addition, we are continuing to diligently pursue our work with our financial and strategic advisors to critically assess the strengths and assets on the come.

And how we can best leverage that and moving forward as.

As we complete our work and assessments, we will look forward to a time and future throughout this year when we can and provided more when we can provide more detailed updates on these activities that are being examined.

Thank you for taking the time to join US today and I'd now like to turn the call back over to the operators for the Q&A session.

As a reminder to ask a question you will need to press star 1 on your telephone.

And to withdraw your question press the pound key.

Place and modeling composite can a roster.

Our first question comes from the line of Matt Hewitt from Craig Hallum Capital you may begin.

Good morning, Thank you for taking the questions.

Just a couple to start regarding revenues should we anticipate sequential growth as the pandemic.

Eases, the vaccinations coming out.

And those types of events I mean.

It appears that revenue should grow sequentially, but is that how youre thinking about things as well.

Thanks, Matt.

So just to sort of be clear and.

We've talked about this and I'm, sorry, I should have reiterated it but we haven't.

We're not going to provide financial guidance and.

And 2021, just because of the.

And building that flow through.

And so.

I think that.

Thinking about things and a good way, but I wouldn't.

And we're not going to be providing guidance.

In terms of revenue.

Our path forward for this year.

Okay, how about I ask it a different way.

And what would prevent you from growing sequentially this year aside from.

Another spike in Covid.

Covid or something along those lines.

I think that.

I think that the.

Pediments that headwinds that we have.

Let's talk a little bit about the headwinds.

And could creep up could be something.

And something that <unk> identified.

On slide through the remediation efforts, obviously could could provide us with some headwinds.

And.

But in terms of what we're doing we're looking we're obviously looking to continue to remediate and bring products to market.

We're thinking possibly about that.

That's helpful. Thank you.

And then you mentioned.

This erosion has been.

Being 1 of the headwinds.

How should we be thinking about that from a magnitude perspective, I mean is it a 5% 10 per cent headwind and you know.

Do you envision that as we get back to normal.

And that those headwinds will abate.

Yes, hi, Matt its Ernie thanks for the question.

And.

The price erosion generally occurs and the market with respect to pricing as competitive products.

I think a lot of that erosion.

Occurred.

Possibly because of fewer tests being done or fewer.

Fewer.

Sales in the field.

On the dermatological products on.

Topical.

Okay.

And then kind of moving down the income statement gross margins, obviously nice improvement versus the year ago period.

Right.

What at what level and I'm trying to think how I can answer this.

And could you answer this and.

What level does that flip back to profitability on the gross margin line is there.

Is it a revenue number or is it just getting through some more on this remediation work that where those costs are kind of weighing on gross margin.

Yes, it's the remediation effort and that.

Okay.

Alright, and last 1 and regarding some of the.

The products that were pulled late last year are those have those all been relaunched at this point or what what's the anticipated cadence for getting those back into the market. Thank you.

Thanks, Matt for.

The profit per head.

A product level.

And we haven't.

We have not.

Back in the market with all of our products at this point and time.

We are continuing to remediate and continuing to evaluate.

Alex This is true.

Arms, a prioritization and.

And obviously, bringing them back and in a way that's most advantageous to the company. So most of the most important products versus.

On down the line.

So based on that.

Yeah, Okay. Thank you.

Thanks very much.

And once again Thats star 1 for questions still on 1 law and for questions.

Right.

Okay.

And I'm not showing any further questions in the queue.

Alright. Thank you then operator.

Thank you all for participating and thanks for attending and listening.

Really appreciate it.

And as I said I feel positive and looking forward to updating you all and the future as we continue to make progress.

On the hard work and we have in front of us.

Have a great day.

We look forward to talking to you again soon thanks Bye bye.

This concludes today's conference call. Thank you for participating you may now disconnect.

Yes.

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