Q4 2021 Eagle Pharmaceuticals Inc Earnings Call
Our call today, Please press star zero.
[music].
Good morning, everyone. My name is Ashley and I'll be your conference operator at this time I'd like to welcome everyone to the Eagle Pharmaceuticals fourth quarter and full year 2021 financial result, all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer period at that time. If you have a question. Please press star and one on your telephone keypad. As a reminder, this conference call is being recorded today March seven 2022. It is now my pleasure to turn the floor over to MS. Lisa Wilson Investor Relations for Eagle Pharmaceuticals. Please go ahead.
Thank you Ashley welcome to Eagle Pharmaceuticals, fourth quarter, 2021 earnings call.
This is Lisa Wilson Investor Relations for Eagle Pharmaceuticals, with me on today's call.
Eagle's, President and Chief Executive Officer, Scott, Terra and Chief Financial Officer, Brian Cahill. This morning, the company issued a press release detailing financial results for the three months ended December 31, 2021. This press release and a webcast of this call can be accessed through the investors section of the Eagle website Eagle U S. Dod.
Com.
Before we get started I would like to remind everyone that 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 may be considered forward looking statements as defined by the private Securities Litigation Reform Act. These forward.
These 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 our filings with the SEC.
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 a telephone replay will be available. Shortly after completion of this call you'll find the dial in information in today's press release.
A webcast will be available for one year on our website at Eagle U S Dot com.
For the benefit of those who may be listening to the replay or archived webcast. This call was held and recorded on March seven 2022.
Since then Eagle may have made announcements related to the topics discussed. So please reference the company's most recent press releases SEC filings and with that I'll turn the call over to Eagle's, President and CEO , Scott Terra well. Thank you Lisa good morning, everyone and thank you for joining our call today.
22, certainly gotten off to an exciting start for us with two very significant product launches vasopressin and <unk> a lot of great work went into getting these two drugs to the market and we're delighted that providers and patients now have access in.
In fact, the vasopressin to market is exceptionally strong largely due to the rise in Covid cases, and we shipped significantly more vasopressin than we anticipated for <unk>. We are finding significant desire for the benefits that the product and bring customers as well and from a revenue perspective, it's useful to look at these two assets together.
Leading up to these launches we have been guiding that we expect to double our revenue and more than double our earnings in 'twenty, two and we believe that we are comfortably well ahead of that run rate. We finished 21 with cash and cash equivalents of $98 million, which would have been even higher but we elected to buy.
<unk> $21 million of our own shares over the course of the year, because we're bullish on our company and our prospects.
Our confidence is even greater now based on the fact that we launched visa precedent vaccine two extremely strong markets and we've been able to commercialize both products using our existing infrastructure.
Today, we are providing some early guidance for Q1 of 'twenty to adjusted non-GAAP earnings per share of around $4 a range of $3 80 to 410 and.
And a number that is significantly higher than what we have earned in most years.
This includes revenue of around $120 million to $130 million, giving us every reason to believe that we should exceed the doubling of our revenue in 'twenty two.
In terms of Q2, we have no contractual limit on <unk> volume, but right now we're expecting a little less COVID-19 cases, so vasopressin volume would come down a bit based on current trends. We believe Q2 revenue and earnings should be around the same as Q1, although its too soon.
To have complete certitude is pricing in these markets can be variable.
We will provide an update as we have more visibility if Q1 and the rest of the year play out as we anticipate we expect to generate operating cash flows that could be as much as $170 million in 2022.
I want to reiterate the significance of what it means to eagle to be generating this amount of cash and to have such a strong balance sheet. Our top priority is to put this cash to good use considering that we have very little debt on our balance sheet. Currently if we take even a modest amount of debt it's easy to see.
<unk> that we could have a significant amount of cash to make acquisitions, which depending on how we raise the money would be minimally dilutive.
Remember too that over the past several years, we have bought back around $230 million of our own shares.
We're seeing a lot of good business development options and as we have stated before we expect to make an acquisition in the first half of this year and another acquisition in the second half of this year.
Importantly, as we go through this process of assessing appropriate targets, we are mindful of avoiding clinical and regulatory risk. We're looking for financial synergy knowing that our talented sales infrastructure can handle additional products in this segment, where they have great access and great relationships. This is a.
Very good period.
In time, historically to be a buyer with the biotech index down as much as it is we are finding very good acquisition opportunities.
And take advantage of our past pruned in handling of our cost.
Of our cash and balance sheet.
So now on today's oppression, let's talk about each of these programs starting with vasopressin in the fourth quarter of 'twenty. One events played out as we thought they would the market for vasopressin is actually much bigger than we thought 21 saw a record product usage likely due to increased COVID-19 hospitalizations and 22 in the first quarter the market was up.
Significantly for base suppression as we go forward, we will continue to watch for the transfer Covid hospitalizations to determine where the bays are impressive numbers will be going forward, but from a share standpoint, we're very pleased with our performance already in 'twenty. Two the market is up again, so we feel very good about our ability to sell quite a bit of product.
During the first six months here of our exclusivity.
And it's worth noting we are hitting these revenue numbers for base of press and even with two additional competitors in the market with this right now we have strong relationships with our hospital based customers and our highly skilled sales force and remember we're not a generics company, we have forged long standing relationships in this space and our salespeople meet directly with the.
Key decision makers on a regular basis, we believes that gives us a strategic advantage when selling our products. Our uptake has been very positive and in fact, we received a lot of inbound calls our customers were ready for this product and they're happy to be receiving it.
And now as far as <unk> goes as I mentioned earlier, just two weeks after our vasopressin launch we brought <unk> to the market our ready to use <unk> may actually prove to be a larger opportunity than vasopressin given that <unk> has been provided reimbursement that should allow customers to benefit from the improvements that we've made.
The molecule.
And now in terms of Bendamustine add this to our growing bendamustine franchise in Japan, which is expected to contribute about another $20 million in royalty and milestone revenue. This year last year, our partner in Japan launched the track as I'm ready to dilute formulation.
And approval for the rapid infusion 50 ml liquid formulation is pending.
So now we have vasopressin and <unk> on the market and as I mentioned earlier, we've accomplished that with our existing commercial team. We have a lot of confidence in our sales force. They know the hospital and critical care space, well and I believe we will hit our target numbers with the strength of these launches we're continuing the evolution of Eagle and establishing a.
Ourselves as a significant factor in.
In the oncology and hospital sectors and now if we turn to the paint line and our plans for the balance of the year.
We are currently preparing to begin clinical trials for <unk> a novel first in class Antitoxin agent ready for phase <unk> three development for the treatment of severe pneumonia in combination with traditional anti bacterial drugs.
Those trials should begin in the third quarter and we feel very positive about this asset.
<unk> has the potential to change the standard of care for patients and to have a broad therapeutic impact, especially in critical situations.
Despite the widespread availability of antibiotic drugs today pneumonia is still the leading cause of infectious mortality in the world.
<unk> ability to neutralized billions effectors to fill a significant medical need by offering physicians, a new treatment that could dramatically improve patient outcomes.
Also as we announced in January we are on track to support the submission of a new drug application for Atlanta La in the second quarter of this year Lanny laws of beta one <unk> Bakr and fits nicely into our expanding hospital based footprint.
As you recall, we entered into a licensing agreement in August of 'twenty, one with <unk> health.
They engaged with FDA to obtain alignment on the content and format of the preclinical and clinical data required to support an NDA.
<unk> approval Landy law in the U S. Keep in mind Atlanta, La is already commercially available in Japan and in several European markets, where it has been very successful.
We are very much looking forward to advancing this asset we believe the product could achieve a $100 million to $150 million of new brand peak sales and making it accessible in the United States of extreme importance to us to sum up we are taking an extremely intentional approach as we identify potential.
<unk> targets <unk>.
<unk> full of avoiding near term clinical and regulatory risk and looking for assets that we can easily integrate into our robust sales structure.
Our sales organization, which is easily expandable is our greatest strategic asset outside of that our products. We're really excited about 'twenty two what it will bring for Eagle. We are in the unique position of having the wherewithal to accelerate the growth of the company. This year and then again through the acquisitions.
We will be making.
We are well funded we will generate significant cash flow from operations this year and with minimum with minimal dilution, we will be in a strong position to acquire a number of assets that will fit well into our hospital and oncology segments, where we have established a strong position and in fact, we could spend a significant amount of our current mark.
Cap during a period of time, where we have an unusually high growth in EPS and still have minimal dilution to our shareholders. As you can see we have a lot to look forward with that I'll turn the call over to Brian Cahill to discuss our fourth quarter financials Bryan.
Thank you Scott good morning in the fourth quarter of 2021 total revenue was $42 $3 million compared to $49 $9 million in Q4 of 2020.
Full year, 2021 revenue was $171 $5 million compared to $187 $8 million in 2020.
Product sales during the fourth quarter were $16 $2 million compared to $22 $9 million in Q4 2020. The decrease was driven by lower product sales of <unk> and ran <unk> for the full year 2021 product sales decreased by $7 $3 million from 2020.
Driven by decreases in sales have been Deca, <unk> and ran <unk>, partially offset by product sales on the launch of <unk>.
<unk> product sales were $5 $5 million in the fourth quarter of 2021 compared to $10 2 million in Q4 of 2024.
For the full year <unk> sales totaled $23 7 million.
Compared to this compared to $27 5 million in 2020.
Fourth quarter <unk> product sales were $6 1 million compared to $7 9 million in Q4 of 2020.
Orders for <unk> are cyclical driven primarily by product expertise.
For the full year round, <unk> sales totaled $25 $3 million as compared to $28 $3 million in 2020.
Q4, 2021 royalty revenue.
It was $26 2 million compared to $27 million in the prior year quarter.
For the full year 2021 royalty revenue totaled $106 5 million compared to $110 5 million in 2020.
Eagle's royalty rate on <unk> was 32% during the fourth quarter of 2021, and 31% for the fourth quarter of 2020.
On October one 2021, the rate increase for the final time to 32%. This is the world too right.
One five decades.
Beginning in the first quarter of 2021 royalty revenue also includes royalties earned on sales of <unk> by some bio.
On the expense front.
R&D expenses were $3 $8 million in the fourth quarter compared to $9 4 million.
In the prior year quarter.
The decrease is largely attributed attributable to the non recurrence of development costs on vasopressin.
Excluding the expenses of acquired in process research and development stock based compensation and other noncash and nonrecurring items.
<unk> expense during the fourth quarter was $2 6 million and was $32 5 million for the full year of 2021.
We expect R&D spend in 2021 on a non-GAAP basis.
To be in the range of $46 million to $50 million.
This reflects expected clinical and CMC work on Callow too.
And full of strength and cost of other ongoing programs.
SG&A expenses in the fourth quarter of 2021 totaled $20 3 million compared.
Compared to $18 $2 million in the fourth quarter of 2020, the increases related to higher employee related expenses and consulting costs, partially offset by a decrease in stock compensation expense.
Excluding stock based compensation and other noncash and nonrecurring items fourth quarter 2021, SG&A expense was $14 6 million.
Full year SG&A expense decreased by $3 3 million to $75 3 million in 2021.
Compared to.
$78 6 million in 2020.
This decrease was principally due to the due to the non recurrence of costs related to the collaboration with <unk> technologies.
In the prior year and lower stock based compensation expense, partially offset by higher employee related expenses and external legal costs on vasopressin litigation.
Excluding stock based comp and other noncash and nonrecurring items SG&A expense in 'twenty, one was $54 9 million.
We expect our SG&A spend in 2022 on a non-GAAP basis will be in the range of $54 million to $58 million.
Net loss for the fourth quarter was $6 2 million.
Dollars or <unk> 48 per basic and diluted share compared to net income of $8 1 million or <unk> 62 per basic and <unk> 60 per diluted share in the prior year period.
Net loss for the full year was $8 $6 million or <unk> 66 per basic and diluted share compared to net income of $12 million or <unk> 89 per basic and <unk> 87 per diluted share in 2020.
Adjusted non-GAAP net income for the fourth quarter of 2021 was $11 $2 million or 87 per basic and <unk> 85 per diluted share compared to adjusted non-GAAP net income of $12 8 million or <unk> 98 per basic and <unk> 96 per diluted share in the prior year quarter.
Adjusted non-GAAP net income for the full year of 2021 was $34 $1 million or $2 64 per basic and $2 59 per diluted share compared to adjusted non-GAAP net income of $48 7 million or.
Or $3 62 per basic and $3 54 per diluted share in 2020.
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.
As Scott mentioned earlier, we are setting guidance for Q1 2020 in the range of $120 million to $130 million for revenue and adjusted non-GAAP earnings.
In the range of $3 80.
To $4 10.
Per share.
As of December 31, the company had $97 $7 million in cash and cash equivalents.
We had $26 million in outstanding debt.
So we had $71 $7 billion of net cash.
We had $41 1 million and net accounts receivable.
In the fourth quarter of 2021, we purchased an additional $8 $6 million of Eagle's common stock as part of our $160 million share repurchase program.
Importantly from August 2016 through December 31, 2021, we've repurchased $228 million of our common stock.
With that I'll open I'll ask the operator to open the call for questions. Please operator.
And at this time, if you would like to ask a question. Please press star one on your Touchtone phone.
May withdraw your question at any time by pressing the palanquin once again that is star and one and we will take our first question from Tim Lugo with William Blair. Please go ahead.
Thank you for the questions and congratulations on a strong launch of both products.
And thank you for the guidance as well, but most.
Most of us on the call. We we have to also do the back end of the year could you maybe directionally give us some ideas on the durability of days on the back end of the year and taxi.
Taxi should should.
It should be growing in the second half of the year.
Yes, Thanks, Tim.
Look good good question and I will tell you we don't have complete visibility to that Theres a lot of factors that go into these into these markets.
Obviously, the first half is going to be very strong for the company because we have the exclusivity periods of the second half of the year is actually going to be pretty strong as well relative to our historical earnings I mean, I think <unk> Z as you look out over a number of years is probably going to be the stronger of the two products because of the way the.
Drugs.
Ian burst and so we're pretty confident that <unk> will be a significant part of the company. These are product based on price and probably will as well, but it's hard to tell at what levels.
Much of this has to do with.
The strength of Covid over the years or certainly over the course of the next 12 months.
Don't know where another variant may pop up and how long COVID-19 will be around.
We're getting very good share on vasopressin, and having great relationships with customers, even with a couple of people in the market with us so.
Our expectation is by the time we're done.
Back half of <unk>.
Of this year will be strong and then as you go to $23 $24 25, we have a lot of confidence that we'll be able to use all this cash we're generating to make sure that we're building growth in this company and so we're looking at the first half as a way to build cash to accelerate the earnings going forward.
We're pretty excited about the long term prospects of the company.
Understood and I know, it's not a yes.
Youre not in a perfect position to give.
Give us 2023 guidance and beyond but maybe as you as you look at business development could you just talk to us about how youre assessing targets you have.
You mentioned in your commentary that you're looking to avoid clinical risk goes I mean marketed products or is that mean, maybe development stage assets, which you think have minimal clinical risk and historically you've been focused on <unk> is that changing wolf will handle all and kind of the acquisition to come and also lastly.
Given the given the kind of the macro issues is Ryan IDEXX for radiation sickness program is that it.
Maybe have a potential for any progress there yes.
Yeah. Thanks, Tim all all good questions. It's let me try to take it.
As best as we can.
But what we're finding is as I mentioned in the script that this is probably a wonderful time historically to be in an acquisition mode.
We have cash we have an unused balance sheet.
We have plenty of opportunity to acquire at the same time, what we're finding our quality assets that have been.
Our cheaper today historically than they've ever been and for a lot of reasons. We're finding people that are probably far better off selling their assets than trying to raise money and build commercial for it which you'll see us do this year.
Is to take this sales organization that we have that we've spent a number of years building.
We have a tremendous reputation I think in the call point of hospitals in the community oncology setting and so what we'd like to do is take advantage of the infrastructure that we spent this year is building because we believe we can add products into this infrastructure and have a minimal increase in the amount.
The cost in people or infrastructure needed in the beginning but we'd like to do is make a couple of acquisitions of already marketed products that are early in their growth stage that have patent life to them that we could just add like <unk> and other products that we're looking at and build a.
Company that would be known as a strong hospital oncology franchise.
<unk>.
Probably won't abandon the 500 <unk> process.
It's worked out well for us but in the in the course of the year, we'd like to buy more and CES more branded products. We have the capability of commercializing those products and Thats. The way, we will handle it and I think we should be thought of not as the regulatory pathway, we take to bring our products to the market, but more.
As.
Where we sell where our call point is and Thats the acute care hospital.
And oncology than later in time, you'll probably see us bringing in some clinical programs <unk> two again in building our pipeline, but let's go into our strength to take advantage of the cash in our balance sheet unless you go add growth products into the company and make sure we keep this.
This great growth that we have in 'twenty two going we do still have a few indications on Iran Index. We're working on it is starting to take a back burner to the company's development as we bring in land the law and <unk> and other projects.
We probably won't pursue radiation going forward. We just don't think that's a big enough market relative to what we've just achieved but there are a few things. We're working on with ran index, we'll see how they pan out in the upcoming.
And in the upcoming years.
Understood. Thanks for all the questions.
Thanks, Tim.
Yeah.
Well take our next question from Brandon Folkes with Cantor Fitzgerald. Please go ahead.
Alright, Thanks for taking my question and congratulations on the progress strong guidance.
I appreciate all the color maybe.
Maybe just two from me.
Scott your comments on sort of much having to do with Covid right.
Can you just elaborate there and just in terms of are you thinking about given the increased usage that we saw in beta with Covid.
Net net our COVID-19 outbreaks and positive for Eagle. This year, just on the back of visa or sort of given pantex and the rest of the business negative and then maybe secondly.
Just.
<unk> generics coming at the end of the year, how do we think about reigniting Bell rapid growth right.
Is that a level, we should think about that you could pull or is it sort of settled into the market and its current market share. Thank you.
Thanks Brandon.
I'll tell you what I don't know the answer to the Covid question right. It's been a drag on our earnings for last two years as chemotherapy visits have been down and I and the Bell Rab. So bad decade numbers had probably been suppressed over the last two years because of that.
Now, we launched <unk>, which is benefited by Covid hospitalizations and we can see the strong quarter that we are having in probably the the.
The strong first half I think we're just going to have to see what happens to COVID-19 from our standpoint, it's still not predictable.
If hospitalization start to Spike again, if you go into the colder weather again next year and they start coming up as a present still going to be a big part of our business and so we'll just have to see but.
We're living in the moment anyway.
Now it's the vasopressin numbers are large and then they would have the wise have been I think so.
For today, it's it's a positive in terms of transit generics. We're in the same place. We've been we think we are going to give up that 30, 35%.
The income we have from it offset by the launch in Japan, and so if we've been bringing in about $100 million a year on under Bendamustine franchise, if that goes down by $30 million to $35 million and we pick up 20.
In Japan.
It's just.
Notes manageable very manageable, especially with this growth that we're going through now so we're prepared for it we'll optimize decision.
<unk> as best we can it's important to note that <unk> is just a better product.
<unk> with the shorter infusion time is very well accepted by patients nurses and physicians. So we think we'll do well, let's see what happens, but all in all you bring it all together and the company has never been in a stronger position than it is today.
Thanks, So maybe on that point.
One more fine may.
And you obviously have tremendous financial flexibility at this stage, but it sounded like you.
Youre looking at.
Tuck in acquisitions initially is that a correct characterization or should we just think about that you're going to be opportunistic in the simulation environments and it could go either way. Thank you on business development.
Yeah. Thanks, Brandon I would say that right now, we're being opportunistic and finding many opportunities. It's just.
We're we're running our company everyone on the calls investors, it's an unusual situation right now.
The fact that we were so prudent over the years and how we managed our cash our balance sheet. It just put us in a situation, where we're building such significant cash still have ability to obviously use our balance sheet that we haven't used before and we're finding assets that are devalued compared to where they've been historically.
Toric, Lee and so our goals to grow the company and to grow it in a way that gives us the best certitude going forward and gives us the best patent life and the ability to grow in oncology and acute care and so I won't rule anything out.
But we're going to bring products into the company the size of those acquisitions, we will see what goes on but as the company gets bigger and our earnings grow we probably have the ability to do bigger deals later and so from a company that went from <unk>.
From wanting to do everything organically, having now brought three products to the market in track as them in in Japan, and then <unk> and vasopressin the ups and downs of the R&D for US right now we're seeing the fruit of all that hard work and we're going to put it to use it and bring products in and now.
We will probably be a company that's more acquisitive than we have been in the past and just as long as we're finding good strong value out there nothing's off the table, we're just going to get this company bigger with taking again prudent risk.
Manageable debt.
And.
Just continuing to grow it's an exciting time for us and we're looking forward to it.
I agree congratulations and thank you for that.
Yes.
Okay.
And once again as a reminder to ask a question that is star one.
And we will take our next question from David <unk> with Piper Sandler. Please go ahead.
Hey, Thanks, So just a few so on vasopressin I wanted to drill down on.
Your thought process regarding.
Sales for the exclusivity period I guess the question here is.
Can you elaborate on where you think your share of the market is going to trend or are you and then secondly are you thinking about that.
<unk> sales in the context of the <unk>.
<unk> environment and hospitalizations and is that what is more of a paramount driver I just wanted to get a sense of.
Is it is it share growing is it just the market growing and how do you think about that that's number one and then number two is.
As you talk about the vasopressin beyond the exclusivity period do you have.
Any sort of market Intel and how crowded do you think the market is going to get.
Not just in the back half of the year, but looking into into 'twenty two 'twenty three.
And then lastly.
Just on Ben Deca, and Bendamustine business.
Knowing that it is.
Has the unique J code, but that notwithstanding I guess with the.
Flood of entrance for for sure Ann.
What keeps the product from <unk> I should say from.
Declining precipitous Lee I guess in the context of <unk>.
A lot of generics on the predecessor product how.
How do you think about that thank you Youre welcome David Let's take this one at a time, but let's go to the last one let's go to bed Deca first and foremost. This is a therapeutic alternative we are not getting generic competition for <unk>, we have done extremely well in the courts with men Deca, we have numerous patents that go out to 30, we've won in the court.
It's we've.
Settled.
If it's a therapeutic conversion not a generic conversion and based on the reimbursement there is a unique J code for <unk>.
<unk> is a unique J code for <unk>, there's a unique J code for for Bell wrap. So we just happen to have the better product on the market. It would be a shame to changed patients. After this time from the benefits of one drug to the inferior benefits of another drug it doesn't.
Typically happen it probably won't happen, we again have great relationships with our customers to patients love, our product and nurses love our product to physicians love our product chances are we're probably correct with our assessment of the amount that we're going to lose.
We can handle it easily we're prepared for it and we don't expect it to be a major issue for the company thrilled about the launches. We've just had if you want to go back to vasopressin.
Let's wait and see what our share is at the end of the quarter, it's hard to give guidance before the quarter is over because we don't have the market size numbers yet to see what it is if you use the Q4 numbers for <unk> to predict what Q1 looks like our share is very good.
And the reason our EPS guidance is so significant for the quarter is largely due to a very significant amount of vasopressin that we've sold both in share and specific volume.
We expect our share to continue we expect our share to grow the unknown is what happens to price. We don't know how many other people are coming into the market. We're not privy to those settlements that endo has but we're very confident that we will maintain a very significant market share a phase of press and due to our relationships with our customers in the <unk>.
<unk> of our sales force and we expect that that share to continue for many years to come.
Thank you.
Welcome.
And there are no further questions at this time I will turn the call back over to Mr. Scott tariff for any closing remarks, well. Thank you again for joining us today with so many exciting initiatives ongoing and into works. We're looking forward to a year of just outstanding growth at igo, the near and intermediate drivers of this growth and our ability.
<unk> to bring in large enough hospital oncology products that we can leverage and grow our enormously talented commercial sales team and footprint within the space.
With vasopressin and <unk> Z product successfully launched together with our highly promising pipeline, including land alone <unk> two we intend to build upon the strong foundation and bring value to our shareholders. We very much look forward to updating us we deploy our cash and grow the company going forward stay safe and thank you for spending in the <unk>.
With us today appreciate it.
Thank you and this does conclude today's program. Thank you for your participation you may disconnect at anytime and have a wonderful day.
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