Q1 2022 Eagle Pharmaceuticals Inc Earnings Call
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Good morning, everyone. My name is scratching and I'll be your conference operator at this time I'd like to welcome everyone to Eagle Pharmaceuticals first quarter 2022 financial results.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer period at that time. If you have a question. Please press star one on your telephone keypad. As a reminder, this conference call is being recorded today may nine two 'twenty 'twenty. Two it is now my pleasure to turn the floor over to MS. Lisa Wilson.
<unk> Investor Relations for Eagle Pharmaceuticals. Please go ahead.
Thank you Gretchen welcome to Eagle Pharmaceuticals, first quarter 2022 earnings call.
This is Lisa Wilson Investor Relations for Eagle Pharmaceuticals.
With me on today's call are Eagle's, President and Chief Executive Officer, Scott <unk> and.
Chief Financial Officer, Brian Cahill.
Got you, Mike Greenberg VP medical sales will be available during the Q&A session.
This morning, the company issued a press release detailing financial results for the three months ended March 31, 2022.
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 may be 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 our filings with the SEC.
Such forward looking statements are not guarantees in terms of 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.
The webcast will be available for one year on our website at <unk> Dot com for the benefit of those who may be listening to the replay or archived webcast. This call was held and recorded on May nine 2022.
Since then Eagle may have made announcements related to the topics discussed.
Please refer to the company's most recent press releases and SEC filings.
That I will turn the call over to Eagle's, President and CEO , Scott tariffs well.
Thank you Lisa good morning, everyone and thank you for joining our call today, we are delighted to share that the early momentum we saw at the beginning of 2022 continues to build reflecting strong initial sales of $34 million for vasopressin and $37 million for Penn sexy during the quarter, we had a great quarter, we Ain't.
Dissipated with non-GAAP earnings of $4.04 per share and over $50 million of net income after tax on a non-GAAP basis, well on our way to the best year in our company's history.
Our cash position is about $70 million with $130 million in receivables.
For total cash plus receivable of $200 million and only $24 million of debt.
Keep in mind, we built inventory and bought back $8 million in stock in the quarter as well if the rest of the year plays out as we anticipate 22 will be a very strong year.
We still have exclusivity for both vasopressin and <unk> sexy or market share for vasopressin was 24% for the trailing four weeks and we are seeing significant acceptance of <unk> in the marketplace. We are extremely pleased with these numbers are.
Our company has evolved and the Eagle story has been simplified we are in the enviable situation of having significant cash for a company of our size and almost no debt and.
And rather profitable, which gives us many options.
We have a lot to look forward to in the second half of the year, starting with our pending acquisition of Acacia pharma, which is expected to close in June .
Part of that acquisition, we expect to gain two projects for him since the first and only anti emetic approved by the FDA for rescue treatment of post operative nausea, and vomiting, Despite prophylaxis and by say, though indicated for the induction and maintenance of procedural sedation in adults undergoing procedures lasting 30 minutes or less.
Yes.
Those are new chemical entities or N cen with strong patent protection.
We are on track to support a O P helps NDA filing for land Elo later this month and assuming approval. We will have rebranded novel N sees our Hampton by stable than Landi law on the market going into the growth phases. We expect we will continue to generate considerable cash from the rest of the product.
And Deca they'll wrap some ran index bendamustine in Japan, and nowadays precedent sexy to be followed by land deal off approved in a relatively short amount of time, we have developed a far more diversified revenue stream anticipated to go from three commercial products to eight and soon it could.
Benign with Landy law era highly skilled and experienced sales force is one of our greatest asset and we are leveraging this strength as we broaden our footprint in the acute care and oncology spaces and looking ahead, we have are very exciting and potentially blockbuster asset Cal owed to a novel first in class.
<unk> antitoxin agent for the treatment of severe pneumonia in combination with traditional antibacterial drugs, we plan to start our phase two b three study clinical trial later this year and in terms of full best strength. We are in the middle of dosing. Our next study and expect results in the fall we will keep you updated on what happens here.
So what does this all mean for Eagle, we continue to build significant cash relative to our size and we will be spending some of that cash on the Acacia purchase we're likely to take on some debt later this year and combined with the debt existing cash in our building cash we will now turn our attention to pursuing additional opportunities.
To strengthen both the portfolio and the pipeline.
This is now where we are focused one of our key objectives is to pursue additional opportunities for currently marketed products and pipeline assets. We have already accomplished quite a lot. Thus far in 'twenty, two and have made enormous progress to expand their presence in oncology and hospital critical care our.
Linda approached our balance sheet and our prudent use of cash have led to the success, we've had with organic growth with the intent to further diversify the company and build out our pipeline we plan to strategically take advantage of the acquisition opportunities as they arise without taking on undue Clint.
<unk> or regulatory risk and with minimal dilution and that this is a great start to what will clearly be a pivotal year for eagle as we expect to finish 'twenty two in a very strong position we aspire.
The time, we leave this year, we are a further diversified pharmaceutical company continuing to build both cash and shareholder value and with that I'll turn the call over to Brian Cahill to further discuss our first quarter results Brian .
Thank you Scott and good morning.
In the first quarter of 2022 total revenue was $115 9 million compared to $41 $2 million in Q1 of 2021, primarily reflecting the strong launches of vasopressin and sexy.
Product sales during the first quarter were $90 1 million compared to $17 $1 billion.
Q1 of 2021.
These are impressive sales totaled $34 $3 million in the first quarter of 2022.
<unk> sales were $37 2 million in the first quarter of 'twenty two.
<unk> product sales were $5 $9 million in the first quarter of 'twenty, two compared to $5 $7 million in Q1 of 2021.
First quarter <unk> product sales were $6 6 million compared to $6 $8 million in Q1 of 2021.
Orders for four Ryan index, or cyclical driven primarily by product expiry.
Q1, 2012, 2022 royalty revenue was $25 8 million compared to $24 1 million prior year quarter.
<unk> royalty rate on fed Deca.
32% during the first quarter of 2022, and 31% for the first quarter of 2021.
The rate will remain at 32% going forward.
Royalty revenue also includes royalties earned on sales of track by some bio.
On the expense front R&D expenses were $6 $1 billion for the fourth quarter of 2022 compared to $14 3 million.
In the prior year quarter.
This decrease is largely attributable to nonrecurring development costs on vasopressin and lower spend on full strength and ran <unk> related projects.
Excluding stock based compensation and other noncash and nonrecurring items.
First quarter 2022, R&D expense was $5 $4 million.
We expect R&D spend in 2022 on a non-GAAP basis to be between 46 and $50 million. This reflects expected clinical and CMC work on calendar, two and full the strength and cost on other ongoing programs. This does not include potential R&D expenses.
For Acacia <unk> products should that transaction closed.
SG&A expenses in the first quarter of 2022 totaled $22 $2 million compared to $19 9 million in the first quarter 2021.
This increase was primarily related to external legal spend for the anticipated acquisition of Acacia and sales and marketing costs for the launch of.
Thanks.
This was partially offset by a decrease in stock compensation expense.
Excluding stock based compensation and other noncash and nonrecurring items first quarter 2022, SG&A expense was $16 6 million.
We expect our SG&A spend in 2022 on a non-GAAP basis to be between <unk> 54, and $58 million as much as mentioned with the R&D expense guidance. These figures do not contemplate the potential acquisition of Acacia.
Net income for the first quarter of 2022 was $44 1 million or $3 47 per basic and $3 41 portal per diluted share compared to a net loss.
<unk>.
$4 million or.
<unk> <unk> per basic and diluted share in the prior year period.
Adjusted non-GAAP net income for the first quarter of 2022 was $52 2 million or $4 10 per basic and $4.04 per diluted share compared to adjusted non-GAAP net income of $3 $2 million or 24 cents per basic and diluted share in the prior year.
Period.
For a full reconciliation of non-GAAP measures to the most comparable GAAP measures. Please see the table at the end of our press release.
As of March 31, 2022, the company had $69 $5 million in cash and cash equivalents.
$139 million and net accounts receivable and $24 million in outstanding debt.
Resulting in $176 $4 million and net cash plus receivables.
In the first quarter of 2022, we repurchased an additional $8 $1 million of Eagle's common stock as part of our $160 million share repurchase program.
From August 2016 through March 31, 2022, we have repurchased $236 $1 million of our common stock.
With that I'll ask the operator to open the call for questions.
Operator, Please go ahead.
Yeah.
At this time, if you'd like to ask a question. Please press the star and one on your Touchtone phone.
You can remove yourself from the queue at any time by passing the pound key once again that is star and wanted to ask a question. We will take our first question from Brandon Folkes from Cantor Fitzgerald.
Hi, Thanks for taking my questions and congratulations on a strong quarter.
No surprise, maybe first question on the Vegas market can you just talk about how you're seeing the baseband market shape up.
Expectations, obviously, you did give guidance for <unk>.
Well the entrance of American region.
How does that play into that exclusivity.
What are you seeing the pricing market compared to expectation I guess, maybe at the.
We ended the quarter just given those guidance.
Hey, Brandon. Thank you for the for the question so visa shaping out I would say pretty much as we expected.
We have about a quarter of the market 24% share.
We're being smart about how we're approaching it the pricing is fine is and as we expected as well we're very pleased with the share in the numbers, we still have exclusivity into the middle of July and expect.
They have a really good uptake in share and continue to do well in the next several weeks.
Okay, and then just any comments on the exclusivity.
Oh, well no I don't think it's pretty much what we expected and anticipated when we looked at the at the landscape going into it.
No I think it's pretty much what we are what we thought we spoke in the past we had a number of scenarios and number of models this fit pretty accurately into into one of them in.
We're just thrilled about where we are right now.
Okay, and then maybe just one more comment and then I'll hop back in the queue and you didn't mention about taking on Dec later in the year. So when you think about that as being for larger more maybe transformative acquisitions.
Just any color around that comment. Thank you, yeah, very insightful, Brandon and yes exactly.
If you take a look at where we are today as we've right as we've stated we just went from.
Assuming <unk> gets approved it will get filed later this month, we just went from historically three products on the market to nine products in the market.
We'd like to to transact accretive large deals if we can.
And take advantage of the of where we are now with all this cash that we have and so.
The market, where it is we'd much rather since we've never used that before really we have with this $24 million of debt and you look at our new EBITDA levels. There is no reason that we shouldnt.
Build shareholder value by taking the cash we have the cash we are building and take on some reasonable debt and if you look at that we can make a pretty significant accretive transaction shortly and that's really what our intent is at the same time I think youll see us doing some smaller transactions, where we also build the pipeline.
Line, but the focus in the short term is really continue to build upon this new EBITDA level that we have and if the acacia transaction yields the revenue and profitability that we forecast. This is.
That was also a great transaction for us and hopefully this company is getting.
A lot bigger quickly and consistently and that's what we plan to do with the cash and use a little bit of a debt, yes, so you're exactly right. Thank you.
Alright, Thank you very much and congratulations on the quarter.
<unk>.
Our next question comes from Tim Lugo from William Blair.
Hey, guys Lachlan on for Tim Thanks for taking the questions and I'll add my congratulations on the strong quarter.
A couple as well sort of recent launches. So just on vasopressin you mentioned the ship later in the quarter.
As the.
It's kind of market dynamics being relatively stable since the end of the quarter or are you seeing.
The continued increase in share.
What changed there and then on.
Betsy it's sort of a similar question.
They had the volume limits for Q1.
Is there any commentary you can give on.
What you're seeing so far in Q2.
Increasing demand relative to what you saw.
February and March or anything along those lines. Yeah. Thanks. Thank you for the questions. So let's start with basal and I would say base is pretty.
Pretty flat in good shape right now.
Our share's been 24% the number that we quoted was the last four weekly numbers. So the last month.
<unk>.
We expect that we'll continue to do well in that market and it's unfortunately, it's pretty stable I think that's fantastic.
In terms of <unk>, we spent the.
Q1.
With those limited vials that we had and putting those into distribution and now we're going through the process of pulling that all through and we're getting great feedback its a great product right I think we invented.
Product and <unk> that has significant advantages in the marketplace and it's being accepted well and we think that <unk> will probably have.
Good lifecycle over a couple of years here. So we're very excited about both as to pet vaccine market builds.
We're just we're in a good place and hopefully we will deploy our resources.
Effectively and just continue to grow the company.
And diversify.
Yeah.
Great. Thanks, and then I guess.
If I could follow up.
Just thinking about sort of the second quarter, how much of the demand in the first quarter was the sort of stocking versus.
Actual patient demand.
So as as typical.
You spend the first period of time in the launch and stocking we've had some.
Pretty good pull through in that pull through will continue to build and sales will continue to build but the important part of it is that that's happening now it's happening at a good pace and.
The customer contact we're having has been very positive.
Again, the fact that it is a ready to dilute.
Product that doesn't need to be mixed in some of the other advantages. We have is being received very very well.
We're just pleased.
Probably on track from where we expect to be.
Awesome. Thank you.
Thank you.
And once again that is star one to ask a question we'll take our next question from David <unk> from Piper Sandler.
Thanks, So just a couple first.
Can you just give us a refresher on how you're thinking about how the bendamustine market is going to evolve once generics of the legacy form of the product.
Enter the market, what's your expectation for <unk>.
Your share.
But I should say the <unk> sure.
And how you think about.
Pricing dynamics. So that's number one and then secondly, I wanted to get your.
So it's on the assets that you're acquiring in the Acacia.
Fans action.
And specifically I wanted to.
Pick your brain on how youre thinking about sales potential of buffet, though in Barhoum CIS and in the context of.
Other agents.
Our available cheaply in these categories.
Any helpful commentary, there would be great. Thanks.
Thank you David So, let's start with Europe been Deca question.
The best way to think about this is.
Deca was in our mind.
A tremendous leap of value in the marketplace from trend and quite frankly, bill wraps up.
And Deca takes the infusion of Bendamustine from $30 60 minutes down to 10 minutes, which the feedback that we've had over the years that we've been on the market has been received.
Significantly well by patients nurses and physicians, it's just the better product in the market and you can see that from the from the market share when trended generics come to the market. Eventually that is clearly a therapeutic substitution to been decades, not a generic substitution and <unk>.
<unk> is going to be protected now I think it goes out to 28 with the recent settlement that we have so we have many years of enjoying the deca. So the question really is how many people are going to go back to.
30% to 60 minute that they have to reconstitute again.
Certainly I would say, it's going to be really hard to switch patients in the middle of a cycle.
We've been saying consistently that we believe will keep.
$65, 70% of the market and from everything that we've seen thus far and the.
The users that we speak to we believe that Thats.
Consistent in its probably whats going to wind up happening. It's just hard to see major institutions that are worried about their patients switching away from Ben decade to generic.
Trend, so we feel pretty good about.
The long term value and Deca will supply and quite frankly.
If that wasn't the case, we'd be selling a heck of a lot more bell wrap. So then we are right because bell wrap so is the same label as trend as <unk> and we have our sales force selling bell wrap so people just prefer been deca and I don't think thats going to change.
Second to that the assets of Acacia.
With our sales team and the foundation that the Acacia team has laid thus far I think we're going to do well and why we made the acquisition we haven't projected yet where we think those products are I think it's a little bit too early but I will say that we think we purchased.
The assets at a pretty steep discount to what we perceive to be the DCF of that product line.
Just we have a little bit of heavy lifting to get to those numbers, but we're we're pretty confident if I recall the combined market value of those two products are about $3 billion.
And so if you think at peak sales, we get about 10% of those markets. Then this is pretty significant peak sales for the two products.
There are acute care products, they're low price, but the pricing that we have in mind for the two products by Teva and Barr hemp Sis are on the lower end of the spectrum. So we believe that will make our money through a lot of volume the margins are still very good on the products.
So we're not too concerned that both products just have.
Have a label improvements they are beneficial and we think with our sales force in the right messaging along with the really tremendous groundwork dedications late.
Excuse me, thus far we're going to do rather well with those two products.
Thank you.
Thank you David.
And it appears we have no further questions at this time I will now turn the program back over to Scott tariff for any additional or closing remarks, well. Thank you again for joining our call today, we have a lot to look forward to in the months ahead as we continue to deploy our cash wisely to build a strong and diverse foundation for sustained growth, we look forward to sharing.
Our progress with you as we always do we continue to work hard to provide patients and providers with the medicines, they need and deliver value to our shareholders and we're looking forward to another.
Another really strong year for the company. Thank you again for being with US This morning.
This does conclude today's program. Thank you for your participation you may disconnect at this time have a great day.
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