Q2 2022 Mallinckrodt PLC Earnings Call

August 11, 2022

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Good morning and welcome to the Malin Q2 2022 earnings announcement and business update conference call. It will begin soon.

All participants will be in the Signaling Mode. Should you need assistance, please signal Conference Specialist Professor Ms. Starkey, followed by 0.

After today's presentation, there will be an opportunity to ask questions.

To ask a question, you may press star then 1 when you tell it from keypad. To withdraw your question, press star then 2.

Please note this event has been recorded. I would like to turn the call to Daniel Special, Global Corporate Controller and Chief Investor Relations Officer. Please go ahead. Daniel Special, Global Corporate Controller and Chief Investor Relations Officer

Thanks, Anthony. Good morning, everyone, and thank you for joining us today. With me this morning are Siggy Oleson, Malacrat's new president and chief executive officer, and Brian Reason, EVP and chief financial officer.

Before I turn the call over to Siggy, let me remind you that you'll hear us make some forward looking statements.

And it's possible that actual results could be materially different from our stated expectations.

Please note we assume no obligation to update these four looking statements, even if actual results or future expectations change materially.

We encourage you to refer to the cautionary statements contained in our SEC filings for a more in-depth explanation of the inherent limitations of such forward-looking statements.

We will also provide selected non-GAAP adjusted measures related to our financial performance.

A reconciliation of these non-GAAP measures is included in our earnings release, which can be found on our website, malincroft.com.

We use our website as a channel to distribute important and time-critical company information, and you should look at the investor relations page of our website for this information.

As noted in the earnings release, our second quarter ended July 1, 2022, included a predecessor period from April 2 to June 16, 2022, and a successor period from June 17 to July 1, 2022, as a result of the emergence from Chapter 11 bankruptcy on June 16.

The second quarter operating results we will be discussing today are for those periods combined with comparisons against the predecessor second quarter ended June 25, 2021. And unless otherwise specified, the net sales percentage changes we mention here will be on a constant currency basis. With that, I'll turn the call over to Siggy. I a

Thanks Dan and good morning everyone. I'm pleased to be speaking to you for the first time as Malenkot's president and CEO .

I'd like to start by telling you a little bit about myself and why I'm excited to be here.

I'll then share my perspective on how our business is today, and the challenges and opportunities we see ahead of us.

I've been in the pharmaceutical industry for nearly 30 years working in both branded and drugs.

I most recently served as the CEO of Hikma Pharmaceuticals. Earlier in my career, I had the leadership positions at Teva Pharmaceuticals, Watson Pharmaceuticals, which became Actavis and then Allergan, and Pfizer.

It's been a pleasure to join Marlinckrodt alongside the company's new board.

Each director has already brought highly valuable insight and input as we plan for Malenkot's future.

In fact, I've been reunited with an old colleague, our Chairman Paul Bissell.

Paul and I previously worked together at Watson Pharmaceuticals where he served as CEO .

Under his visionary leadership, we transformed the company into a global branded pharmaceutical leader.

This experience will be deeply beneficial to our work to put Malenkov on the path to long-term value creation.

While the company has no doubt faced many challenges and changes in the past few years with the recently completed financial reorganization and global pandemic, I believe Manco is at an important inflection point.

Today, we have the opportunity to bring the focus back onto delivering innovative solutions to patients.

A lot of work has been done already to establish a strong foundation in the business.

which is underpinned by significant liquidity, meaningful cash flows from operations, a solid US commercial platform, competitive positioning in critical care and immunology.

Although I believe there is a lot of potential at Malincross, significant challenges exist that we will have to work hard to address.

These challenges include stabilizing the performance of R32 and the Inomax, driving growth for Para tried severe touring

executing the launch of Stratograph

gaining approval for telepresence in the US, and protecting the bottom line in generics, all while continuing to balance careful cash management and reinvest in the business.

Brian will go into the details of the quarter shortly, but our financial results for the quarter

From the guidance we are sharing today, we reflect the opportunities we are pursuing on the headwinds our business is currently facing.

Importantly, we are working with urgency to navigate these headwinds by focusing our organization on three near-term priorities.

strengthening the balance sheet

stabilizing our portfolio, and making the right investment in our pipeline.

Further, there has been a real opportunity and need to re-energize our teams and to increase engagement and communication with the wider organization.

I am clear that we need to redouble our relationship with many of our stakeholders.

I recognize that the reorganization combined with some of the litigation that led to it.

has had an impact on how Malenkraut is perceived.

This is something I am personally committed to fixing.

Injecting new optimism into our company culture and strengthening the Marlin Croft relationship with healthcare providers, customers, partners, patients, payers and of course our shareholders will be a vital complement to our near-term business priorities.

Since this is Malenka's first investor call in some time, as a refresher on the state, let's dig into where we are today.

I'll begin by providing some information on our business segment, and then we'll talk in more detail about our priorities moving forward.

Our company has approximately 2,700 talented employees serving patients through two segments, specialty brands and specialty generics.

Starting with specialty brands.

This is a global business focused on innovative branded drug development and commercialization for underserved patients with severe and critical conditions.

This segment benefits from core products that bring established track records, strong brand recognition and visibility to high market revenue streams, a robust foundation to drive value.

In addition to our in-market products,

We are in the midst of an exciting launch of Stratograph and look forward to the potential US launch of early pressing along with future line enhancements to help to stabilize our base business. We are in the midst of an exciting launch of early pressing along with future line improvements

Let me highlight our branded in-market products and opportunities.

First, Einomax nitric oxide gas is a vasodilator and a leader in the inhaled nitric oxide market.

Inomux brand recognition and superior customer service and technology, coupled with international expansion, have allowed it to remain the leader in the inhaled nitric oxide market.

Moreover, long-term contracts for the product provide significant revenue visibility as we continue to navigate competitive pressure and work towards stabilization.

We continue to drive innovation in the franchise and look forward to launching Einomax Evolve.

which I will talk more about in a moment.

Next, Seracos, immunology platform enhances a patient's ability to fight disease via the world's only fully integrated and validated extracorporeal photophoresis or ECP system.

Paracost is a drug device combination with niche indication and very well established safety profile.

We also plan to launch Teracos in Japan in 2024 and are pursuing additional opportunities to expand labeling.

including adding graft-versus-host disease to the US label, and expand into additional geographies.

While product utilization has been impacted by COVID-19 and competitive pressure from oral therapies, it remains the market leader in ECT therapy and we expect this product will continue to grow over time.

On the immunology side of our offerings, after till...

repository corticotropin injection is our biggest product currently in market and the leader by decades of clinical evidence supporting its efficacy and safety.

ACT-TL is a complex mixture of ACTH and other peptides that has 19 indications across multiple therapeutic specialties.

We currently promote 11 of these indications with a focus on later line of treatment for patients living with acute and episodic autoimmune disorders.

We also continue to drive innovation in the Asker franchise and are committed to delivering our self-delivery injector device which we'll talk about in a minute.

Amitisa lupiprostone is a CIC-2 activator for the treatment of constipation and the globally-partnered product for which Malacros retains manufacturing and select S&T responsibilities.

We see continued strong utilization for this partner product in the Japanese market.

where exclusivity extends to 2026.

AutoCraft, which launched in January , is the first FDA-approved alternative to AutoCraft for adults with deep heart-deal fitness burns.

It is designed to handle like an autograph and support the public's own ability to heal.

It has a large total addressable market with approximately 40,000 patients being hospitalized annually in the US for the treatment of severe burns.

We've been deliberate with the launch to ensure a positive outcome and to ensure that the healthcare providers understand the role of strategies in helping burn victims.

While we recognize this will be a slow launch due to the thorough educational approach we are taking with surgeons, we are encouraged by our progress today.

We have made presentations to surgeons in over 50 persons of burn centers in the US in line with our internal goals. And we are pleased with the feedback we have received from doctors and key opinion leaders.

Moreover,

We have a remaining 11-year exclusivity period providing ample runway that will enable us to invest in the life cycle of this therapy and expand into indications including full thickness burns on pediatrics.

where we think Stratocraft can be a game changer.

We are very excited about this new innovation.

Turning now to our branded pipeline.

Let me start with telepressing.

This is a synthetic selective vasopressing amyloid indicated to improve kidney function in adults with hepatitis syndrome or HRS.

In June , we resubmitted our NDA to the FDA and the agency established a PDUFA date of December 9.

Since we have an orphan drug exclusivity, if approved, we will have a 7 years exclusivity period for this therapy.

ELLIPRASIN is recommended as a preferred treatment for HRS according to global treatment guidelines.

including the American Association for the Study of Liver Disease and the European Association for the Study of the Liver.

in countries where it's approved.

Kelly Pressing has a strong history of treating patients in global markets and we are confident that it will be a growth driver, if approved, with high doctors' awareness, good clinical demand and use as a first line treatment.

If approved, telepressing will be the first and only FDA-approved treatment for HRS in the US.

Next is I-Nomax Evolved, which I mentioned earlier.

This is our next generation device with enhanced automation, streamlined design and improved transportability.

We are targeting a 2023 launch.

In addition, we have our new Aqstar alternative delivery device, alternate delivery device, an easier and more patient-friendly version of Aqstar GL for single-unit dosage indications.

We expect.

innovation will help stabilize the performance of our ACTA-TL franchise by expanding REITs to a broader appropriate patient population.

Due to the substantial patient benefits in terms of self-administration, we expect over time a full conversion to the device and most of our therapeutic indications.

In terms of where we are in the process, device development has been completed.

While we are ready to proceed with submission, an ongoing regulatory matter involving one of our partners remains

which must be resolved before we can move forward.

Turning to our specialty generic segment.

Vertical integration affords a number of important competitive advantages, including quality, quantity and consistency of supply that position this business as a skilled, studied partner to a large purchasing organization.

It also provides visibility across finished doses and API opportunities.

In addition, we have proven capabilities in complex formulation, state-of-the-art laboratories, and the highly engaged R&D organization.

Our diversified specialty generics portfolio has over 50 product families across APIs and generics.

more than 250 SKUs and a diversified portfolio of complex NDAs to drive long-term value creation.

We are also proud of our strong execution in Space LT generics.

I'm pleased to report that we missed zero shipments during the pandemic as the leading API supplier for code-related analytics.

Now at the top of the call, I mentioned three near-term strategic priorities, which I will now discuss in further detail.

Starting with a balance sheet.

while the company made critical strides reducing that through reorganization process.

We will prioritize further reducing debt and continue to drive strong customers.

Building on the actions the company has taken over the last year plus

We will start by reducing costs and spending wisely.

Over the last 12 months, there were a number of changes made across the segment to achieve a lower cost base.

protect the EBITDA margins and support the long term growth.

This includes realigning segment leadership and refocusing R&D priorities.

shifting to a shared service model to reduce SD&A costs and containing spend in the R&D and operation.

We will continue efforts like this across the organization.

One of my key priorities is taking a close look at everything we do and how we do it.

And I'm confident

that we can continue to streamline and enhance the way we operate to better suit the size of the day.

In doing so, we will become more efficient, spend less, and maximize the impact of each dollar spent.

At the same time, we will also be evaluating opportunities to divest non-core assets to further the level.

And the other part of strengthening our balance sheet, of course, is continuing to generate strong caskmoles.

which takes me to our second and third priorities.

Our second priority is stabilizing and maximizing opportunities for our in-market products.

On this front, we are starting with a strong portfolio which is critical.

we will align the organization's focus around executing on the existing opportunities to bring these products to new markets.

We will also continue driving innovation to bring more patient-friendly solutions to market.

And our third priority is our pipeline.

While we have several exciting new products in development, our focus here will be on investing in the expansion of our pipeline with the goal of establishing a regular canvas of bringing new value-enhancing therapies to markets.

Before I turn it over to Brian , I want to note that since joining Malincott just approximately seven weeks ago, I've spent a great deal of time engaging with our employees and hearing directly from them about what they think Malincott is doing well.

and what we can do better.

I also look forward to doing the same with our customers, healthcare providers, patients and partners in the near future.

The valuable insight.

we learn from these conversations will feed into the process we are undertaking to redefine who we are on the Charles Malenkraft's path forward.

And while we have our work cut out for us, I want to reiterate that these conversations have already reinforced my belief that we have a foundation to create a successful future for the company.

The teams here possess extraordinary grace.

focus, resilience, and above all, a desire to serve patients that will be crucial for our success.

I wouldn't be here speaking with you today if I didn't have every confidence in Malincroft's ability to create value for shareholders and make a positive impact on patients' lives every day.

With that, I'll turn it over to Brian to discuss our second quarter results and our outlook for the remainder of the year.

Thank you, Siggy. We're thrilled to have you on board with us.

I'd also like to thank everyone for joining us today.

We are excited to be back in the public market.

and look forward to moving the stock to a national exchange as soon as possible.

Before I dive into this quarter's financial results...

I want to touch briefly on what Mount Crock accomplished through the financial reorganization completed in June .

First, Mallinckrodt meaningfully improved its financial position by eliminating more than $1.3 billion in debt principal and by raising new $200 million accounts receivable credit facilities.

which contributes to our strong liquidity position.

Second, the company resolved significant litigation uncertainty.

This included resolving litigation related to opioids and Axar gel, including both governmental and private matters.

And third, during the reorganization process.

the company executed a number of organizational enhancements and cost cutting reduction initiatives.

meaning that Melencott today is leaner and more efficient than in recent history.

Turning to our results.

Non-cross total net sales in the second quarter were $469 million.

as compared to $546 million, reflecting a decrease of 13.8%.

Our specially brand segment reported net sales of $306 million.

as compared to $382 million.

This reflects a decrease of 19.2% primarily due to the impacts of competition on certain products including Acthar Gel, Inomax and Eri-Coase.

the continued impact of the COVID-19 pandemic to product utilization, and continued payer scrutiny on overall specialty pharmaceutical spending.

During the quarter, the company incurred a one-time $9 million adjustment to its historical Medicaid rebates related to the ACT-R jail program.

which impacted its performance in the Corps.

Through the year, the company anticipates net sales of approximately $500 million forActuallyanev-

Our Specially Generic segment reported net sales of $163 million.

as compared to $155 million.

This reflects a decrease of 1.2% primarily due to a reduction of dosage opioids and controlled substances, API, net sales, offset partially by the net sales growth in APAC.

the company's net loss.

for the second quarter was $257 million.

is compared to a net loss of $106 million.

driven primarily by the impacts of Emergence and Fresh Start accounting adoption.

The Melon Cross adjusted EBITDA was $156 million in the quarter as compared to $200 million.

a decrease of 21.7%.

This was primarily due to lower net sales.

the negative impact from foreign currency.

Expenses associated with the launch of Stratograph.

build up and launch preparedness for terro-pressing.

primarily offset by other reductions in SG&A and R&D expenses.

as the company has undertaken specific action over the past year to reduce its overall cost structure.

With respect to operating matrix in the quarter, adjusted gross profit as a percentage of sales of $67.1%.

adjusted SG&A as a percentage of net sales was 28.3%, and adjusted R&D as a percentage of net sales was 7.1%.

Like most companies, we've seen unfavorable impacts from foreign currency during 2022, resulting in approximately $10.6 million in incremental SG&A expense in the quarter.

throughout the tendencies of the Bancroft Sea.

the company generated strong cash flows, allowing us to satisfy a number of plan-related settlement payments and debt repayments at emergence in mid-June.

We expect the business will continue to generate cash flows moving forward. And as Ziggy mentioned, the company will evaluate non-core asset sales as we look to continue improving the balance sheet.

In fact, as you may have seen, we recently announced the enclose on the $100 million sale of the Priority Review Voucher obtained in the Approval of Stratograph.

of which we received $65 million.

The company has more than 550 million in liquidity.

Our cash and cash equivalent as of July 1, 2022, were $355 million.

This is net of all cash outflows that are emergent and includes $65 million retained from the proceeds of the sale of the Priori Rooting Voucher.

We continue to maintain a new undrawn $200 million dollar cash receivable financing facility established as part of our access findings.

Total principal debt outstanding at the end of the second quarter was $3.604 billion with net debt of $3.249 billion.

which differs from the balance sheet due to fresh start accounting and excludes annual settlement payments.

This reflects a $650 million financing we completed in June and the pay down in full of a $900 million refund.

Looking ahead for the full year 2022, we expect to achieve total net sales of between 1.875 and 1.8

billion dollars and 1.925 billion dollars.

Total net sales in specialty brands of between $1.25 billion and $1.28 billion.

Total net sales are especially generic of between $625 million and $645 million.

an adjusted EBITDA of between $630 million and $660 million.

Now I'll hand the call back to Ziggy for some closing remarks.

Thank you, Brian . I want to restate that Malenco today has a strong foundation underpinned by significant liquidity, meaningful cash flows from operations, a solid US commercial platform, uncompetitive positioning in critical care and immunology.

And while we still have challenges ahead, I believe we are well equipped to meet them.

We have a clear path forward to stabilize the business by executing our near-term priorities and the top priority for me will be to re-energize our teams and helping to re-enthusiast our stakeholders to Malenkov.

These efforts truly go hand in hand.

Finally, the more I've learned about the company, the further my conviction has become that Malincroft has a strong future rooted in an unwavering focus on improving outcomes for patients.

I'm pleased to be working alongside teams that share a passion for putting patients first and making a difference in people's lives.

We are excited what comes next at Malenkraut.

And with that, we'll now open it up for Q&A, operator.

We will now begin the question and answer session.

To ask a question, you might press star then run your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.

To withdraw your question, please press star and 2. At this time, we will pause and move on to the

question will come from Greg Frazier with the truest.

You may now go ahead.

Thanks for taking the questions and congrats on getting to this point.

First question, just on this thought, when do you anticipate getting relisted on an exchange? If you could walk through that process and the timing, that would be helpful.

Yeah, sure. So from a relisting on the exchange perspective, you know, this is something obviously that we worked on, you know, in advance of emerging from bankruptcy. We didn't quite meet the requirements from a listing perspective due largely in respect to the concentrated nature of our shareholders at that point. It's something we're very much committed to. As you heard Brian make specific reference to, you know, wanting to do that as quickly as possible. You know, we're in the steps of working through, you know, the application requirements.

and ensuring we meet the requirements and we'll look to make application in short order.

A couple of questions on the guidance and the key specialty products. Can you talk about the assumptions for InaMats and TheraCoast that are factored into the specialty brand guidance?

And on ACTR, can you talk about the steps that you've taken to protect that franchise and mitigate share loss with the new competitor on the market?

So let me start on ASTR and then Brian will talk more about the EINEMAGS and the FEROCOS. So on ASTR, I think clearly the product has been under pressure and what we have seen is mainly a pricing pressure.

As you mentioned, there is a new competitor on the market, but what we have seen with the new competitor is that really the market has expanded. And we can see that from symphony data that really the introduction of the new product coming to the market, a 505B2 product, has expanded the market itself. Not so much affected our prescription rate.

I think the big thing for us will be the new injection device, the self-ject that we hope to introduce soon. We have a challenge with one of our suppliers, one of our partners, which is working very hard with the FDA to resolve an issue, but we hope as soon as we can to bring that product to the market. And I feel, I'm looking at the opportunity and getting the feedback from doctors and the patients.

That will be the real opportunity of turning this around and giving a better boost and tailwind into the after process.

Still a very good product. You have to keep in mind that this is a product that has 18 different clinical trials behind it. It's promoted in 11 different indications. We are very pleased with the product and how it's performing, but clearly, over the last few years, it has been under pressure mainly due to the pricing pressure in the market.

Ryan, maybe on IOMax. Yes, thanks, I'll make a couple of comments. So, when we look at IOMax, as you know, Praxair has been in the market for a couple of years now. We're largely through kind of the customers, the renewal of contracts in a kind of a round of competitive markets. ring, I don't know what the current hub process is going to be over a shutdown coming up. So make sure theircor doom is trumpeted into a good target so we don't track hem trade off of that focus.

So, you know, we are starting to see that product stabilize and we are seeing the market, you know, start to bifurcate between institutions that are view the delivery of nitric oxide as a commodity versus does it value

you know, technology and kind of white glove service. So we are we are seeing that and and we obviously compete in the latter. On Theracose, you know that historically has been a very consistent growth asset for us. During the pandemic we did see the stem cell transplant dip quite a bit and there's a bit of a lag to the

to when these patients go on to therapy. So we did see that dip. We do expect to see that, kind of the stem cell return to kind of normal levels and there goes to the return to growth. There are a couple oral competitors out there, very, very early stage on that, but we.

We do see it as a market in which there's room for both types of care.

Yeah, maybe one thing I'd add to Greg, appreciate the question and you mentioned specifically about guidance. I think one of the comments that we made today was really just trying to set an expectation for ACFAR for the remainder of 2022 or 2022 maybe in totality. So we referenced it specifically.

and approximately $500 million mark for that product this year. So if you take that into consideration with respect to the net sales guidance we provided, especially brands in total, that should help you kind of frame what the rest of the portfolio looks like.

Just a quick follow-up on IMS. How much of the customer base is locked in with long-term contracts and how do those contracts roll off over the next two or three years? Thank you.

Yeah, so on Inomax, it's basically a contracting. So some customers are on a yearly contracting, other customers are on a multi-year contracting up to three years. So that gives me, at least coming new into this business, much more visibility. I think we are still the market leader. We have 50 gross markets here, but whenever a contract comes up, we need to negotiate and go back. We have a good visibility.

at least 12 months at the front, but some of the contracts are multi-yield contracts.

but some of the contracts are multi-year contracts. Thank you.

Any other questions Fred?

I'm good. I'll hop back in the queue. Thanks so much.

Okay, appreciate it. Good to hear from you.

Next question, please.

Again, if you have a question, please press star, then 1. Our next question will come from David Amselin with Piper Sandler. You may now go ahead.

Hey, thanks. Just had a couple. First, I know you're talking about trying to...

to stabilize Axar, but there is the reality of competition. So Siggy, I wanted to get your thoughts on how you're thinking about ways to just further diversify the business away from Axar. Do you look at generic assets? Are you looking at brand assets? And can you articulate how you're thinking about that in terms of...

business development. And then related to that, can you also talk about your M&A bandwidth in terms of deal size? That would also be helpful. Thank you.

Thanks, David. As I mentioned in my prepared remarks, I think the first point of, first thing we are focusing on is the balance sheet. How we can lower our debt. We do that with two ways. In a way, we have this opportunity of reducing costs and increasing hopefully the EBITDA or at least stabilizing the EBITDA as we have.

but doing that by reducing the debt in the company. And the team really has done a great job over the last 12 months in preparing the landscape there, but there's more to come. I think we need to look at the opportunities of right-sizing this business for the future of Malincott and the size of the revenue and product offerings that people have.

The second thing obviously is this opportunity of selling non-core assets for the business to reduce debt, but also to give us a little bit of an opportunity for the in-market product. In terms of the business itself, you highlighted it, the key thing for us now is to stabilize after Dell and IONOMAX. We have been under pressure over the last three years. We went through that in detail towards the reasoning for that.

And we feel that everything we have in hand now and the understanding, we understand that we will still be under pressure for the next 12 months, but we really feel we have the opportunity of turning this around because there is a line extension for both products that we have in the pipeline and hopefully we will bring soon to the market, which will help us to stabilize the business more than anything else.

In terms of how we can grow the business, it has to be around the pipeline that we have. First of all, I'm very excited about Stratograph. I know there's a slow update, but really this is a game changer in the treatment of burns for burn victims around. As I mentioned, 40,000 burn victims. If anyone knows how autocraft works...

I think stratigraphy is a great alternative for the patients to be able to utilize. So I'm excited about that. We know it's a slow effect. It will be a slow effect. And the reasoning for that is we need to work with the burn surgeons to change their behavior and how they utilize, how they treat burns in the surgery. But we have a big belief in this product and therefore we are in a way working online extension.

also on food thickness, but also on pediatrics, where I personally believe will be a game changer for this product going forward. I'm also excited about telepresin. I think telepresin is a key product. We have a pitufa date on December 9th.

there is no product approved in the US for the treatment of HRS. And HRS is a very critical condition. In the US today, there's over 40,000 people that get liver failure every year. So this is a real issue where the kidneys stop functioning, the type one HRS that we expect the indication to be. There is a real patient need, and this is a well-known product.

outside of the US, the safety profile that's well known and US doctors know this product from above, from their colleagues that work outside of the US. In terms of other pipeline opportunities, I think we need to look at both generics and brands. I think on brand is to expand a little bit more on the phase two, phase three products. We are actively looking for partnership on that.

We still have cash flow in our cash projections. We are paying down debt, but we also are building up the pipeline and supporting the in-market products.

So, there won't be maybe the same as we saw maybe four or five years ago, but we still have a significant opportunity to invest in our pipeline and will continue to do that.

As you know, I've been in generics a few years. I'm impressed with the generics business we have. It's relatively small in comparison to maybe what I've been used to in the last 10 years, but overall I feel that the niche part of this business is the exciting part. By introducing one or two or three products to the market, that could make a difference for this business, which wouldn't make a difference for the big giant company of Viachris or Terra or Santo in the market.

That really makes a difference for us. So in terms of M&A, I don't expect us to do anything M&A in the next 12 to 24 months. We simply don't have a cash flow. Our focus will be on paying down debt and then utilizing, if we have some remaining cash availability to enable us to continue to grow the business going forward.

Brian anything from you? No, I think that was a great answer. I just add to the any M&A or BD in the next 12 to 18 months. I think there's an opportunity to...

to smaller type transactions with Creative type structures that wouldn't require a large upfront And obviously we focus on d levering but you know where we could you know, maybe bring an asset in Have some back-end royalties with an opportunity to drop that in utilize our commercial our current commercial infrastructure, so you know

a big upfront and long-term diluted type of asset. We're not going to be doing that in the near term, but there is a way to creatively...

upfront and long-term diluted type of asset. We're not going to be doing that in the near term, but there is no way to creatively structure transactions and have some near-term increases.

and we'll look to tack those on.

look to tack those on in the next year.

Okay, that's helpful. If I may follow up, guys. So, Siggy, when you were at Hickman, obviously there was a big hospital injectable franchise there. You're certainly no stranger to that piece of the business. I guess what I'm asking here is you do have hospital infrastructure. As you think about the evolution of Mallinckrodt, how do you think about further build-out?

of a hospital and deductible franchise, whether it's regular generic, some 505E2s, maybe some brand. But how do you think about that going forward, given your expertise and your experience in that piece of the business?

Yeah, so I think the first thing is I'm impressed with the infrastructure that we have in our critical care business. We really know the doctors, we know the need, we have an amazing relationship. You know, we just answered the question about the Inomax, but the Inomax is such a relationship product due to the nature of the service we provide Stratograph. It's a relationship. We are working with a burn unit.

Keep in mind, burn units in the US, there's only a hundred of them in the whole of the US. We've already spoken to more than half. We really are building up because of the relationship we have. And I think that will help us with tele-pressing coming into the market, which is an injectable product. And really, there is a trust in our hospital and critical care business units.

I think there's an opportunity to expand that. I think we would be an ideal partner for somebody that has one or two products that needs a commercial partner to take it to the market. We really would be in the short term, we have an opportunity in our backs to take on more products we have the bandwidth, we have the expertise, we have the market access team, we have the customer service. So coming into this, having seen really the need for good service to the hospital.

That's where the focus is. What type of product is impossible to say now? I doubt that we would do that for generics, but I think with any differentiation, specialty differentiation, no matter if it is 505B2 or a specialty patent-protected drug, I think we couldn't be a good partners for the reason you mentioned. What I've seen, I'm impressed with, I think we have an early product, we have two products in the launch phase with stratigraph and telepresence.

which hopefully will be in the launch phase later this year when approved. But really the opportunities is we have this infrastructure, we have this expertise, we have this very positive feedback from the hospitals that would allow us to expand our product offering. And that's really part of the BD and maybe M&A opportunities that we have to expand into that part of the business.

Okay, thanks, Siggy. Appreciate it.

Thanks, David. Good to hear from you.

operating more questions?

There are currently no further questions. This concludes our question and answer session. I would like to turn the conference back over to Daniel. Thank you for attending a special point of closing remarks.

Yeah, thanks Anthony. We want to thank you all for your interest in the company and we certainly look forward to engaging with you guys in the coming days and weeks ahead. If you have any questions, the best way to get a hold of Derek and I today will be via email and we'll certainly get back with you as soon as possible. And we look forward to obviously having Siggy and Brian engage with investors here moving forward as well. All the best to you and your families and have a nice day. Thank you.

The conference is now concluded. Thank you for joining today's presentation. You may now disconnect. Thank you.

you

Good morning and welcome to the Maling Q2 2022 earnings announcement and business update conference call. Good morning and welcome to the Maling Q2 2022 earnings announcement and business update

All participants will be in the Signaling Mode. Should you need assistance, please signal Conference Specialist Professor Mr. Starkey, followed by 0.

After today's presentation, there will be an opportunity to ask questions.

To ask a question, you may press star then 1 until it's on keypad. To withdraw your question, press star then 2.

Please note this event has been recorded. I'm trying to come to a Daniel special.

Global Corporate Controller and Chief Investor Relations Officer. Please go ahead.

Thanks, Anthony. Good morning, everyone, and thank you for joining us today. With me this morning are Siggy Oleson, Malachat's new president and chief executive officer, and Brian Reason, EVP and chief financial officer.

Before I turn the call over to Siggy, let me remind you that you'll hear us make some forward looking statements.

And it's possible that actual results could be materially different from our stated expectations.

Please note we assume no obligation to update these four looking statements, even if actual results or future expectations change materially. We encourage you to refer to the cautionary statements contained in our FCC filings for more in-depth explanation of the inherent limitations of such forward looking statements.

We will also provide selected non-GAAP adjusted measures related to our financial performance.

The reconciliation of these non-GAAP measures is included in our earnings release, which can be found on our website, malincrapt.com.

We use our website as a channel to distribute important and time-critical company information, and you should look at the investor relations page of our website.

for this information. As noted in the earnings release, our second quarter ended July 1, 2022, included a predecessor period from April 2 to June 16, 2022, and a successor period from June 17 to July 1, 2022, as a result of the emergence from Chapter 11 bankruptcy on June 16.

The second quarter operating results we will be discussing today are for those periods combined with comparisons against the predecessor second quarter into June 25, 2021. And unless otherwise specified, the net sales percentage changes we mention here will be on a constant currency basis. With that, I'll turn the call over to Siggy. What is growth Metal 1?

Thanks Dan and good morning everyone. I'm pleased to be speaking to you for the first time as Malenkot's president and CEO . I'd like to start by telling you a little bit about myself and why I'm excited to be here.

I'll then share my perspective on how our business is today, and the challenges and opportunities we see ahead of us.

I've been in the pharmaceutical industry for nearly 30 years working in both branded and bi-

It's been a pleasure to join Marlinckrodt alongside the company's new board.

Each director has already brought highly valuable insight and input as we plan for MarlinKot's future.

In fact, I've been reunited with an old colleague, our chairman Paul Bissell.

Paul and I previously worked together at Watson Pharmaceuticals where he served as CEO . Under his visionary leadership, we transformed the company into a global branded pharmaceutical leader.

This experience will be deeply beneficial to our work to put Malenkopf on the path to long-term value creation.

While the company has no doubt faced many challenges and changes in the past few years with the recently completed financial reorganization and global pandemic, I believe Manckroft is at an important inflection point.

Today, we have the opportunity to bring the focus back onto delivering innovative solutions to patients. A lot of work has been done already to establish a strong foundation in the business, which is underpinned by significant liquidity, meaningful cash flows from operation, a solid US commercial platform, and competitive positioning in critical care and immunology.

Although I believe there is a lot of potential at Malincross, significant challenges exist that we will have to work hard to address.

These challenges include stabilizing the performance of Arc30L and the Inomax, driving growth for Theracos, and the development of the new performance for Daracos executable and four HackULT 4 and Inomax mm anymore Hellorh

executing the launch of Stratograph-

gaining approval for telepresence in the US, and protecting the bottom line in generics, all while continuing to balance careful cash management and reinvest in the business.

Brian will go into the details of the quarter shortly, but our financial results for the quarter

From the guidance we are sharing today, reflect the opportunities we are pursuing and the headwinds our business is currently facing.

Importantly, we are working with urgency to navigate these headwinds by focusing our organization on three near-term priorities.

We are working with urgency to navigate these headwinds by focusing our organization on three near-term priorities. First, we will be forming a height, which is almost a 1 Area.

stabilizing our portfolio and making the right investment in our pipeline. Further, there's been a real opportunity and need to re-energize our teams and to increase engagement and communication with the wider organization.

I am clear that we need to redouble our relationship with many of our stakeholders.

I recognize that the reorganization combined with some of the litigation that led to it.

has had an impact on how Malenkraut is perceived.

This is something I am personally committed to fixing.

Injecting new optimism into our company culture and strengthening Malenkraut's relationship with healthcare providers, customers, partners, patients, payers and of course our shareholders will be a vital complement to our near-term business priorities.

Since this is Malenka's first investor call in some time, as a refresher on the state, let's dig into where we are today.

I'll begin by providing some information on our business segment, and then we'll talk in more detail about our priorities moving forward.

Our company has approximately 2,700 talented employees, serving patients through two segments, specialty brands and specialty generics.

Starting with specialty brands.

This is a global business focused on innovative branded drug development and commercialization for underserved patients with severe and critical conditions. This segment benefits from core products that bring established track records, strong brand recognition, and visibility to high market revenue streams, a robust foundation to drive value.

In addition to our in-market products,

Let me highlight our branded in-market products and opportunities.

First, Einomax nitric oxide gas is a vasodilator and a leader in the inhaled nitric oxide market.

Inomx brand recognition and superior customer service and technology, coupled with international expansion, have allowed it to remain the leader in the inhaled nitric oxide market.

Moreover, long-term contracts for the product provide significant revenue visibility as we continue to navigate competitive pressure and work towards stabilization.

We continue to drive innovation in the franchise and look forward to launching AinoMax Evolve.

which I will talk more about in a moment.

Next, Seracos, immunology platform, enhances a patient's ability to find disease via the world's only fully integrated and validated extracorporeal photophoresis or ECT system.

Pericose is a drug device combination with niche indication and very well established safety profile.

We also plan to launch Terracos in Japan in 2024 and are pursuing additional opportunities to expand labeling, including adding graft-versus-hostases to the US label, and expand into additional geographies.

While product utilization has been impacted by COVID-19 and competitive pressure from oral therapies, it remains the market leader in ECP therapy and we expect this product will continue to grow over time.

On the immunology side of our offerings, after-Tl repository corticotropin injection is our biggest product currently in market and the leader by decades of clinical evidence supporting its efficacy and safety.

AfterTl is a complex mixture of ACTH and other peptides that has 19 indications across multiple therapeutic specialties. During this learning process the x-M collection talks in meantime about wearer instructions

We currently promote 11 of these indications with a focus on later line of treatment for patients living with acute and episodic autoimmune disorders.

We also continue to drive innovation in the After Frances and are committed to delivering our self-delivery injector device which we'll talk about in a minute.

Amitisa Lupi-Prostone is a CIC-2 Activator for the treatment of constipation and the globally-partnered product for which Malacros retains manufacturing and select S&T responsibilities.

We see continued strong utilization for this partner product in the Japanese market.

where exclusivity extends to 2026. AutoCraft, which launched in January , is the first FDA-approved alternative to AutoCraft for adults with deep partial-thickness burns. It is designed to handle, like an AutoCraft, and support the public's own ability to heal. It has a large total addressable market with approximately 40,000 patients being hospitalized annually in the U.S.

for the treatment of severe burns. We've been deliberate with the launch to ensure a positive outcome and ensure that the healthcare providers understand the role of Stratocap can play in helping burn victims.

While we recognize this will be a slow launch due to the thorough educational approach we are taking with surgeons, we are encouraged by our progress today.

We have made presentations to surgeons in over 50 parts of burn centers in the US in line with our internal goals and we are pleased with the feedback we have received from doctors on key opinion leaders.

Moreover,

where we think Stratocraft can be a game changer. We are very excited about this new innovation.

Turning now to our branded pipeline.

Now to our branded pipeline. Let me start the telepresence.

This is a synthetic selective vasopressin amyloid indicated to improve kidney function in adults with hepatitis syndrome or HRS.

In June , we resubmitted our NDA to the FDA and the Agency established a PDUFA date of December 9.

Since we have an orphan drug exclusivity, if approved, we will have a seven-year exclusivity period for this therapy. Eliprescine is recommended as a preferred treatment for HRS according to global treatment guidelines.

including the American Association for the Study of Liver Disease and the European Association for the Study of the Liver.

in countries where it's approved. Telepresin has a strong history of treating patients in global markets and we are confident that it will be a growth driver, if approved, with high doctors' awareness, good clinical demand, and use as a first-line treatment.

If approved, telepressing will be the first and only FDA-approved treatment for HRS in the US.

Next is I-Nomax Evolved, which I mentioned earlier.

This is our next generation device with enhanced automation, streamlined design and improved transportability.

We are targeting a 2023 launch.

In addition, we have our new Acter Alternative Delivery Device, alternate delivery device, an easier and more patient-friendly version of Acter-GL for single unit dosage indications.

We expect.

innovation will help stabilize the performance of our ACT-RT L franchise by expanding REITs to a broader appropriate patient population. Due to the substantial patient benefit in terms of self-administration, we expect over time a full conversion to the device in most of our therapeutic indications. In terms of where we are in the process, device development has been completed.

While we are ready to proceed with submission, an ongoing regulatory matter involving one of our partners remains

which must be resolved before we can move forward.

Turning to our specialty generic segment.

This is a vertically integrated business producing high quality generic medicines and active pharmaceutical ingredients or ATIs in complex markets that provide stable and highly diversified global revenue streams. Vertical integration affords a number of important competitive advantage, including quality, quantity and consistency of supply that position this business.

as a skilled, studied partner to a large purchasing organization. It also provides visibility across finished dosage and API opportunities. In addition, we have proven capabilities in complex formulation, state-of-the-art laboratories, and the highly engaged R&D organization.

Our diversified specialty generics portfolio has over 50 product families across APIs and generics.

more than 250 SKUs and a diversified portfolio of complex NDAs to drive long-term value creation.

We are also proud of our strong execution in specialty generics.

I'm pleased to report that we missed zero shipments during the pandemic as the leading API supplier for code-related analytics.

Now, at the top of the call, I mentioned three near-term strategic priorities, which I will now discuss in further detail.

Starting with a balance sheet.

while the company made critical strides, reducing that through reorganization process.

We will prioritize further reducing debt and continue to drive strong customers.

Building on the actions the company has taken over the last year plus

We will start by reducing costs and spending wisely.

Over the last 12 months, there were a number of changes made across the segment to achieve a lower cost base, protect the EBITDA margin, and support the long term growth.

This includes realigning segment leadership and refocusing R&D priorities.

shifting to a shared service model to reduce SD&A costs and containing spend in the R&D and operation.

We will continue efforts like this across the organization. One of my key priorities is taking a close look at everything we do and how we do it.

and I'm confident that we can continue to streamline and enhance the way we operate to better suit the size of the market today. In doing so, we will become more efficient, spend less, and maximize the impact of each dollar spent. At the same time, we will also be evaluating opportunities to divest non-core assets to further the level.

And the other part of strengthening our balance sheet, of course, is continuing to generate strong cast gold.

which takes me to our second and third priorities.

Our second priority is stabilizing and maximizing opportunities for our in-market products.

On this front, we are starting with a strong portfolio which is critical.

we will align the organization's focus around executing on the existing opportunities to bring these products to new markets.

We will also continue driving innovation to bring more patient-friendly solutions to market.

And our third priority is our pipeline.

While we have several exciting new products in development, our focus here will be on investing in the expansion of our pipeline with a goal of establishing a regular tendency of bringing new value-enhancing therapies to market.

I also look forward to doing the same with our customers, healthcare providers, patients on partners in the near future.

The valuable insights we learn from these conversations will feed into the process we are undertaking to redefine who we are on the Charles Malenkraus path forward.

And while we have our work cut out for us, I want to reiterate that these conversations have already reinforced my belief that we have a foundation to create a successful future for the company. The teams here possess extraordinary grace.

focus, resilience and above all a desire to serve patients that will be crucial for our success.

I wouldn't be here speaking with you today if I didn't have every confidence in Malincroft's ability to create value for shareholders and make a positive impact on patients' lives every day.

With that, I'll turn it over to Brian to discuss our second quarter results and our outlook for the remainder of the year.

Thank you, Siggy. We're thrilled to have you on board with us.

I'd also like to thank everyone for joining us today. We're excited to be back in the public market.

and look forward to moving the stock to a national exchange as soon as possible.

Before I dive into this quarter's financial results, I want to touch briefly on what Mount Crock accomplished through the financial reorganization completed in June .

First, Mallinckrodt meaningfully improved its financial position by eliminating more than $1.3 billion in debt principal and by raising new $200 million accounts receivable credit facilities.

which contributes to our strong liquidity position.

Second, the company resolved significant litigation uncertainty.

This included resolving litigation related to opioids and Axar gel, including both governmental and private matters. And third, during the reorganization process.

the company executed a number of organizational enhancements and cost cutting reduction initiatives.

meaning that the mountain crop today is leaner and more efficient than in recent history.

that the mountain crop today is leaner and more efficient than in recent history. Turning to our results.

Meloncross total net sales in the second quarter were $469 million.

as compared to $546 million, reflecting a decrease of 13.8%.

Our specially brand segment reported net sales of $306 million.

that's compared to $382 million.

This reflects a decrease of 19.2% primarily due to the impact of competition on certain products including Axar Gel, Inomax and Theracose. The continued impact of the COVID-19 pandemic product utilization and continued payer scrutiny on overall specialty pharmaceutical spending.

During the quarter, the company incurred a one-time $9 million adjustment to its historical Medicaid rebates related to the ACT-R jail program.

During the quarter, the company incurred a one-time $9 million adjustment to its historical Medicaid rebates related to the ACT-R jail programs, which impacted its performance in the quarter.

Through the year, the company anticipates net sales of approximately $500 million for Axar Gel. Our specially generic segment reported net sales of $163 million.

company anticipates net sales of approximately $500 million for XRGEL. Our specially generic segment reported net sales of $163 million as compared to $155 million.

This reflects a decrease of 1.2% primarily due to reduction of dosage opioids and controlled substances, API, net sales offset partially by the net sales growth in APAC.

The company's net loss for the second quarter was $257 million.

is compared to a net loss of $106 million.

driven primarily by the impact of Emergence and Fresh Start accounting adoption.

Melon Cross adjusted EBITDA was $156 million in the quarter as compared to $200 million.

a decrease of 21.7%. This was primarily due to lower net sales.

the negative impact from foreign currency.

Expenses associated with the launch of Stratograft and launch preparedness for turtopressants, primarily offset by other reductions in SG&A and R&D expenses as the company has undertaken specific actions over the past year to reduce its overall cost structure.

With respect to operating matrix in the quarter, adjusted gross profit as a percentage of sales was 67.1 percent. Adjusted SG&A as a percentage of net sales was 28.3 percent. And adjusted R&D as a percentage of net sales was 7.1 percent.

Like most companies, we've seen unfavorable impacts from foreign currency during 2022, resulting in approximately $10.6 million in incremental SG&A expense in the quarter.

Throughout the tendencies of the bankruptcy, the company generated strong cash flows allowing us to satisfy a number of plan-related settlement payments and debt repayments at emergence in mid-June.

We expect the business will continue to generate cash flows moving forward. And as Ziggy mentioned, the company will evaluate non-core asset sales as we look to continue improving the balance sheet.

In fact, as you may have seen, we recently announced the enclose on the $100 million sale of the Priority Review Voucher obtained in the Approval of Stratograph.

of which we received $65 million. The company has more than $550 million in liquidity. Our cash and cash equivalent as of July 1, 2022, were $355 million.

This is net of all cash outflows that emerge and includes $65 million retained from the proceeds of the sale of the priority reunion voucher.

We continue to maintain a new undrawn $200 million accounts receivable financing facility established as part of our exit financing. Total principal debt outstanding at the end of the second quarter was $3.604 billion with net debt of $3.249 billion, which differs from the balance sheet due to fresh start accounting and it excludes annual settlement payments. This reflects a $650 million

financing we completed in June and the pay down in full of a $900 million dollars. Looking ahead for the four year 2022, we expect to achieve total net sales of between 1.875.

billion dollars and 1.9 to 5 billion dollars total net sales and specially brand of between 1.25 billion dollars and 1.28 billion dollars

Total net sales are especially generic of between $625 million and $645 million and adjusted EBITDA of between $630 million and $660 million.

Now I'll hand the call back to Ziggy for some closing remarks. Thank you, Brian . I want to restate that Malenco today has a strong foundation underpinned by significant liquidity, meaningful cash flows from operations, a solid US commercial platform, and competitive positioning in critical care and immunology. And while we still have challenges ahead, I believe we are well equipped to meet them. We have a clear path forward to stabilize the business.

for patients. I'm pleased to be working alongside teams that share a passion for putting patients first and making a difference in people's lives.

We are excited what comes next at Malenkraut.

And with that, we'll now open it up for Q&A, operator.

We will now begin the question and answer session.

To ask a question, you may press star then long your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.

To withdraw your question, please press star and 2. At this time, you will pause and move until it is some bar roster.

Oh.

Our first question will come from Greg Frazier with The Truthless.

Our first question will come from Greg Frazier with The Truist. You may now go ahead.

Great, thanks for taking the questions and congrats on getting to this point. First question, just on this thought, when do you anticipate getting relisted on an exchange? If you could walk through that process and the timing, that would be helpful. Yeah, sure. So from a relisting on the exchange perspective, this is something obviously that we've worked on in advance of emerging from bankruptcy. We didn't quite meet the requirements from a listing perspective due largely in respect to the concentrated nature of our shareholders at that point. It's something we're very much committed to, as you heard Brian make specific.

reference to wanting to do that as quickly as possible. We're in the steps of working through the application requirements and ensuring we meet the requirements and we'll look to make application in short order.

A couple of questions on the guidance and the key specialty products. Can you talk about the assumptions for item asks and Theracos that are factored into the specialty brand guidance?

And on ACT-R, can you talk about the steps that you've taken to protect that franchise and kind of mitigate share loss with the new competitor on the market? So let me start on ACT-R and then Brian will talk more about the Einomux and Cerakos. So on ACT-R, I think clearly the product has been under pressure and what we have seen is mainly a pricing pressure.

As you mentioned, there is a new competitor on the market, but what we have seen with the new competitor is that really the market has expanded. We can see that from symphony data that really the introduction of the new product coming to the market, a 505B2 product, has expanded the market itself. Not so much affected our prescription rate.

I think the big thing for us will be the new injection device, the self-ject that we hope to introduce soon. We have a challenge with one of our suppliers, one of our partners, which is working very hard with the FDA to resolve an issue, but we hope as soon as we can to bring that product to the market, and I feel, I'm looking at the opportunity and getting the feedback from doctors and patients, that will be the real opportunity of turning this around.

giving a better boost on tailwind into the after process. Still a very good product. You have to keep in mind that this is a product that has 18 different clinical trials behind it. It's promoted in 11 different indications. We are very pleased with the product and how it's performing, but clearly, over the last few years, it has been under pressure maybe due to the pricing pressure in the market.

stabilize and we are seeing the market you know, start to bifurcate between institutions that are view the delivery of nitric oxide as a commodity versus does it value

you know, technology and kind of white glove service. So we are we are seeing that and and we obviously compete in the latter. On Seracos, you know that historically has been a very consistent growth asset for us. During the pandemic we did see stem cell transplant dip quite a bit and there's a bit of a lag to the to when when these patients go on to therapy.

So we did see that dip. We do expect to see that kind of the stem cell return to kind of normal levels and theracose to return to growth. There are a couple oral competitors out there, very early stage on that, but we do see it as a market in which there's room for both.

Yeah, maybe one thing I'd add to Greg, appreciate the question and you mentioned specifically about guidance. I think one of the comments that we made today was really just trying to set an expectation for ACT-R for the remainder of 2022 or 2022 maybe in totality. So we referenced it specifically.

Got it pretty helpful. Just a quick follow up on IMF. How much of the customer base is blocked in with long-term contracts and how do those contracts roll off over the next two or three years? Thank you.

at least 12 months at the front, but some of the contracts are multi-year contracts. Thank you.

Any other questions, Fred?

Any other questions Fred? I'm good. I'll hop back in the queue. Thanks so much.

Okay, appreciate it. Good to hear from you. Next question, please.

Again, if you have a question, please press star then one. Our next question will come from David and Thelon with Piper Sandler. You may now go ahead. Hey, thanks. Just had a couple. First, I know you're talking about trying to stabilize XR, but there is the reality of competition. So, Siggy, I wanted to get your thoughts on the question.

how you're thinking about ways to just further diversify the business away from Maxar. Do you look at generic assets? Are you looking at brand assets? And can you articulate how you're thinking about that in terms of business development? And then related to that, can you also talk about your M&A bandwidth?

in terms of deal size, that would also be helpful. Thank you. Yeah, so thanks, David. So, you know, as I mentioned in my prepared remarks, I think the first point of, first thing we are focusing on is the balance sheet. You know, how we can lower our debt. We do that with two ways. In a way, we have this opportunity of reducing debt, reducing costs.

and increasing hopefully the EBITDA or at least stabilizing the EBITDA as we have, but doing that by reducing the debt in the company. And the team really has done a great job over the last 12 months in preparing the landscape there, but there's more to come. I think we need to look at the opportunities of right-sizing this business for the future of Malincott and the size of the revenue and product offerings that people have.

The second thing obviously is this opportunity of selling non-core assets for the business to reduce debt, but also to give us a little bit of an opportunity for the in-market product. In terms of the business itself, you highlighted it, the key thing for us now is to stabilize after Dell and I know Max. We have been under pressure over the last three years. We went through that in detail what's the reasoning for that.

We feel that everything we have in hand now and the understanding, we understand that we will still be under pressure for the next 12 months, but we really feel we have the opportunity of turning this around because there is a line extension for both products that we have in the pipeline and hopefully we will bring soon to the market, which will help us to stabilize the business more than anything else. In terms of how we can grow the business, it has to be around the pipeline that we have. First of all, I'm very excited about Stratograph. I know there's a slow...

burns in the surgery, but we have a big belief in this product and therefore we are in a way working on line extension, both on food thickness, but also on pediatrics where I personally believe will be a game changer for this product going forward. I'm also excited about telepresin. I think telepresin is a key product. We have a PDUFA date on December 9th.

There is no product approved in the US for the treatment of HLS. And the HLS is a very critical condition. In the US today, there's over 40,000 people that get liver failure every year. So this is a real issue where the kidney stopped functioning, the type 1 HLS, but we expect the indication to be there is a real patient need. And this is a well-known product outside of the US, the 50-profile.

that's well known and US doctors know this product from abroad, from their colleagues that work outside of the US. In terms of other pipeline opportunities, I think we need to look at both generics and brands. I think on brands is to expand a little bit more on the phase two, phase three products. We are actively looking for partnership on that. We still have cash flow in our cash productions. We are paying some debt.

have been used to in the last 10 years, but overall I feel that the niche part of this business is the exciting part. By introducing one or two or three products to the market, that could make a difference for this business, which wouldn't make a difference for the big giant company of Liatris or Perva or Sando in the market. That really makes a difference for us. So in terms of M&A, I don't expect us to do any big M&A in the next...

12 to 24 months, we simply don't have that cash flow. Our focus will be on paying down debt and then utilizing, if we have some remaining cash, availability to enable us to continue to grow the business going forward.

Brian anything from you? No, I think that was a great answer. I just add to the any M&A or BD in the next 12 to 18 months. I think there's an opportunity to...

to smaller type transactions with creative type structures that wouldn't require a large upfront. And obviously we focus on de-levering, but where we could maybe bring an asset in, have some backend royalties with an opportunity to drop that in utilize our commercial, our current commercial infrastructure. So, a big upfront and long-term diluted type of asset where we're not gonna be doing that.

in the near term, but there is a way to creatively structure transactions and have some near term accretion. And we'll look to tack those on in the.

but there is a way to creatively structure transactions and have some near-term accretion. And we'll look to tack those on in the next year.

Okay, that's helpful. And Ethan? Yes, and so I think the first thing is I'm impressed with the infrastructure. We have an amazing relationship.

You know we just answer the question about the iNomax, but iNomax is such a relationship product due to the nature of the service we provide Stratograph is a relationship we are working with the burn unit.

Keep in mind burn units in the US, there's only a hundred of them in the whole of the US. We've already spoken to more than half. We really are building up because of the relationship we have. And I think that will help us with tele-pressing coming into the market, which is an injectable product. And really there is a trust in our hospital and critical care business unit.

I think there's an opportunity to expand that. I think we would be an ideal partner for somebody that has one or two products that needs a commercial partner to take it to the market. We really would be in the short term, we have an opportunity in our backs to take on more products. We have the bandwidth, we have the expertise, we have the market access team, we have the customer service. So coming into this, having seen really the need for a good service to the hospital, that's where the focus is. What type of product is impossible to say now?

I doubt that we would do that for generics, but I think with any differentiation, specialty differentiation, no matter if it is 505B2 or a specialty patent-protected drugs, I think we couldn't be a good partners for the reason you mentioned. What I've seen, I'm impressed with, I think we have an early product, we have two products in the launch phase with Stratograph and Telepresin, which hopefully will be in the launch phase later this year when approved.

But really the opportunity is we have this infrastructure, we have this expertise, we have this very positive feedback from the hospitals that would allow us to expand our product offering. And that's really part of the BD and maybe M&A opportunities that we have to expand into that part of the business. Okay, thanks Siggy, appreciate it. Thanks David, good to hear from you.

is we have this infrastructure, we have this expertise, we have this very positive feedback from the hospitals that would allow us to expand our product offering. And that's really part of the BD and maybe M&A opportunities that we have to expand into that part of the business. Okay, thanks Siggy, appreciate it. Thanks David, good to hear from you. Operator, any more questions?

There are currently no further questions. This concludes our question and answer session. I would like to turn the conference back over to Daniel Sbleszko for any closing remarks. Yeah, thanks, Anthony. We want to thank you all for your interest in the company, and we certainly look forward to engaging with you guys in the coming days and weeks ahead. If you have any questions, the best way to get ahold of Derek and I today will be via email, and we'll certainly get back with you as soon as possible. And we look forward to obviously having Siggy and Brian engage with investors here moving forward as well. All the best to you and your families, and have a nice day. Thank you.

The conference is now concluded. Thank you for joining today's presentation. Will give you another chance to participate thanks to fund. You see the Smokey Macée guys with their

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