Q2 2023 Aytu Biopharma Inc Earnings Call
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371594.
Thank you and your first and last name please.
David Brown.
And your company name Sir.
And here I E.
Thank you so much I would say she through to your call.
Thank you.
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No.
Question and answer session will follow the formal.
Welcome to <unk> Biopharma fiscal 2023.
Oh.
<unk> two results.
Conference.
It's zero on your telephone.
On a listen only.
Upon this conference.
I'd like to ask a question please press.
I'll turn the conference over to your house.
Okay.
Hi, Jerry Weiss.
Confirmation tone will indicate your line is in the question.
<unk> afternoon, everyone and thank you for joining us.
Two questions from.
As farmers second quarter fiscal year 'twenty to 'twenty three.
The Q1.
<unk> actual results conference call.
Operator assistance during the conference.
On the call is a two C E O.
Okay.
Oh gosh.
No.
<unk>.
All.
The company's Chief Financial Officer, Mark Oki.
Roger.
Okay inclusion of todays prepared remarks, well open the call for a question and answer answer session.
Roger for <unk> Biopharma.
Action.
<unk> second quarter fiscal year 2023.
One day of today's call will be available by using the telephone numbers.
Hey.
<unk>.
On the call.
Yeah.
<unk> is a two CEO .
Issued earlier today.
His pro.
Finally, I'd also like to call your attention.
Okay.
The safe Harbor disclosure.
Today's prepared remarks.
<unk>.
I'll open the call for a question and answer answer.
Patient forward looking statements.
<unk> mined everyone.
Regarding the goals.
One being recorded.
<unk> strategies.
<unk> play of today's call will be available by using the telephone numbers and conference I'd provided.
<unk>.
In the earnings press release issued earlier today.
So a reasonable based on us.
All your attention to the customary safe Harbor disclosure.
These statements are not guarantees of future performance.
The conference call today will contain certain forward looking.
<unk>.
Shipments, including statements regarding the goals.
Or webcast replay.
Yes.
Actual results may differ materially.
I mean results.
Lee result of risks uncertainties and other factor.
<unk> believes these statements are reasonable based on estimates.
<unk> fourth in the company's filings with the SEC.
These statements are not guarantees of future.
C update or revise any of these forward looking statements.
You too.
Payments that said.
Curates of any telephonic.
Sad event over to Josh Disbrow.
<unk>.
Brown, Chief Executive Officer of a two biopharma.
As a result of risk.
Risks uncertainties and other factors.
And welcome everyone.
But not limited to the factors set forth in the company's filings with the SEC.
Again, as we report our second consecutive quarter of companywide positive adjusted EBITDA.
These forward looking statements.
Achieving positive adjusted EBITDA for the second consecutive quarter as another key milestone for <unk>.
Statements Executive officer of <unk> Biopharma.
To do in the years to.
Please proceed.
Come enthusiastic about our continued movement into the current March quarter.
So I'd like to share how extremely pleased I am with the recent momentum in the business of gain as we report our second consecutive quarter of companywide positive adjusted EBITDA.
Quarter.
Strong revenue growth.
Find in today's press.
Growth positive adjusted EBITDA for the second consecutive quarter as another key milestone for HII.
Relief to $26 3 million.
The trajectory of <unk> in the years to.
Our Rx.
Very enthusiastic about our continued momentum into this current March.
<unk> billion due to the continuing execution of our sales force.
Quarter HD franchise posted all time weekly Rx numbers here in February .
Terry patient access.
As we get into spin.
This along with the market tailwind associated with the ADHD stimulant.
Specific increased by 14% compared to the year ago quarter to $26 three.
Net revenue increased 95 <unk>.
<unk>, while ADHD scripts for the quarter rose eight 1% sequentially.
Due to the continuing execution of our sales force and the leverage we are generating through <unk> connect.
<unk> EBITDA of $3 1 million.
So every patient access.
Negative adjusted EBITDA reported in the year ago period.
Ram HD stimulant shortages, which we are capitalizing.
Period increase from our.
Segment.
23.
<unk> portfolio net revenue increased 95 <unk>.
Three but prescription segment positive adjust.
Percentage, 1% sequentially.
That business in.
Actually only demand for.
Outside.
Further our Rx segment had a positive adjusted EBITDA of $3 1 million.
<unk>.
An improvement compared to the negative adjusted EBITDA reported in the year ago period of $1 nine.
And a.
The sequential increase.
Kris from our first fiscal quarter of 'twenty.
<unk>.
Three this is now.
EBITDA, just a bit last quarter.
From which the prescription segment has had positive adjusted EBITDA.
They're impacted as we phase out the direct mail channel and focus on the more profitable.
<unk>.
<unk> medicines.
Can you use to execute on our objective to improve segment profitability.
Circle Health branding initiative later this year.
<unk> contribution margin online sales channel.
Recent gains and propel this segment forward to generating positive adjusted EBITDA thereafter to free cash.
<unk>, just a bit last quarter.
Cash flow on this in a moment.
<unk> for the consumer health segment will likely be impacted as we phase out the direct mail channel and focus on the more profitable OTC medicines and their e-commerce sales.
Moment in Paris to a negative $7 6 million in last year's second.
Channels that later this year.
Quarter more than eight.
Year proposition to build upon our recent gains in propel this segment forward to generating positive adjusted EBITDA and <unk>.
Miniature associated with the now suspended clinical development.
<unk>.
Grams. This pro forma adjusted EBITDA highlights the operating strength that <unk> has going forward.
In the second quarter.
Cobra 13th of last year, we announced an important shift to the company's strategy aimed at accelerating the growth of our commercial business and achieving profitability.
I would also like to note that the company generated a positive $2 million of adjusted EBITDA. When you exclude the residual expenditures associated with the announced suspended clinical development.
<unk> elected to save the company over $20 million in projected future study costs.
Graham strength that <unk> has going for.
Three of our positive adjusted EBITDA.
Forward last year, we announced an important shift for the company strategy.
EBITDA <unk> synergies and driving down expense.
<unk> and achieving profitability.
<unk> accelerate our path to profitability.
Ability development programs, including <unk> hundred one our <unk> for the treatment vascular handlers Danlos syndrome.
Let's dive into the commercial business a bit more beginning with our Rx segment.
And projected future study costs.
Alright segments, we operate primarily.
Cost three of our positive adjusted EBITDA.
<unk> D and.
EBITDA focused our efforts on growing revenue maximizing synergies and driving down expenses.
<unk> and <unk> XR ODT.
After profitability.
FDA approved instead of mean methylphenidate extended release orally disintegrating tablets.
<unk>.
What's particularly for the treatment of ADHD.
These are actual business a bit more beginning with the Rx.
Because our formulated and patient friendly orally disintegrating tablets that utilize our proprietary micro particle modified release.
Segment Pediatrics.
At least technology plan.
Steady HD.
During the quarter, our ADHD products contributed $11 1 million in net revenue.
Steve.
<unk> increase of 2% compared to a year ago period and down 4% sequentially.
Integrating <unk>.
The noise in the revenue number however is the scripts were actually up over 8% sequentially.
What's reasonable formulated and patient friendly orally disintegrating tablets that utilize our proprietary micro particle modified release drug delivery.
Actually it was largely due to the end of your shipping.
<unk> ADHD products contributed $11 1 million in net revenue.
Remember that there was a significant winter storm that impacted logistics in the U S. At the end of calendar 'twenty two.
Revenue, there's a little bit of noise in the revenue number. However is the scripts were actually up over 8%.
The current quarter.
I believe the script number is a better characterize.
ADHD continue to provide tailwind.
<unk> demand and the revenue impact during the quarter is largely due to the end of your shipping issues, resulting from sustained inclement weather throughout the.
<unk> data company Trillium.
Today significant winter storm that impacted logistics in the U S. At the end of calendar 'twenty two.
<unk> doubled the seven 4% rise seen.
To see the timing of this issue ketchup.
The impacts of the various generic adderall XR manufacturer delays.
Phd continue to provide tailwind for the <unk>.
And still remain.
We continue to see overall growth in the ADHD market as we see an increase in diagnosis.
<unk> discussed and the ongoing impact of the shortage.
<unk>.
Fortunately our supply has remained robust and uninterrupted.
During 2020.
The supply disruptions over the past few quarters have enabled <unk> to gain market share and mind share.
Various generic adderall XR manufacturer delays and supply disruptions I talked about last.
<unk> bio equivalent to Adderall XR. So our brand is well positioned to continue to capture additional share as the remnants of the extended release and betterment shortage remains.
Quarters, Fortunately our supply has remained robust.
Leverage the ongoing adderall XR shortage and our execution.
Over the past few quarters have enabled incentives to gain market share and mind share.
The 200 total prescriptions.
In the.
This is an all time high and is.
Data <unk> is approved is bio equivalent to adderall XR. So our brand is well positioned to continue to capture additional share as the remnants of the extended release amphetamine shortage.
Among its highest weekly numbers with over 3200 <unk> has that same.
<unk> flex our shortage and our execute.
Week over the previous.
<unk> the week ending February 10th.
We create shortages and know of Johnson <unk> Johnson's discontinuation of the Concerta.
<unk> is an all time high and is up 26% from the previous.
Market factors, providing tailwind that we believe may persist for some time.
Weak registered for.
Time for weeks ending February 10th our combined ADHD scripts are up 20% over the preceding four weeks.
The brand name.
Weeks.
This is up 16% over the previous.
And across the entire Rx portfolio were up 24% year to date over last.
Weak.
Year at the very least we have tremendous momentum on our side with our prescription brand.
To get market factors, providing tailwind that we believe may persist for some.
Brands job, creating and delivering on the tool.
Our combined ADHD scripts are up 20% over the preceding four.
<unk> drive.
We can.
I'll remind you that following the acquisition of nios nearly two years ago.
Portfolio were up 24% year to date over last.
Our newer to industry sales representatives and a stronger pay for outsized performance compensation model.
Asked year on the macro tailwind. So I believe our team has done a tremendous job, creating and delivering on the tools.
But it has now begun paying dividends across the is still new and highly motivated sales.
<unk> growth.
In conjunction with our commercial team a key part of our success lies with <unk>.
In the process of revamping the sale.
Connect to 1000 network pharmacies in key markets across the country on the.
For pay for outsized performance compensation.
For all stakeholders.
Model for a large portion of the former <unk> sales.
Holders of that platform.
Team transition and change of mindset took time, but it has now begun paying dividends across there's still new and highly motivated say.
That for in patient out of pocket co payments.
<unk> commercial team.
<unk>.
And our more than 40% increase in prescription.
Connect work pharmacies in key markets across the country on the platform.
For patient.
<unk> connect creates real value for all stakeholders.
<unk> has been the purpose since the inception of the <unk>.
Holders.
Program with <unk> Rx connect the growth of this platform largely be attributed.
Connect results in nearly 50% reduction in patient out of pocket co payments.
Good.
<unk>, a two <unk> improvement in <unk> net margin per Rx.
Consistent in <unk>.
40% increase in prescription refills by patient.
Experienced when writing and filling branded script largely goes.
<unk> <unk>.
Health care providers and <unk>.
<unk> continued to lead.
Two purpose since the inception of the program.
Average equating to bring into the portfolio.
Program connect the growth of this platform can largely be attributed to the fact that many prescriber hassles associated with dealing with payers.
A lot of work has gone into creating this momentum and I am grateful to the entire team for putting us in such a strong position.
Patients and clinicians often experience when writing and filling branded scripts largely goes.
<unk> transferred both incentives and co tempo that we have underway, which is expected to further improve our profitability.
As a way to bring into the portfolio.
<unk> reported back in September the process is well underway with the prospective contract manufacturer.
Recent script.
<unk>, putting the conduct of bioequivalence studies in the other required.
Grip travel to the entire team for putting us in such a strong position.
Work CMO, producing our ADHD products calendar.
<unk> Folio just a quick note on the manufacturing transferred both Dennis and co tempo that we have underway.
18% or.
<unk> further improve our profitability.
That if achieved will further improve our P&L.
<unk> the process is well underway with the prospective contract manufacturer.
Progress on this.
<unk>, including the conduct.
Let's now transition to our pediatric portfolio, which includes <unk> four and five.
A finalized and the CMO producing our ADHD products in calendar 'twenty.
Containing combination fluoride and vitamins.
Three profit margin of the ADHD brands by 15% or.
<unk>.
More meaningful step change that if achieved will further improve our piano.
Carbon oxiclean based antihistamine suspend.
But we are pleased with our progress on this.
<unk> for patients two years and.
<unk> mission to our pediatric portfolio, which includes poly VI Flor and Tri VI.
Older distinct clinical features and patient benefits over both branded and generic competitive.
The nations of fluoride and vitamins.
Alex you have 95% growth in revenue from our prescription pediatric line with revenue ramping to $6 3 million.
<unk> extended release carbon Oxiclean based antihistamine suspension.
Growth in revenue from pediatric products that we achieved in the first quarter.
And there is an.
Just continue.
Older products serve large established pediatric markets and offer distinct clinical features and patient benefits.
<unk> solution as well as the <unk> Rx connect platform leverage.
<unk> during the quarter, we achieved 95% growth in revenue from our prescription pediatric.
PBF and TV after the Rx connect platform.
Clients. This was in addition to the 73% year over year growth in revenue from pediatric products that we achieved in the first quarter.
CDC data shows that only 63% of the U S population has <unk>.
Key drivers here are the improved sales force execution as well as the <unk> connect platform.
<unk> teens or even less.
Providing tailwind for the products prescription growth trajectory.
Less gene opportunities for fluoride multi vitamin line.
<unk> Rx connect platform.
<unk> needle fluoride supplementation.
Significantly.
<unk>, we believe that growth across both new and existing geographies will serve as the basis from which we will continue to grow poly VI Flor and Tri VI Flor say.
<unk>.
Sales to provide additional recent context on the growth of our pediatric brands I'll note that tremendous growth there also experienced.
<unk>.
<unk> again, using the week ending February 10th.
<unk> opportunities for the fluoride multi vitamin line.
Last.
Line, two additional areas in need of fluoride supplements.
Year are up over 120%.
<unk>, new and existing geographies.
Sent over 33%.
Fees from which we will continue to grow poly VI, Flor and Tri VI Flor sales.
Sales side additional recent context on the growth of our pediatric <unk>.
Segment second quarter.
Brands Madis growth there also.
<unk> $3 1 million and adjusted EBITDA.
February <unk>.
Give quarter with positive Rx segment adjusted.
$10 three last year.
<unk> with continued growth.
Whereas <unk> scripts are up over 100.
<unk> measures in place, we expect to continue the positive EBITDA quarters going forward.
And overall.
Let's transition to our consumer health.
<unk> Cross our Rx segment.
The reminder, within consumer health, our core product focus.
Segment second quarter.
IU based products competing in large categories.
And adjusted EBITDA.
Digestive health diabetes management.
Rx segment adjusted.
National brands.
EBITDA continued growth.
Brands directly to consumers through e-commerce platform, including branded website.
We expect to continue the positive EBITDA quarters going.
Consumer segment sales products through our proprietary sales marketing platform, which focuses primarily on directly.
Perl, our core product focus is on branded value based products competing in large categories, such as hair loss digestive health diabetes management and outages.
Correct much higher contribution margin online sales channels.
We sell directly to consumers through e-commerce platforms, including branded websites.
Air profitability OTC medicines.
<unk> sufficiently the consumer segment sells products through our proprietary sales and marketing platform.
<unk> impact revenues in the near term, but will drive improved EBITDA within the consumer health.
Form for our objective has been to improve consumer health segment profitability.
Segment.
<unk> focus on more efficient higher contribution margin online sales.
And adjusted EBITDA.
Channels are phasing out the direct mail channel and order.
Nearly 500000.
Order to Tc.
And it was achieved despite the segment experiencing a 3% year over year decrease in total segment revenues.
<unk> near term, but will drive improved EBITDA within the consumer health.
Growth in this segment are beginning.
Segment, and the more profitable OTC e-commerce portfolio.
And a big part.
<unk> grew 70% over the year ago quarter.
Value brand called Circle.
<unk> EBITDA for this segment improving by 30% ordinarily nearly $500000.
<unk> family of value based over the counter medicines addressing a range of conditions.
Year over year decrease in total segment revenues to $8 three.
His family.
So as to drive sustainable profitable growth in this segment are beginning to.
<unk> is expected to create the common one stop shop for families seeking value brands addressing common everyday conditions ultimately driving more repeat customers.
Officially launch later this.
Sales were all margin.
This year core represent our brand family of value based over the counter medicines addressing a range of.
<unk> existing products at new products.
Conditional products through single recognized family Brad.
<unk>.
R&D more collective brand.
Family approached the circle.
Equity is expected to create.
Over to Mark Let me just say how incredibly proud I am of the entire organization.
In common.
<unk> continues to rally around the opportunity to build a truly great execution oriented company.
<unk> overall margin.
Revenue growth in our second consecutive quarter with positive companywide adjusted EBITDA.
<unk> to rebrand existing products add new products.
Yeah.
Alex and integrate all of those into the circle brand family.
On a position.
Family Hello, as we approached the circle.
<unk> further growth coupled with operational improvements and further cost reductions and margin improvements during the remainder of the fiscal.
Along the rally around the opportunity to build a truly great execution oriented company.
With that overview now.
When <unk> growth and our second consecutive quarter with positive companywide adjusted EBITDA and again.
<unk> prescription trends through the middle.
So on the call.
Very encouraging.
Earlier today.
<unk> strong position.
That we filed a Form 10-QA to restate our first quarter.
Operational improvements and further cost reductions and margin improvements during the remainder of the fiscal.
Earnings.
Here, we are in a much stronger financial position to drive long term shareholder.
The company concluded that certain warrants should have been accounted for as a liability.
Our value or to the.
And as equity.
The change was.
And welcome to everyone joining us on the call.
The classification.
Call earlier today.
<unk> value of these warrants from additional paid in capital.
To restate, our first quarter earnings.
<unk> and a gain on derivative warranty liabilities.
Earnings accounting for previously granted <unk>.
These warrants on a quarterly.
Parents, what do you transact.
Relative to that additional gains or losses on derivative warranty liability.
<unk> liability.
Note that.
And as equity.
That patient.
The change.
<unk> gains or losses have no impact on cash.
Vacation.
Total.
<unk> of the value of these warrants from additional paid in capital.
Creations.
<unk> ability.
<unk> EBIT.
<unk> pain on derivative warranty.
Built upon the comments Josh has already provided regarding our quarterly results.
<unk>.
Starting with revenue.
This resulted in additional gains or losses on derivative warranty liabilities.
<unk> quarter was $26 3 million.
<unk>.
The $23 1 million.
No impact on cash.
<unk> second quarter, a 14% increase.
Cash cash flow from operation.
If the component parts.
<unk> EBITDA.
Revenue from prescription product sales.
The comments, Josh has already provided regarding our quarterly results.
<unk> compared to $14 6 million.
<unk>.
Same quarter last year.
Three.
Year, an increase of 23%.
$3 million.
Sent US noted ADHD experience, 2% growth in net revenue to $11 1 million.
14% increase.
<unk> second quarter.
Looking at the component part.
<unk> $9 million during the fiscal 2022.
So.
<unk> COO.
2023 second quarter was $18 million.
<unk> portfolio experienced a 95% growth in net revenue.
<unk>.
Last.
In our fiscal 2023 second quarter.
As Josh noted ADHD experienced 2% growth in net revenue to $11 1 million.
And let me to the end of calendar year shipping delays.
Against $10 $9 million during the fiscal 2022 second quarter.
Quarter of 2023 net revenue from the consumer Health segment was $8 3 million.
Growth in net revenue to $6 $3 million in our fiscal 2023 second quarter.
<unk> attributed to the channel strategy.
<unk>.
Yeah.
2022.
<unk>.
And again this growth was somewhat muted due to the end of calendar year shipping delays.
That pushed revenue into the following quarter.
For de prioritize.
The second quarter of 2023 net revenue from the consumer health segment was $8 $3 million.
Compared to $8 5 million in the same quarter last year.
$545000.
You attributed to the channel strategy.
We expect other revenue to degree decrease going forward.
A small amount of other prescription revenue both this year and less.
6%.
The other pertains to discontinued or de prioritize.
<unk> incentive net revenues in the year ago late quarter.
<unk> totaled $581000.
Change was primarily driven by product mix.
The second quarter.
Mix ADHD pediatric private client.
<unk> of net revenue.
Any sort of cost reduction efforts.
Revenue do you expect other revenue to degree decrease going forward.
Can vary from period to period for various reasons.
Strongly to 66%.
Reasons, not yet account for any improvements we expect.
Sent to 53% of net revenues in the year ago late <unk>.
We are optimistic that the margins will further improve upon the completion of the ADHD manufacturing trans.
<unk> and the ADHD in pediatric product.
For the second quarter of 2023.
Lines and greater volumes.
The impairment expense and amortization of intangible asset.
<unk> C to period for various <unk>.
Assets were $20 3 million.
Reasons I get account for any improvements we expect from the manufacturing transfer.
We've test.
A decrease of about $1 8 million.
The margins will further improve upon the completion of the ADHD manufacturing transfer.
For 2023.
On the Opex side.
1 million.
For 2023.
For the second quarter.
The impairment expense and amortization of intangible assets.
$3 million with expenses.
It's $8 3 million.
Compared to $22 $1 million.
At the same period a year.
It's impacted by an intangible.
$1 8 million.
$6 million related to our now former drug candidates.
Quarter of 2023.
Yes.
<unk> compared to $4 5 million.
Jim of drug development.
To second quarter.
<unk> permits during the second quarter of fiscal 2022.
$1 3 million was expense associated with the recently.
To 2023 was $6 7 million.
At least the first net loss was impacted by an intangible.
Compared to $11 5 million.
Read it related to our now former drug candidate.
Okay.
<unk> 502.
<unk> adjusted EBITDA for the second quarter was a positive $727000 compared to a negative $7 6 million a year ago.
<unk> loss for the second quarter of fiscal 2023 was $6 7 million.
In the second quarter of fiscal 2023.
Compared to $11 5 million.
Yeah.
For $8 74 per share for the same quarter last.
Sure.
<unk> adjusted EBITDA for the second quarter was a positive $727000 compared to a negative $7 6 million.
And $5 million in the year ago period.
Hit the breakdown by segment.
<unk> improvement year over year.
For a prescription segment during the second quarter of fiscal 2023.
Year tied to our now suspended R&D pipeline was a negative $1 $3 million during the second quarter of fiscal 2023.
In the consumer health.
$1 million in the second quarter of fiscal 2022.
$1 million compared to a negative $1 5 million in the year ago period.
Two such time that we can fund R&D from operations or engage a partner.
Finally, adjusted EBITDA titles are now suspended R&D pipeline was a negative $1 3 million during the second quarter of fiscal 2023.
Cash and cash equivalents at December 31, 2022.
<unk> 2022.
$2 million compared to $23 8 million.
<unk> spend to be minimal until.
2022.
And fund R&D from operations.
To the second quarter, we announced an agreement with Avenue venture opportunity Fund.
<unk> come to adjusted EBITDA are provided in the tables.
<unk> senior secured loan.
<unk> press.
Loans to January of 2024.
Release the balance.
<unk> discussed this extension.
At December 31, 2022.
<unk> quarterly conference.
Two 5 million compared to $23 8 million.
Cole capital of the <unk>.
September 32022.
<unk>.
<unk> implemented a one for 20 reverse stock.
Two with Avenue venture opportunity fund.
23.
And in the interest only period of our existing senior secured loan facility.
With Nasdaq's listing requirements effective January 20th of this year.
<unk>.
In some detail during our previous quarterly conference call. Please.
Thank you Mark.
Today's press release for a recap of the detail.
Mark.
I am extremely pleased with the recent momentum in the businesses gain.
Eight one for 20 reverse stock.
It's a companywide paused.
Split of 2023.
<unk> strategic.
And enabled the company to regained full compliance with nasdaq's listing requirements.
Indefinitely suspend our clinical development programs that put us on the path to profitability.
That go over to Josh.
So two consecutive quarters now.
Josh.
Now a positive adjusted EBITDA.
Conclude with where I started.
<unk> in both ADHD and our pediatric Rx business.
<unk>.
Our second consecutive quarter of companywide positive adjusted.
With e-commerce sales and the upcoming launch of our circle of family of brands.
<unk> to accelerate the growth of our commercial businesses and indefinitely suspend our clinical development programs have put us on the path to profitability.
<unk> day, and we will now be happy to answer any questions you.
Ability to positive adjusted EBITDA.
With product tailwind in both ADHD and our pediatric Rx.
You might have if you would like to ask a question. Please press star one on your telephone keypad.
<unk> commerce sales.
Pat and tone will indicate your line is in the question queue.
Sales.
Queue, you May press Star two if you would like to remove your question from the.
Second half of.
Q using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
The year he might.
One moment, please while we poll for questions.
At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone.
The Cantor Fitzgerald.
Pat indicate your line is in the question queue. You May Press Star two if you would like to remove your question from.
Peter.
Few questions here.
Q equipment, it may be necessary to pick up your handset before pressing the star.
Sure.
On the ADHD portfolio can you quantify how much was pushed into the third quarter and then my second question is could you give any more color on the impact of consumer health expected over the next few quarters in terms of the revenue impact.
For taking my questions and congrats on the quarter I have a few questions here.
And then my last question is.
We ended the year shipping delays.
Is it seems like.
Snip portfolio can you quantify how much was pushed into the third quarter.
And margins from.
<unk> question is could you give any more color on the impact of consumer health expected over the next few quarters in terms.
With.
The impact.
But.
I guess the improvement in gross margins you'd expect.
But it's a material amount, but it's.
Gross to nets, obviously are sort.
Sort of unique in our industry as you know Jennifer so timing.
Correct.
<unk>.
We expect a 15% improvement in margins from.
Quantified it is at this point.
Hi, Jennifer this is Marc we have not quantified.
Consumer health shift.
Our push into the next quarter.
<unk>.
Generally speaking.
It's a it's a material amount, but it's.
Gross to nets, obviously are sort of unique in our industry as you know Jennifer so timing.
It's not to suggest that.
And have a little bit of a lagging effect so we've not quantified.
But they will be flat to down ish not massively but.
It is the revenue impact on consumer health shift.
So nice improvement over the.
Generally speaking.
EBITDA with the hope that that bid against cash.
<unk> is exactly like you said and like we've said here, we're going to focus much more on the bottom line for that segment than we are to the top line, it's not to suggest that.
When we when we are final.
Any meaningful way, we think that they will be flat to down ish not massively but.
The improvements would be in addition to what we've already gained just through some of the normal.
Next handful of quarters.
Improvements that have happened here over the last year.
And to begin cash flowing and then with respect to the tech transfer.
So for the ADHD product.
Yes, we do anticipate an incremental.
Okay, great, maybe if I could squeeze in one more question R&D expense.
All very facility and into the new contract manufacturing facility.
In one quarter.
Improvements would be in addition to what we've already gained just through some of the normal.
<unk> pipeline programs.
And the normal improvements that have happened here over the last year.
In the in the.
So how do you think that 15 percentage points for the ADHD product.
So second quarter excuse me we are.
A few expenses related to wrapping up the <unk> hundred one trial, we will have a few small ones going forward.
There should be a significant decrease.
Quarter.
Kris.
As you sort of move away from the costs associated with the pipeline programs.
Okay.
Thanks, Yes.
In the.
Comment.
Fourth quarter I'm sorry.
Rent pressing star one.
The second quarter excuse me, we had a few expenses related to wrapping up the <unk> hundred one trial, we will have a few small ones going forward, but there should be a significant decrease.
One I was taking my question and congrats on the great momentum.
Just wanted to follow up.
Kris again, if you have a question or a comment.
<unk>.
Please indicate so by pressing.
<unk>.
ADHD products.
<unk>.
Question comes.
Stan the taking advantage of.
From me.
Of the problems with the generics out there.
Taking the question.
Sure. So thank you Chris.
Point to that.
Great momentum.
Net.
I just wanted to follow.
For example.
XR ODT.
As far as the.
To capitalize on.
Our concern.
<unk>.
And I understand the taking advantage.
Right.
And then.
<unk>.
The problems with the generics out there.
No.
There I think.
Yes.
Perfect.
Quantify.
Hi.
Wondering how much of those.
Ill.
<unk>.
Again as <unk> XR ODT.
Because of shipping.
He is on.
And the calendar.
The fourth quarter.
Sales in that regard.
Or do you see real soon or will it be down the road.
You said you couldn't.
Question Vernon, Yes, we should see it in the next quarter.
How much of those.
Days of revenue and as you know.
We expect those sales that were deferred because of shipping.
Issues.
<unk> shipments.
And the calendar.
When we.
'twenty two.
Wholesalers.
We see real soon or will it be down the.
And which day to day orders and what have you, but there were some delays.
Our road question Vernon, Yes, we should see it in the next quarter again, it's a couple of days of revenue and as you know.
As to our docks.
It's just a timing thing with the shipments.
Nice shipments.
So.
Based on when.
When we.
First question Vernon.
Gives us sort of comfort in the context of maybe continuing.
A lot of it just depends on which day the orders and what have you, but there were some delays.
<unk> looked at sort of the.
<unk> travel.
<unk>.
Late summer early part of the fall the most immediate impact was actually with immediate release the adderall just regular <unk>.
<unk> arrived in.
<unk>.
Next the next week.
And impacts sort of down the line of course.
Weak Vernon what gives us comfort in the context of maybe continuing.
The wholesale or the wholesaler chips into retail and then ultimately.
<unk>.
Patient.
It was interesting when you looked at sort of the.
The time to.
The late summer early part of the fall the most immediate impact was actually with the immediate release.
It was a win that ultimately affects.
<unk>.
The ability to pick that.
<unk>.
Hep play even even further around the extended release formulations of the Adderall generic.
It starts obviously at the manufacturer of the manufacturer ships in the wholesale or the wholesaler shifts into retail and then ultimately the patient picks.
Meaning really just now to the point that patients and physicians.
Up to that.
<unk> feel.
But when the public is sort of being noticed of this shortage, there's a lagging effect in terms of when that ultimately.
What I can share this is really.
<unk>.
Descriptions are all.
Play, even even further around the extended release formulations of the Adderall generics such that I would even say just now we're starting to get into the thick.
All you can see the delayed nature.
Of being really just now to the point that patients and physicians are starting to feel.
I know communications and press releases.
Specifically with the extended release such that.
As bill and.
C and I can share this because really.
Good book, even through the holidays before we were comfortable that that was starting to be realized that the physician and patient level.
Just started to rear its head really kind of in February so.
Dennis.
The delayed nature of this effect whereby.
From that preceding week, they jumped up 26%, which is obviously a significant.
And then press releases.
<unk>.
No way to tell exactly how long we would expect this to continue but I will say.
Look even through the holidays before we were comfortable there.
Last week Bloomberg published yet another article.
That patient led.
<unk>.
Far and wide around the continuing shortage in the issues and the pinch that it's really putting on patient.
<unk> <unk>.
So from that preceding week, they jumped up 26%, which is obviously a significant.
We are still very much in the.
No way to tell exactly how long we would expect this to continue but I will say.
<unk> put a benefit.
To be a lot of discussion around that we just last week Bloomberg published yet another article.
When you look at the February .
Slide around this continuing shortage in the issues and the pinch that it's really putting on patients.
Scripts.
So.
Would you consider this.
I mean, it seems like in <unk>.
Demand is growing.
Relative early to middle innings of this issue such that.
Okay.
<unk>.
But do you anticipate perhaps.
More to see there, but script trends are really encouraging when you look at the February .
Taking advantage of those.
Needs and shortfalls for example could be maintained what efforts.
Scripts.
It seems like demand is growing.
Our long term maintain that.
To be a zero sum game.
Correct.
And you anticipate perhaps that.
<unk>.
Question and one thing Thats important to note about ADHD of course is that it's chronic and so once you get a patient converted from a product like.
Shortfalls for example.
We expect to maintain that that patient.
So youre going to see a step function in one that would sustain itself you're not going.
Paul.
And you would not expect that a patient gets one prescription or a dentist.
If you could characterize.
Yeah.
This market.
Which off of incentives and go back to Adderall.
But to your question and one thing Thats important to note about ADHD of course is that it's chronic and so once you get a patient converted from a product.
All I know is now coming off and even a higher base and so if you look at new.
Like.
So youre going to see a step function in one that would sustain itself youre knocking.
<unk>.
And you would not expect that a patient gets one prescription of <unk>.
<unk>.
Dennis and then Adderall comes back.
Those to now be able to pivot off of a much higher baseline.
And so.
Your line.
Quite the opposite in fact once patients are on a product with which theyre satisfied they'll stay on.
So that annuity value is now coming off of any of a higher base and so if you look at new.
So to speak and come in and be.
<unk> prescriptions.
After these pace.
And this considered new.
And obviously from a revenue.
We didn't look at new starts versus refill.
Higher baseline.
<unk> expect the refills to now be able to pivot off of a much higher baseline of new.
Lines are seeing.
And that is what we're seeing and that's one of the things that is.
Continuing on to a dentist.
And of course, we have the Rx connect.
You bet.
Form that enabled them to continue to have.
<unk>, so to speak and come in and.
Okay.
The health of these patients and their families.
February and March when they have a higher co pay due to.
Please now operate off of we think a higher baseline.
Sure.
Slide <unk>.
From which to gain refills and so it's exciting for US we definitely are seeing.
Or is it half or even.
Being patients are starting on adventist or continuing on to Dennis.
And of course, we have the arts.
Even the same and we'll obviously be hard to realize the higher net selling price by virtue of a lower buy down so.
Connect copay.
So.
In terms of the year like January February March when they have a higher co pay.
If we go forward with higher refill rate.
<unk>.
Right and just more patients overall on third.
These patients on such that as we get into the.
Got it.
Or even second sort of.
Two thirds of the year.
Experienced in its history.
<unk> pays will maintain the same and we will obviously hot to realize a higher net selling price by virtue of a lower buy down so.
You may have something in the neighborhood of four.
So tremendous for us as we think about the relative near term and then as we go forward with higher refill rate.
And it's a combination of these tail winds that are brought about.
Rates.
But.
Rates capstone.
That's really complemented by the sales force execution this young hungry salesforce.
On it are the highest the branded.
The leverage ability of AQR connect.
Brand, it's all the way back to when Nios had.
Working together right now to really drive.
30 sales representatives selling.
Sure.
We now have something in the neighborhood of $40 40 sales representatives selling.
Okay.
At an all time high so.
Okay.
So it's working and it's a combination of these tailwind that are brought about by the shortages.
Realized.
But it's really complemented by the sales force execution this young hungry salesforce.
Morning session.
The power of the leverage ability of <unk> connect.
Session closing remarks.
Three of those things are working together right now to really drive prescriptions and we're excited about where we.
ARX today, we appreciate everyone's participation looking forward to updating you.
We are.
On our next quarterly earnings call, which is scheduled for May so with that thank you for your interest in <unk>. Thanks for attending and everyone have a great afternoon or evening.
We have reached the end of the question and answer session I will now turn the call over to management.
<unk>.
Zoom.
<unk> disconnect your phone lines at this time.
Thanks, very much John and thanks to everyone for joining the call today, we appreciate everyone's participation looking forward to updating you.
On our next quarterly earnings call, which is scheduled for May so with that thank you for your interest in <unk>. Thanks for attending and everyone have a great afternoon or evening, thanks, very much take care.
This concludes today's conference and you may disconnect your phone lines at this time. Thank you for your participation.