Q1 2025 Mallinckrodt PLC Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the Mallinckrodt First Quarter 2025 results conference call.
Speaker Change: At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will meet a press star 1-1 on your telephone. You will then hear an automated message advising you your hand is raised. To watch all your questions, please press star 1-1 again.
Speaker Change: Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today to our motionor. Please go ahead.
Gerard Muechner: Thank you, operator, and welcome, everyone. With me this morning on Mallinckrodt's CEO .
Sigurdur Olafsson and TFO, Bryan Reasons.
Gerard Muechner: Before we begin, let me remind you that we will make forward-looking statements on the skull, and it's possible that actual results could be materially different from our state-of-the-expectations.
Gerard Muechner: Please note these forward-looking statements are made as of today, and we assume no obligation to update them, even in the event of new information or of actual results or future expectations change materially.
Gerard Muechner: We encourage you to refer to the cautionary statements contained in our SEC findings for a more in-depth explanation of the inherent limitations of such forward-looking statements.
Gerard Muechner: We will also provide select non-GAAP adjusted measures related to our financial performance on this call.
Gerard Muechner: A reconciliation of these non-cap measures is included in our earnings release, which can be found on our website, Mallinckrodt.com.
Gerard Muechner: We use our website as a channel to distribute important and time critical company information.
Gerard Muechner: You should look to the Invest Relations page of our website for this information.
Gerard Muechner: This call does not constitute an offer to buy or sell all the solicitation of an offer to buy or sell any securities or solicitation of any vote or approval.
Gerard Muechner: in connection with the potential combination between Mallinckrodt and Mendo. Mallinckrodt has filed with the SEC, a registration statement that includes a joint proxy statement of Mallinckrodt and Mendo in the perspective for Mallinckrodt shares.
Speaker Change: The Joint Proxy Statement, Perspectives, and other relevant documents filed by Mallinckrodt and Endo with the SEC will be available free of charge at the respective company's investor relations webpage or at the SEC's website.
Speaker Change: You should review such materials files or to be filed with the SEC carefully because they contain or will contain...
Speaker Change: the business combination and related matters.
Speaker Change: including information about certain of their respective directors, executive officers and other employees who may be deemed to be participants in the solicitation, proxies, in connection with the business combination and about their interest in the solicitation.
Speaker Change: As noted, in our earnings release, our first quarter ended on March 28, 2025. Additionally, unless otherwise specified, the net sales percentage changes we discussed will be on constant currency basis.
I'll now turn the call over to Siggy.
Siggy: Thanks Gerard and good morning everyone. I'm pleased to report that that Mallinckrodt had a great start to the year and we continued to build on our post-it momentum from 2024.
Siggy: Our teams to live it another quarter of strong performance that kept us on track to achieve our full year guidance, a sign of our confidence in the business.
Siggy: In the first quarter, we achieved the top-line growth when adjusting for the Therocost by the rest of the year, demonstrating the meaningful progress we have made on our key strategic priorities.
After gel, sales grew for the fifth consecutive quarter.
Siggy: and the loans of our self-debt device has been tracking well ahead of our initial expectations as we continue to see a strong physician and patient demand.
Siggy: In light of this, we are increasing our marketing investments behind after which is reflected in our decision to reaffirm full-year guidance.
Siggy: In addition, our rollout of the Aynomaxi World DS delivery system continued to hospital and the ongoing efforts to expand the adoption of türly of us remains underway.
Okay.
Siggy: On the specialty generic side of the business, overall performance was strong and we continue to see the benefits of the high quality product and stable supply we offer customers.
Siggy: Our positive momentum also reinforces our excitement for the planned combination
Siggy: I'll speak more on that shortly, but I want to highlight that front, how proud they are.
Siggy: of our teams for continuing to execute at the high level until liver for our patients while doing the significant planning work to bring our two companies together.
Siggy: I turn now to the detailed update on our business segment.
Siggy: Starting with Specialty Brands, and actor Gell. As I mentioned, we are pleased to deliver our fifth consecutive quarter of year-over-year growth with 12.3% increase in that sale in the first quarter.
Siggy: This was driven by growth in the overall market on the successful norms of self-debt.
where the team has done a really outstanding work.
Siggy: Feedback from the health care providers and patients on Celtic has been overwhelmingly positive. And this innovative device now accounts for over 70% of all new actor brand prescriptions.
Siggy: A number that is even higher for certain therapeutic areas and reflects a great momentum we have with both new and returning healthcare providers.
Siggy: We expect positive momentum in the Celsius rollout and patient demand growth to continue. As a result, we are raising our 2025 net sales guidance for after from a low single-ditted range to a high single-ditted range.
Siggy: Moving to dynamics, our multi-error load of the World DS delivery system into U.S. Hospital remains underway.
Siggy: in the portability and new features offered by the product reflecting the importance of the system for the appropriate patients.
Siggy: As a reminder, we expect this rollout to continue throughout the end of next year, and we will be working closely with hospitals to unprovide this to drive further adoption throughout this period and beyond.
Siggy: While Einemarks sales continue to be impacted by competition in the U.S. market,
Siggy: We were encouraged to see a stronger performance and growth outside of the U.S. Particularly in Japan, where sales grew 7% as compared to the first quarter of 2024.
Siggy: As a reminder, TURLIVAS is the first and only FDA approved product indicated to improve kidney function in adults with hepatorenal syndrome with rapid reduction in kidney function.
Siggy: Turning to specialty generics, we continue to build on our track record of consistent growth in the segment, delivering our ninth consecutive quarter of net sales growth.
Siggy: Strong performance in the ADHD Finnish product business was offset primarily by a global competitive pressure on the API business, particularly our A-POP products.
Speaker Change: In a period of supply chain uncertainty, Mallinckrodt's theonetrics business benefits.
Speaker Change: Before I hand it over to Bryan, I'd like to give a brief update on our previously announced
Speaker Change: Over the last month, we have spoken extensively with our stakeholders about the combination and are pleased with a positive feedback we have received today.
Speaker Change: We remain confident in the bright future ahead of our companies as of one combined organization which will benefit from increased scale to develop new therapies to address unmet patient needs.
Speaker Change: Our team has already hit the ground running in our work to complete the transaction, which we continue to expect the low cure in the second half of 2025.
Speaker Change: In April , we filed our form S4 Registration Statement with the SEC to begin the SEC process a key milestone towards holding the shareholder meetings to consider and vote on the transaction.
Speaker Change: We have also formed a dedicated transaction planning team to support our integration efforts post-close and look forward to steering additional details in the coming month as we continue to work to bring our two companies together.
Speaker Change: With that, I'll turn the caller to Bryan to discuss our financial performance and expectation for the balance of physical 2020-25 in more detail.
Bryan: Thank you, Ziggy. Mallinckrodt's net sales in the first quarter of 2025 were $419.9 million. It's compared to $457.8 million in the first quarter of 2024.
Speaker Change: Reflecting a 10.2% decrease on a reported and constant currency basis.
Bryan: Excluding the impact of the Therica's bi-bestiture, total net sales grew by 2.5 percent.
Bryan: Net loss for the first quarter of 2025 was $27.7 million compared to a net loss of $65.4 million in the prior period.
Bryan: A just city to die in the first quarter of 2025 was $102.3 million that's compared to $144.9 million in the prior year period.
This was driven by strength and both the specially generic segment.
and Axard Gel.
Bryan: largely offset by the impact of the Syracuse by Vestiture, incremental commercial investments for Act Our Gel and the impact of nitric oxide competition in the U.S.
The special brand segment.
Bryan: reported net sales of $207.3 million as compared to $257.3 million in the prior year period. This 19.4% decrease includes the impact of the Therica's divestiture.
Bryan: Excluding Theracost, especially brands, net sales grew by 4.1%, different primarily by growth and act our gel and the uptake and self-jerk.
Bryan: Act our gel net sales were $115.4 million in the first quarter, an increase of 12.3% compared to the prior year period.
Speaker Change: As Siggy mentioned, we are raising our four-year sales guidance for AXAR and now expect high single-digit AXAR net sales growth in 2025.
Speaker Change: Automax Generated Net Sales of $62.5 million in the first quarter, a decrease of 11% compared to the prior year period.
Speaker Change: Term of ad generate net sales of $7.4 million in the first quarter, an increase of 23.3% compared to the prior year period.
Speaker Change: The special generic segment reported net sales of $212.6 million as compared to $210.5 million in the first quarter of 2024.
Speaker Change: This growth of 1% was driven by continued strong ADHD product sales, offset by decline in the API business, particularly APAP products driven primarily by global competition.
Speaker Change: With respect to offering matrix in the quarter, adjusted gross profit as a percentage of net sales was 61.3% that's compared to 64% for the first quarter of 2024.
Speaker Change: A adjusted S-GNA as a percentage of net sales was 32.9% as compared to 27.3% in the prior year. And adjusted R&D as a percentage of net sales was 4.7% as compared to 5.9% in the prior year.
Speaker Change: Turning to our balance sheet, we ended the first quarter with a cash balance of $422.2 million.
Total Outstanding Principled Death was $864.6 million.
Speaker Change: A reduction of 47.5% compared to the first quarter of 2024 and outstanding that debt was $451.4 A reduction of 67.6% compared to the first quarter of 2024.
Speaker Change: Our net debt leverage ratio was 0.8 times at quarter end.
Speaker Change: For the full year fiscal 2025, we are reiterating our previous guidance ranges and expect total net sales of between $1.7 billion and $1.8 billion and adjusted the data between $480 million and $520 million.
Speaker Change: Our decision to reaffirm our previously stated guidance reflects our strong performance partially offset by elevated S.G.A. levels due to incremental commercial investments related to the ACFAR.
Siggy: I'll now hand the call back to Ziggy for closing remarks.
Siggy: Thank you, Bryan. To wrap up, I'm incredibly proud of the way our entire team has delivered on the strategic priorities for the ultimate goal of improving the lives of our patients.
Siggy: As we look ahead to close the merger with Endo later this year, I am more constant than ever. In the value, we can deliver to our shareholders' customers on patience.
We will now open the calls for Q&A operator.
Speaker Change: Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment while we compile our Q&A roster.
Thank you.
Speaker Change: Our first question is going to come from the line of Hammond Corson with VWS Financial. Your line is open. Please go ahead. Good morning. Thank you for taking my questions. First, could you just collaborate on the marketing strategy behind ACTHAR Gel and what you're hoping to achieve? Is it more from the patient standpoint or is it from the physician standpoint as far as demands concerned?
Speaker Change: So we can see the overall market is growing for Kortikotrop in today.
Speaker Change: We are clearly benefiting from that. We have a strong sales support on it, but we also have a big patient support system to support the patients through the experience of going on actor, which is very important. I think that's number one.
Number two.
Speaker Change: We see, we have seen a huge benefit on the lawns of Selkert. Selkert makes it so much easier to use it and...
Speaker Change: What we call new prescriptions, those are prescriptions for patients that haven't been on prescriptions for a long time or are totally new to after at all.
Speaker Change: over 70% of those patients are going on Celtic and then some other indication I will call out even though I didn't do it in the script.
Speaker Change: in Ophthalmology, it's closer to 80% of all new prescriptions are on Celtic, so these two things together.
Speaker Change: are benefiting and we have used some mentions in the script. We are putting more marketing emphasis now behind the product when you see the growth. The obviously actor was a challenging story declining from 2018 until the beginning of last year.
Speaker Change: And then in the last five quarters we have shown every quarter or growth of this product.
Speaker Change: The doctors, the physicians are seeing the benefit of it. I think patients are getting more comfortable and self-gift was a piece of that that was missing in the person. So, so we are very pleased but it's both on the patient side we are seeing the benefit but also on the physician side.
No, it's not
Speaker Change: Given the timing of when you're expecting the merger and the other close, do you have any new intentions with the cash or will the cash balances continue to increase?
Speaker Change: Now, so we obviously are limited with the merger agreement with Ando, what to do with the cash, so there's a limitation of what to do with the cash until the the merger will close in second half of this year.
Okay, great. Thank you.
Thank you.
Thank you.
and one moment for our next question, please.
Speaker Change: Our next question is going to come from the line of medicine around with J.P. Morgan, your line is open, please go ahead.
Madison Aran: Hi, thanks for taking my questions. It's just, uh, scaring with...
Can you?
Madison Aran: I want to find the marketing support that you're putting behind the drug, and then you've noted that the market is growing for the drug. Can you just walk us through which indications are you seeing that growth? And then maybe define it a little further. Is it more just new patients that they're staying that adherence has improved?
Madison Aran: and then just lastly on Act R, you talked about the patient support system that you have for the subject. Can you quantify or just walk us through how that support system differs from the vial?
Madison Aran: Yeah, so if I start on the marketing, so we haven't broken out the marketing cost of the product.
Madison Aran: We, but what we have said is for actor is our largest marketing support in the brand business.
Madison Aran: We have a sales force, we have marketing, but we also have the patience support system in plays. So clearly, a great support for this product.
Madison Aran: In terms of the indications, which are the growing indications, so we are roughly in six to seven even though I think that there is a proof for 19 indications in the FDA label, but there's really four indications that are growing the most.
Madison Aran: It's rheumatology, pulmonology, nephrology, and I mentioned ophthalmology which is growing faster. And especially we have seen that with the benefit on rheumatology and ophthalmology, those of two indications where the self-jecting lines have...
Chains the delivery system on the experience.
for the past tense.
Madison Aran: of this work. This work has been approved for many, many years. As a lot of experience, many patients have been using it through the years, but continues to be a very important work for patients out there going forward. The third part of the questions, if you could repeat that again.
The patient support that you have for self-jacked, how does that differ from the vial?
Madison Aran: assuming that that's trying to drive more patients towards that.
Madison Aran: Yes, so we don't differentiate, we support all the patients, whether they are on mile or on selfie, but it's mainly around the nursing support when patients start.
Madison Aran: When a patient starts on a while, there is a little bit more involvement in teaching them how to draw the drug from the vial and inject them to themselves. We are on self-doubt. That is so much significantly easier. We still have the nurse support around that.
Madison Aran: But that's probably the single most differentiated is to between the vile and the self-ject. It is a simpler to treat with self-ject than it is with the vile going forward.
Madison Aran: I guess attacking the tax system that is coming out of Ireland would love to just get your thoughts on what you're seeing. I know it's early. We don't have a lot of details, but love to hear your thoughts on what you're trying to do to circumvent any of these challenges.
Madison Aran: Yeah, it's Bryan. I'll jump in there and see what I've had on. As far as the tariffs, when we kind of looked at it, we feel like we're in pretty good shape and don't have a ton of exposure. You know, we have...
Some inputs into RAPAP business coming from XUS.
Madison Aran: The RIP is largely held offshore, but we're an Irish company. We have...
The
Madison Aran: for them to eliminate that type. It's probably that type of structure. It would take probably more of a act of Congress, but we don't necessarily...
Feef.
Madison Aran: you know where the where the tariffs are going to find the land either so there's a lot of uncertainty there.
Madison Aran: The difference between us and many other companies here in the U.S. is we have most of our manufacturing in the U.S.
Madison Aran: So, the DNRIC finished post-manufacturing is in the U.S. The API, more than 50% of the API, we manufacture ourselves for our DNRIC's business, which is St. Louis in North Carolina and Greenville. So, so...
Madison Aran: That changes the pictures on the terrace. Yes, some of the stopping material for our ADI, we we might have to bear terrorists on that, but overall we feel the company is in a good shape if the terrace comes through.
Speaker Change: If I could just squeeze one in. So just giving the fact that you have a lot going on in the U.S. Can you just walk us through or quantify the turf? Kill win as it relates to the AAPAP and API business.
Speaker Change: Yeah, it's difficult to do the tailwind but what you know, I think how we position things is you know like with all our generics are manifested in hope of New York.
Speaker Change: where with most of our competitors, although not on controlled substances, in the generic industry, a majority of the volume is manufactured outside of the U.S.
Speaker Change: So so I think overall we are involved to system from that point of view more than anything else but to go further than that It's probably not wise because there's so as you started your question. There's so many uncertainty around
Speaker Change: What the administration will do going forward but we feel with the infrastructure that we have we are well positioned whatever comes down the road.
Great. Thank you.
Speaker Change: Thank you and I would now like to hand the comments back over to Gerard Mewchner for closing remarks.
[inaudible]
Speaker Change: Thanks operator and thanks again for joining us all today. We look forward to engage with you in the coming days a week ahead.
Speaker Change: If you have any questions, the best way to get a hold of us is via our email and we will work with you to get back to you and set up in Western meetings, but thank a lot for all of you who could join us today. Thank you.
Speaker Change: This concludes today's conference. Thank you for participating. You may now just connect. Everyone have a great day!