NEOS - Earnings call transcript Q3 2017

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Operator

Thank you for holding. Good morning. And welcome to Neos Therapeutics’ Third Quarter 2017 Financial Results Conference Call. Today’s call is being recorded. At this time, all participants are in a listen-only-mode. question-and-answer follow. a be will session to There

For over Neos to opening remarks, Therapeutics. the call I’m turning Richard go introductory ahead. and Please Eisenstadt, CFO of

Richard Eisenstadt

our XXXX welcome Thank I issued we am Commercial www.neostx.com. Garg, available results Chief press Vipin our everyone. on Good highlights financial conference President And joined corporate and which you. third This by morning, our Thomas quarter and Today, release, financial and morning, our results call. at McDonnell, to Officer. CEO; is website

Before I’d forward-looking to the statements. read we like begin, following regarding

call, During Securities and Safe ER Private our commercial date and connection XXXX, Harbor including be will statements a concerning and are this with that the commercialization IV ER, forward-looking XR-ODT, the of Litigation Cotempla we to of launch Reform Adzenys Certification Adzenys make statements considered the provisions business of Act related made to Cotempla response Paragraph Adzenys of to in XR-ODT. pursuant the may XR-ODT,

upon may as often similar indications Forward-looking or such our statements expectations. These should today expect, future views not upcoming be reflect date. we statements of and words statements views as expectations. anticipate, of subject of as representing of These we actual variety that any risks differ to identified subsequent a could uncertainties with from materially only our are and cause reflected to be results as

results, our to other CEO now Form of will discussion refer recent Garg, SEC call actual affect a material those For President. please the over I could contained important risks turn filings. other our and our our that to and and XX-K most Vipin in factors

Vipin Garg

you Good today. our Rich. call joining morning, for Thank everyone, and thank you,

recently second Neos. XR-ODT. The Most product for importantly, productive Cotempla third launched quarter our we ADHD was

old. of The first years release ADHD six in the and patients methylphenidate disintegrating deficit to treatment orally XX extended disorder for hyperactivity attention or tablet only

awareness this far believe very We report for encouraging. Cotempla their are so plans that and that nearly is technology of our XX,XXX using relationships our our in to prescription established a professionals, XR-ODT XR-ODT are with very of their pleased products. interest innovative result We the healthcare

commercial of XR-ODT. Also the XR day that third Adzenys Adzenys reported ADHD ER, in oral our refrigeration growth first once a does product also our approved suspension or amphetamine level. We pharmacy continued require FDA not at reconstitution product mid-September, the product

very in quickly We with early Adzenys agreement reached IV on litigation we launch and XXXX. have that October commercialization exclusivity Paragraph to on were had certification finder whole from continue expect Also to Actavis, submitted stapled of announced ER Adzenys to we confidential for this ANDA efficiently XXXX. we In to generic received front, version settlement pleased and October Teva this a us patent Cotempla had We XR-ODT. XR-ODT. licensing market efforts we IV that on a our Paragraph XXst, knowing FDA an a the the advising Paragraph generic they IV have Pharmaceuticals, until and

clinical and XR-ODT. data, approval past, for vigorously we three period we IP of rights. for currently a X our exclusivity of enforce product from done the certification Because our intend we date the a the in for paragraph to As Cotempla have evaluating Phase years we have new are of

products AACAP of with without study Child we impact our Data in Adzenys Academy showed XR-ODT. ER Adolescent for American posters included Meeting findings and with on ER key Adzenys no parameters. presented it can or findings two XXth or bioavailability posters food food taken Cotempla from pharmacokinetic relevant our clinically October study affect from in that a These two Washington, Lastly, Annual the D.C. on of the of & at Psychiatry with

weight. clinical symptom pharmacokinetic-pharmacodynamic dose process and developed a methylphenidate direct This subjects in those is correlation provide between required model the showed or a for body may model useful dose that titration XR-ODT target tool For for a practice. the estimating and there was Cotempla facilitating XR-ODT, PKPD that a they control

turn Cotempla now to and me products, recap the Let commercial Adzenys of our XR-ODT. two XR-ODT

by its we as second For it continued are the the market. through on progresses pleased year growth Adzenys XR-ODT

QuintilesIMS by for the months October by October XXXX, were an number XXXX. cumulative months of XR-ODT XX, Adzenys XX,XXX. over Adzenys filled as of September the prescriptions June for number reported Through for was the As three prescriptions total three XXXX XX, QuintilesIMS ended ended XX,XXX, in of XR-ODT, XX.X% increase reported for XX, XX,XXX total the

prescriptions in XR-ODT As Quillivant total Adzenys Concerta, ended Doctors a to of XR-ODT XR-ODT the by over QuintilesIMS from XXXX, the cumulative product QuintilesIMS. number or for their accounted such filled week its such reported XX% XXX,XXX. switch as approximately October switches launch XX% as May reported And number the -- by of methylphenidate of as as continued patients the XXXX, from XX, approximately to approximately since Adzenys switches and XX% of new XX, an total was all were of prescriptions as for and product Adderall Adzenys October XXXX, the were of Daytrana. amphetamine Vyvanse, these have

reported types. As appeal all were in Adzenys of adult a indicating and week prescriptions all new Adzenys QuintilesIMS, October of patients, patient ended XR-ODT the were of for for patients broad XX% XX, by XXXX, as pediatric XX% XR-ODT

month X,XXX. total early by of filled Cotempla for availability, Cotempla Now October of unit equivalent Through XR-ODT. XR-ODT limited XXXX, XXXX, XX, for for during September The of experience unit QuintilesIMS equivalent prescriptions at program was the launch look the XXX. as let’s of number October Cotempla the XR-ODT prescriptions recent number was reported in

QuintilesIMS force methylphenidate especially prescription this infrastructure. Adzenys amphetamine to leveraging The company unit since the product the market the increase, XX, dosage We sales tablets an launch effect disintegrating to branded by to we believe synergistic only growth and extended the are trends of two of very our continued equivalent and branded will makes the Cotempla ADHD in were week the attribute us prescriptions and ending XXXX. available as for combined orally are company existing The continue at of the reported release its with X,XXX XR-ODT commercial have initial both of trend form. October prescription that for and markets receptivity pleased product XR-ODT

I the to to I PDL company per our submitted proposal with review regarding PDL Before the time over unsolicited same agreement By want press in release, price. into call a of week, background first previous our Rich Neos confidentiality of information for address financials, to $XX.XX unsolicited Biopharma’s last acquire facilitate way briefly sharing as unsolicited chose to announcement an in proposals. turn PDL. to approached and with from proposal that our cash. detailed and another PDL in at June between July engagement acquisition companies, On the XXst, At the share and enter we to

to proposal to increased made affirm independent saw the as value, Consistent it value $XX.XX carefully financial legal a acquire During again the Neos that the affirming company consultation these its even and duties reviewed with of Neos PDL per and company the advisors, result fiduciary with considered Board its view statement in share. its PDL discussions, the same for proposal. and greater a in Despite of price information PDL shared.

strategic the Neos value undervalued value or what substantially determined the company Board was Following Neos’ Did this in proposal reflect creation, and not Neos. best review, Neos growth for shareholders. that interest not as continued the and PDL’s future prospects of unanimously

a comprehensive October and that rejected unanimously much again for The we aligned once per the the and As with $XX.XX financial Board share price proposal. proposal a rejections the its were rejected after PDL reasons conducted with proposal advisors, in PDL’s again forward on XXth June price very and same you reasons the put review legal in Board’s Neos saw, consultation October July. same

PDL’s Over analysts time, cover PDL We conversations, the Neos interest feedback these our believe and appreciate support. larger everyone’s shareholders of and many greatly week, support on and view of and with the the past proposal is we value many underscores spoken we research Neos’ opportunistic Neos. growth have Based creation that prospects. who that shareholders

and the company’s successfully accomplishments we are executing our As launches product new strategy. show,

in want confident our the that where today’s and Accordingly, these results is that to of fiduciary keep in turn financials. take review enhanced road Neos now while equally the directors momentum will believe interests reiterate deliver to purpose to are you had business Neos. Neos’ our for call attention please we Rich? duties ahead shareholders. directed in that are call is Board cooperation. and your is results value And I for well-positioned focused. We strong the to seriously, committed Board that your their remain I questions is topics. our management’s options the With and Thank to to the direction, Rich and today’s that advance strategic confident best the shareholders over great opportunities to Neos in demonstrate on we our all -- we you the I said, to the discuss and deliver objectives. to creation all Neos’ are value considering of open to serving ask

Richard Eisenstadt

from approvals, net now $XXX,XXX XXXX. to you, $X.X months months primarily on the XXXX, XR-ODT Total company million and XXXX. for XX, testing, XX, administrative gross Thank its Cotempla was Adzenys September million XXXX expenses business to million the At XX, three supply compared was three XX, $X.X XX, months September same are the with discount a expenses decrease and couple inventory XX, into until ended operations due they to compared product ended was $X.X the materials million, the studies reduction September being $X.X and for were investments which XXXX XXXX of cash months to in or XXXX, negligible. net million recent to the a $X.X on Vipin. R&D from September and period to the XX% XXXX. of following $X.X cash same September XR-ODT current was cash ER. three the million the of The in for are positive million, XX, completion XXXX, to due September clinical program decrease combined the Adzenys experience same for September in for for which net continues three loss quarter, sufficient net ended the amounted in profits a three XXXX. XR-ODT in ended $X.X ended months were period Sales decline capitalized inclusive a million support were $X.X XXXX XX%. period million, General $XX.X the to Cotempla short-term for for believe for to of flow and expenses equivalents $X.X million expenses, our were compared the commenced for based product plans. revenues early for Gross approximately revenue in

due million, to $XX launch decrease in The XXXX. costs advertising million the million XR-ODT. for decrease expense For compared XX, call. loss of was and turn $XX.X and $X.XX September compared of per the in to three months marketing XXXX With for period in three the Q&A the expenses for XXXX, selling in or fees to expenses due same was months a XXXX. to XXXX to ended to like the period of for in Adzenys would Net and were or XX, agency anticipation the per that, $XX.X same share share, $XX.X the million portion we $X.XX now September ended other

is Vipin focused call topic. we discuss keep said this As questions please third on earlier, your quarter, the results that of our ask for given purpose you the this Operator? to

Operator

from Our Montreal. Bank Instructions] of first Gary comes Nachman question [Operator with

open. is now line Your

Unidentified Analyst

results, expires This so how Bankurk proposal With on be all? for taking morning. was strategic Hana would guys. at Good the Gary. focusing quarter questions [ph] it disruptive you to and Thanks (XX:XX) -- extensive business the for process Do the on potentially the today. PDL is third the Ann

Vipin Garg

all interest we to the PDL’s in options committed business, confident remains our and before and focus as Board has our as fiduciary see our press grow and Neos management’s open that and serving are release objectives. on business So the discussed of evaluate the proposal creation Board evaluated as deliver continuing you Board our remain continues for from results, the we to best Neos’ have can shareholders -- said its Board on and direction The said, the and we options focus they really value have to That the duties. to to our is all we strategic will that. pursue considering is and are

Unidentified Analyst

much. Thank so you

As a are having with conversations you still PDL? follow-up,

Vipin Garg

to considering that -- reviewing are and we discuss the Board cannot I cannot them. committed stated we that and have disclose have we but commit point. I this as earlier options -- evaluating that, all at then is

Unidentified Analyst

so you Thank much.

Operator

Our Maris from with Fargo. Wells next David question comes

is line open. Your now

David Maris

Hi. Good morning.

Vipin Garg

David. Hi,

David Maris

we progress you lower Thank whether about to should a Could just can see and some trend bit gross expected net or talk what you little that to say downward? expected when this you you you. quarter, starts

Vipin Garg

Richard.

Richard Eisenstadt

Entering expect We the this with mid with see was came of QX some with some an of effectively progress, David, the to see get XXXX to we our QX XX%. progress did the a think next hope that a discount. of to these It Scripts lead. payers agreement where expect quarter our executing going we quarter. with expected XX% would rebate based We is agreement XX% Yeah. which is had will primary get to coverage some players, other on example status in discount. and into discussing into help Scripts. kind low and this into did We from going the was of us be to follow in number We lower shift year. open mid-XX%s. Sure. our are to secondary to thanks. additional Express somewhere from door Yeah. Among and as to recently net Contracted initiatives agreements entered will we that biller, gross at we rebate we really Neos continue rebate Scripts to into improvement. be Express currently XX%s, Express it payer strategies

David Maris

Thank very much. you Great.

Operator

Our & next with from Tyler Cowen comes question Van Buren Company.

Your line is open. now

Tyler Van Buren

guys. Thanks Good questions. taking for Hi, the morning.

recent to percentage guys on to of Express that, some as statement prescriptions are as coverage lack on respect the clearly, towards that affected Adzenys recent to currently win, that also by to for Just you follow-up could ability regional have wanted just been well the prescriptions with where last speak what of Scripts, the that you Express Express get guys with plan with to win? for paying due Scripts

Vipin Garg

do Tom, you take that? to want

Thomas McDonnell

question, Good the for Tyler. Thanks morning. Sure.

with Rich to we excited obviously you power of now in those very if with recent now We plans Blue able was remember, demand good Shield and experience of with so. that Express national drive as them product the overall plans, drive you that’s demand in payers terms the go need our demonstrated negotiate you strategy contract that is states the main the will win some and our strategy leverage and most working theme growth with our our its one the to that are at has and of and playing Scripts and because and regional And said, have in see enhance the Cross/Blue to marketplace overall about out to our payer Scripts. to -- why Overall, reasons is terms really can in negotiating with contract clinical was and that the other key come which and Express plans important we be sit table with then great follow those regional players. certainly

Tyler Van Buren

Adzenys -- synergistic, And you of That’s spoke the a given great about hear. launch effect clear the existing Cotempla to the launch guys synergistic efforts. Cotempla recent

these they are split a We clearly, since bit the spilt in but are formulations, and generally alternative different. prescription aware little of methylphenidate of the marketplace, amphetamine maybe

of see Adzenys we volume speak of this prescribers continues increase kind are might could work versus you how kind prescribing share the trajectory the for of to them ramp out? ultimate high Cotempla seeing just Cotempla percentage what So you and and

Richard Eisenstadt

Tom?

Thomas McDonnell

Sure. Yes.

a So, it to overall you in stated marketplace. really are great number known is well methylphenidate. well of company and is, and Cotempla -- One, and definitely that, with And seeing that back are a of to we strategy be much we goes the the think now was more that reasons. amphetamine I as is only company for the launch

have sales representatives. experienced We

existing have We relationships.

technology deliver good and patients. to one we AHDH proven We that to name a have is medication our have a

will the there treatment feedback finding I But I our is conversation the physicians, is voice. in entity, on really overweight methylphenidate larger patient we early now mean, chemical the key given physicians see. the that, a the enhances certainly but our -- -- is There share, pediatric overall best and certainly population thing the populations. us As with for are that the are think for some not option overall in it especially that’s

actually the are methylphenidate. in some physicians overweight on areas of country are Some

able more a are we that be Now presence office. in to of

getting the clinical the the feedback XX we’ve working fantastic. Cotempla at to been with moving we hours. day to It’s have So has been on that an hour into studies lasting

is So the But, the about and that we amphetamine each now option think, best for an are both we other, methylphenidate having it. are treatment chemical very talking finding I excited are just pushing over seeing effect, individual not because overall, patient. which we entity one about synergistic

Tyler Van Buren

perhaps Great. be, appear makes I product from guess, the And which coming sense, are their launching on in be is of for quarters clearly, new far coverage. patients kind quarter the up ramping with last I in one still switches their of and guess, -- so products prescriptions three to question be that the and but surprise would given could that maturing early

category So form on that still gone Adzenys with the forms going percentage otherwise as expansion just the seeing on overall low there. and patients despite really Cotempla this want dosage market these wouldn’t dosage fact are this or alternative it get market, of to alternative you a such thoughts your new treatments

Vipin Garg

clinical of methylphenidate, We for when that’s that’s we One company launch now interesting evolved It’s is, things really this amphetamine of we where the first or best from launch about dosage really for experience. to point a alternative come the a the Adzenys forms. option talk doctor’s and conversation. now the time. even lot Is part the

seeing products to that’s are ADHD alternative have. But, two from the that these overall, feedback So great to are physicians a treat really getting we and nice and dosage we the form just is patients. those are

back in starts. of especially to start the see strategy. in will I a believe payer the payer of an news patient little to progress go we some will bit our uptick as I think that I and

patients with are improves, medications. coverage will our newly better access have to our that As ADHD diagnosed

products In are be physicians to XR-ODT able or addition start the very to and fact the that to feeling Cotempla with both technology now the Adzenys XR-ODT. comfortable on patient

So, payer and confidence in a I as coverage that think, our comfort is our there piece it’s improves, as physicians gain two-fold products. really

will an start in patient a category. We see uptick that of start to little bit new

Tyler Van Buren

for Great. questions. Thanks the taking

Operator

with from Our next comes JMP Butler Instructions] Jason question [Operator Securities.

now is line open. Your

Roy Buchanan

can a Couple for versus in It’s the can Roy you guys, for questions. coming are mix follow-ups I of give Thanks pediatric very in us adult where and launch, Cotempla, you patients, the early it’s know the taking on but switches Hi. Jason. of sense of the from?

Vipin Garg

amphetamine the of for terms -- is you really to methylphenidate at don’t there Thank early brands is is getting some market question. Concerta CD, have multiple access on Concerta, there in data This it’s -- point. as know, there some you very We brand. Metadate switches. But there, obviously brand Quillivant, that XR, the more than fragmented, much but must the really be is very probably is Focalin fragmented there we this is status lot leading is so

get So in XX% adolescent methylphenidate methylphenidate, are that as or the and patients pediatric patients. uses part of we of data Cotempla of mix will the the

amphetamine age age really so -- years six in label sorry, Cotempla our and So that to it’s XX group. years,

patients So segment that coming from obviously population. most the of the are of

Roy Buchanan

going given you Cotempla uptake, strategy sales Okay. sales the then, the do I apply it. a when without give force specific Can Great. of far you to to that focused so force Thanks. sense guys And you on are before apply a having as us Cotempla? guess, strong

Richard Eisenstadt

Tom?

Thomas McDonnell

Yes.

as on sales this point. forces full Cotempla we do So have

opinion first specific for So focus across key area launch we of country. few the just weeks really in the the leaders on

on Cotempla sales we However, force at launch a have full point. this do

presenting now physicians. So Adzenys sales right and representatives everyone our to of is Cotempla both

Roy Buchanan

is, for last And Helpful. seeing that up you it’s getting what I dose Thanks. are follow the differentiated? feedback responses about superior forms. out, getting not the are form the dose the are feedback you am alternate -- are guess, That’s the getting the you then, makes patients Great. the feedback stand if is, wondering you question products that’s just product alternative the I Okay. guess are making that I on what

Vipin Garg

Actually.

Thomas McDonnell

Yeah.

there One say I of the is… -- wouldn’t

Vipin Garg

ahead, Tom. Go

Thomas McDonnell

the existing they are switching -- arsenal, there that that obviously, on their the one superiority, say say with what saying products methylphenidates, and to I amphetamine wouldn’t in patient another, different they picture. wouldn’t are looking I just from doctors thing if have whole but physicians at is and has are right, experienced

on So good It’s they got a with dosage what I’ve patients. form. my are experience It’s saying, well convenient Adzenys. worked

with it water. take can without You or

only say, maybe the really are efficacy, whole versus, or we they So overall package can will early before would safety, event beyond seeing because to patients efficacy, the profile, physicians saying probably, or very in I we and that, is dosing we that what are we don’t What want launch that choosing. the the not the the swallow for it’s pills. launch are that’s looking adverse are really be convenience

And as we but not form option good really treat alternative so are just AHDH. to a dosage an ourselves positioning

Roy Buchanan

Thank Great. you. Okay.

Vipin Garg

is One Cotempla other would with we thing our have I data. highlight X like to own Phase

also that’s us. helping So

one We conversation helpful. have our within proving hours in hour to talk and really looking be duration fast are can to that our physicians XX label for X to that engage really got Phase looking shows patients that’s onset very in and is own about what are what having data for, very and we data time --

Roy Buchanan

you. Thank Great.

Operator

from Our with Fitzgerald. Louise Cantor next Chen question comes

open. now line is Your

Jen Kim

Jen is on This for Louise. Hi.

Vipin Garg

Hi, Jen.

Jen Kim

first it to what have get you to you continue our My to table, is, would undervalued? question questions. for that where taking Thanks evaluate you you being currently the say are take proposals,

Vipin Garg

that, and what open of serving we have to Board remains all said this to Well, Neos but I shareholders will options, management the we the I value considering interest cannot point, delivering the on all reemphasize will before, Board comment creation objectives. and on continue and at that evaluate best

third about really not is to and proposal quarter results As our the is here. PDL you about said, talk focus financial this call

Jen Kim

on? an plan of maybe then, you your more and pipeline do on you a specifics idea when will on -- focus And pipeline providing Good. when what areas follow-up have is, the

Vipin Garg

Absolutely.

the So continue develop the said to we for in options we have pipeline. past,

going effort very in area. R&D active We on have got a that

evaluating securing IP. component proper a that very IP. We That’s of important are

more disclosing So that work feel then have done once we we all those. comfortable

to during the pipeline. So, half position that again, have we what be we past sometime will the going in first the candidates next it it’s are year next said to in our be in talk of about a

Jen Kim

then, for Cotempla? you current IP since the IP, and last status a And about Adzenys a question Okay. you about can talked talk bit

Vipin Garg

So we we very look on over in at a through we Actavis, October Adzenys. were from nine so agreement got if outcome for that Paragraph which and XR-ODT. nine announced -- reached licensing settlements with you settlement we the so IV pleased of the years XXXX Certification their with We this types launch Adzenys of years,

-- think we that been second team Paragraph are position on IP a filed settlement we it it’s and sort are as the -- is with for conclusion as And as basically in these from I Cotempla both Adzenys well on well. Teva, IV bodes we Actavis our Actavis that. same believe group evaluating that. some Cotempla well our sort basically We same products. good for the So and on of Certification the before has reaching of of very which with There a

to and you more front. we update intend there will So vigorously on developments it we is that defend as

Jen Kim

you. Thank Okay.

Operator

to for At this closing further the Garg turn I would questions. showing I over to back call no time, am Vipin like remarks.

Vipin Garg

much. in our you continued to for New York be Thank will of the you and hope updating look everyone throughout We forward to you year. very joining we see This we Healthcare Stifel you Thank month on there. Conference progress presenting XXXX many the today. us at

Operator

conclude. thank Ladies for attending conference This you and today’s does call. gentlemen,

You a Everyone may day. now have great disconnect.

Neos Therapeutics (NEOS) 8 Nov 172017 Q3 Earnings call transcript