NEOS - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to the Neos Therapeutics' Second Quarter 2018 Financial Results Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only-mode. There will be a question-and-answer session to follow.

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

Richard Eisenstadt

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

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

technology may related this provisions forward-looking be commercialization we Litigation Cotempla that the make oral XXXX, our development During the business, the Adzenys business to and of our and Harbor of timing ER statements product Adzenys of including and XR-ODT, through pipeline research Securities of of considered statements are Safe development and to pursuant activities expansion call, Private made Reform and suspension, activities. candidates Act and our of product product including XR-ODT, of concerning growth business will our our the progress our the the capabilities

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

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

Jerry McLaughlin

three diligence and be serving about value you a to operations, take I with joined for get here commercial why I'd confident Thank our Neos core Good competencies we and development. CEO substantial six This to will ago. our our such manufacturing of accomplishment, with prepared and portfolio Neos was I and ability competitive FDA and stems saw these to their really comprise very company, existing time. that and individuals through you for stage my growth (X:XX:XX) next I regulatory continue opportunity ADHD the approval shepherd as progress weeks bit provide through I of and I'm my products talented from share the business. to of impressed quality assurance to in company R&D, for growth significant a confidence runway as My Neos, firmly our believe on areas. advantage we morning, I the everyone. a offers R&D, the as moment the to was the performing started commercialization period [really] before In healthcare for today to by have a providers tremendous portfolio ever patients and our a you, current rapid more believe today. speak have comments, to excited Rich. speaks I'm like of of the I subsequent

with was In patients field have and when right each during Neos pediatricians primary at psychiatrists, and their the of they and and with inspired fact, of can on first professionals, last had formulation. spending board, these the make motivated ADHD ADHD of difference including current by compassion one including the of physicians. the in lives for patients both treatment concern the our we week, sales my day the in remarkable medications right with which I pleasure spoke care healthcare the I a specialists, dozen about

products, overall patient with regard very several feedback with to we with our challenge are encouraging maintaining to our received to continued from technology. there the with microparticle impressed regard we continue pull path and XR-ODT the And I will of providers how our XR-ODT, our support profitability, with Adzenys accelerate mentioning believe they growing to are Importantly satisfaction Cotempla proprietary and to business, our several our our to that existing commercial ADHD can focus are while growth of business. levers and on strategy. response thinking We regarding

process to additional same the enhancing challenges each our I assure allow and business dollar reduce others that invested. is on that focused justify commercial a may adaptive rapidly companies evolving may to Some are to while the we and relentlessly better environment is you achieve return investment, us facing pharmaceutical or the this can on in manner underway today. spend

into going forward XQ during today, do and our not XXXX call. earnings XQ providing are we details XXXX I to look While specifics more

our will robust focus products, beyond a also more a currently marketed on Looking I'll which talk about we pipeline, building moment. in

me XXXX. let commercial Now a for provide XQ recap

now time representatives during the to trained us quarter is behind This invested our during new back-to-school to and sales is as fully professionals convert many children ADHD young sales annually to team we school. returning and time. and to trained that First, in-house execute our and most a for fully our visit the growth sales adults disruption critical on our franchise prior force driver prepared second healthcare strategy, their

parents is the the after at for parent-teacher ADHD the Another feedback first key market get in conferences. time fall

initial very the are pleased are back-to-school we with into early results. While season, we

ADHD July In Cotempla the increased each in July of for the three, for Adzenys week. share four market last weeks combined market ending XX, has prescriptions and fact,

turn let results. to quarter me Now the

X,XXX alone. We for and XR-ODT the XR-ODT $X.X ADHD a quarter second which had Second sale writers were in XX.X% represents over million, revenues growth $XX.X X,XXX of ADHD Adzenys Cotempla quarter over quarter over for first of net product writers products million. net

year rapid its XR-ODT, product still the and to of is Cotempla the for in first Specifically have launch continues growth.

and back-to-school is in is In ADHD as the the for XR-ODT significant mentioned new-to-brand fact, this at driver market. earlier, a Cotempla first growth season business

with for of a methylphenidate We product behavior including pediatric the a measured These needs In at patients. Cotempla hours treatment experienced patient one launch less p-value believe were is of are tailored duration pleased study, benefit hour, benefit with remains that one improvement of a needs by of the the meets to-date it onset additional time-point and the to adolescent significant formulation the through Cotempla within through than XX results and XR-ODT dosing. and time-point with attention XX% in patients and hours. X.XXXX statistically after hour each significant first laboratory XR-ODT the XX classroom uniquely

showed ADHD math to within was problems Product test, ADHD to asked assess In with patients of efficacy called skill-adjusted to the Measure math correctly, treatment XR-ODT used or studies both one the and hours minutes. child's importantly XR-ODT test level PERMP. and a Cotempla XX inclusive post-dose. patients measured in with of with out first and time-point math effect of through Additionally, treated are XX they of Permanent answered attempted math attention to the measured Performance, Cotempla problems a problems of continuing XXX all complete up points the beginning number significant a post-dose for number time of the

in number example, patients XX equations placebo. improvement measured receiving equations an one XX% minutes taking of is XXX attempted compared Cotempla time-point, in XR-ODT This tests. As as a at XX by for productivity to patients

versus entities. robust business and from growth. At our Adzenys versus And so $XX all the per Net of commercial revenue pack delivery approximately $XX quarter for per $XX per now not profile per Cotempla the ADHD leverage the of XR-ODT only company Looking and pre-existing and pipeline to the quarter XR-ODT normalized advantage release XXXX, products, XXXX modified of in of diverse by benefit applying the for was of take products, drug the increase pack. With it for to prioritizing of quarter also a but net second the Neos, have pack XXXX base of next in being to for patient second our improve pack first this clinical of quarter. the established at XXXX. in development solid we of revenue are technology, proprietary in $XX a new revenue we able to was first stage the second also of net – to strategic pack our quarter the its molecular growing

Our modified clinical of unlock drug technology to molecule care a and release of has compared broad microparticles unique maximum can the to standard pharmacokinetic potential the to generate treatments. the applicability create complex improvement its because release provide meaningful technology properties that value delivery profiles. a believe of has a capability with We current

and our advancing the actively acquisition summary, our for amortize opportunities profitability to our thank will achieve for now current continue your Rich. goal I call and robust In to are treatment to ADHD the assets of a commercial you vomiting our I and commercial turn stage candidate build we grow for pipeline. Neos franchise, market over and develop nausea and is infrastructure. pipeline licensing time, to evaluating drug development and on Additionally, the for and also both

Richard Eisenstadt

position end of to operating position of a our ended the approximately cash sufficient million June. believe cash have that will of We Jerry. with revenue, Thanks, we breakeven. We cash flow versus $XX.X July reach at $XX.X increasing with million cash

revenues for Additionally, ended changes that $X.X to XX, to three provide period structure XXXX. our could the June some making we in debt million Total same the liquidity. $XX.X continue explore compared for to some XXXX additional million product months were

Tussionex ended XXXX. Net the February XR-ODT, compared months were $X.X which same For profit $X.X $XXX,XXX three million the of in Adzenys June the million ended for to were XR-ODT three Gross XXXX XX, million quarter, product million gross million. period totaled XXXX. $XXX,XXX a to ADHD for our net in for XX, and sales was months the of Sales for revenues months commenced including XX, June Adzenys of compared XXXX for generic profit the net products $XX.X June three of ended $X.X revenues XXXX, revenues $X.X Cotempla negligible. ER, XX,

cleanup in XX inventory for R&D associated were costs million expense, Our the cost with same our programs. commitments to XXXX, June adjustment the to as associated included XXXX. expenses ended three compared for pipeline $X FDA goods $X.X development period approximately principally expenses months as ended compensation months $X.X our XXXX. clinical June three General include of the R&D $X.X of $X.X in well million million. with administrative and in period expenses million XX, for compared same were post-marketing million

to For was or compared ended for period for expenses the the turn June compared selling three loss XXXX, in loss share and Net of months XX, $X.XX a were the portion per Operator? three to million months that, marketing we'd XXXX. per the same XX, million $X.XX now like $XX.X the in period XXXX, $XX.X million XXXX. $XX.X June loss same to ended With or for $XX.X the million of call. share of Q&A a to

Operator

you. Thank

take comes from [Operator Instructions] question Please We now any questions from Securities. may The first JMP Jason Butler go will you have. ahead.

Jason Butler

the Hi, questions. thanks for taking

that changes question terms you've already ask been could in maybe catch just R&D impressions first – or your weeks, the one, you have I infrastructure Jerry, First commercial hold plans any in the the implemented pipeline of of six what plans?

Jerry McLaughlin

capabilities call we're weeks, Jason, first those first for question. to the back-to-school I and with the R&D by that commercial our coming the early meeting. meeting, ever thanks think of enthused and I potential. pickup plans in impressed just am six We out of sales really national our the and prescriptions executed more and the see all In starting here

mentioned here. So I my our strategy, as can approach industry the business I needs road I think have to we're confident make our think to commercial coming question will continue and pull, can we And months there levers in in down do. we as that we are really to I'm comments, will shape. and the Obviously, impact our good the quarters in substantial to tweaks

process continue to even we'll look is at all underway business of aspects and commercial. our that So, beyond

Jason Butler

Rich, year, And the rest Can a the just where quick clean-up speak you to for cost maybe given had Great. COGS follow-up. think this normalize that quarter? one-time the of could you then you

Richard Eisenstadt

I little you detail. mean more Yes, bit give I'll a

to reasons Regarding write revenue. reviewing inventory other could off inventory unlikely in result material was some adjustment due see some in we the to inventory, felt QX. and less aged additional decided We're a that further, also to and aging but

from the approval. validation we finished of PDUFA build-up following and this our to relates made inventory batches, Some

this cost point with no cost is at but case gross in function and that So downward cleanup revenue time. also and adjustment. obviously beginning deductible as lower constant. Gross on percent; pressure margins QX the and to the per both of inventory unit those in the in are QX, out of There's revenue had age we plan, QX a reset the higher margin in remained

we're on still process products, ADHD production manufacture know, our you lengthy in-house, very throughput products seeing saving older lower as expect fruits standards, and our we efficiencies and we the As a fairly when ultimately expensive process. Jason, future we're product our of our inventory lower. recognizing these to product the cost in benefit currently but so actually in higher were was basis, is of our plus the account the XX% our a see initiatives cost and of FIFO production still are COGS We're We gross believe operating periods. we for not making margin at costs,

margin like mentioned, items, have gross upper our a I which we've at so climb going the these adjustments, up Again, cash quarter. all from year mid think affecting is next all. I inventory, through do non-cash not to to impact the we could XXs, inventory some us through saying. standpoint, back aged been type still it's really are

first-half in that previously the financial making I a we XXXX. don't product guided. will believe now still are now statements Although the we margin into of gross of have we realize supports our benefit mid-XXs

Jason Butler

the previously? one in and XXXX Okay, which the CNS be GI second vomiting second to nausea clarification. still it Jerry, candidate quick I said great. space the And to just or in half to it in your is then that identify advance would candidate, pipeline candidate, and you also clinic of your think the have you That’s said still helpful. plan is plan

Jerry McLaughlin

Yes.

think we about GI. talked previously I

will to on initiate nausea are We candidate. we continuing advance early vomiting, and some that work

as this a not opportunities. suffice candidate whether we point; be as build is market development GI are internal acquisition far committed opportunities, our all we'll a stage to we assets candidate, As to we at or products, continue licensing evaluating move it plan as And or both well number to are second opportunities of market pipeline, to update programs. our to but out early even the near as forward, say,

Jason Butler

the questions. for Okay, great. taking Thanks

Operator

question [Operator from Please Chen comes Instructions] Fitzgerald. next Thank from go you. Louise Our Cantor ahead.

Sudan Loganathan

taking I’m for Loganathan thanks Sudan for questions. Louise. in Yes, the

the ask commercial Is main the about So to business to the or XX to on you than approximately or and revenue work XX also broadening the reach months. going Cotempla uptake, per like acquisitions XXXX? continuing potential for Adzenys next are to to going I are what pipeline QX $XXX kind script by and wanted some in of for of and be the model forward the first question, on the the focuses other $XXX $XXX track for it

Jerry McLaughlin

Host get in commercial Right. here quarters combination you the are terms once we you forward real I next again, there. in to model, is our underway terms a process far them. and I'll competitive – we'll be pipeline, months think of I the that it for questions improve business you I think that our And I'll of the there opportunities of assure to and Thank as detail. take will model approach well And how going sharing increase in back in and more think strategic. coming be coming in relative can position. business of we're and significant opportunistic with as and I our that'll be the

commercial that our infrastructure. expertise, look for has existing our competency amortize we and opportunities – and team significant to have We built a

we However, best-in-class will have believe that that a at course maybe our our is technology us for ways really I pipeline. maybe strategic on take or new – and time, the what delivery in adjacent a leverage microparticle look to same we with areas for technology, a

Richard Eisenstadt

with the we at Again, from of is last feel approaching in had quarter-over-quarter revenue $XX, year. thought QX. $XX net QX the second still Yes, Adzenys years. you benefit it's Cotempla, in pack, on in deductible high from great $XXX progress end else, QX about for good do nothing about really made we of couple and year. of the would the our to we people the the That's if been per plans of half where be experience it coming the at Adzenys off in $XX

as We to improvements expect there continue to make well.

I by but end at current think probably of this $XXX of more chance $XXX range still to in that's net about point, our will a think $XXX for that. are I to we the getting looking our in and the we and $XXX Adzenys. revenue exceed the have forecast at going we – But for to $XXX a our year maybe be

Jerry McLaughlin

to the to and on Tom we are commercial have half. over back here, push this our talk competitive our what how excited and on to question we about strategy our going Getting turn position back-to-school I'll about in second the and Tom?

Tom McDonnell

Thanks Sure. Jerry.

switching So understands prescriptions, medications new-to-brand the and are perspective. think everyone XX% or increase a patients We of July I starting put see August. to in importance back-to-school it from in ADHD which

high So, our current of obviously on over our focus large physicians. also user but a certainly sales is very ADHD on our XX,XXX still of important prescribers medications, time, base force

stated, our they having much centered out came age. of training Jerry needs on patients' as with was discussions doctors just and as meeting, reassessing we a So back-to-school about very

for to So possibly needs finished to their their middle moving reevaluated child a medication just that example, well. has school high be school, may as change need and

then have also great focus utilize physicians about to and is to products the that. September, the important fall, our not other And continue patient in able starts. we've one experience prescriber peer this be base our there move new and August a very as look also is education, to back-to-school We in that to around just into increase heavy to great it's a so on heavy educate at heard and strategy we and

and first Adzenys well the in there's time, increase With meetings, a starting the are Cotempla period, we medications and new and heavy patients think marking ADHD parent-teacher both patient start. heavy first for or influence for first positioned

year. plans. excited close So the have back-to-school things expect we we that We're the our and excited very with momentum about out we're to great

Operator

you this and This you great a today's conclude showing for queue conference. in does and day. have further I'm now Ladies questions disconnect. gentlemen, time. at thank the program Everyone participating no may And you. Thank in

Neos Therapeutics (NEOS) 8 Aug 182018 Q2 Earnings call transcript