NEOS - Earnings call transcript Q2 2019

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Operator

Good morning. And welcome to the Neos Therapeutics' Second Quarter 2019 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.

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

Richard Eisenstadt

This our Good Jerry call to press at XXXX call. www.neostx.com. our you. release, McLaughlin, second we Thank morning, on joined quarter our financial everyone, which is I results CEO. our corporate am results by and financial and available welcome morning, highlights issued website conference today's on

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

and our our the our pack, programs, to call, of benefits market our our Connect, pursuant the our timing of Reform that the of the activities, ER net to we and intended including per including concerning considered will and our financial with pipeline products, and ADHD this strategy, current business activities, the Safe and of of our expansion for capabilities development related our revenue forward-looking technology statements During regarding be XXXX, Cotempla script for business make including XR-ODT provisions of Adzenys Act oral the to of business, Litigation suspension, development and the candidates, may share, are product patient Neos to Adzenys exclusivity commercialization respect Private Rx financial future research commercial position. and expectations our of product including results volumes, statements look and made future Securities XR-ODT, Harbor progress access how brand

realize as may inherent product actual statements performance today, results any views associated our identified of that may future strategy, of to of not and that for to risks subsequent preliminary commercialization These operations of anticipate, or of and we upcoming products variety Forward-looking actual to of including, as subject with expectations. our reflected of uncertainties not period. as development date. and our such not intended be views from we candidates, expect, differ benefits reflect and our the with reflect similar expectations, statement words new These a any materially could upon should not the that may but often are risks as representing be we indicators cause results statements indications commercialization only of early limited

of most For refer that affect recent other discussion important in risks please contain material our our could filings. the the and factors SEC results, information to actual

I turn now Jerry. call will the to over

Jerry McLaughlin

today. our continued quarter Thank to you, Rich Thanks I'm good able this and for us strategy. to progress morning, of fronts multiple report be everyone. joining pleased across

late ultimate strategy our focused to As growth, of that know, volume we profitable with based our needed goal in XXXX evolve we business path to accelerating one determined you from the prescription on to profitability.

decision, that to a have the fundamentals short of we and following time. period deal quarters our financial of and fruits commercial our great are of efforts, accomplished we seeing in full Two the business improve very a

in our made the towards our quarter, ADHD product we loss while the from focus on significant by solid our operational quarterly of shift achieving pack, During and both realized net revenue away volume. progress again and reduction remain the prescriptions per have expense growth revenue strong XX% and management we the despite net And have and total productivity goal profitability. reflects grew

remain continue side future areas commercial the key forward, we to today and that believe the we growth strongly of the this financial the focused business. profitability to We have three move in foundation operational To a support and of company. on

First, per revenue pack. increases driving net further the

maintaining volume. prescription and focus on base. our Second, And target accelerating subscriber third, growth

to on We we ADHD are our keeping updated the now and just the progress. forward important back-to-school market entering season in look you

on our can we metrics we sales we by turn of team commercial revenue into is for and business, To is performance representatives. approximately ADHD key where our force prescriber I potential then start of now Let me based currently the a three specialty the ADHD This deliver rolled our metrics, for accounts key have deployed variables. highest has initiatives squarely will reviewing the medications upon focus out for on XX business, profitable base our business more number believe net that utilizing the generate amongst a quarter.

performance We the are new which and Also analytics basis, and on make enhanced second our ability has assess our an decisions. identify to monitor quarter, base. better continuing beyond informed ongoing to we any prescriber more-timely during to potentially within performance this implemented our opportunities new and business platform,

and was reports, and tremendous the our the emphasized of team. focus, back-to-school our introduced training from June, new strategies this using national these At criteria meeting, now new excitement team resources. and the on deployed and customer hosted on individual season. energy the to is team we promotional efforts. selection newly We on guide of focused strategic trained we for and their late a importance There including which sales brand also deployment sales preparing the meeting data completed In

We've launched XR-ODT, for XR-ODT season. the back-to-school campaigns Cotempla new promotional Adzenys for

include will back that relevant season for school to coupled a campaigns, with brand Neos. support messages, compelling We multichannel strong which confident new are these and marketing efforts

are pharmacies co-pays We This we predictable the network patients. low sponsored a assistance insured and commercially through Neo Neos independent to program offers also of and Connect to began year. QX Rx new in of operates expand continuing program Co-Pay this

in encouraged through commercial pharmacies. very with the total our second XX% Connect are progress approximately we Neos have were claims of made We the quarter, Rx processed to-date, and

medication patients medicines prescriptions we Rx patient company, Connect patients reducing to of enhance percentage balance for process both getting in is as commercial to providers healthcare seek for number pharmacies we by their an the for and access and the During the and the program This XXXX, Neos network. of for continue to simplifying pharmacies. program important Co-Pays, the participating Neos participating of expand filling expect through the of the

this was a pack, for performance quarter. numbers, per business commercial on Turning now to metric results the as performance key specific our focus discussed our in our revenue as net realized

pack was increase ago. XX% the net increase Cotempla over over $XXX, revenue was for the XX% a same per quarter a For Adzenys revenue one XXXX. $XXX, year quarter in same per And XR-ODT net XR-ODT, pack

are gratified strong firms And our to this decision shift area our focus progress metric. commercial We to strategy. in such of growth this in the see our

reported where our a into the increase we net per time is for period, pack branded further third IQVIA the move into ADHD prescriptions the release overall for Aggregate highest, a X% for ADHD core XXXX, the we As extended products, quarter same to increase quarter, revenue will for of franchise. confident increased historically are compares medications the quarter the XXXs market. commercial as in by we and This ADHD same by X%, in only X.X% all compared second of to the XXXX. blended ADHD

despite realize these volume-based Clearly our a this shift away to strategy. We from a positive is prescription business. were able the sign results for

commercial our on continue meaningful So executing progress in to our Work to to-date. the are have portfolio on in made progress we make very be remains to strategy. but positioned we capitalize done, all-in-all, we well

is a I moment tremendous to to need. to our want take new address asset a that potential Now Parkinson's development with for treatment of retardation condition turn excessive mental or to neurological a the disease, ALS, believe salvation the exhibit a unmet pipeline. entity chronic NTXXXX cerebral disease patients with candidate palsy, NTXXXX chemical high We conditions where and a drooling. such as product is sialorrhea,

can dosed complex easy to or with daily, required. an as swallow titration be orally NTXXXX, formulation develop administered to once plan twice We that no

the We in half PK XXXX. are file and by of pilot quarter past development have additional initiate studies NDA made late first actively to IND the in work remain formulation track We enabling progress to XXXX. hope in on an

first overall the step opportunity disease that to build symptoms burden. development broader believe pipeline. CNS address with neurological associated a a We large exacerbate is our NTXXXX focused objective in disorders there's to

company see, growth As drive toward short-term business our you for intended everything we can late progress is XXXX and profitability. since long-term done both and have to the

what we successful The plans in back-to-school Neos. for ADHD will season place are be believe for

We profitability. toward in see financial we prescription and demonstrated And expect strong company continue progress of in to volumes. revenue the strengthening our net per goal in foundation have the of achieving pack increases growth

I like thank to the review I to you and Rich, over that With turn to would our financials. call

Richard Eisenstadt

we million Thank you, short-term held and and equivalents XXXX, At cash June Jerry. investments. XX cash $XX.X in

principal million burn $X.X was net May, approximately our for quarter cash payment Deerfield at $X.X the Excluding in million. the paid

product months revenues ADHD XX XXXX. XXXX the period same million XXXX. product for for $XX.X for June in revenue product period to in million ended million $XX.X three June in for the $XX.X in to Total our three ended the were XX revenues were million compared Total $XX.X compared XXXX same months portfolio ADHD

XXXX. million compared second in the net increased And new several quarter $XXX,XXX as $X.X Tussionex our a additional as for period to product generic the same of revenues of to $X.X in the million result XXXX customers

product period June a to three ended gross million million, increased XX% $X.X Margin XXXX. in months three as in the months ended June Gross three the for the For XXXX. XXXX, XX% of XX, June from $XX.X to ended sales was in same XXXX, profit XX, net months compared XX, the percentage

the ended for and three ended XXXX. million, XX, our Selling $X compared $X.X period XXXX, same the June months marketing R&D million for $X.X three to for were months June the was same in December a of the of quarter XXXX. result organization primarily XXXX, XXXX. This ended as $XX.X for period and to XX, in sales decrease expenses compared were million million marketing in restructuring expenses XX,

three the from ended flat XXXX three period G&A XX, ended $X.X million Loss of months XX, XXXX. June was XXXX for $XX.X improvement of loss the of months June million compared of each $XX.X operations as same XXXX. expenses at to $X.X for million and for the were million an

XXXX. three million Net the per XX, This the in or loss or have compared produced quarterly our period was $XX.X share, same $X.XX in represents quarter June net we where share for per the to million, $X.XX $X.X months consecutive loss. XXXX fourth ended

portion Operator? With call. like the of that to we Q&A the to now turn

Operator

Cantor We questions The from the will Louise line Fitzgerald. first [Operator now comes take Mr. of from Instructions] go question you Chang ahead. have. Please any

Carvey Leung

Carvey Thank Louise. for Leung my taking you question. for

your program more Do advantage? see a to so, Neos that rate Rx provide Rx new the uptake a and product? Connect you how of Connect why? sales of drives Neos you on the higher it can Is program? going competitive If First, color

data for we at released? Will get PK we sort a Or will setting? is design asset PK a X when trial presented do be to detailed conference Phase of when the Secondly, expect NTXXXX this data?

what greatest that excited are Lastly, pipeline most Thank see to you. doing the do about? the What M&A? expand through and portfolio? Will you Where or product need? internal do you development unmet are you areas you

Jerry McLaughlin

stocking and All year. right, Connect we're in in I'll those. very and appreciate try well, And thanks, January I'll we them take that order. a I take the patient Neos this launched program access is all Rx questions pharmacy of and a the with hassles between and but this excited ecosystem partnership healthcare for and really patients about deter practitioners. other with the physician medications, prospects the only the access Patient frustrate patient. as not to

providing -- we alleviate physician Adzenys concerns or and a Cotempla where this that a best approach at prescribe Co-Pay ER, And developed medications correctly adjudicated Adzenys whether mitigate lot to be lot it our a those would XR-ODT, a class And seamless we competitive of XR-ODT. be very a in could when it believe patient by medication confidence program. has the will pharmacy offering of

prescriptions reduce will brands as So XX% whole that second mentioned to in comments, help to We're is good our through for that the our And give reduce Co-Pays had in for I them the the we and medication system. time. loyalty of patients prepared quarter, healthcare this access to provider. hassle to provide adjudicated over goal confident

it expect continue future. to grow We in the to

talking As about country, this it the a we've to energized view and partnership. healthcare providers resource as they're tool very out, across this and been

a to and strategy So key that part we're business of of part a come excited to going our a our this long time for forward. be is really long, fundamental going

salivary a conditions your selective We about that Turning highly that receptor really about NTXXXX, the Anticholinergics, question a have addressing with a non-selective antagonist, of number NTXXXX excited for neurological unlike your cuts asset. it's we're preferentially perfect older and marriage this what to is gland. across extremely debilitating selected of symptom muscular second into think we

provide the advantage and control index. of therapeutic pharmacokinetics perfect well particle day, day take with at marriage an to older So twice our the a at where that a technology increase as a that we in products can if think further it's are dosing not down three once times least day, to delivery we itself. micro And will the dosed as and that to reduce

present would not with know, the to in year. the information a are XXXX. of data, first With posted, discuss presentation the your also And regards later PK, and initiate release, you the that question And you we'll as as basis. course, that expect we pilot we PK studies. press form either scientific in could be keep to of Those that are, we in forms relatively expect on long but multiple in to half timing the of quarterly this of

expansion Turning to associated of micro we NPOXXX. address are pipeline, can We area to that and where underserved and that the symptoms conditions value. that, clinical technology are our the like At additional really turning in provide the area particle first excited back today. CNS delivery to particularly

we are CNS in for continuing the to area, associated ways in So technology CNS symptoms our CNS the the leverage look supportive to disorders. in

make on our competitive that systems. infrastructure. products we given our are distribution leverage And given we to looking addition, commercial looking potentially and our infrastructure actively adding In to and in believe is what sense, portfolio always footprint actively commercial for we're commercial our ways market advantage our at

have So I assure as discuss ongoing these to can We But today. specifically you those assessments are we don't these anything are ongoing. speak.

Carvey Leung

so you thank much. Awesome,

Operator

from Mr. ahead. go Ken & Company. Cacciatore Cowen Please

Ken Cacciatore

Guys, congrats on progress. all the

can spending, will Just sales should at margins. rate? gross are also Rich, we questions a us is couple more for normalizing is bump the Or you HX? potential your be school into rate? bit of going But improvement? then give force? this then on sense season up ask we margins of little go first, So for on the Connect. back Neo there going on a a first to a first the run be and right what for you I'm Or to look And gross of to modeling as in do -- this you

there And of of So through. those XXX% getting set the great, you place? then XX% are in through sense Thank Jerry going and you on the that's you now Can are that lastly, having the of Can where give program, us patients and terms ready sense Neos actually where push there in on now so Connect XX% a a there kind getting parents that to you you of of established? are you us give are pharmacies way or are are to in up? them you.

Richard Eisenstadt

joining Thanks is This Ken. us for Thanks, morning. Rich. this

that previously net course would into gross So we of throughout thought much both It's the margin revenue mid-XXs we and by guided have we the very XXXX. costs. get driven

per QX remains revenue had in when in There's as case XXXX, as pressure. and obviously last QX was when QX. improvement lower, again think, I year, we've QX constant. QX the net and it's higher in pack, there's and cost And downward

continue in to drop to pack So a revenue previously little deductible into net high we you'll But as expect off of plans in place. margins. QX. I indicated, bit we're going coming we our to improve think anticipate gross see our again, fluctuation do per begins QX as We

be So will there. there some variability

average $XX ago. net note is QX our year think, in that in $XXX versus $XXX I and to what's important products revenue that, one ADHD for was

there. of lot a improvement driving that's So

a On same one products, an adjustment cost if ago. improvement unit had And period per ADHD XX% as versus cleanup the you we year ago well, cost in also the side, for we our remember. one year inventory had

we cost. expect we'll realize our in So to improvements continue

We take programs costs the of in have active to place out business.

do into think we improvements gross next range. margin looking year XX% So and expect beyond get the I can into the and

and sales marketing we think increase probably expenses. I should some in spend, see Regarding

programs relationships also reestablished into year, As some purposely we we our our you territories as school some to that to between off of new our their of will the last this season. on sense enter of part reconfiguration point It got until out fall. part peer anticipate campaign money out we spend But marketing our in we back And as of didn't instance. for and our bring as of spend we held peer HCBs contacts. representatives make

up. going sales We've previously to still year that's and indicated, in would where our show thought the to the And low expense anticipate marketing that's for be that mid-XXs. we we

it the for get from incentives beginning for fairly on back more stays expense, up on later and the throughout year commitment resulting pick R&D as flat the studies near-term, Cotempla remain flat should marketing PDUFA G&A for improvement, post year. maybe our our we into spending to relatively money

Rx will the in the pay paperwork insured commercially Neos you and is $XX for Co-Pay. to offers XXX% designed that the Neos And will others Connect, maximum insurance. they it covers their reduce lowest on zero insured Again of for lies, by then possible hassle. patients covered pay reminder Co-Pay medications is just their it's it he it's commercial the a dollars as if know, involved And commercial

growing with to is board We that ended second close XXX pharmacies weekly. quarter on and the

we're that as have queue a We processing speak. we

to continue the and throughout of pharmacies remainder XXXX, into of We Ken, early the program the on. expect, success of number likely the grow to XXXX given

And So expand that look focus to to to will for continue a ways go forward. be as we continue we'll that.

of So we prescriber. we where geographies have sort universal have our coverage our target within

Ken Cacciatore

Great. Thanks, guys.

Operator

JMP from Butler go Securities. ahead. Jason Mr. Please

Jason Butler

Just follow you Can the Connect through? percentage of today you're of it flow broadly majority to you in maybe Neos so the you the you are what maybe that concentration a secondly, seeing products? messaging the program. for your elaborate the force pharmacies current Is that up speak across quick on the And you strategies new Rx in that the a at scripts pockets brand network seeing meeting, on discussed bit little mentioned sales far? then

Jerry McLaughlin

comes early the any rule. Connect, small a it's of Neos provider course, use, and begin further -- a classic it adopt down every of good experience, like of out of and a very initiative utilization. percentage, Rx broadening adoption see about to And we're a they I've Neos sales Connect, has since days week sales pick national in force Neos our to Jason, pleased that of and tries is of concentrated have highly our providers. what been up. that, you XX-XX efforts right the this And of seeing benefits meeting. Over adoption time, Rx And Rx number new field really in I'll the handle case a a really, Connect the high once just the we're further. to a to communicating And and

now, concentrated. additional to across the we we is spread and was pharmacies, additional adoption have And utilization over territories. our that early highly add as So time on, beginning

That's micro second the on strategies. We're And in in you the our confident space. us technology. question ADHD was brand had really the delivery differentiates particle highly what

focus medication with of micro really on the effectiveness and technology. our we XR-ODT, Adzenys delivery the ADHD so the particle And

real With XR-ODT And a clinical win two XR-ODT that hour. Cotempla The helps through the the day at you morning out there's good is Cotempla within is hours. one sustained highlight in data including on rapid onset have and and efficacy one things. hour XX you outstanding. win that

a we is whose the So patient they're you throughout bus can going be to and have the day at through can effective, the in the by the child on hours. morning, and homework school, break it you school, time even

In problems. math that really have on addition, highlights data performance outstanding we

And And Neos in math our program Combining brands. believe problems. on combine is about your so in is that forward. school, what's highlight performance good We're for best class that math patient forward overall our with think for with excited very Connect. access of and best our with Rx symptomatology we going the what brand you going sort ADHD really a we

Jason Butler

questions. taking for thanks Great,

Operator

Please Mr. Jason go Fargo. ahead. Wells from Hughes [ph]

Unidentified Analyst

morning. good Hey,

quarter, per think given on do Just this this -- pack see and a that you you've you the net the $XXX stretch, a about do still is question still had $XX that? in the million revenue improvement how year or million, quick seen

Jerry McLaughlin

are… never never morning. thanks million million. $XX and in for guided -- people to $XXX calling we've Jason this We've Those Yeah, really

Unidentified Analyst

for the Deerfield, right. Those

Jerry McLaughlin

where we said that slide year we are Those are payments agreement haven't out we where Deerfield guiding the the then to never numbers option in if that have we hit an our debt but guidance. provided two we're those milestones was to for and really

Unidentified Analyst

the burn half or fourth the million, is that second Okay. pick Deerfield up ex $X payment the on on quarter? cash in consistent does kind And then of secondly the that in the

Richard Eisenstadt

and funds with are expenses seasonal, we're Ken's think our as some we'll as in indicated question expect but I to earlier well. we we gross There sales spend I growing marketing. some margin revenue that and expect be our are that also more Well, going

think necessarily So sort seasonality. as it's to trend. a from We really good not a QX offset there’s specific of tend collect [indiscernible] It's we collections our I have point. in

is quarter, enough profitability. see good expect to QX we as to but So continue a to have burn, get improvements and always before, indicated in we've we to our that cash

it's generating. point, it's burden some cash a at So not anymore,

Unidentified Analyst

Okay, thank you.

Operator

ahead. Gary Nachman from Please BMO. go

Unidentified Analyst

Rafael Can hear you morning. Good okay? for guys It's me Gary.

Jerry McLaughlin

Yes.

Unidentified Analyst

physicians to in past about the a have you've they've do those X,XXX for your you in that So haven’t of what have physicians why audience, talked and those prescribed percentage for been call being physicians sense so? do reluctant that

question, you to of campaigns? it's Second increase are on increase or flows digital how April. Can targeted respect campaign? net much a help with increases, Cotempla quantify whether of any How some growth you that sort much took lastly, in national X% you of to campaign conducting a more price that priority is DTC price? And

Jerry McLaughlin

So, comes the to strategies, tried sustain strategies the And great the more to our adopters, with the we're question I brand season, school X,XXX and and more business can range And majority I'll what levels become and and/or focusing focusing our dabblers strategy. current of product has focused our our up, within brand quickly that our think and brand start targets. on brands. team throughout our for prescribing on right. X,XXX really beyond the where specifically first vast the target of win shifting A product back we questions.

also expanding and today. prescribers focus to the it's at Rx our our prescriber growing that will those But into existing about Connect rates on our doing we're moving And program. beyond existing brand time, same then through Neos these through we best-in-class, becoming So dabblers strategies adopters. continue

again strategy. we're technology that micro So three pronged promotional back and once to able And our with our particle of data. do getting look sort it's a when our a you to campaigns, it, at

products a a strategic at providing proven with on will the from symptom shift XR-ODT, on focus is adult continually where to our we this driver look to prescribers. continue our predominately really we're you in ADHD And moving be and effective -- prescribed the Amphetamine-based the the good management, exists that's market among going Adzenys focus be that adult historical our direction adolescence. patients. focus in on think and slight be And population. focus When our to

continue there with Cotempla effective and evening we’ll focus earlier only is morning, And the market, about I campaign predominately the compelling but to not day about clinical then patient And the the adolescent on in the our have XR-ODT, to talked into which methylphenidate. data that a allows throughout hour. relief

to that's into the continue adopters, to along So, is goal and become identify prescribers these dabblers mix. then to new the move to bring

your term look something right our are very not we non-personal question, later was but now, as is this and engaging final I only digital we're DTC. longer examining, select type on Now based at year, Broad examine we campaigns strategy. marketing specific looking that think DTC actively not we

Richard Eisenstadt

price QX that related Cotempla. And more pack. regarding been your question improvement beyond most we about shifting That of the an revenue to took on our focus profitable the talking per strategies was just growth, in was for was prescriptions. It revenue to increase we've net improved

generating per was know. that you the in pack net probably increased driver So bigger as revenue

of takes. much all not price does The pharma manufacturer increase it that retain any

good a that. So we scripts, the don't we book are off indicator selling off scripts of But scripts the book the wholesalers.

in do expect the necessarily price their the math not as the strategies well. but the came from that So most back growth with prescriptions QX and and increase of increase from can school then see we we QX prescription into the to going return new season to you growth,

Unidentified Analyst

much. Great, thank you so

Operator

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

Neos Therapeutics (NEOS) 8 Aug 192019 Q2 Earnings call transcript