NEOS - Earnings call transcript Q1 2020

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Operator

Thank you for holding and good afternoon. And welcome to the Neos Therapeutics First Quarter 2020 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, of the Neos opening Richard over and CFO Eisenstadt, Therapeutics. introductory I'm call turning to For Please go ahead.

Richard Eisenstadt

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

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

and our of Revenues, business will and Act we this products Securities concerning Adzenys commercialization benefits volumes and to with of COVID-XX commercial on and statements considered to including pack; statements revenue During results XR-ODT, the ER results company’s Litigation the including may make force of strategy Cotempla for per with of forward-looking oral respect company’s the that our financial XR-ODT of of and including the related pandemic are announced the intended the financial reduction results including market share; call, be in -- to safe the Reform pursuant operations prescriptions business net today. made outlook on the XXXX condition, respect the our business. impact harbor Adzenys to and respect of provisions Private for suspension; script

the pipeline and Neos including future of support Our activities expansion of expectations and current regarding development candidates; through the and our research including our position. RxConnect; business activities; our the product our development program capabilities future ADHD brand patient financial exclusivity and for progress technology NTXXXX, our products; product our of our timing

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

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

the over turn will Jerry. now to call I

Jerry McLaughlin

our outlook, and costs conjunction better like the in call affects further long-term Rich, our also you, our welcome accelerating necessary This would throughout business operational was we everyone. Thank strengthen I approximately to with announced forced organization discussing our streamline or decision in difficult employees while our earnings XXXX in this afternoon. of workforce. quarter to our today the The a very path force XX% first start XX company's but reduction reduction to for and by profitability.

approximately the XX XX which XX% have base approximately of represent current company sales these Following of the business. will ADHD changes, the for previous prescriber territories,

them current Additionally, I’d like including promotion to employees; the personally Neos. talented we for acknowledge efforts non-personal towards deploy many contributions marketing prescribers. alternative impacts many XX% and and their decision plan telesales remaining to of this of to sales thank We

new to half, creates and in Neos profitability year the worked past the long-term resulting and products. corporate we efficiencies product reduction the focus and include the expand marketed opportunities portfolio next on our several This us and Neos for have better other return pursuing we our in ADHD Over to our Organization for advancing operation growth. our of that believe a over and to maximize force allow which financial objectives, position years franchise NTXXXX,

like to the for to presented spread ADHD challenges our strong mid-March, the for market by of negatively situation Unfortunately, COVID-XX. restrictions shelter-in-place business, the facing impact our prescription began despite volumes our U.S., start and and ADHD in a unprecedented to are pandemic entire for XXXX in started And began many as well. we peers, ADHD the as COVID-XX prescriptions

products the products the relatively through total prescriptions IQVIA. consistent the by XX%. by March. weekly in more lower, three-week than last weekend impact ending with X, March, ADHD became the May pronounced, we our pandemic the March the total XX, saw During X, ADHD slightly a on week prescriptions ADHD subsequent week for as the are new high for ending week the period for reported through we total declined XX-week Since had In end March prescriptions medications still of when but of of

data relative we While the very a situation. believe fluid we this of in the market, operate continue reflects stabilization to

longer-term live Our and virtual of sales a this near-term and needs and potential marketing environment of organization adapt continues face-to-face for blend by and to new our marketing products. for preparing to selling

of our continued first total exceeded we quarter, Throughout able as additional RxConnect chain crisis, expand Neos with Late the and network. in network. we been have through of pharmacies added COVID-XX May and supply another large a the And in substantially the fully have the to pharmacy our maintain an number we to we participating pharmacies of in regional went chain XXX pharmacies XXX live Meyer. X,

Furthermore, about It of the we the reach we that expect second their ADHD at value competitors. Neos that our XXXX during RxConnect had to providing – clear that pharmacists mission confidence to greater ADHD and availability XXXX. a RXConnect double number of with quarter us X,XXX is end have affordability ensure our differentiation of with remains driver the of the pharmacies medications point key our and of access patients from by Neos to to It medications. is [indiscernible]

stay-at-home healthcare receiving physicians Furthermore, and uncertainties to during many and the all program monthly medication. hassles medications created work professionals frustrate home stable ADHD of for to delivery period insured unnecessary pandemic, patients the provide eliminating them Neos establish has COVID-XX the potentially place an customer's a proved our trip commercially of of many of our to of tremendous that be affordable to of from pharmacy. remain the patients RXConnect to a We the co-pays in eliminate for by Neos ability coverage the patients Neos RXConnect pharmacies, prevent add that and and their value provide or

of As and revenue performance we've volume overall talked net calls, prescription of generate. key a the the about a we use pack commercial during past per quality metric, we as measure

have quarter in strides this this make We to positive continued for area.

the business XXXX. the These XX% products two strategy towards blended shift to successful continued segments. Our execution pack numbers quarter ADHD core Adzenys against market was our increase Cotempla and same and and revenue in reflect more over net channels our XR-ODT for XR-ODT business $XXX, profitable per our ADHD a

a one-third as Now condition We pipeline. of for a drooling of unmet palsy, sialorrhea, our our such Parkinson's exhibit due to neurological the cerebral and where asset more turning retardation, sufficiently to than mental address chronic potential excessive with believe with an disease, the ALS swallow that tremendous saliva. lead need patients the to to conditions inability NTXXXX a development high development candidate is treatment

tolerability patients regimens result treatment in associated physicians the this report million only too the improved severe socially. for providing patients treatments. side associated a medically NTXXXX an of treatment currently both this to by enormous This basis. many the effects We profile most reserve means left dosing address that this on with available option that currently experienced States United condition And X.X due suffer complex challenges promising Approximately limiting dosing and with believe annual both to regimen. with patients offers in condition, treatment they and being new need to and unmet and

the In by pleased administering agreement methods directed Trademark and in to N-desethyloxybutynin Patent expire before treating This the patent is expected November NeuRx XXXX. not sialorrhea in we we're issued to States a licensed the United active April, patent of of NTXXXX. is announce that from patent to XXXX. Office pharmaceutical And

We multiple a plan is extending this trial. once be likely twice only NTXXXX daily. initiate administered The is clinical develop that dosed an to step Phase as to X next dose program or for single and to orally formulation

second expect by if this continue COVID-XX. study impacted provide We an NTXXXX will that initiated X we be to ascending of And in dose is timeline update half the of the Phase will XXXX.

organization continue existing with our we opportunities can model leverage near-to-market seek committed lastly, commercial our where to product opportunities. And remains on-market to additional or

and we Neos are commercial we of our the platform since to made to commercial leverage in applicability accelerate beyond product investment RXConnect well confident end the our today enable organization. treatment path profitability, or XXXX our made ADHD shore our decision that ability we and analytics sialorrhea our further to progress opportunities the strengthen As acquire have We and believe of have and NTXXXX license one franchise. for

need, the significantly lives forward look team our as accessible of in to on our simultaneously And while confident to bring your working to today. progress our to interest improve daily execute remain forward soon. the for in deliver that products updating medicines we vision We Thanks time ability and we living. on you patients and new

to it turn now Rich. over I’ll

Richard Eisenstadt

X, with of Deerfield $X Thank you, agreement the million and May On our today. amendment Jerry. we announced deferred principal of due otherwise

through monthly be September installments now eight in XXXX. XXth will required make on April We payments beginning equal to XX,

$XX.X inventory The a in XXXX, million $XX.X and first months short-term The compared of March million to and selling As below I'm product XXXX three for as compared the million in in was in to and quarter Cash to we to XXXX compared XXXX. historically fewer the ended March was weak the in XXXX, for XXXX, decrease of was wholesaler burns XXXX $XX.X as cash million. for held $X.X to one levels. held XX, to period equivalents same XX, investments. cash reduction attributable substantial XXXX, sorry revenue approximately

negatively quarter affected the experienced revenue the COVID-XX late pandemic. a decreased that may in we as of believe have we that Additionally, first utilization products been result our by of

million three $X.X compared same profit March and $X.X amortization compared for in million XXXX Marketing to three Gross XXXX the million ended XX, XXXX. months were $X.X the XXXX. For same same million months period XXXX. months XX, compensation XXXX. million million same were March G&A the months $X.X period & in $X.X compared expenses for approximately for for R&D expenses for ended three the million for the in in million, period $X.X were March million XX, three the to XX, to ended compared $X.X were the $X.X March Stock the period to months XXXX. and expenses depreciation for $X in ended XX, XXXX. was March XXXX Selling ended three

$X.XX Loss XXXX, to share XXXX XX, the March was loss per was million the loss for March compared $X.X in for $X.XX per three XXXX. for period in for million, or months the same XXXX. $X share months $X.X million ended to reported Net operations period $X.X operating three XX, ended from the million compared or same

& of changes, for to Following the Marketing full discussed approximately be anticipated are which XXXX. $X $XX to R&D $X now for Selling in expenses we expenses are updating $XX are expenses earlier, million the protected to million range to Jerry calendar $XX million year. And year organizational XXXX. for guidance. full G&A are all our million expected of expense million be the the run

severance the In in related year. quarter. the to million in manufacturing returning addition half facility, temporary furlough these to to the Due second in percentage incurred that in the will run costs, mid-XXs expect the of XX% the before there'll we second gross expenses mostly to margin range approximately the $X.X be mid-to-upper continue and

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

Operator

have. first Ladies Louise Instructions] question take Chen now comes from and gentlemen, may questions [Operator any Fitzgerald. from you we Cantor will The

Unidentified Analyst

Phase seeing you just you Adzenys on X for the Louise. is questions. Kim much Jen so quarters and Thank that confidence next on quarter, growing level a is be seeing initiation from first for might on we cannibalization COVID-XX? taking and in thanks Cotempla? all is My are question be Are you reiterate the to by see for whether the Can and of my products that we COVID-XX? Cotempla. first can trends or that The second XXXX? performance the do attributed Hi, not Adzenys impacted our trial This how saw NTXXXX. over is just then question your that beyond those And you. two a few And --

Jerry McLaughlin

the afternoon XX-week the With Jen, a I were being pleased thanks very Yes. appreciate we to Jen, performance had high in March. we good prepared regard the first much quarter and thanks. our in and with question on for prescriptions call. remarks, performance, as mentioned early in weekly so and posted

And versa. products. Adzenys or So the forward, We going of were vice both guidance things little the on future right and Cotempla pleased are with the moving growth direction products. very cannibalization give we in from and don't

store we RXConnect enthused mass As good However, earlier seen critical the we've we results grocery has Program first brought really hit Neos what with and by large chain Patient Support we're saw regional on.

pandemic Rate another the place we were XXX put and the across as is stores measures in when added the Midwest. stay-at-home Greater Meyer

about as we're that well. really excited so, And

we March well not in pandemic. we to have with the to ‘XX lot XQ second patients, So with the of the for have RXConnect continue really of on fact XXXX, quarter to bring that, XQ big think of program greater And have pace value were our the of we patients Neos a top with solves an in impact commercially half own And products. of prescriptions particularly and that great hassles opportunity We of those the RXConnect. through face. our a Neos insured from that issues on physicians if to verses number sequential

bullish and platform growth. along drive forward Neos our leveraging to we're analytics RXConnect continue So going real to with

As on protocols of for trial. up the a and on the leading remain your to track, we question given now NTXXXX, of working and the on internal lot work initiation is work

have for second remain for you the that track said, if half things And impacts. that That any COVID-XX on we're with to on track assess of right but change we continue related half. keep initiate that year. the to So we'll second on to the trial in now, updated we

Unidentified Analyst

thanks right, so All much.

Operator

Securities. from line Butler Next Jason question the of comes of JMP

Jason Butler

I questions, thanks Hi, the two. for taking had

hearing right And docs patient in starts, question, you maybe COVID-XX? you're cetera now us restrictions back virtual place, that any into how the switches the ease of about think they're force how patient strategies First during putting as -- peer year? -- what of little second, insights thinking give you out about later of the you field terms from getting new more you can and all, to et talk then how can a Thanks. start about as you're think education, about this bit and then

Jerry McLaughlin

little Well, Jason. right. Hey, and for market, across have the Yes. the thanks two joining thanks bases, specialty a pediatricians. It's dominant And psychiatrists us. for board the ADHD question. we In

they in we with to bit summer the patients little we canceled, With schools market what move And saw and segment, seem adapt to going-off the of being as on. a quickly pediatric very stay-at-home segment telemedicine. pediatric adult lot a we impact of readily saw with with The psychiatrists, early early the of medications. and think an

up, that category seen. they precipitously be of open of how routine We the one dialogue days of and be. initial down might far concerned the challenges during ADHD. the from And an the in out. hear discussion big as early things you pandemic in across the so were the a visits busy this plays remains how to the this country weeks, they of pandemic visits or and lot Those pediatricians see about where Not work are have in we'll will

was happened future. believe forward, it's heard all the up. a we overwhelmed once predict It can't really they'll significant we've with within impact concerns going precipitous be But market. was we patient period an kinds -- of But unclear. on visits approaching and here the a the there Since, reduction. pediatricians we from it's ADHD And open once early it's So three-week know stabilization. there summer there things in comes that

an engaging, right – coming our sales We the of where it we we're out and to representatives won't a force now. Jason, reengage will territory. day in intend it sales be -- in marketing We every opening likely the for As entirely be will virtual on sort weeks.

respect And We we will of our also customers. local wishes will and guidelines. -- the local and follow state

education and we're advancing representatives are time, our our for sales advancing and techniques. So with at the accustomed live in selling training experienced retraining who same

We and are the to them now over how well. platform training as articulate on virtual the phone

that selling so virtual flow And as and flexibility sales want we go force has we live between And a that key and becomes the forward. forward, -- ebb to going part.

Unidentified Analyst

That's helpful. Thanks the Okay, taking question. great. for

Operator

a Gary comes of Markets. from Nachman BMO question line from Next Capital

Unidentified Analyst

day. for Rafay Good Gary. Good Hi, evening. on It's

Jerry McLaughlin

Good evening.

Unidentified Analyst

for of How from revenue trend? year, a any to then about rest secondly, trend the think economic anticipating year? the that especially of credit, line Are just prescription headwinds balance the should $X And last facility drew net cadence on I per you how the for and million the what a saw we the sheet have compared Thank the on short-term about you are would you that? terms of repay quickly you. to broader

Jerry McLaughlin

per Rich our first and the Yes, lowest first quarter talk so the I then about line to for year of the part is is revenue could net of speak Typically, the pack. -- quarter credit. can the

may can portion taken But Aside of from year that primary may net to of all last packs the if we That modest increases was It pack. revenue would revenue That -- in market we've year. Rich? COVID, at we we that. our increase going not the increase impact the seeing experienced see said, in of throughout large majority a we year, modest think be we that was the we How throughout of expect to that that. that would remains a a net focus net forward. impact -- anticipate see per on increases XXXX. COVID-XX. have impact to We gained revenue we

Richard Eisenstadt

COVID. one it thing Sure. And uncertain happens is might add I more on what with

to folks could if an insurance, lose course, Of be there, impact seen but there be what happens. still remains

with is our XX-day it's debt on based rate XXX. plus short-term interest the On [indiscernible] LIBOR

are in when secured revolver, sense, and receivable collected. sales the It's not paid issue and in draw for accounts is X% but receivables paying receivables we it a the have range we're back true we with debt. So that as it gets

that. always drawing we're So and repaying

about we most the going had pandemic But the a So be as hasn’t on, to specific we as given to cash access are to today. make want past. much paid. COVID it drawing companies could, doing been in have conservative as sure We timeline maintain very doesn't we that

Unidentified Analyst

Got inventory had be quarter? were level then expect at wholesalers some of that the the inventory it, thank could end or or mentioned that will at that historical restocking you there stay level around you. second XQ? third Do And below you in

Jerry McLaughlin

days at Yes, midst were We're cautious. It pandemic. be factory have the of winter be of remains not sure breaking it in bit little inventory year-end a products did XX and of to to Adzenys down weeks varies the wholesalers inventory right -- were come at usually wholesaler between inventory. The for [indiscernible] than more uncertainty inventory generally and XX and QX, two each wholesaler, as fewer our the two main it that when Cotempla our it could the the down. levels and days for wholesalers from be seen. wholesalers and shut of maintained and end physical why was of of our the at Historically, out holiday could XR-ODTs

we know those to build they maintain So some they'll -- whether inventories don't continue or levels those backup will skinny

Unidentified Analyst

with are transaction? of the targeting what Thank currently development, to for you you. of kind And then in you lastly, marketplace? are seeing potential opportunities what respect business kind timeframe And

Richard Eisenstadt

that. take at our looking force. not We're existing complement opportunistic I'll may may Yes, opportunities, right a or variety that of some sales

ruling not ourselves We're to not psychiatry limiting out. or pediatrics. are We

with RXConnect, a a and very we've So outside we benefit. We ADHD. that leverage would built well ability that be to Neos and have the strong believe, system

partner. have bring a commercial the we we're products on not do or disproportionate that. neurology like space, it not we opportunities near-term We once yet to market could think to look we So for mainly but value where limited again, that

Unidentified Analyst

much. Great. Thanks so

Operator

from from Jorge question last Our [indiscernible]. comes Londoño

Unidentified Analyst

taking so my you thank question. guys, for much Hi,

if your prescribers. sales more on can and marketing us additional have the So force? and to details also, through those to you walk with strategy expect And won't could the to the due And mission XX% targeted call, prescribers some my on your you reduction, this with provide with and the first sales deeply us access leaner sales engaging do be you efforts alternative of strategy force you your permanent. is remaining question

Jerry McLaughlin

Now, that's great.

our over it -- blend last constantly believe a sales top what maintain and our here the of very to the year structure, is still kind assess together and workable doing this coverage on market have the XX% questions, access of assess current force, been of done they think your our I environment, And we've but So assess half, business. prescribers. our profitability allowed territories of we we've it us we

has over are said who great real That it out force and with this the opportunity next our of existing the we're franchise contribution pleased prescribers years. prescribers the how medications. whitespace still sales good structuring a cadre new several gives And are the the there of our our of so laid in and financial to physicians of us maximize ADHD

telesales that in we will -- well And to we or continue as be our promotion, we telesales a frequency group non-personal expand these mail, it as time of prescribers. so, will and group, we've have maintain for use in we had among that, now, some e-mails whether direct in the a expanded addition to expand place form will fashioned old

So, we be maintaining think effective that can business. in real

of these In close personal addition, with contact many prescribers we across country. the top keep

So that be well. avenue as an will

So to that continue in our confident of going we much ability forward. business maintain to are

And COVID-XX expand one have of thing how companies teams I interesting have has as forced And sets seen our adapt The sales skill we're of think and embraced commercial selling. organizations. our real concept pandemic to virtual this us this. proud marketing and fact and in many that's

the increase blend, of a of forward. the live customers think to who we have going gain how with so this on face-to-face year against continue our have sell, could are frequency there can beyond we to we environment preparation next one to year out capability opportunity blend our and selling efficiencies and And envision a evolve virtual the advancing sales there's to may have the selling. virtual ability And even interactions for execute that the training representative and and of

the sales think train how than this become will our So of we more we force going norm forward.

Unidentified Analyst

RX and Connect. Thank you, this very on is just helpful

going percent program? us you through for you'd to pharmacies are of Do year? going the on on the prescriptions all, have congratulations First provide details goal the forward of of of Could the And have the in set program year? the you. the by the you to any of for end a progress rest that number with the like

Jason Butler

Yes, of now of neo through percentage is talk a prescriptions XX% so our in Connect business sark's we have the first adjudicated pharmacies. excess internal it's of about are

and So network, great grow to as track excited the We're independent chains compete. regional reputable areas continues brands, with pharmacies in us regional, highly we're not over time. that on only very that but these our give coverage and strong the pharmacy in which we

we'll to opportunity. So to the a add it to requires continue an not provides opportunity where number geographic specific but or additional

So to regional to we'll Connect, look growth RS our expect chains with through see add business and additional to advantage. our is that percent additional the to continue continue we to -- that's NEOs we we run This And selectively continue pharmacies our incremental will of greatest of overlap think or opportunity. and areas

Unidentified Analyst

Thank my you. very taking helpful. Thank is questions. for you This

Jerry McLaughlin

Sure.

Operator

conference. does the in queue gentlemen, this time. no your you for Everyone in not day. you program. This questions may and Ladies disconnect. have today's great a thank showing further conclude at participating I'm And And

Richard Eisenstadt	Chief Financial Officer
Jerry McLaughlin	Chief Executive Officer

Neos Therapeutics (NEOS) 11 May 202020 Q1 Earnings call transcript