NEOS - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to the Neos Therapeutics Third Quarter 2020 Financial Results Conference Call. Today’s call is being recorded. [Operator Instructions] For introductory and opening remarks, I am turning the call over to Richard Eisenstadt, CFO of Neos Therapeutics. Please go ahead.

Richard Eisenstadt

Good morning, everyone, and welcome to our third quarter 2020 financial results conference call. our available and www.neostx.com. on issued release, highlights we is which our morning, financial corporate results press This website at joined by call on our I’m CEO. Jerry McLaughlin, today’s

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

net with per technology Neos our for share; support our volumes the commercial and and regarding including patient this of the benefits Private our script that company’s revenues, to Act our Securities will are the pursuant market and pack, Litigation strategy; call may of statements results harbor our for of the safe ER and our financial the development brand on progress and the candidates, product exclusivity COVID-XX condition; activities capabilities our products; business, expectations XXXX, respect intended to ADHD business, prescriptions and business pandemic RxConnect; the Adzenys to forward-looking revenue program, of Reform Adzenys products the we the our company’s for to expansion make timing our our product NTXXXX; including XR-ODT including over statements future and to current research Jerry. considered of results financial including financial provisions of During on impact I call, outlook oral business suspension; and made operation related of concerning the an will XR-ODT, commercialization and the position. our be development of now activities, turn of of pipeline Cotempla the future

Jerry McLaughlin

for everyone, us our and update. Rich, thank morning, you today Thank you, joining and quarterly good for

of segment. the the of of rebound the begin rebound saw have for of the pandemic the the we prescription from recovery believe drivers third the continued been this quarter and the quarter, a ADHD market gradual pediatric impact strength Neos to We key second segment prescription volume COVID-XX adult in the profound and XXXX. ADHD During overall volumes

see prescription market quarter happy go growth that to to quarter the that a the medications this pleased commercial compared being for ADHD the RxConnect, of more rebound, was Neos’ the double a ADHD but is I’m sequential filled market. growth ADHD report support continued We are recent third of detail second our into to I Neos’ XXXX, overall and growth of of through program. will prescriptions moment, patient large best-in-class in nearly Neos driver

Let me for some providing start with Neos metrics brands quarter. our this

the and X.X% XXXX. first by pandemic, into Adzenys work of same The adults weeks third To responsibilities. with overall quarter this sequentially care for on strategies obligations focused Adzenys the saw following third Cotempla of of During of sequential XR-ODT growth XR-ODT growing the a outperformed quarter the result period, continued Neos and growing market ongoing a which the COVID-XX the ADHD XXXX, during X.X%, started brands X.X% the experienced as the quarter quarter-over-quarter. final market with impact ADHD of end, Over market deployed for pandemic disruptions those of given continues COVID-XX ADHD. in adult ADHD, many this the for XR-ODT ADHD who with ADHD has with in growth prescriptions. their additional for challenges manage with adults to introduced work anxiety, routines, majority must particularly we drive increased The child new adults by

same grew by adult XR-ODT the market XX.X%. time result, period. Overall sequentially grew prescriptions for during by just Adzenys X.X% a As ADHD prescriptions adult

and long-term segment. that of the growth Adzenys there ADHD And in remains we continued achieved fact, Adzenys the growth third believe prescriptions the expected patient highs XR-ODT of for adult segment, population the in the this potential the during given In all-time benefits quarter. adult XR-ODT

Next, on our strategies. commercial

attractive opportunity many this and benefit, of that all support the patient program within therapeutic ADHD appropriate co-pays RxConnect the differentiation value this commercially presents In they a from patients this work, interactions RxConnect, in leverage patients. simplifies driver key medications elimination a we’ve pandemic, health and the and involved RxConnect deliver point allowing to to believe, of access prescribers or contactless ADHD many our our ADHD We of place an both COVID-XX for current unnecessary, deter for platform during acquisition or monthly that insured customers’ the pharmacy. competitors become environment, of uncomfortable Neos beyond to a forward impossible accessing continues Neos process medications desire affordable Neos consider Our COVID-XX categories. leveraging as the their for able be many the this space. acquiring adjacent to Under consumer way, patients. providing prescribing We care hassles patients. trip as may to Neos most of increasingly and prescriptions branded and to of entirety effectively providers medications of means in And era. medication throughout look business And eliminating pandemic will a the been preferred an home means in for to infrastructure by furthermore, from medications with

selectively aligned force we number to our during regional footprint and with geographical the are significant with chains expand this of program, sales quarter smaller a As opportunities growth. added continue prescription in we for areas that are

ADHD total sequentially XX% commercial third make filled. up grew of prescriptions of commercial the pharmacy XX.X% Neos During filled quarter now RxConnect by XXXX, through prescriptions network Neos and than more Neos the

role that to access our speaks ADHD predictable confident Neos RxConnect and business the our and for are will of continue providing medications to our to all patients. ADHD to play We in growth affordable commitment appropriate an increasing

team made And we over of see engaging by ADHD force in this for on return our during our with to customers XX profitable most to us highest the sales a second quarter, XX, growth. both despite territories to to we our focused flexibility our quarter. to the new from down of by mid normal. In be Regarding sales with had on to we are XX% in decision force, the growth significant organization, commercial we receptivity force, business realigned reduce gratified where sales about third we the and territories a areas approximately the have strategic continue and sales the smaller this our potential started

We and in need in are place unmet adapt the and team positioned address chronic are of are our sialorrhea development we we drooling. value-added customers a meaningful for on the well confident candidate, a excessive the we manner. And engage future, and to systems in have I treatment NTXXXX, our to that pursuing to for which to touch rapidly high lastly, want

need opportunity tolerability regimen. profile the of significant by potential a become its and a encouraged new has option as that care with standard promise improved We’re dosing that offers address the the unmet to new NTXXXX treatment to

trial closing, NTXXXX impact business the on XXXX, we in In and multiple of to temporarily we cohorts. single first consists a half and pandemic, Given Phase a our this the for now ascending COVID-XX dose plan SAD/MAD of of of multi-part with ascending COVID-XX business, the program pause while a which environment. X clinical study challenging result initiate the remains

Rich encouraged the maximize portfolio that review positioned the the in we the to the is market business will financials. are contribution both the turn call continue ADHD to company. signs during to With our well ADHD that, to CFO its Eisenstadt the and third financial believe Neos third to We positive our by over quarter Rich? I quarter. And

Richard Eisenstadt

Thank you, Jerry.

for basis. $XX.X XX, $XX.X year-over-year decrease COVID-XX Total continuing period product of attributable compared a in As cash and for the on million three million the cash XXXX, to same to was XXXX, XXXX the equivalents. held in impact in of part revenue ended September XX, months September $XX.X million was the we

million $X.X September we’d $XX.X depreciation Stock facility for or compensation in We now that, months XX, for expenses same the the like per million September approximately in reduced for $X.X period $X.X and same to XXXX. three the for for in For Generic same compared three and in portion was Loss ended months R&D the three were the XXXX September and Gross XXXX, $X.X principal ended the ended short-term share call. million operations $XX.X ended period profit in the of to were months in million reflects our debt months of outstanding million debt three XX, decrease September three ER. XX, G&A $XXX,XXX XX, profit the XXXX period compared expense under $X.X Selling per $XX.X to with Net amortization have expenses year-over-year. $X.X the $X.XX marketing months to same XXXX million had XX, loss million in the in from XXXX. outstanding for size compared XXXX. XXXX – period $X.X Deerfield primarily $X.X September ended were was and same $X.XX September months to within impacted XXXX. the ended was compared for million with Adzenys With $X.X the three compared the for for for and Q&A XXXX, was turn XXXX head XX, XX, negatively for to September Deerfield. same $X.X of in Tussionex bottle XX, XXXX the expenses At the million to XXXX. period the smaller million in in by gross $X.X Operator? debt XXXX. share Siena. short-dated, compared million currently million million $X.X the the ended to million September lending we write-off three period million months count were

Operator

of Chen Our Cantor first from Fitzgerald. Louise question comes

is line now open. Your

Jennifer Kim

This have Thanks questions. much is I so for two Louise. I Jennifer taking for questions. Kim on guess, our

one how think pediatric opportunity is, give Thanks. X.X% in And the could you will your are COVID? like adult population? sequentially? around thinking what’s what do the targeting recovery franchise the in strategies on you second you pediatric just, is, The the my question bit other you remaining your wondering, And I’m will play your for out like adults And detail how – what out, the what’s you did guess recover on do considering that noted as sequentially. more I your the in first it numbers And and there? grew a look growth pediatrics from market? current play strategy market you for then market have that then

Jerry McLaughlin

Yes.

you So that the for may, so I much thrilled. questions. to take With those. we’re adults your I’ll Thank regard very

last on from to year. X% flat segment anywhere has growing order the the X% been to of of Over couple years, per pediatric

adult the has and And and to So very pediatric X% year. X% those in modest XX growing growth per been segment segment the under. that’s

Heading the ramps reduction this to typically at second In fact, think it pace very prior we’ve back quarter took nicely up year, in a it The of on growth. it’s pediatric And last the hasn’t by it And to versus school and out held continued rebounding continues big COVID month XXXX, that hit, in double-digit half to the looked to a a once it in a as market season, you slowly. grew – COVID. pronounced. obviously if we’re bit XXXX segment terms delay year, rebounds, about in again, while to basically and and we to been X%. which into season, What back is August. month a about seen back school this through and

gradual to were respond. So it’s but been Northeast. more the hit in than And, see particularly it continue We hard steep. we

in City For October. not early September, New schools York late example, did fully until reengage

delayed So had a much season. we expect to looking effect on school it expect fully the continued What back growth. forward, we very

segment not experiencing the patients for disease driver very be been this name that hereditary last as patients their into a adult are as And tends And a of one that’s not be number adulthood the are to often disorder. is, parents this see years, expect and We ADHD adult, XX of and market lot and self-identify, – advancing over been to well. one, reasons. these has in you But are growth Also of growth the to who XX this just has market. long-term their the a market of to have in developed symptoms, – patients’ often much is source diagnosed eliminated. we adults, as a

So bullish on pretty forward. that going we’re

segment launch focus and the particularly was, more the our there given at that think here that the Neos, are melts. focus was pediatric a products on real think of at I I

offers for a when of think home, their for people XR-ODT to the who it and to is pills. with – schedules alternate there what’s inclination benefits with not could kids on the and medication real reality natural have for go, was need take Adzenys before who convenience for fits swallow But adults, think at and into dealing the I day. them them schedule keep the their in they can work their of

an question We But quarter segment as So X.X% the the did about the XR-ODT about get it’s alleviates going the for with and convenience know combined second be the of see. know it best-in-class adult well. support hassles prescription. they’re answer adults, of saw we that our clinician. of can confidently And with about a patient pay it’s They growth quarter that. each available. doesn’t versus where growing Sequentially were every to to Adzenys this third really what year. the really in program, It lot XR-ODT to your the a They Adzenys also mean the their we Peds excited pediatric going isn’t month. quarter-over-quarter,

disproportionate will prescribers we to see focus. of see way that the to go-forward frequency basis, with think continued be be share in to driver population. and have with tend So going a a select opportunities on we continue And digital will increased continued on that their who be We big marketing. we call a opportunities adults the forward –

excited that we’re real go we So as about forward.

Jennifer Kim

helpful. quick up sales, the franchise, percentage follow-up? versus I adult one guess what the your made super For is of That’s ask I population – Could pediatric? by Okay. total

Jerry McLaughlin

Yes.

So it’s rough. It’s interesting.

market’s it’s adult the about – XX% – the – typically XX% we and pediatrics. So markets roughly are

We’re inverse. the

is pediatrics. and because XX% makes in ways, XX. ages Cotempla X about to sense for It indicated XX% We’re adults some

we’d almost that expect exclusively population. to So be that in

a years a able direction. two we currently. business XX% of move as to for to in continue having pediatrics, Adzenys percentage of to of adult we despite XX% Adzenys, business with pediatric increase for have our XX% our we both from However, been positive ago, And indication, actually XR-ODT, adult up the and had was

to XX% forward it’s So – business. – Adzenys, overall And of potential growth of franchise. Adzenys, only a think But go going for the fact, majority have for our well. it’s we we for a the in Cotempla. see it’s business as we’ll We impedes actually with XX% see forward not because always for franchise, we up as our great adults, we

and to really made we’ve see in we a it future. good It’s that So progress. good continued for higher marker the us, move

Jennifer Kim

Thanks Very Okay. helpful. guys.

Operator

our And you. from Thank JMP next comes Butler Jason from question Securities.

Your open. now line is

Jason Butler

congrats pediatric where quarter. with rebound was quarter your and aligned saw questions Rx the taking in you I’m growth and and for on – thanks wondering adult, the Hi, the that justify sales the white does that growth just in in focused. adding extent, overlap? reps? spaces that now I is realigned guess where more guess And what are the way, Thanks. a in force to I seeing you could both

Jerry McLaughlin

Yes.

to May, and on our what the So – Jason, targets compliment connection thanks execution. in we retain When prescribers in to we’re excited speak because for you space, thanks white force sales about other telesales of so realigned physician the them. means we’re keep much actually, rebounding able with and and our XX% quarter, with key good the and with deployed we’re we doing in to the to we and

have where the representatives. sales our both better rebound that we’re white of also base seen our with force, target have space we we seeing well. in returns some obviously, And So in prescriber our we as but

So an we’ve talking removed remained force When to some last adjusting we was back been years. And we go as built sales really we for commercial and market. as made realigned, with didn’t give our structure, in something RxConnect, we the two to Neos exercise committed the the up contracts. to certain our about changes much. analyzing we’ve This

shifted. landscape opportunity Our

It’s well aligned to opportunity headroom. in aligned lies. the potential Neos It’s growth RxConnect And this where as our so XXXX, realigned commercial once well where we pharmacies. again, saw with there’s

we a And them reducing position sales compete. better that so in our we’re excited really despite to force, put

Jason Butler

Great.

regional quarters? step-wise that Is substantial adding more of we think occur? could like RXConnect. just on pipeline Okay. you certain just how And there chains either did from a other expansions the higher one in products quarter? potential beyond this And growth you the are a thinking that? network How about then the your coming about strategically, then any for it of network Are to just level this like should or in leverage

Jerry McLaughlin

Yes.

where’s and we’re or this think, or point. in we’re gaps we are surgical we’re franchise. products, this the growth doing what of network of Neos looking I’m from in is, Valley at network groups our easily, sorry, as where of in AHC And I was regional that in surgical and more was was Phase region, Jason, terms pharmacies. now whether XX for built about now fold to smaller we you added built – yes, an other And what would it it never small chains, I I analytics just was pharmacy or we in we’ve perspective added then and Ohio built. easily a repeat support smaller psychiatry that’s The now targeting, the to So can think in question right? Jason, long-term just your at So example, commercial fill second is We whole whether independence beyond. a opportunity and infrastructure chains RxConnect how more about from enhance. this it’s the contribution the neurology, commercial terms perspective, ADHD. in area? they’re – headroom financial optimize in And they’re chain, of But could additional products,

so easily And we can add value.

we’ve fact, about wanting from incoming with to RxConnect. multiple In partner Neos had companies

industry. pipeline by that So assets we in can And bring either to putting think many we to brings or built disproportionate RxConnect. them our are know market fold that already value value into something we with we’ve the on Neos

Jason Butler

again Thanks taking for Great. the questions. Okay.

Jerry McLaughlin

Thanks, Jason.

Operator

our Gary question BMO. And Instructions] of Nachman from [Operator comes you. Thank next

Your line is now open.

Rafay Sardar

It’s think per I comment the was it Gary. on was $XXX XQ. hoping I Rafay revenue in Congrats on for morning, in quarter? quarter. you said the good prescription you could guys. on Hey, net

XXXX? into about should there So any trending color and we how think that

Richard Eisenstadt

it. about talk I’ll Rafay, Sure.

a to one-year revenue per So $XXX versus our ago. improvement, XX-day pack, prescription we $XXX increasing in Cotempla, net QX had year-over-year for

July, of quarter we one Medicaid pack. with increase, and increase although pricing, contractual wholesalers, decreased on penalties actually obligations weight we buying Adzenys, our price Adzenys in took the price which $XXX implemented a per For a to price in when our

some work We we get into this fourth quarter. will through of expect as that its way

think I to going. going we’re where about Rafay, think forward,

saw year opportunity more the as have say, earlier, to range ago. that We’re huge XX%. XX% rather it’s like we not a said incrementally I on, to would do But going than improvements continuing we see, increase. to the X% We expect there’s

Rafay Sardar

operating And you. expenses on there current options other Thank your and could any comment was respect it. hoping Got flexibility you and runway cash your you’re that to considering? I with

Richard Eisenstadt

obviously This expecting year, we COVID of that were lot believe be. we by taken of were it We out versus hurt business. to cost where Sure. we’ve a our

We be continue thing XXXX. to strategy, is our is we’re payment which the keeping back on to growth help on due revenue May our us. The plan principal eye Deerfield debt will one in that

payment. $XX And as calls, dealing on have We for indicated including exploring debt. with earlier a different payment, refinancing solutions that million that possibly we’re we’ve

move been on we’ve discussions having we’ll forward that, to So continue and that. regarding

Rafay Sardar

then bit Got also then Thank the it. could color you’re you. would early, but that for on your little on development And you opportunity any I time be it’s market expectations comment helpful. on know a XXXX, seeing And how line?

Jerry McLaughlin

Jerry. is this Rafay, Yes.

With think of pause, see that we market, some development the in the we temporary in make a but up modest program. delay can we time the

of a that lunch of friend patients at with get the drooling early we’re plate. who enthused product. pride help their for a of confidently The the at looking robbing patients. The XXXX no in our issue So cerebral longer we understood. around and dig The to issue still existed wanting cerebral opportunity, ability fear as it’s playground. take XXXX, about have as to not over and more it’s can bigger with about heart-wrenching. issue for the to Parkinson’s not advances, able only of of parent here them for issue distancing, and patient that we terms is talk a a and to forever take to a really, started the palsy, in I palsy. issue well sialorrhea to Parkinson’s And Parkinson’s just their it’s child being social And

that neuromuscular we know issues. think swallowing. with all a I there’s difficulty There’s

does your with which causes issues additional advanced clear risk properly aspiration. swallowing, can risk there’s is the leading to which among so saliva, with pneumonia, the of to patients. it of aspiration, increase of increases inability your in aspiration which And death lead Parkinson’s And disease

titration is has impact, really And psychosocial patient is this no a only there’s social particularly There’s and option. that problem or medication And uncover, that not to deleterious schedule. clinician clinical or effects there’s good a offering good – make it in really in a the that Rafay, side really today, or trade-off a issue, meaningful advanced as a option. there’s disease. So onerous has dosing has we no an

in that conversation, a and not think that patient And is who if we’re unless patients disease. state and able more clinicians And more brings that formulation, sialorrhea. care right of helped be either, to a We early the should or promise, mild-to-moderate reserve in confident gold it be treatment many We with think disease on and the easy-to-dose result, B, a, could able that advanced. As we’re the product much disease the standard sialorrhea and be the it engaging will experience set well-tolerated for for treated. confident think sialorrhea the we that to up; patients. a delivers really of if be will NTXXXX, patients with that’s more

There at the patients in are than excited about X.X market opportunity. more the United million are least ever we So States.

not that We that a remain confident also It’s to require a investment it’s very we pretty little of audience. ton rights, narrow compete. commercial a have competition. does worldwide and market there’s And

for for think, commercialization it successful a we all bodes So well, NTXXXX.

Rafay Sardar

gross expect going margin, level return I to trial? different know then, historical R&D called we And on the a SAD/MAD to two quarter. note of then Should I as spend a on forward? should gross that. quick just you. Thank you this Thank trending ramp out about And had you of just How Rich, you. margin sort of items we follow-ups think up couple

Richard Eisenstadt

to that, the Rafay, we’ve Yes. million XXX in that running don’t $X.X think changes On million And per the term. I near been $X in quarter.

with XXX. that When $X.X start or spend about program. really that not to continue study to study, we on programs external expect million is do options We

at actual earlier Some year sometime in half R&D for first samples making the XXX internal planning don’t big beyond step-up that probably testing. of in cost are expenses related the of But that, to for we expect I that any will But XXXX, as in is that. hit of a the point pick as than data. been for with up XXXX. will commitment increase on regarding year probably the next some some we our back in-person Adzenys expense actual There We’ve rather agency studies get R&D our on to be working Cotempla. in post-marketing that studies modeling in and

will cash So lot us save we go that hopefully a of resources forward. as

maybe margin don’t this any increase that step-up XXs gross mid-to-upper I year, year. So a will we year R&D in later and rise Rafay. expect On into next still then gross believe this just slight cost, margin,

With our from the reduced we the XX% actually margin the took gross inventory XX%. out-of-date charge QX, in to for that reported

and costs operations. on hopefully, to meet And this regarding the course employees with kept effort XXs. increased itself. guidance lower that, safe and keep our margin. back to don’t So that, the our ongoing in out gross We earlier the on furlough we year, be our a overhead an in were Earlier anticipate will repeat production the shutdown, unabsorbed to led year, had facility we which

revenues are stronger. even still maybe margin net forward, XXs, you increase, we per I ultimately gross when our currently into half believe the year So year next revenue back the that hopefully, think the pack towards sales as going increases, as up of get

Rafay Sardar

much you for the color. very Thank

Operator

this conclude for gentlemen, And queue conference conference. participating call. further you Ladies Thank questions your I’m thank in in at and you. This time. no does showing today’s

You disconnect. may now

Neos Therapeutics (NEOS) 9 Nov 202020 Q3 Earnings call transcript