REPH - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello. Thank you for standing by and welcome to the Recro Second Quarter 2021 Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Stephanie Diaz, Investor Relations. Please go ahead.

Stephanie Diaz

Thank you. for you thank and joining us. Hello, call, and Ryan today's we have CEO; and President Enloe, Lake, David On Chief Officer. Financial development will for results we June of updates be an corporate and contract on update including manufacturing and the XXXX. quarter Today, activities business, -- providing XX, Recro's financial overview ended will remarks, After questions. our we prepared your welcome

assumptions, the Private Before I'd like contain no I during to concerning Litigation review today, risks these call undertakes obligation from conference to XXXX, of we filings differ all of revise the matters. encourage to will made XXXX, you the the include any Actual begin, current the August forward-looking the Commission and number today. Exchange results company's Securities or certain meaning Reform and Act within could made beliefs these company statements, statements and this of Securities company, with caution other the that of a X, update and concerning uncertainties. comments which statement of

press earnings non-GAAP will include this release call certain information. discussion of and Our

release, CEO. You will relevant over find David call turn press President that, corporate including recrocdmo.com. earnings our our the non-GAAP reconciliations I Recro's Enloe, to website at can and on With

David Enloe

Today projects as Thank quarter new multiple to company in via second who Recro. the who are exciting is and and webcast. very strong you participating pleased as report earnings This has you, the our Stephanie, and addition to at customers everyone time today thank to dialed to those well is pipeline. of a

substantially capabilities and May downs company's combined continued our oversubscribed million. that with cash and results. reduced our significantly underwritten overview financial with key competencies. proceeds of funds all of two those have X-month on an an $XX.X the balance through operational increased outstanding during the additional of QX provide the achieved enhance strategic to appointments quarter, During net company and position milestones also and our its XXXX will facility the the pay And raise business and the strengthen public details finally, talent our credit debt. of offering of to in following These company leadership with achievements closing I financial strengthened

For that to the call over turn I'll Ryan.

Ryan Lake

Good David. you, afternoon, everyone. Thank

million. Before to brief financial to Revenues on the today, overview XX-Q XX, result primarily new product transfer one increased business, from materials revenues represents was compared from a higher XXXX an I prior for quarter issued I'll clinical commercial June recorded release second this revenue commercial our financial including trial with of filed quarter begin, revenues $XX.X a partners our in of details project. as the was the today overview included in as press of in ended increase results which XX, our a XXXX and financial million months our addition quarter the on with year-over-year XXXX of begin the This were X and XX% compared X% provide ended increase the first year and call of the for the during prior additional second to are results tech $XX The increase well product Form our June SEC. I'll quarter. the sales call to period. from our for

compared LIBOR million $X to second public million million product compensation in primarily the XXXX. costs expense. partners and period. and ended compared was the Interest company million XX, commercial higher the of the including primarily was certain recorded significant expense the two million to ended our $X.X tax stock-based of quarter quarter incentive for that commercial costs challenges lines XX, was our XXXX compared for the X $X.X our related by lower that in The the by decrease Importantly, partially months $X.X to million $X XXXX, for decrease due comparable as our commercial was offset reduced for with $XX.X June for of increase Agreement in last base offset million The XXXX. the of volumes, efforts due overcome borrowings under on well our term interest The partially of to in revenues million was to faced loans to to as sales reported the QX the manufacturing XXXX. loan June the credits Credit the reflect period of million, a decrease $XX.X as quarter, XXXX lower discontinuation of employment period Credit XXXX were was $X.X due primarily $X of to quarter. Athyrium, decrease XXXX, term SG&A comparable under expenses we growth ongoing Cost the in Agreement. rate

the for XXXX. in diluted quarter of the partners result of announced period. revenue decrease product company quarter comparable overview share, compared was share, lines adjusted I two the the period. the the XXXX. XX, diluted million for Revenue million as ended for June financial or for months in prior X per will our of or our the XX, $X.X the X For same $X.X XXXX, of net a $X.X XXXX. period year of recorded million, income commercial first of EBTIDA, loss of period to June to the was $X.X million $X was the period of XXXX compared for million The per $X.XX $X.XX net month provide discontinuation $XX.X $XX.X in the by ended million as in a compared an to results primarily million commercial now

product year as increased $XX.X clinical SG&A period, X incentive the June XX, expenses million sales XXXX to to $X.X the the our business, in the million, materials XXXX credits loans under compensation. ended cost decrease. The primarily the Cost same expense months decrease of Credit to stock-based $X.X was as June from ended employment period compared $XX.X as XXXX costs the as of June the reduction of prior for decrease trial revenues in volumes million X in $XX.X of ended for million partners XX, higher partially LIBOR Athyrium for primarily Agreement. The as million lower million to decrease sales $X.X $X.X borrowings XX, well a primarily commercial months term as XXXX. the with loan due related rate manufacturing well to for period $X.X offset company lower of sales respectively. tax reflects was the in XXXX. our months force Credit commercial was and of from due well two certain the in under our same and XXXX, the reduced Agreement lower to The decrease term costs base due the $X.X on interest was million XXXX million, X and of was XXXX. Interest during were public compared million and During

loss $X.XX comparable the June share per Recro million, reported For compared net in period diluted a of months or or loss $X.X XXXX, XX, $X.XX for to million, share a net per diluted XXXX. the ended X of $XX.X

that $XX.X prior and million cash May equivalents as of million in The of XX, as to the offering the XXXX. proceeds underwritten of cash cash increase to net million in due end Our June of is closed from an primarily public $XX.X the $XX.X year. XXXX, of fiscal were compared

update and back my are overview. financial during This operations over turn We year revenue for call the an David full I maintaining and the will to on period. also our EBITDA concludes achievements now guidance.

David Enloe

sustainable Ryan. and I business leadership a growth. excellence, develop initiate strength designed with manufacturing financial the last Recro to joining in Recro Thanks, to Upon December, through and worked build strategy brand

of the our Over has our great last each X four strategy. with months, strides the team prongs made of

a clinical our as are programs As expanding and our our on leadership transfers and for as well inorganic reminder, support restructuring the validations. and financial projects, stage technology high operational strengthening better expanding order organization to augmenting diversifying and Recro's our in customer while facilities to and value and continuing upgrade growth, position capabilities expansion organic both of commercial support they base,

beginning successes quarter, the will with build achievements team point, the quarter I to to each point the by our company's and the customer our During area first our of address our in growing base. of strategy commitment second on continued

strengthen the to customer, as new Ensysce reduce During quarter our base, customer the Pharmaceuticals, with a Biosciences Astex for continued their colleagues diversify line sustainable and towards top I'd as progress and my unnamed portfolio of second and new past for projects expand during of our our profitability. we concentration make the addition Recro margins, all successes quarter. both like risk, well to acknowledge

a During significantly quarter, second successful oversubscribed position, the our also proceeds raised May offering $XX.X million. of net closing public that underwritten in financial the of with strengthened we

reduced and two debt stated $XX through XXXX and delevered a credit addition from December executed which company's in of facility, outstanding the successfully XXXX, of of million rate Recro balance February our were sheet total to In interest. amendments our

$X.X Through these interest $X.X strengthening amendments growth. in both and XXXX. inorganic approximately these organic result will second towards million of our strategic approximately expect million and and in best cash We our of position made year for financial XXXX have goal support full savings to significant we progress achievements, steps

The to leadership as third objective of as our organization. our operational well our is strategy augment restructure

our As you team, and markets Northern representatives addition representatives, may as critical members Boston Southern in as or business reach including business the in for California, Clinical regional announced sales life bolstering Midwest. recall, last of company's the CTS, the development Services quarter, six well Trial new the the to company science and

now is of XX global With professionals executive these sales development Recro's team by experienced time comprised marketing long Hirschman. Bill additions business led and

position our creating global and a running operations environmental, with quarter, until food operational growth an business. equity manner. number with well Raether that key a acquisition diversity, In be the resource Laura and and and Laura execution and short appointment leadership team a Europe, the appointments Ph.D. She and responsibility XX contribute talent is was biopharma, global Recro's doing and and key Patheon, development of at President branding, included recently Bio accounts has in approximately and of to Directors. new focus L. on leadership organization. Vice was member the executive solutions sustainable device India, achieve company’s industries, culture the worked the Erica served arm the success of and CDMO advancing led strategies high -- biotech future of acquisition President pharmaceutical as a Scientific strategic believe our role, advanced the on Vice and and and its Human with enterprise inclusion relation in and people, with given of Japan Services, U.S. responsible in Solae, will Recro leadership in by President Erica leader appointment of engagement, will profitability, Pharmaceuticals Thermo a Board operates Laura as this commitment member end, and the she strategies Ajinomoto for critical, as role with for leading medical planning, culture. as objectives to market the the DSM employment this advancing of years CDMO long-term the and stands governance. employee Resources and global teams which a biopharma served Fischer President Recro within at employee goals management, and its wide-ranging of drive as ESG and global company's as towards made teams track culture inaugural business most as innovative activities. of Recro to global a focusing of role, at division the announced second related ESG, services Vice me efforts and performance, of subsequent of XXXX. announced a company's and In June people to which that to team X,XXX operational of experience significantly This sustainable an global end-to-end U.S additional In companies. achieving CDMO individuals U.S. strategic so management, DuPont. senior mindset July, of we To initiatives, Erica In social recently human performance the Co., Ajinomoto and Pharma the executing goals. developing leadership including a employee commercial Patheon, Prior industry and change Her well of she offering During of employs experienced her record aligned focus that Parks,

organization strides members Erica of and new believe towards and our we appointments additions Parks, the future. Raether, great we have of organization With and these new expect to development operations third we the technical the goal team and each teams, leadership significant to enhancing of our in business make made restructuring of contributions our our Laura

address this to and value clinical fourth our programs commercial like facilities to area and end, capabilities blister expanding capabilities offerings. Recro, technology projects, stage pharmaceuticals. and growing the I upgrade today, packaging of services, is expanded among added continuing sachet and clinical for of and trial which June, Recro capabilities are To while it support validations. Finally, the would CTS announced the strategic expand for company's focus that transfers to CTS in high clinical-scale trial clinical Included newly the clinical

services We are to earning services a more very efficient incorporate they sales which and new clients support for revenue. a Further, rapid to offering provide to as shorter our allow clients. these attract happy existing these and the new and cycles of with contribution

declaration successful or following during a a country. the required Qualified first new biotechnology the the QP’s relationship to company. has clinical European using Based in in company a CTS the for or non-EU of process. is product for been the allowing to materials customers. Europe for Union A QP clinical In closing, CTS manufactured these a Europe-based the I QP in trial QP of offerings organization seeking the X to last Recro pharmaceutical with the addition Recro, support any have time, believe capabilities Person In and a quarter, EU, agreed established review its for drug successfully its on validating audit, the of conduct months it efforts trial particular, QX, for represent clients results Recro’s the release can that in

newly and results. implemented seen early and impressive We have continue to our execute strategy

achieving bringing and grow, experience growth. to talent Today sales organization. we to an critical have well and diverse we Our progress more continue to a as CDMO towards exceptional team stronger, sustainable other and superb as continues base, building profitability customer make

and has Our financing with outstanding growth finally, company's a make both efforts end status restructuring the the company's to of and credit business, our reduction inorganic enhancing to through organic And in drive competencies, and of the improved the completion will which progress of continue financial significantly successful of since facility. we fiscal and continued the to critical capabilities be XXXX activities. our

As conveyed improvements to I'm quarters. accomplishments more I Recro's coming achievements I made during proud I on and This value XXXX, up We my given can prepared believe creation for significant Recro in thrilled market there of have look many opportunity remarks for our to call and the appreciation reporting cap ahead. with today. open performance hope continue the team. that is Operator? the concludes today, a for in questions. we've forward now the I'm of

Operator

comes question Matt Capital. Hewitt first Our Instructions] from [Operator with Craig-Hallum

question. You may your proceed with

Matthew Hewitt

and afternoon, on progress. Good all congratulations the

David Enloe

Matt. Thanks,

Ryan Lake

Matt. Thanks,

Matthew Hewitt

couple A questions.

the First, regarding guidance.

You're about reaffirming guidance. QX. little the down Are something a there help give if was year? a similar year, curious QX? cadence. this Last and should in step obviously, How anticipating prior on I'm thinking QX could us we you you

Ryan Lake

about So, you Matt, great guidance question really guidance. maintaining to feel asking, our the for full We and we've good good to thanks and that provided and talk afternoon. year this

guidance results, we at can the where just of we're can you the year the terms how in guidance. easily first look you year put we that see to get if at half think full and pretty I out,

momentum we really the set what So out our we to we and feel accomplish. good to ability that about have, achieve

Matthew Hewitt

Okay.

that kind would it's second half, fall So I'm versus million help to the me in you on depressed -- to the QX half adjusted guess and back year. it either QX, million of second there, the the this, imply and takes $X.X for I within not range, for $X stay just understand went but of the puts going from to or EBITDA,

Ryan Lake

good. I think really again, we -- that I mean, feel

saw the think volatility we that to XXXX. are going see certainly during we I that not

QX of be view will that stable. would from QX and a expect I relatively consistency point So

Matthew Hewitt

really you. helpful. And shifting little then a bit. That's gears Thank Okay.

services, that What Regarding new getting obviously, quarter. to here news European the back like? in -- clinical that look pipeline quickly How trial that that's you ramp? can past just start does the

David Enloe

clinical on us is wanting Europe, is biopharma David. say the companies that who is, to have clinical this to this number allows would of the even Yes, both can into of with Atlantic. expand begin conversations their expand studies mean, I or what sides indications we are I

result deeper U.S., can But well, and So what way pipeline, going material got clinical in can allows that I I to more dollars important clients us to really in provide to very going a broadens Europe, and may think you, many launch, this discussions say the they it's are it to also enhance bring leverage able studies be I with be to say in well relationship. clients can't relationship we're that relationships built, the solution is, different of be supporting we it might our in we to million for a support the advance it's who the certainly they've of to and be clinical therefore And needs. already and think have as product already them case and we have it to Europe. for use that that about

tell happy. you it and QP and the process. relationship a work, designation not also, pleased complicated a serious I'm have to very lightly. who is we're results So not take to the of by is QP it's lot very It commitment performing really I It I the mean, services, with took a a the is are people there. something throwaway. and

Matthew Hewitt

of one distribution maybe uptick an That's and in weeks, the in Morgantown that and great. that of market? your I'll in And would more for where you can within there? us, what facility and shut seem kind with being -- tell expectations are What the What coincide down. sit to Verapamil the do things couple back partner's your queue. then partners hop noticed We've last

David Enloe

to for Yes. Ryan, do that you him? cover want

Ryan Lake

there's or less customer when for the out and From than marketplace. the experienced half mentioned third-party you volatility what lot think be stable now. was see our partners quite and a continuing perspective, company the that, again, market maintain certainly from their that can are I data, that we while from our during a we Yes, XXXX to of -- share

Matthew Hewitt

Got you. it. Thank All right.

Operator

Our question from [Operator Thank Johnson Stephens. comes you. with next Instructions] Jacob

your question. with proceed may You

Jacob Johnson

maybe stabilized and just talk afternoon shoots Verapamil on ADHD trends congrats question. on go kids like Are the up there? quarter. the ADHD any back-to-school Good you thanks. just question It or nice Can on Hey, following just Maybe Matt's get recent last market? the sounds a about green other market. one seeing commentary on any as you just

David Enloe

to closely. this defer Ryan tracks very, I'll who very Jacob. Thanks,

Ryan. So

Ryan Lake

Good Jacob. Thanks, afternoon.

So, category from But overall trends to XX% heavy still say, are levels still again, pre-COVID range. The understanding below this year last I this the part COVID. would pediatric of improved many baseline to that the in compared volumes They're down volume year, were continue specialty a prescription time pretty have in time last lag. we levels.

Jacob Johnson

Thanks that. you. Got for

Ryan Lake

end From months seasonality And an just perspective, within again, being perspective, user ADHD as well. typically there less during summer is usage summer the is school but this an for the summer, months. no kids from out there of the some is

Jacob Johnson

Thanks you David, Can clinical the the you That's capabilities that, talk just question added. trial helpful. kind offering. it. just then of that on about And talked Got another for today? offering stands Ryan. maybe, about where You EU

opportunity remind some you clinical then may be and of this trial? I longer think us others, maybe term added the

David Enloe

Right.

programs. reverse Phase XX that preclinical, of -- So, of now provide to is proposition commercial Phase in-market we're sort X, I Phase being in to manufacturing. able Recro a our ourselves robust integrating back value And clients lot stage I and the years XX, the from X, fact mean, then X leveraging early of to the think we're

so the can us miniaturized stages, it have I'll from perspective we in I so Phase that X a call X client commercial the a we of to essentially manufacture that capabilities come early can and guess, And Phase built materials. the scale we have, out, a version

then it drug produce and produce a also can ultimately evaluate robust We the up then the scale able we delivered, scale. to in be that do to can so client that way prototype development can it, wished they we be commercial and for

clinical around I trial we've way label and multiple trial then stage about -- different added ways these for which materials think package, clinical services it well capabilities were earlier are to distribute more would support. that program So as as

So I hope that's helpful.

Jacob Johnson

Thanks, one helpful. just thing. David. last Maybe Super

David Enloe

to know you thing. failed what, [Multiple I answer one speakers]

able that other potency built early actually trial whereby we've to material using suite from The clinical apologies an that that more support high built perspective, my toxic is stage manufacturing suite we a out is out materials. that we're

the development built there's biopharma areas way -- it's so in more from materials, growing and those high And that a certain in operators potent our trials. protects clinical material for in demand of

that belt as we've So under well. got our

Jacob Johnson

I just Then the I'll get. can for last it, color all that one Thanks Got question. take David.

on of can Just those development just it people quarters on how business the new take maybe a bear some efforts for time fruit, and these I an know couple team, to are but going. update

David Enloe

Sure.

I mean, built important that's that able team development I quarter. the in facility ever, lost until because think this numbers to get really business the a is we one can So see of not that thing even COVID, was that past

awareness the a And I really it technical team we one off to there. helped And an gel, way, Congress of really careful think to through have I between and take understand team created other's sort together that deep and building members to meeting, CPhI of the that facilities understanding business in level our meeting, went of from relationship offerings a our and the heightened appropriate right the just entire to Gainesville, now and we expertise, in we development Board Philadelphia. staff very presentation and in that The have, the is staff. facets also each team and different business able relative the at start -- really were a attended in an attended come of so

And add that the what do projects programs I seeing and I and getting, number mentioned to the the with operations what the progress. revenue. cycle we're don't ago, our they having. take like that it. we're interactions the quarter like we I recognizing opportunities first which we're your like and we've results and done you the expanding side to then to and the leverage the pleased do start But of sales size of something seeing, through immediately the we're way and just rate I'm the have the the at it's the a other where and that's so, relationships, I like funnel point, doing performing and team But

Jacob Johnson

Great. questions. Thanks taking the for

Operator

Thank you. this I'm call not like questions I And for further David any remarks. showing any time. the over further back turn to at Enloe to now would

David Enloe

webcast. on Yes. Thank to everyone I to again you today's Recro. who to like In to particular, continue I'd incredible Recro who thank today and a we to wish call our Thank importantly, participating continued exceptional support for and for And the extend our of participating customers again most special investors your and thanks business. our employees that make you are. support company

Operator

call. today's you concludes conference This Thank participating. you. for Thank

now may You disconnect.

Societal CDMO (SCTL) 9 Aug 212021 Q2 Earnings call transcript