OSMT - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Osmotica Pharmaceuticals Third Quarter 2020 Business Update Call. [Operator Instructions] Please be advised that today’s conference maybe recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ms. Lisa Wilson, Investor Relations for Osmotica. Please go ahead, ma’am.

Lisa Wilson

operator. you, Thank Pharmaceuticals Osmotica XXXX update business Welcome third call. to quarter Wilson, This Osmotica. Investor Lisa for Relations is me With and call Chief Andrew today’s on Operating Brian Executive Einhorn. Officer, Markison; Officer, JD Schaub; Chief Officer, are Financial Osmotica’s Chief afternoon financial for detailing XX, the press September results ended the company months This a XXXX. release issued three and of Investors this release the Osmotica of section website can be press This osmotica.com. call a webcast at the accessed through

conference I performance. of release Osmotica’s started, intent statements intent Such as would afternoon’s like that statements are guarantees everyone by expectation, remind belief, this uncertainties and or the and any Securities on except in today’s and regarding disclaims the or materially get available to SEC. update forward-looking as made the company’s may that projection, on with obligation future statements as statements. risks statements based information Litigation future the we statements, results forward-looking today noted law. management defined not call events Osmotica anticipation forward-looking Private a required any these Act. forward-looking express including in Reform those performance forward-looking to Before forecast, considered by be future These specifically from those involve Actual and are may projected filings to differ our press of

EBITDA. we During measures adjusted to this as refer call, such non-GAAP

tables at this of available adjusted reconciliation of of on XX be our end EBITDA to see net the a for website, the loss, press For archived will or release. income our call webcast The osmotica.com. days please

on Markison. turn XX, may or archived Brian recent I’ll press may call be held XXXX. who Since to Osmotica’s most SEC announcements And to please and company’s webcast, and to the have the of topics related made replay filings. was Osmotica CEO, benefit the discussed, reference the the those releases For that, then, this with call November so over recorded listening

Brian Markison

call our today. for and Lisa, joining Thanks, you thank

quarter approval has started third way, received our review few which over FDA arbaclofen for up early FDA Labor Santen The exciting. picked commercialize engaged also we’ve and Day. the the the been with to after finalized We the Upneeq, of with for the on NDA, considerably Upneeq Osmotica past been has partnership Along months.

Upneeq, the on our to to the set last our truly way program care and representatives. are company. realizing with IPO growth that program out XX On early we product our we we call, We importantly, a sales our practices strategy physician where earnings team the exceeded branded become and eye experience at Early more our have the leading to responses targeted of expectations. XXX with patient described

Upneeq over little of the time. droopy supply a physicians after Likewise, begun first XX% already months, this weeks, trying have been likely early their care, terrific, those that a of the to initial treatment first-of-a-kind actually many we been surveyed eyelid. have insight been great to specialty sampled has matter in fact, nine In it eye write many by on have embraced first have on, called of customers with No our for prescriptions. the over the of themselves or continue we gained ptosis the experience two program. with feedback going into treatment patients deal from patient for has through In

in We need order that force a be drive additional sales to have measure tactics good the and growth. effectiveness of to out rolled

commercialization Andy? insights who the will share who over into turn the Schaub, Andy Rule financial Operating all the early Takeover call will the in Upneeq. In the announcement of press company’s the and possibly followed about arbaclofen. about Einhorn, I’ll for results. Upneeq release X.X Andy now our clearing our to Irish Chief runway fact, will JD discuss be by is additional Officer,

Andrew Einhorn

compared Selling, to XX, revenue and compared million decreased administrative three Upneeq months September decreased offset by three months three million the XXXX. offset decrease $XX the NDA XXXX the to $XX.X erosion sales XXXX ended expenses for September by fees milestone September contract continued volume the during XX, sales $XX.X decrease September reflects Upneeq, to million transaction. $XX.X for payments quarter the million product million months ended sales and XXXX. ended first by license three XX, months compared $X.X incurred of net on reflects by three existing revenues XX, receipt expenses to XXXX, the $XX.X quarter in Santen Net decreased primarily million decrease completion XXXX, higher XX, three license Research million three months Total the Brian. million This competition. September and XX, the studies decrease filing third XXXX. compared related months and the in a to due $XX.X clinical in $XX.X reflecting of arbaclofen generic and Licensing XXXX to the price ended the under for from September you, reductions of stemming in portfolio our for to in primarily XX, general million September $X.X of and million to product were to and $X.X as months which $XX.X licensing Thank for months development as The were in ended million with This the $X.X Pharmaceutical. of related launch XXXX. Santen September costs ended reflects force three ended the contract associated the to ended with revenue. XX the additional product higher million costs increased

During charges the of impairment intangible $XXX.X of rights as write-down the charges of asset product recognized third million XXXX, compared reflecting quarter impairment XXXX. of for million, to we $XX.X quarter of third

a adjusted of in XXXX $XX.X XXXX. EBITDA EBITDA $X.X the quarter $XXX.X net to compared Our third net million for the to of for loss quarter Adjusted loss third quarter third quarter was of XXXX $XX.X of of of million million third million the XXXX. compared for was the

had and cash $XXX.X facility million and million. XX, credit of equivalents of capacity we cash As our under borrowing revolving of $XX September

amount aggregate now under loans loans, $XX also the principle As the over XX, the $XXX.X during quarter. JD. term had term turn of I’ll borrowed of call September of million prepayment XXXX, our million to we following

JD Schaub

Andy. Thanks,

As we early upfront, FDA our branded supported dedicated time truly new some exciting the organization expansion and XX-person of for sales accelerating a I’ll specialty company. our for this operating a subsidiary, from you Today, of and on launch of through Upneeq arbaclofen been on has share and early Brian a approval potential with details year-end, pharmaceutical by stated of rollout continuing further samples Upneeq transition Upneeq update to team. the controlled efforts. In additional our highlights launched our September, Pharmaceuticals, largely RVL the those before

more controlled The Uncovering early of and a core program response, targeting than sampling we number in country. combination our and/or practitioners still aggressive to experience to this works, XX-day surface. the ECPs clinicians tremendous The for providing audience. early an are opportunity and of a promotional an overwhelmingly effort, kits target patients positive. through and trial been has UP samples Upneeq experience XX,XXX been patients these feedback just seen of generate approximately X% real-world Ptosis, designed trial insights XXX quickly The UP, participating later, represents launch was Initially, meaningful first expanded we X,XXX, provide inform or throughout and less to launched rollout. and eye ECP to expanded weeks Approximately phase than which seamless the the to from experience scratch nine the the offices. further of shape has over of product By care all total we have the accounts, have starting we early the

point the from traditional has of product more than Importantly, product. new feedback our launches, the to and prescribing of sale. of access at given evidenced availability, prescriber moved already Further, many as X,XXX having challenges our mitigated payer trial capture to pharmacy strategy unique us ability coverage notably the ECPs also has with by the

the outsized In filled XX% and have opportunity. data and time been prescriptions far we This an is the commercial submitted short increased feedback of to momentum on early have protocols generated focused safety. always we efficacy sales ECP total, population. indication from and for partners’ remain XX existing in Specifically, our significant fraction prescriber small potential strong of as a confidence have a to launch, believed daily use a validates an targets establish patient and days, X,XXX just of in Upneeq while continuing both of and about We of intent within number and physician our since footprint, reaching what routines. patient a thus part

to targets. us sales, launch, about our our unique end increasing preparing forward, in accelerate ECP investments further XXX to and we XX,XXX first corresponding XXXX, of our quarter we of XX sales the this the Moving team medical the expand reach marketing expect from to growth asset. to over an allowing Notably, for to by expanded are broaden

of with care Head who Additionally, Sanjay we a new recently experience. Marketing, Maliakel welcomed [ph], wealth eye the of joins

in look drug and and As progress a as look ahead, marketing elevating launch we back layering promotionally to expand medical targeted and the loyalty to Brian. call spend, on patients With we program. this almost beginning will forward an effect early place foundation, a to further With immediate starting positive consumer that phase. like we our ECP in target through sensitive. to our I’d education and audiences meaningful on is we that, further see be continuing create awareness has within awareness the updating community, We put and to our you the turn move to

Brian Markison

can Thanks, like the so to portion we now JD. the And our Operator? And field the is what remarks. to I’d call that questions. back do prepared of turn operator concludes

Operator

Randall Markets. first question you. Thank comes Stanicky our from Capital Instructions] And with [Operator RBC

Your line is open.

Randall Stanicky

law, what And expand Brian, the that? strategic understand us on to if press have related you fundamental the that’s process But takeover and then Irish comment commentary extent have just this. sparked you couple that of and And to the a Great. that just maybe just I can timing, on at follow-ups. review Thanks. around may the the process, looking help can? missed I release

Brian Markison

– company. an under Randall Thanks, and we good Irish-domiciled Irish number Yes. Well, are one, afternoon. the

for to I’ve we that to believe And what drive to we’ve order arbaclofen. of we’re company in now. on the with runway right lot this And really we And willing that this just want really of and diversified the we’re to arbaclofen Upneeq that investing that of outcome is as Takeover Upneeq sparked earlier, shareholders. upside Irish under Rules, type huge we’re think is short a So focus clearing on, should through fairly very know, has a on you time product. of well specific And And then we have and a year, fairly seen be to disclosure. bullish want for by market all the that fairly brand, in us we as know this we drug said and winner. the portfolio options best make letting growing get we Upneeq in end our folks approved a as consider sure are in which the for the

Randall Stanicky

talked being cash you’ve generates mean, generic base that – having a I about flow.

pursue talked that part do of certain this splitting point, give of generic along you’re transitioning this to flow possible mean, of to You’ve you process? thinking to to the a that about kind in other does in company, the at specialty changes? inflection you be that and And over part I some more that flexibility business specialty the way using terms of in point certain time. specialty –a then growth And Irish you at the that terms right strategic growth, just law, disclosure, to now. in business? the just cash question, invest Or that of spur need – dilutes of generic Is

Brian Markison

kicking off are are frankly, process. of the this really, the We We with release. that quite infancy at

also in company facility be the for and is upon that we lot ultimately as free And same portions to if pipeline investing we wide we another really for of going the stated. have, have But manufacturing in to product fairly that. we’re Upneeq, flexibility, up and are we to we a for continue can which do So pride the time, clearly so. along. open generic at is different far arbaclofen it with to you business, this our of And reliant monetize

Randall Stanicky

in used question that just received in it early being And intermittently? use Upneeq. it’s one on Is Any But sense you yet? think early I then to do you too But a terms daily, the over you launch, feedback do could to a perspective have Understood. us from you time? the of I you’ve refill. script it’s how sense It’s from sticky – the understand. as that will how give use think anything sense that be get physicians? of probably

Brian Markison

Yes.

our fuels drug our exactly the is how And Randall, population of exactly age now, But out, confidence. and more right So which our detail. used the base will we that’s XX. it’s But getting know median right roughly now question. being population JD I’ll great which clinical trials, is it a start add from

would But care it’s those So severely are get it’s out It’s right a there ptotic really we little that the not older in patient, expect to than now moderate. time. we the further not eye patients as the identified. mild in because were surprising easily more sitting

JD, add? – more So don’t that, you we with why I think, what would

JD Schaub

Yes.

use the XX one, Randall which think, to insights of did XX product The is I I And is I’d it, think Brian’s important around of is I and the think important comments, are on for I make, to a – you’ve touched for But that here, really we it’s only days. add the patient. refills. the good of that’s commitment reason number and afternoon. one prescriptions think thing behalf is, comments too days early on early two-thirds

upon about are that this first drop. know to what every the And to within chance so reality we patients X excited use stickiness, each minutes are going and about underlying it using it the is day see XX to Patients we’re take what the that every when committed is upfront. day, you speaks and to and based a ask how to trends effect are is the what effect of and they’re think it, using be it that trialing seeing, using in what I

here. very eight, encouraging nine And weeks through all that’s so

Randall Stanicky

it. Thanks guys. Got

Brian Markison

Randall. Thanks,

Operator

And next our from question you. David with Jefferies. Steinberg comes Thank

is line open. Your

David Steinberg

Okay. Thanks.

give patients. prescribed early So just really the it’s those older the that patients scripts through more surgery, – launch, I time a ptosis. broader being part there I to who that more, to third going that appeal – parse housekeeping gross your over of to you and that, probably your of patients towards also severe by the you’re would hopeful of – the you’re but any sense us to you’ve you increase are medical you spending And type managed in of know have a the to of issue general Is evidence a would going as something be sort spend. in XX increases much Could sort see? going going that know it’s are that the you’re considered just who – question, first of what [indiscernible] just for you’re that to that Or indicated increasing types more you sales you quarter, in [indiscernible] – younger group [indiscernible] reps be so largely some phased

Brian Markison

the can JD, we you while you cleaner the I we’re David right. please? we get give that to his line. David, if he All back, Could to of lost on the last get part answer don’t think, Well, then it, why for on us And back -- let’s a of reconnect question. we or beginning end question. see can of waiting

JD Schaub

to free the were bit in questions I and a little do, out. you think, if David, feel And expand, of Yes. all

we to But seeing. capture So around more the patient was sure and think what first a bit of answer. make I little and we’re one we types want

expanding upon, a look, certainly, it’s clinical world. maybe profile, bit the real trial So patient but in little

And so making a therapy go choice they’re to here. on

saw we I reflects patient I skewing it’s And doesn’t a potential is, the seeing want that surgery, bolus reality we’re severe, study, maybe go profile that with I think to clinical or consider in what not unexpected. what moderate it untapped the overall. and, potential think lot would actually that the the to more entirely drug is we’re not through out extract while surgery that female, use confidence the as all go, those does doing. with what of build as and us are opportunity to has here a different And segments bolus, give that optimize working we while same we of it’s and upfront really the

but a I upfront. depth to think, move levers year of going and these been next is the bring demographic one educated into that roll Brian to as the more themselves, that out and investments lot and on consumer hasn’t of awareness the through piece across bit And we a think age even other those to beginning little this, think offices. is accelerate group keen patient-focused certainly of I I spectrum we’re a add is to more there

Brian Markison

All right.

R&D depending expenditure looking think promotional digital increase think the do goings JD of let’s of next selling double you see. year-over-year I direct-to-consumer. we of if But behind effort around on and the this a roughly of the mentioned, terms in then internally will keeping with most our marketing end of to our So that upon we’re expenditure from relatively for the our year. early let’s basically responsiveness, a -- addition David, the the see, our at we I this of shifting have year footprint in in force spirit the experiments XX% resources a XXXX our and base we So total spend the the sales fungible number available field in Upneeq, this will are back? of footprint, And increase early to with going, question, remain minimum, of and scheme even around at plan in think particularly I things, second side, year the and Upneeq. our

and budget, has the community, the because So fairly we which outreach, a number Upneeq investigator-sponsored affairs dedicated will pretty aesthetic have among a particularly will medical been plan of studies expansive. include

and we to is if can always there back. him. David see operator, come not, I’ll back So If stop

Operator

[Operator Instructions] Okay.

Our next here’s David. --

David Steinberg

was Yes, went the My -- just gross question just answered you I that. -- think don’t last I dead. I about Sorry margin. signal about

generic of erosion Concerta you VERT. think there’s and further I indicated

things terms of the profile? margin. do You’ve job managing done you gross bottoming a in see where out But nice

Brian Markison

lion’s David. business, would base the like seen erosion of the to of Yes. the we’ve think We share that

we’ve And a costs, of reduce so of seeing some steps in goods, quarter the out. pan that cost to of to yes, taken and you’re try number reflected

mix the a lines margin Upneeq As as and note that rate of prominent, -- most that we base shifts the the the some than is we today. are sales business shift higher at becomes Upneeq of gross gross more margin existing encompassing

expect Upneeq there. improvement some would gross we margin begin take sales to So as off,

Operator

next Thank question Fadia with Ami you. Leerink. our And from comes

Your line is open.

Ami Fadia

for thanks the question. evening, Good

not around your generics to of Firstly, products? was a about law. picked the the why under how regards you So exploring you think business Can in or of the And Upneeq? do that just why sort some as me help primarily of is to think legacy of the Because regards you Upneeq Irish with maybe about divestiture phase. still of announcement the announcement kind early launch kind why it with one?

then just regards that your And you. you you color sales many -- mix started Upneeq? distributed effort you the us you the can more terms give of the the come? of can give talk you’ve focusing around be seen can lastly, or Secondly, about to in a been in to that the total in so of the have type and adding have you’re samples where prescriptions Can talk they where marketing with and And of shift you Thank efforts. how volume might of about far expansion market for on? us sense physicians

Brian Markison

to I the I’ll fairly, all with information want be regard assets. are beginning I half. some in of Thanks, you. to have available Takeover maximize clear to to that Okay. And for and we for the very think, second turn good exploring available very, it the Law, and it company Irish to options order the But basically take we JD the Ami,

approved, should with consider example, co-promote divestiture, we get range would arbaclofen. arbaclofen for partnership, any So of

approved. And bandwidth the same in the that. acquire quite that of publicly acquire the to arbaclofen But we someone be a someone those erosion we’re time. Should would our open we what really whole pretty to frankly, given assets And face as seeing at should so to with today have we business, well want to base Should that’s We’re both tremendous Upneeq. to don’t upside the the to issue a traded, business, get going naturally quite we’re much generics maximize were is open company, that. no-brainer. want

at give fuel So us non-dilutive capital look we revenue and more to need to create growth. also our to refinancing structure runway some

great completing really really And is a a this great and a expand. had into transformation our business. we’ve now So got run off -- to base story, it’s the growth time

JD, over to you. So

JD Schaub

And so I’m of Yes. couple these I’ve of try some going hit jotted sequentially to a insights. down Ami, in to notes, terms

seamless think think trial at and the physicians. talked the about I from we of and program of also time a you product would been just first introduced a asked to really looked use means I outside it preview that would what way every but measured give clinical delivered. in an but straightforward were a we’ve meant our start with XXX and opportunity about Upneeq generating to use was one, a with number has of early core about group going as think this And a the a the awareness I And we and day we before, And and experience and manner. approach, free not patients standpoint setting, product sampling. be consistently and each comfort physician was

additional here There’s what think not is terms everywhere a good we analogues into I a But that channel setting, of and that really market. these tremendous the building about receptivity, then forward ophthalmology, and where in think, of of know optometry, across opportunities. some saw I talking lot eye a are. adjacent out within care, was we and patients we’re amount what obviously, oculoplastic they’re looking coming of

where X,XXX over we’ve end had ECPs And where taken to October, of through experience. early we’ve expanded just product be added throughout experience thus of to I in patients. as that over And it quickly a days. talked function in we early X,XXX eye the far So kind total, samples think kits enough of and to the XXX practices about XX,XXX care we’ve country, trialed it’s

marketing given both ultimately awareness of developing launch. patient upfront, your also sense us But feedback ECP of perspective offices think quickly accelerating what the what was additional data think and sales, that in a points. product. has I expansion And not touching lot some a this is rooted just quite on are then confidence question I within medical I it’s the in and from but of really last the think again, bit some core So a in this

we early the I visibility data think really of this Upneeq. don’t which anchoring X,XXX. holiday, Labor right prescriptions had over X,XXX. September, to we had to again, at over those launched about through time and By grown things from end points I and XXX really submitted to similarly, So same of coming practices that the the are trends And prescribed went had Day, just But Day not think point. Labor also during out XXX that number and and October, around overall periods two

over prescription X-week weeks about X amounts in growth Xx but in launch. what that the volume period, So to

I the to ramping them not keeping we’re the tools reps from and made in about So of mind additional that much what got in patients. Remember, offices really top or there our where or incremental up X resources. tweaks mix most is surround aren’t this excited lot And we’ve adjustments to sound ECP new, traditional obviously, some each to community, transitions we’ve HCP product this. data is them market. to and the have building of encouraging of looks these forward. marketing, This identify your and with with importantly, of them that We give one, education these that scratched education, of really headed tactics surface And and through weeks the front baseline. terms the of Look, and ECPs and developing who day, a question barely to every trends of are in a some medical office-based early spend to and when last be the out we’re And today, going the moving do. we’re the feedback peer-to-peer I help number look, the a on. think about marketing like number we’re X the that that think,

the On clearly, side, additional data. medical it’s

help I going digitally we’re personnel the think expand think it’s at and first be And education. that campaign horsepower a and wrapping to I to the going market launching consumer to then pilot be consumer from side and peer-to-peer promotional starting to testing a the things. as to to efforts additional and bandwidth continue up research the the messaging some then and perspective awareness, on turn using and -- we’re build tactics baseline also micro and as January, we geographic some consumer into expand and of DTC level upon

Ami Fadia

That’s maybe just clarification get very could If helpful. I question. just one

So you where there Or practices from practices gave Just have curious. outside also samples? the prescriptions that, all that were come out prescribed? any are that of

JD Schaub

Yes. great a It’s question.

to. was those that So gone I practices driven think had early on, it we by

maybe just samples put a these that are I towards here. and several think weeks with us we what physicians the think a in, of all particular, continues to space, sitting this start that tailwinds X, footprint kind and group to for samples information, moved or here up and doubt, turn organic And And as indicators, it in launch controlled things increase. the a as really looking have reps yet have ready of I to was think we’ve in XXXX. have to in -- really white today, called number targeted open traditional sampled expand given over the X of prescribers the and last I strong term, really weeks, there’s, be no to

Ami Fadia

Thank you, very helpful.

Operator

Fraser Greg comes Securities. with from Truist question next Our

open. line is Your

Greg Fraser

you. Thank

that for are And current fund sales with non-core not? or Upneeq initiatives focus that it be would to the you planned planned increased Upneeq, structure? would on more like your marketing the difficult that assets to of spend, XXXX, some monetizing there the to fund Will on initiatives -- wanting make but you’re expansion, the in drive in cap on you mentioned up Following XXXX to side. force investments the depend medical

Brian Markison

Yes.

I not now, this really invest. process ability think we’re to right at looking driving our

at at end the loan is of think XXXX. our minimum, I a due

of at restructure be looking that again to options piece we’ll capital. So

We other. plan can I for think And for we upon how best at invest look company this it they’re to so you that’s and do single the thing matter no shareholders. not dependent the because the really

that. So with pretty I’m comfortable JD?

JD Schaub

I thing on we -- Yes. more. we’re would add, have spend is, say Greg, always I always spend I is, think what I would the only more. think look, to you But can focused

the then things where and you next that more put thoughtful very ramping give confidence And to we points seeing the But and We’re data that’s reach continue those But dollar expanding investing about things that. be the seen going in beyond conviction like and and/or marketing the spends. campaigns. we’ll consumer to trends far. that in same thus it’s rooted seeing we’ve likely be

Greg Fraser

And Got then confidence helpful. a on you it. so positive That’s a question far, how just in would review your Based characterize the has outcome? on progressed how arbaclofen. very

Brian Markison

Well, what in But Street and and that I’m look, to I -- outcome. to we the think count the The be, I’ve for everyone it let’s before supposed it. I’m wait product confident told happen on

think is extremely review. engaged right thorough. fairly I in what being rigorous I can the really a say now, FDA with They’re we’re

the requests we our come of from into them. deep excellent diving CMC. behind the statistics answers And everything, deep on database, they’re very into the good information We’re the feel that all have with some getting way. to And questions diving heavy

for think but the optimistic I confidence cautiously to be is of our I So want sake building, investors.

Christmas hoping product. a date, December But in is the But I great neurology I’m of It’s armamentarium present. place real a and goal a nice we’ll XX, MS. think see. the it’s got

Greg Fraser

it. questions. taking Thanks for Got the

Operator

Brian turn there queue. further for to like questions in the I’d the no any call are you. remarks. to closing back Markison Thank And

Brian Markison

opportunity we today. into And all Operator, call the to thank you thank for update joining the We as future. Okay. you. you our move welcome

store great some for Thank us, will in be you. in got touch. we’ve think and I things we

Operator

call. gentlemen, today’s participating. conference Ladies this and you Thank for concludes

Everyone, day. now disconnect. You may have great a

RVL Pharmaceuticals (RVLPQ) 10 Nov 202020 Q3 Earnings call transcript