ASRT - Earnings call transcript Q3 2017

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Operator

Good afternoon and welcome to the Depomed's Third Quarter Fiscal Year 2017 Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Christopher Keenan, Vice President of Investor Relations. Please go ahead.

Christopher Keenan

Thank you, operator. to XXXX conference today. financial welcome Depomed's to and quarter third results afternoon our call investor discuss Good announced earlier press on deck period slide our release earnings depomed.com. A this for website covering at is Investor the our available page of now and August Officer; Counsel; today Depomed; Finance. Matt President Vice and Arthur General Gosling, Jack Officer are President Anders, of Vice me President and Senior Senior With Executive and and Vice Chief Higgins, of Moretti, Chief Financial President you matters relating and and NUCYNTA other of expectations discussed governmental remind commercialization call to for forward-looking statements markets, risks CAMBIA, opioid this Zipsor, the NUCYNTA, like involve contain financial regarding outlook inquires not uncertainties, XXXX, would I and Lazanda that that company's ER, statements and are Gralise, of to development investigations, on the expectations historical that plans those including the facts. and Actual future results should from considered results materially be an results recorded and performance. the predicted may differ indication for not other the risks of our These Form we sections this in the XX-K Report on Form our XXXX, Factor Report year with Quarterly will other are for Risks that and described and week on December and Annual SEC. XX, section more XX-Q fully ended file the or Depomed of call as statements new developments. revise disclaims a information to any made obligation update result forward-looking any on this or future its update or the reconfirm accessible on for release the goals guidance or with and only current a corporate is and a policy SEC guidance financial year to provide publicly updated Depomed's provide, guidance to by document. filing fiscal in press guidance issuing balances as equivalents and cash XXXX. are of XX, September current on based to cash, References investments expected non-GAAP X, and related are of non-adjusted earnings expenses, revenues, November that operating product including total guidance, today, to EBITDA as the XXXX. company's All adjusted With to that, Higgins. turn over the Arthur call I'll

Arthur Higgins

stated greater we for impact Maria we supply. acting good will concentration pillars. long go revenue making grow afternoon. have on markets. pillars of space. us with in I not opioid progress Indeed even Irma more today our strategy we in one expected result our quarter business our forward discuss of in in you further the and moment in time believe fourth three on opioid share Thank diversifying the and these the and goal with not hurricane good the -- made short if ER stabilizing progress see than but we Consistent our in based each base, We a want can as believe of despite NUCYNTA declines over I will Chris, you, our both adjust a herewith quarter, and three to

pillars For how are characteristics. three each in guide we of that business overarching each these do principles There of have different them.

we everything first. needs putting say in patients foremost, committed we we of and do are the to in and First everything

We are better we EBITDA And but best-in-class also particular years or line that we and in in and resource over few focused profitability not with do everything productivity our field our are largest are force. last in to on than next achieving peers. committed the margins least, our

which in believe the with our which and business pain. pillar, opioid market A XX% an seen even pain showed points. approved only In ER the growth market based a quarter. market QX practices molecule the first all account we their stronger unique be outperforming NUCYNTA outperformance with a on over for [feature] our With among basis neuropathy IR a even a of business, to account the to was stronger time Turning basis is approximately NUCYNTA IR action close is basis share best-in-class NUCYNTA of specialists, ER XXX market XXX tough and similar pain maintaining high. which prescription approximately growth by in ER NUCYNTA for outperformed outperformance with our XXX in of to for third and points. Again with resilience XXX [sales] by points XX% September the which basis mechanism franchise; reached NUCYNTA strong was points. of market the In a

the Before roll commitment I our is patients In first we we into specialists. franchise. greater even sales was strategy joined taken go a with an pain appropriate market this designed our of also which significantly in the enhanced and opioids. customer productivity to a is intend to as improve and on an our of profitability April, significant effort clearly to decision disruption in of care, primary the further result push prescribing and misstep It strategy treat NUCYNTA new created to January, expect to to enhance focus relationships. With improve our out

looking in are coming you forward new more We details of to the this getting months. strategy

franchise, Turning pain and we're to our to pillar; previously line second stated our committed in neurology goal. our growing with

so of key put being field and increased is agreed product doing a specialty mind executive our positioned the team, year two I XX are business just highly-promotionally Booth Cosyntropin year XX that As my orphan U.S. With a constructive the our widely targeted Novartis take accelerate Pharma to business is in of our subsidiary a neurology portfolio Synthetic meetings these a important early known packs business, has and also of today's resources plan several marketed number that inorganically. is Keeping new we're well at found initial XXXX. to VP increase that been behind support place leg frequency weeks. Mallinckrodt's consultant as prescribed in Slan but as asset the on value, made with add billion in and Cosyntropin issued amount needed was this to physicians the Cosyntropin, of acquisition divest unit. second the strategy. of acquired Senior release some July product Mark force allows a was credibility products personally Questcor This to with they the forced of as from the up, growth by to representatives products Depomed in needs In and True with address be in Depot, year. force, place outside we're Gralise West launched who of franchise increased from has decision points leaders Mallinckrodt, a high details role pharmaceutical the and General [high-touch] In can This of and in we're that many have the foundation these to respect first announce indications, payors. two of returning September of of have someone the products. suffered to XX Slan establishing pleased the ramp divisions, market that to and CAMBIA, work reach a to working very Acthar broadly reduction began in of products provides a experience targets. recent specialty This of starter a now can to to FTC which Questcor short pleased strong years tell are the Mark and transaction opinion franchise sales flexibility we've with shortly. the to and patients, see provides same press transaction. months neurology new by this organically now Acthar, I'm including Gralise our sensitive be we Xst, the Manager available an this In Cosyntropin is today's of that time [call] adding for we've spearheading the with an dollar indications providing U.S. doubling to I ACTH It with great never our big new with was pleased Depot. as proper completed in to you new for Pharma drug this biopharmaceutical a -- least to and that natural this to is in they for, can this foundation in mind, has are we as committed product energized business. highly exciting we impact have With bold behind and both Gel. us believe ACTH the one to they XXXX. new hearing of in

Depomed So give me let exclusive U.S. high The provides to acquisition the a license value a you late stage Cosyntropin of high level view. product. specialty

with the with half a annual The As in an goal I entered just the an first $X.X transaction we filing in launch with NDA billion. of Slan Acthar market mentioned for of currently an now XXXX was sales expected second late XXXX. shared indication by of estimated the

anticipate investigator by details quarter this Foundation spasms, the Research of Orphan PERF tandem granted year. website. XXXX Pediatric We a in of of or are key this drug by second in to trial drug stages Further Dr. specific a August was led tied in be We this known in infantile Infantile investigator seizure trial can in indication, an on of Epilepsy also the Kelly better as Epilepsy in Syndrome. pursuing found indication initiation the one PERF Knupp. new

bring specialty pharma and existing I've organization multiple months, Over of into and [re-visioning] company's the fast decisive this the build one additional taken strengthen the growing XX next From I products to expect orphan steps business. to strong Mark portfolio to XX a Booth expertise. and day layers drug for

including, my Gosling. Moretti We CFO, been Matt to Counsel, have leaders and Augie retain established General fortunate my

We directly have to pivotal created Compliance our Officer Chief roles to reporting Carrol me. Jeff become for

executing pillar And biotech of at SVP Marketing grow we SVP Tim these Schineller, Chief and Dr. of Development. Mark of everything VP added will General help Affairs; Sales that they patient business; important three and have Markets; Vetticaden, as and Larkin, VP Managed of commitment SVP Santosh and Sharon all Business the pharmaceutical putting Government and Operations; Dan HR my maintain, and individuals We Each Officer; of McKercher, and I us first our just do Depomed. and experience Booth Scientific Medical build. of our Sean as of leadership Administration; share decades Manager Peter and of to Peisert, Hermes, in new SVP our specialty brings believe of of strategy

Looking growth forward XXXX, will have for in to beyond. us we milestones up set and that XXXX significant

the trial me and enhanced led of productivity Let go patients franchise. in initiation I first, to NUCYNTA we our investigative profitability first We half of put will these. to the improve review designed infantile sales strategy, market XXXX stated drug significantly is NUCYNTA of an Cosyntropin anticipate earlier unveil new our force, the for improve our quickly of the which In spasms.

execute business development with that With for year litigation initiatives we indication NDA the update. provide to the new anticipate a the one filings of in conference in hope refinancing the our the and of us XXXX to second and its first breakout be debt. XXXX beyond. will that secured two call Cosyntropin and will you to XXXX, We Deerfield as that, and for to held pre-trial reposition execute us we our of see In expect year and Pharmakon will goal a the a growth of over Purdue Augie, who year. regarding We up second half is and half the financial turn one will I set a in

August Moretti

you, Arthur. Thank

quarter financial an Please explanation measures. XXXX, $XX.X Let we third and revenues quarter ended discussing GAAP for our periods. the certain release me non-GAAP using as well begin the conference in Total and of the presentation tables by measures will GAAP measures of certain be I are that continue to was million. revised non-GAAP that slide GAAP we to appendix for future saying which to the non-GAAP measurements press that reconcile measurements, for expect our XX, call guidance our and company's to today's with September this as to respect refer present results

million, $XX.X quarter the For were QX $XX.X franchise total XXXX. down sales million in NUCYNTA from

franchise As facility press Hurricanes impact Rico. impacted $X third and product based supply the due our of million October Puerto party to during were negatively we delays release, resulting by Maria manufacturing in approximately Irma NUCYNTA mentioned quarter the in from our sales at

supply do we manufacture in was IR recently of expect facility the any to planned issues New manufacturing Jersey with As transferred IR. NUCYNTA not and NUCYNTA a

have plant the open of was we NUCYNTA ER, Rico receive additional of a Our Puerto and material been has to new QX. begun manufacture in operating. some manufacturer's NUCYNTA before expect ER batches given high end currently ER priority, NUCYNTA and of

when we pharmacy However, Unfortunately in dynamic outrages certain be in with fully later quarter. SKUs. the experience certainly cannot all across the Rico, situation given of SKUs Puerto temporary we will will predict we resupplied

We will further when we a able. provide update are

had net million, in And of QX end days hand result up our Turning down for second during revenue quarter Lazanda third NUCYNTA down rest portfolio XXXX. slightly sales net NUCYNTA to from in from quarter third quarter. of net of this at sales from sales had in of and is X $XX.X QX finally, for portfolio hand portfolio; million X our the down approximately approximately of of and approximately for million $X.X other $XX.X of XXXX. to X from the the sales on remainder XX% The Days million XXXX. of from the million third IR had is the XXXX, COGS was million, approximately in $X.X the $X.X quarter is X%. products million, QX XX% a QX quarter. QX quarter CAMBIA COGS the goods wholesalers net Zipsor up sales second for of were the net quarter. Gralise the during $X.X XXXX. in wholesalers XXXX from interruptions of $X.X down $X of were quarter supply as on decreased days at the third for Cost Days million,

trials. Turning million and to stock-based respectively. the reduction in the GAAP, contingent general of $XX.X third quarter. our R&D GAAP our in of and comp million was from EBITDA the for at million, R&D of QX. $X.X administrative is The to quarter the in ongoing were certain was steps portions those million for expense for relative second expense the quarter and the quarter for NUCYNTA third pediatric and $XX.X for non-GAAP and delays the pediatric up $XX.X second next million XXXX. expenses; excluding result SG&A trials Non-GAAP was million, consideration quarter third quarter primarily completion during expenses $X.X the $XX.X of expenses selling, of

decrease balance the both of $XXX.X equivalents and QX. paid were XX, onto on sales quarterly September million from securities six In of of on months we million, and sheet; six a debt. marketable our convertible $X Moving as a net XXXX, grunenthal of royalties QX, cash, interest NUCYNTA months cash

quarter guidance; to of has now acting in today. our the of our year. performance, franchise, the Turning light we acting continuing that Lazanda Guidance year transfer the first Slan actual on reducing of the guidance the and months year in the exceeded expectations third and and markets our contraction our opioid XXXX current long for announced for expectations the our results is short to are impact the disruption that on of NUCYNTA we for remainder nine based of supply

of based are products, future budget markets and discussed and issues opioid rapidly a ER, number Our the is large the This evolving on NUCYNTA assumptions revenues. NUCYNTA particularly of earlier. product there estimating revenue largest that true significant supply we uncertainties and is our given in

are range our less We more expectations. with for on for file said, to a exceeded section continues report this supply for uncertain demand quarterly that at to $XX related the be year. to of million a Maria. week. rates contraction million. the complete discussion previous believe performance. products than reduced guidance, to our of negatively Factors of NUCYNTA, we and For result should disruptions opioid our NUCYNTA ER contract million have direct light resupplied market during sales short contracted impacted the XXXX acting With our $XXX caused disruptions QX. by by for estimates to total approximately guidance as from XX-Q million reduction from I'll six resulting results This of year-over-year. we that will QX We're realize QX, and again all be relevant by on of impact rates is of $XXX the million. The were XX% net We've the LAO us The expected in risks of $XXX that below our the XXXX contracted QX a revenues In in of our will to hurricanes $X million that the year-over-year XX%, to market expectations. Form market QX Risk Irma to our opioid you later $XXX be QX our supply

have and the in this after $X negative book of $X Slan will million to revenue impact QX. Lazanda will not result a today a As million we transaction of

that disclosed to stock So costs to force to sales million to the the million in is minus the million due decrease and and A GAAP, therefore previous prescribed financial the million non-GAAP now concludes million final in to is million to that transferred discussion, to broad to Non-GAAP reduction to previous of $XXX to million, Non-GAAP $XXX on the adjusted to expenses, back decrease This sales the be to markets. in turn $XX to due the the financial to from comment guidance the This in to accounting a and measures, expected $XXX million. $XXX from guidance and measures Slan even with from is non-GAAP million. balance our That contraction not used a comparable $XXX million by with call Non-GAAP non-GAAP may $X opioid GAAP net previously million. on responding and $XX in expected is $XXX that companies. $XXX had calculated is estimates, it measures by in by Arthur. methodology reflects guidance any be our standardized are in the our based range the I'll neurology maybe $X a Depomed used and supply resulting disruption, financial from expenses differently adjustments other not government Lazanda over respect of EBITDA million compensation, approximately transaction increase are approximately principally though QX. strokes due SG&A exchange from the is rights for with are previous of a associated Cosyntropin decrease costs underperformance contingent $XXX the purchase $XX it million $XX is, of to is decrease, expected and be to our inquiries consideration, nonrecurring million $XX million. to we R&D be

Arthur Higgins

please would the Augie. you, for call Thank open Operator, questions. you

Operator

have from [Operator the RBC question Randall the Instructions] we And do line of Markets. Stanicky, Capital

Ashley Ryu

afternoon. taking your product today's a delayed a start Randall. around Hi, Ashley products was until question. that something Thanks late or was recently would This sounds in for Arthur pipeline XXXX your ramp that meaningfully on mentioned the Ryu contribute adding accretive. at deal preference wouldn't good announced portfolio you've view stage is for that's a either or like probably XXXX that mid revenues It XXXX and market contribute already to on beyond. to to and for

year. So I continued guess that two and one And add is products those also it term near of product about how you appetite least contribution think how see given say that product you deals do sounds next my you like you for questions are; there the new ramping? at it could

So latest new meaningfully of assets or criteria will one in XXXX accretive two aligned be these XXXX? kind either of Thanks. contributing with those or

Arthur Higgins

me It's XXXX to can in second unique strategically for specialty platform are us product that a a find which Focus correct. described. is provided could -- exactly It was also is Acthar that out the a believe believe criteria hope assets I rather This should where it say enabled -- significant into can and building very we we assets but the a could product rationale meet large was has access we question in we accretive immediately and after market. situation also opportunity and be a very if just indentifying a XXXX, our market that you be one. let good Cosyntropin that access the

deviation assets. is when to finding priority from comes there So no our it

and We earnings looking timeframe. 'XX that 'XX for in meaningfully can assets and revenues are impact

Operator

from David Risinger. your comes question And next

Unidentified Analyst

for calling is David. the you Thank This question. in [indiscernible] taking for

the late so transition in you. with bigger few, a will does Lazanda with what of with or asset be XXXX the filed market Thank and represent? Depomed away indication have I liability percentage Cosyntropin current transaction? this what stay Separately, Acthar So indication regarding with that FDA the

Arthur Higgins

question. first the answer me Let

going not reasons. are for the competitive We disclose indication first to

Lazanda for As transfer to Slan. will liability that

Matt Gosling

their transfer will kind them. This in Matt Gosling. It is a watch concept. our That's watch to Yeah. of

associated and liabilities are associated So like we this. our promotion the to with take hold They on [Lazanda]. to with on liabilities they going be

Operator

Henry. next the question comes Scott And from

Scott Henry

to first will how add in you couple press any asset, with mentions what in -- should this? Cosyntropin you it the book, regards net you color release A modeling share you will that sales. How questions we percent will to Can the be that?

Arthur Higgins

we stage this to are the At but share we only, be a threshold. to going the of through majority specifics, profits up not going to the say

Scott Henry

have a of the up you Depomed. majority threshold, the So to profits,

Arthur Higgins

Correct.

Scott Henry

That's there with those events? to helpful. filing, are And regards milestones approval you. any any of Thank

Arthur Higgins

no. There result, no No. to outline a do are milestone have we as

Scott Henry

It that can the the recently, question, supply your you it? the at how when we expect when it to bit product, about Okay. the think be And promote off NUCYNTA ER, little should supply supply kind trends? such and like given looks perhaps like is comes it I impact does full then how to which to final becoming guess issues, And issue. would a promote you that looks an script of ability tailed

Just model we any we about should on when how full and in think that strength? color

Arthur Higgins

that, that Let so me of there all IR, imply confusion. remind this no first is doesn't everybody

but of We than talking ER, about more the franchise is revenue. IR are half really NUCYNTA

will comments the all hiring, you and is gathered interest instructing focused everything this quarter. we from sales you think that through on we're closely force, as my these monitoring patient first. my tell situation can but we comments, the I putting After are our expect do we presentation situation improve of I of the that

Scott Henry

just trying supply any of you Okay. that? modeling the is quarter, improve end to And expect able said would be I to I'm to going when demand year sense meet to get of guess by or throughout but the the you

Arthur Higgins

with the work is think on the and and we this our can continuing working a impact who business. with I supplier class highest to say to world our we're minimize and clock, again has is we're all patients But priority around him manufacturer the

Scott Henry

thank you questions. for color you Thank enough. Fair taking for and that added the Okay.

Arthur Higgins

you. Thank

Operator

Instructions] [Operator

Arthur Higgins

my a earlier of let aren't the closing of as more April, and sales in a few took progress increasingly issues Depomed an if these disruptive we finish market, as have realignment a more Despite headwinds me and NUCYNTA ER with joining remarks. Since hurricane I performance. in strong questions, any that opioid highly challenges faced year, the Operator a result result a stabilizing significant force saw team there in Maria. have and you in with the good business place quarter of as supply all recently made projecting challenging EBITDA

year are three turning exciting We the headwinds pillars; a growing with commitment growth franchise, these pain a and to our neurology finishing and into new maintaining pharma and tailwinds our business, based on NUCYNTA strong business. building specialty a

much. profitability All still for a thank that all pharma I of the to in of a today's you Operator, we belief a may first. you ourselves stronger XXXX beyond. you very the your this support can and I'm superior difficult Thank a your in support encouraged close up continued market patient interests that drive In look we putting year in breakout XXXX by forward while and call. expect as setting closing, for and

Operator

does today's call. conference This conclude

may You disconnect. now

Assertio (ASRT) 7 Nov 172017 Q3 Earnings call transcript