LCI - Earnings call transcript Q3 2018

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Operator

Hello and welcome to the Lannett Company Fiscal 2018 Third Quarter Financial Results Conference Call. My name is Michelle, and I will be your operator for today's conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that today’s conference is being recorded. the to turn now would call Mr. over I Lannett. Jaffe, Investor for Relations Robert Sir, you may begin.

Robert Jaffe

afternoon, thank Third everyone us Good Michelle. Thanks, and discuss Company’s Results. today you Lannett Fiscal Financial XXXX Quarter to joining for

cautionary on the actual all to be of Galvan, information company’s and covered being available those least from The Marty statement broadcast provisions Litigation the forecast for company’s information today’s today implied. Officer; call www.lannett.com. results or forward-looking make at months Officer. call the Tim Chief stated at Chief and Crew, aspects On that Act. management’s Executive reflecting discussed Lannett’s of call everyone could under is on A like certain and differ company’s Reform include live the This the Financial of website. I��d Harbor materially is the will current are remind playback three discussion Safe of will the future,

of the be call, refer Accepted company’s non-GAAP XXXX XXXX the with In detail, goals. addition, prepared as Principles measures are near this financial is used guidance. today. in will non-GAAP of Then accordance we discuss earlier financial comments reconciliation will financial quarter brief remarks from on Lannett’s fiscal press during Tim fiscal contained financial may to measures GAAP other financial on to the and recent to companies. measures U.S. term also The review measures provide measures financial directly well more the announcing including results company’s announcement. including release its afternoon, results earnings Investors most encouraged earnings in release the non-GAAP for by Accounting are in the and This Generally issued press quarter company’s Marty not as comparable for that different course financial its the non-GAAP reasons third in developments

turn now questions. to Crew. With over call Tim? Tim will that We said, I open for the the will then call

Tim Crew

our and team. We're depth months on Thanks, and effectively. growth everyone. efficiently with several our We're overall progress. After operating management I'm pleased to is adding with organization proceeding Robert five launches executing product the and afternoon, our good and and expertise as CEO, strategy

last generic due fiscal of sales regard sales by affirming For XXX an sales on are and basis we approximately net a million, Today Squibb XXXX the be quarter from by third focus top Officer and she Stepping as marketing, on our will lower as Marty our sales the With for Bristol-Myers margin and XXXX, this results reduction have financials, far. fiscal high first would quarter. Maureen Affairs. in industry full so driving was I reported, our and Profitability the in my Positively we extremely margin in skilled just success. adjusted to declines. a first year anticipated, she's executive provided is our couple our organizational expectations. our quarter. products, operating line with lines and Vice Senior with at the will more worked sales Teva bottom and the of for A strategies. profitability, and long financial be offset I'd began third totally volume refresh X expenses. decline items shortly. discussion Maureen’s impacting she we the Operating to Toprol, well than development organization mix, Commercial largely mind, the that regulatory key the Lannett commercial A our of a others of and said welcoming increase and were of although the family. and to our Maureen record and over thorough was products Gross first oversee research in today selling better certain and Maureen was align quarter faced role, net to an begin tweaked. outlook our of of I our and guidance day lines investments the back between good an call, CEO, million Cavanaugh the of year and serve quarter margin conference With to team, known product lower been reported President is along this previously sales looking like prior adjusted by performed together on will while

this us John has been with of and In of officers. our Operations Chief we realize Grant President launches our Grant of in project areas. and heads of Alicia efficiency to will conjunction Abt Vice product Chief structure named and on tenured term two new Evolga members, increasing on Maureen, Both Marketing. and quality President future Officer, been team manufacturing new team. few focusing our last have Moreover, to near other recently Vice addition President are Alicia organizational management promoted executives site their respective improving Operations responsibilities output, and Strategy engineering, Kozlowski these John product be a also as In our also talented our quarter. executives focus driving will Brock Vice joined Officer. has joined of Quality as selection. management and while experienced

depth All may drive sales sites succeeded provide our increased board. are seasoned customers production Board become on many LePore, and some announced and you of ultimately discipline Jeffrey development product has been increase through of to related this intended appointed an X and output enhance of Patrick our year. managerial that to know, pharmaceutical our works. note, Directors exceptional Chairman a launches these of of will to who we executive, increase our July and remain effective customer efficiencies, share of changes also new the operational execution, Farber to changes our On

will to insightful down our of has the from for steady financial working John leadership in board. also succeed personally Audit as the at board future. our the named as board John with has forward of course chapter. and his audit James very been completion Jeff Chair. In Chapman tenured thank who addition, easing life. fiscal XXXX in experience we Maher a his has him statements. as extraordinary will best my personal the the of step transition my and thanks Jim I partner next chair all Similarly, look publicly He to Jim wish for to traded our

partner. in to to to our products of In will products expand we supplement recap In three where generic Turning I’m this already begin the we in three We efforts following be position These as is acquired over new development we alliance into launched several strategic capabilities, conference strategies internal call, entered attractive particularly we business because in focused, in additional these transactions. received share shipments UCB. I January, said February, that Toprol the we and and products five partnerships March, an awards agreement our recent to happy include our calendar this with XXXX. late quarter. said partners. will last have few our months offering separate for with for executing last Metoprolol and I looking read and customer major progressed agreements mid-market Lannett investments, the goal

dose distribution In Diclofenac agreement of at this ER. current acquired tablets, exclusive business. for the five agreement, and FDA be currently our the and an markets. in exclusive another agreement, US the to to streams year. is we and plan cups of ES our The products the have launch rights we calendar hospital provided Incorporated we into new in we Under product has of second ER already generating believe unit and launched half managed third the second This to application for current distribution late Pharmaceuticals transaction distribution Associates of product begun The repacking Fluvastatin was the quarter. marketed revenue first the care to pending approved for

our products Carmel, payment generics [indiscernible]. be portfolio not a semi-solid liquid all pending of the New XX portfolio And capacity, oral these mainly The expertise is but upfront For in agreements, and requisite facility from we approved a York, has last of acquisition application The with consists capabilities. products. primarily manufactured one announced Endo. solutions the will of at required no today, of least, three and few which

begin the that and the regulatory we associated begin for and filing fiscal currently the We estimate launching we will activities products will transfer second XXXX. immediately half of

term blizzard that this well revenue. activity, will more that remain transactions in engaged a new in pleased drive number of several of of near optimistic with we’re we discussions are While actively discussions and result these so

development Our grow to cash business our debt. overarching internal opportunities and pay down revenue streams, is diversify or to to efforts with augment goal generate our immediate

other Now, around operations let’s turn and some opportunities. to

and Indiana for very this satisfactory history. for our in the Carmel, First, past has I’m manufacturing congratulations Lannett main at manufacturing York. our holding pleased continuing FDA to inspection good few had standards sites staff Seymour, current to in we've New and reputation tight impressive report a weeks,

Second, last to a year, Cody $XX announced million expansion we Laboratory our subsidiary. related

investment. near of of opportunities timing part risks reassess with focus and while that As we opportunities, term our to we the have decided on significant expansion associated suspend the

make in of to continue We investments in believe continue substantial opportunities business. to and this the Cody integration vertical

our time China spending this of HEC. leadership with Third, I'll teams based month, later partner, the be

received related Hydrochloride C-Topical an by product our launched. matter brand within optimistic a topical generic Fourth, know, In level the addition affordable FDA. as will product has in is call. XXXX, our this you with strategic company the that be planning a reviewed NDA will to to that pen near another XXX(b)(X) product. approvals with investment, increasingly proven further our to conference sell well which regard option been opportunities, product reviewing hope relationship to opportunity. and yet and I we not update in market our deliver I'm many continues on to term To Numbrino be product, multiple next Cocaine the for discussing to of Meanwhile, insulin of products, to be knowledge, customer timeframe. able December FDA

however, XXXX We by goal calendar year. July PDUFA to of XXXX, a that product ongoing the of until we approval FDA will have expectations, due anticipate guidance not date

with mutual continue sense myriad both Jerome makes We a point time to to interest regard optimistic long Numbrino strengthen remain matters Finally, that with to the do for to that that at them parties in business partnership of of be Stevens, the standing so. partnership. extended with we will discus

our about overall So the and to making improve operations grow to we're business. rapid very feeling good summarize, I’m progress the

our already our customers. to near of call a progression the strengthened more the employees, turn product additional to that, partners have add Marty. received several to over our continue importantly, our by has talented I to term and even team our opportunities and well and management revenue We streams With Today, pursue been portfolio. number in Marty?

Marty Galvan

good you, everyone. Thank and afternoon, Tim

press today’s will measures. referring in non-GAAP earlier, to GAAP numbers release. be the I mentioned to be of was can financial As reconciliation The non-GAAP found

of Our schedule release by medical also earnings indication. includes a net our sales

Now results basis. a on adjusted for financial the non-GAAP

For quarter. Interest million, million with from tax of million million. third the of million third XX% reflecting million decreased SG&A was reform. million. million. fiscal to $X.XX R&D XX.X third XXXX million fiscal diluted Lannett X.X XX.X quarter, million XX% $X.X a $XX.X XX.X Gross from XXX.X the income for of from share Income million for was share per Operating expenses XX.X recently sales $XX.X sales XXXX. $XX.X diluted tax million Net or quarter impact to $XX.X increased favorable $XXX.X fiscal or decreased or increased or enacted sales profit decreased XX.X with compared compared of expense net the from the net XX.X year net million million the million from to expenses million. per were third XXXX with XX.X quarter. compared $XX.X to prior income to $X.XX for expense attributable

on mentioned, Having third our adjusted As our quarter probability compared add those of with expectations. a I to an that, basis Tim said overall bit our internal color performance expectations. might exceeded

negatively sales products pressure, of quarter, by order of million lower in were due timing in migraine Gross volume in offset the products $X.X overall two Thyroid was than higher by a and notably and most During our impacted our mix. categories. key was a R&D a to due prelaunch canceled expenses the margin CNS Anti-Psychosis partially categories. This sales milestone totaling few inventory for payments. to and were sales change a anticipated of lower Deficiency our

enhance Tim deals and In we earlier, supplementing acquisitions to internal portfolio. as development product efforts product are addition, mentioned in-licensing with our product

effective third quarter approximately our of points expected. increase catch-up tax that was XX%. quarter percentage of reduction impact to higher effective XX%, in reductions rate The resulted a credit our year Lastly, the the R&D the and a our full to than tax rate other couple in in tax tax expected reflects related

cash cash, XXXX, our XX, debt March at $XXX.X million and sheet, equivalents balance investment our to Turning XXX.X totaled and was securities million.

made within required million we February, debt of reminder, remain our And covenant well payment a $XX balance. a in ratio. debt toward voluntary As we our

be year sales our our for an the have individual range now although Turning on and been XXX in basis guidance, elements to of follows. is XXXX as profitability We full revised adjusted guidance fiscal a unchanged, of down the Net unchanged. range for net million to sales of percentage to $XXX the expense million, other R&D to Adjusted $XX as midpoint the ranging million XXX million lastly, obtained XX%. be range $XX million. in range in though XX%, to million to is million $XX to margin $XX approximately XX% Adjusted the million. from and to gross million, net range XX%, million $XXX expense capital the $XX And sales of adjusted to from rate XX million, million tax changed from effective million from in XX%. from of expense, adjusted XX range $XX year $XX from adjusted full $XX the to approximately down XXXX of interest $XX approximately million, expenditures and up approximately of fiscal to unchanged, the million, SG&A

does our that we outlook alliances acquisitions, Operator? address strategic of our the from questions may benefits from include currently to possible sales includes of Nor strategic guidance like product As overview, pending ANDAs potential pending any sales not does have. our the paydowns or with a would at applications of FDA. or further debt. you And now any future partners reminder,

Operator

with queue Deutsche [Operator first Gilbert comes Gregg the in The question Bank. from Instructions]

Gregg Gilbert

a couple. have I

or operational I'd linkages Tim, want that integrating than return. good to you're my you're and I better you? generate vertically using price the understand important but other products Cody. to spending the square your about magnitude controlled those that screen in of revenue to are a up. substances, can things generation the And still to investment mind that hear second you're near question and like Just changing First term about correctly bring committed to Did is that Thanks. What in that strategic a are it?

Tim Crew

Thanks, Gregg. couple And a I guess in days. we’ll of see

we’ll believe of weeks expansion, reconsidering We first. footprint believe vertical as at and integration of I’ll investment, a the What rate question now I take still in off, we’re Cody, to the through the back business continue degree said First portion of is of a the Cody integration. on you is what that still the in this we the before in-patient coming accordingly. in time. customer in and still he this work our at Yes. to our support the time get scale we the the that significant pain vertical our need reflection process. in impactful have however, Wyoming I space, certainly

have look are that that accretive immediately. think risk on straightforward. level launches, looking minimize near our thresholds. or relates I it products is We to of As to expenditure, in almost is term the to approved At we purchasing, approvals typically new we’re want thresholds something it's that this say, product to fairly for

you bit looking has more thin. are blended but be price their there to had and flexible and the seeing supply able margin can still we’re some and folks thick pressure that we more It’s product that market margins, overall our very historically a for We’re them would patients, is that on important if profitable to come room a through support point maybe bring to certainly we to customers. those to and later the company continue

obviously there versus of internally partnership. limitations that we we what need to obviously do room are a and So some then certain do

non-solution which near also partnerships, is thing into of acquisition products. great sort own tap to capacity KU if as internal of that with to needed capacity, through come it’s the So, our still a manufacturing its is non-oral term often the working the

the of threshold. think So the I think exact more important and those would kind I parts be are moving

I into think in We’re the seeing term of industry. virtually you’ve market more the of are far quite few some expensive and acquisitions a bring accretive them you when in years that the recent opportunities that’s from seen a immediately

Gregg Gilbert

a particular confident you're understand done to want JSP the collaboration a in getting just us elephant you under situation, can that way. not the follow-up on if whether them. or circumstances you Is Is in of versus there helpful? sounding way? willing that about one tell something sort of would I could, on anything really proceed some would with extending be Just anything your looks you're one about something room there Thanks. to say And what

Tim Crew

a with they’re the speak savvy We It's they’re folks, beautiful I've with Yeah. big regularly, embrace as Look, an managers. we them elephant. that terrific team, organization. met

great we'll the horse. about. parts believe dialog they a I side, all we've it’s initiatives the there basis, moving renew cart is front so doing just been business doing an I be that have our in but we’ll when put to a are I'm than that. clearly continue of on We that don't chance to want Elephant important get optimistic and very focused this agreement to nothing the ongoing on supportive right and various to more talking for,

Operator

next queue comes The in Dana from Flanders Sachs. the with question Goldman

Dana Flanders

My of just from in understand then captured little these revenue the a add? in announced. profitability just help us first you. does how other guidance products, going and Endo on recently more concentration that to Can Thank one you And deals? that from how give announced, fiscal is incremental profitability much then much can deals here, your back terms some you you ’XX us just of just deal flavor standpoint, a key bit the you

Tim Crew

for you start All one right. last question. with first. Thank the will I the

and Most the obviously earlier some are terms and metoprolol of substantial in forward. to there just products up effects are of coming outside quarter. this into market we this metoprolol good impact more quarter so from of where pretty later needed and these ramping from moving In this value the launch quarter,

guess As it product. we will But and related paid a to $XX million and it first Par transfer the of our launch you Q the about see few our, I dollars the milestones shortly. relates of transaction, to payment million in upfront for

competitors, that and made year profitably, and are pretty and XX a our large go near [indiscernible] here, had handful We we in but who those profitable, of hopeful transfer are be hopefully while obvious they there capacity and less with to it plant are products acquisition a While through. New products there fairly ability that would actually perhaps in that the seller would a Carmel, are price portfolio, term first margins the that opportunities. a that be is the a not that them than of that products we excess and in capability I healthy ton typically to very has have process bring note and capacity have we more has York got sales

books here our nine so process. products those months based transfer or until don’t hit approval on also So the really from

Dana Flanders

maybe a potential those flavor little pretty follow think those then some Is it over give you about this quarter. weakness you next optimistic on And that just of on just the been going back Okay. had up, previously competition Can I more the was think I bit XX a markets? XX in? what's sumatriptan, fluphenazine quick coming and you us in mentioned, to months.

Tim Crew

Yeah.

fully now. working slow their For position through prior our bouncing bit in to sumatriptan, -- been On to it’s did a brought there right didn't some that’s our more a supply we year. shifts of so our additional to customers come that a supply There we through for up quarters systems, of of last was so to this in reverting into in kind were a the and is couple our maybe that fiscal interruption comes the SAP, its went way the year of around late level a year, bouncing few the to be fluphenazine, competitor areas. were late numbers that sure incremental third no year of position in year, I'm the transition a to in erosion make this we’re the picked some and recovery of fiscal products ball way our get starting as a therapeutic this back important disruptions, bit, share first this the But there bit on little fiscal. steadily its having of fourth and some quarter last fiscal this trying and -- little to is calendar in final calendar back say of sales And through quarter now be bit bled a it will quarter quarter washed since although up of year. second quarter a that’s in which declining of through computer

Operator

from queue question Finkelstein Andrew Susquehanna. next comes the with The in

Andrew Finkelstein

a I quarter. average in talk the margin was hoping a but as product, strong Certainly, in is could and was levothyroxine understand the was little bit gross margin you lower about more the I Toprol dynamics quarter. it above

margin any So of color also fourth quarter. a if midpoint think rebound you I could guidance the of the a provide implies bit in gross more and in

for So relative if your the anything It guidance then you helpful understand about could comment else on comment be timeline that? on say product? can would to you to that And Numbrino.

Tim Crew

right. All

to fundamentally that? Marty, comment watch in, margin our products mix. you to the add rate. our I do product partner and related as both and we more do coming want average overall We to So anything margin margins with have gross think on the lower of some the is

Marty Galvan

I quarter. we had said piece add Andrew fluphenazine the Clearly would as a the is weaker

for margin high us. it’s So a product quarter

somewhat that our So was expectations. off

Just margin the the gross like rolling in you also percentage into company’s see quarter.

Tim Crew

remarks, that the next our additional FDA continues have more into for to And calendar I of to think an file, some our to our data, in existing year pushes see topical, meanwhile the noted belief prepared the review sales as product continues approval on they of again I well. asked which

is space yet. shot this into entry up in an market not the with company other The

that no customers. to to It’s providing of continued So effects had product ill that arrival. we’ve our

Operator

Elliot with queue the in Raymond question from next James. Wilbur The comes

Elliot Wilbur

to review of on possible respect couple a follow-up Numbrino questions and impact with Just and timing [indiscernible] launch. of

currently the of launch will your similar do think of question, exclusivity, potential Numbrino And an possibly you vantage to the or point, impact on Given received it have product? ongoing that has your review NCE any marketed then [indiscernible] C-Topical. ultimately impact

Tim Crew

Thanks for question, the Two Elliot. things.

of all, the guidance approved the in market, First on suggest the of it typical, to relates arrival XX-month period. an the of would Grandfathered product same variety as application the FDA about

is is involving of controlled product, idea obviously of As review it grandfathered disruption very the to relates cocaine. substance sensitive the to supply This the issues. course

I'm the sure up product that thoughtful beforehand. be to will their shows be service FDA market assuming least expect we So general in to to would December, the in through at able product

products believe exclusivity not requirements As plain been technical we CFRs it relates we the the submissions. And we language, as additional exclusivity the blocked, block able to our are written vagaries in the of the to means, to meet an it the proceed review if reads you what go could have of that believe and applications they statute through on do since have earlier nature be to but are blocked, FDA product. submitted, we that that we review under

Elliot Wilbur

been softer function a follow Okay. than we sort expected simply the that’s levothyroxine, the perhaps all could fact of expected or launched wondering fiscal’XX. has point relatively be here. launched products this I in direction phase and are of you not talk market Can business. maybe delay year of or XX player, be the of launch is owned this saw that I'm and something over think in terms in major of there quarter, your retained question dynamics recapturing will particular assets first correctly, results a actually you given X last have gone actually Had share of – at two about into partnered there and just or in numbers that ups those additional in of of ANDAs perhaps And quarter balance heading one And being launched I’d players then early will return be is, the that get if but more soon. that if just this the space.

Tim Crew

Okay.

all, ANDAs, get announce a approved First new They longer ones through a are that is the of to pending about That today our bit will we've take block transaction to the north of happy are owned that I’m XX launch. been talking sequencing, previously. now. of

products launched quarter. have couple of fiscal We a last this

we’ll that number fiscal compares dozen with than think the I this a two half or so to previous much a in That year. quarter. calendar more launch not

So company issues. for some some management been bandwidth We’ve has focus get to running. time up capacity the and to on added working these

market I quarter. So suggest those of them a will to so. to dynamics if of time, period market, the will wouldn't level a of of dynamics to be substantial will products justify change of fiscal all come a want doing to and all under them the over high in coming fairly block scrutiny pressure bring very could but

a excited about we company quarters we’re So the as into frankly we quite it’s that coming how and value lynchpin of drive in years. move this and

benefit was fiscal levothyroxine, to spillover to this relates effect in it As continues that some yes, us there last quarter.

the Some XXs during higher upon of the the mid in share peaked disruption. information depending who probably you at or look

but back before disruption. was came somewhat down, share was drifting market, than on competitor still higher As our the it that

some to given us. also one provided of note was of major to a house, like expressed. didn’t That’s in going first fiscal that upside bit to our position, customers disruption. it to fiscal of aggregate but there quarter, bit our look source our fourth the matters little bump necessarily a just also their that plan share I little persistency from the of I’d space quarter. In also lot share customers from it the a added our some the is to coming position, So is a some side continue of is has to our and that subsequent that of competitors a that

Operator

in from next comes The question Markets. Matt queue the Hewitt with Capital Craig-Hallum

Charlie Eidson

Hewitt. my questions. A Eidson couple for Hi. Thanks This taking on Matt for Charlie is for me.

products since in-license look with ability in-licensing runway much for LCI what strategy a of number today. is opportunities pipeline First, How to shown there you’ve the an the additional of does taking and the like helm.

Tim Crew

one for of see company. the the favorite question. relative the you my position It’s Thanks for to

space of are us a As right, portfolio, products, the with like us, that larger some of cashed done their front we noted we've adequate fairly lot set or opportunities well of the a Diclofenac inside the transactions partner firm known nothing former but partners of in mid-market of add several to with the leaving the players have the size with other opportunities with done of we rationalization, in partners sizable or as as we’ve see Metoprolol a majors, we’ve as great new on.

a runway. fairly substantial I So, see

spending time situations them internal sort week and of We believe have on a against quarters. I capabilities in that building got obviously, here we’ll to opportunities, coming forward it’s the we value we’ve space to ourselves as situation. financials and with have and and execute it. balance of all modest come to get open company make we on the every them, that great sure are bear at parties literally conversations will of business market be calls the external a dozens absolutely and ongoing, have we commitment development we relatively fruition opportunistic got I reasonable moment, not to almost with continue team and avail share will to And given full drive we of right that to the for the the in of any we’re mean all

Charlie Eidson

a want think get teams added move? last of you sound of things couple then to commercial where to are you to more, people take operations how and like number your Can talk great. you've long will over about them you moving That's to Okay. quarters. And acclimated the them it fully one

Tim Crew

now. let We’ll something them. around table Well, the there right is

obviously. to bring hoping We’re matters weeks to in of speed them up

working today immediate Some management bandwidth is time. makes is period company same team few ago with a than some we've a The of it issue. of and impact, this a years was just considerably for larger that been stuff

reserved, that of get the some areas right. So

the I it progression young, These into impacts. our to into in intention things Obviously, are will been an than simply sorry, already here, that getting here history great team time, of provide the experienced market as these ones quickly. the of quality, we and take the add ideal little but now on that is the quite and context the make immediate and to production, that less And in is drive we the done particularly ready bandwidth et make additional is teams joining portfolio a marketing, such but a are move So, the new our help have parts forward. organization, cetera. management products some bandwidth new children, situation, around commercial, some seasoned to areas rest but space to well, team of while they’re that moving company more from it’s have operations, not again, some add the and contacts underserved where into this can our therefore or I'm executives we we've in

looking forward and from extended so so the coming And to the good, quarters team. far

Operator

from The in from BMO queue the next Markets. comes Capital Nachman question Gary

Gary Nachman

elaborate spend managing will R&D on. to Just coming you internal think think an forward? about marketed that Hi. any your going Good that pipeline? important how is down, the afternoon. Tim, be you appropriately to How that point fund on that. them these real products, mostly with Endo, other looking looking most clarify just of pipeline are And as you're to deals similar able do at, it's at, I you're

Tim Crew

Yes. you for Thank questions. the

the relates it right. a to I think As of moving there's lot parts, spend,

do issues the any a about million I’ve of haven’t in you. around of say moving quarter on $XX studies developing projects. you specific timing have is that we're million course, what reduction $XX There heard portfolio. There products some and specific our just products. parts XX in timing of we bio and We expense got are the And staffing,

there's that hit both R&D investment. also there's So investment doesn’t lines, sort but of income sheet balance the statement and

spending other doing impression anything not R&D. would we’re on I an So align more with than

are of in of but couple the available done get now, of a our We versus now as a products. approved interest that what this internal products can Because are of in-licensing you do been we pipeline, disproportionate We’ve pipeline, number availability right in have spending products have time some balancing own capabilities. of later. we

So quickly. market as you’re accelerating to not the necessarily time

in So our that I that until we'll continue around that or do soon. wheelhouse, any that some this specialized manufacturing things looking particularly but executing early efforts, pool now, so dry, is to of to runs time access are we’ll and and coming pipeline we’re happening capability, on that right technologies judiciously very us add to we're with don’t again large see

Gary Nachman

when on any up the is you happen? as those visibility our a and guys and are everyone Levo, just an held to market with enter additional you side how nicely guess are couple of might then your has products behaving I think And expecting pricing on reentered, when still that competitor follow-ups

Tim Crew

for not I'm competitive on of going market whole pricing host to reasons. a comment and compliance

We are our are with where we pleased expectations. with and the product meeting are

market, dose products our reasons there's I coming length. result a to want happened I index, long to that logistical relates expectations technical as for of customers and obviously neurotherapeutic volume market. people patients moving to a to extensive our many of years. been reluctant number it from too and whole challenges, very bringing the the ongoing reiterate well in bore the of going for lot product’s as There and don't of As high forward, making manufacturer presentations, parts broad a time. product have partner low rely including audience is firm this and extremely it rumors of couple done hard supplier, very to so a but range a always of that's and this very just switch to hasn't to recently, making moving of on has into JSP why so

of product companies our to out entities a space, the of multiple brand exist Neurotherapy. brands those this with flexibility result for AB there. and XX As may long ratings history customers, supply multiple with again, And so the reliable whatever a ratings of from a and substitute called three that has volume, and physician create we're low partner despite dosage in preference

product but rapid world days, our not position. it’s will would some of we the the So show expect in it deterioration significant sort and up, in eventually,

Operator

in Scott queue question next Capital. with the Roth comes And from Henry the

Scott Henry

questions Henry Capital. Hi. It’s been Scott lot asked. Roth A at have of

to if year, down it topline, any year. up context, about want in a Levo you on how a flat as on were fiscal thoughts directionally year, XXXX, do focus, view really you Just but you just the year, looking not fiscal guidance, that for do of the an can, fourth quarter that we into the think year, and within

Tim Crew

to Layering note like even discussed our to from I we time. year would supply that have more we sounds broad of some, this on all relative large of we once chance of we next little – circumspect that to going that sort at our the say the get clarity the into spoke that will the at we’re that modest you albeit is this this bit well, we bit a notable. disruptions what erosion with I moving Well, parts it don’t note be sort would year. year, length to we enough of base benefited repeat business expect part that review

starts all start and make at just [indiscernible] And with in normalization, of quarter of levothyroxine, at number we products, up got with some so, as that these with unlaunch of launch next. things to approved and you sort layering you which a deal exit into that of this we will before

so of of bit comfortable adjustments you not are add can And if Marty, a we providing this a on a there time. moving is any series that to little? color

Marty Galvan

will fiscal margin I year first point a the the I thinking XX%. you’re in to XXXX, of piece number, the gross fiscal, as want look have fiscal we’re that, I end, fiscal add you year the the point are slower of year, as point think in of to There is margins in Scott, we’ve that said, anomalies at current perspective of, and the, just we would that from I way margin would repeat a fiscal necessarily mentioned from we like look of year second quarter. the in the see wanted a I that to a ’XX, margin lower as Yes. be from this quarter, mention to for but next is I say, half as half the working much The second another and to to XX those. piece, the is perspective. is gross may or specific other it talk to perspective the want what a on But the like, you gross I and gross start what ’XX. Tim up make our margin stronger about right. call in early other fiscal seeing only had going direction know not

Scott Henry

color the appreciate I and on that. helpful That's

a I just going it putting map, going question, separately, of happened Just I'm that typically that and fell kind I the pure line something or change forward? off model Is see looking a there? Is in sequentially urinary items of should modeling that don't you're away the urinary how at magnitude.

Marty Galvan

Yes.

low had So things drove pricing of you’re that number that two that modeling there. to It’s we actually couple – that with a customer in particular impacted that seeing, some adjustments the as make very quarter, far as we had that happened a had it affected that that Scott, things that $XX,XXX. number. We

that so we is and temporary second look the to that down quarter volume, a is compared quarter production third volume to is it number fourth to end and experiencing to had So XX% if number, you what we’ve to that compared number that the about or as rate also at last the XX% been year's and and we’ve third of when backlog we the get our quarter. to normal quarter expect – will run go that at back a up

Scott Henry

Okay.

is representative QX? than So it more QX sounds like

Marty Galvan

Correct.

Operator

call in management. I to at the We time. queue will over have this no questions further turn the

Tim Crew

Well, thank our forward you We today. our sharing to joining. on next for everybody us for look joining conference scheduled call. progress again Thanks

Operator

this you Ladies today's concludes and Thank teleconference. for participating. gentlemen,

may disconnect. You now

Lannett (LCINQ) 7 May 182018 Q3 Earnings call transcript