Mallinckrodt PLC

Good day, and thank you for standing by. Welcome to the Malin Cry Q4 2022 earnings announcement. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dan Special, Chief Investor Relations Officer. Please go ahead.

Thank you, Tanya. And I'd like to welcome everybody to today's call. With me this morning are our CEO, Siggy Olson, and Brian Reasons, our CFO. Siggy will start with an overview of the business performance, and Brian will take you through the financials. Before we begin, let me remind you that you'll hear us make some forward-looking statements, and it's possible that actual results could be materially different from our stated expectations. Please note these forward-looking statements are made as of today, and we assume no obligation to update them, even in the event that new information or factual results for future expectations change materially. We encourage you to refer to the cautionary statements contained in our SEC filings for a more in-depth explanation of the inherent limitations of such forward-looking statements. We will also provide selected non-GAAP-adjusted measures related to our financial performance. A reconciliation of these non-GAAP measures is included in our earnings release, which can be found on our website, mallincroft.com. We use our website as a channel to distribute important and time-critical company information, and you should look at the investor relations page of our website for this information. As noted in our earnings release, our fourth quarter ended on December 30, 2022, and the comparative period we will be discussing this morning is the predecessor quarter ended December 31, 2021. As a result of the application of Fresh Start Accounting, the company's GAAP financial statements for the periods prior to June 16, 2022, the date of our emergence, are not comparable to those periods subsequent to June 16, 2022. Further, the results in the quarter compare a normal 13-week period to a 14-week period in 2021. While the exact quantification of the impact of the extra selling week in 2021 is extremely difficult to determine, we believe it reduced reported quarterly net sales growth rates of the company as a whole by approximately six to nine percentage points. The numbers we were discussing this morning make no adjustment for that comparison, and are presented on a constant currency basis unless otherwise noted. For the quarter, Mallinckrodt reported a GAAP net loss of $250 million and a net loss of $911 million for the 2022 fiscal year. After adjusting for specified items, our non-GAAP adjusted EBITDA was $176 million for the quarter and $675 million for the fiscal year 2022. With that, I'll turn the call over to Siggy. Siggy?

Thanks, Dan, and good morning, everyone. I'm pleased to be with you today to discuss our successful quarter for Malincross and share some color on what is ahead for our company. I'll start by briefly touching on a few key highlights about our full-year performance. We executed well, and I'm incredibly proud of how we finished the year, exceeding our EBITDA guidance and achieving the high end of net sales guidance for the year. Brian will provide a further color on the financial results as well as guidance for 2023 later in the call, but I wanted to kick things off with these positive results as they tie directly back to our strategic initiatives. As you may recall, we have been focused on executing our three near-term strategic priorities, strengthening the balance sheet stabilizing our portfolio and making the right investment in our pipeline. We are beginning to see evidence of solid execution of these initiatives in the full year results. We achieved net sales at the high end of our guidance range, reflecting our team's efforts to stabilize the portfolio and EBITDA exceeding our guidance range as we continue to focus on disciplined cost controls and making thoughtful investments in our pipeline. We also saw a slight increase in cash on hand during the fourth quarter and believe our liquidity will allow us to continue making important investments in the business. For our portfolio, we made a solid progress in the launch of Turlevas and we continue to see a strong engagement from the clinical community on the role of Turlevers in treating and reversing hepatic renal syndrome, including discussion of Turleprecin in a 2023 review article from the New England Journal of Medicine. Early clinical consensus appears to align with published clinical guidelines, which recommended the use of Turlevers as a first-line therapy for appropriate patients. We also recently welcomed Dr. Peter Richardson as chief scientific officer to oversee efforts to advance our pipeline and round out our executive committee. Peter brings 30 plus years of research and development experience and a proven record of executing clinical programs and advancing product development pipeline to Malacroft. We are fortunate to have him on board. Good progress throughout the year in achieving other key objectives, including putting in place a full management team, adding industry leaders to the board as independent directors, and working to reinvigorate our company's culture. 2023 is a pivotal year for the company, and we stand ready to navigate the opportunities and the challenges we have ahead of us. I am pleased with our efforts to date. and I have a great confidence in Malenkrot's long-term ability to drive value for stakeholders. Now, let's do a deeper dive on the performance across the business segments during the fourth quarter, beginning with specialty brands. First up is Aktargel, which we believe is showing an early sign of stabilization. We were pleased to see the overall market for ACTA grow slightly in 2022. We are also encouraged by the stabilization in patient demand and continue to work with payers to ensure appropriate access for patients that need this therapy. With our continued commitment to the product, ACTA remains a top choice for prescribers and we are continuing to work closely with them to make this therapy available to as many appropriate patients as possible. That said, there is a competition in the market which is expected to continue to have an impact on performance in 2023, where we anticipate the product revenue will decline by roughly 10% from 2022. As mentioned last quarter, Development of our Acta Next Generation delivery device has been completed, but we do not anticipate a launch in 2023. We continue to work towards a resolution of a regulatory matter involving one of our partners not specific to our device. We remain optimistic about the important role the device will play in our portfolio if approved, an easier and more patient-friendly version of Acta's gel for single-unit doses. We'll continue to update you on any developments on the resolution of the third-party matter as the year progresses. I'm excited to share our progress with Turleverse this quarter. In September of last year, Turleverse became the first and only FDA-approved therapy to improve kidney function in adults with HRS with rapid reduction in kidney function, a devastating condition with a high mortality rate. Since approval, we have been working hard to engage with hospitals to gain formulary inclusion of Turlewa's, and we have made good progress in a short amount of time since approval. As we indicated last quarter, while this process takes time, we have gained formulary approval in vast majority of those hospitals that have reviewed the product. What's more, there are over 100 additional reviews scheduled in the coming months. The significant enthusiasm we have hearing from the key opinion leaders community combined with the product's inclusion in treatment guidelines will be key to gaining formulary access. We expect to have more to share in the coming quarters and remain very optimistic about the future of this product. Looking at INOMAX, this product continues to be a market leader backed by our best-in-class INOMAX total care service offering. While we continue to face competition that is expected to persist in 2023, we expect to continue to be the market leader in nitric oxide for these critically ill newborns. Our top focus here is our planned launch of INOMUX Evolve, the next generation delivery system of INOMUX. If approved, we remain on track to launch this year and we are excited to bring this product to market. With enhanced automation and streamlined design, we expect INAMAX Evolve to provide a meaningful advancement in the delivery of our products to help improve clinician experiences. We have seen a strong level of interest for this new option to come to market and are looking forward to adding it to our offering lineup later this year. Moving to Theracos, this is the world's only fully integrated and validated ECP system to enhance the patient's ability to fight disease. It represents a platform technology that we believe has the opportunities for geographic expansion and potential label expansion over time. We have historically seen this product as a consistent mid to high single digit grower and we were pleased to see a sequential growth for Theracost in 2022 as we navigated the impact of stem cell transplantation due to the pandemic. We believe we are entering 2023 on a positive note with a clear pathway to returning this product to its historical growth trajectory. For Stratagap, Stratag has been well below expectation to date. Despite this, We still believe this innovative treatment option for adults with deep heart health sickness burns has an important place for patients and doctors and provides a significant improvement to orthopathy. We are continuing our conversation with burn surgeons and physicians to drive adoptions as well as working on improved pathways for reimbursement. Turning to amethyst, our focus remains squarely on the Japanese market, the Marley Cross expects exclusivity into 2026, and strong utilization trends continue. We'll continue to see annual price reduction in the Japan market and the loss of exclusivity, but we expect this product to generate a good cash flow in the years ahead. As a reminder, at the beginning of the year, the U.S. market became fully generatized with multiple launches. As we stated in the prior quarter, this will result in a roughly $75 million reduction in amethyst royalties for 2023. Now let's turn to our specialty generics sector. Specialty generics continued its strong performance and has proven to be an important part of the Malincroft business. We expect this to continue into 2023. As we discussed in our previous earnings call, we anticipated that our scheduled Acid Amino Fan or APAP production shutdown in fourth quarter would impact the performance of the product family in the quarter. But we have seen improvement in outputs from recent upgrades as it returned to full operation. For the remainder of the portfolio, We have been pleased by the performance of the finished dosage products, which helped to offset the APAP shutdown and the extra selling week in the prior year. Bigger picture, our specialty generics business continued to benefit from a well-deserved reputation for producing high-quality generic medicines and active pharmaceutical ingredients. We are the only manufacturer of APAP in the U.S., and we made important investments in our U.S. manufacturing capabilities. These upgrades will benefit us over the long term as the ability to offer customers a stable supply becomes more important than ever. Our efforts in specialty generics have set us up for what we believe to be a strong 2023. We believe this business will stabilize in 2023 and has the potential to grow due to the consistency of supply and quality. We closed out 2022 with a strong performance in the fourth quarter, and we are confident that we are well positioned as we kick off 2023, which will be an important year for Malincroft. We have some real opportunities ahead. namely continued investment in the launches of Perlibas and Stratagraph to support their future and looking to gain approval and launch the next generation INOMAX Evolve products. At the same time, we are prepared to face challenges this year and so on, including the loss of royalty due to generic competition in the U.S. for Ametisa and ACTAR competitions. While there are some clear challenges to the business, I believe we are taking the right steps to mitigate these operational impacts, and we are seeing an encouraging sign across both business segments. We expect Pericost to return to growth this year, and believe our strong performance in specialty generics will continue. The medical community's enthusiasm around Turley Wells exceeds our initial expectation And we are excited to drive this launch forward as 2023 progresses. With that, I'll turn the call over to Brian.