Amneal Pharmaceuticals, Inc.

Good morning, and welcome to Amniel Pharmaceuticals' first quarter 2020 earnings conference call. Please note, today's call is being recorded. At this time, I'd like to turn the conference over to Tassos Kanadaris, Chief Financial Officer at Amniel. Please go ahead.

Good morning, everyone. Earlier this morning, we issued a press release reporting our quarterly results. The press release as well as the slides on this call are available on our website at www.mnel.com. We're conducting a live webcast of this call and the replay of it will be available on our website after its conclusion. Please note that today's call is copyrighted material of MNEL and cannot be rebroadcast without the company's express written consent. I would like to remind you that statements made during this call stating management's outlook or predictions for future periods are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the section entitled Questionary Statements on Forward-Looking Statements in our Earnings Release and Presentation, which applies to this goal. Our future performance may differ due to numerous factors, many of which are listed on our most recent annual report on Form 10-K, and are revised and updated on our quarterly reports on Form 10-Q and current reports on Form 8-K, which you can also find on our website or on the SEC's website at sec.gov. We also discussed certain non-GAAP measures. You will find important information on our use of these measures and our reconciliations to U.S. GAAP in our earnings release. Included in the appendix of today's presentation, you will find U.S. GAAP financial statements that correspond to some of our non-U.S. GAAP measures we referenced throughout the presentation. On the call this morning are Shurak Patel and Chintu Patel, our co-CEOs. In addition, Andy Boyer, our Executive Vice President of Commercial Operations, Dota Disco, Senior Vice President of Specialty Commercial, and Steve Manzano, our General Counsel and Corporate Secretary, are on the line and will be available for the Q&A session. I would like to note that all of us are at different locations due to COVID-19, so please bear with us if there are any technical issues. And with that, I'd like to turn the call over to Chirag.

Thank you. Thank you, Tasos, and good morning, everyone. Tasos joined MNIL as a CFO in March, and we are pleased to have him on our team. I'll begin by addressing our response to COVID-19. First, I want to acknowledge the difficult environment we are all navigating as individuals, as a company, and in our communities around the world. Our thoughts go out to those impacted by this global pandemic, and we hope all of you are healthy and safe. We are deeply proud of how MNIL has and continue to respond to the COVID-19 crisis. We were proactive, and mobilize quickly to evolve our business to protect the health of our colleagues and communities while sustaining the supply of medicines for patients. We established a strategic task force made up of top leaders across all business functions to ensure our preparedness, oversee our response, and enable mitigation and continuity across our business operations. I want to recognize the exceptional efforts of our employees. Our operational teams have kept our facilities running to ensure our products get across the finish line. We have also ramped up production in certain areas to help meet new demand. Our distribution teams have done a terrific job getting our products out to our customers. In addition, our sales and marketing teams have been innovative and productive as they work remotely. For example, they have created new procedures and automated processes to deliver samples to physicians and launched virtual lunch and learns to continue physician engagement. Importantly, our supply chain also continued to perform well. Our procurement teams have done a great job of sourcing and receiving the active pharmaceutical ingredients needed to keep our manufacturing and production operations running as smoothly as possible. As we continue strengthening our supply chain, we are pleased with how we operated during the quarter and confident in our ability to continue procuring materials and delivering finished products. Given the nature of our business and MNIL's commitment to patient access, we believe it is our responsibility to help combat the global COVID-19 pandemic. We quickly accelerated production of hydroxychloroquine sulfate to move beyond our traditional 4% market share, which helped us meet demand from states and government agencies and continue supplying this medication to lupus and RA patients. While we have seen some disruptions as a result of this pandemic, our teams have done an incredible job minimizing the impact to patients, customers, and MNEO. With our diversified supply chain, substantial US manufacturing footprint, and track record of quality, we are well in position for unique challenges of COVID-19. That said, this crisis is shining a spotlight on the dependency of the American pharmaceutical supply chain on foreign manufacturing. The US is almost completely reliant on other countries' supply chains, and manufacturing for the production of APIs and key starting materials to produce finished drugs. It is more apparent than ever there is a need for more drug manufacturing to be in the United States. We want to ensure that when another global emergency comes along, we are ready and able to ramp up production and manufacture lifesaving medicines. We know there is a bipartisan support around this issue, and people on both sides of the aisle understand its importance for national security. As the largest U.S. domicile-generated drug manufacturer, we believe MNIL is uniquely positioned to be a key part of the solution. We look forward to participating in the dialogue. Now let me review the first quarter. We are pleased with our operational and financial performance. which demonstrates continued progress in our efforts to build MNIL 2.0. We are focused as ever on improving our operational execution by strengthening our supply chain, increasing plant utilization, reducing costs, and addressing inefficiencies. All of this is expanding our margins. We have also continued to execute against the strategic priorities we laid out last quarter. These include revitalizing our generic business, growing our specialty franchise, and diversifying the business intelligently. We remain focused on these initiatives even as we navigate the challenges created by COVID-19 and believe we will continue building our momentum in 2020 and beyond. Let me now provide an update on our business segments. Generics had a solid start to the year. It notably achieved 42% adjusted gross margin during the quarter, which is ahead of a long-term goal of 40%. We have two main priorities in this business, strengthen the base business and drive new product launches with enhanced preparedness and execution. We have continued building on our large portfolio of products and remain on track in terms of new product launches. We are growing our market share as we continue shifting our focus to developing and commercializing more complex, high-value products. Last August, we set out to launch at least 15 high-value generics products by August 2021, and we have already launched five, including most recently generic Butrans transdermal system. Our two recent first-to-market launches of generic versions of NuvoRing and TerraFit are up and running and we are pleased with the results to date. Chintu will provide more details on our R&D pipeline and what we are coming up in generics. In specialty, we are continuing to grow our franchise. We outperform expectations on almost all our products during the first quarter. Looking at some highlights, Rytory saw year-over-year revenue and TRX growth of approximately 31% and 17% respectively. driven by continued traction in our marketing initiatives. Unitroid revenues and prescription also increased year-over-year by 33% and 18%, respectively. This reflects continued success of our existing marketing programs and favorable comparison to prior year. Through the week ended May 1st, we have seen a minimal negative impact from COVID-19 on all major specialty products. Prescription refills have remained strong, while new patient starts have dipped slightly. Post-COVID-19, we expect new patient starts to resume growth at the same rate we experienced in the first quarter. Turning now to our efforts to diversify the business intelligently through new distribution channels, we completed our acquisition of a majority stake in Avcare on January 31st. As planned, It is operating as an independent subsidiary, and we have essentially completed the integration. With this differentiated platform, we are identifying new opportunities to better serve government agencies, and our strategy of selling more unit-dose products, which is a niche business, continues to be a part of our strategy for our EVCAT platform. We will continue to evaluate opportunities for value-creating partnerships, and smart, accretive M&A transactions. We believe there will be exciting inorganic growth opportunities as a result of recent dislocation in the market. MNIL remains opportunistic and disciplined, which we believe positions us for continued growth, be it through new distribution channels, new geographies, or complementary additions to our specialty business. As we look ahead to the rest of the year, there's no question COVID-19 has added complexity and a degree of uncertainty to our business and our industry overall. For example, in the second quarter, social distancing and the reduction in physician visits and elective surgeries may impact volumes of certain products across both specialty and genetics. Importantly, however, we have a diverse business and our solid first quarter results demonstrate that our strategy to revitalize this business is working. We are confident that the strength and resilience of our team and our focus on execution will enable us to achieve our operating and financial goals. With that, I'll now turn the call over to Chintu.