Eagle Pharmaceuticals, Inc.

Please stand by. Your program is about to begin. If you need assistance during the conference today, please press star zero. Good morning, everyone. My name is Katie, and I will be your conference operator. At this time, I would like to welcome everyone to the Eagle Pharmaceuticals second quarter 2022 financial results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. At that time, if you have a question, please press star and 1 on your telephone keypad. As a reminder, this conference call is being recorded today, August 9, 2022. It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. Please go ahead.

Thank you, Operator. Welcome to Eagle Pharmaceuticals' second quarter 2022 earnings call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. With me on today's call are Eagle's President and Chief Executive Officer, Scott Tariff, Chief Financial Officer, Brian Cahill, and Vice President of Medical Affairs, Dr. Mike Greenberg. This morning, Eagle issued a press release detailing its financial results for the three months ended June 30, 2022. This press release and a webcast of this call can be accessed through the investor section of the Eagle website at eagleus.com. Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation, or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Eagle Pharmaceuticals management as of today and involve risks and uncertainties, including those noted in this morning's press release and are filing through the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Eagle Pharmaceuticals specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. A telephone replay will be available shortly after completion of this call. You'll find the dial-in information in today's press release. The archived webcast will be available for one year on our website at eagleus.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 9, 2022. Since then, Eagle may have made announcements related to the topics discussed, so please refer to the company's most recent press releases and SEC filings. And with that, I'll turn the call over to Eagle's President and CEO, Scott Tariff.

Thank you, Lisa. Good morning, everyone, and thank you for joining our call today. We're pleased that our second quarter 2022 results are bearing out the vision that we have been articulating for Eagle for some time now. Over the last year or so, we have focused on strategically building out our portfolio through acquisition, licensing agreements, and launches of organically developed products with a stated expectation that we would double our revenue and more than double our earnings in 2022. We are achieving that aspiration. In fact, our first half 22 non-GAAP earnings came in at $5.60 per share, already more than double the full year 2021 number. And our first half 22 revenues of $190 million already exceeded our revenues for all of 2021. In just six months, we have already outperformed our best year. Our main objective is to grow from here. The largest disconnect we need to bridge for our investors is that our internal forecast suggests that we will continue at the 2022 level in 23, with significant growth thereafter. This is also without further deploying our cash and balance sheet. Let me take the next few moments to explain our point of view. First half 2022 sales of Deja Press and Pemfexi combined reached nearly $100 million. Our expectations for the third and fourth quarters of this year are that we will remain quite profitable. Our cash position is strong at $37 million with $86 million in receivables for total cash plus receivables of $122 million as of June 30 of 22. And this is after acquisition of Acacia, and we have only $48 million in outstanding debt we are confident that 22 rebased our revenue and earnings. 2022 continues to be an active and exciting period for EGLE as we broaden our ability to bring much needed medicines to those who depend on them. It comes down to the fact that 2022 is a year of significant step up in revenue and earnings for us. The questions we are asked most frequently are, where does EGLE go from here? Can Eagle continue to grow from here after posting such significant EPS growth? And what do 23 and 24 look like? I would like to make it very clear that our objective is to use 2022 as a springboard for further growth. We have a very good chance of achieving growth next year and beyond. On the upside, we have added Bar-Emsys and Byfava and hopefully Landilol to our product mix next year. We also expect to grow Pempexi year over year. On the downside, vasopressin will decline, and we'll lose some Vendeca loyalty in 23. All in all, with our current product lineup, our projections today lead us to expect a very strong 2023. As previously mentioned, we have $122 million in cash and receivables, and we do not require a major deployment of cash to achieve our goals. Add into the mix the potential of Fulvestran, Cal O2, and now the three NLR pipeline opportunities announced this morning, and we see the potential for dramatic growth from where we are today. To be clear, we do not need a significant acquisition to achieve growth in 2023. Let's see how it all unfolds, but we are very focused on growth beyond the significant earnings and revenue step-up that we have achieved so far in 22. Let's discuss Pemfexi and the rest of the opportunities in further detail. Pemfexi is a unique market and one that is new to us. We developed a product with many benefits. Our customers have embraced Pemfexi as evidence from our first half sales of $54 million. As this market matures, we believe many of our customers are highly likely to use a generic form of Olympta through the end of this year. This is due to the way that generics are reimbursed in the first six months of their life cycle. Thereafter, we expect the dynamics in the market will allow many of these customers to transition their demand back to Pemfexi, starting in the first quarter of 23. As of today, we believe that we will sell more Pemfexi in 2023 than we have in 2022. Turning now to our hospital business, and our recent acquisition of Acacia, which directly supports our stated objective of becoming a leading diversified pharmaceutical company. With the closing of the transaction, Eagle picked up our Emsys and Byfava, two commercially compelling FDA-approved hospital products with meaningful differentiation. Both are new chemical entities with patent life extending into the early 2030s, and we are seeing a lot of excitement around these two products. Let me spend a few minutes walking through why we think there is such a strong synergistic fit here and a sizable opportunity. Baramsis is the first and only antiemetic approved by the FDA for rescue treatment of postoperative nausea and vomiting, referred to as POMD, despite prophylaxis. We already call on most of these same healthcare providers and institutions. Paramsys is also approved for the treatment of PONV in patients who have not received prophylaxis and for the prevention of PONV. The total estimated annual U.S. addressable market for prophylaxis and rescue is $2.7 billion. The second product by Fabo is indicated for the induction and maintenance of procedural sedation in adults undergoing procedures lasting 30 minutes or less. Here, the estimated addressable market in the procedural sedation is more than $400 million per year in the United States. As we commenced the integration, we were impressed with Acacia's previous plans and the positioning of our M system by FAVA. In our view, the two products were underinvested both from a cost and manpower perspective. Additionally, the products were launched into a very difficult COVID environment in which access to decision makers and prescribers was limited. Acacia had approximately 70 employees prior to the acquisition, of whom we retained approximately 20. Most of these individuals are now members of our commercial team. In reviewing the future plans, we were immensely impressed with the vision, experience, and leadership skills of Acacia's Deborah Hussain, who we recently welcomed as EGLE Senior Vice President, Head of Commercials. Eagle's team is now at its peak commercial strength with approximately 50 individuals. Deborah brings nearly 25 years of pharmaceutical industry experience leading commercial launches in the hospital and critical care space, having spent 22 years at Eli Lilly prior to Acacia. We look forward to her leadership as we work to realize the full potential of our emphasis and by favor and future launch products. Francis and Byfavo serve to diversify and complement our revenue streams and have the potential to accelerate our growth trajectory and strengthen our advantage in acute care. We believe that peak U.S. annual sales of the two products combined could potentially total $275 million, and we look forward to demonstrating the strength of the acquisition as usage builds over the next 12 months. Now turning to Landialol. On June 1st, we announced the submission of a new drug application to the FDA, seeking approval for Landialol, an ultra-short-acting, cardio-selective beta blocker. Landialol is a leading hospital critical care product in Europe and Japan. Based on feedback from FDA, we expect approval around mid-next year, with a commercial launch soon thereafter. Together with Baramsys and Bifava, this would give us three newly approved NCEs with strong patent life going into their growth stage, with projections of peak sales just shy of $400 million. Our hospital pipeline is very strong. We believe Cal O2 has blockbuster potential and could be a groundbreaking opportunity in severe bacterial pneumonia, which is a leading cause of death worldwide. In simple terms, CalO2 is being developed as an add-on to the clinically indicated antibiotic treatment that neutralizes bacterial toxins from the body. It is well established medical understanding that these toxins significantly contribute to the severity of pneumonia. We start our clinical trials later this year and anticipate interim results at the end of 23. Importantly, the trial asked clinicians to add Calo2 to their current pneumonia treatment regimen. In the fall, we will begin opening what we expect will eventually be over 100 clinical sites worldwide. Now we add Analar to the mix, strengthening our hospital pipeline. This transaction broadens our acute care business with the addition of a portfolio of novel NCEs with strong intellectual property protection from the mid-2030s into the early 2040s, including composition of matter patterns. DNA001 is a new chemical entity with a mechanism of action that's simply described as a molecule that stimulates breathing. Think of it like a pharmacologic ventilator. You can imagine a number of indications where being able to stimulate breathing would be extremely valuable. At present, Anilara has elected to move forward with three targeted indications. Postoperative respiratory depression, its most advanced development program. Community drug overdose, a problem that continues to increase in prevalence and severity. And apnea of prematurity, a common condition in preterm infants. We see tremendous potential to address significant unmet medical needs for millions of patients worldwide suffering from acute respiratory depression. This is another example of our acquiring pipeline products that represent a strong strategic fit with our specialized sales and marketing organization. And we believe will serve to expand our portfolio of hospital and anesthesia products. We believe we will have approval for these postoperative respiratory depression in 2026 and community drug overdose thereafter. Now let me turn it over to Dr. Mike Greenberg, our Vice President of Medical Affairs, who will explain in greater detail about the initial targeted indications for ENA001. Mike?