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spk04: Good morning, everyone. My name is Todd, and I'll be your conference operator. At this time, I'd like to welcome everyone to Eagle Pharmaceutical's fourth and full year 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 one on your telephone keypad. As a reminder, this conference call is being recorded today, March 13, 2022. It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. Please go ahead.
spk01: Thank you, Todd. Welcome to Eagle Pharmaceuticals' fourth quarter and full year 2022 earnings call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. With me on today's call are EGLE's President and Chief Executive Officer, Scott Tariff, Chief Financial Officer, Brian Cahill, and Vice President of Medical Affairs, Dr. Mike Greenberg. This morning, EGLE issued a press release detailing its financial results for the three months and full year ended December 31st, 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 our filings with 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 March 13, 2023. Since then, EGLE may have made announcements related to the topics discussed, so please refer to the company's most recent press releases and SEC filings. We will be discussing non-GAAP financial measures during this conference call, in addition to financial information prepared in accordance with U.S. GAAP. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. A description of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to their most comparable GAAP measures are set forth in our earnings press release available on our website at eagleus.com. And with that, I'll turn the call over to EGLE's President and CEO, Scott Tariff.
spk05: Scott Tariff Thank you, Lisa. Good morning, everyone, and thank you for joining our call today. 2022 is an outstanding year for EGLE. Their adjusted non-GAAP earnings per diluted share was $7.79 for the full year 2022. compared with $1.68 adjusted non-GAAP earnings for diluted share posted in 2021, our previously best full year. We earned $132 million in adjusted non-GAAP EBITDA in 22. This is a very significant achievement for a company of our size. This is $7.79. more than tripled last year's non-GAAP earnings per diluted share and came in at the top end of our expectations for 2022. The fourth quarter of 2022, our adjusted non-GAAP earnings per diluted share was $1.10, compared with $0.83 in the fourth quarter of the prior year. Adjusted non-GAAP net income grew by 31.8%, to $14.4 million in Q4 of 22, up from $11 million in Q4 of 21. Our earnings per share in the past few years have been strong, and we expect that to continue in 2023. It's not just that we tripled our adjusted non-GAAP earnings per deleted share year over year. It's how we did it. Let me point out once again that this was accomplished mostly organically. We have not raised any money through equity or debt finances in about seven years. In fact, we used almost $250 million since 2016 to buy back our stock through our share repurchase program. In 22, we also spent about $100 million combined in cash and evil shares to acquire Acacia Pharma and its two commercial acute care products, Paramsys and Hyfeva. And we still have net cash and receivables after all of it. Our cash and cash equivalents is held almost entirely at JP Morgan in operating accounts. And we have outstanding $63.8 million of debt on our $150 million credit facility with JP Morgan. As of today, we hold less than $1 million in a small number of accounts at Silicon Valley Bank with no individual account in excess of $250,000. Not only are we in very strong financial shape, but it places us in good position to acquire assets or companies. Eagle has successfully managed expenses and had strong profitability. We expect to earn $74 million to $80 million of adjusted non-GAAP EBITDA in 2023. Assuming the mid-range of this 2023 guidance, this would represent a compound return annual growth rate for the four-year period of 2020 to 2023 of 6%. As an organization, we are keenly focused on developing important products for the patients who need them. At the same time, we have tried to achieve this in a manner that creates profitability. I doubt our mindset will change in the near term. Let's discuss the strength of our year. Our fourth quarter 22 gross margin reflects both the expiration of our 10% Benamustine royalty and the buy-down of our Pemfexi royalty. We expect these positive impacts to continue in 23. I will point out that in the fourth quarter of 22, we had just over $12 million of Pemfexi net sales and exited the quarter with a 6% share of the U.S. market in community oncology. We previously stated that we anticipated doubling that share to 12% by the end of the first quarter of 2023, and it continues to be our expectation as we have already captured 10% share through February. In 2022, Pemfexi net sales reached $67 million. We expected net sales of Pemfexi in 2023 will be higher than $67 million. As a reminder, in Q4 of 22, we reduced future royalties on Pemexi profits in exchange for a one-time payment of $15 million to eliminate the royalty on the first $85 million of profit on Pemexi, beginning October 1, 22, and for a reduced royalty thereafter. Let me speak now to our Bend the Mustang sales and profitability and provide an update on where we are thus far in the first quarter of 23. In 22, we had year-over-year revenue growth in both Barrazzo and Triakizem net revenues of 42% and 97% respectively, while Bendecca declined. In total, our Bend the Mustang franchise revenue grew in 22 over 21. As we have discussed many times, the Ben and Mustin franchise faced competition for the first time on December 7, 2022. Eagle's strong fourth quarter of 22 earnings reported today and just discussed obviously include those three weeks of competition in December. Based on IQVIA data through February 24th, Bendecca and Belraxel hold an 88% share of the U.S. bendamustine market, where historically those two products have held about a 90% share. We continue to believe that Bendecca is a meaningfully superior oncology product for patients and healthcare providers compared to Tranda or generic Tranda, and that it will continue to maintain strong market share of physicians throughout 2023. As we've been saying for some time, we expect Bendecca and Bell Rhapsody to maintain approximately 75% of our gross profit in 23 compared to 22. In the nearly 90 days since competition entered the market, we can see that our products are holding up quite well relative to our forecast erosion to support our expectations. Let me also point out that we no longer pay the 10% royalty on our Dendamustine products, a royalty obligation that came out of gross profits until it expired in Q4 of 22 and had a lifetime cap. Turning now to the Acacia products, Barhamsus and Bifavo. Although still a small base, the nearly $1.5 million in combined sales of Barhamsus and Bifavo in the second half of 22 represents a doubling from Acacia's reported net sales of $722,000 for these two products in the second half of 21. In 22, sales for the two products included $1.2 million by Acacia prior to the closing of our acquisition of the company on June 8th, and $1.6 million by Eagle Postcodes. Keep in mind that Q1 of 23 is the first quarter in which we have our full-size and fully-trained sales team. We are extremely encouraged and hopeful the growth trends will continue. Both products are patent-protected until 2031. Net sales of Rihanna decks increased year-over-year by 19% for the full year of 2022, and days of Preston and Pettexi, our two new launches in 2022, generated $131 million combined in net sales in 2022. During the first quarter of 23, we decided to exit the laser pressing market by discontinuing all related manufacturing and halting sales beyond the current inventory levels. So this is our opportunity to proudly discuss our record year in 22. The question on everybody's mind is what about 23 and beyond? Once again, as we've indicated in the past, we believe our product and pipeline opportunities are collectively strong with seven commercial products on the market and three exciting pipeline programs. Our guidance of $74 to $80 million of adjusted non-GAAP EBITDA for full year 23 would represent an historical record, second to our record year for adjusted non-GAAP EBITDA in 2022. Taking a look even beyond 23, as we have indicated in the past, Eagle desires to make an accretive acquisition for additional patent-protected assets to solidify our growth for several years. This brings us to our cash and balance sheet. We are being very selective, but we believe we have the ability to make a meaningful acquisition, one that we'd expect to potentially go a long way in positioning Eagle as a growth company for many years to come. If we can accomplish this, while we work towards our objectives for by HEMSIS, excuse me, and by FAO, we believe it would have huge impact on our ability of future growth. It is our belief that our pipeline opportunities offer not only potentially first-in-class products, which could have significant impact on treatment options, but the potential market could possibly have dramatic impact on evil size and values if the The significant pipeline opportunities include ENA001, an investigational one-of-a-kind new chemical entity. It is an agnostic respiratory stimulant being developed by Analar for the potential treatment of post-operative respiratory depression, community drug overdose, and apnea of prematurity for which FDA granted orphan drug designation in Q4 of 22. As a reminder, we acquired approximately a 17% equity stake in Analog in exchange for two upfront investments paid in August of 22 and February of 23. And we have an option to purchase the rest of Analog in the event specified milestones are achieved. TALO2, a novel first-in-class broad spectrum antivirgulants agent for the treatment of severe community-acquired bacterial pneumonia, for which a global phase 2 study is underway, with 276 expected patients in 120 centers expected in 22 countries. And our MDA for landialol is under FDA review. The filing seeks approval for landialol for the short-term reduction of ventricular rate in patients with supraventricular tachycardia, including atrial fibrillation and atrial flutter. We expect to have informative data readouts on analog and COW2 in about a year or so. In the meantime, in 23, we are projected to use TASH to support Anilor's EMA-001 for an additional equity investment and for Cal O2 through R&D expense of about $35.5 million to $37.5 million combined. This does not include any cash that would be required in the event that Anilor achieves certain milestones or that we exercise our option to purchase the remaining shares of Anilor. As we transition into a diversified pharmaceutical company, we see two avenues. open to us to meet this goal clinical development and acquisitions for now we plan to balance both required acacia pharma and hope to make an additional acquisition we recognize that clinical development carries more risk but with a potentially higher return to be clear if we do not succeed with the cali 2 and annular clinical programs. We intend to add the cash we would have spent on development and any accompanying earnings back to the company, and then concentrate on acquisitions. If we are successful, then we believe our investment will be money extremely well spent. In summary, 2022 was an outstanding year for Eagle, and we believe 2023 is shaping up to be another very strong year. We hope to make a meaningful acquisition, focus our efforts on Barham's system by favor to support the development of ENA001, and work hard on advancing Landy Law and Cal O2 over the next year or so and see how those turn out. Well, with that, I'll turn the call over to Brian Cahill to discuss our fourth quarter and full year financials.
spk02: Brian? Thank you, Scott, and good morning. Good morning. In the fourth quarter of 2022, total revenue was $60.7 million compared to $42.3 million in Q4 of 2021, primarily reflecting continued revenue from sales of Azepressin and Penfexi, which we launched in 2022, as well as the addition of Barhensis and Bifavo to our commercial portfolio. Full year 2022 revenue was $316.6 million compared to $171.5 million in 2021. Net product sales during the fourth quarter of 2022 were $37.2 million compared to $16.2 million in Q4 of 2021. Full year 2022 net product sales were $214.5 million compared to $65 million in 2021. Vasopressin net product sales were $3.6 million, and Penfexi net product sales were $12.1 million in the fourth quarter of 22. For the full year 22, Vasopressin net product sales were $63.2 million, and Penfexi sales were $67.5 million. Regarding Vasopressin, during the first quarter of 2023, we notified customers and the FDA of our decision to withdraw from the Vasopressin market. Inventory on hand and in distribution channels is expected to be depleted by the end of the second quarter of 2023. Del Rosso net product sales were $11 million in the fourth quarter of 22 compared to $5.5 million in Q4 of 2021. For the full year, Del Rosso net product sales totaled $33.7 million compared to $23.7 million in 2021. Fourth quarter 2022 Ryanadex net product sales were $7.2 million compared to $6.1 million in Q4 of 2021. Full year of 2022 net product sales of Ryanadex totaled $30.2 million compared to $25.3 million in 2021. Q4 2022 royalty revenue was $23 million compared to $26.2 million in the prior year quarter. Full year 2022 royalty revenue totaled $98.3 million compared to $106.5 million in 2021. Royalty revenue includes royalties earned on sales of Bendecca in the U.S. and Triakasem in Japan. During 2022, we recorded $3.8 million of other revenue for a cumulative sales milestone on sales of Triangosyn in Japan by our marketing partner, Symbio. Gross margin was 67% in Q4 compared to 71% in the prior year quarter. This decrease was the result of the addition of product sales of Vasopressin, Pemfexi, Barhensis, and Bifavo to our portfolio, which contribute lower margin than historical revenue mix, which has been dominated by Bendecca royalties. Also compressing margin is the inclusion of amortization of intangible assets related to the newly acquired products and the reduction of the Confexi buy-down beginning on October 1st, 2022, which will continue going forward. On the expense front, R&D expenses were $7.2 million for the fourth quarter of 22 compared to $3.8 million in the prior year quarter. This increases largely attributable CMC and clinical trial spend on our Cal O2 program. Excluding stock-based compensation and other non-cash and non-recurring items, fourth quarter 2022 non-GAAP R&D expense was $6.6 million. Full-year 2022 R&D expenses were $34.1 million compared to $51.3 million in 2021, primarily reflecting the non-recurrence of a $10 million upfront payment related to our license agreement with Combioxin for Cal O2 and $5 million upfront payment related to our license agreement with AOP Orphan for Landia Law. Lower headcount, also lower headcount costs of $1.3 million and lower spend on vasopressin of $7.6 million. Rianidex NDA-111 of $3.1 million and Penfexi of $2.2 million. This was partially offset by $10.7 million of CMC and clinical expenditure on our Cal O2 program in 2022. excluding stock-based compensation and other non-cash items, adjusted non-GAAP R&D expense for 2022 was $31.5 million. SG&A expenses in the fourth quarter of 2022 were $24.1 million compared to $20.3 million in the fourth quarter of 2021. This increase was driven by higher headcount and marketing spend related to our newly acquired products, or HempCisa by Fabo, and Pemfexi, which launched in February of 2022. Excluding stock-based compensation and other non-cash and non-recurring items, fourth quarter 22 non-GAAP SG&A expense was $19.9 million. For the full year of 2022, SG&A expenses were $106.6 million compared to $75.3 million in 2021. This increase primarily reflects costs associated with the acquisition of Acacia, including severance expense and other deal costs. Also, higher headcount and marketing spend related to our newly acquired products, or Hemp System by Favo and Pemfexi, which launched in February of 2022. Excluding stock-based compensation and other non-cash items, adjusted non-GAAP SG&A expense for 2022 was $70 million. We expect our SG&A spend in 2023 on a non-GAAP basis to be between $68 and $90 million. Net income for the fourth quarter of 2022 was $8.2 million, or 63 cents per basic and 62 cents per diluted share, compared to net loss of $6.2 million, or 48 cents per basic and diluted share in the prior year quarter. For the full year 2022, net income totaled $35.6 million, or $2.76 per basic and $2.73 per diluted share, compared to a net loss of $8.6 million, or $0.66 per basic and diluted share in 2021. adjusted non-GAAP net income for the fourth quarter of 2022 was $14.4 million, or $1.11 per basic and $1.10 per diluent share, compared to adjusted non-GAAP net income of $11 million, or $0.85 per basic and $0.83 per diluent share in the prior year quarter. For the full year 2022, adjusted non-GAAP net income totaled $101.8 million, or $7.87 per basic, and $7.79 per diluted share, compared to adjusted non-GAAP net income of $22.3 million, or $1.71 per basic, and $1.68 per diluted share in 2021. For a full reconciliation of non-GAAP measures to the most comparable GAAP measures, please see the table at the end of our earnings press release. Also, please note, as disclosed in the footnotes to this morning's press release, beginning in the fourth quarter of 2022, Edle no longer excludes expenses for in-process research and development from its non-GAAP results. Historically, the company excluded these charges. These charges have been made, these changes, rather, have been made to align with the views expressed by the U.S. Securities and Exchange Commission. Prior periods have been recast to reflect these changes. As of December 31st, 2022, and following the completed acquisition and synergizing of Acacia, the company had $55.3 million in cash and cash equivalents, $72.4 million in net accounts receivable, and $63.8 million in outstanding debt, resulting in $64 million in net cash plus receivables. In 2022, We repurchased $18 million of our common stock as part of our share repurchase program. From August 2016 through December 31st, 2022, Eagle has repurchased $46.1 million of its common stock. During the fourth quarter, we refinanced our debt facility. The company now has a new three-year $150 million facility with a bank route led by J.P. Morgan that includes a $50 million term loan A and a $100 million revolving credit facility. The terms, including covenants of this facility, have been publicly disclosed and are similar to those of the prior expiring facility. With that, I'll ask the operator to open the call for questions. Operator, please go ahead.
spk04: Yes, sir. At this time, if you would like to ask a question, please press the star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star and 1 to ask a question. Our first question comes from Brandon Foulkes with Cantor Fitzgerald. Hi, thanks for taking my question.
spk06: Congratulations on a very strong year. A few from me. Maybe just firstly, just on the context, can you talk about the moving pieces around 2023's revenue? As you gain this market share, are you dynamic that revenue should not track around a similar growth rate?
spk05: Can you repeat that again? Brandon, we lost you for a second.
spk06: So on Pemfexi, can you just talk about the moving pieces around 2023 revenue? As you're gaining market share, any dynamics that revenue should not track around about a similar growth rate?
spk05: Oh, I see. Well, thanks for the question, Brandon, and good morning. Yeah, so, you know, we are – Out in the marketplace with our sales force concentrating on Pemexi, we're thrilled about the growth that we've had so far, the announcement today, the $12 million in Q4, and then the market share of about 10% where we are today. And I think if I understand your question, it's really about how inventory levels relate to sales and how that shapes out in the course of the year. For the most part, Our customers have acquired inventory in anticipation of their future growth. You know, we expect the 10% to grow to 12 by the time we get through March and then grow beyond that standpoint. You know, it may not track exactly from quarter to quarter with squirt activity. We'll just have to see how that all shakes out into where the market share winds up. But at the end of the day, you know, we'll expect to have sales in excess of last year's number of $67 million. And right now we're in track, you know, we're right where we thought we would be. We're hoping to have and still have high expectations that we're going to have a strong year for the product. And remember, you know, the profitability of the product is improved this year as well as we bought down that royalty payment. So it's, you know, it's an exciting year for us as it relates to Pemfexi. Great.
spk06: Did that answer it? It did, yeah. And then maybe on bull wraps, though, Now that we have the trend of generics on the market, did your strategy around that product change at all?
spk05: We are doing our best to protect our franchise. We have an ecology sales force that is very focused on the product. You know, we just think we have two really good products, especially in Bendecca, the 10-minute infusion, Belrapsa being a liquid product. You know, I think we're just going to stay very focused. We've committed before or at least expressed that we thought we would be within this 25% loss, you know, keeping 75% of our product. And you can see after the first 90 days, Brandon, we're, you know, really in very good shape. we've been able to do, you know, a really nice job keeping our products. And we expect that, you know, we're just going to have a strong 23 as it relates to the Ben the Mustang franchise, both Bendec and Bellwraps. So combined with, you know, what we just articulated on Pentexy, you know, we're expecting to have another strong year across the board with our products in 23. It's an exciting time for us.
spk06: Great. Thank you very much.
spk04: Thank you. Thank you. As a reminder, if you wish to ask a question at this time, please press star one. Our next question comes from Tim Lugo with William Blair. Hey, guys. This is Lachlan. On to Tim.
spk02: Thanks for taking the question, and all my congratulations on a strong 2022. So, on Pemfexi, the market share that you provided is
spk05: very useful. Uh, I was wondering if you can talk about how much of the market you call on with the Salesforce, um, to help us think about sort of where that market share could get to. And then on, uh, yeah. Well, let's start there, Lachlan. Thank you. So our Salesforce covers the entire market. The market is split between, um, commercial and the hospital market, the 340B market pretty evenly. We're mostly focused with the Salesforce on the community side. And those are the shares that we're referring to as the shared community. So, you know, it's a big marketplace. We're very focused on it. We expect the share to continue to grow throughout the year. You know, we haven't guided to where we expect to go. We'll take it quarter by quarter, but, you know, we feel pretty confident at the 12% level as we leave March, especially considering that we've already grown from 6% to 10%. And then we do have a focus on the hospital market, obviously, as well. We'll see how that goes. But right now, very focused on community. The sales force covers 100% of that business. And... You know, today we're feeling pretty good about it. Awesome. Thank you. And then you mentioned in the press release and in the prepared remarks, you're anticipating growth in Bahamas by favor now that the sales force has fully scaled. Can you just talk about when that sort of happened? You know, when did you complete that scaling and sort of how big is it now compared to what it was last year? The scaling is really just coming into play. We only purchased the company in June. We went back to the territories now that we had these new products. We made some changes. We made some expansions. At the end of the day, we have more reps today than we had last year by a few. We're just really very excited about the ramp. It's looking good. I realize it's a small base, but you can see by the remarks we made today, there's strong growth there. We're expecting 2023 to be a very solid year and lay the foundation for future growth. We still have really high expectations. The two products are wonderful. We're getting great feedback from our customers and the users of the product. We had the Um, we had what I thought was a really very strong investor day a couple of months ago, and we just keep hearing wonderful things and let's see how the growth goes. But right now we are also very enthusiastic about the trends for the product.
spk02: Uh, thank you.
spk05: And I guess on the topic of Salesforce, if I could just quickly ask you, are you expecting much incremental expansion there around or landing a lot of potential approval? No, I think we're right-sized for all of our launches and all of our business this year. I think the step-up that we took and the people that we have now is sufficient to get us through at least the next year.
spk04: Great. Thank you. Thank you. Our next question comes from David Amselom with Piper Sandler.
spk03: Thanks. So just a couple. First on vasopressin, can you just go through your thought process in more detail on the withdrawal? Is that just a function of the crowded nature of the market? Or are there other considerations? And then can you just talk to how you thought about the ROI on that given situation? given the withdrawal and, you know, was there – is there a potential to come back at some point as you look at market conditions? So just a few on those. And then secondly on Ben Mustine, I guess it was sort of in early days with, you know, generic market formation, but can you talk about where you ultimately think things will settle out regarding – both Ben Decker and Bill Rapsoe share. So something of a longer-term question there. Thank you. Yeah.
spk05: So, okay, let's start with Veja, David. Thank you for the question. So, look, Veja Pressing was the only generic we've developed in the company's history. We thought we had a unique capability of bringing the product to the marketing game through the courts, which we did. We sold quite a bit last year in the year that we launched it. But our business, the rest of our business is just so strong, right? In the Musti market, the Penfexi market, we're investing behind Calib2 and Analar. There's just no real room in the company for a generic product, so we exit it. You know, these generic markets, well, as the price declines, there's just no reason for us to be spending our time and our sales force's focus on a generic product. In terms of coming back to the market, that's really very interesting. Certainly, we have the capability of doing that if things change. We did have very good market share for the product. We don't have any plans in the near future or anything that we see on the horizon, considering that we just exited. But the AMDA is viable, so we'll see how markets shake out. Sometimes things change. That's basically the Bezos story. Now, and the Mustang, Bendecca, we've guided to keeping 75% of the gross margin in 23. So far, 90 days into it, almost 90 days into it, we're really encouraged. We're ahead of our forecast and our plans. I think that speaks well to the strength of the benefits of the products. Let's see how the months go. You know, we'll get more of an update when we close out Q1, when we report there. But, I mean, so far we're thrilled about how the products are holding up and how the trends are working. And right now, you know, Danny, we just feel great about Ben and Mustine and, quite frankly, the entire line. So let's see how things unfold. It's going to be another really good, strong year for us in 2013.
spk04: Thank you. Thank you. Thank you. At this time, I show no further questions in queue. I'll turn the call back to Scott Tara for any additional or closing remarks.
spk05: Well, thank you, everybody, for joining the call. Look, 22 is a record year for EGLE, and we're committed to carrying that momentum into 23 and beyond. Our team remains focused on delivering value to stakeholders and ensuring the patients have access to our therapeutics, We look forward to updating you as we continue to pursue growth organically and potentially through acquisitions. Thank everybody for joining today. I appreciate it. And be healthy.
spk04: This concludes today's call. Thank you for your participation.
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