Eagle Pharmaceuticals, Inc.

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.

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.

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.