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spk00: Thank you for your patience, everyone. The annual third quarter 2021 earnings conference call will begin shortly. Thank you. Thank you. Hello, everyone, and a warm welcome to Amniel's third quarter 2021 earnings conference call. I would now like to turn the call over to Amniel's Head of Investor Relations, Tony DeMeo.
spk05: Good morning and thank you for joining annual third quarter 2021 earnings call. Today we issued a press release reporting our financial results. The press release and a presentation are available on our website at annual.com. We are conducting a live webcast of this call, a replay of which will also be available on our website after its conclusion. Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management 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 Cautionary Statements on Forward-Looking Statements in our press release and presentation, which applies to this call. Also, please refer to our SEC file, which can be found on our website and the SEC's website, for a discussion of numerous factors that may impact our future performance. We also discuss certain non-GAAP measures. Important information on our use of these measures and reconciliation to U.S. GAAP may be found in our earnings release and the appendix of today's presentation. On the call this morning are Chirag and Shintu Patel, co-CEOs, Tasos Konideras, CFO, Andy Boyer and Joe Tedisco, Chief Commercial Officers for the Generics and Specialty segments, and Steve Manzano, General Counsel and Corporate Secretary. I will now turn the call over to Shirad.
spk08: Thank you, Tony, and good morning, everyone. MNIL achieved a solid third quarter results with net revenue of $529 million, adjusted EBITDA of $135 million, and adjusted EPS of $0.21. Our third quarter performance builds on the strong momentum we have seen these last two years, and we believe the best is yet to come. Let me provide a few updates across the business. I'll start with our genetics business, which is built on our core competencies in R&D, manufacturing, and commercial excellence. Over the last several years, our robust innovation engine has significantly strengthened our portfolio with increasingly complex products. Our extensive manufacturing and operational capabilities allows us to manufacture most of these products in-house, which accelerates our time to market and improves margins. Our commercial teams have done an excellent job working with customers to bring these impactful products to market and provide access to these affordable medicines for patients. As a result, strong execution is driving performance, including sustained higher levels of profitability. Notably, adjusted generic gross margins were 45% in 2021, year-to-date, which is a remarkable increase from 36% in 2019. Last quarter, we highlighted what makes our genetics business durable and different, including the pace of new launches and our increasingly complex portfolio. There are two points to reiterate. First, a third of our current genetics revenue comes from products launched since 2019. Second, half of our current revenues and over 85% of our pipeline is non-oral solids, demonstrating how our business is increasingly diversifying with more complex products, leading to more durable revenues at a higher profitability. Aligned with our revenue 2.0 strategy to expand our portfolio with increasingly complex products, We are so excited to announce the acquisition of Punishka Healthcare, which is a pivotal step in growing your injectable business. Today, the overall U.S. institutional market, from a manufacturer's perspective, is around 5 billion in size and growing. While at the same time, there's a history of supply shortages for sterile injectables and need for more capacity. Currently, MNIL is 15th in this market with about 125 million in annual revenue. We shared last quarter that our goal is to more than double by 2025, and our aspiration is to be in the top five. This acquisition allows us to accelerate our injectable strategy for the United States and the international markets. Moving towards specialty business, we are continuing to advance our strategy and expand our portfolio. We remain focused on growing the business organically, advancing our pipeline, and pursuing inorganic opportunities, focused in neurology and endocrinology. First, the team is driving strong commercial execution, leveraging our expanded endocrinology sales force this year In the third quarter, we saw continued strong performance of our two largest specialty products, Criterion and Unicor. Second, we continue to advance our specialty pipeline. Most notably, we are pleased with the positive phase 3 data for IPX203 and the potential this technology has. We do not view IPX203 as a line extension of writery, but rather we believe IPX203 will be a distinct innovative therapy for the treatment of Parkinson's disease that will have a broader market appeal with patients and prescribers. We are advancing our pre-market work, and we are excited about the commercial opportunity that IPX203 We continue to advance the programs across our specialty portfolio, and Chintu will discuss these in more detail. Third, we continue to actively pursue complementary commercial stage assets and late stage clinical programs to leverage our existing specialty infrastructure. In our healthcare distribution business, we saw continued solid performance this quarter. With healthcare, we are focused on strong commercial and operational in the large federal healthcare market, the federal government healthcare market, and expanding our unit dose offerings to drive sustainable growth and profitability. Finally, as a mission-driven company focused on providing affordable essential medicines for patients, we were delighted to release our inaugural sustainability report yesterday. The report highlights our ongoing efforts in driving environmental, social, and governance initiatives at ME and provides important insights on our business and its impact on stakeholders. For example, in terms of access and affordability, our genetics medicines were responsible for saving patients nearly $10 billion in the United States last year alone. In addition, on the environmental stewardship side, we have implemented a clean renewable geothermal energy system at our Brookhaven New York facility to reduce our environmental impact significantly. With that, I'll turn the call over to Chindu.
spk09: Thank you, Chirag, and good morning, everyone. First, let me thank our nearly 6,500 MNIL team members who work hard every day to make healthy possible. Since our return as co-CEOs, we have been focused on operational excellence and cost efficiencies, and we have seen tremendous progress with sustained high levels of profitability. Today, we see the result of nearly 20 years of that continuous improvement mindset as we are constantly improving our execution, whether that's process improvement, gaining supply chain efficiencies, or better inventory management, including reducing obsolescence and the lowest level of backorder in our history. Since the inception of MNIL, we have maintained a commitment to the highest standards of quality and current good manufacturing practices. The team continues to maintain its stellar manufacturing quality track record with currently no open or pending issues with the FDA and an impeccable compliance history at all our sites. I'm incredibly proud of our team. As you are aware, The FDA issued an untitled letter raising concerns around bioequivalent studies performed by Synchron Research Services. The FDA assigned a DX code for applicable products, which impacted several manufacturers. For our handful of impacted products, The bioanalytical data and statistical analysis for most was completed by a different CRO, not Synchron. Also, MNIL monitors and independently audits all CRO studies as part of our normal process and validated these results. We completed our responses to the FDA as we want to restore AB ratings in a timely manner. Turning to the injectable business, as Chirag highlighted, the Punishka acquisition advances our strategy to meaningfully expand in injectables. Today, we have 25 commercial products for the U.S. institutional market with more approved and a rich pipeline of over 40 injectable launches planned. This acquisition accelerates our deep R&D pipeline with enhanced R&D capabilities and speed. By acquiring the state-of-the-art facility and adding five sterile injectable production lines, we are also expanding our capacity, which will provide more supply, add redundancy, and allow us to be more opportunistic in pursuing business. We expect FDA inspection and approval of the site by the end of 2022. We believe this acquisition is the cornerstone of our plan to be a leading player in the global injectable market. Let me now walk through our company's innovation agenda and provide an update on our progress. First, in generics, our strategy prioritizes innovating across complex product categories, such as inhalation, injectables, implants, drug-device combinations, and ophthalmics. We believe MNIL is differentiated from its peers in our ability to successfully innovate and launch products in these hard-to-make complex areas. Zephyrme, Nuwaring, and Sucralfit are great examples. Our internally developed R&D and manufacturing capabilities drive these fast-to-market complex innovations. Overall, we feel great about our generic pipeline, which is now over 85% non-moral solids. Currently, we have approximately 125 products in our pipeline and another 100 products with ANDAs pending. We expect to file 25 to 30 ANDAs and launch 20 to 30 new products each year. We are very pleased with the new product launches in 2021, such as Zephymi, Abiretron, and Tobradex. Last week, we announced the approval of dexamethasone, an important steroid used for a number of medical conditions, including treatment of respiratory symptoms associated with COVID-19. This represents another CGT-designated approval, which provides 180-day exclusivity. MNIL has the highest number of CGT designated products in the industry. In short, the wheel of innovation constantly turns at MNIL and we see a long runway for our R&D engine to drive growth and sustain high level of profitability. Second, we remain focused and excited about global expansion. as we pursue opportunities to leverage our portfolio and out-licensing certain products in select markets. With our partner Fosun, we are filing 10 products in China near term and look to start commercializing in 2023. Outside of China, we are actively working to partner in other geographies, and we will share more as we progress. We see global expansion as another vector for sustainable growth. Third, we look to enter the biosimilar market in 2022. We have three oncology biosimilars, Nipogen, Neulasta, and Avastin, all filed and under review with the FDA. We expect to receive our initial approvals next year. Beyond this, we are evaluating additional opportunities with partners where Amni can be first or second to market in biosimilars. Fourth, We continue to advance our specialty pipeline as we look to launch at least one new specialty product per year starting in 2022. Starting with the biggest one, IPX203. Recent Phase 3 results showed IPX203 met its primary endpoint by demonstrating superior good on time from baseline in hours per day. when dosed on average three times per day compared to immediate release DDLD dosed on average five times per day. In a post hoc analysis, IPX203 resulted in 1.55 hours of increased good on time for those compared to ircdld and we believe ipx203 has the potential to help parkinson's disease patients achieve more good on time with less frequent dosing than IR-CDLD. We see a broader market opportunity for IPX203 as compared to RITERI, which represents only 5% of the broader CDLD space, and we expect to submit our NDA in mid-2022. In addition to IPX203, we continue to advance the rest of our specialty pipeline. First, our NDA for the DHE autoinjector for migraine and cluster headache is pending FDA approval, with launch expected in mid-2022. Second, we expect to file our NDA for K127 for myasthenia gravis in the second half of 2022. Third, we plan to file our IMD application for K114, a modified release, T3 product for hypothyroidism in the middle of next year. These are all 505 programs for which the risk level is relatively lower than the new molecular NTT programs. We look to share additional programs in the near future as we further expand our pipeline utilizing our proprietary drug delivery technology platforms, Grande and Chronotech. We expect these technologies will provide a wellspring of new opportunities. Now I will turn the call over to Tasos.
spk07: Thank you, Chedu. For the third quarter, we reported total net revenue of $529 million, up 2%. Adjusted gross margins of 45.4%, up 570 basis points. Adjusted EBITDA of 135 million, up 19%. And adjusted EPS of 21 cents, up 31% all year over year. Our growth is primarily driven by new product launches, operating efficiencies, and it also includes substantial investments in R&D and our specialty commercial presence to drive long-term growth. From a balanced perspective, I'm happy to report that both gross and net debt continue to decline, with net debt to adjust the dividend for 4.6 times compared to 5.3 times December 2020 and 7 times December 2019. In addition, our improved operational performance and lower levels of debt were cited as key reasons for the recent upgrade for long-term debt by the rating agency movies. Let me now start with our generic segment, where third quarter net revenue of $347 million was up $5 million or 1.5% year-over-year. Growth was driven by the strength of new product launches and the diversity of our increasingly complex portfolio. New products launched in 2020 and 2021 accounted for $45 million of growth this quarter. From a product perspective, Zafemi and Avira Deron, which were launched earlier this year, were strong contributors to growth. On a year-to-date basis, generics recorded $1 billion in net revenue, up 2%. Adjusted gross margin for generics was 43.6% in the third quarter, substantially higher than the 37.4% in the prior year. Gross margin expansion was driven by bringing substantial value to our customers, being in product launches, as well as operating efficiencies, including in-source manufacturing and procurement savings. Moving to the specialty segment, net revenue of $93 million for the third quarter was up $5 million, or 5.6% year-over-year. As a reminder, specialty centers in urology and endocrinology with right-oriented unit growing. Both brands continued to grow nicely, and in the aggregate recorded $57 million in net revenue, up 13% year-over-year. As expected, this growth was partially offset by declines in non-promoted brands. who expect continued strength in writer and unit drawing, as Q3 total scripts for both were up high single digits and new scripts were up double digits. Adjusted gross margin for specialty was 78.7% in the third quarter, representing a 440 basis point improvement year over year due to the favorable product mix. On a year-to-date basis, Specialty recorded $277 million in net revenue, up 3% year-over-year, with right-of-way unit growing up 10% combined. In the out-care distribution segment, third quarter net revenue of $89 million was down a million for about 1% year-over-year. Growth was impacted by top prior year comparison due to a timing issue. Adjusted gross margin for out-care was 17.2% in the third quarter, which was 270 basis points higher year-over-year. Total company adjusted EBITDA of $135 million for the third quarter was $21 million higher than the prior year quarter. Gross profit growth added $33 million. It was partially offset by $8 million in higher R&D as we incorporated the Kashif Specialty Acquisition and $10 million in high-risk G&A due to our Salesforce expansion and higher expenses as the economy opens. adjusted diluted third quarter EPS of $0.31, which was driven by the strong EBITDA performance, partially offset by higher taxes. From a cash perspective, operating cash flow was $82 million in the third quarter and $179 million year-to-date, as we continue to expect $220 to $250 million for the full year. In addition, We closed the third quarter with $311 million in cash and cash equivalent, and our intent is to utilize a portion of that to fund the $93 million purchase price of the PNISCA acquisition. From a timing perspective, approximately $73 million of the purchase price is funded in November, with the remaining $20 million to be funded mid-2022. As Shirai mentioned earlier, we're very excited about the capabilities this acquisition gives us, and we expected to begin adding meaningful revenue in EBITDA starting in 2023 and accelerating substantially after that. As we're nine months through the year, and most of our 2021 new product launches are behind us, we're updating our full-year guidance. On the top line, we're tightening our expected net revenue to about $2.1 billion, which represents mid-single-digit year-over-year revenue growth. We're very pleased with this organic level of growth, which reflects the depth of our R&D pipeline, the resiliency of our commercial portfolio, and upset headwinds driven by the lack of flu season and lingering COVID-19 impact. At the same time, we're raising our adjusted 2021 EBITDA full-year range between $530 and $550 million, compared to $500 and $500 million range which reflects high double-digit growth versus 2020. We're also raising our EPS guidance range to 78 and 88 cents compared to 70 and 85 cents. Our operating cash flow guidance remains the same at between 220 and 250 million, and we're slightly lowering our CapEx expectations to 50 and 60 million compared to the range of 60 and 70 million. In summary, we feel great about our quarterly and year-to-date performance of solid top line, double-digit adjusted EBITDA growth, and our ongoing positive trajectory. Let me now hand it over back to Shirag.
spk08: Thank you, Kasim. In summary, MNIL is executing well in all fronts, solid performance across the business, and sustained high profitability reflects the diversity, durability, and increasing complexities of our portfolio. Looking forward, we see continued growth and strong profitability. We'll now open the call to questions.
spk00: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure that your phone is unmuted locally. Our first question comes from David Amsalem of Piper Sandler. David, your line is open. Please go ahead.
spk03: Okay, thanks. So just a high-level question as a starting point, given today's acquisition and where you're taking the business in terms of the mix of specialty brands, biosimilars, and complex generics, I can't help but wonder how you're thinking about your base oral solids business, and is that a business that you're going to look to strategically exit or pare down over time? Just how are you thinking about that lately, particularly given the acquisition today? And then secondly, regarding biosimilars, can you just talk about the potential for interchangeability of anything you have in the queue and how important interchangeability, getting that – is for your business, or really for any biosimilar. Just get your philosophical thoughts, given that we saw a recent interchangeability designation for one of the Humira biosimilars recently. And then lastly, any thoughts on the Copaxone generic? Just wanted to make sure I didn't miss anything on that product in your prepared remarks, but anything you can say on that would be helpful. Thanks.
spk08: David, good morning. Good to hear from you. So on your first question, the MDL 2.0 strategy, as we had clearly laid out, that we are diversifying our business away from oral solids. That does not mean we're getting out of oral solids because we have fantastic extended release, multi-layers, oncology, all those competencies. we're pretty much very less on to the commodity oil-solid products, and that we are reducing further. But it still reduces the cash flow, which allows us to utilize and allocate that capital to a proper areas that we are growing. So we're diversifying, we're so reliant on Today, 125 are aspirations to be in the top five. This acquisition provides us with accelerated R&D development and accelerated launches, five excellent lines, all European lines, a state of the art, the best facility in injectables in India. So we are very excited to be now meaningfully adding contributions on injectable. The third piece is the international markets. which we have a partner for soon. And we're very excited. We haven't shared any details yet, but we're very excited what we see on those products and opportunity 23 onward and building a very good business with Fursui in China as well as Africa. The fourth is the biosimilars. And I'll take my shot on biosimilar first and pass it on to Chintu for interchangeability. So my view remains biosimilars as evolving market, much needed. It is going to be highly competitive, so more of a payer-driven and PBM-driven market developing. Yes, for the buy and build would be a separate economics, but the payers will still drive it. So interchangeability and any intervention by CMS Covering all biosimilars would be really helpful for penetrating more than 20, 30, 40, 50% market share to go to more of a 70, 80% volume penetration. And that would be fantastic news for biosimilars. And with or without interchangeability, I think it needs to get there to realize for our country true savings on biosimilars, which is a huge potential. Shintu, you want to comment on interchangeability?
spk09: Sure. Hi, David. Good morning. Before biostimulant, I just wanted to add also you had a question on specialty. So we are equally focused on building our specialty pipeline organically and inorganically. As I mentioned in my opening remarks, we have a good pipeline product which shows good promise going forward, and we are also looking at inorganic assets to acquire. So along with the injectable complex generic specialty also remains the focus, and we are very happy and excited where we are in the building of a pipeline. Coming to the biosimilar interchangeability, David, I think from science side it's very good. and exciting that gives comfort to the physicians and the patients that when the products were interchanged between from the immunogenicity or efficacy perspective, you know, the statistical differences were not significant to raise any concerns. uh but the main driver would be actually i mentioned would be the pair and how the reimbursement occurs to have a lot more growth on a biosimilar industry but we see biosimilar as a must and i think over a period of time uh whether it's the regulatory pathway interchangeability or the other areas i think it's going to evolve and be more acceptable and normal going forward And your last question on Kapak soon. Kapak soon, due to the delays of COVID and it was PMO, we are not forecasting in our 2022 launch. It's most likely to be 2023 launch first half.
spk03: Okay. Thanks so much. Thank you.
spk00: Thank you, David. Our next question comes from Nathan Rich of Goldman Sachs. Your line is open, Nathan. Please proceed.
spk02: Hi, good morning. Thanks for the questions. Sharag, you highlighted the gross margin performance in the generic segment. I know the goal for a while had been to get back to 40% margins. You're now solidly there. As we think about the opportunity going forward, can you maybe give us an updated view on where you think gross margins for that segment could go, especially as you do shift the portfolio to more complex products. And then maybe, Tass, as a follow-up for you, could you maybe just talk through the updated revenue outlook, you know, moving that towards the lower end of the range and kind of what changed relative to your prior expectations? Thank you.
spk08: Thank you, Nathan. Good to hear from you. Good morning. So gross margin, as we said, we brought in-house all the manufacturing from CMO, most of it in-house, which is helping the margins. We addressed our operational efficiencies, the plant utilization. Back orders are virtually not existing, which takes care of the failure to supply. The returns we're working on algorithm to reduce and working proactively with the customer. So all these The more we launch complex products, more injectable products, we see the margins improving. Now, it may not be right in one year, but over one, two, three, four, five years, our goal would be to have a higher gross margins because of the complexities of the product with the portfolio mix we have. house manufacturing, and very few products are partners, so we're not sharing economics for most of our products. So that is on a gross margin on genetics. Top sales would you like to?
spk07: Sure. Good morning, Nathan. So from a top-line perspective, as you recall, our range was 2.1 to 2.2 billion. And right now we're guiding at 2.1, which still is up 5% organically from prior year. So first, we feel great about this. It's a couple of points and dates. Number one is our new product introductions have performed better than we thought. uh first they got uh they were launched much earlier in the year they were anticipated and so that has done much better than we thought which actually was a key reason why our gross margin uh improvement was better and a key reason why our ebitda we increased our ebitda guidance so that's a good thing The two things we did not anticipate as much was, as we spoke earlier on this year, was the complete lack of flu season. So that essentially cost us $40 million just so, you know, not selling any type of flu as well as some other, you know, products. That was the biggest negative variance from an upline perspective. Also, you know, sitting trying to give guidance earlier on this year, trying to anticipate what the COVID-19 impact was, that continued to have some lingering effects, I think, that impacted everything. So those are the two reasons why, the three reasons. So some of the legacy products doing a little worse than we thought, primarily around lack of flu season. New products doing better than we thought that also drove the beat of the EBITDA and the raise of the EBITDA guidance. Does that help?
spk02: Great. Yeah, thanks very much.
spk00: Thank you, Nathan. Our next question is from Balaji Prasad of Barclays. Balaji, please go ahead. Balaji, your line is open. Please make sure you're unmuted. Unfortunately, we're not receiving any audio from Bellagio's line at the moment, so we will move on to our next question, which is from Elliot Wilbur of Raymond Jones. Elliot, please go ahead.
spk04: Thanks. Good morning. First question I wanted to ask was around the injectable segment, obviously expected to be a key driver of growth going forward. Question is, you know, outside of some of the more differentiated, complex filings that you have in your pipeline, Can you win business in the injectable market on a molecule basis, or do you really need a much larger, more representative portfolio and able to be considered attractive to the GPO buyers, which have very different needs than those of your traditional big three retail purchasers? That's the first question. Second question is just in terms of new product performance, obviously very strong year to date. Looks like it was at least 15% of the total top line at least nine months into September. Just trying to get a sense from you what you're seeing in terms of the actual base erosion. Certainly some other players have talked about accelerated erosion, volume plus price, and that definitely seems to be sort of borne out. Looking at industry metrics, you guys have been able to offset that, but I'm wondering if you're seeing some accelerated pressure on the bases.
spk08: Great. Thank you, Elliot. Good morning to you. So your first question, we've been in the institutional market since 2016, 17. We started launching our products today. We have 25 products in the institution. doing 125 million or a little bit better this year. So we're already there and we have the relationship with GPOs and there's a different sales force and led by different commercial head to actively build a relationship with institutional buyers. And, yes, the portfolio matters, the redundancy matters, and this is why we acquired ReadyMate site and not waited to build our own, which would have costed three, four years and a few hundred million dollars. So it's exactly because we got the R&D pipeline. We needed the capacity. And today, if we have to order you a new injectable line, most of these, and then the DPA. So we're really excited of how we're going to enter in. And yes, we will have a larger portfolio, multiple products, many for us to launch, complex products, all kinds of technologies, just like what we did in retail. We're committed. with the highest quality, highest R&D, and we're here to stay in injectable markets. So we will grow from 1.5 to much higher. Our aspiration is to be in top five. And it also allows us to market those injectable products into international markets, which further diversifies it. I've been answering the bays and all these answers since 2017. I'll give it to Tassos. It's the same behavior from the three buyers that they constantly look for opportunities and driving as much cost down, which is, I think, not healthy for the industry as manufacturers would have to rationalize their portfolio if this pressure continues on. low it has gone, it is very concerning. But I'll have Shadassah to explain the details.
spk07: Shadassah Khan- I just wanted to add on the injectable side.
spk09: But earlier, it's very exciting because it triples our capacity overnight, these acquisitions, and we become a value volume player. Plus, it gives us added and a very huge capacity for large parental bags, and there is a very little competition when it comes to the bags. So it gives us differentiated dosage form to enter, and we are very strong and robust pipeline into that segment. So in Injectable, we are working on a lot of complex products, including microspheres, liposomal, large parental bags, and a lot of auto-injectors, and also we have a lot of wild products and others. We are even bigger players than what we are today, and we are very excited. It's the right deal at the right price, at the right time. Go ahead, Tasos.
spk07: So I think the other part of your question was around the base business. Do you see an acceleration of the decline or not? So for us, it's been a fairly steady decline. And that is at the kind of high, I'm sorry, low double digits. So think of it as the base business declining approximately 12%. That's what we saw last year. That's what we're expecting this year. The other differentiating factor perhaps of us, if you look at that base business and you see what percentage of our generic portfolio that accounted for. Back in 2019, the base business was 93% of our revenue, of our generic revenue. This year, that part of the business will be about 64% of the business. So we have substantially decreased, right, the year-over-year headwind represented by this kind of continued downward pressure. And on the other side, as the portfolio of the rest of the business evolves to more complex, right, yes, that will become older, but because it's more complex, it's not going to be subject to the same headwinds as the traditional oral solids. So hopefully I think that does answer the question.
spk00: Thank you. Next question, please. Our next question comes from Balaji Prasad of Barclays. Balaji, please go ahead. Your line is open.
spk01: Hi. Good morning, everyone, and my apologies for missing the call earlier. Firstly, on Punishka Chirag, can you describe the facility that you're getting and the capacity, and also any particular products in the pipeline side that you would like to call out? You mentioned that you're expecting FDA site inspection and approval by the end of 2022. Is it linked to any specific products at all, or is it all site inspection? Second question on Dexamethasone. I think you, if I heard you correctly, you stated that this was a CGT designated opportunity. So can you also provide some context around revenue expectations at least the first 180 days? Thank you.
spk08: Thank you, Balaji. Chintu, would you like to explain the Punishtha's state-of-the-art facility?
spk09: Yeah. Hi, Balaji. Good morning. Puniska site is around 293,000 square feet, state of the art, recently built in last two years as a five, you know, European-made while and emulsion and the large bag lines are So it gives us capacity of around 30 to 35 million dosage forms out of that site. And that caters to our requirements all the way up to 27 as per our internal volume forecast. So that site, from the FDA perspective, they do have a product pending. We are not revealing the name of the product. They have two product pending, one while and one back product. So that gives us, it comes with 560 great people and the R&D infrastructure is separate. So it also gives us added R&D manpower and the very trained manpower for in general. So overall, it's right in our strategic move to expand our injectable. So we are very excited, and it just overnight gives us that needed capacity.
spk08: Yeah, and this is a fourth facility. So this is, we already have three facilities, one focusing on oncology, on injections, and then two others, and this is the fourth one. On dexmethadone, as we, you know, we do not provide specific product, but we love these products. niche product that we are alone for a while or two of us or three of us where we have a chance to make better gross margins than the other products. So it's a good product and every year we expect many of these products to be launched. So this is why we're not reliant on any one big launch in a year. but multiple new launches coming up. And we're also excited about the potential launch of the rest of Preston as well, as we have filed, we responded to our CRL, and we expect that in the first half of 2022. I understand.
spk01: Thank you.
spk00: Thank you, Balaji. As a final reminder, if you wish to ask any further questions on the call, please press star followed by one on your telephone keypad now. Our next question is from Gary Natchman of BMO Capital Markets. Please go ahead, Gary.
spk06: Hi, good morning. This is Dennis on for Gary. Thank you for taking my question. Just a couple from me. Lately, in the news, we've been hearing all the supply chain issues. Is there anything that you've kind of seen that you believe the supply chain issues could affect your fourth quarter or next year? And then another question on debt. You guys have been clearly lowering it. It was seven times in 2019, 5.3 times in 2020. Now we're at 4.6 times. I'm just curious, is there a number that you're looking to get into or you're achieving towards? Thank you.
spk08: Thank you, Gary. Very interesting question on supply chain issues. Yes, they are happening. We fortunately have a very robust pre-planning and our team is excellent, which is running pretty much a year out. But it's concerning. And what's concerning is the more of an inflation associated with supply chain. So there are drastic steps have been taken by china to shut down certain ksm key starting material uh input material uh the certain api facilities and that is going to cause and already we have api suppliers pretty much all of them are asking for higher price increase in cost. The inflation is here. So that is concerning on supply chain issues and certain KSM. And obviously our teams are proactively working with our partners to make sure we don't get into this On a debt, we've been saying it's under 4X as our target, and as low as we can go, that's how we like to allocate our capital, be smart about it, go on at the right time, right deal, and right price. So certain times we don't win the deals right now in the seller's market because we're not ready to pay up extraordinary prices which are in the market at this point. And we're very confident in our own organic pipeline and patiently will wait to do a right deal. But we are constantly looking for deals. So it's a very fine balance to keep going down in a leverage and still keep adding the new capacity and diversifying our business. And that's exactly what we are doing. Thank you. Thank you.
spk00: Thank you, Gary. As another quick reminder, if you have any further questions, please press star followed by one on your telephone keypad now. We have a follow-up question from Elliot Wilber of Raymond James. Please go ahead, Elliot.
spk04: Thanks. Just two quick follow-ups, I guess, first for Shinto. You talked about the Synchron issue and the alteration of the TE code to BX from AB. I guess in looking at those products, we came away with the conclusion that they were all relatively commoditized and somewhat small in terms of the markets. But if you could just maybe give us a sense of what the current revenue base of the affected products is. is within your portfolio. And then bigger picture question, there's been a very noticeable slowdown in the rate of new ANDAs coming out of the FDA, and it seems to be even more difficult to pull out complex generics. as obviously these timelines seem to get extended more and more every year. So that can both be a competitive advantage or a disadvantage. just, you know, wanted to get maybe your perspective in terms of, you know, what may be happening in the FDA with some of these more complex filings, why we're not seeing more of them, and, you know, whether or not you think that has led to or you have sort of kind of adjusted longer-term expectations in terms of the timelines in which you expect some of these key products to be approved.
spk09: Yeah, hi, Elliot. Thank you. So on Synchron, as I mentioned, that we have responded to all of the FDA queries and responded. We have used bioanalytical lab outside of Synchron. We have third-party independent audits and MNIL audit. uh very optimistic that we have done very thorough job that you know would have a positive outcome hopefully from fda i don't have a timeline that we can talk about as and when but we are working very diligently with fda uh to resolve the the ab ratings we are about eight or so products uh we do have one product which is important but we have not seen on any material impact at this time, which is Baphomet, but we have not seen any material impact at this time or a patient concern or the customer concern. Regarding the approvals, Amnil has the highest first review cycle approvals. I can say in the last three or so years or four years, we have received more than 40 first review cycle approvals. That's in around 10 months. And COVID did impact many companies from receiving approval earlier. But MNILS, because of its standard quality track record, we never had any delay associated with pre-approvals or anything else. Even our inhalation plant in Ireland, we had an online audit. And our plant, from a pre-approval perspective, is approved by FDA. Complex scenarios, it's a challenge depending on where you are. FDA is also learning many times with you as they are looking into the science and various ways of bringing these complex products. I think depending on the product, it may take longer. like on a trans-thermal and many other dosage formats, we have been working with FDA and Ophthalmics that MNIL has a very good understanding of what FDA expectations are. So we have that early mover advantage on the complex product also in the areas where we have already received approval, which is like Ophthalmics, Toradex was our recent approval, which is a very complex ophthalmic suspension product. That gives us the pathway for many more, and we'll be able to overcome FDA questions proactively. So I think you are right. There are delays. There are less approvals than the prior year. But as far as MNIL, we are getting, you know, 30 or so plus approvals every year. We expect the same next year. Few complex. There has been certain delays due to certain change in requirement or FDA's expectation. But overall, MNIL is in a better position than its competitors. Thank you.
spk00: Thank you, Elliot. Our final question comes from Greg Fraser of Truist Securities. Greg, your line is open. Please go ahead.
spk05: Great. Thanks for taking the question. Sorry if I missed this earlier, but did you comment on the outlook for new launches in the fourth quarter? And then On the injectables business, in your outlook, you're obviously expecting a lot of launches over the next few years and rapid sales growth. I'm curious if you expect some standout products to drive an outside portion of the growth, or will the growth be diversified across a broad portfolio of injectables? Thanks.
spk08: Great. Good morning. I'll take your second question first. Injectable is a similar strategy that we applied in the retail side lately, which is more complex, more diversified. the bags, as well as vials, the auto-injectors, the PFS, right? So it's a mix of products. Oncology is also added. So four different plants, redundancy is there now. So it would be more diversified and more lasting, and as well as some of those products would be good in international market, especially when it comes to products like full westerns in higher demand. and prices than United States. So, really excited on injectable business growth side. The NPL has been strong, as Tash has mentioned, for the whole year. So, we just launched a couple of small products, but they add up really good on contributions for the margins perspective. So, we'll continually launch every quarter new products, whether they're five, six, every quarter we're launching it.
spk07: That would just be even more specific. So Q3, I think we said it was about $45 million of growth. You should expect about the same level of growth versus prior year in Q4.
spk08: Thank you, Greg. Thank you.
spk00: Thank you, Greg. We currently have no further questions, so I would like to hand you back to Chirag Patel.
spk08: Yeah, thank you very much, everyone, for joining today's call. As it is, you know, this is our multiple now calls, eighth or ninth, and we're pleased with the progress, and we'll continue. We're steadfastly focused in disciplinary growing the company, and we see excellent opportunities as part of MN2.0 strategy with diversifying our genetics business, which I like to call it affordable medicine business, along with the specialty products, which is we are in a phase one of our branded strategy at this point and executing well on phase one of our, which are 505B2 products, and then we'll move up the value chain as we become really good at executing, especially the side of business. So we're excited on both, and the international expansion on affordable medicine is very purpose-driven as well, and we will keep bringing more complex products and access to patients worldwide in select markets with select partners, and some markets will be may be entering on our own ways selectively. So very excited overall and thank you very much. Have a great day. Thank you.
spk00: This concludes today's call. Thank you all for joining. We hope you have a great rest of your day. You may now disconnect your lines.
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