Lisa Wilson - Investor Relations Scott Tarriff - President and Chief Executive Officer David Riggs - Chief Financial Officer.

David Amsellem - Piper Jaffray Ashley Ryu - RBC Capital Markets Tim Lugo - William Blair & Company Irina Koffler - Mizuho.

Good morning. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Eagle Pharmaceuticals' Third Quarter 2016 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period.

[Operator Instructions] As a reminder, this conference call is being recorded on November 9, 2016. It is now my pleasure to turn the floor over to Lisa Wilson. Lisa, you may begin..

Thank you, Erica. Welcome to Eagle Pharmaceuticals' third quarter 2016 earnings call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. With me on today's call are Scott Tarriff, President and Chief Executive Officer; and David Riggs, Chief Financial Officer.

This morning the Company issued a press release detailing financial results for the three months ended September 30, 2016. These can be accessed through the Investors section of the Eagle website at eagleus.com, and you can also access the webcast of this call from there.

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 this call; you will find the dial-in information in today's press release. The archived webcast will be available for one year on our website eagleus.com. For the benefit of those who may be listening to the replay our archived webcast, this call was held and recorded on November 9.

Since then, Eagle may have made announcements related to the topics discussed, so please reference the Company's most recent press releases and SEC filings. And with that, I'll turn the call over to Eagle's CEO, Scott Tarriff. .

Well, thank you, Lisa, and good morning, everyone. This was yet another exciting quarter for Eagle with important development and milestones that ensured the continued growth, success and sustainability of our future. Bendeka market share continues to ramp with 88% of the market now converted.

Teva and Eagle continue to share the goal of achieving a 90% plus market share. With the recent announcement that CMS is granted a unique J-Code for Bendeka, now have more certitude about the significant earnings potential of Bendeka well beyond 2019.

We have six patents issued and listed in the orange book, extending from 2026 through 2033 including the 2026 patent that Teva hold. This patent is already been found to be valid at the district court level, and has survived two IPR challenges. We will also receive $40 million milestone and our royalty rate will increase from 20% to 25%.

We have a great relationship with Teva and have extended our licensing agreement to include some territories outside the United States and Canada. We received an upfront payment of $1.75 million on signing this extension and we will receive a royalty on the net sales of 20% as Teva enters each additional country.

We are also pleased to report initial positive data from our study with NIH evaluating Ryanodex in Ecstasy induced hyperthermia consistent with result of our clinical work with Ryanodex for the treatment of exertional heat stroke.

We look forward to reporting further result from our ongoing animal study for EHS to support the submission of our rolling NDA for Ryanodex with the FDA shortly.

If the outcomes of the animal study prove successful, we anticipate requesting priority review and have the potential to be the first drug on the market to treat -- for the treatment of exertional heat stroke as early as next summer.

If approved, we are hopeful of being the first to market with the potentially life saving treatment option for exertional heat stroke next year. As many of you know, we will host our first Investor Day this Friday, November 11 at the Pierre Hotel, where we look forward to sharing more details about our pipeline.

Lastly, I'd like to point the strength of our financial performance during the quarter. We reported revenue of $37.8 million, earnings of $0.73 per diluted share, cash and receivables of $106.4 million and no debt. We are very focused on optimizing the deployment of our capital on behalf of shareholders and continue to evaluate opportunities to do so.

As part of that effort, through the end of the quarter, we repurchased a total of $32 million in shares as part of our stock buyback program of which $18 million was in the third quarter. With this as background I'd like to turn the call over to David to update you on our third quarter financial results.

David?.

Thank you, Scott. For the third quarter of 2016, our revenue as Scott just mentioned, totaled $37.8 million, compared to $5.7 million in the third quarter of 2015. The revenue mix consisted of product sales, royalty revenues and license and other income.

Overall, total product sales reflecting all of Eagle products increased $4.5 million to $7.8 million during the quarter as a result of $2.2 million in net product sales from Bendeka, $1.2 million in sales of Ryanodex, $1 million in net sales of Docetaxel, and increases in net sales of Argatroban offset by a decrease in diclofenac-misoprostol sales.

Royalty income increased $23.8 million to $26.2 million, compared to $2.1 million in the prior year quarter as a result of the launch of Bendeka. We recorded license and other income of $3.8 million during the third quarter of 2016 with no amount to the same quarter in 2015.

R&D expenses were $3.2 million in the third quarter of 2016, compared to $6.9 million for the same quarter of the prior year.

The $3.7 million decrease resulted from certain cost reimbursements from one of our suppliers non recurrence of project spending for Ryanodex for exertional heat stroke related to the completion of the clinical treatment portion of the safety and efficacy study and lower project spending from Pemtrexed offset by the increase in project spending for EP-6101 by bivalirudin, and other projects and higher personnel related expenses due to increased headcount.

SG&A expenses were $11.9 million in the third quarter of 2016, compared to $5.5 million in the prior year’s quarter. Personnel-related expenses accounted for the bulk of the $6.4 million increase and were due to overall expansion of the business. We expect sales and marketing expenses in 2016 to ramp up as new product launches begin and gain momentum.

Net income for the three months ended September 30, 2016 was $12 million or $0.77 per basic and $0.73 per diluted share as compared to a net loss of $10.2 million or $0.65 per basic and diluted share in the three months ended September 30, 2015. On August 9, 2016, the Board of Directors approved a share repurchase program of up to $75 million.

As Scott mentioned, we repurchased $18 million during the quarter and the total of $32 million since the program was approved. We believe this reflects the best use of our growing cash position at this time in best interest of shareholders.

We closed the quarter with $59.3 million in cash and cash equivalents, $47.1 million in receivables with approximately $30.9 million due from Teva and $206.5 million in additional paid in capital. With the J-Code decision, the company's royalty rate has increased from 20% to 25% on Teva's US sales of Bendeka, effective November 1.

In addition, we will receive a milestone payment of $40 million. Finally, we believe we will reach the accumulative sales milestone in January of next year, entitling us to another $25 million milestone payment. Altogether, we expect to receive approximately $100 million one more from Teva over the next few months.

We had $105.5 million in stockholders equity as of September 30, 2016. And with that I'll turn it back over to Scott. .

Well, thank you, David. I am very proud of our team for the progress we made so far. We expect to see continued progress on multiple fronts in the coming weeks and months. We build the solid foundation and are focused on execution and we believe the Eagle is well positioned to deliver growth well beyond 2020.

We look forward to welcoming all of you to our first Investor Day on Friday, November 11 at the Pierre Hotel when we will share more details on Ryanodex and our pipeline. Thank you for your support and for joining us this morning. I am pleased to answer any questions you may have. .

[Operator Instructions] And we will go first to the line of David Amsellem from Piper Jaffray. .

Thanks. So just had a couple questions.

So on the Bendamustine franchise, now that you have the J-Code in place, how do you think about the potential role of the big bag over the long term or even near term? Teva hasn't switched the entire market so is there potentially a role near term or do you envision launching the big bag after generics on the lie-off product into the market in the late 2019.

So maybe just give us a lay of the land and how are you thinking about big bag? And then secondly, in terms of capital deployment I mean you are generating quite a bit of cash.

So I wanted to get your thoughts on potential acquisitions, assets that you are looking at that where you can leverage your hospital infrastructure and how much of a priority that is in the near term. Thanks. .

Thank you, David. Appreciate it. So big bag, let's step back for a second and review where we are. We now have almost 90% share. We have 88% and we are committed to seeing that grow. We have faith that Teva will continue to grow that market share.

Now we have the J-Code, I think it is safe to say that we have an asset with a very long tail probably well beyond 2020 with the way reimbursement works. And in the virtue of the product which is so wonderful. And so now you are looking at having the value of that franchise probably into 2026 and maybe well beyond that.

Our royalty just went up to 25% of net sales. The last week is really a sea change in the value of Bendeka to us and we are just thrilled. And we are sitting here with big bag which obviously still has value and could provide some additional value to the company.

But we have to be very strategic and we need to determine exactly what we are going to do with it. And I can't tell you that as of today we have a clear response for you and answer as to the big bag. And the reason for that is we are absolutely thrilled with the way things are worked out for us, thrilled with the relationship with Teva.

And very satisfied with how this all worked out. And so for now we are -- where we are with the J-Code -- we will continue to monitor the situation over time. .

Scott before you get to the M&A question, just to be clear, your contractual rights regarding big bag do not change as a result of the J-Code right? I mean you still have the right to launch it whenever you like per the contract? That hasn't changed?.

Yes. That's correct, David. We still have the right to launch big bag today if we wanted to contractually. Those terms are not altered with the J-Code. Right, and while we are on the topic obviously we are also thrilled about expanding the territories with Teva.

They are now bringing Bendeka to several additional countries over the years where we will enjoy milestone payments and royalties from that as well. So we are pretty, I mean we are just really very, very pleased with where we are. How things turned out over the years with Bendeka.

On the capital side, you are correct, we are building we are very nice cash. We have a significant amount of receivables now coming into the company. We have the $40 million payment from Teva as David mentioned. We think we hit that next sales milestone probably first half, middle of January, that's $25 million that will be coming to us.

The royalty rate for Bendeka I just mentioned went up during the quarter during Q4 when the J-Code occurred. So we get that extra 5% as well. We have been buying back our stock. We have a $75 million stock buyback, we are at about half way, and we are still very bullish on purchasing our stock.

And you are right with the fact that we have absolutely no debt completely unlevered, we are commercial organization and we have this cash flow coming. And we are -- we are looking at potential acquisitions. We are looking at acquisitions on the product side.

We are looking at ways to improve our capabilities here to company and as we come to conclusion of how to deploy capital we obviously let everyone know but take solace in the fact that we are very, very focused, very focused on building shareholder value and that's our first and foremost objective. .

We will go next to Randall Stanicky from RBC Capital Markets. .

Thanks. Good morning. This is Ashley on for Randall.

Scott, as we discussed now that you have the unique J-Code and greater visibility on cash growth kind of beyond 2019, where do you see its potential for share beyond 2019? And do you see an opportunity to take price?.

I am sorry. I missed the question.

Can you repeat it please?.

Sure.

Where do you see potential for share beyond 2019 given the decision and do you see an opportunity to take price?.

Sure. So market share and price right. The market share is really very important. And so our view of the process is really twofold. The one the way the drug is reimbursed. Two, the product attributes. And we continue to hear very positive feedback about how the drug is being received by patients and by physicians.

And we just believe that over time as the drug is being used the product attributes will separated from generic trend, and that the reimbursement is well will provide an opportunity to see that through. And so our view is solidifying on the J-Code.

But I think it's safe to say at this point that we will maintain a significant portion of that market post 2019. Certainly the majority of the market, we are very enthusiastic about the value of the product post 2020. And I think as time goes by we'll have more specific number for you in terms of market share.

But we think that market share is significant and high. And so that's the sea change that we had in the company here over the last week. The fact that the value of Bendeka well beyond 2020, hopefully to 2026 and then maybe 2033 will continue to be a significant opportunity and profit driver for this company for many, many years to come.

In terms of price, that's really a Teva situation. They have all of the responsibility for handling price. We don't get involved in that. So I think that's the question for them.

Remember, too, as part of the J-Code here, we given up our ability to take the drug back in generic trend is come to the market that was the trade off with the $40 million and the extra 5% because we feel so confident in the product that the reimbursement we think Teva the innovator for all these years and with the 88% share that they have, are best positioned to continue to grow this opportunity for us for many, many years to come.

.

Thank you. [Operator Instructions] We will go next to the line of Tim Lugo with William Blair. Please go ahead..

Thanks for taking my question. Maybe we could start with the MDMA study. It looked positive.

Should we expect that you'll run a clinical human study in 2017? And also, could you update us on the timing for the methamphetamine study and maybe the gating factors for EHS filing?.

Yes, hi, Tim. Thank you. So we will update everything that you are asking now in more detail on Friday. We expect to spend quite a bit of time on all of these questions on Friday. But just to give you a quick overview, we will be meeting with FDA to discuss the path forward on ecstasy.

Really looking forward to having that meeting with them now that we have this date and we will share more again at the meeting. The methamphetamine piece is starting now with NIH. We elected to do ecstasy first, get that out of way, take a look at it, learn from the study design and then move into meth. So that's starting.

We will get those results out to you reasonably quickly. Let's see what's happens. We don't expect to see much of a difference between the meth piece and the ecstasy piece. So everything seems to be consistent with what we've seen with brain hyperthermia across MH really, EHS and amphetamines both meth and ecstasy so that's all tracking well.

And exertional heat stroke, we will also provide an update on Friday. But that's all moving as planned. .

Great. I am looking forward to the update on Friday. I guess then just going back to financial. Can you maybe talk about the build out of the company in 2017? Your expenses looked a little light this quarter, but I assume you are going out to invest in Ryanodex for next year.

Can you give us on a high level just when does that build out occur and maybe the magnitude of that build out?.

Hi, Tim. This is Dave. Yes, well, you can expect to see a build out, we are working on those numbers right now. It should be thought out as a traditional branded product launch which requires significant investment.

And being responsible business guys we are focused very much on the right time to add expense applied against the D&L, and right now though the plan is to be prepared to launch Ryanodex in the exertional heat stroke market in summer hopefully earlier rather than later. .

And Tim I would add to that as well. I do believe Friday is important day because we will spend a tremendous amount of time with everybody going through the medical side of Ryanodex, the clinical side and really spend the good amount of time with everybody on the marketing plans, the size of the market and the opportunity.

And I believe we'll be in better position to speak to how we plan on handling what is hopefully a 2017 launch of the exertional heat stroke and then let see how the FDA meeting goes now and start working on our future launch for drug induced hyperthermia. But I do believe the size and scope of the opportunity will become more clear in two days.

And then we could probably have a good healthy discussion about our marketing plan just see glimpse into our public relations and marketing plans on Friday. And we are excited about sharing it with everybody. .

[Operator Instructions] And we will go to Irina Koffler from Mizuho. Please go ahead..

Hey. Thanks for taking my questions. I have a bunch. Scott, can you comment on just the overall trends in Bendeka and the market? Maybe break out the actual royalty on Bendeka? And then another financial question I had was the R&D refund. Can you go through that a little bit in more detail? I think there was something like that last quarter.

Just wondering if it is a recurring expense.

And finally, do we have any updates on Kangio?.

Yes. So thank you, Irina. So first the trend in Bendeka, as we've mentioned before as we look at Bendeka, it is about a flat market. Our internal forecast or maybe it is down a little bit in volume, maybe a little up in volume. And the quarters ebb and flow, they are not consistent.

Some quarter will be higher, some quarters will be lower but when you look at Bendeka over four quarters, six quarters and eight quarters, it has been somewhat flat on a volume standpoint maybe down a little bit. And so we think that trend is just going to continue.

And now that we have the increase of the royalty from 20% to 25%, you'll certainly see a significant pickup in our revenue 2017 over 2016 as our share continues to grow and our royalty increases. Kangio, we plan on giving an update on Friday as well. So nothing new there.

And I don't think we can go into the R&D refund piece today but maybe at some point we will be able to go into some details on that. .

But it is non- recurring. .

And at this time it appears we have no further questions. So I'd like to turn it back over to Scott for closing remarks..

Well, thank you everybody. Really do appreciate everybody spending time with us this morning. It really was a very meaningful quarter for us, moved a lot along very positively and we are very, very much looking forward to our first ever Investor Day on Friday, and speaking to everybody thereafter. So thank you again. We all appreciate it. .

We'd like to thank everybody for their participation on today's conference call. Please feel free to disconnect your line at any time..