Scott Tarriff - President and CEO David Riggs - CFO David Pernock - President and Chief Commercial Officer Adrian Hepner - EVP and Chief Medical Officer Lisa Wilson - IR.

David Amsellem - Piper Jaffray Randall Stanicky - RBC Capital Markets Tim Lugo - William Blair.

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' Fourth Quarter and Full Year 2016 Earnings Results Conference Call. 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. [Operator Instructions]. As a reminder, this conference call is being recorded, Today, March 1, 2017. It is now my pleasure to turn the floor over to Lisa Wilson. Ma’am, you may begin..

Thank you, Erica. Welcome to Eagle Pharmaceuticals' fourth quarter and full year 2016 earnings call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals.

With me on today's call are Scott Tarriff, Chief Executive Officer; David Pernock, President and Chief Commercial Officer; David Riggs, Chief Financial Officer; and Adrian Hepner, Executive Vice President and Chief Medical Officer.

This morning, the company issued a press release detailing financial results for the three and 12 months ended December 31, 2016. This press release and a webcast of this call can be accessed through the Investors section of the Eagle Web site 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 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 Web site, 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 1, 2017.

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..

Thank you, Lisa, and good morning, everyone. In 2016, we significantly enhanced Eagle’s long-term value. It was a transformative year and I’m pleased to report that we continue to see significant momentum in our business.

Our revenue grew 186% to 189.5 million and fully diluted EPS grew to $4.96 per share largely due to our ready-to-dilute bendamustine product, Bendeka. Launched in January of 2016 with our commercial partner Teva, Bendeka now commands a 92% share of the bendamustine market, exceeding our joint goal of 90%.

We are pleased with Teva’s ability to rapidly convert the market with Bendeka and expect it will continue and which will contribute significantly to our financial performance for many years to come, a driver of growth in 2017.

Earlier in the year, Teva provided Bendeka guidance of $600 million to $660 million for 2017, which did not include an increase in products. While their fourth quarter results were at the low end of the range from what we see so far this year, we are comfortable with their range and realize that we are only eight weeks into the quarter.

But as of today, Bendeka net sales during these first eight weeks are running ahead of the first eight weeks of last quarter. And don’t forget we have a full quarter of a 25% royalty compared to 20% last quarter. In Q4 of last year, we received a $40 million milestone payment for the J-code and $29 million in royalty.

This quarter, we have now qualified for a $25 million sales bonus triggered by cumulative Bendeka sales reaching $500 million since its launch. To-date, we have earned a total of $110 million in milestones related to Bendeka.

There is significant cash flowing to Eagle from this relationship and we’ll shortly discuss how we’ve elected to put our growing cash position to work, while we continue to focus on investing in our future.

With the CMS decision to issue unique J-code, which went into effect in January of this year, outpatient facilities and physicians that administer Bendeka now have reimbursement coding clarity which we believe will make it easier for patients to access the product and support further growth in market share.

This, combined with 14 issued or allowed patents protecting our Bendeka portfolio to-date, 11 of which have been issued, 10 of which are Orange Book listed and the successful outcome to a legal challenge to 1 of the 10, we believe the hurdle for any ANDA challenger is high.

And as we continue to file additional patents, the patent protections for the Bendeka family of products will continue to strengthen. Therefore, we expect a long life cycle for Bendeka supported by its multiple benefits to patients and providers and protected by a growing patent portfolio extending from 2026 through 2033.

We also made significant progress this past year to advance our pipeline. Our most significant near-term opportunity is in expanding the Ryanodex label to include indications for the treatment of exertional heat stroke and Ecstasy and metamfetamine intoxication.

As approved today, Ryanodex for malignant hyperthermia is a solid component of our portfolio. Our sales force of only about 12 people continues to increase Ryanodex’s share of the dantrolene market substantially. In 2016, sales increased 92% to 11.7 million compared to 2015.

Physicians understand this benefit in treating malignant hyperthermia which we believe will gain adoption of future Ryanodex indications if approved. We are confident in the growth of the molecule especially since we will be quadrupling our sales force from 12 reps to approximately 50 reps.

In January of this year, we completed the NDA submission for Ryanodex for EHS and we requested priority review for this severe and debilitating condition that can cause long-term neurological impairment and organ damage for which there is no approved drug treatment currently available.

If grated, as anticipated, the PDUFA date for a decision on the NDA would be July of 2017, later this year. If Ryanodex is approved for the treatment of EHS, we could be the first to market with a potentially transformational therapy for the treatment of EHS in emergency settings that ameliorate brain damage and organ impairment.

David Pernock will address our commercialization plans in more detail shortly. Remember, we believe EHS is significantly underreported and there may be approximately 75,000 cases of EHS annually in the United States. Beyond EHS, we also made progress exploring the potential Ryanodex to treat Ecstasy and methamphetamine intoxication.

Clinical studies are currently underway at the NIH. In December, we had a positive pre-IND meeting with the FDA during which the FDA suggested broadening the indication to evaluate severe organ dysfunction and damage. Planning and execution of a pilot clinical study is underway.

We anticipate beginning a pilot study as soon as possible followed by a pivotal study starting in Q4 of this year. Both opportunities address debilitating conditions in sizable populations for who no drug treatment options are available today.

We are pleased that we were able to reduce our royalty obligations for Ryanodex from 15% all the way down to 3%. This will enhance our future earnings on the product. In 2016, we also acted to identify longer-term opportunities to replicate our successful product development and commercialization strategy.

We are working on an innovative formulation of fulvestrant and are very proud of the work we are doing here. This is Eagle’s first product completely developed in-house, showcasing our formulation and clinical knowhow. The currently marketed formulation requires two large IM injections to deliver the monthly recommended dose.

It contains castor oil and a warning has been added to the label concerning painful injections, sciatica, neuropathic pain and peripheral neuropathy. The injections can last 1 to 2 minutes each. Our unique formulation contains no castor oil and only requires one monthly injection allowing for alternating the injection site every month.

Therefore, our belief is that we can eliminate the current warning in the label by conducting the appropriate clinical trial. As a result of these improvements, we hope to achieve the unique J-code just like we did with Bendeka. We filed an NDA for our ready-to-use Pemetrexed in formulation in December which was just accepted for filing.

It has a PDUFA target date of October 30 of this year. Importantly, we also established a foothold in the biologics space with our acquisition of Arsia Therapeutics renamed now Eagle Biologics. Our plan to partner with key biologic innovators and biosimilar companies to improve their existing pipelines into biobetters.

You will hear more about biologic strategy over the course of the year. In addition to building our product portfolio, we are focused on optimizing our strong financial position. We acted to accelerate spend in R&D and SG&A during the fourth quarter where it made sense so that we would be better positioned for 2017 and '18.

At the end of 2016, cash and cash equivalents were 52.8 million, accounts receivable were 42.2 million. We remain debt free and we repurchased approximately $37 million of Eagle stock. And since commencing the program authorized in July of '16, Eagle has purchased more than 722,000 shares totaling approximately $48 million or over 4% of our stock.

To answer the question of what we are doing with our cash, we are accelerating our R&D where possible and buying back our stock. If our R&D continues to perform as it has, then our stock buyback will prove to be even more positive. We plan to remain focused on shareholder return and believe we have been very good stewards of our cash.

Our average purchase price is slightly more than $66 per share and we are quite pleased with our investments. I’d like to also mention that as Eagle builds an attractive portfolio of injectable assets that address a large market opportunity, we continue to strengthen our management team.

I’m very pleased that David Pernock, a long-time business partner and friend and industry leader with exceptional commercial track record of bringing blockbuster drugs to the market, has transitioned from our Board of Directors to lead our commercial team as President and Chief Commercial Officer.

David has hired team members with extensive industry experience to assist in the launch of Eagle products. With Mike Moran and Sherry Korczynski reporting to David along with the extended team, I am very confident that Eagle will be well positioned to commercialize our products, beginning with Ryanodex for exertional heat stroke if approved.

As we move through the rest of the call, you’ll hear from David Riggs, our CFO about our performance last quarter and during the year including the accelerated and nonrecurring expenses in Q4 and expense guidance for 2017. David Pernock will then discuss the upcoming EHS launch and Adrian Hepner will discuss our clinical activities.

Before I turn the call over to them, let me leave you with a few thoughts about this year. We believe 2017 will be another transformative year for the company. We expect to have another strong quarter here in Q1. Bendeka royalties are running ahead of Q4 and we have earned a $25 million sales milestone this quarter.

We expect to have a 50-person sales team to support EHS if approved and other products as they become market ready. While our R&D focus in 2016 was on formulation development, we’re now shifting our R&D efforts to a clinical focus. Our in-house formulation team will continue to deliver results with the development of Pemetrexed and fulvestrant.

Adrian’s team is preparing to run up to four clinical studies this year as we continue to build our pipelines and secure our future.

This includes fulvestrant, the Ecstasy and met intoxication as a third indication for Ryanodex, the lead product that we are developing in conjunction with AMRI and potentially a fourth study that you’ll learn about as the year progresses.

With that, I’d like to turn the call over to David Riggs, our CFO, to update you on our fourth quarter and full year financial results.

David?.

Thank you, Scott. I’d like to start by pointing out that after we received the great news on the J-code for Bendeka, we were in the $40 million milestone, we decided to accelerate spending in both R&D projects and sales and marketing activities.

This spending amounted to approximately $15.6 million for the quarter and brought total operating expenses for the year up to our previously given expense guidance of $80 million to $84 million. Now I’ll go into the detail. For the fourth quarter of 2016, our revenue totaled $81.1 million compared with $18.2 million in the fourth quarter of 2015.

The revenue mix consisted of product sales, royalty revenue and license and other income. Overall, total product sales reflecting all Eagle products increased $6.2 million to $9.1 million during the quarter, driven by net sales of $3.9 million in Ryanodex, $1.7 million in Bendeka and $1.5 million in Docetaxel.

Royalty income increased to $32 million compared to $312,000 in Q4 '15 due to the launch of Bendeka. License and other income during the fourth quarter of 2016 increased to $40 million compared to $15 million in 2015, again due to Bendeka.

We received a $40 million milestone payment from Teva in Q4 of 2016 related to the new J-code and $15 million in Q4 of 2015 related to receiving the approval for Bendeka from FDA.

For the year, total revenue increased 186% to $189.5 million consisting of $40.6 million in product sales, $99 million in royalty revenue and $49.8 million in license and other fees. On the expense front, R&D expenses for the fourth quarter of 2016 were $16.7 million compared to $8.8 million in the fourth quarter of 2015.

The $7.9 million increase is due primarily to the increase in spending on fulvestrant and other accelerated and nonrecurring expenses. Keep in mind historically our average R&D expense, excluding the employee expenses, during the first three quarters of 2016 was approximately $5 million a quarter.

Approximately $12.3 million of this $16.7 million in spending during the fourth quarter was related to accelerated and one-time expenses to advance our programs with $4.4 million in other R&D expenses during the quarter. This puts us in line with our average quarterly R&D spend.

In the fourth quarter, we elected to accelerate R&D spending on fulvestrant, a molecule we believe has significant value recording $5.1 million in development spending. As a result, we now have much of the development costs out of the way. Our fulvestrant spending in 2017 will largely be related to running the clinical study.

Registration batches associated with the product will be reflected, however, in our Q1 numbers. In Q4, we recorded $1.5 million of nonrecurring filing fee expenses related to Pemetrexed. We spent $3.1 million in the fourth quarter to accelerate a project with AMRI moving the lead product forward.

And lastly, we recorded a one-time $2.3 million raw material write-off from one of our development projects. For the year, R&D expense was $30.3 million compared with $27.9 million in 2015. Looking ahead to 2017, we expect our yearly R&D spending to be essentially flat.

The maturity of our R&D spend will shift from formulation development to clinical expense as we move the company to a more robust and clinically focused commercial organization. We may run as many as four clinical trials this year, as Scott mentioned.

The nature of R&D expense in 2017 will be substantially different from that – the $30 million was spent in 2016. We nevertheless plan to be in the range of $31 million to $35 million in 2017. This includes $3.5 million to $4 million earmarked for our biologics division.

If we opt to run additional clinical studies during the year, R&D spending may increase. That will become clear as the year progresses. Back to our 2016 expenses; SG&A was $17.4 million in the fourth quarter of 2016 compared to $5.6 million in the prior year’s quarter. G&A remained essentially flat for the quarter.

Sales and marketing expenses and personnel-related expenses accounted for the bulk of the $11.8 million increase and grew largely in accordance with our pre-launch activities for Ryanodex for EHS. Here again we are able to utilize our growing cash position to accelerate $3.3 million in spending from Ryanodex for EHS marketing activities.

For the year, SG&A expenses increased to $52.3 million due to overall expansion of the business. For 2017, we expect SG&A to be in the range of $65 million to $68 million, a $13 million to $16 million increase. In 2017, as we’ve mentioned before, we don’t expect to renew the Spectrum contract when it expires in July.

The money we save will not be a complete offset but will be a substantial one against the cost of building our own sales force as we prepare for the launch of Ryanodex for EHS. We expect that even with launch expenses, our Ryanodex franchise will have a positive P&L effect in 2017.

As you saw in our fourth quarter results, sales of Ryanodex for malignant hyperthermia were $3.9 million. We think this market still has room to grow particularly as we expand our sales force from 12 to 50 people. We anticipating stocking for MH and EHS in 2017.

Even with added expense for our internal sales force, we expect Ryanodex to have a positive P&L effect and we are setting ourselves up for a very good 2017. I’d like to point out that included in operating expenses in 2016 is approximately $10 million related to stock-based compensation expense. That’s a 140% increase over the same period in 2015.

We estimate that stock-based compensation expense will increase to approximately $15.5 million in 2017. Next, let’s talk about our changing tax landscape which affected both fourth quarter and full year 2016. For the full year, the company recorded a net tax benefit of $28 million.

Included in this amount is a reversal of our valuation allowance which has been carried against the company’s net deferred asset consisting primarily of net operating losses. Based on our current profitability expected in future profits, we believe it is likely that these tax numbers will be utilized.

As I have previously said, the company expects to be a taxpayer going forward. As a U.S. company, we expect to record tax rates at statutory rates. Earnings before taxes in the fourth quarter of 2016 were $20.3 million.

The net tax benefit for the quarter was $29 million which brings us to Q4 2016 net income of $57.3 million or $3.75 per basic and $3.52 per diluted share compared to net income of $1.2 million or $0.08 per basic and $0.07 per diluted share in Q4 of 2015. Earnings before taxes for the year was $53.

4 million and the net tax benefit for the year was $28 million. This brings us to net income of $81.5 million or $5.24 per basic and $4.96 per diluted share compared with net income of $2.6 million or $0.17 per basic and $0.16 per diluted share in 2015. On August 2, 2016, the Board of Directors approved a share repurchase program of up to $75 million.

As Scott has said previously, I’ll add a little bit to this. We repurchased $19 million during the fourth quarter of 2016 and a total of $37 million throughout the end of 2015. We’ve now repurchased approximately $48 million or over 722,000 shares of stock.

We believe this reflects an effective use of our growing cash position and it is in the best interest of shareholders. We ended 2016 with $52.8 million in cash and cash equivalents, $42.2 million in receivables with approximately $31.1 million due from Teva.

And don’t forget we have a $25 million milestone payment due from Teva related to the Bendeka sales milestone. Thank you. With that, I’ll turn it over to David Pernock..

Thank you, David. I’m very pleased to be on the call and my role in Eagle as President and Chief Commercial Officer. As an Eagle Board member, I became deeply involved in the company’s pipeline and prospects which made a decision to take this position straightforward.

I am confident in Eagle’s future and glad to be onboard in this capacity to ensure a successful commercial launch for our next product Ryanodex. We are working diligently to prepare for our first self-launch product which if approved will be first in class and the only drug in the market for treatment of exertional heat stroke.

There is a high clinical need in the market. We believe that if approved by the FDA, our Ryanodex formulation for exertional heat stroke will feel that need. Ineffective treatment can lead to severe neurological complications and even death. As many as 30% of patients with exertional heat stroke experience long-term neurological damage.

With Ryanodex once approved, we believe practitioners will be able to treat heat stroke patients from the inside out. We know that the brain heats up faster than the body and is more likely to have sustaining damage from exertional heat stroke. Elevated temperature can lead to calcium dysregulation that lead to cell damage and cell death in the brain.

We believe our formulation by modulating the ryanodine receptors in the brain which are intracellular calcium release channels may contribute to restoring calcium homeostasis, arresting the excitotoxicity cascade and ameliorating brain damage. We know that external cooling methods alone are not sufficient to shutoff the receptors.

Our goal is to help protect patients from a long-term impact of exertional heat stroke by including Ryanodex with the current standard of care. To accomplish this, we plan to increase our internal sales force to 50. We’ll be targeting the top 2,500 hospitals and the military.

We also plan to work with large major influencers and stakeholders to change treatment guidelines and protocols. Medical education will play a significant portion of what we do to inform the market. Cooling, while important is clearly not enough, more must be done.

We will be launching a public relations campaign to raise awareness that a drug option is available to treat exertional heat stroke. Let me just remind you that we submitted the product to the FDA in January. We’re awaiting FDA approval and are hopeful for a decision in this July. I am proud to highlight that Dr.

Julian Bailes is a driving force who shed light on the issue of concussion in the NFL is now working with Eagle in an advisory role. His efforts formed the basis of the movie Concussion which described a devastating impact of brain injury suffered by football players. Many of those afflicted by EHS are young athletes in the prime of their lives.

And as I said a moment ago, those that survive EHS attacks often have brain damage. Dr. Bailes is passionate about the negative impact of EHS on the brain and we are fortunate that he will serve as a consultant at Eagle as we work to raise public awareness of this condition.

This is an important product for Eagle with the potential to be a significant addition to our portfolio. As David Riggs mentioned, with the Spectrum sales force deal ending here, we expect our direct sales expense as we build our team to be substantially offset by that savings.

With additional expenses largely attributed to our direct marketing efforts. This is an important launch for Eagle demonstrating our ability to commercialize products without partnering and we also plan to allocate the necessary resources to ensure its success.

We believe that building our own internal commercial team of approximately 50 builds strength in the marketplace and open new opportunities for the future. To sum it up, there’s a clear unmet medical need with life threatening consequences. We believe we have the right product candidate to fit that need.

We are building the organization for a successful launch in anticipation of approval. We believe Ryanodex has the potential to treat MH, EHS and other hyperthermic conditions including those induced by drugs such as Ecstasy and methamphetamines. But more importantly, our Ryanodex portfolio will be profitable this year.

I look forward to updating you on our progress throughout the year. With that, I’ll turn the call over to Adrian who will discuss some additional pipeline opportunities..

Thank you, David. As Scott and David mentioned, we are also exploring the potential for Ryanodex in treatment hyperthermia induced by Ecstasy and methamphetamine intoxication, which may lead to neurological complications and brain injury.

This will be a very important self-indication for Ryanodex as over 125,000 emergency room visits annually are related to Ecstasy and meth use just in the United States. We are working jointly with the National Institute on Drug Abuse, part of the National Institutes of Health in our effort to address this growing public health problem.

NIDA began a pivotal animal study during the summer of 2016. Initial data shows that animals with Ecstasy-induced hyperthermia treated with Ryanodex had a greater decrease in brain temperature compared to animals treated with the control only. We are very encouraged with the results and filed a pre-NDA meeting with the FDA in December.

In the meeting, the FDA suggested expanding the indication to evaluating severe organ dysfunction and damage such as renal and liver impairment in patients with MDMA and methamphetamine intoxication which we plan to do.

It’s important to keep in mind that while the ryanodine receptors play a major role in the brain, these receptors are also widely found throughout the human body. We do not believe a full clinical trial will be required to support the efficacy of Ryanodex for this indication.

At this time, we are planning a pilot clinical study to maximize the strength and quality of our pivotal trial. We anticipate that a single robust control and well powered clinical trial may be sufficient for filing the NDA. A pilot study will start as soon as possible with a pivotal study anticipated to begin in the fourth quarter of this year.

As Scott and David noted, we have also advanced our trial to develop an innovative formulation for fulvestrant for use by breast cancer patients. The currently marketed formulation requires two large intramuscular injections to deliver the monthly recommended dose.

It contains castor oil and a warning has been added to the label concerning painful injections, sciatica, neuropathic pain and peripheral neuropathy. The injections can last 1 to 2 minutes each. Our unique formulation contains no castor oil and only requires one monthly injection allowing for isolated injection sites every month.

Therefore, our belief is that we can eliminate the current warning in the label by conducting the appropriate clinical trial. Our innovative formulation and simplified dose regimen may offer competitive improvements for the market to convert. And this product could be an important addition to the long-term value of our business.

These are just two of the products we are balancing. We look forward to updating you on our progress throughout the year. With that, I will turn the call back to Scott..

Thanks, Adrian. In my opening remarks, I indicate that 2016 was an important year for Eagle. Market share grew and Bendeka now holds a 92% share of the bendamustine market. We achieved major milestones and just met another, surpassing 500 million in cumulative Bendeka sales since launch.

We strengthened our IP with a total now of 14 issued or allowed patents. We accelerated development of fulvestrant. We submitted an NDA for Ryanodex for exertional heat stroke and initiated studies with the NIH for Ecstasy and meth intoxication. We submitted an NDA for Pemetrexed which has been accepted for filing by the FDA.

We entered into the most attractive drug market in the world with the formation of Eagle Biologics and we managed our money and maximized shareholder return by accelerating to expand in Q4 and repurchasing our stock. As we look at the year ahead in 2017, we are poised to be even more significant than in '16.

Bendeka will continue to be a solid contributor to our earnings with an additional $25 million in milestone payments from Teva reflecting in our performance this year. We anticipate an FDA decision on two NDA submissions; Ryanodex for EHS which could be as early as July and Pemetrexed with a PDUFA date of October 30 of this year.

We will be scaling our commercial organization to prepare for its first self-launched commercial product if approved. We will pursue opportunities to apply the Eagle model to the growing field of biologics by improving delivery and partnering with an innovator or with those developing biosimilars.

And importantly, we have additional pipeline opportunities that we will discuss as the year progress. I am very proud of the work our team has accomplished in creating products that improve people’s lives and deliver value to our shareholders. I’m very more excited about the additional value in our pipeline that we plan to unlock in the coming months.

Thank you for your support and for joining us this morning. Operator, please go ahead and open the line for questions. Thank you..

Thank you. [Operator Instructions]. We will take our first question from the line of David Amsellem with Piper Jaffray. Please go ahead..

So a few questions here; first, on Ryanodex on the clinical program in drug-induced hyperthermia.

Can you provide, and maybe it’s too early to do this but can you provide details on what the design of a controlled pivotal trial will look like? And then secondly on Pemetrexed, is it your expectation that you’re going to get sued by Lilly and maybe walk us through how you’re thinking about that from a legal perspective? And then lastly, I know we asked these questions a lot but this is on the big bag.

I haven’t asked it in a while but any plans there regarding the big bag on bendamustine and is that something that may be in the cards down the road? Thanks..

Hi, David. Thank you very much. Let me take your questions if you don’t mind in reverse order. Look, big bag; we’re thrilled with how it’s doing. 92% share of this market exceeds our expectations. We started out slow. We were hoping for 80%, then we moved the target up to 90% and now we’re at 92 and quite frankly we think it’s going to continue to grow.

They’re doing everything that we asked for; great partners. The product is building well. The feedback that we’re getting from patients and physicians has been wonderful as well. And I don’t think there’s any need in the short term to do anything with the big bag.

I think where it plays a potential role and we’ll just have to see how we feel about it is ultimately when generics come to the market, if we want to use the big bag to keep that 30% of the share that we can if we’re going to lose. But for heaven’s sakes, we have all the way until the end of '18 to worry about that.

So short answer, nothing imminent about big bag. As it relates to Pemetrexed, you’ve been involved, we’ve all been involved in these things before. You heard we described it previously when you’re trying to get to the market, it’s interesting, isn’t it, how our marketplace has evolved over time. We just have a better product.

It’s going to be a rollercoaster of a ride to figure out how we get the product to the market once it’s approved. We feel really strongly about moving through the review cycle with FDA over the next 10 months and expect to have a positive action at the end of October.

We really can’t comment on litigation on what may happen other than there’s just going to be a lot of activity between now and the time that we ultimately bring the product to the market. Lastly, let me ask Adrian if he can comment on the Ryanodex clinical design size of the DIH program..

Thank you, Scott. We are working with the FDA and with clinicians experts in this field to decide the best study. And as we said during the call, we are planning to run a pilot study first to really make our pivotal trial as strong as conclusive as possible.

With that being said, the study will be utilized in the current standard of care which will be standardized across every single clinical site involved in the study. All patients will receive that, as they should of course. And the Ryanodex will be added in a randomized manner to the patients that belong to that treatment group.

With that being said, there are multiple factors and multiple measurements and several data we can use to really assess all the damage and of course the brain disorders associated with that.

It’s well known that drug-induced hyperthermia especially associated to [indiscernible] as these two that we are planning to study produce severe kidney damage, muscle damage, liver damage and devastating population disorders. Of course on top of these issues come a confusion and many other neurological disorders.

So all these are going to be taken into account in a holistic manner to assess how a patient progresses from the moment he’s admitted into the study throughout the conclusion of the study..

Thank you, Adrian. David, I should add one more point that I neglected in your big bag question. Also keep in mind that we believe that in 2017 over '16, Bendeka royalty will grow pretty significantly for us. It’s a pretty good growth driver.

And when you think about it, we now going into the year with this 92% market share right from the beginning of the year and so another reason not to worry about big bag into '17..

Thank you..

Thank you. We’ll go next to the line of Randall Stanicky from RBC Capital Markets. Please go ahead..

Great. Thanks. Scott, on Ryanodex for exertional heat stroke for investors who are looking at this and looking at the upcoming launch which is going to be new and unique unmet need, it’s obviously a new category.

Can you just walk through the selling process of the 50 reps? Who are they going to be selling to? Are these PT committees? How should we think about the uptake here in order to set expectations appropriately and penetration and how quickly can that happen?.

Randall, I’m going to turn that over to Dave Pernock. Let me remind you just upfront. We have basically three categories. We have the military, we have the hospitals and we have the ambulances all playing a part in this. But I think this is best for David to go and respond to..

Thank you, Scott. Randall, to address your question, our primary focus is going to be on emergency rooms and the military for the most part during the first core parts of the launch.

A couple of factors to keep in mind is that even military is potentially a very large purchaser of our product as well, because exertional heat stroke is one of the leading causes of death and long-term injury. In military outside of – what happens on battlefield. So we work the government exclusively.

We’re in the process of hiring a really high talented team there. And we have a good plan going forward. In terms of the emergency room, we’re working with emergency medicine physicians.

Often times, our sports medicine physicians are involved in helping influence guidelines with emergency room medicine physicians and also neurology sometimes has a key role too. Therefore, it’s important for us to bring Dr. Bailes onboard. Importantly, our reps will be calling on the top 2,500 hospitals focusing on top-down approach.

And we think we have a compelling need where fortunately that we already are formulary in a considerable amount of hospitals with MH which we think helps ease the formulary process for us. We’re just adding another indication. It’s not so easy compared to getting a new product approved through formulary.

As far as formulary process for those hospitals over the platform formulary process, the way I look at it from all the experience I’ve had in launching many, many products in the industry is that we have a very unique opportunity here.

And that we have no product to displace, no company to fight against on the formulary battles, because there isn’t anything for exertional heat stroke. We’ll be the first and only product ever approved in the world for exertional heat stroke and there’s a high unmet medical need.

There not only is there a huge emotional component being able to help these unfortunate patients that have a heat stroke that are otherwise healthy, we have a very unique selling proposition here and we have very, very strong clinical data. And I think that’s testament to the fact that we hope to get approval by the end of July.

So we’ll be ready to go. We’ll be working on educational programs. We’ll have programs to help build awareness of the disease state with a long-term impact of the disease state prior launch. We’ll be having a lot of public relations efforts, so Dr. Bailes will be available to the media upon launch and the brand’s spokesperson.

And we will be able to cover 2,500 hospitals I think very efficiently and very effectively with the sales force in place..

Thank you, David. On the assumption that you’re approved in July, how do we think about contribution or ramp? Obviously, I would assume that a military sale that could come early given the July timeframe.

But in terms of the ramp, in terms of sales to hospitals and other groups, is this going to be an educational process such that we should from an expectations perspective step back and say, well, there’s going to be a little bit of a selling process here and think about that as a 2018 ramp, or can you get out there quick and start penetrating earlier?.

Randall, that’s really a very good question. I’m going to turn that over to David again. But before let me just remind you that what we’ve said today. We almost had 4 million, right, 3.9 million of Ryanodex sales in Q1 and it’s growing nicely. And so we’re still growing the MH market very, very well.

We’re going from the 12 reps to the 50 reps, so we just feel good about the ongoing growth of the product. We do believe it’s a very large product out over several years. As I’ve said before, that’s the disconnect that we see and that’s the primary motivation that we’ve had since August to buy back our stock.

As it relates to the second half of this year and the first six months of launch, what we’ve committed to so far is remarking that we expect that the P&L for Ryanodex will be positive this year with this added expense that we have in the launch year.

And if we do a really, really good job and we have a nice profitable franchise in '17 that should set us up for really – what we think is a really very positive '18, '19, '20, beyond with this product and then you’ll layer on the new indications beyond this. And so that’s the way we’re thinking about it. David, other comments..

I agree. They add on to what Scott said, Randall, keep in mind a couple of things. This is a transformational first of class product. We’re going to get a lot of attention very quickly from emergency room physicians in particular.

And then there’s going to be a strong push on their half as advocates and as other companies have with our very talented sales organization to get the product out and get the products on formulary, which means that we’re likely to get a lot of stocking.

Let’s not forget that the typical dose is going to be 2 milligrams per kilogram and if every hospital stocks six to eight vials, that’s a big number. So we think people want to get ready, they want to get ready for usage in '18 but we’ll benefit from a lot of stocking.

We also think that the stocking of EHS will help to even accelerate the stocking for MH, because hospitals – once the product is viewed as an umbrella product for the treatment of all hyperthermia conditions, hospitals want to train their staffs on how to use one product for all hyperthermia conditions including MH and EHS together.

So we think one indication helps strengthen the other. That’s sort of the strength and the beauty of having wide portfolio products too. And our sales organization is particularly [indiscernible] and skilled at hospital formulary processes.

Most of the people we’re hiring are from hospital sales background for major companies and they know how to get to the formulary process. And again, this is an atypical situation because we’re not trying to knock another competitor off. So we’re not – company A is not fighting company B. It’s Eagle and Eagle alone.

And the only treatment out there is use some water. So all we have to do is get hospitals to agree to use in conjunction with water. We have very good safety profile with Ryanodex too. So we think that this will be much easier than other additional pharmaceutical launches. So we’re very excited about it and we’re going to make it happen..

Helpful color. Thanks guys..

Thank you, Randall..

Thank you. We’ll go next to the line of Irina Koffler from Mizuho Securities. Please go ahead..

Hi. This is Andrew Geller [ph] on for Irina. Thanks for taking my questions.

So thinking about EHS reimbursement, if a patient is treated by an EMT in an ambulance if they’re brought to the hospital, is there an existing pay and pathway in either setting or will Eagle need to petition for a special payment?.

Very good question. As far as reimbursement, we’ve obviously studied this issue very thoroughly and we’re very happy with the results we find upon extensive research. First of all, our initial targets are largely going to be emergency rooms and physicians.

And ambulances will be somewhat of a partner for those ambulance services that are affiliated with the hospital but was in vertical integration, and some of the very large ambulance companies.

We would be very successful with this product getting established with the emergency room physicians first, military equally and then basically in the following year on totally ambulances. We just want to say that’s twofold.

One is that for reimbursement point of view, when a product is administered in the emergency room or in any hospital setting we’re very confident we’ll have no issues with reimbursement and likewise in military.

If the product is administered first in an ambulance and they’re not affiliated with the hospital, you’re going to need different coding for that. So we’ll be working on that in 2018 as we apply through the process. We’ll hopefully have those in place sometime before 2019 season.

Once we have the appropriate reimbursement code setup, which takes some time to get, then that opens up the opportunity to go to ambulance services. We also believe that again since the treatment of heat stroke hasn’t changed since the Roman Empire that there’s need for a pharmacological intervention.

And so we think that we will be able to hopefully positively influence key stakeholders to influence guidelines to suggest that the simple thing to do and a most awful thing to do on behalf of patients is to add ranitidine [ph] to the standard of care.

So with guidelines in place, reimbursement codes in place, we think that operation in administration of Ryanodex will be much easier to do a little bit down the road. But at the meantime focus on hospitals and military. There’s plenty of money to be made there and plenty of lives to be saved..

All right. Thank you very much..

We’ll go next to the line of Tim Lugo from William Blair. Please go ahead..

Thanks for the questions and thanks for all the Ryanodex color, I guess one more. Will the military be buying ahead of the summer? It seems like their buying patterns would perceive the formal indication by the FDA.

And maybe can you talk about the fourth study which may be initiated later? Is that – I might have missed this but is that a Ryanodex indication? And if so, is that an acute or more of a chronic condition? And also is that included in the R&D guidance?.

I’ll take the first part. So basically just taking about the military, obviously we can’t promote to military until we have product approval. So we don’t expect any sales or any orders prior to getting our drug approved.

And then largely – when we speak of the military, what I’d like to point out is there is – military has all the extended arms and tentacles in military. For example, National Guard, Coast Guard, all these types of opportunities that emerge. So we’ll be working at the appropriate times with the four forces in the military.

We’ll be working with every aspect of military, agencies and groups to protect every possible person in services as far as the heat stroke. Just as an example, National Guard often times gets a call to – takes a flight for response and things of that nature and obviously that’s a very ripe opportunity for exertional heat stroke.

So we’re working with the appropriate agencies at the right point in time to encourage them to stockpile or to across the [indiscernible] product for them. So if 1,000 National Guards have been called to Wyoming in the middle of summer flight for response, we’ll be able to supply Ryanodex whenever they need it.

So all these are different aspects that we’ve clearly brought through and we’ll be implementing as best we can. But we’re bound by the same FDA regulations with talking to military as well as civilian population, so we’ll abide by all those guidelines..

Tim, in the conversations that we’ve had, our objective here at Eagle is to make sure that every military personnel around the globe has access to Ryanodex if they need it, and that is our first and foremost goal of the discussions we’re having. Let’s see where it ultimately takes us. But clearly that’s what we’d like to see.

We think this drug is so very important for our military and we’re doing everything we can to make sure that there is appropriate supply available throughout the world. And then I think the clinical question, Adrian if you don’t mind taking it..

Sure, Scott. So regarding the fourth study, as we are growing our pipeline and expanding our clinical capabilities wall, we are planning also to explore other therapeutic areas especially those will high unmet need where first in class will also be required to really address some devastating disorders.

And I look forward to providing more information in the near future..

Tim, the guideline – the guidance question is I think in the range that David provided to us. We’re in pretty good shape with what we have planned internally. There are other opportunities that are coming along in Adrian’s area and in the formulation area.

If we’re fortunate enough to make movement on some of these other thoughts we have, we may need to add to the range. But right now I think we were very careful in how we provided guidance this morning..

Okay, understood. And maybe just a quick Bendeka question. I think when the initial guidance came out, it seem like most on the street were just assuming the competitive products were hurting the franchise and the frontline. It sounds like January and February shipments have been strong and obviously pricing wasn’t taken last year.

So overall, how should we expect the kind of volume basis for bendamustine let’s call it over the next three years?.

It’s a little bit hard to tell. We’ve analyzed and we’ve had some outside experts analyze it. We’ve listened to our partners. We think the bendamustine market generally speaking is down a little bit low-single digits. There’s a lot of reasons why bendamustine is still the product of choice in the category. So we don’t see major differences.

We think that there is pricing powers totally outside of our control. But in our models, we actually have over a three-year period of time Bendeka flat to up not down when you take into account. But again it’s outside of our responsibility.

But I’ll point out again that in our models, we see Bendeka as a growth driver certainly in '17 to take a short-term approach to it going into January with a 90 plus share and we’re seeing that we have the 25% royalty now instead of the 20%. Clearly, the opportunity for growth in '17 is pretty meaningful.

And we’re just really pleased where we are this year..

Understood. Thanks for all the clarity..

Thank you, Tim.

Are there any other questions?.

There are no further questions at this time. I would like to now turn the floor back over to Scott Tarriff for additional or closing remarks..

With that, I would just like to say thank you. I know it’s been a busy day for everyone. Thank you for spending the time with us. Obviously, we’re enthusiastic about our business going forward. We are doing everything we can to improve shareholder value. It’s a very important focus and I’m sure we’ll be speaking quite a bit over the weeks going forward.

And again, thank you..

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