Scott Tarriff - President and CEO David Riggs - CFO Lisa Wilson - IR.

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

Good morning. My name is Keith, and I will be your conference operator today. At this time, I’d like to welcome everyone to Eagle Pharmaceuticals' First Quarter 2017 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 8 (sic) [May 8], 2017. It's now my pleasure to turn the floor over to Lisa Wilson. Please go ahead, ma’am..

Thank you, Keith. Welcome to Eagle Pharmaceuticals' first quarter 2017 earnings call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. With me on today's call are Scott Tarriff, Chief Executive Officer; and David Riggs, Chief Financial Officer of Eagle Pharmaceuticals.

This morning, the Company issued a press release detailing financial results for the three months ended March 31, 2017. 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'd like to remind everyone that any statements made on today's call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the Company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act.

These forward-looking statements are based on information available to Eagle Pharmaceuticals management as of today, and involve risks and uncertainties including those noted in this morning's press release and our filings with the SEC. Such forward-looking statements are not guarantees of future performance.

Actual results may differ materially from those projected in the forward-looking statements. Eagle Pharmaceuticals specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. A telephone replay will be available shortly after completion of this call.

You’ll find the dial-in information in today's press release. The archived webcast will be available for one-year on our 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 May 8, 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. So this was a record quarter for Eagle, driven by Bendeka and Ryanodex with sequential and year-over-year growth in revenue and profitability. We continue to pursue the strategy we outlined at year end, and the Company is committed to successfully execute on that strategy.

I remain confident that this will be another transformative year for Eagle with ongoing progress. Net revenue increased to $77 million, which continues to be driven by the growth in Bendeka, our bendamustine hydrochloride injectable marketed by Teva, which reached a record 95% market share, and of course Ryanodex sales.

And we delivered another strong quarter of growth in net income with EPS of $1.42 per diluted share, while investing in our R&D programs and scaling our commercial organization to support the launch of Ryanodex for exertional heat stroke this year, if approved and advancing multiple additional development programs.

While we are not providing formal guidance for 2017, we believe that the full-year analyst estimates are consistent with our expected performance. That said, we are increasing our spend on additional R&D projects and product launch activities during the second quarter. Because of this investment, Q2 EPS will be lower than current analyst consensus.

The second quarter will also be the last quarter during which there will be an overlap between our third-party sales force licensing agreement and the growth in our own sales force as the licensing expenses will be eliminated in subsequent quarters.

Importantly, our Q2 spend should have a positive impact in return on our business beginning in Q3 with our expected launch of Ryanodex, and continue for the remainder of 2017.

As part of our overall strategy and to maximize the value of our growing asset portfolio, we are advancing the development of our Ecstasy and methamphetamine intoxication program and fulvestrant. And Adrian Hepner, our Chief Medical Officer and the Eagle team have made progress to prepare for the four clinical studies I mentioned on our Q4 call.

Fulvestrant, Ecstasy, and methamphetamine intoxications, the third indication for Ryanodex, the lead product we are developing in conjunction with AMRI and a potentially fourth product to build our pipeline and secure the future of the Company.

We are now about 4.5 months through the year and Eagle is achieving the milestones we laid out on our year-end call. Let's review those and why we believe Eagle is poised for strong 2017. On a sequential basis, Bendeka royalties were up $5.7 million over Q4.

We continue to see market share expansion for Bendeka, which grew to 95% as of the end of the first quarter and for which we now received a 25% royalty. During the quarter, we extended the patent protection of our bendamustine portfolio with a total of eight newly issued patents.

This brings the total number of issued patents to 14, of which 13 are orange book listed, and we remain committed to protecting the longevity of the product. We continue to make significant progress towards advancing our pipeline and launching Ryanodex for exertional heat stroke, if approved. Let me first update you on our Ryanodex program.

During the first quarter, we achieved a significant milestone. The FDA granted priority review for the NDA we submitted for exertional heat stroke. EHS is a significant unmet medical need, many patients may have long-term neurological damage, organ damage, and [technical difficulty].

We are preparing for the launch of this important indication for which there is no approved drug treatment currently available. With anticipated PDUFA date of July 23 of this year, we continue to align resources and plan for product launch.

We're building a 50 person sales team to support the launch of EHS, if approved, all of which will be in place by the end of this month. This would be our first self launch product and the first of several labeled extensions we're exploring for Ryanodex.

We're obviously pleased with the $4.4 million in Q1 sales from our MH indication with the sales team of only 12. With the added internal sales strength and the anticipated second indication for Ryanodex, we expect our dantrolene sales to continue to grow in 2017.

We anticipate reaching several additional important achievements and milestones in 2017 based on what we laid out at year end. The clinical trial dosing for ecstasy and methamphetamine intoxication indication, which we broadened to include severe organ dysfunction and damage following our pre-IND meeting with the FDA will begin shortly.

We expect to start dosing our first subject next month. Currently, we consider this a Phase 2 study and we're starting to recruit now for it, but please note that this program may role into a pivotal Phase 3 study program. And we believe we can recruit all of the required patients over the next six months.

As everybody knows, we start building our Ryanodex acid with malignant hyperthermia, which is doing quite well. We're hopeful that these potential exciting indications will be meaningful to patients and to the Company. We are also currently working on a few new indications for Ryanodex, in addition to those that we’ve previously disclosed.

The nature of these indications will provide us with additional near and mid-term opportunities, for which the market sizes are meaningful. I would also note that we remain committed to further approvals and licensing agreements for Ryanodex ex-US.

As you can see, we expect to continue expanding the value of Ryanodex by adding further indications and expanding our reach into new territories, all of which we will discuss in greater detail as the year progresses. Our fulvestrant work continues.

Fulvestrant is an exciting opportunity to improve patient care and could be a significant source of revenue for Eagle. We're recruiting sites and expect to dose our first patients within the next couple of months. We remain very excited about this opportunity.

Fulvestrant could well be a $1 billion worldwide product by the time we come to market, representing a very meaningful opportunity for us going forward. Likewise, we see a potentially significant opportunity for our Pemetrexed formulation and await the FDA's decision in October of this year.

Turning to Eagle Biologics, we continue to evaluate opportunities in the space where we are developing innovative formulations of several significant Biologics.

We believe that we have a strong platform from which to partner with e-biologic innovators and biosimilar companies to improve their existing pipelines into biobetters, enabling better patient friendly delivery of Biologics and potentially improving bioavailability.

We will keep you apprised of developments with Eagle Biologics throughout the course of the year as well. I'd like to end my prepared remarks by reminding everyone that we are committed to unlocking the full value of our growing portfolio of assets for the benefit of our patients, employees, and shareholders.

We're implementing a strategy and action plan that positions us for a successful product launch this year with Ryanodex for EHS and a path forward for product introductions from our deep R&D pipeline. Our strong financial position ensures that we have the resources necessary to execute our strategy.

And with that, I'll turn our call over to David Riggs, our CFO to update you on our first quarter results.

David?.

Thank you, Scott. For the first quarter of 2017, our revenue totaled $76.8 million compared with $29.6 million in the first quarter of 2016. The revenue mix consisted of product sales, royalty revenue, and license and other income.

Overall, total net product sales reflecting all Eagle products, increased $1.2 million to $15.3 million during the quarter, driven primarily by net sales of $4.1 million in Ryanodex and $7.6 million in Bendeka.

Royalty income increased to $36.5 million compared with $9.5 million during the first quarter of 2016, reflecting increased Bendeka sales and our royalty rate of 25% during the first quarter of '17 compared to 20% in Q1 of 2016 when Bendeka was first launched.

License and milestone income for the first quarter of 2017 were approximately $25 million milestone achieved upon Teva reaching $500 million in cumulative Bendeka sales.

We feel confident in our ability to meet our top line goals for the year, keeping in mind that our revenue in 2017 will be largely impacted by Teva's marketing activities for Bendeka, the launch -- successful launch of Ryanodex for EHS and new opportunities that may go over the course of the year.

On the expense front, R&D expenses for the first quarter of 2017 were $7.5 million compared to $5.5 million in the first quarter of 2016. The $2 million increase is primarily due to the increase in spending for the manufacture of batches -- development batches for fulvestrant, which in part we plan to use for clinical testing later this year.

We continue to expect our R&D expense to be in the range of $31 million to $35 million this year, largely driven by our planned clinical studies. If we opt to run additional study during the year, R&D spend may increase. SG&A was $18.6 million in the first quarter of 2017 compared to $12.7 million in the prior year quarter.

Sales and marketing expenses and personnel related expenses grew in accordance with our prelaunch activities for Ryanodex, or EHS and accounted for $2.5 million of the increase for the quarter. For 2017, we continue to expect SG&A to be in the range of $65 million to $68 million, a $13 million to $16 million increase for the year.

We anticipate that a higher portion of our total operating expenses will be reflected during the second quarter of 2017 as we complete our obligations under the -- our agreement with Spectrum Pharmaceuticals that ends at the end of July.

Prepare for the launch of Ryanodex for EHS at the end of July, if approved, and begin clinical trials for both fulvestrant and Ryanodex for meth and ecstasy intoxication. We should see a more normalized level of spending in our operating expenses during the third and fourth quarters of the year.

Earnings before taxes in the first quarter of 2017 were $32.7 million. Net tax expense for the quarter was $9.7 million, up 30% effective tax rate, which brings us to Q1 2017 net income of $22 million or $1.50 per basic and $1.42 per diluted share compared to net a net loss of $900,000 or $0.06 per basic and diluted share in Q1 of 2016.

As part of our stock repurchase plan, we purchased $13 million worth of our shares in the first quarter of 2017 and have now repurchased $51 million or 756,000 shares since the third quarter of 2016. We believe this reflects an effective use of our growing cash position and is in the best interest of shareholders.

We ended the first quarter of 2017 with a $27.7 million in cash and cash equivalents, an $84.7 million in net accounts receivable, $71 million of which was due from Teva. This represents an increase of $17.4 million in cash and cash equivalents and net accounts receivable compared to December 31, 2016. Company had no outstanding debt.

With that, I’d like to thank you for your continued support and open the call for questions. Operator, please go ahead and open the line for questions..

[Operator Instructions] We will take our first question from David Amsellem with Piper Jaffray. Please go ahead. Your line is open..

Thanks. Just a couple. First, on Pemetrexed, on that product, my understanding is that you have yet to be or not been sued by Lilly here. So I wanted to get your thoughts on what to expect here going forward.

Are you going to be in a position to launch shortly after approval if assuming that it is a timely approval and how should we think about what your strategy is there and what your thoughts are on the competitive dynamics there?.

Thanks, David. Good to hear from you. So Pemetrexed as we mentioned, it’s filed, we have a PDUFA date at the end of October. And the best way to describe it is that we’re obviously doing everything we can to optimize the value of the asset. We really can't comment past this at this time and it's a fluid situation.

Just keep in mind that it ebbs and flows and we're doing everything possible to find the appropriate value in the product..

Okay. And then just as a follow-up, and this is on Ryanodex and I may have missed this early since I joined the call a little late, but can you talk about the study or the path forward in drug-induced hyperthermia.

And can you just remind us when you think you’d be in a position or what’s the earliest timeline for when you think you'd be in a position to file the SNDA in that indication?.

Yes. Thanks, David. Yes, Ryanodex for amphetamine overdose, specifically ecstasy and meth is really pretty exciting. And so, what we commented here this morning is that we're getting ready to start dosing patients, probably have the first patient dose next month already.

If all goes well, the expectation is that we will have the study completely recruited in the next six months, right. So that’s before this year, if all goes well, it will either be a Phase 2 study or a Phase 3 study, we will get back with the FDA and we will follow-up on the timelines after that.

But what we're trying to do is have all the patients recruited now this year and then file as quickly as we possibly can after that..

So just to be clear, as the FDA communicated to you that a single study in that indication would be sufficient for filing?.

Yes, at this point what transpired David is we had our pre-IND meeting with FDA. Obviously, we met with them. We brought into the view of what that clinical trial would look like. And now we’ve decided to go and recruit those patients. And now either via Phase 2 or pivotal study, we will start collecting the data.

We will meet with them again and they will have a better answer for you, but we believe we have a very good handle on the situation. And we expect to have the study completely enrolled in a very reasonable amount of time..

Okay. Thank you..

Thank you very much..

We will take our next question from Randall Stanicky with RBC Capital Markets. Please go ahead..

Great. Scott, I just have a couple. Can you first comment on what the specific pluses and minuses are of potentially having a new partner selling Bendeka, if Teva was to sell it to oncology business. And maybe walk through the contractual protections in the event of a change of control that you have there? And then I’ve a follow-up..

Yes. Thanks, Randall. So look Teva is our partner for oncology for Bendeka. I don't know anything beyond that. They are doing an outstanding job obviously.

Sure, we’re all very pleased with the fact that they reach 95% market share now and we can see the growth that we've had in our royalties at 25% level this year compared to last year and certainly last quarter.

All I can remind everyone is that Bendeka is the largest product in that division, and I'm sure if they do divest, anyone who acquires it is going to be acquiring it largely for this wonderful asset that we’ve built. So I’d imagine that anybody, if anybody took over that division, they would feel the same way about it.

I'd also remind everyone that there are certain diligence items, if you will, in the contract that would require any potential future owner to live up to those same obligations. So, we’re not very concerned -- in fact, we’re not concerned at all. The product continues to do very well.

Teva is putting significant amount of resource behind it and we have record 95% market share..

Are those obligation related to selling and marketing spend or number of reps or a combination of both?.

It is a dollar amount..

It is, okay. And then, my follow-up here is, can you just comment on the timeline as it currently stands on fulvestrant, if that's changed from we’ve previously talked about an April 2018 NDA filing time line and obviously priority review is important.

And specifically, Scott, how many months is enough in terms of getting out ahead of generics and feeling like you can maximize that market opportunity?.

Yes, So look, Randall, good question. On fulvestrant, everything is on target. We're doing everything we can to get the product to the market in the timeframe that we've outlined. It's interesting question. It's obviously a growing product. It's -- we think it could be a billion dollar product worldwide by the time you get to '19.

And let's remind everyone what we've done to the product, right. The current product has two very viscous castor oil based 5 ML injections that need to be injected over 1 to 2 minutes.

Painful and with a warning attached to the product about -- associated with the number of sticks and the formulation, and here we come along hopefully, if we’re successful, and we cut the number of injections from 2 to 1. We reduced the volume from 10 ML to 5 ML, so we’ve reduced the volume in half.

Our IM injection should be no different amount of pain than a typical IM drug.

And if we're correct, then we’re able to take the warning label out and receive a unique J-code, we really would have by far the better product in a very large market, better for patients and for the people that actually have to deliver the drug in colleges and oncology nurses.

And so, even if the period of time, if we launched after generics or we launched before generics and generics eventually came to the market, I think based on all of that that I just described, this product should do extremely well regardless in a very significant market.

And so, obviously, we're trying everything we can to get the product to the market prior to generics coming to the market, but even if we wound up being late, then we still think we have a very wonderful opportunity ahead of us..

Do you think given the safety differentiation and potential lack of black box, do you think there's clinical support for Astra, assuming you are to partner with Astra, pulling the older version and promoting your improved version?.

Yes. There is no black box and its really impossible to predict, Randall. I think the point is that, if we were successful with the plan we've outlined, we certainly would have by far the better product on the market. And you can see, let's use Bendeka as an example, right.

The products co-exist on the marketplace, but Bendeka is just such a better product than the old TREANDA, we’ve 95% share now. And so I think that you'll see a similar type of marketplace unfolding if we brought fulvestrant to the market with or without a partner.

And so, if you continue to innovate and bring out the better products, I think the market just takes care of itself.

And all the physicians that we've spoken to about the product and the research that we've done, we feel quite confident that people would far prefer to dispense the product that we've outlined than the current product that’s on the market..

Okay. That’s great. Thanks, Scott..

Thank you..

[Operator Instructions] We will go next to Tim Lugo with William Blair. Please go ahead..

Thanks for the question. Just a follow-up on fulvestrant. Can you discuss the clinical program again? I'm not sure if I came on a little late, may be you discussed that earlier.

How many patients, what’s the duration, and how long you’re going to be following outcomes to come up with enough safety events that would differentiate label?.

Yes. Thank you, Tim. So, as we stated those patients are going to start to be recruited very soon. And I don’t think it's going to take a unusual amount of time to get the product completely recruited. I would think it's in our plan from the time we start recruiting to the time we go through the 12 months of stability for the product.

We should be able to recruit all of our patients at that point. There's probably about a 90-day follow-up after the last patient is recruited. And I don’t know, probably 100, 150 patients is what we're thinking at this point, all very achievable in the timeframe that we’ve laid out..

Okay, great. And for the additional candidates AMRI and the other can development.

When do you think you’re going to disclose those?.

You know I think towards the end of the year, as the year rolls along, Tim, we will have more product information. Today on the call, I just spoke briefly about additional indications of Ryanodex that we haven't discussed yet, that could be extremely meaningful to us.

And so, as the year goes by and as we have the discussions with the FDA, and as we have our patent situations in place, as we always do, we will speak a little bit more to you..

Okay. And for the exertional heat stroke indication, you’re going -- your PDUFA date is mid-Q3.

Will we have to wait for Q4 to see a ramping in Ryanodex revenue?.

Well, we will have it launched on the day of the approval and we will start, the program. The 50 reps will be all be on board this month. They will be out promoting both MH and then upon approval EHS and we'll see those sales shortly after launch, and we will report back obviously as soon as we’re able to..

Okay.

I guess for malignant hyperthermia, what do you think the percentage is the penetration now?.

What we have, well over a 1,000 hospitals now. Somewhere between a 1,000 I think and 1,200 or so. And if you think there are 5,000 hospitals, right, there's our market share and that’s with about right a dozen people moving up to 50 now.

And the intent would be that with the additional salespeople, the MH indication should continue to grow and then assuming the EHS approval on time in July, we think we're positioned well with 50 people to hit the gates quickly, expanding the number of vials that 1,000 or 1,200 hospitals stock and then continuing to have new hospital stock to product in both the operating room and the emergency room..

Okay. And maybe a question for David. It looks like accounts receivable was up a bit, especially over your cash levels.

Can you just talk about cash collections and how we should expect that the trend in the next couple of quarters?.

Sure, Tim. Well, I think what I want to do is assure you that none of those receivables are late. We’ve been getting remittances mainly from Teva, our largest AR source, on a timely, regular basis and yes, they’re higher, but we did earn a $25 million milestone, which is in there.

And there was some inventory replenishment that went into that bucket, along with just normal royalty revenue. So, not to worry, it's a higher balance, but it should work itself down in Q2..

Okay, great. And actually before I hop off, sorry for all the questions.

The undisclosed candidate, is that part of the reserve folks down in Boston?.

No, no..

Okay. All right. Well, thanks a lot..

Thank you, Tim..

And we will take our next question as a follow-up from Randall Stanicky. Please go ahead..

Hey, Scott. Thanks. Just two quick follow-ups. First, on Pemetrexed, I'm not sure how much you’re able to comment, but as we get closer to PDUFA, if we don't see a settlement with Lilly, what legal or at risk launch options do you have, given that you haven't been sued, but that threat certainly could be lingering.

And then, I just wanted to clarify on guidance. When you mentioned that your -- that your expected performance is consistent with the analysts 2017 forecast, are you talking about both revenue and EPS? Thanks..

Yes. Thanks, Randall. To the Alimta question, we really can't comment any further. There's just so much activity that’s going to take place over the rest of the year on Alimta. It's just going to -- as I keep saying the ebb and flowing. If we have anything tangible that we can tell you, we will. We will just watch the situation.

Just know that we are doing everything we can to find the appropriate value on that asset. And in terms of guidance, when we made that statement, we're thinking mostly about the EPS number. But you can see from Q1, our top line continues to do rather well.

We had a very good first quarter and 4.5 months for the year we're very pleased with the way the business is running from a commercial standpoint. David Pernock is here in the room with me right now and he's just been doing an outstanding job of preparing for the launch and bringing the sales forward on the product, so we do have in the market.

So we just feel good about 2017 all the way around as we move forward..

Great. Thanks again..

It appears we have no further questions at this time. I will return the floor to Scott Tarriff for any additional or closing remarks..

Yes. Thank you, operator. Thank you everybody for being on the call. I know it's a bust day today. Really appreciate and hope to speak to everybody again shortly with more information. Thank you again..

And this will conclude today's program. Thanks for your participation. You may now disconnect..