Good morning, and welcome to today's program. My name is Keith, and I'll be your conference operator. At this time, I'd like to welcome everyone to Eagle Pharmaceuticals First Quarter 2020 Earnings Results Conference Call. All lines will be 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 today, May 11, 2020. It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. Please go ahead..

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

This morning, the Company issued a press release, detailing financial results for the three months ended March 31, 2020. This press release and a webcast of this call can be accessed through the Investors section of the Eagle website, at eagleus.com.

Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the Company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act.

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

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

You'll find the dial-in information in today's press release. The archived webcast will be available for one-year on our website, at eagleus.com. For the benefit of those who maybe listening to the replay or archived webcast, this call was held and recorded on May 11, 2020. Since then, Eagle may have made announcements related to the topics discussed.

So, please reference to 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. Let me begin by acknowledging that the world is a very different place from what it was just two short months ago on our last earnings call. COVID-19 has had a profound impact on all of us. The way we live our lives and the way we must conduct.

We've had a lot of news lately, obviously, we had a very good quarter. We had the ODE affirmation at a favorable BENDEKA patent ruling, and we've had good news on fulvestrant. And still this year we have a lot going on with vasopressin and potential to bring it to market this year.

We have our EHS PDUFA date in July and we still expecting to file for brain damage secondary to nerve agent exposure if not this year than early next year.

We still expect that we can have five launches in the next three years; EHS, fulvestrant, vasopressin, our collaboration with Tyme Technologies for their encology product SM-88, and finally PEMFEXY, a truly remarkable lineup.

On top of all of this, there are our other remaining projects for acute radiation syndrome, EA-111 which is a new chemical entity for dantrolene, Alzheimer's and traumatic brain injury for a total of 13 key initiatives.

If it all shakes out the way we hope, as I said on our last earnings call, 2020 could turn out to be the best year in Eagle's history in terms of total revenue and gross profit.

With that, we expect that the aggregate RYANODEX revenue we generate for the balance of 2020 even in the absence of a label expansion will exceed aggregate revenue for RYANODEX in all of 2019. I'll touch on all of this, but let me start with the quarter. We had a great first quarter generating EBITDA of $15.2 million and diluted non-GAAP EPS of $0.84.

The balance of 2020 will continue to be very active for the company as we advance numerous programs across the board. Our strong capital position allows us to apply our best scientific talent to address some of the most challenging and underserved therapeutic areas.

Q1 we invested $10 million or $0.55 per share to advance our pipeline including legal expense. Let me start with our ecology business, leading off with our fulvestrant product candidate EA-114 for estrogen receptor positive advanced breast cancer. Last quarter, we shared that we were refining our programs.

As announced last week we have conducted our pilot work and we met our internal objectives. We will be requesting a meeting with FDA to determine what the next steps are. And we look forward to updating you on the progress of this potential best-in-class treatment for HR-positive advanced breast cancer.

Let me also touch briefly on another important and somewhat overlooked contributed to our oncology portfolio, SymBio, our Japanese licensing partner completed clinical trial enrollment for their rapid infusion bendamustine product. SymBio intends to file an NDA in Japan with the expectation of obtaining regulatory approval in the second half of 2022.

Last September, SymBio also filed an NDA for the bendamustine ready-to-dilute product with an expected approval later this year.

As you may recall Eagle is entitled to a $5 million milestone payment on approval of either of these NDAs and starting this year the royalties could be meaningful, roughly $10 million to $25 million per year for SymBio first launching with the 500ml bag and then the 50ml bag.

And now turning to BENDEKA, two weeks ago the court upheld our patent infringement claims is valid, meaning the defendants in the case will be enjoined from launching their ANDA products before 2031. This important protection boost the value of our bendamustine assets and enable us to continue investing in our active research and pipelines programs.

In addition, we had an appellate court victory confirming orphan drug exclusivity for BENDEKA. As a result of FDA's decision regarding the scope of Eagle's orphan drug exclusivity no bendamustine products including generic versions of TREANDA may launch in the U.S. before December 7, 2022 unless clinically superior to BENDEKA.

We see this as another driver supporting our growth and our active research pipeline going forward. In January, we also added to our oncology portfolio through a strategic collaboration with Tyme Technologies to advance SM-88, a late stage novel therapeutic aimed at difficult to treat cancers.

Our initial investment of $20 million gives us a co-promotion rate on SM-88, as well as 10 million shares of Tyme's common stock, along with the opportunity to increase our investment under certain circumstance. Tyme may also payout Eagle's rights under the promotion agreement at any time for $200 million.

We look forward to providing further updates on this collaboration. Finally, in Q1 we received final approval from FDA for PEMFEXY following our settlement with Lilly.

With an initial market entry of a three-week supply of ALIMTA on February 1, 2022 followed by an uncapped entry on April 1, this launch period represents another significant opportunity for us. Turning now to our critical care business starting with vasopressin. Its noted on our last call the trial was scheduled to begin this month.

Due to the COVID pandemic the trial has been delayed and a new date has not yet been set. The court agreed to allow Eagle to file a letter requesting summary judgment of non-infringement for which we believe we have a strong position. Our letter was submitted on April 17th and parts responsive letter was submitted May 8th.

This request is currently under consideration and the parties have a joint status call with the court for May 18 at which we may be further [briefed] on the trial date and summary judgment requests. Vasopressin is a very important product to us.

We are the first to file an ANDA referencing Vasostrict 20 units per one ml and anticipate having a 180-day regulatory exclusivity. As we await further guidance from the court being anticipate that we will receive tentative approval in time to launch the product later this year and take advantage of this market opportunity. Now let's turn to RYANODEX.

We have our EHS PDUFA date coming up on July 8. We expect to start what will be our last study for the treatment of brain damage secondary to nerve agent exposure this year and to have it filed shortly thereafter. We are still hopeful we can submit an NDA for this indication if not by year-end then early next year.

Our animal studies of RYANODEX for the treat of traumatic brain injury in collaboration of North Shore University Hospital are progressing nicely, albeit somewhat more slowly due to the current COVID environment. Our newest RYANODEX program is for COVID-19 with its potential to reduce the impact of the life cycle of the virus.

In mid-April we announced that RYANODEX for injection suspension inhibited the growth of SARS-CoV-2, the virus causing the COVID-19 pandemic, trolled in vitro laboratory tests.

Working in partnership with Hackensack University Medical Center, we have submitted an investigational new drug application with FDA for a Phase II clinical trial to evaluate the efficacy of RYANODEX in infected patients. We're meeting with FDA shortly to discuss our proposed trial and will report back following that meeting.

As I mentioned at the outset, these are unprecedented times for our country, for the world and for our industry. As you can see this is an important time for Eagle with multiple near-term inflection points and we're certainly excited about our prospects. With that, I'll turn the call over to Pete to discuss our first quarter financials.

Pete?.

Thank you, Scott. In the first quarter of 2020, total revenue was $46 million compared to $49.8 million in Q1 of 2019.

Product sales during the first quarter increased by $3.2 million year-over-year, totaling $17.7 million compared to $14.5 million in Q1, 2019, primarily driven by a $7.4 million increase in RYANODEX product sales due to historically large expiry cycle.

And a $1.3 million increase in BELRAPZO sales partially offset by a $5 million decrease in BENDEKA pass-through sales to Teva due to the timing of inventory deliveries. BELRAPZO product sales were $4.6 million in the first quarter, compared to $3.2 million in Q1 of 2019. Eagle recognizes BELRAPZO revenues on shipments by Eagle to whole sales.

Based on IMS data, Eagle's market share of bendamustine wholesaler shipments to end-users was 7% of the U.S. bendamustine market for first quarter.

Social distancing measures and shifting priorities of patients and health care providers in the wake of the COVID-19 pandemic resulted in induced utilization of many physician- administered oncology products. Beginning late in the first quarter we have observed this impact on the bendamustine market and that impact has continued through April.

We anticipate this trend abating as we move through the second quarter. First quarter RYANODEX product sales were $11.4 million, compared to $4 million in Q1 of 2019. Orders for RYANODEX are cyclical, driven primarily by product expert. First quarter of 2020 saw the greatest number of expiries over RYANODEX since its launch.

Despite the challenges to a commercial effort and accessing our current and potential customers precipitated by the COVID-19 pandemic particularly in the second quarter, we continue to expect record sales for the product for the full year.

Given the expiries cycles in Q1, we anticipate that the first quarter of 2020 will be the high-water mark for the year. The first quarter RYANODEX had a 54% market share of normalizes dantrolene injection units. Q1, 2020 royalty revenue was $28.3 million compared to $26.3 million in a prior year quarter.

BENDEKA royalties were $28 million compared to $26 million in the first quarter of 2019.

Eagle continues to receive royalties from Teva at a 30% royalty rate following our amended license agreement until October 1, 2020 when the rate will increase to 31% for the following 12 months and 32% on October 1, 2021 where will remain for the life of the product.

Gross margin was 83% during the first quarter of 2020, as compared to 74% in the first quarter of 2019. Expansion in gross margin in the first quarter of 2020 was driven by an increase in RYANODEX sales, lower BENDEKA product sales in the period to our marketing partner on which Eagle earns no profits and the increase in BENDEKA royalty revenue.

On the expense front, R&D expenses were $9.4 million for the first quarter compared to $6.4 million in a prior year quarter. A year-over-year increase is largely attributable to spending on fulvestrant and payroll expenses.

Excluding stock-based compensation and other non-cash and non recurring items R&D expense there in the first quarter with $7.8 million. We are reiterating our 2020 guidance that R&D expense on a non-GAAP basis will be $46 million to $50 million as compared to $31 million in 2019.

The anticipated 2020 R&D expense includes one, the EA-114 pilot trial and CMC initiatives; two the RYANODEX trials for the treatment of nerve agent exposure, acute radiation syndrome and COVID-19. Three, EA-111 IND enabling toxicology studies and CMC scale up activities.

Four, EA-112 patient development and additional pre-clinical work at the University of Pennsylvania and NorthShore University HealthSystem. Five, regulatory advocacy for RYANODEX EHS; and six, launch preparedness for vasopressin and PEMFEXY.

SG&A expense for the first quarter 2020 increased to $24.8 million compared to $18.1 million in the first quarter of 2019. External legal spend, external sales and marketing spend, stock-based compensations, as well as a $2.5 million charge related to the Tyme collaboration account for most of the year-over-year increase.

Including stock-based compensation and other non-cash and non-recurring items first quarter 2020 SG&A expense was $15.5 million. We are reiterating our 2020 guidance that SG&A expense on an non-GAAP basis will be $61 million to $64 million as compared to $56 million in 2019.

The year-over-year increase is largely attributable to higher sales and marketing payroll partially offset by lower external legal spend. If the RYANODEX EHS label expansion is approved we will revisit 2020 operating expense guidance accordingly.

Net loss for the first quarter was $2.9 million or $0.21 per basic and diluted share compared to net income of $9 million or $0.64 per basic and $0.62 per diluted share in the prior year period.

Adjusted non-GAAP net income for the first quarter 2020 was $11.7 million or $0.86 per basic and $0.84 per diluted share compared to adjusted non-GAAP net income of $14.6 million or $1.05 per basic and a $1 per diluted share in the prior year quarter.

For reconciliation of non-GAAP net income to the most comparable GAAP financial measures, please see the tables at the end of our press release. Our EBITDA for the first quarter of 2020 was $15.2 million [ph] compared to $18.8 million dollars in the prior year quarter.

As of March 31, 2020 the company had $202 million in cash and cash equivalents and $54 million in net accounts receivable, $34.5 million of which was due from Teva. Company had $148 million in outstanding debt including $110 million drawn on our revolver. Therefore as of March 31, 2020 the company had net cash plus receivables of $108.5 million.

Since March 31, the company has repaid the $110 million revolver. The first quarter of 2020, we purchased a $1 million of Eagle's common stock as part of a $160 million share repurchase program. From August 2016 through March 31, 2020 we have repurchased $172.9 million of our common stock.

With that, operator please go ahead and open the line for questions..

[Operator Instructions] We'll go first today to Tim Lugo with William Blair. Please go ahead. Your line is open..

Thanks for taking a question. And Scott as you mentioned in your comments these are kind of unprecedented times.

Can you maybe just outline what you're expecting sequentially quarter-to-quarter over the next few quarters given kind of a macro environment and what are you hearing from maybe distributors or your own hospital context given the broader COVID environment for just use of hospital-based products and BENDEKA, the availability of chemotherapy to oncology patients, maybe just broadly what are you expecting Q2, Q3?.

Sure. Thank you, Tim. I also remind everyone that also in the call with us today is David Pernock, our President and COO and Dr. Adrian Hepner, our Chief Medical Officer. And so, Pete maybe you can chat a little bit about the quarters and then David a little bit about what we're seeing in oncology.

But Tim, thus far our business relatively speaking seems pretty healthy because of the lineup of products that we have.

But Pete you want to add something?.

Yes. Hi, Tim. Good morning. On the revenue side we did note that there is some diminution in April people in fusions. Of course, that has not yet impacted our revenue because we booked revenue when we ship product to wholesalers. So we're keeping an eye on that and we hope and expect that that trend will abate as we move through the second quarter..

And maybe on the expense side are there areas where -- which you obviously control a little bit more, which could offset some of that April issue?.

Well, fundamentally we think our business is healthy as we mentioned earlier. The R&D and our business is not linear SG&A is as we look through the quarters.

As we look at R&D spend you'll note that we are maintaining our guidance for the year which is essentially noting that the back end of 2020 will be heavier on R&D as it was last year just in terms of the timing of external clinical spend. But we believe that the business is fundamentally healthy and so we are comfortable with our cost structure..

Understand. And David did you want to add to that..

Yes. Basically I agree with what Pete said. We expect that a slight downturn in oncology visits in the month of April was seen, I think across every company is experiencing that just because of the situation. But we expect that that will start to return back to normal as more and more states begin to reopen.

So I think all-in-all will be -- we should be in good shape there. Relative to RYANODEX, basically we have seen hospitals ordering more RYANODEX in a situations in particular where emergency rooms were expanded outside their typical setting to -- because of the COVID situation.

Oftentimes what happens is emergency room might need to do an intubation, and oftentimes, that requires volatile gas. Therefore, there's the risk of MH. So, we've seen that. We've seen that occur as well.

And likely what will happen, we think, in the ambulatory surgery centers and in surgery centers in general, lot of the elective surgeries were delayed because of COVID. Once things improve they'll probably a huge surge in terms of those types of surgeries and so probably see some additional stocking due to that.

so all-in-all we're hoping to basically do everything will kind of balance out at the end of the day..

Thank you. And Scott, maybe one last question. You mentioned five launches kind of over the near to intermediate term. The pipeline has kind of struggled productivity wise in the past, let's call it, few years or so.

Can you maybe just outline your opinions on those five launches which are kind of the most highly likely for success? And what will be the most meaningful to economics for Eagle?.

Sure. Tim, it's hard to predict some of this. But we feel good about our project. I think if you just look at where they are, PEMFEXY, as a high degree of certitude obviously and that could be a very valuable product since we have the settlement with Lilly and we have a final approval.

In the case of vasopressin, we feel -- we feel pretty confident that we're going to wind up receiving our tentative approval in time. And we think we have an excellent position in terms of our litigation. And then as you move down the line, I will say that fulvestrant is really exciting and very important to us on a whole number of levels.

We believe that we have something that's very important for the patient population, postmenopausal metastatic breast cancer patients. And that there could be a significant paradigm change if we're able to get that product. And what we see so far in our pilot study we're very encouraged. And so that's a strong possibility coming up as well.

And then beyond that nerve agents will run another animal model. There's no reason to believe that that next model won't be similar to the other models that we've run previously, and we get that product to the market. And Tim you would think who thought we'd be living in a pandemic the way we are.

Who wants to think that one day there could be a nerve agent attack on U.S. soil. But I think the country's preparing forward and concerned about it. The state of the world is the state of the world and that could be a pretty significant product. And then we have the EHS PDUFA date coming up in a couple of months. So we'll see where COVID leads us.

We think we have a good chance. Maybe all 13 projects that we're working on maybe they don't all come to the market, is typical in our industry, but we feel good about our future..

Thank you for the color and my best for the team..

Thank you..

Our next question is from Randall Stanicky with RBC Capital Markets. Please go ahead..

Hey, good morning. This is Dan Busby on for Randall. I've got a few questions. First on EHS.

Can you talk about your launch strategy since the approval in July? And how do you see COVID-19 potentially affecting that launch especially hospitals are still focused on the pandemic?.

Yes. Thank you, Dan. So EHS launch PDUFA date coming up on the -- in July. You're right, you have to look at the two programs; COVID and EHS in tandem. If in the event that we have products -- a product for COVID eventually come into the market, that's going to be a lot of RYANODEX movement.

And then obviously, when you get into next year, the potential nerve agents as well there's a lot of work that needs to be done. As far as the launch of EHS in the summer time, David, you want to make any comments about how we're handling that between now and the potential launch date..

Yes, sure. So basically a very good question, we understand. So largely, what it -- when you step back and take a look at the big picture, basically, EHS is approved and actually COVID turns out to be a positive as we hope. There's going to be an awful lot of reasons for hospitals to want to stock RYANODEX, as you could imagine.

So we would expect potentially a very big surge in orders as we try to serve as many people as we can. So I think overall that's the important point to keep in mind.

On a granular level regarding EHS, there is -- remains to be very high interest from emergency room physicians in treating EHS because of the unmet need and the inadequacies of the current treatments that are available. So, we think we're still going to feel a major need. Obviously, there's not as much sports going on as we all know.

So basically it'll be a little bit of less little -- little less of that happening and hopefully it will return to normal at some point, but there is some impact there. We're going to basically proceed business as usual. We expect that basically our sales force will be able to contact emergency room physicians through a variety of different methods.

We've found podcast in particular to be particularly successful vehicle for emergency room physicians and we'll be planning on attending most of the emergency room, specialty conventions, etcetera to build the work. We're very excited about it, because we've been working at it for a while as you know and still remains a very big unmet need.

And again, we think combined with this, with our under indications we're going to open up a situation where there's a huge need for us for the hospitals to stock RYANODEX.

We think that could have a positive impact on even MH business, right?. Because as Pete said, the first quarter we had a 54% market share, but as more -- as we -- as the value proposition for RYANODEX grows, we expected our overall market share of the MH market to grow as well..

Great. That's helpful. And then one on vasopressin. Let's say the court doesn't reach a decision before October, but you do receive tentative approval before then, and that presumably places you in a position where you could launch at risk.

Is that a decision you've given any more thought to?.

That's an interesting scenario, isn't it. I think what's probably is going to happen, I believe that the court is very well aware of the timing situation. Nobody expected again to be in this pandemic. Let's see what happens in the next couple of weeks with our summary judgment motions.

I don't think this is a particularly difficult case to decide, at least that's our review of things. And depending on when the trial gets delayed and if we wind up having a trial then it would be up to the court to see if they can get a decision put together around that 30 month date without delaying things too much.

And so when you look at the whole situation, we still think there's a pretty good chance of getting to the market before this year. So that's what we're planning for..

Okay. Thank you..

[Operator Instructions] We'll go next to Brandon Folkes of Cantor Fitzgerald. Please go ahead..

Hi. Thanks for taking my questions.

I’ve just got three here and maybe -- can you talk about your capital allocation for also the share buyback, but in light of the potential launches how are you thinking about additional business developments over the coming years? Maybe secondly, on RYANODEX for COVID, can you maybe just elaborate in terms of the patients you will be targeting? And where in the treatment paradigm we should think of RYANODEX kicking in? And then lastly, I think late last week we saw BELRAPZO judgment would slay back.

Should we be thinking about a generic TREANDA and BELRAPZO coming to market when BENDEKA ODE runs out? Thank you..

Thanks, Brandon. Let me take those in order. On the capital buyback and how we see things, financially I'll turn that over to Pete for a moment. But business development continues to be of interest to us. As we outline today we have so many internal projects.

There's nothing more efficient than having organic growth if it works and as we outlined earlier we believe that much of this will. Having said that, we think we're in great shape with our balance sheet and the cash we're generating especially if we start to get some of these products to the market.

And so I believe that we're still poised if we find the right opportunity to move our business forward with both organic growth and by licensing in products along the way. And so we want to grow the company. We'll do it in both ways and we'll see where it takes us.

In terms of BELRAPZO and then I'll turn it over to Pete and then over to Adrian on the COVID question. But in terms of BELRAPZO, I think you're right. I believe in December of 2022 the way things look right now, we'll have a generic competitor for BELRAPZO at the same time we have generic competitors for TREANDA.

And with that, anything you want to add Pete to the capital side of things..

Well, I would just note that we have since March 31 repaid the revolver. Brandon, I'm sure you've noticed on our balance sheet our cash and our debt balances are larger than were use to be. At March 31 we did draw down the $110 million revolver in March.

We did that as we observed the drawdown in the equities market and that was certainly accompanied by considerable disruption in the credit markets at the time as was manifest in credit spreads expanding dramatically.

And so as a hedge against the potential for interbank liquidity constraints, having lived through the last crisis, we did decide to draw the revolver on March 12. As I said, we have since repaid the revolver in full and so our existing balance today on the revolver is zero. Of course we have still the term loan outstanding for $438 million.

And so, we have a net cash position as you know the same net cash position essentially we had at the end of March. And of course we continue to generate cash. And so, we do intend to opportunistically buy back stock. We intend to pursue external business development as we've done recently in the case of the Tyme transaction.

And we have the flexibility from the balance sheet perspective that we believe is a real competitive asset..

Thank you, Pete. And then on the on the RYANODEX for COVID, where we think it may fit in the paradigm of treatment if we are successful and the patient population that we expect to explore initially, I'll turn that over to Adrian for a brief summary..

Thank you. Based on our research, we understand the mechanism of action of RYANODEX as impacting some of the needs that virus have especially to maintain the life cycle. Because of that and the ability of RYANODEX to impact the needs of calcium that the virus required to replicate and to get release from one cell to another.

We envision RYANODEX to be an addition to standard of care. As we know these patients require multiple therapeutic approaches depending on the stage or depending on the underlying conditions.

With that, as I said, we anticipate RYANODEX to be an addition to establish a standard of care which also continues to evolve and hopefully, that addition of RYANODEX helps impacting the lifecycle of virus and [eliminating] the viral load..

Thank you, Adrian. Brandon, did that answer your questions well..

Yes, very well. Thank you very much. And congratulations on all the process..

Thank you..

It does appear we have no further questions. I will return the floor to Scott Tarriff for closing remarks..

Thank you, Keith. Let me close today by reiterating that 2020 has the potential to be the best year in Eagle's history in terms of total revenue and gross profit followed by an accelerated period of growth over the next three years.

By building our strong bendamustine franchise we remain dedicated to advancing our pipeline programs and bringing new and important treatments to the public. We continue to focus on addressing underserved therapeutic areas growing our company both organically as I stated in three strategic relationships and delivering value to our shareholders.

So once again thank you for your time this morning. We hope that you and your families remain safe over these difficult times and we'll speak again shortly. Thank you again..

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