Good morning, everyone. My name is Leo, and I will be your conference operator. At this time, I’d like to welcome everyone to Eagle Pharmaceuticals’ First Quarter 2021 Financial Results Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period.

As a reminder, this conference is being recorded today, May 10, 2021. It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. Please go ahead..

Thank you, Leo. Welcome to Eagle Pharmaceuticals’ first quarter earnings. 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, Brian Cahill..

Well, thank you, Lisa. Good morning, everyone, and welcome to our conference call today. The lingering effects of COVID-19 continue to impact our industry and although the country’s beginning to open up, it may take some time to return to pre-pandemic levels of access to providers and patient visits.

Eagle has done a tremendous job in the face of these challenges, but like our peers, especially those in the oncology space, we have all felt the effects of fewer oncology visits.

Oncology treatments across the industry were down this quarter, mostly for patients holding off their chemotherapy visits waiting for the washout period for their vaccinations. However, we expect chemotherapy visits to return to normal this year.

At the same time, our expenses are up a little bit more than in previous four quarters, mainly because of the way the R&D fell into the quarters for the year. We expect both sales to bounce back and expenses to come down over the next three quarters. And Brian will walk you through the numbers in a few moments..

Thank you, Scott, and good morning. In the first quarter of 2021, total revenue was $41.3 million, compared to $46 million in Q1 of 2020.

Product sales during the first quarter decreased by $0.6 million year-over-year, totaling $17.1 million, compared to $17.7 million in Q1 2020, primarily driven by a $4.6 million decrease in RYANODEX sales and a $1.1 million increase in BELRAPZO sales.

BELRAPZO product sales were $5.7 million in the first quarter, compared to $4.6 million in Q1 of 2020. Eagle recognizes BELRAPZO revenue on shipments by Eagle to wholesalers. The increase in sales was a result of an increase in our market share.

Based on IMS data, Eagle’s market share, the bendamustine wholesaler shipments to end users was 9% of the U.S. bendamustine market in the first quarter, compared to 7% for the prior year quarter. First quarter RYANODEX product sales were $6.8 million, compared to $11.4 million in Q1 of 2020.

Orders of RYANODEX are cyclical, driven primarily by product expiry with few customers acquiring dantrolene unless their stock is expiring. Q1 2020 royalty revenue was $24.1 million, compared to $28.3 million in the previous year quarter. This was almost entirely from BENDEKA for each period.

As we have discussed in the past, beginning on October 1, 2019, Eagle’s royalty rate on BENDEKA increased from 25% to 30% and on October 1, 2020, the rate increased again to 31%. On October 1, 2021, it will increase for a final time to 32%. Royalty revenue also includes royalties earned from sales of TREAKISYM by SymBio.

Gross margin was 74% during the first quarter of 2021, as compared to 83% in the first quarter of 2020. This reduction in gross margin was driven by revenue mix..

We will take a question from Tim Lugo of William Blair. Your line is open..

Hi. This is John on for Tim. Congrats on the quarter and the progress and thanks so much for taking our question. I was just wondering if you can give some color on the timing of any potential BD opportunities you might be thinking about, if we might see anything within 2021 or more likely we will see something in 2022.

And maybe as a follow-up, how you are thinking about the sizing of any prospective deals? Thanks..

Wonderful. Thank you. Good speaking to you this morning. Appreciate the questions. The timing of the licensing is probably in the near-term, I would say. This year clearly is the expectation. We are -- as we mentioned in the call, we are doing a good job moving through diligence on a number of potential opportunities.

I would add that one of the aspects of it is that these are programs that we will be able to fund out of current cash and future cash flow, which is tremendous.

Depending on how the next few months go as we try to pull this together, we may be able to reshape -- additionally reshape the pipeline in the portfolio using existing assets to the company’s, existing cash, which could be very exciting if we can get it done.

And so sizing varies, these -- some of these products are pretty significant relative to the size of the company. Some of them are products that are already filed. Some of them are products that are in development. But it’s a short-term growth opportunity, as well as a mid- and long-term.

So let’s just see what happens, and hopefully, we will have a good few months continuing to evaluate the opportunities and moving some of them forward..

All right. Thanks so much for the color and congrats again..

Thank you. Good speaking to you. Thanks..

We will move now to Daniel Busby of RBC Capital Markets..

Hey. Good morning. I have a couple of questions.

First, on vasopressin, can you provide any guiderails on when you would expect to receive a decision from FDA following ANDA resubmission, understanding that that’s a priority for FDA, and what are the earliest and latest dates you would expect to hear back after resubmission? Second, can you talk a little bit more the expected cadence of royalty and milestone revenue in Japan beyond 2022? You talked about potentially hitting $25 million next year, I think that’s a little bit earlier than you had previously communicated.

So were there any one-time payments in that number that would result in a step down in 2023 and beyond? Thank you..

Yeah. Thanks, Daniel. Appreciate it. So in terms of vasopressin, we can’t give you a perfect timing. We think it’s going to be -- how can we phrase it, I would say, relatively soon. It has been prioritized as a priority ANDA and then a COVID flag and the conversations that we have had with the agency leads us to believe that it is a priority for them.

So what we have said is, I think, the best guidance that we can give, because we don’t have anything else to articulate other than, we think that once we get this responded to in full here in the next short while that the approval will come well in enough time to get the product launch this year.

And I wish I can give you more specifics but we can’t, but that’s our best understanding at the current time. And then in terms of the royalties, I am going to turn that over to Brian. But what I will say is SymBio has been doing a great job. They are running ahead of our internal schedules.

They have been able to get the 10-minute filed quicker than we anticipated and they were able to get the -- which is a very significant expansion of their label approved well beyond our expectations and timing as well. So we are really just thrilled with the work that they are doing out of Japan.

And so, let me turn it over to Brian if he can give a little bit more color on the numbers..

Sure. Hey, Dan. So you see in our press release the -- that the RTD has been approved with the RI on the way. We think that they will elevate to that level of our royalty. We haven’t disclosed our royalty percentage. But there’s also an aggregate net sales milestone that we expect will also be achieved in 2022 to reach that peak..

Okay.

So could there be a slight step down in 2023 when you remove the sales milestone from a modeling perspective?.

Slight, sure..

Okay. Thanks for the color, guys..

Okay, Dan. Sure..

Thank you..

Our next question is from David Amsellem of Piper Sandler. Your line is open..

Hey. Thanks. Your willingness to settle that suppression, Endo’s comments on their recent call suggested willingness. So can you talk about whether you have engaged or are engaging in the dialog with Endo? That’s number one.

Number two is just, overall strategy, I mean, you are talking about licensing, is the strategy is still injectables and specifically 505(b)(2)’s and vasopressin is kind of an outlier because it’s Paragraph IV. So just talk about, in general, Scott, with BD, where you want to take the business and what you are envisioning? Thanks..

Yeah. Thanks, David. Appreciate the call. So, look, the settlement, I don’t know what to say about that. Of course, as we have stated in the past, we have an openness and a willingness to settle under the right conditions.

Our belief is that it’s our obligation to optimize the situation for our shareholders and we believe we are sitting in a pretty good place. The CRL was unfortunate, but we have industry experts helping us. We have been through a meeting with the FDA.

We believe we are confident in our approach that we are taking and we are going to submit to respond to that CRL completely here shortly and because of the priority review, two priorities really, we expect that we are going to get it approved. We have the court case coming up in July 7th.

As I dialogued here earlier in the call, we are outside of the pH range. We are very confident in our position. I think that’s going to become clear in that first week of July -- July 7th, 8th and 9th, when we are in the courtroom. So we are in pretty good place. We are open-minded, but we worked really hard at this.

We have spent well over $25 million now bringing a first to file an ANDA to the market and we have our nose to the grindstone. So to speak and we think we are going to get an approval and a early court decision as well. And so let’s just see how that all works out. So there you have it. It’s just, I think, we are in a good strong position right now.

In terms of licensing, we are looking for unique product opportunities, not necessarily all in the 505(b)(2) space. What we are finding? I think if you step back and look at one of the significant strengths of Eagle is our footprint and our sales force capability in the hospital, in acute care, in oncology.

And we are finding companies, a number of companies quite frankly outside the U.S. that have spent a lot of time and money in R&D over the years and they have done a good job with the FDA here in the States.

But they haven’t -- they don’t have the capability that we have of being able to market those drugs, sell those drugs and bring them through FDA or won some clinical trials that may still be needed.

And so what we are finding is opportunities to strengthen our hospital, acute care, critical care oncology portfolio by leveraging the strengths that we have and we are finding potential partners who match up with us well that need what we have. And let’s see what happens. Again, I think, it’s a little bit too premature, David.

But we have opportunities that we are in, what I would call, pretty far along with that would strengthen the portfolio in the very short-term, as well as providing us a further pipeline in the mid- and long-term. And so, we are pretty excited that we could wind up strengthening our product offerings here pretty significantly.

And the exciting part about it is being able to do it out of current cash flow and with our current financial resources, which would be wonderful if that’s what we are able to achieve..

Great. Thanks..

Thanks, David..

We will move next to Brandon Folkes of Cantor Fitzgerald..

Hi. Thanks for taking my question. Maybe just one from me, can you just talk about sort of your manufacturing and scale up for vaso, should the decision come quite early? How quickly could you have products in the market? Thank you..

Yeah. Brandon, thank you. All I can say about that is, as we have stated, we expect to be in a position to be able to bring the product to the market this year and I think that’s all we can say at this point.

But let’s get it submitted here over the next short while, let’s go to trial here in the next short while and then, I think, the rest of it will take care of itself..

Great. Thank you very much..

Thank you..

And it appears that we have no further questions at this time. I’d be happy to return the call to Scott Tarriff for any closing remarks..

Well, thank you, everyone. Appreciate it. And I think we are setting ourselves up really very nicely in the future with all these launches and potentially additions to the pipeline, plus what we are doing with nerve agents and fulvestrant.

It’s just going into a very exciting growth curve I hope for the company and with the share buyback we have had over the years, I think, we will all be rewarded and we are looking forward to it. And so thank you again for being on the call. We all appreciate it. Thank you..

This does conclude today’s conference call. You may now disconnect your lines and everyone have a great day..