Good morning, everyone. My name is Todd, and I'll be your conference operator. At this time, I'd like to welcome everyone to Eagle Pharmaceuticals Fourth Quarter and Full-Year 2022 Financial Results [Technical Difficulty]. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions] As a reminder, this conference call is being recorded today, March 13, 2022. It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. Please go ahead..

Thank you, Todd and welcome to Eagle Pharmaceuticals' fourth quarter and full-year 2022 earnings call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. With me on today's call are Eagle's President and Chief Executive Officer Scott Tarriff, Chief Financial Officer, Brian Cahill and Vice President of Medical Affairs, Dr.

Mike Greenberg. This morning, Eagle issued a press release detailing its financial results for the three months and full-year ended December 31, 2022. 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 may be listening to the replay or archived webcast, this call was held and recorded on March 13, 2023.

Since then, Eagle may have made announcements related to the topics discussed, so please refer to the company's most recent press releases and SEC filings. We will be discussing non-GAAP financial measures during this conference call in addition to financial information prepared in accordance with U.S. GAAP.

These non-GAAP financial measures should be considered in addition to, but not as a substitute for the information prepared in accordance with GAAP.

A description of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to their most comparable GAAP measures are set forth in our earnings press release available on our website at eagleus.com. And with that, I'll turn the call over to Eagle's President and CEO, Scott Tarriff..

clinical development and acquisitions. For now, we plan to balance both required Acacia Pharma and hope to make an additional acquisition. We recognize that clinical development carries more risk, but with a potentially higher return.

To be clear, if we do not succeed with the CAL02 and Enalare clinical programs, we intend to add the cash we would have spent on development and any accompanying earnings back to the company and then concentrate on acquisitions. If we are successful, then we believe our investment will be money extremely well spent.

In summary ‘22 was an outstanding year for Eagle, and we believe ‘23 is shaping up to be another very strong year. We hope to make a meaningful acquisition, focus our efforts on BARHEMSYS and BYFAVO, to support the development of ENA-001 and work hard on advancing [landiolol, CAL02] (ph) over the next year or so and see how those turn out.

Well, with that, I'll turn the call over to Brian Cahill to discuss our fourth quarter and full-year financials.

Brian?.

Thank you, Scott, and good morning. In the fourth quarter of 2022, total revenue was $60.7 million, compared to $42.3 million in Q4 of 2021, primarily reflecting continued revenue from sales of vasopressin and PEMFEXY, which we launched in 2022, as well as the addition of BARHEMSYS and BYFAVO to our commercial portfolio.

Full-year 2022 revenue was $316.6 million, compared to $171.5 million in 2021. Net product sales during the fourth quarter of 2022 were $37.2 million, compared to $16.2 million in Q4 of 2021. Full-year 2022 net product sales were $214.5 million, compared to $65 million in ‘21.

Vasopressin net product sales were $3.6 million and PEMFEXY net product sales were $12.1 million in the fourth quarter of ’22. For the full-year ‘22, vasopressin net product sales were $63.2 million and PEMFEXY sales were $67.5 million.

Regarding vasopressin, during the first quarter of 2023, we notified customers and the FDA of our decision to withdraw from the vasopressin market, inventory on-hand and in distribution channels is expected to be depleted by the end of the second quarter of 2023.

BELRAPZO net product sales were $11 million in the fourth quarter of ‘22, compared to $5.5 million in Q4 of 2021. For the full-year, BELRAPZO net product sales totaled $33.7 million, compared to $23.7 million in 2021. Fourth quarter 2022 RYANODEX net product sales were $7.2 million, compared to $6.1 million in Q4 of 2021.

Full-year of ‘22 net product sales of RYANODEX totaled $30.2 million, compared to $25.3 million in 2021. Q4 2022 royalty revenue was $23 million, compared to $26.2 million in the prior year quarter. Full-year 2022 royalty revenue totaled $98.3 million, compared to $106.5 million in 2021.

Royalty revenue includes royalties earned on sales of BENDEKA in the U.S. and TREAKISYM in Japan. During 2022, we recorded $3.8 million of other revenue, a cumulative sales milestone on sales of TREAKISYM in Japan by our marketing partner SymBio. Gross margin was 67% in Q4, compared to 71 % in the prior year quarter.

This decrease was the result of the addition of product sales of vasopressin, PEMFEXY, BARHEMSYS and BYFAVO to our portfolio, which contribute lower margin than historical revenue mix, which has been dominated by BENDEKA royalties.

Also compressing margin is the inclusion of amortization of intangible assets related to the newly acquired products and the reduction of the PEMFEXY buy down beginning on October 1, 2022, which will continue going forward.

On the expense front, R&D expenses were $7.2 million for the fourth quarter of ’22, compared to $3.8 million in the prior year quarter. This increase is largely attributable to CMC and clinical trial spend on our CALO2 program.

Excluding stock-based compensation and other non-cash and non-recurring items fourth quarter 2022 non-GAAP R&D expense was $6.6 million.

Full-year 2022 R&D expenses were $34.1 million, compared to $51.3 million in 2021, primarily reflecting the non-recurrence of a $10 million upfront payment related to our license agreement with Combioxin for CAL02 and $5 million upfront payment related to our license agreement with AOP Orphan for landiolol, lower headcount also -- lower headcount costs of $1.3 million and lower spent on vasopressin of $7.6 million.

RYANODEX and EA111 of $3.1 million and PEMFEXY of $2.2 million. This was partially offset by $10.7 million of CMC and clinical expenditure on our CALO2 program in 2022. Excluding stock-based compensation and other non-cash items, adjusted non-GAAP R&D expense for 2022 was $31.5 million.

SG&A expenses in the fourth quarter of 2022 were $24.1 million, compared to $20.3 million in the fourth quarter of 2021. This increase was driven by higher headcount and marketing spend related to our newly acquired products BARHEMSYS, BYFAVO and PEMFEXY, which launched in February of 2022.

Excluding stock-based compensation and other non-cash and non-recurring items, fourth quarter ‘22 non-GAAP SG&A expense was $19.9 million. For the full-year of 20 22, SG&A expenses were $106.6 million, compared to $75.3 million in 2021.

This increase primarily reflects costs associated with the acquisition of Acacia, including severance expense and other deal costs, also higher headcount on marketing spend related to our newly acquired products BARHEMSYS and BYFAVO and PEMFEXY, which launched in February of 2022.

Excluding stock-based compensation and other non-cash items, adjusted non -GAAP SG&A expense for 2022 was $70 million. We expect our SG&A spend in 2023 on a non-GAAP basis to be between $68 million and $90 million.

Net income for the fourth quarter of 2022 was $8.2 million or $0.63 per basic and $0.62 per diluted share, compared to net loss of $6.2 million or $0.48 per basic and diluted share in the prior year quarter.

For the full-year 2022, net income totaled $35.6 million or $2.76 per basic and $2.73 per diluted share, compared to a net loss of $8.6 million or $0.66 per basic and diluted share in 2021.

Adjusted non-GAAP net income for the fourth quarter of 2022 was $14.4 million or $1.11 per basic and $1.10 per diluted share, compared to adjusted non-GAAP net income of $11 million or $0.85 per basic and $0.83 per diluted share in the prior year quarter.

For the full-year 2022, adjusted non-GAAP net income totaled $101.8 million or $7.87 per basic and $7.79 per diluted share, compared to adjusted non-GAAP net income of $22.3 million or $1.71 per basic and $1.68 per diluted share in 2021.

For a full reconciliation of non-GAAP measures to the most comparable GAAP measures, please see the table at the end of our earnings press release.

Also please note as disclosed in the footnotes to this morning's press release beginning in the fourth quarter of 2022 Eagle no longer excludes expenses for in process research and development from its non-GAAP results.

Historically, the company excluded these charges, these charges have been made, these changes rather have been made to align with the views expressed by the U.S. Securities and Exchange Commission. Prior periods have been recast to reflect these changes.

As of December 31, 2022 and following the completed acquisition and synergizing of Acacia, the company had $55.3 million in cash and cash equivalents, $72.4 million in net accounts receivable and $63.8 million in outstanding debt, resulting in $64 million and net cash plus receivables.

In 2022, we repurchased $18 million of our common stock as part of our share repurchase program from August 2016 through December 31, 2022, Eagle has repurchased $46.1 million of its common stock. During the fourth quarter, we refinanced our debt facility.

The company now has a new three-year $150 million facility with a bank group led by JPMorgan that includes a $50 million term loan A and a $100 million revolving credit facility. The terms including covenants of this facility have been publicly disclosed and are similar to those of the prior expiring facility.

With that, I'll ask the operator to open the call for questions. Operator, please go ahead..

Yes, sir. [Operator Instructions] Our first question comes from Brandon Folkes with Cantor Fitzgerald..

Hi, thanks for taking my questions and congratulations on a very strong year.

A few from me, maybe just firstly, just on the -- well, let's start with PEMFEXY, maybe just -- can you talk about the moving pieces around 2023 revenue? As you gain this market share, any dynamic that revenue should not track around a similar growth rate?.

Yes, can you repeat that again? Brandon, we lost you for a second..

Sure.

Apology, so on PEMFEXY, can you just talk about the moving pieces around 2023 revenue? Just as you're gaining market share, any dynamics that revenue should not track around about a similar growth rate?.

Oh I see. Well, thanks for the question, Brandon, and good morning. Yes, so we are out in the marketplace with our sales force concentrating on PEMFEXY, we're thrilled about the growth that we've had so far, the announcement today, the $12 million in Q4 and then the market share of about 10% where we are today.

And I think if I understand your question, it's really about how inventory levels relate to sales and how that shakes out in the course of the year? For the most part, our customers have acquired inventory in anticipation of their future growth. We expect the 10% to grow to 12% by the time we get through March and then grow beyond that standpoint.

It may not track exactly from quarter-to-quarter with [Indiscernible] activity, we'll just have to see how that all shakes out and see where the market share winds up. But at the end of the day, we'll expect to have sales in excess of last year's number of $67 million, and right now, we're on track. We're right where we thought we would be.

We're hoping to have and still have high expectations that we're going to have a strong year. For the product, and remember, the profitability of the product has improved this year, as well as we bought down that royalty payment. So it’s exciting year for us as it relates to PEMFEXY.

Did that answer you, Brandon?.

It did, yes.

And then maybe on BELRAPZO, so now that we have the TREANDA generics on the market, did your strategy around that product change at all?.

We are doing our best to protect our franchise. We have an oncology sales force that is very focused on the product. We just think we have two really good products, especially in BENDEKA, the 10-minutes infusion.

BELRAPZO being a liquid product, I think we're just going to stay very focused, we've committed before or at least expressed that we thought we would be within this 25% loss, keeping 75% of our product. And you can see after the first 90 days, Brandon, we're really in very good shape. We've been able to do a really nice job keeping our products.

And we expect that we’ll just going to have a strong ‘23 as it relates to the bendamustine franchise both BENDEKA and BELRAPZO, combined with what we've just articulated on PEMFEXY, we're expecting to have another strong year across the board with our products in ’23 it's an exciting time for us..

Great. Thank you very much..

Thank you..

Thank you. [Operator Instructions] Our next question comes from Tim Lugo with William Blair..

Hey, guys. This is Lachlan on for Tim. Thanks for taking the question and I'll add congratulations on a strong 2022. So on PEMFEXY, those the market share data you provided is very useful.

I was wondering if you can talk about, sort of, how much of the market you call with the sales force to help us think about where that market share could get to? And then on -- yes, so I'll leave it there..

Well, let's start with [Indiscernible] and thank you. So our sales force covers the entire market, the market is slipped between commercial and the hospital market to 340B market pretty evenly. We're mostly focused with the sales force on the community side and those are the shares that we're referring to is the share in community.

So it's a big marketplace, we're very focused on it. We expect the share to continue to grow throughout the year. We haven't guided to where we expect to go. We'll take it quarter-by-quarter, but we feel pretty confident that the 12% level as we leave March, especially considering that we've already grown from 6% to 10%.

And then we do have a focus on hospital market obviously as well. We'll see how that goes, but right now, very focused on community the sales force covers 100% of that business and as of today we're feeling pretty good about it..

Awesome. Thank you.

And then you mentioned in the press release and in the prepared remarks that you anticipate growth in BARHEMSYS and BYFAVO, now that the sales wasn't fully scaled, can you just talk about when that sort of happened? When did you complete that scaling and sort of how big is it now compared to what it was last year?.

Yes. So the scaling is really just coming into play, we only purchased the company closed on in June. And so we went back to the territories now that we had these new products and we made some changes, we made some expansions, at the end of the day, we have more reps today than we had last year by a few.

And we're just really very excited about the ramp, it's looking good. I realize it's a small base, but you can see by the remarks we made today, there's strong growth there. We're expecting ‘23 to be a very solid year and lay the foundation for future growth and we still have really high expectations.

The two products are wonderful, getting great feedback from our customers and the users of the product. We had the -- we had what I thought was a really very strong Investor Day a couple of months ago and we just keep hearing wonderful things and let's see how the growth goes.

But right now, we are also very enthusiastic about the trends for the product..

Got it. Thank you.

And I guess on the topic of sales force, if I could just quickly ask, are you expecting much incremental expansion around landiolol potential approval?.

No, I think we're right sized for all of our launches and all of our business this year. I think the step up that we took and the people that we have now is sufficient to get us through at least the next year..

Great, thank you..

Thank you. Our next question comes from David Amsellem with Piper Sandler..

Thanks. So just a couple.

First on vasopressin, can you just go through your thought process in more detail on the withdrawal? Is it just a function of the crowded nature of the market? Or are there other considerations? And then can you just talk to how you thought about the ROI on that given the withdrawal and was there a potential to come back at some point as you look in market conditions? So just a few on those.

And then secondly on bendamustine, I guess it was sort of in early days with generic market formation, but can you talk about where you ultimately think things will settle out regarding both BENDEKA and BELRAPZO share, so something of a longer-term question there? Thank you..

Yes. So, okay, let's start with vaso, David. Thank you for the question. So, look, vasopressin was the only generic we've developed in the company's history. We thought we had a unique capability of bringing the product to the market and getting through the courts, which we did. We sold quite a bit last year and a year that we launched it.

But our business, the rest of our business is just so strong, right? The bendamustine market, the PEMFEXY market, we're investing behind CAL02 and Enalare, there's just no real room in the company for a generic product. So we exited these generic markets well as the price declines.

There's just no reason for us to be spending our time in our sales forces focus on a generic product. In terms of coming back to the market, that's really very interesting. Certainly, we have the capability of doing that if things change, we did have very good market share for the product.

We don't have big plans in the near future or anything that we see on the horizon. Considering that we just exited. But the ANDA is viable, so we'll see how markets shake out, sometimes things change, that's basically the vaso story. Now bendamustine, BENDEKA we've guided to keeping 75% of the gross margin in ‘23.

So far 90 days into it, almost 90 days into it, we're really encouraged, we're ahead of our forecast and our plans, I think that speaks well to the strength of the benefits of the products. Let's see how the months go, we'll give more of an update when we close out Q1, what we report there.

But I mean, so far we're thrilled about how the products are holding up and how the trends are working. And right now, again, we just feel great about bendamustine and quite frankly the entire line. So let's see how things unfold, it’s going to be another really good strong year for us in ‘23..

Thank you..

Thank you..

Thank you. At this time, I show no further questions in queue. I'll turn the call back to Scott Tarriff for any additional or closing remarks..

Well, thank you everybody for joining the call. Look ‘22 is a record year for Eagle and we're committed to carrying that momentum into ‘23 and beyond. Our team remains focused on delivering value to stakeholders and ensuring the patients have access to our therapeutics.

We look forward to updating you as we continue to pursue growth organically and potentially through acquisitions. Thank everybody for joining today, I appreciate it and be healthy..

This concludes today's call. Thank you for your participation. You may disconnect at any time..