EGRX
#Thank you, <UNK>, and good morning, everyone.
We're pleased to share with you the progress we're making at Eagle.
Our business outlook for the Company remains bright.
We're encouraged by the potential of our products to deliver solutions that address that life-threatening conditions and improve treatment outcomes, and look forward to some upcoming milestones that we expect will drive meaningful earnings growth.
Since we provided a thorough business update a few weeks ago, I'm going to keep my remarks brief on this call focusing on several key highlights for the quarter.
Then I will turn the call over to <UNK> to review our financial results for the first quarter of 2016.
During the quarter, Teva launched Bendeka, beginning the market conversion from Treanda.
Product did not ship until the end of January, so the launch was slightly delayed, but momentum is clearly picking up and we have a shared goal of 90% market share.
We'll talk a little bit more about market share in just a moment.
Our Docetaxel non-alcohol formulation launched in January, and contributed as expected.
This was our first quarter as a fully commercial organization with our own sales force.
And as a result, Ryanodex sales were up approximately 5% quarter over quarter, the message is getting out and we're beginning to see reorders.
As previously disclosed, we received a complete response letter for Kangio from FDA.
We have now met with FDA, and they are in dialog with the agency.
As soon as we have something tangible to share, we will let you know.
We also advanced our programs focused on Ryanodex label expansion opportunities.
We are encouraged by early clinical results and enthusiastic about the prospects for Ryanodex to be approved to potentially treat exertional heat stroke, as well as ecstasy and methamphetamine intoxication.
This was an active an important quarter for Eagle, largely due to the much-anticipated launch of Bendeka by our marketing part in the Teva Pharmaceuticals.
As Teva stated on its call this morning, it is fully committed to Bendeka.
Bendeka was launched at the end of January, and sales are now steadily advancing.
In Q1, Teva achieved net sales of $38 million for Bendeka, reflecting the timing of the launch.
We are seeing momentum, with estimated net sales for the month of April at $45 million, and an overall conversion to Bendeka as of the first week in May of approximately 71%.
We expect significant market share increases during this quarter.
In the critical hospital outpatient and clinic segments, which account for about 70% of Bendamustine sales market shares already reached approximately 77%.
Teva and Eagle have a joint goal of reaching 90% or greater share.
We believe Teva is committed to enabling Bendeka to reach its full market potential.
We're quite pleased with Teva's commitment to the product, and we are fully committed to supporting Teva in achieving those targets.
As Bendeka sales grow, we expect our 20% royalty from Teva on those sales will be an important earnings driver for Eagle Pharmaceuticals.
Teva and Eagle hold six patents in the orange book for Bendeka, extending from 2026 through 2033 with additional patents pending.
It is reasonable to believe that the market protection for Bendeka is likely to hold for many years to come.
Regarding the Delaware litigation involving generic challenges to Teva's Treanda patents, we are still waiting for a ruling from the court.
We're optimistic that there will be a favorable outcome for Teva, particularly since the claims that have been brought will have to be invalidated for generics to come to market.
Now let's turn to Ryanodex, a product which we believe has the potential for multiple additional clinical indications.
As you know, Ryanodex received first-cycle approval from FDA for treatment of malignant hyperthermia.
We have secured seven years of orphan drug exclusivity, have five patents issued, and two more filed.
The message about Ryanodex's effectiveness is spreading, and our sales force is focused on it.
Sales were up about 5% quarter over quarter, approaching the $2 million mark.
It is early in the quarter, but we continue to see momentum and expect additional growth.
We are waiting for comments from the FDA regarding Ryanodex for the treatment of exertional heat stroke, for which we've already been granted fast-track designation and the orphan-drug designation.
Our study at the [Haje] last year showed 122% increase in incremental improvement in the Glasgow coma scale at 90 minutes in the subset of non-intubated patients.
Substantiating that the use of Ryanodex drives the improvement of cognitive function, which is the critical CNS factor motivating Eagle to pursue these new indications, exertional heat stroke, ecstasy and methamphetamine intoxication.
We have the potential to be the first drug to market for the treatment of exertional heat stroke.
We look forward to updating you on the final meeting date with the FDA soon.
The National Institute on Drug Abuse, part of the National Institutes of Health, is preparing to undertake pre-clinical animal studies evaluating the use of Ryanodex in the treatment of ecstasy and methamphetamine intoxication, a potential additional indication.
Ecstasy and methamphetamine intoxication, which can result in life-threatening brain hypothermia, accounted for 125,000 emergency room visits in 2011.
Our intent is to file an IND related to ecstasy and methamphetamine intoxication, and ultimately meet the with the FDA.
Now I would like to ask our CFO, <UNK> <UNK>, to update you on our first-quarter financial results.
<UNK>.
Thank you, <UNK>.
For the first quarter of 2016, our revenue totaled $29.6 million, compared with $36.3 million in the first quarter of 2015.
The revenue mix consisted of product sales, royalty revenue, and license and other income.
As this is the first quarter we are recording Bendeka revenue, let me add some color about how we are accounting for the product.
In addition to royalty revenue, there are two components that we include in our income statement.
Bendeka is accounted for as part of both product sales and cost of revenue.
When we ship inventory to Teva\
Thank you <UNK>.
To sum up, we believe the outlook for Eagle Pharmaceuticals remains bright, with multiple upcoming growth drivers.
I realize there is a focus on the outcome of the generic litigation in Delaware, and rightfully so.
In event that the outcome is favorable, Eagle will be in a stronger position with strong earnings, significant cash, no debt, and a deep pipeline.
And importantly, a significant portion of our revenue will be coming from Bendeka, a branded exclusive product rather than from a generic marketplace.
We believe we're well-positioned to continue to build value.
Thank you for your support and for joining us this morning.
I am pleased to answer any questions you may have.
Thanks, <UNK>, for the question.
Appreciate it.
As you know, as of May 1, we have the contractual right to launch our big bag, the 500 milliliter bendamustine formulation.
We have not launched it, obviously.
There are a number of variables that influence the decision.
What we can say is that we are very focused on this, and will be updating everyone regarding our plans in the future, in the near future.
Yes, were there a number of variables that influence the decision, <UNK>.
As we said, we are focused and we're going to provide an update here in the near future.
But what I will say is Bendeka is being very well received by patients and physicians.
The feedback has really been very positive on how the shorter time infusion rate is being received by the people that are touching it and using it, which is great.
And you are right, we will have to focus on how that goes, what's going on with the litigation.
We have a public hearing coming up very shortly on the J-Code appeal.
And from our standpoint, we just need to look at all these variables and I think we will have an answer before too long.
Okay, so thanks, <UNK>.
Yes, I think that we want to stand by the guidance that we gave at the last conference call and also at this one.
So we would expect to see sales and marketing expenses at $18 million to $21 million, and G&A at $19 million to $21 million and R&D around $30 million for the year.
Right.
Yes, we would expect the royalty number to really be the bulk of what's reported there.
And cost of revenue to be approximately equal to product sales.
Thank you, <UNK>.
So first on the IPR, it appears, from our view, that the IPR is positive.
We have the first IPR coming out and positively for Teva, and the IPR, the patent office, not going further.
Remember the standard at the patent office is lower than the standard in the court.
So even though there is no direct influence on the court by the results of the IPR, we are certainly encouraged by the fact that in the first IPR we had a positive event on the 270 patent, which is a key patent here.
And in the second IPR proceeding, the key claims, claims one, three and five also went well for Teva.
And when you look at that and then combine that with the higher hurdle at the District Court of clear and convincing, which favors the innovator, we are optimistic that things will work out.
But obviously, there's no way to tell.
We will know in a few weeks, probably by early June, and we will just have to see how things unfold.
On the salesforce, we've certainly reduced the number of people that we have right now in terms of what we plan to hire because of the delay in Kangio.
And we have put our effort now behind Ryanodex, and it's having a pretty good impact.
If you look the last couple of quarters of Ryanodex, it's growing nicely.
As I stated my comments here earlier, that I realize it's early in Q2.
But we are seeing continued growth of Ryanodex to date, and so I think we're getting good use out of the salesforce.
We are making reasonable progress on the docetaxel launch, and we still hold out hope for Kangio.
We did meet with FDA, we are in dialog.
Let's see how that goes, and as soon as we have anything tangible there we will give everybody an update.
But business development is a focus.
We are commercial now, and we do have the salesforce between ourselves and Spectrum and it would be nice to be able to add more products.
We think we can add a few products into the infrastructure here at Eagle without adding much expense to the system.
We are looking.
We have not found anything yet that quite fits us, but we are aggressively reviewing opportunities and hopefully we will find some good fits.
We are open, <UNK>, to look at all opportunities.
The way we see things, the Delaware court case obviously is so important to us.
But in the favorable situation where there's a positive decision there, we find ourselves with a long number of years where we have really wonderful royalty coming in from Bendeka.
And the way we view that is, Bendeka is a branded product.
We are not subject to some of the issues going on in the generic environment, and that's a great place to be.
Add the pipeline that we have, it's not just the methamphetamine, the ecstasy and the exertional heat stroke coming out of Ryanodex, but it's the AMRI relationship, it's a couple of products that we have in our pipeline that we haven't fully spoken about,.
Remember we have the Pemetrexed, the Alimta filing later this year.
I think once we get past that court decision, we will step back.
We will look at Eagle and see how well poised we are, again, with cash and a pipeline and no debt, and obviously the clean balance sheet.
It gives us a lot of opportunity to acquire baskets of products or products.
Or quite frankly, <UNK>, we would be in a situation or maybe patients works where we would not be in a situation where we have to have increases to the pipeline or the portfolio through acquisitions.
So why don't we take it step-by-step and see, and leave it at the fact that we would love to be able to bring some more products into the salesforce.
Thank you, <UNK>.
So I will say, go down the road whenever it is that there are generics in the market.
Hopefully, later as opposed to sooner.
I think what we would find ourselves in a situation where we would have the two best products in the marketplace of three.
Now as I mentioned earlier, Bendeka is showing some very positive results early.
There's some, what we would call, safety data coming out that will be public here soon, that I think will add to everybody's enthusiasm about infusing bendamustine over 10 minutes.
And so we are reasonably optimistic with a commercial organization maintaining a large portion of the Bendeka market, even in the face of generic competition.
I think the longer number of years that Bendeka is out in the marketplace, so patients and physicians and nurses could enjoy and see the tangible benefits of the product, the better situation we will be in, in order to protect that share over time.
It's hard to predict how many people will ultimately enter that market, or when they would enter that market.
And certainly the price within the market is going to have an impact on the profitability of the product, but probably not the market share of the product and we will just have to see how things unfold.
And contractually, again, if there is no unique J-Code, if the situation stays the way it is, we have the right to terminate the relationship and take back Bendeka and also launch our big bag.
That's still an option for us that we are reviewing.
So what I will say here, <UNK>, is lots of variables, lots going on, but what we do know is Bendeka is the better product.
It has wonderful benefits.
Early on we are seeing that with the response from patients and from physicians, and it should maintain itself as probably the workhorse in the marketplace.
Yes, sure.
So we are ---+ the contract is obviously addresses the situation, and we are evaluating that situation on the exact timing now, <UNK>.
Keep in mind that we do have a preliminary ruling now, we are going to CMS hear shortly to argue our points.
We will see how that goes, and then in the fall there will be a final decision coming out of CMS.
You're welcome.
Okay, thank you, <UNK>.
Let's take it one at a time.
So of that $155 million or so that Teva reported, about $38 million of that was Bendeka, the rest was Treanda.
So we received our royalty on the Bendeka piece obviously.
And then what we did just state that the month of April, it looks like sales of Bendeka was about $45 million for the month, and we continue to see the ramp up hopefully in May and June as we end the ---+ at the quarter.
I don't recall specifically Teva's sales number, but I thought that their Q1 number was about 1% off of where their Q1 number was the previous year.
And there may be some seasonality, there may be an anomaly there and terms of what their Q1 sales are.
We don't know, but the range was similar to what it was in the first quarter of the previous year.
Thank you.
Thank you, everyone.
I appreciate the time everyone took today, the continued support of the Company, and we look forward to continuing to update everybody as future developments unfold.
Thank you very much.
