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OSMT Osmotica Pharmaceuticals

Participants
Lisa Wilson President & Founder, In-Site Communications, Inc.
Brian Markison Chairman, President & CEO
Andrew Einhorn CFO
James Schaub EVP & COO
Gregory Fraser SunTrust Robinson Humphrey
Ami Fadia SVB Leerink
David Steinberg Jefferies
Randall Stanicky RBC Capital Markets
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Osmotica Pharmaceutical First Quarter 2020 Business Update Conference call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Lisa Wilson, Investor Relations for Osmotica. Thank you. Please go ahead.

Lisa Wilson

Operator. you, Thank Pharmaceuticals' Osmotica XXXX Update Business Welcome First Call. to Quarter Wilson, This Osmotica. Investor Lisa for Relations is me With and call Chief Andrew today's on Operating Brian Executive Einhorn. Officer, Markison; Officer, JD Schaub; Chief Officer, are Financial Osmotica's Chief

section afternoon, at call financial for detailing through can XX, This be the press a osmotica.com. and Investors March results press ended accessed the release company of months webcast This website a XXXX. release the issued Osmotica X of the this

Such would like made company's I release guarantees regarding by information forward-looking the These remind may Securities everyone call afternoon's Before express forward-looking as statements started, based we and are expectation, from future statements intent to in that filings forward-looking any with be involve statements, in Private considered or Litigation management anticipation of today those any obligation specifically forward-looking differ and statements. required SEC. statements intent on that this Reform statements the to get except and may uncertainties, future update noted available law. Actual on Osmotica's to events or conference disclaims and projected results our future those as Act. performance. these today's performance the forward-looking including as are press projection, materially defined a belief, forecast, risks Osmotica by the of not

adjusted EBITDA. During this call, to we refer as such measures non-GAAP

for press on tables this The adjusted website of EBITDA XX the archived reconciliation of income available our osmotica.com. loss, our will see For net release. be days call on at a or please end of to the webcast

listening this Since was to filings. the of recorded May company's held call archived replay reference XXXX. topics press have benefit or the the and most those related to For XX, please releases announcements so discussed, who recent SEC may and on may Osmotica made then, be the webcast,

Markison. to call Osmotica's CEO, that, I'll over the turn with And Brian

Brian Markison

afternoon, good the joining call. and thank you and you, Thank Lisa, for

First, during like to all of thank and who dedicated unprecedented our this I employees, focused would time. have remained

colleagues every showing our up Our warehouse and company. and become supply chain backbone manufacturing, have have of the been day

Our and has well, reasonably business are promoted our exceptional. been products performing Trigen

importantly, for or RVL-XXXX, review Second, droopy be of eye, to the blepharoptosis July date. FDA to on meet novel treatment most appears our perhaps and XX goal our track

of While will product, physician rollout the continues early and build. and interest KOL this pandemic introduction the affect to support innovative

the today's in where of more focus acquired the currently advisory offers will and RVL or armamentarium to Over used our boards droopy eye. future the even deeper face everyone does for to not eyes to may a and a to treatment masks period attention months, world treat groups patients wearing dive option blepharoptosis past few we become customer into have clinicians focus that be In a and base. pronounced. exist time,

In and anticipate the our continue a coming landmark major ex-U.S. pivotal care publication pace. our on in a efficacy efforts partnership X III journal, eye months, studies of we Phase

of June. application, our for by track end on file or Finally, remains NDA, to drug the amended arbaclofen new

team study this to the earlier has spreading expeditiously our to news R&D I'm close of As year, report been pandemic study, our safety was completed. this that long-term out pleased and worked

our arbaclofen As efficacy have of management with globally the we sclerosis programs, demonstrated of Phase a will with submitting multiple safety regimen. twice-a-day a be Osmotica our large for databases treatment and reminder, Through the one largest III of spasticity.

Ashworth by dose-response the further with modified In for XX-milligram scale, doses, year fact, tolerability and the molecule. is XX-milligram arbaclofen as has unprecedented exhibited safety demonstrated measured X relationship and that and this

products. share details the Andy? results. Operating our discuss followed who Andrew who company's Officer, by the will turn Chief Andy will to Einhorn, JD, promoted like I'd to Now will over be company's financial of call the

Andrew Einhorn

months to ended from March million to and sales. X decreased Brian. ER Net XXXX, $XX.X for March product months million decreased XX, XX, XX, for decrease in product million XXXX the methylphenidate volumes. ended selling both $X.X primarily to sales X to to you, the net X $XX.X the net prices tablets by million primarily XXXX a $X.X to X compared due Total $XX.X for March $XX.X declines March months Thank the as for as by and compared ended revenues XX, venlafaxine ended for million stemming months XXXX, ER million due lower

in quarter cost not of to clinical development and costs which compared by Selling, realignment to reductions quarter of X costs the during $X.X compared a first year of offset associated, third RVL-XXXX of the general during with the decreases during in of severance in XXXX, prior manufacturing million decreased of of XXXX, million force $XX.X $XX.X in ended by expense the sales year III the the million XXXX, decreased completion quarter ER the trial as primarily quarter. batches and XX, arbaclofen present sales the in administrative The the XXXX with reduction quarter to lower the were to of trial as related quarter marketing and prior $X.X first second March expenses Phase was costs million clinical reflect launch expected to million $X.X first partially months Osmolex XXXX associated costs increases of reflecting of in in force quarter, the with development the XXXX. the expenses XXXX. RVL-XXXX, which Research first associated

EBITDA of adjusted to loss XXXX. XXXX first XXXX. million $X.X of was in Net first the first XXXX of EBITDA quarter compared loss the a Adjusted in to of quarter the was $XX.X of quarter million the net million of $XX.X million for compared for first quarter $X.X

and XX, March of of availability of equivalents As cash and we had $XX XXXX, our under million. revolver cash $XXX.X borrowing million

principal had also under amount aggregate loans. term We our borrowed million $XXX.X

and underwriting expenses. completed In million we of offering commissions offering, effect after net a discounts, public January giving XXXX, equity $XX.X generating proceeds to

JD. I the will now over call to turn

James Schaub

like continue to we us, Thanks, Andy. situation all monitor challenges, The closely. of presenting the impact unique of COVID-XX and, is

As effectively working as to support we an been very new remotely have transition employees while rapidly to working. organization, embrace pleased I'm were ways our able able to we of that they protecting access continue patients as their to we of the our and need get and to uninterrupted information our receive safety ensure they the as customers products. well they well-being education as

methylphenidate growth During volume for quarter extended-release existing market-leading strategic make M-XX the and the the second the first existing our visits decreased. in of new and orders tablets, national with extended our into and quarter resulted from efforts launch continued brands, promotional growth Osmolex, and impact prescription and key our of we a progress our brands continued shelter-at-home our more Predictably as on RVL-XXXX. has Divigel, the to venlafaxine to XXXX, recently, of and showed with priorities, potential generics, preparations ER in have the slowing promoted patient trends rate

significant Fortunately, are these date we have minimized business. we navigate overall times to taking uncertain to believe to the impact our steps

to seen topical volume, every specifically, front period our and continued XX% year be XXXX XXXX. of expect will the maintain More as of prescription in ability the in Divigel quarter. when continue first COVID to saw grew of our promoted its all approximately the the have estrogen leader we day, customers to same market strength Divigel while brands position compared a growth continued replacement. in impact in with existing quarter versus And our it prior dynamics

quarter 'XX. strong versus a first M-XX as prescriptions also grew QX XX% experienced

reps by our versus market to we encouraged growth continue broader last anticipate the ADHD we resume We to traditional activities performance the weeks. are a months. product XX of M-XX's as grow short And promotional the term, in the the over coming leveling although in expect more

with first in engage the the and ways the telesales, impact Amidst patient via focus education, physicians connect, XXX neurology to access in Osmolex. services totaled COVID of Lastly, on Osmolex sample disruption, abrupt quarter supporting early patients to prescriptions our and online virtual the to despite ordering continue space March. alternative we and to center

continue tactics year and to this through committed the its have our market. on first We who patients, expect to Osmolex practitioners challenging to adapt the through and embraced time remain

despite continues buying. competition financial an Andy non-promoted generic increased earlier the business consolidated and commented our As products be in important to highlights, contributor and

and Our manufacturing, operations been mitigate and during chain appreciated. disruption supply prepared efforts greatly this have those well to time, colleagues potential are

pipeline, for with look RVL-XXXX. we momentum we're planning the significant gaining launch towards our As

on touched be a excited more and Brian our with deeply his and opening last professionals. created lot to the have weeks in an KOLs remarks, engage care even XX eye As about, there's to opportunity

there providers are has and more a unprecedented. simple, traditional we being not XX doses will being of option all suffering and care, in customer date, the a eye we've be to in things launch for this the disruption, launching While forced evolution the an acquired with adjust in been to effective we deploying from always To and all U.S. differently. for about treatment and than safe experience patients patients challenging doing adapt the as RVL, million believed alike,

ECP for build expand. as community serve Our we the strong experiences creating partnerships will and will with collaboration foundation which early and and connections from positive momentum, the

unmet product, transform all a the launch combination the our for of providers, unique huge will organization. and with of and model, need In truly first-in-class business millions we enthusiasm together pay sincerity, for a novel believe value to is of the a the our contagious, fulfill continue cash patients proposition deliver

back I will to call now the Brian. turn

Brian Markison

you, to the Q&A. Thank operator, you you. it for JD. And I'll turn Thank

Operator

SunTrust. comes Greg from [Operator from of our question first Instructions]. I show the line Fraser

Gregory Fraser

could there prolonged RVL, environment something if economic thinking with a on First, is the payers and downturn be you how contracting the I'm might risk reconsider. positioning? you're that about has specifically wondering And changed that

Brian Markison

for part. I the second first the take Thanks JD question. and part, Yes. will I'll the take think

tactics understand how time combination with back see But We I for key we're ear. to customers is what frankly, taking and of to I its at the know engagement of be as last come forward. mean, sales no as on a at time to originally touched quite we the a our on clinicians as look model launch go spend mentioned base things a of the anticipated. to we're now, other begin a lot do they ramp be Our selling, a force think proceeding. how want different new NDA slower the that be it matter we entire we review earlier, as our the will And And will to of than with right as with And physician normal, digital we track, approached. well FDA. bit direct time, is with are KOLs, least it. rules what is plans going we the the

side, pay On the JD?

James Schaub

you Yes, I approach rooted Thanks. The market would think no opportunity. simplicity. with is payers? I believe, was it, matter Thanks, this what is way Greg. in contracting reconsider And our question, cut And and large transparency a we

between continues severe the XX-million-plus we've to and is the lack from and ptosis a pay discussions trying reimbursed versus acquired sticking and and drives the right approach to to the research a and proposition entering with the that and us estimates our that the done tell product control and of pay and balance patient there direction of simplicity from product challenges with this think and continuum value that and this for that forth the business the of I really cash out patients that comes approach -- across contracting population size mild cash model back model approach.

Gregory Fraser

business of Got that I help of to makes wondering reliability the over U.S.-centric supply the speak history supply this your win if and you the sense. to of expect whether you've quality, time your and model That you demonstrated you nature environment. chain it. could also was in And and generic

Brian Markison

well. in short there's Georgia, a lot with and communication Well, of to just all the I products we trying And of at to the the manufactured our very other ground yes. same our of are in close preemptive manufacture all in our Methylphenidate, We're as raw way Marietta, that think been other is we're U.S. in customers. We've for example, stake secure materials many in along answer it. that steady But ability companies advance. venlafaxine with

So products the chain we on from don't see interruptions supply any horizon. our of in

Operator

Fadia Ami Leerink. Our next from from comes question SVB

Ami Fadia

an if for with a and that to type in the prepare follow expense maybe an see RVL expect for change -- trend. up start Does in do launch, increase expected the R&D And around product? expect the your go-to-market and thinking we question wanted question on you then some to on unemployment on do I pricing maybe strategy recessionary building quarter? more inventory? the broader strategy then And time. prior your I second should when have you when And to the you of have another impact start you as

Brian Markison

Okay.

this not outrageously straightforward really with not begin And May. to partner, long. the So the we is sort time end will in lead of But build of -- a is drug to not before coming Nephron. very our manufacture inventory the months, that's

we're looking inventory. beginning month, think months X.X to a I build end, to at

got going we're dating probably start excellent the So June. We've on to in product.

always at the $XX. With quite current regard a a $XX all frankly, to our pricing, not been at looking and range I've JD's we been were $XXX month. between And much. is at environment $XXX. that I changing think And perspective

of to pay. are something I a well change where and $XX the $XXX not on want And that market to to are rely do drug, going research a willing lifestyle going between this dip willingness lot people pay to into a is to continue it to it's We and and do think going become and with it month. be and to

to ZIP JD, in the much add thinking what our So you pretty pricing that? around same would is Code.

James Schaub

our don't this out professionals customers I excitement the just eye think there? the peers, adaptation in of and really understanding, as want unemployment to force-continued The RVL, and and, of out current and gets particular, market think that now. market. with is focused right really a a would in adjustment this terms say, I in education and and question very the the communicate case, and controlled the which something comfortable think a I awareness landscape is really like get create what We're we are that real. this interact of large there. we're care that in does that, of, as is just doing many necessary launching landscape, I enthusiasm Yes. and the Ami, our on ways is to that's There And build pricing se? per it's in that way a impact

Ami Fadia

if Great. Two somewhat may, and probably they I are quick questions, more more ones.

regards for And second any that with Firstly, additional profile? completed then quarter? with think with the about color how should regards study, safety arbaclofen, is can safety give trends us just to to you there we volume

Brian Markison

Okay.

about or people our the NDA with going on frankly, and reviewed and is excited second the So And quite clinical the And the track about the naturally, a are year of data my unprecedented also a XXX talking is both over of in particular. terms adverse than And are that baclofen to with for somnolence, before. that. end drafted now lot we quarter, that's NDA arbaclofen, the for resubmission by tolerable reports being have a very of of team. may have with the of study strong is right a we're to it go CSF started travel events to and arbaclofen, shows line in additional study delivered levels the that's and evaporate just interesting. when and altogether. completion near that be in and began at safety is And at and the will we we'll to only be the tolerability in submission milligrams the such been finish future XX into ever in that of exciting the safety of And international a and be estimation March, our dose information us. we additional And it has our link in and The part down baclofen, that in got product at to right, to -- of R, arbaclofen submission higher things the very as X-year S-isomer also XX milligrams, shut the information CSF, very R-isomer.

months, it's be but on all it's So trends, over to get -- the that we'll in. deck the hands JD? then finessing And now, story application coming right

James Schaub

Yes.

business, the overall earlier the just Ami, of So, stable. I the we're fairly comments trajectory like think about

quarter. last and terms NRx I or the some in wouldn't in and the QX quarters more overall, the Divigel brands in so of first have few of impact we XX. over like in of say a into growth terms of tempering promoted just headwinds cliffs that down I our that trends of over probably visits QX ultimately, and drop-off seen weeks expect think massive we modestly patient moderate any with and X the But the seen recent the we've

the And out think, been obviously, consistent chain with just maintaining side, about The and business, on good we've our branded supply but very of the there the in on talked news, for stability. levels focused supply generic channel. I we've is us stable even

possible. think on that as we've as in keeping ex-factory level second So back spike don't performance been huge first have contributed strong then volumes, is a seen that to quarter, the I to come supply given whip the in that quarter, and going focused things around really

the we volume On think key consistency side, and from products quarter X share X. anticipate for I of quarter the generics to the market relative

Operator

from David Our next comes Steinberg Jefferies. from question

David Steinberg

on questions I couple of have RVL. a

said The will PDUFA FDA you is first hold. as date, with that you think progressing is, the expected, the Brian, and your dialogue I think,

are, just date? patients There now, And few no way end, exactly So to optometrists. to And if see projected launch the ophthalmologists. that you stay very launches. bit? I why curious, going I'm seasonal up, in kind the delayed are that right want of what their that's to is with pick there are Or things meetings companies right a know to have impact your little they is want you'd consider some launch would delaying launch and any away? you

relating collaborations. secondly, then And to

you've the a last in you I with of Japan. had Asia, think particularly said dialogue companies lot on that call,

second said Japanese pretty least after you discussions U.S. largest companies. serious market at with had progress you Japan's Any think I X the the And there?

the back consumer would pay coming a guess the the this of fact U.S., to the United in sort you've company a I largely with business, collaboration RVL? that on larger thoughts be to some it and decision then cash help on doing it given any made to And launch price product, States

Brian Markison

questions. of bunch a That's Okay.

conversations say, proceeding, partnership nicely. I are ex-U.S., So would

the can't hedging bit quarter. complete the good spill it see process, and competitive are next going bear I'm we pretty airplane get just a other bit on hammer because to fruit a may planning a But into out and a quarter, it, think I do process. these have We're an but each it's details. have and within soon. we to and with negotiations pleased we We little fairly

all we're this from they in people as you companies So it making up look, environment, cover, of the an go. know and you sort where are

we're going these that of out right the organizations talking And you. lot core working going them core to We're see KOLs could group. to we're with reps and prescribers, to a and tell during to their and talking high we've pandemic been will lockdown. get that more in going factual to that information are and we're to going as approval, away. with, Upon day what's formally. different that we every And number a practices we open Here's get I up we're to experience are open while people different time and states model, and of that expand developing softly to begin as up reach

I great go up return it the and out. investment, we a for it. We're So But going replicate group we a there small in we're something to XX, seasonality. of call it on then if And And this in from can the with putting that test be our away. from that We're right? think start we couple approval was going We be get we'll have begin expenses a going weeks to to throttle then launch. start as product That's we're the people's don't a all controlled a say, learn see July date. up lot. to will any We're on of small going to with questions, group. going a date hands back and sense build right of let's goal doctor-by-doctor, to

David Steinberg

it. I think that covers

Operator

Stanicky [Operator Randall RBC Capital next Instructions]. from I our comes from Markets. show question

Randall Stanicky

do hit but market, to aesthetics do opportunities side going And are have firm RVL so follow-up. and do have aesthetics Great. looking then and that cover to I offices what to what I be do up, partner you highly to Facial there's to make the for Brian, take try too? with that? is you point need of attack at lot the cross-selling. getting on hard. catch At to money And U.S. across more a a look quick, costs. pretty a to profitable, offices

Brian Markison

Yes.

was David frank. well are the partnering So third we're can didn't in a -- aesthetic drug so can't conversations is we physician thinking the I to -- think of space, few a complementary that aesthetic but be novel. right I the as And that is advanced, question quite completely the with It to. that about convinced we're the doing that things asked having get now. do that ourself this not is lot it that We because

think into we're carefully. I wading this So very

I I mean, to what you think, that? add would JD,

James Schaub

Yes.

alone. ultimately build maximizing we the And like practitioners to the to with the ongoing optimizing now and we're in aside, are developing aesthetic and I own right KOLs think ultimate points relationships we think of go that and that the I our assess balance conversations using Brian's in the opportunities Randall, rooted really the with value space and it most make, decisions it here. and of merits

Randall Stanicky

different areas some touched about force specifically? point my in further waters you importantly, in the And and are How the split? therapeutic sales more thinking leverage few those force thinking additional second adding you question. of your at products about on therapeutically. about Brian, Talk got licensing start to what you've the here do sales And a sales existing you toe structure,

Brian Markison

the completely that that start take Yes, once makes really RVL And of direction. really other to going we support a promoted no-brainer. to But background we sell that turn this relative brands great organization position, Divigel, the thinking products. basically decision will We're to M-XX, almost to reminder question, products, growth we detailing the Randall. a telesales, anticipate those current RVL, calls, are virtual that in maybe the trade-off

-- or aesthetic can a that's and the end, women's other right launch. now, wait company and we I see But could On very roll determine is tuck-in, We one got great a eye what we've got eye as think how We're position, get space. more the the uptake. products. pruning for we're arm, our this we we'll neuro and on for maybe space. a in of spot. the health And finance But developing that's the going out an care a now, was sales around we've women's company sort because And back not acquisition launch representatives. the we into sure any health partner arm, to portfolio front, the in may we're this an road, cash we're XXX to a with care love ourselves necessary good possibly with of right I'm down calendar drug all them launch, not we a end the feel plan add all year getting for they offices. structured the of And in going to reps. to are of the year be longer would

And So expand group. XX. have reps Right sense now, a we XX strong on around we can we it and of uptake defend investment return with model. we get how physician to a and smaller have once receptivity a we'll

Operator

Markinson, further closing CEO, I the Mr. this turn show Brian questions call no in over the time, for back At remarks. like queue. to to I'd

Brian Markison

safe, Please everybody, the time. thanks, social distance. Okay. call. stay Well, joining for appreciate really Bye. We and you. your Thank

Operator

this gentlemen, call. today's and Ladies Thank conference participating. for you concludes

You disconnect. may now