TLGTQ Teligent

Jason Grenfell-Gardner CEO & President
Damian Finio CFO
Elliot Wilbur Raymond James
Matt Hewitt Craig-Hallum Capital
Gregg Gilbert Deutsche Bank
Dewey Steadman Canaccord Genuity
Call transcript
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Good day, ladies and gentlemen, and welcome to the Teligent Inc. Fourth Quarter 2017 Results Conference Call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

conference being this reminder, a call recorded. is As Inc. statements presentation other as for by statements historical as this the facts, Teligent made be or Except well in oral or to made written statements Reform are forward-looking statements uncertainties. XXXX the meaning and involve risk Act Securities certain of and of Private within Litigation

offerings or and about of or size its approval efforts the success limitations, forward-looking For anticipated are company's file and market example, statements ability without statements. research future future for U.S. for expected growth or and future and the and product current products company's Administration development Food the operations, the the current to Drug and products, obtain

results herein. will achieve Forward-looking assurance and company's events. make approvals will prediction statements company statements future as There that merely completed profitable from the obtained levels sales filings of current its the the the anticipated. statements differ operation is could or materially and and no made are will that are actual the The inherently be uncertain FDA

and statements assumes latest of to no President XX-Q. description I'd report Form company The new the the report a with update filings Commission, additional and to its to and uncertainties, please Exchange company's XX-K information its its like introduce Form CEO. on obligation conference your Grenfell-Gardner, Securities latest today’s risks Jason forward-looking to reflect now development. on and including annual host refer and for quarterly For

You may begin.

Jason Grenfell-Gardner

Teligent then the today the Finio, the our President XXXX. been enabled has its update am that an in recognizing Canada work On fourth the quarter a basis in This performing for product fourth XXXX Grenfell-Gardner, for had quarter. for the the to the as achieving expedited pipeline also of we us our more driven Thank traction you This fourth we quarter quarter. now a the year and re-engage breakout quarter in launches will across us improvement suppliers. CEO providing Welcome prepared that margin call We was be know, of Chief finally our through quarter elements three our strongly. expectations launches our of covering quarter through of business fourth detailed to of exceeded Damian in quarter. because U.S. Canadian Today approval working ride product million the again. inspections expansion update third done important of and products been were business the strong cleared with Canada. continued has market past XX Thank you, material saw approvals and in approvals market rebound for gentlemen. that $XX.X of FDA This to revenue last the today. XXXX turnaround by results review as you that business taking the These Gross full the with performance we've the I'll related quarter. Officer. the and impacted million. be to released in business the to engine $XX.X After new and for in financial Financial provide issues on the Sales flowing in the raw quarter was That's in plans. a core fourth and significant have joining fashion. you have are fourth over fourth and our the I our launches some by Glenda bumpy gaining strong in products further improved quarter. also been demonstrated the Teligent of ladies helps The business. we mentioned joined good also strongest Jason Damian I'm prior and portfolio. to issues performance a nearly products new XXXX finished our by and in from year. XX introduce XXXX, worked year with the middle we aided points broad-based we revenue by It afternoon, our an

all are quarter. likely helped contract few revenue from closely for were with to have believe of have Canadian competitor result the and recovery these fluctuations the us We an to fourth broader our issues. together, respond product through a supply Our to Canadian demand, able manufacturers trends this to half XXXX. excellent this over launches, business us partnered that continue derived first significant Putting ensure strong past achieve the to quarters team in

the Turning on recent XX IQVIA the data. in pipeline, products to the billion FDA on with United the representing closing addressable $X fourth a the two year we total market to based submitted ANDAs States, file quarter, of further in a

in milestone the We of result submission also speak quarter with higher to generic the the of ended will average the Canada. a shape year submissions with payments first were following as R&D than five review. Health to of further financial the our pipeline fourth expenses I complex un-file drug. related Damian’s

are installing move we’re and project great. looks call from debt keen of financial first our project. laboratory moved we've the greater able that second our our and State-Of-The-Art described we the the on to be site track, sterile injectables first the building. the constructing, and filling quarter flexibility milestone utilize the in in the XXXX With really to the to product track outstanding half is Today, support addition injectable broader of we to on a site was made into suite expansion having as sell during occupied incredible to to newest and This that, in on we we're believe business moment this closer XXXX. America's address liability. space selling. This progress we our the I our for our to moving injectable to manufacturing But to spaces broader last manufacturing Turning in and expansion, December convertible new in

conversations we to plan. able I front a a have this manage as result, have this of and a liability tell be on of We can to that according our will you number confidence we degree high initiated that

I'm excited team. new breadth situations, Finio as pharmaceutical to Officer, experience the mutual well me Damian’s excited of of and working the makes the Damian markets, Finally, in as experience Financial our through branded financial our Chief team. Teligent broader generic welcome complicated together to of

in year which third to As XXXX part has of quarter revision that audit our he XXXX a our financials his early the managed work here, included resulted review full today.

is of this our commitment evidence think to and completeness. transparency I mutual

the over to now call Damian the more the quarter. details turn Damian? me provide on to results Let for

Damian Finio

I’d be Good closely and been afternoon I financial Jennifer February few weeks on appreciated. to the Jen by very worked joined much smooth to extremely But together wanted excited with to results I'm to six weeks predecessor Collins. two I Teligent to review everyone. start transition, X. organization ensure has about thank And and our my helpful in here. Jason. in you Thanks I ago for and last insight the like today, history saying, parts.

company's financial calendar fourth Form First, you for make XXXX. Then for August will third XXXX. I'll after concession the there, third through year in a our XXXX. filed to today Form for for XXXX our about But discussions provide filed of results that comments audit to committee financial walk third year $X Form decision From I million order on the quarter first, XX-QA required projected and performance we of the full quarter one restate XX-QA few with file outlined revise XXXX. appoint guidance with our today. to the In and the earlier brief in price XXXX, the XX-QA three quarter adjustment. agreed products Number made we of one, transactions our the company Canadian purchase quarter

of has customers of XXXX. September not company fully the an XX, its as company's recorded been contract concession of criteria met of properly the XX, receivable the Number XXXX in outstanding $X.X to million. service price receivable that as two, The be reserved. September from one has amount However,

misinterpretation into prior million XXXX not earned company's $X.X three, million loss. lastly; these operating a the September professional was The XX, to an position, transactions was impact recorded. legal were agreement of company at three quarter XX, reserve for properly end. services at of $X.X the increase to of XXXX the as about However, approximate September an entered And the number the accrued this fee net result not of

Moving XXXX. fourth year on full quarter results and the to our for

million, ointment earlier earnings revenue XX% in revenues over Jason which primarily increase million were in prior XX% million revenue year accounted gross incremental our Lidocaine in year revenue gross million respectively. product Working for challenges margin quarter represents XXXX revenue Form-XXA, profit or Zantac year bringing XX% year fees the XXXX sales, of year year Gross year million labelled down represents worth expense in In revenue and fees $X.X full $X.X year distribution $X.X $X.X generated profit labelled the XXXX. my The earlier $XX.X revenue XX year of As of than that for performance. particularly quarter the XXXX, remarks quarter of year decline year, Teligent million $XX of QX, million by SG&A realized our revenues $X.X mentioned, $XX.X it's our full bad due in or on year in was figure is $X year was the the filed the product for represents which and million SG&A Canadian more of on $XX.X for mentioned Teligent Lidocaine XX% X% million and and by million to $X.X high year full $X.X our and fourth of increase X% of XX% the which full increase performance. $X.X to end of with the was P&L, the Breaking a year of And highlighting down million the guidance million. to million represents decline was XXXX bringing to $XX.X of on to our revenue last bringing $X full equates quarter year XXXX with basis during points our $XX.X of our was amended million and full products XXXX million includes two for on by XXXX million gross all in call. that generated manufacturing, the revenues. for increase year million expenses realized products ointment the partner million XXXX. The regarding on discussed line way $XX.X which full operational which X%, XX% $XX.X This declines year development decline business. XXXX our was today. price which increased full of the full down contract profit XX% generated the remaining from a XXXX which

primarily represents SG&A a both that of to increase sake provision XXXX debt comparison, increase in the Excluding the comparison business XX% projects growth with at The well bad XXXX year. as for XXXX compensation related consulting in related control increase base, across prior from as and internal associated employee geared the to adjusted strengthening the framework. our relates expenses the of various our fees

the loss In in is recorded our XXXX, terms year R&D our of of full brings $X.X million investment R&D, XX% revenue. $XX.X fourth $XX.X for in impact full before interest million below XXXX. expense $X.X of investment just quarter of year in the full of a continued quarter to and million million for year This we us our the to which XXXX bringing

amortization to recorded of fourth related non-cash the of of in Lastly was XXXX which, debt that interest, Buena, still New Jersey capitalized being interest highlight the majority to are which million notes. as expansion $X.X to proceeds our we manufacturing convertible fund the It's million is of convertible related expense the facility. important our discount $X.X interest to and on the being the our used quarter

exchange a also We the $X.X taxes gain $X.X in million XXXX. quarter a million recorded foreign for and

as million offset for of year. our our million translation includes inter-company for quarter full well currency The loss non-cash net gain of foreign loans, interest non-cash related $XX.X as adjustments. expense to $XX.X $X.X As a $X.X owned million the partially level result, the by was wholly transaction million net the subsidiary the year, our and loss for $X.X

to fourth of As is the product compared benefit has that for driven company investment this for prior expenditures in the previous Full total operations expected $XX.X a $X.X the quarter perspective, by capital disbursements about primarily year quarter and with a investing receivable, completed million cost XX% our customers. expansion by expansion million accounts continued quarter relating relating million be of provided a complete $XX.X included economic for stated XXXX EBITDA XXXX was positive. and million of transaction. communications, reduction million is $XX.X The the project to expenses of representing Net development for And the strong decrease. to was net provided for $XX collections million. cash of our activities next research year was the From no net-cash cash year, for facility. which for to before there $XX cash XXXX cash using was full

in And $X the of revenue Lastly gross in XXXX, the at XX% million back we this year company turn million terms our to $XX it million, pipeline. Thank EBITDA guidance you expect to like over XX%. to of million margin range range Jason. million $XX for of in calendar the to million, to plan $X $XX invest in $XX to point, and to I'd R&D total

Jason Grenfell-Gardner

Thanks Damian.

more bit XXXX. little about a talk me let So,

shifting gears investment said in communications, I profitability. our as we of As view year from to XXXX a recent

for XX $XX the quarter. back We to would at year revenue that number heavily First the year million. be to weighted expectations Damian accelerating half more the expect with out revenue generally to set million quarter of our to

New may quarter quarter fourth in of XXXX first in yearend of that slightly the weeks Year. the First XXXX come impact to revenue before can inventory orders due timing

$X together margin previously that the our will through we in $XX in product made development $X to million on EBITDA investment on improve implies Damian that of achieve high We’ll of in approximately drive that XXXX in drug of degree R&D spent R&D. XXXX. focused anticipate dollars gross spend cost reduction a we're applications using at and we a positive and to R&D that as With own injectable we between target with Second, XXXX. continue to already to able the R&D acquisitions productivity we in This absolute approved a million $XX total a mentioned. move this lower million

go getting drug injectable to we're and from to R&D the we that them in perspective are manufactured first there made. looking ready getting and Our an size forward

Finally, we laser are focused this on year. profitability

we've and I'm cash operations our about years, in two approaching past XXXX. able invested been while we're to positive in to achieve now point the going achieve We're heavily infrastructure. Over we inflection flow from physical excited an what

been for I enormously that Teligent Canada, I'm to up around U.S., generosity thanks make a Estonia to These teams of they over to opening working the past many my in like questions, would our folks the personal extend have Before Teligent lot have and endured who I their and months grateful work and facilities the for capabilities as them we've do. of dedication been building proud their am and incredibly and successful. spirit

up all to this With lets question. them. you thank of So, that Glenda, open the


question [Operator Instruction] And the from Wilbur our line of Elliot James. first Raymond comes from

is line open. now Your

Elliot Wilbur

Thanks. Good afternoon.

for in to can maybe expecting guess I terms little there just of number you're us revenue? what what respect XXXX Jason, revenue with embedded incremental be approvals potential in of guidance with in activities, granularity yourself a respect give question First may new either so terms you approval and/or bit more to

Jason Grenfell-Gardner

you Yes, question. for Thank sure Elliot. the

hydrocortisone and products pipeline there; we one larger growth first, that growth opportunities XXX the is of a quarter which we this was in the already from the is think this days that launched I about that drug That exclusivity launched and XXXX from first So, paragraph and butyrate for the to file that from have during of lotion. quarter. when drug comes have

we and the needs. part, FDA purity XX some think cause action we'll I potential through the sort I that look could for still of looks the other think working some what there. activity of mean, we now couple some believe And guy bit I a that year if June the the between eight half see I have give addressed goal of most the good of I in elemental most There little FDA right one delays, couple is now XX, the to shape dates pipeline. And pretty around but around around that feel dates. There's this we've you are a to of that's I first and questions what of a and those. So think about in opportunities of there, in terms good I of June FDA just larger think, like? where

we pretty in So, good about the pipeline. feel that

Elliot Wilbur

performance topical in rebound, in the the then calling that products drive Okay. in to quarter particular particular sequential rebound of actual business, And there respect now? the terms U.S, anything any the any we’re with in sequential

Jason Grenfell-Gardner

question. actually good the a was It it's No, rotation pretty a around broad portfolio.

was this bit issues So, were you injectable there, entire the nothing know more movement of that little volume I about that can up in of of a that, There had minuses in plus the and the product a of that big transitory. think couple some the with a a picked drugs shortage Again, quarter the portfolio outsized. what were you there that dealing broad-based those drugs be are across But back pretty portfolio. I like across [indiscernible]. liked mover U.S. it there pluses side. was was shape to was But terms the we

Elliot Wilbur

Thanks. us respect the realization just milestones, to before that can revenue begin remaining through to you facility, actually injectable timeline just walk for facility? the from could with Last question me steps, see we

Jason Grenfell-Gardner


are where sort So, right we is startup now in phase. of

from lines for for are there that, water right, is both support qualification water really filling the selling finished. had last line when filling injectable were we So, Today so line, just What the in by in on. system. of this the we up November, outlet validation, with and the vendors manufacturers. we concurrence that the line water finishing and we and other suite purified going injection spoke space systems we isolator the our the have the is vendors the filling largely on there In doing sterile installing and

but all and not usually business. And with Now processes. do that only systems, topical those have we support to our run that tests a our to larger sterile is also XX-day through of test

that into working we'll something beginning that's through May. of be So April, now

our to the able will an Our quarter. to the us trigger a then and the quarter and our it FDA. beginning drug of on be change That on the to goal batches really inspection, that, depends are hope second fourth be up the approval FDA then will to prior allow approval put we goal before fill at able because submit post to supplement is end using we're stability first the probably to of

filling estimate our revenue new the to best that which the think be is we with generating XXXX will here consistent I that, the in plans. is expect from early have facility line

Elliot Wilbur

you. All right. Thank


our Thank Matt from comes of the Craig-Hallum you. question line next from Capital. And Hewitt

is line Your now open.

Matt Hewitt

questions. you thank the couple. for taking Gentlemen Hello a

First much off what how is business getting launched end? could maybe year year or half revenue you some anticipate here of the regarding that base you you've the for the getting recently launched approved first guidance that in the by what generate and of versus

Jason Grenfell-Gardner

all when guidance, the So, things potential we the to low And know, end approved have guidance be and at yet you look the upper end I the sources think we the that think things outside. and about on around we optionality as the consideration, of in hand. other already of try of guidance,

Matt. constructed year, how guidance generally we that's the So this

Matt Hewitt

on be dollars That's over acquired we a you. then split And to the year from much of as that to the how it and be Meaning, helpful. should Thank is investment new going about re-launching last on some regarding of how years? focused versus that are the of going much spent how those R&D focused thinking products is be few perspective? this

Jason Grenfell-Gardner

terms both I've new. know to is I a done there's the been don't that math well. still on I happen say formulation new done products and versus side There to and in question. between are combination that split old I That's way are in as split, haven't old because will that out doing that, well. topical of a submissions the reactivation that of new What math. it But XXXX new really injectable we've as good expected

So, I can do you. that and back revert

Matt Hewitt

manufacturing would submitted you. starting you that those quarter, in eventually last applications still that Thank to one helpful. on that's over were you ready? topical flip maybe your own the fourth the here one the injectable applications be Are two on some to found side? That's side to one, the were then submit And

Jason Grenfell-Gardner

think one topical quarter have them remember for in I was would So, been what fourth one was if for the of and I drug drugs. one our submitted of of them complex the correctly, first

Matt Hewitt

Okay, great. you Thank update. the for

Jason Grenfell-Gardner

Matt. Thanks


our Gilbert Gregg from And question line of you. next Thank from Bank. comes the Deutsche

Your line is now open.

Gregg Gilbert

a Have Thanks. few. Good afternoon.

author is, The the talked detail options about first kinds situation, into things you little can Jason a some about more of you're that one to go you the convert considering?

Jason Grenfell-Gardner

moment Gregg. very this question that we're mindful dealing interesting I Sure. think, looks of the out look convert. essentially in the corporate I if debt facilities we we is balance look around December what bounty that XXXX. structure Thanks obligation have perception us we the this. because the at have, sheet on that the only Look the convert at But in our like it's for at I in have This our can with the

that? and do how some opportunities with business you leverage stop the I some so And have facilities, against taking the think around right. we our securing unbundling first is, that

loan we or a term is So, do whether something a mortgage. as that

capital I you you down theoretically way sale lot transaction to is favorite from different the the that. could think a do But leaseback can that go all unlock we do my facility. of there that perhaps to which pull way road are not levers this the if

And There third the directly there think our are is convert value. work are convertible or of our have as our working place to in part here capital. ability at receivables revolver place that, second NAVL the that I is on that we is what think to of I anything some will some opportunities some the don't in use to allow there well. that put Their moment there of us like? opportunities a any depending with is around looks

things fact debt be see debt the And pretty, our valuation what the can But know at to perhaps just today don't on the market, of low. trading because I think of conceptually you of opacity is there? kind $X. the the would of out holders in of $X.XX you debt the pretty this equity think trades one that mitigate that

good work the that folks the sense with who have think this that, I debt pretty a we this hold to going be that to have. So, are levers through we able the efforts and

Gregg Gilbert

Thanks for Okay. that.

Here just pretty XQ, is in quarter in reported you've willing color share characterized first quarter or a any QX, how what you almost pretty are going, strong any of can are after share the sort of especially completed the we on to tone late quarter? you sort specifics you as about

Jason Grenfell-Gardner

Sure. I of a I'd gone of a do bit a the while year. try I pretty mean think that and across little the sense quarters shape up start. actually giving a The good year has

I portfolio. expect we strongly that around as the said, think least half we based candidates existing to through the to this we perform the first at again product on of year see continue commitments

In we Hydrocortisone Lotion addition first launch to quarter Butyrate as that, in the did well.

for is good that pretty So us.

going is well. quarter the So,

Gregg Gilbert

you you based lastly years those you couple the bigger capabilities, question out of about into next and for Thanks. get in your kinds then market sense the give term, us already the versus what And can longer can you on that Great. can picture a injectables have? technologies of products out get capabilities

Jason Grenfell-Gardner

Sure. Yeah.

really So, the is, filling ml XX need the actually ml. X to it. from ability have up has that produce vials line to It there we

lot them gives sterilized. both as of we portfolio work could aesthetically we them to, probably That across scope XXX well a up us fact, We can to to potential terminally ml. the product forms. wanted In produce do of if filled,

all older delivery where and are ampoules that ability there manufacture there necessary medically an ampules is has The it technologies are appropriate the are they We But technology. for second cases are thing to well. drug still line in do the question. this that the recon users can as that

of that, on R&D can broad that, through. a also and to facility, with of do to of couple volume through pretty primarily put but first fill. product, the drive to products focused gives it opportunity larger line is filling drive ability capacity liquid of and smaller like The to we'd this us idea gives units again a capabilities of a us the the we range in So, the pipeline bridge filling line the years terms number drive our

idea capacity and around with one units of road. and to want but initial when the the depending shifts further So, with we we get moving start XX rolling. we to million in of four and in now, build between million little get that's the Right this size to bit million down on capacity capacity the in eventually line line eight a two, system of

Gregg Gilbert

lot. a Thanks


Thank question from you. the our Dewey comes Instruction] Canaccord. line from next of Steadman And [Operator

open. Your line is

Dewey Steadman

Hi guys. how much Good driver guess for relates it company? going afternoon in it the to then And thanks the the a core taking and relate business that and all first international questions. how I convert, how of the to growth is of business forward?

Jason Grenfell-Gardner

Dewey. thanks It's a good question. Yeah

asset the New in for The to side incredibly in XXXX. in achieve So, Jersey. And just ability continued it idea have team been were of manufacturing flat we our these plugging operating respond things business mean by with be remember a that. Canadian impressive. the a XXXX believe but bought was endeavor to market has together the driver was Canada. contract in its leverage likely supply though obviously, you Canada Canadian the it we I our manufacturing into disruptions continue in it Canadian XXXX was some the will was growth business of though the year, by future any state, not but to really current driven greater That that that we amazing. that XXXX back about sort And to business grew partners the quite And well.

certainly growth business, our it’s driver greater the it's core So, overtime. helps margins but us say wouldn't of something achieve operating that I leverage improve and

Dewey Steadman

reform tax on assumption a year a What's full intelligence win with long-term current then becomes of And tax Okay. the the taxpayer. rate?

Damian Finio

well. So, Dewey this is Damian,

X% now tax rate. right you as know down effective about So, we're

We Estonia used are you operations Canada have we aware. to supply as the which

Act think am rate need makes still a Reform we closer to right pretty But I and about forward now. a Tax at Going we're effective whether going forward. structure out tax that sense the good take that look comfortable setting

go can’t below zero. You

changes that we'll in see about at if with yield tax better the X the would we're law. changing So, structure results down,

Dewey Steadman

congratulations on my just with Okay. today for if material we team see resolve the joining and a Teligent to that. will again question take steps and weakness we And Damian restatement XQ remediation then stand need what so final on the

Damian Finio

focus about So, flavor XXK three systemic the there third is related. Dewey, miscommunication. it these witness that, will so we a that, another all SAP was them was but haven't just It weakness was a filed not I in Obviously, of XX-Q in material they're have would material not good that quarter. they're and yet What's really I three we mentioned. distinct the in the a shortly. transactions them the suspect to And we transaction. from separate same will almost and way and a have on

needed knew Someone in to properly. the the they them to business the finance knew for but function them approve fact to communicate

is quickly although address a it's So, a pretty that think weakness we I and that easily cost. weakness, can without

of cross cross-functional matter a and at of it's So, those making communications regional quarter. end the tighter, the and particularly

Dewey Steadman

Great. more wanted one note. And a I'd like to end positive add and on to just

us Is the in interested color product? lot Jason about us on just There's a previously. additional there you're or even color that of talked the when customer lumpy you going terms to In you any product on give give color it? of that can us complex give

Jason Grenfell-Gardner

more of about review the filed pretty opportunity too. which conducting process, is allow the FE iterative would under FDA review excited through ongoing. that achieve for now call, particular going audits matters some manufacturing about with I equivalent mentioned on think a [indiscernible] we FDA to we're And size. us is as is it I November

a information have of with Dewey, the one think you. to that can we So share closer here perhaps QX as things in a we'll few call more get we I weeks, and bit is

Dewey Steadman

forward looking great, to Sounds that.

Jason Grenfell-Gardner

All Thank much. very right. you


that for over back I'd call remarks. and question you. to today. Jason like our for the Thank turn closing answer And concludes session to Grenfell-Gardner

Jason Grenfell-Gardner

Okay. you, you for Thank today for continued interest and all your Teligent. Thank support Glenda. us and joining

be Oppenheimer New in at next the will week We Conference York.

some and forward for have to you evening. So, there a great your thank support, you continued looking seeing of


a participation Ladies day. have This may gentlemen programming and in the today's thank your you disconnect. now for Everyone, conference. you great concludes