TLGTQ Teligent

Jason Grenfell-Gardner President and CEO
Damian Finio CFO
Matt Hewitt Craig-Hallum Capital
Elliot Wilbur Raymond James
Call transcript
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Good day, ladies and gentlemen, and welcome to the Teligent, Incorporated Fourth Quarter 2018 Results Conference Call. [Operator Instructions] As a reminder, this conference call maybe recorded. Except for historical facts, the statements in this presentation as well as oral statements or other written statements made or to be made by Teligent, Incorporated are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involves risks and uncertainties.

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

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

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

Jason Grenfell-Gardner

XX%, will And Thank covering morning. Jason you, business the CEO Teligent and Chrystal, I XXXX. ladies Financial us Damian I'm year are XX% line Officer. for of three talk Teligent plagued will Teligent. you year the Sales morning, joined for product to in an the and million, to our growth for and performance the be of years for Grenfell-Gardner, of margin things while $XX.X this Thank that gentlemen. that growth quarter the There Welcome our on Teligent joining Finio, provide call. with launches and like breakout delivered our Overall good I’m probably the President the past the today continuing Chief and quarter of by providing growth, to the fourth recorded guidance. on in about update the Damian and with the out of fourth players capped of I'd XXXX. results more core quarter a growth. update our a for that financial can and Today international in latest the operations. on nearly for year, end in generic you point year fourth of erosion. the injectable sector guidance plans. was of XXXX, of our price our robust our lower detailed our full-year released for elements an has by were business then fueled pharmaceutical quarter few two we industry today been gross

I would was work the done of provide XXXX. to summary a that First, like in transformational

XXXX continue Second, and to our in you to some online our like I'd sterile to perspective to provide injectables on work drive bring pipeline.

and our our I of sense Finally, the segments you these to in generic position happening of to pharmaceutical plan like to to would what's challenges. give Teligent industry how respond we

we’ve the the So first, past seen recap let's year. Teligent changes over at

the liquid factory transferring drug As compounding new suites. and and the process year you know, manufacturer into of new began quarter the our of semisolid topical products during our we’ve of the we our commissioned last bulk

approvals automated designed through work of us time given to allow more bulk goods. systems rate to are our in around This bottlenecks labor and our We've volume delays, the us not the improve compounding. provider for should to was on work. make bulk operating We’ve and of touch know the I rework serialization industry that industry. data multiple increased certain manufacturing new business. including of removed everyone drug of struggled to bit that serialization us, compounding to were the may I perfectly. you Now nature that Many else sound is a understand profound the something our to of facility to improve better batches critical launches at Teligent. the to This to however, had from and drug drug over be in mention, across seen did our odd shifts as time to leverage This business. the hours go in challenged the that want by who happening industry suites finished but efficiency failures the The like the required led service manage also, and add

that of our the our did projects completed media suite we’ve again this lower levels but troubles of that the aseptic at worked filling failure-to-supply of a a by rate capabilities. believe gave XXXX. largely it support through inventories sizes quarter, continued team inventory second of number have the quarter we’ve to in initial we end lead for normal the our rise working fills In fourth These and Although sterile penalties. quarter teething the certainly aseptic first to the having injectables at to shortages implementation, much into

As it get this important was right that for I we in time. mentioned first me our the last call,

in during are into we understood we quarter I FDA state the the generally this And and continue readiness, end our injectable track that quarter, to by sterile to incremental systems added current about that's year dynamics XXXX. by of be the incremental launched we to second point and on to the have pretty talk have us external and and see an believe our in to so, me the still R&D And to first experts particular. triple our injectable my This Based and provide our facility ongoing fourth first work. injectable our double for on inspected check exciting, help support product markets. to the pipeline of the pipeline brings particularly given

continued to Our has progress. pipeline R&D

XXXX it in And frankly by XX up XX the first companies year has generic submitting in desonide months and the support XXXX and and II. which work months pharmaceutical major the just team Already done, end drugs. further the discussions our Incremental environment speaks of our pathway with the a our of the organization to and the of to been has their the first of the that mindset the drug. But R&D our clarify take review four believe, of the XXXX XX than this current partners launched the We we’ve that’s space. the review all responsiveness, approval approvals this the This people. approval last week's submission, and more our XXXX, as seen ANDA partners XXX requests. FDA, quarter You ointment conducted the and drug of support further received in under month and date top been pace all development to Based to finished through on of XX had the orphan of of a In of analytical submission. CRL a received throughout FDA quality drugs. an FDA's nine March remarkable to regulatory for received the for of of was was from cycle during testing we've will approvals review to have GDUFA team anticipate into work that response. fourth launched generic approvals product, that required two the response CRL we the XXXX quarter

XXXX both pipeline injectable well on internally Finally, pipeline, previously as as our products. developed submission acquired our we're based preparing of on number our for a

resources but happen Now at pipeline all been factors possible. which the on pipeline. you injectable apparently away doesn't to our limiting that to can I've know come approval I fast internal that the The development that to and pace work has allocate of optimist always Chemistry expect blown quickly we by being way, said, that rate become have as I'm humanly and our as up the financially an speed. the things site

certainly significant us Finally, our to at Clearly, of seen business, in it couple I common Teligent results that chunk lower Indeed, out barriers the took price how of we erosion what a here couple minutes revenues and to the over that our I for as of past specifically. topical want fairly business our We've year, industry for entry. seeing impacting about impacted the has perspective spend at a the price has from talking price a erosion particularly been years. our products are in Teligent. have look theme

three we continue However, in show had favor to growth. to our working us allow things to

line First, overall robust a revenue of contributed had pipeline were significantly the during as top well as year. and These margin. drugs dynamic to drugs that we both launched

we’ve U.S. a stable XXXX business volume from basis, a CMOs molecules, had by on supply of although challenges injectable Second, pricing environment. four showed impacted our nascent our which in

great in done our over a Canadian job business by where had international team has the growing year a revenues fantastic we’ve XX%. Finally,

to As According is data, we peaked at the total look ahead, billion. addressable generic Today we $X.X about market dermatology same in the believe market that system. IQVIA something market XXXX. to data, based has billion that $X give in on January in the around

the revenue $XX.X billion growth, while For see comparison, been existing $X all industry. continue same. injectables at in that the we Conversely, in core was billion. erosion $X.X generic market. XXXX not impacted same living of XXXX. the across sterile Today, able has injectable slightly erosion are we’ve is of to profitability that’s period been when January billion growth pharmaceutical data, stands wave we've addressable our generic the market. IQVIA Clearly the market And in on market price This markets deliver up on market to from still the in below based underlying through margin the for

the challenges? how less dynamics segments industry So seen the as across portfolio some exit respond market The have to as competitors pricing generic profitable these rationalization Teligent to began in led of to we market. do the dermatology

make drugs certain an frankly sense have to basis. ongoing from rationalized that ourselves We portfolio our on cease

attempt done have faster as look to declines look our we a between competitive also in tougher acquisition gross costs should much In fact, the model in sales to taken of that highly the we rates wholesale We've markets. probably travel net at some sales. business manage to at

of travel seem may potential cash business. to this impact Although flows a has arcane, that significant the

contract a that business, bring now directly. and topicals manufacturing someone appointed as private-label to as for injectables, to business point we back to some capacity grow develop allow and well us gotten we’ve have to we’ve for and where both Finally,

it’s encouraged as for quality Although from manufactured the we early landscape I'm product contract see opportunity by Teligent. what days,

generic for products be strict our success. for We market expected the cost will Supply, critical be on pipeline, continue dynamic. and will the pharmaceutical control quality to

provide year. Damian on over remarks turn the and me Financial Finio, our Chief his quarter Let the the call now to Officer to

Damian Finio

Jason, you, our the and and good financial outlook everyone. would XXXX On and like performance morning, of to of XXXX highlight I call, Thank financial full-year projected components Teligent's fourth our today's performance. quarter key

our launching net which had ultimately the posted shipping of quality led financial challenges, serialization that of in on XX% our and by products, our mentioned in in delays, We earnings year-on-year highlights call business department revenues of resulting addressing On we So growth approvals impact let's November, obtaining were XX% fees. a U.S of topical with in our failure-to-supply start quarter and fourth and and we significant of driven our Canadian respectively. workload FDA million success to new products $XX.X performance. portfolio the

quarter first $X.X lowered million the XX%. XXXX, margin fees the United during our addressed net in are fees quarter was issue of we $X.X and in to EBITDA operational to gross supply These fourth this the Although States included of from XX% gross revenues, by profit failure and incurred quarter. fourth reduced our million in

$X.X also were of that operations, administrative non-cash and assets expenses as intangible is from on million This but has selling, prior in and We and impairment no EBITDA. posted charge charge impact statement general Alveda. on a reported years AstraZeneca amortization on acquired the

XXXX remaining our fourth convertible fourth our Lastly, we paid XXXX to with briefly in year-end, our using explain. of an By a Management cash wanted of to a of million just XXXX extinguish I December a $XX.X bonds. impact on term December interest process December loan days beginning loan convertible XXXX on later buyback These had transactions initiated million the quarter debt executed the during bonds. XX that and few the quarter of we related XX, Capital Ares agreement purchased proceeds portion

expense term to XXXX of extinguished the So I'm reconciliation the loan, paid and we today's please interest measures the cash from release. prepayment million note, both we earnings penalty. non-GAAP included accrued of interest When in referring $X.X X% a our

December. six bondholders months our November of bondholders interest we In months XXXX to the and to we for addition, interest paid in our paid in XXXX December of six first mid May time

of cash buyback We mentioned, in December agreement to I balance back Ares the the accrued year of to also process the bondholders to interest the million sheet. their as $X.X with we another week addition, loan of execution pay required the those initiated therefore we In immediately ended so bond following who on bonds or were Teligent. and sold mid

by a a when revenues, the our to on line posted revenue be Canadian especially X% financial we reported the increase this reported We and top manufacturers mentioned by encouraged Overall, full-year failure-to-supply are growth declines. XX% growth to of Turning consolidated pharmaceutical previously revenues XXXX strong year-over-year of business. fees million performance. consider basis top in many in generic and $XX.X a line despite year

initiatives in expense XXXX continue. the cost Turning second that savings the base, of to our quarter began

million spending $X.X year-on-year incurred administrative increase However, fees selling view included impairment In by charge mentioned is and costs. XXXX. we’ve selling, benefit audit the related professional previously, incremental going transition as transition reserves expenses. bad and and the as We million progress administrative in the my million audit costs reducing masked last and discretionary expenses made investments increase general our company general the XXXX, well reported debt the that in internal framework control and regarding will a our comment in as of $X.X legal forward. And staff $X.X staff

filer, accelerated for an the is our As Form XX-K today. deadline

firm's on to time the XX-K, with will we the comparative allow obtain request be the However, an filing XXXX our consent SEC formally our in in former extension. external Form audit to to XXb-XX order included figures needed

to Our soon Form the X deadline. file possible, but later intent as is as XX-K than April extended no

Looking FDA steps ahead our scale on one: organization taken upcoming inspection, to prepare the two, approval the capitalizing last operational with to are learned prior XXXX, up and and we our of structure, this priorities as focus with on the expanded our to capital business. major facility construction for lessons the continue year execution, completed

percentage performance terms of XX, over are In represent financial first, excess for XXXX, our in year of million, XXXX. revenues ending consolidated which December would projecting: double-digit $XX.X we guidance the growth

our relating of orphan launch the excludes to the upside in launching manufactured revenues projected includes U.S. and the guidance Our incremental product, by but revenues injectable any first revenue products generated potential

Second, we consolidated gross expect XX%. margin a above

million, to with margin an adjusted in fourth, $XX than million XX%. XXXX Third, line EBITDA investment in $XX R&D of and greater

exchange are expenses plus currency GAAP as or foreign losses. We and stock any defining adjusted noncash any EBITDA EBITDA gains

operational beginning our in and the phasing, by Canadian in and here The serialization challenges in quarter guidance. year-end. disruption terms in on and will that our second quarter we is to we're speaking opportunities through fourth ramp our of top chain that Teligent, the I anticipate projected line our priorities addressed performance are And the our deliver due our encouraged have with in contract from continuing diversity and of European now to mentioned and the decline for of department products. XXXX of been revenue in at decline XX% first excited the quality due sequential Canadian larger of revenues lie and manufacturers the to U.S XXXX we up previously. to ahead Overall, performance financial about behalf approximately Lastly, supply organization quarter first a that everyone efforts we're primarily our and we confident XXXX quarter of to portfolio the that relating

Let over me before back for Jason comments turn the call questions. closing take to any we

Jason Grenfell-Gardner

partners. And faster with footing us the through the with through. we once in month. the balance challenges firm manufacturing is bumps the sheet some sterile regulatory it one very satisfying the for in was thorny XXXX it but the and We to not generic perfect. a want best regularly, long I development company But than this out long-term delivered came we a to Thank it a We All what that injectable see facility that injectable weren't America's It's manufacturing you, achievements. drug Damian. segments technology, best road. put on some drive approvals pumped worked right. drugs. would and was a that best newest team, growth and financial one repeat that did restructured pharmaceuticals, definitely year. positioned growing with for space, along deliver new state-of-the-art topical a and arming delivered We were There pipeline

up every extend Estonia, poured let's their questions, do. opening like dedication working they in With into that, grateful and have been I open what to this day. of to Before for company that Teligent you proud for all they to have Thank of to up this our I personal generosity spirit of questions. the Teligent make teams them Chrystal, would United and my successful. and thanks Canada to remain who States,


Thank you. from first Hewitt Craig-Hallum Instructions] [Operator Group. from Capital our question comes Matt And

Your line is open.

Matt Hewitt

Thank gentlemen. for you questions. morning, Good taking our

Jason Grenfell-Gardner

Matt. morning, Good

Matt Hewitt

couple. A

penalties, the you’ve your in having challenges suppliers getting the been supply issues? -- are on with the your or implemented on the where failure First issues on to is of serialization and some those having contractors it

Jason Grenfell-Gardner

it's No, internal really an challenge.

when data into cloud. numbers So and went challenges. it's services that that are who a -- doing and we're combination them had they the then very live support back and into what the the feed few and this, in ability serialization the to There the data send manufacturing suppliers provide system between

where to but of lines. all now challenge. led gotten a it and a that address then It things perfect that point it Thankfully, a more repeated into in a run daunting smoothly lot it us able was having manner. to was inventory on pretty it's bulking we’ve product, are So we much now on better basis. is to running and putting than certainly system a WIP through It's relatively not timely yet, to

Matt Hewitt

out come into that’s Okay. And maybe inspection little launch have of function the the for a of or to like then the been some bit. first FDA a with over of think shifting us Is timing I of something that maybe the has sounds anticipating the of products, pushed some half facility fold? the injectables, else been reintroduced those injectables, a of some

Jason Grenfell-Gardner

injectable products this the We in half first of never intended the to launch first year.

So from. misunderstanding I'm not that where comes sure

readiness the back but trigger we by is able for launch FDA that of facility the pretty this half help year. would of on first which of half inspected in the the are get that year on half to it's year, and think our inspection around Our being this depend first We goal product the us to to to in much FDA our going timeline this submit. then

our on we as basis readiness We will currently get ongoing that’s plan. our informed an to audits, but by continue update assessment own internal our

Matt Hewitt

and Okay. maybe queue. And one the then back hop I in will more

or and the drug potential orphan product it much guidance little into outside and response one, the the And in that anticipate would number to it the drug orphan be takes at if very included like Regarding number this injectables? resubmit the your your I guidance. be submit for injectables, yet of the guess, least bit you a puts from the in factored there have so the two, to the approved year, the tying high in how orphan some this actually that CRL major from injectable, a to the you for from would you two, week haven't appear next you sounds or but Maybe there? us understand revenues help anything

Jason Grenfell-Gardner

start the me I on Let orphan Damian drug with touch let then and will guidance.

a and time to CRL, GDUFA review orphan the that’s normally month under by major we responding XX has drug, On FDA. a are II

respond if XXXX, in XXXX March, So we January will normal of target or at -- rather, be action it’s the apologies. end date

that think we normal standards. to FDA though the most GDUFA for is accelerate potential that, So according to there for is that the a even reason appropriate forecast to way

let me Let about Damian talk guidance.

Damian Finio

Matt. Thanks,

say the mix of in our bit XXXX, think And that’s to as including as down well story, of the launch mentioned base, Jason the which us well XXXX enabling managing brings as Jason in where XXXX mentioned we XXXX I what's injectables is annualization launch us of XXXX. also continued we improve guidance, XXXX in really add incremental is cost quarter, in customer revenues margins. above guidance also launches diligence driving in actual revenues terms fourth a In to it continued I but of above revenues, the EBITDA would from would are landed I a

Matt Hewitt

it. right. Got you. All Thank

Jason Grenfell-Gardner

Thank you.


our Raymond And comes Thank from question from you. James. Elliot next Wilbur

Your line open. is

Elliot Wilbur

Hey, good morning.

filing specifically more a facility the First to is general Is Jason, question of is FDA triggering inspection? or GMP first two with it the exactly at or questions it the triggering Buena for a respect event? inspection what

Jason Grenfell-Gardner

the approval that prior to as FDA filing a so of triggering the Yes, the we event would own supplement facility. we site bring that a drug already support anticipate inspect to transfer

Elliot Wilbur

half And that’s expected obviously event? Okay. still first

Jason Grenfell-Gardner

correct. That’s

Elliot Wilbur

Okay. market launches. little of just date has a a XXXX, faced perceive the launch we I your and what challenges capture of company then in from that maybe more It new I specific the in that been picture that essentially execution than how of then each mean, company's able challenging bigger are issues And that’s be these given expected? to data guess feeling previously you question, share of of you in to fair about Jason, multitude industry to always the for bit success terms some been just individual seems out come the

Jason Grenfell-Gardner

It's question. a great really

great our would look of in into at ability look exceeded our we’ve share and job fact I of is share and hit gathering think terms and markets share. I capturing often products a gain those the targets I to we’ve in that some launch So, markets, don't say in challenge at done that share and really of I them.

I the margins. think is that that appropriate making the challenge we sure in achieved

look at It’s are managing, look at I we sort of we prioritize over significantly. and believe so mix customers that to really grew margin need I sometimes volume XXXX, revenue. volume over of that I we -- as And the

that some to entry quite of products was challenges grew that margin through lower also the tough. in it We barrier but these came really was erosion pricing revenue, that

to barrier pipeline XXXX, helpful to in to higher We XXXX. we the know this share. of has portfolio as care much margin -- over significant entry margin as we percentages time. dermatology But as Now in about and we of story of that component of in space. something you got is seeing than market as are to of focus That’s continued are the going think our amount care at we about probably more spend we that's we on margin a about that the approvals the the segments look mature us more

Elliot Wilbur

somewhat about that business, revenue the yourself on perhaps And probably approved, there but incremental obviously obviously help just over about approvals are? -- and Okay. generate from to the XXXX. will of couple of from revenue be be already some progression questions question I what element products -- pipeline stream you counting maybe to well be injectable of or Jason. how just as -- perceived think products mean, Could more us launched Damian risky Essentially think and us approved the or potential are for many course help of events launches

Jason Grenfell-Gardner

Well, can that. with I start

So anticipate there are I pending of keep throughout FDA. pace think this at We currently that XX continuing that full. the ANDAs pipeline year filings will

the interesting will communication or One file ANDAs as the complete on facility during into challenges to injectables. and have that that as site process we to of between existing manage the the support as give letters we response we ANDAs of well year that own mix transfer that responses NDAs is sure the you making supplements -- filing we to good

will the year, of annualization financial of for be is fully to mentioned think were Damian we When a projections The to obviously those if year. to we growth. know the facility the making about sterile able would biggest pipeline the terms shape generate products So launched opportunities the components of that as is throughout of Damian what it's we of the injectable mean related and this the data the this with but to on supporting support the well the stability concurrent start support to you in does once in remarks that. commentary year updates help batches submissions. exhibit further of as his it to obviously don’t I XXXX to are that giving expect approvals that, pretty year cool online. really the that like be batches that. to get team at moment that any second the if need the add as obviously And throughout accelerating you in We in half

Damian Finio

Yes, I add. would

customer the heavily about as more launches year's Elliot, private-label last at launch it's rather I annualization say of I would weighted and towards talk let's had plus than year's the XXXX, and mentioned Jason said, look expanding year's of I includes on that base last then this customer annualization manufacturing I revenue Jason launches. first would contract Canada. also In products way forecast also launches, and U.S the but new our new then for mentioned So, say mix, U.S., opportunities.

be past those it's Canada, get U.S our contract three challenges that, the is we Canada we team but around mentioned some there So serialization shortage as to revenue call right once that the drive customer as drug combination forecast that a can continued an manufacturers, in advantage of XXXX. opportunities list. things expect which corner, expanded take of for In the with well we

think the for two for a rather three things drives U.S combination those those I So XXXX things of revenue it's relying our and guidance. Canada that injectables than on

Elliot Wilbur

yourself, sort over course the more? of operating opportunity further normal just this new know level is to to XX% or XXXX. or improving of two an And Is net for gross maybe this there generation Okay. the quick financial net enhance to period ones been Gross improve this improve around somewhat flow Damian. has and to and cash I that number

Damian Finio

we well where quarter possible contract second and as list. WACC improving reduce customer the both In to price the actions XXXX, Yes. took of third to as increase quarter and some

in the in So there we think XXXX, are things of regard do helped same both opportunities that those different In to continued products. XXXX. group with of do a

So progress we to I that year. maintain or think continue expect we'd last made the

Elliot Wilbur

on expectations could one, provide any for flow Thanks. color you Last cash operating Okay. XXXX?

Damian Finio

Yes, absolutely.

two When look revolving year paying our our completed. past as been the Ares. years. XXXX, cash loan mentioned, we with for biggest of we $XX the so remaining bank, been no the the with longer cash ended has I are cash million So That’s over construction at forecast at $X.X on I burn in contractor, million general

not Our next interest until May. on is the payable bonds

opportunity, Ares the Now mentioned on to call on the I or we pick an interest last defer also have interest loan. with

that and paying than if big flow in products. with compound would forgo but we to be interest is order cash that goal have principle on help rather pay us the debt, have launching Our to interest a option needed in

about follow be quarter say, the thing last a early so minuses the think, shortage of think need the lower But outweigh the through. collections to the will course first would is pluses in quarter that in expected that I cash XX% I that of from the second manage in I mentioned all, revenues cash all on I than we QX, in part are projections. to flow


to I’m from Thank our like closing remarks. further phone the now over for no lines. turn to Grenfell-Gardner conference you. showing any I questions And would back Jason

Jason Grenfell-Gardner

Chrystal, at ROTH look joining of this have Teligent you us all conferences to the some joining thank morning. a great today. for throughout spring. other Conference I Thank seeing to and you support you, at Okay. Thank us. and you California this your you for and in for forward Thank week


Ladies and conference. for the This gentlemen, in does participating conclude program. you thank today's

have You may day. all a disconnect. Everyone wonderful