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TLGTQ Teligent

Participants
Tim Sawyer President and Chief Executive Officer
Damian Finio Chief Financial Officer
Matt Hewitt Craig-Hallum Capital Group
Gregg Gilbert SunTrust
Call transcript
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Operator

Ladies and gentlemen thank you for standing by, and welcome to the Teligent, Inc.

First Quarter 2020 Results Conference Call. At this time all participants’ line are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions]

the or this or other made Teligent facts, as as to historical by statements, oral written Inc. for statements presentation, in well be Except statements made, product Litigation company's meaning and risks development market the for growth and example, about the the and and statements uncertainties, within success to or limitation, company's future the statements of XXXX forward-looking Private efforts for are Securities the products, Reform without of future Act involve and research of the its anticipated current offerings size or obtain the for ability expected file and and current U.S. operations, and Food FDA, products future are for forward-looking Drug Administration, statements. approvals

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

quarterly The For risks obligation statements on filings Commission, on update and company's refer the and to Securities reflect its the to XX-Q. no information its with its additional description and latest XX-K new latest Form annual including of Form company uncertainties, report developments. assumes please a forward-looking reports to Exchange and

Please Officer. you. to today, Mr. speaker Thank conference ahead Tim your I and now over hand President Chief to would Executive the like sir. Sawyer, go

Tim Sawyer

Officer, call by President Thank on morning's I'm CEO Chief and for us Financial of joined you, joining today. I'm Daniel. Good and Damian Tim Sawyer, everybody. morning, you Thank this Finio. our Teligent,

around by and thanking world, Buena, those I'd like New particularly the Jersey. start Teligent in our employees to

capable state In in they with times challenging every and they during the Their on one As unprecedented professionals. inspiration. you. and the Thanks we're these way organization of continue as are considered desire manufacturing a extremely and truly each to pharmaceutical New basis, accomplish evidenced committed of alignment win to facility, an right to by the our clearly daily is a Jersey, what directives to essential.

We to remain safe will products that order and remain for need the pharmaceutical to permitted our in to patients as continue supply them. long open employees conditions as

a measures business while continuing preventative to stable taken number and has support Teligent safe of ensure continuity help to operations.

nonproduction and We local state work directed have in with all employees accordance guidelines. home to from

point Our monitoring implemented our daily employees to have personal masks equipment, gloves, we our facility. provided are protective services including temperature and upon their of And entrance. established single at on-site newly arrival

and number and have to low fulfill implemented or between in distancing social limit concentrations to employees customer areas deep adjusted schedule biweekly employee We demand. demand hours concentrate while production continuing feasible. our sanitization on the process help a high adjusted to also the products help distance certain measures We've shift and reduce where stock implemented of related employees to

have paid off tested of positive COVID-XX our efforts date. employees Our to none for as, thankfully, have

and As a down dermatology COVID-XX, April. March visits in consequence of were

in comparison dermatologist Although topical to in come Not less pre-COVID-XX at of a visits XX% demand U.S. to our suggests of across differ, pharmaceuticals. research estimates the decline I've least levels. into all for less surprisingly, portfolio my nearly translates

positive some the first anticipate our quarter decline lessen, demand But an earnings to XX% we country to really on as begin fact, Revenues approximate to last XX%. levels. to in in pre-pandemic were, fact, mentioned call, shelter-in-place we we've down see begin build we towards As QX expected in signs in May. started versus across And XXXX. guidelines

predict or the anticipated pace decline. second Given it's be wave ramp the challenging and might of level guidelines, whether there the of consequences and potential still extremely of a uncertainty less not stringent of to

we've taken costs performance terms in in That you financial top second aggressive that actions line will seen through bottom versus momentarily, the we've Damian of quarter anticipate improved and what to and we said to-date an reduce quarter second on the the based quarter. walk demand first

Teligent my talk I on needed execution. the when was focus what that the As observation joining moment, for news last but a some putting want relentlessly to organization challenges I evidence strategy I when COVID-XX mentioned was sound, our to call, the about on good initial execution, aside share of mean of and I

warning We letter. FDA are in late There to respond received to warning XXXX. letter phases from the a two a

exact, just in second response call the later two the be The warning FDA letter. approval about shortly supplement early completed then filed would phase on then April FDA for our serve the anticipated a filing after completed And XX to a company first another nine on preapproval and time March and [ph] filed final approval injectable after the and This for quarter fourth joined that the of XX, prior trigger our prior which XXXX last our for supplement product. we as weeks we to days to we was pharmaceutical April I of early inspection. first at backup will injectable of in ranitidine the

both and our our has nearly injectable COVID-XX granted. our everything of FDA, restrictions permitting. otherwise FDA submitted letter business, the in uncertainty took an an we or in anxiously knew lives warning approval once With created travel for supplement and to COVID-XX inspection, filing response prior anticipate we and second in

soon begins based confident Teligent return will I'm injectable world the manufacturing U.S. to and infrastructure, manufacturer well-positioned and However, topical capacity, be pharmaceutical our our new growth. for normal, that leaner as to a with have future to as

that close, And about now of ago, non-core process a including by strategic process X, on now. arrival. few review that fully more would words believe ever. initiated eight the the my before concluded resonates stakeholders, to XXXX initiated assets, prior say the We company with I recognized the made have October many months in to patients I me assumed I wanted was America over than that

in in November, factor-in is received If you executed. warning there's not that early commenced update. it meaningful XXXX, remains late pandemic expectations a those a in March. February relevant initial mine may global did or I with letter and a transition more provide fair transaction be the that to the the progress this will in continues, it's commit The process priority area, However, I leadership the of possibility say that that XXXX,

me opening call challenging the share now to of continue turn questions. through up first take the and to Let Damian's our we'll on call Damian we've you Damian? more opening After to over detail and remarks, to taken Teligent the conclusion thoughts before some to financial lead these times. final both performance I'll provide quarter actions

Damian Finio

everybody. provide first quarter morning taken NASDAQ reducing performance, XXXX will cash on actions detail Thank by you expenses the Tim I morning, and our listing financial good aggressive we've our preserve This and status. to

On actual the $X.X price were to last call, anticipated weaker an driven were performance. to million first challenges that the was and products fourth financial quarter The approximate supply quarter in revenues of for first line with $X.X $X.X reporting attributable I decline remaining with million XX% decline Canada. XXXX. prior U.S. topical Of by erosion. quarter primarily comparison in million that start in we our revenues, our mentioned quarter, down was XXXX projection first Let's the demand million in from quarter $X.X decline XX%,

well of incremental generate strategy cover inventory $X.X unrelated lower $X.X dampened cost resulted by the revenues by reflected of low are costs put, market of million, selling factors reserve as an combination of These product, of net were which facility. the company's inventory recorded as quarter further The margin in of an fixed sales. these the moving for negative slow gross cash to reserves of running of was inventory the inventory we manufacturing enough first reserve a our to intentional in million. Simply not consequence quarter. incremental a cost As incremental incremental reserves,

The improved the That performance quarter an expectations. said, costs the first last given million reflective one-off of fourth the development translate various The the costs assumption development dermatologist. of into underlying first returning versus reduction change quarter. States this of quarter the are incurred will was in guidelines inline in top of relaxing quarter we that second $X.X with our do patients and foresee to XXXX quarter shelter-in-place in recent costs line

costs the over million same and for prior $X.X increase general the year. the were quarter a million. over million is administrative quarter $X.X the a in XXXX This Selling, quarter of increase fourth and $X.X

with First selling, XXXX quarter litigation, NASDAQ agreement Capital continued associated in items, incremental ongoing and delisting-related amendments and general the loan fees early legal administrative with costs include Ares April. executed ultimately

Lastly, both of future anticipated impacted been company performance COVID-XX. by had and current negatively the financial

XXXX. charge a impairment prior of such no fourth the quarter recorded current company year asset in the recorded There quarter. consequence, non-cash intangible of the $X.X the quarter of same the in impairment a million in charges or were As

can. In beginning quarter. challenge, short, patients actions first reduce are we we to the a is taking we encouraged was are are costs dermatologist From and aggressive In line to diligently And products environment, suggesting demand preserve in what second control uncertain for perspective, the working and improving. we a but improvement the our to return by positive expect we cash. signs to top the macro quarter are this

to a are four business. managing I highlight will our of give of these you actions sense we how

executive along in leadership take over I, other XX% eight-week employees same period. reduction X, and annual our a pay more to eight-week than rest XX% with reduction Tim salary in May $XXX,XXX of team on First, earning accepted the and asked a voluntary that

Buena in short we furloughed hand. same day, down as the the for given topical of employees ramped our inventory term, a on Second, adequate manufacturing levels on we portion

effort spending, simplify on what's and initiated focus reduce critically Third, a company-wide important. we only discretionary organization to the

XX Small operating commonly Business with PPP. received the majority we We're May the Protection actions balance fourth, a of the COVID-XX forgiven. the ensure the the million forgiveness to approved loan $X.X of will and actively taken previously period referred the were now Administration to are and under as be relief And on within employee-related Payroll needs of more Program, working business to loan

improvement financial the bottom We projecting in performance in second and both line quarter. top are

for improved the a short in XXXX. our quarter second are are ability financial hinder and company's term. reliably position business, future financial financial to in the surrounding results covenants Due projecting uncertainty remainder the of to the unable the severity not therefore, And and estimate we COVID-XX are its to performance, of pandemic we although on may provide to COVID-XX our guidance duration we and, impact the meet

call, earnings compliance to permitting compliance. period regain last companies on Since I file time number longer regard NASDAQ June to communicated status in gears regain for Switching the X, was to issued of then, a NASDAQ deadline XXXX. the listing XXXX-XXX Teligent’s

As again. such, was our deadline deferred

anticipate to XXXX. However, on presents future initiate the investors. to split and split the that a plan effectuated current reverse we XX, a remove We May ratio to uncertainty in of will XX:X stock the potential reverse delisting be

provides extension us of on terms June Form file Friday XX-Q, in quarter first XX. Form XX COVID-XX the to And until extension first quarter an XX-Q. for May related our applied The we

However, very Tuesday events. planning to no unforeseen next barring we were file or shortly thereafter,

reduction, slow-moving we with paid. and address potentially letter, closing, new the and preserve credit should and inspection position will our aside, the and cash assets of actions capital. debt explore total continue a costs, in improve In with structure of and be to better profile creditors our cost reduce the and to cost warning inventories, to to focusing capital on aggressive take debtors opportunities to will By our cash work thus work COVID-XX reduce to generate and minimize pre-approval divest we existing non-core resolving passing to debtors interest sale

today's to the to move now for before Tim? question-and-answer call call. the Tim back me turn final Let of we portion remarks

Tim Sawyer

you, now of XX my been XX-week weeks. on years, stretches Thank working I've of this career. for a Board nearly been most without Damian. for although one has XX the challenging And doubt, about I've been

headwinds. are continues all potential. significant As required to decisions some Damian to the and navigate not the Teligent’s company without but we're of are full to I untap The business making challenge, highlighted, through rightsize difficult absolutely aspects

management team our needed I pharmaceutical proud and manufacturing achieve to U.S. We're a facility. the base remain to confident; employee I priorities. have run

we As believe value in America ever. than I said made now earlier, has more

inspection to and soon the injectables thereafter. FDA's We look launching forward

importantly, in you that and we and most families and good safe health. Lastly, your hope are

Daniel ask to now open With questions. call up that, will the to I

Operator

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

Your line is now open.

Matt Hewitt

some thank bigger of and the can couple start the get quarter? over. a morning, Good of I'd as Damian, for items balance off But update the taking an of on numbers I've that got we like the end cash and to you first, Maybe picture questions. to then go

Damian Finio

$XX reduction was Good the morning, end the million Cash XX-Q million. filed quarter Yes, absolutely. Matt. $X.X the at from balance that's in the have of week. about We'll of year-end. It's next sheet a

incremental had pretty collections in mentioned I'd by my cash more decline I was first quarter because that As terms decent fourth I opening quarter pretty would revenue. this we in decent driven had a of in consequence, say, we expenses the cash say XXXX remarks.

Matt Hewitt

be maybe thinking here you added cost should thinking about shifts and we shift it in there's guess obviously, we as steps. I like and are in along And of sounds the to country I for be steps QX an have separation rest it that health Help but year? that like in And those and costs? extending the and sounds ensure expenses, incremental maybe not companies Okay. you should at specifics how the world, but mean we some the most of about those or to those? us, how taken a their create of and employees, to you've lines, fact, that, the the taken what similar extra employees look safety

Damian Finio

I'll if you a Maybe to maybe about it over and cost about more then could talk Tim, little Yes. talk process. the and, to start hand bit I

In with the and as done we things We honestly, significant of two changes do a plus additional terms every cleaning such We've cost temperature facility basis, daily made. that. weeks there's Matt, cetera. on like of there's to sanitization doing et the not costs, checks, things we costs also a are that the –

noncore remarks So well perspective, the spent What incremental significant. fees, which and that NASDAQ around process the mentioned, the cost in of it Tim other as I legal been with in COVID-XX, in as as delisting fees continues, opening as mentioned the asset hasn't on we first costs associated primarily his from as were fees quarter professional well. terms of

have So been from an significant. of COVID-XX cost changes been perspective I minimal, would SG&A say the more of the has but process

Tim Sawyer

tried our can we for really of we that safety critical patients. Okay. products – Obviously, safety their I to Yes. is mean our Matt, us. to the means produce employees

cross to But sort did contact. outlined one of we a – I shift. So other didn't shift for paths, out, would would add not staggered, to some we've used that and taken example, paths be you we multiple example, be add of about just one shifts, steps just as talk in them. when create the just We would coming they one the cross was person-to-person that come in, used going to as clear,

one created and there comes you one there commingling the everybody single in way a building the timing different in. through staggered leaves, the that process as We've so in And that we've also well. must leaves through that come so then and door, is door through come a that new and flow no through one so that everybody leaves door

So – doing logistical we're protect operational things the things. and just that those aren't employees. and They're costly to

Matt Hewitt

Understood.

Okay. That's helpful. you. Thank

without in what thinking a back anticipate? How I'm XX%, talked ramping kind getting QX. As be Do at it's improvement look we whether improve specific, improved performance to halfway you we should we assuming QX an of – margin XX%, normalized gross get for level, about we as well. should financial maybe about whatever? will maybe that back more but

Damian Finio

again, start. great. in Tim, jump would be I'll Yes. if you want And Matt, afterwards, to So that

As quarter. top as we're expect of bottom line we I we the speak. improvement in And second second line quarter course, and already into mentioned, the

a So to we the demand our good sign customer products top have line. for as and

So there. we comfortable feel

of in first terms onetime generate sales flow mentioned, were to cash margin, quarter. in the there In order as I some

in the now. than the It's our get the better Matt. that, move It's inventory have on to and of some be always sit rather there'll shelves. think I position inventory right cash

pricing would of especially some discount. first has to refusal. continue Tim But say our how think made we're ROFRs, in the be of about that response I products, short a as So right to such at with sales there'll I changes

And I some take see also in perspective, out, COGS margin. think from we'll of these a inventory improvement reserves. you'll

mentioned had inventory the some of first I in So pricing lower we market sales the or of the adjustments on went that because on took the out of of cost quarter. door shelf

but in as So to I second we the of still that some quarter, expect it have don't much. may be

uncertainty I and starting approach in the in trend the to gross little a improving second weren't of those call. see could this fourth. a why mid-XXs margin, prepared improvement think morning's But and back would I but quarter, quarter, certainly terms that probably the of towards guidance bit in we I is that year, Last back the Matt, see mentioned north bit in on back that a gross think bit we think we us just being I margins do with for in this direction, second give returning XXXX. quite I everything third time, full year that COVID-XX improvement to posted don't of caveated to So I positive. levels, said I in

Tim Sawyer

The our that done a we, want right? I'd customers, up supplier our out add they're thing increased of are Matt, penalties. of end have that as steady that don't company, so we stocks invested – to is can positioning one we've that that to we have only levels that, inventory We with we choice the have is a and in we customers things be supply so our supplier improve for that that to to our failure of don't

I demands, and forward. our I creates needs on customers' all that. And advantages, invested side good to feel in the but margin us improve we've that and we being so and about should some that of And challenges as able satisfy think some go help

Matt Hewitt

two to those are sit another past do point of fourth work Or you've some the changes through incremental with penalties, I QX, sounds – or improvement. And some hit the in? quarter. failure the it. It a those got had seeing supply you issues? that of that I do some now Okay. was Where in regarding here we're quarter to you guess, some like maybe implemented? in but

Damian Finio

Yes.

the the was In quarter quarter. in supply failure quarter, had in have to million. first and first second about $X.X the We it

say fees. The failure quarter, may supply I been second shift that about be But range. same in there's would to a

recorded primarily mentioned, line year this year, in it's in is in of supply was primarily But Canada. quarter U.S. the our improvement So we last being top the part I what as we're seeing What addressed Canada. second challenges

would U.S. it's But think of most So another in those fair have to say, as I penalties. in to hope failure both the forward. Canada in Again, normalizes or supply probably the quarter likely Canada. we I again, to majority, supply and say Matt, us behind two going

Matt Hewitt

And mentioned That's related release, clarification. In not point coronavirus, volume. to then pressures, you loss of a the contract Okay. press just competitive correct?

Tim Sawyer

say quite Matt? didn't that can you Sorry, I that again, say again. Can understand. you

Matt Hewitt

Yes.

So press there the loss comment volume. contract in sort part first quarter the on coronavirus? Or that you related And for clarification, the were revenues to pressures? competitive was release, just of to that related of was impact in

Tim Sawyer

competitive coronavirus was question, pressures. related. Good That not

Matt Hewitt

And reflected being Okay. of the the you as in well? some then first that also in that's saw quarter pricing

Tim Sawyer

Correct.

Matt Hewitt

last for then guess I and me hop And Okay. back then one into queue. the I'll

on orphan any Thank and you. the that update status drug, Regarding where sits? that currently

Tim Sawyer

Thanks, Matt.

So our what's understand we as us, constant in the dialogue well very are and to to complex our obviously, their with needed to FDA partner as development concerns. both product important is address

clarity least responses. us down slowed As way product, their has way in down soon – we with at as on this have their of in the specific slowed FDA really – terms they've

have an already really for with expect waiting hasn't. it update so And frankly, And provide and – we an expect to occurred to quite update. them we're just us we

don't all. as as I we'll But an right now share have timing. with have update of clear you So we that in terms soon information,

Matt Hewitt

thank All you. right,

Tim Sawyer

Thank you.

Operator

Instructions] [Operator you. Gregg Thank question Gilbert SunTrust. with next from comes Our

is open. line Your now

Gregg Gilbert

competitive it by company-specific we'd environment, gentlemen. as of pricing of more start But I acting rate question. some maybe a to are Tim, generic whatever industry distributors, Thanks, the know of with is, pricing heard smaller stable. late the with have category little been rate seems good well are stable the flat, that thought picking erosion I to competitively. for But intensity while described maybe macro a things to players a relates the as at morning the things has more from address. companies but environment companies the larger erosion kind obviously, in pretty as as you lot a a not pretty I've up terms smaller of approvals

Are you you play you the is it what in Or would environment the the you're with several of has seeing say that agreement is pricing and broader quarters? been that in? sort commentary categories for in

Tim Sawyer

participate competitive those continue seeing such. responding to tell we I in Gregg. question, that some obviously, service we competitive pressure. that declines we're we're marketplace want pressures And Good customers their seeing the definitely needs. But our we that some satisfy you and and categories the as would in, to in We're of are intensify. seeing those to

Gregg Gilbert

Sure.

yourselves on Phase you're in, As that strategy, of than would where going your Teligent as obviously aspirationally track the to next in fitting injectable What look types after it relates your of do cleaned number in up, years of it one. and is player few getting you the that? longer products facility versus term priority terms But longer X of Teligent injectables be like? sort see an

Tim Sawyer

are the from products that Obviously, – my perspective, of being over Phase X X – here. prior time. acquired long they company has to a number the Phase

others. Phase includes baskets that products those as So well few of as X a –

some right type However, of longer our we've products. our and volume that for the really put built – is term outfitted lower construction facility now together and and

we to haven't But enable fitted necessarily volume the us that out space that's make So order have yet. been higher products. to all in we constructed

on at So of more focus outset. we're volume going to the the products lower some niche or

Gregg Gilbert

a and angle. this commented the times couple the of USA Got it. you've lastly, made about And last in quarter

government or was curious frame a attractiveness think just Can entities maybe you means have nongovernment sense? advantages the U.S.-centric in player? sort Is tangible lot. entities? comment? business company, as a can Is even as get you independent we Thanks an an it more we I So M&A that think it think of with what you a you

Tim Sawyer

you. thank Sure,

U.S. contracting seen U.S. couple some manufacturing. that's focused I that we've in been a One, So think things. the government been and marketplace development towards of there's that

a So sign. positive we think that's that,

to economic impact sales an entities. in terms have could it of government so And

to it M&A the – honest be Actually, one and from you if the perspective, entity hit that assists marketplace for was be into that come would foothold States could It us. be that areas, of that all an to you. wanted So United participate on the desirous a with in doing had be an area could somebody possible.

that we customers feel And good may do supply job is resonate they that if it local supply our partners. their a they with in that have we partners from time, from uninterrupted like – over ensuring so our their think can clear, right

Damian Finio

in just in approved, in I And lower think, addition previously I's we see were strategy and we're that our I summarize acquisitions in made arrival. would The prior add, to Teligent approved the products, injectable higher value, sort I Gregg, would headed. value. If made products focused with bought but previously are in where to was I is of categorize again, on that generally to, America, Tim volume

Gregg Gilbert

Thanks, gentleman. Good luck.

Tim Sawyer

Thank you.

Operator

Thank Group. question you. Matt And from our is with Craig-Hallum Capital next Hewitt follow-up a

now Your line open. is

Matt Hewitt

Thanks.

pending the be it pipeline more. your to possible pipeline, realized get Letter maybe upon does the it's at of update sit getting today? on applications revoked? Warning But where couple current a FDA, an number Would Just contingent

Damian Finio

drive XX Matt, There on wasn't we still are to growth pre-COVID-XX. launches originally budget, was all reliance FDA this awaiting part year. with this have when we for And most on obviously, did the ANDAs we – So, file label new didn't have approval. Teligent that topical our the

was since it of October. say Given an the I haven't to third Warning week about Letter, want we seen approval,

the supplements then Warning We So injectables, of we with hope and of we for on Letter at to flow products further end with year. of the the have that pick resolution start should prior up see approval still approval again file. the back filings

of would the mentioning, say, months So there's worth the no Warning Letter. in movement of really past been because couple I

Matt Hewitt

then, I And last guess, the one for me. Understood.

facility a other current With FDA? coronavirus to gone could standpoint, just the FDA high online, with "Listen, that you be that sitting drugs strategic the the to because but here the the an opportunity demand looking even in environment at a and standpoint and soon, state-of-the-art vaccine of from and hopefully going got where you coming Or but go. we've virus, have are does injectable online and some create the to treatment from not coming of ready said, facility the

us And what the can Let help help. discussions, you We if had those been have has you." response?

Tim Sawyer

Thanks.

not discussions have yet. we those had So

to The that we order, we submitting completed, the agency. internally in was did first make thing wanted we've get to sure which house now including our

in So to an products for USA to perhaps and about, leverage us made out we try that of the them is and future coming things types go the that to in opportunity the being talked we're certainly the with. that just

opportunity the affect – the product an so forward to facility timing as our go us for well both we as It's they as of perhaps PAI the release that can approvals.

that. So we'll towards work

Matt Hewitt

All right. Thank you.

Operator

any not I turn further closing Thank this like you. showing for time. any back questions would at I'm Sawyer now to the call over remarks. Tim to

Tim Sawyer

time you, weekend, a in this have we'll you for you soon. Bye. touch great Memorial morning. thank I Day all your hope and Thank and right. be All

Operator

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

You may now disconnect.