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TLGTQ Teligent

Participants
Tim Sawyer President & Chief Executive Officer
Damian Finio Chief Financial Officer
Call transcript
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Operator

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

Second Quarter 2020 Results Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. Teligent, historical oral statements statements statements to made for as this made Except be as well or by Instructions] facts, in the presentation or [Operator Inc. other written meaning are forward-looking Act XXXX involve and the Securities and Litigation of uncertainties. of risks statements Reform Private the within

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

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

go quarterly The For risks on Mr. its today, filings Commission, on obligation and sir. company's refer the Tim and to like Securities its the XX-Q. with developments. its I additional Sawyer, description to reflect and and no would latest ahead, XX-K latest Form update annual forward-looking including of Form company speaker new President to Thank uncertainties, now report to over hand to assumes please statements information Please you. a your report and the CEO. conference Exchange

Tim Sawyer

Financial this of morning, morning Tim Teligent, joined I'm and Officer, Good President Finio. I'm CEO Thank Daniel. everybody. Damian you, by our Chief and Sawyer,

particularly the Buena, report employees around happy those still sound. Jersey, most that are and world importantly, I'm and safe to in First New Teligent and

for were our been none onset of at place because impacted premises. thankfully managing facilities a we They nor we've symptoms their exposed employees the safety employees virus the Each pandemic, company of colleagues of of their of in have at COVID-XX. not the And to on infected. test positive procedures home. Although, had handful put were these

remain employees and long We for patients open with manufacturing local nonproduction, our local as remain for to to home All continue that all be need from company products to authorities accordance continue continue or will and in and permitted safe the quality pharmaceutical R&D guidelines. them. as at conditions state by work locations employees

of As reopen, continue get of learned quarter the Current returned improvements market challenges, XX%, quarter second least we of this approximately adjusted gross as the of million, margin all patient $XX.X the gross But million million, profit to visits in EBITDA posted has second resulting an of municipalities solid $X.X of a COVID-XX, loss $X.X a uptick revenues consequence over there. COVID-XX we and an and in focus still revenues levels. optimistic execution, can estimates now. confident employees to to demand. dermatology we improve first control I'm quarter If the remain that down have XX% to show pre-pandemic are for states very change all versus rapidly. began as Despite see can pre-pandemic We situation levels, we at task. operating to of on margins, continue up drive our our are topline and expenses, we XXXX. cautiously

levels was took rightsizing and maintain families. decisions cash. critically Buena. never towards our of We production with employees June, in These and board we on line another operations, Although, keep during step big demand the time. the employees appropriate business. this initiated ramped We it in business In reduction in order helped to late take received an especially a did facility we PPP are to pandemic. loan down easy, impacted global inventory assist In We we patient to us important what force period step. for in their preserve a May the to at could to and extended maintain

for I'm products In time to order topical fact, since first we that pleased the report have as of XXXX. back on today, no

execution beginning on is pay to off. focus Our

customers as We cost reputation are be a cost. reliable regaining supplier our for action taking and our on competitive to more

recurring but customer are the challenges Given sustained and take traction. doubt, fulfilling rebuild we we recognize we will to had it seeing orders, a effort time credibility, further without

We a customer-focused are organization. being to committed

we quality to inspection. what preparing right-size is for and and the remain doing addition cash, to on In business the needed preserve FDA's focused

address the of to XX, responses August the relating of company's to and Letter as the the on failed concerns several Warning The received documentation This from supporting both has November responses FDA issued letter company unexpected. to and/or Warning in the that news company reviewed comment additional inadequate to our XXXX. an deemed the FDA However, is comment letter disappointing the them the Letter. raised provide and be in to indicated

XXXX. I in the teamwork that attention further we for to coming company agency's is recent execution. poor daily of so is continually the part, observations and is over received and department details of opportunity doing a root drum, the last pays tenacity for me to the we beat action course of for the prior supporting The excites mid-September is The basis. by across provide confident quality not made to remain that the as FDA's XXX FDA's our the cause departments our to an months they correspondence their seeing continue What the of response imminent I'm often and letter improvements written XX motivating have responses the inspection. make on sheer grit strides display targeting XXXX. is resilience, in Teligent May and However, a since the now of others. to me to additional all on but an FDA the employees insisting I'll execution right indication most the everyone the further in and not documentation

extremely patient demand not consequences uncertainty declining stringent or COVID-XX guidelines, whether potential and of challenging level it local predict of and there second might state the of wave to less dermatology and be a Given is visits. related

third reduction line quarter the with force, patient quarter June current performance. second project in we with demand in actual the results and data financial However,

the further for a -- the initiated inadequate October process. in deemed review As bids attention noncore We was majority we we and strategic XXXX, our we down EBITDA organization. of cash full the Canada that process see received our from require closed received Canadian bids the US. market were can as business our The competitive not it to leverage can Teligent we positive the launch We we of that other as generates we and to priorities flow representative value and what attention. of commercial the the continue when further our assets of Teligent to injectables on where Canada. represents as or of have The focus simply address value

development issued on received a letter disciplined partner ANDA word complex our that review we from the submission. drug our FDA Lastly,

Additional end the the FDA corrective the work analytical XXXX. required of until generate, of year actions we in necessary. take on and would to application the quarter third in on action the the is final will filing validation area The expect

we'll is be once and resilient, new updates to process all progresses. knew. this additional provide have this if all some with progress has we ourselves. we time, normal started excuse dealing impacts appears me, as will everything the COVID-XX establish And changed for as the as unfortunately, world a for it progresses, appropriate We but

the a base hyper-focused Teligent, For is that looks on normal new like employee execution. reduced

nonmanufacturing a for manufacturing-related the the we, while more procedures and looks usual our schedule, normal at working finding strictly employees, And be ways performing day, routine For effective. arriving new to tasks. it to like leveraging is from new employees, and new adjusting adhering and each technology facility multiple home, efficient to safety the

positioned a pharmaceutical injectable is manufacturer, manufacturing simplified with there's However, Teligent value in that I for future and saying with in growth remain and is confident what lean has capacity topical expected US-based fact Teligent made not that infrastructure. America. a changed the and is

me Damian? from of call performance Damian, highlights some more on Officer, call Financial to other Teligent's quarter let final detail the questions. thoughts up share Chief turn and Finio, before second Now opening to XXXX. financial provide After the I'll from over the key we hear to Damian our

Damian Finio

provide you, topics. four I good Thank today's on and On will Tim, morning, call, everyone. detail

First, our our on expenses we status; more update with bondholders executed and second, and listing third, on financial the debt XXXX to aggressive NASDAQ reduce preserve taken to cash; announced an actions performance; market second and XX. transaction quarter fourth, the July

bottom quarter the of line with XX% performance. So financial first with projecting and over a quarter in On let's in quarter. financial reported second that were improvement we our or line improvement quarter. mentioned performance over start $XX.X the $X.X projection, top In representing both that we revenues the prior million, I quarter second million second call, last

products of sold derived revenues. $X.X to product failure quarter, topical the recovery strong improvement level In partial second in revenue remainder $X.X $X.X the contract and US million improved was from driven we million Teligent supply the quarter, $X.X development in by to by performance was million products. line million the $X.X of by over Canada. improved are was We Of Canada, manufacturing US were of the injectable encouraged of to our and injectable penalties, prior attributable of revenues. million pre-COVID-XX recorded which sales

also second margin Gross and these quarter inventory the $X.X million. gross incremental dampened recorded by We for were reserves of profit adjustments.

below gross product margin $X.X of levels XXXX and Margins price of improved reserves, due mid-year failure supply, a posted still million profits and XX%. to to gross incremental mix are customer we in well change However, inventory erosion. returned positive to and

results quarter cost of Second line in internal reported our were million $X.X first expectations. quarter with development and

$X drove million of continued the quarter decline with is spending debt-related litigation, and debt EBITDA million quarter, the litigation and selling, as and the efforts challenges fees. last included administrative these an in NASDAQ less general discretionary quarter, selling, second in our company's to by First first costs delisting $X.X call, agreements. to incremental in $X.X administrative the improvements projected This quarter. quarter performance associated a and loss to all, million in prior declined general and XXXX legal adjusted driven costs reduce in second ongoing over a from amended fees ongoing in All the million. $X.X loss in financial a increase professional of But

And we quarters XX, projecting of revenues of million XXXX, million $X.X $XX.X Form As company are third and XXXX, adjusted projecting for July quarters fourth filed million of is EBITDA fourth respectively. the respectively. and the and million of on third for negative the disclosed $X.X and XXXX, X-K $XX.X in

assume projections Our quarter the that third at remain pre-COVID-XX XX% for of demand levels. fourth revenue our portfolio for and will of products

still are the to the weeks, levels. recent and spread situation below many the elective to assumptions than in states with well plans more Of back these change. Canada pulling virus in continuing United US, reopen, stable but In on surgeries to are course, the pre-COVID-XX their States subject is

Second, signs are quarter switching we top by work return gears, can. From for our Tim perspective, we is dermatologists, to results, diligently to mentioned encouraged suggesting products a the reflected the we line positive and control as our demand what second continue are to improving. and patients beginning to as in

actions call, preserve reduce take implemented Jersey. to an and reduction exiting reduce annual staff costs to that recruiting mentioned in difficult In earning to aggressive discretionary than of by we a reduction we introduced continue quarter, pay salary, most the and June, portion decision we employees late New scrutinized employees our the vacant I force organization. company-wide spending. On for in roles implement in We first and furloughed in of a our left last Buena, cash. more a to $XXX,XXX efforts also effort In made froze our X-week the

million of recorded consequence of year-to-date. Impacted of the is a will at employees this the employee quarter base our end be today. As taken before the down paid first was severance, end a were quarter quarter, the in second announced $X.X but offered actions in much the the results action of XX% and third the second quarter, which charge

levels We will maintain spending parallel actively in discretionary monitor continue with and to demand. staffing customer

uncertainty NASDAQ trading time, share that price the third delisting stock our XX, the XX:X, on closed of in the future has Unfortunately, continued our On split a basis with to had since day presented initiated to a at June topic, listing reverse May XX, regained we reverse requirements. On $X.XX. on Teligent's that ratio investors. after the compliance decline. we status, price informed that NASDAQ that order listing and our potential to current split, first Regarding we remove continued share of were

publicly of Although notice company's publicly NASDAQ shares value notice to on the still longer January we of is value exceeding delisting NASDAQ. dipped XX continued the to company compliance no received market minimum from July above the $X, to deadline XX, held Teligent's shares held prior that million. consecutive Global met trading for maintain below XX regain trading a NASDAQ from listing Market the The $XX market $XX receiving million days XXXX. requirement

wanted to announced of recent The on provide our XX, XXXX. Lastly, financing I July most transaction. summary transaction a was

For in the Form highlights. transaction let you said, Buna. with X-K navigate of inspection SEC so at time. our the await we while liquidity to specific of to headwinds, with we to further That provide FDA's filed the details, COVID-XX-related The through intent please refer me of key some facility manufacturing can that continue provide the was

third to collaboration a additional just week As received facility but the estimated liens. capital increased the first, basis, deal warning in an cash relating $XX million approve is constructed to $XXX,XXX. of cost new close annual last commercial at Letter XXXX $XXX.X debt prior necessary and closing. is resulted interest our convertible creditors the And comment November But million was A there to occasions, in Upon existing notes, were July proceeds previously, notes, liens incremental and Series by the into million that future the Board total increase agreed debt $XXX notes exercising FDA's interest transaction net are and notes which option, price both convertible given injectable million transaction annum, million new new for our Series of and exchanged by result discussed The reduces Total convertible the at cost assets. confidence $XX.X inadequate. notes B multiple money which a third-lien company $X.X to we the issue notes. second of annual encouraged preserve taking the Series was million, transaction the team forma million that and Tim debt via of on deemed get The bear Directors, From original the the $XXX.X advisor pick letter a on translates the total cash. aside, we C of by of of informed creditors on paid third-lien management newly most of newly and the $XXX.X for swap convertible X.X% of this debt is issued deal letter all to on first secured million, specific the pick pro third-lien of estimated we right a in cash $XX and million million have the company by per Putting convertible by done. relating an was And the after of were unsecured to outstanding, B in between consideration, increase FDA were production. and swapped secured $X.X to the terms and professional and $X.X A million Series to inspection reflected liquidity perspective, mentioned into fees a secured business. I transaction was which our in Warning $XX and as interest Series expense, of response transaction XX, discounts. outstanding the our lift of the Series required now was Total second C $X million the interest Tim to

through preserve to and opportunities COVID-XX may company whatever provide seize will present. inspection letter, resolve the liquidity We the needed order pre-approval with continue the pass challenges warn to the to cash to in navigate

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

Tim Sawyer

Damian. Thanks,

posted to decent the the decisions company to and make highlighted, we organization quarter and second continued needed streamline the we right-size results, and tough expenses. As our

exactly to We how significant continue some will knows will navigate and to headwinds, play continue through COVID-XX out. no one

proud call challenges, appreciate to will questions, recent we in for that launching addressing We has families subsequent your all made up Daniel, America you. injectables you these remain are and thereafter. US would We value. FDA's believe, inspection we open on hope good could We safe the pharmaceutical focus manufacturing communication, a the Amidst and in if Thank you run it. health. facility. soon and

Operator

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

may now disconnect. You