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TLGTQ Teligent

Participants
Philip Yachmetz Chief Legal Officer and Corporate Secretary
Tim Sawyer President and Chief Executive Officer
Ernie De Paolantonio Chief Financial Officer
Matt Hewitt Craig-Hallum Capital
Call transcript
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Operator

Greetings, and welcome to the Teligent Second Quarter 2021 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Philip Yachmetz, Executive Vice President and Chief Legal Officer. Thank you.

You may begin.

Philip Yachmetz

operator. you, Thank of XXXX all us Teligent's for Welcome Conference you Call. Quarter Earnings Second to joining

Before we legal disclosure we to regarding attention begin, forward-looking want to statements. your draw our

specific Q&A as which review statements described regarding assessments reinspection certain beyond, events, company's the of XXXX actual call the as this FDA. commercialization by in During annual for business XXXX, about those the critical We events factors could U.S. we future currently or particular, results identify ending ongoing In and year company as plans encourage report and the differ the forward-looking and strategic and including with that you course filings may period materially to Form strategies the impact statements. the make from XX-K fiscal XX, the the will cause following, and well financial, future conference on forward-looking undertaken, and statements have to our the past as well December inspection SEC. which

over can Officer. accurate made only in Tim Please and database that in XXXX, comments www.sec.gov Executive or at call today's section I the call Investor may today, hand Sawyer, the company's XX, Chief note rereading. the filings Relations August You any at the www.teligent.com. at our and Tim? not at any to EDGAR or to of conference as the the transcript be President SEC replay of time would like now speak on find website

Tim Sawyer

you today Teligent's for morning, Call. and I'd us Second Thank to on Earnings like all Good you, of thank Phil. Quarter XXXX joining

Officer, Yachmetz; Chief Teligent's is Chief President and me Legal Financial Officer, Paolantonio. the and Philip Joining De Vice on Executive our Ernie call

productivity our not second wane. did Teligent's to quiet announcements, quarter respect Although with new relatively was

our remediation facility continued important. focus of extremely fact, on Buena proved the In

later inspection which earlier its anticipated. discuss process in the call, will is we than in mid-July, further we As this FDA began

a within pricing by remediation-related combination effects impacted COVID-XX generic segment. was the ongoing topicals quarter the the for of erosion activities, including the of modest performance operating Our factors, and pandemic

Teligent by human forward, and our expansion leveraging making continue effort Board anticipate including our both and injectable into providing the assets the assess updates we on shareholder of value maximize proprietary are existing possible manufacturing services, this Looking and how asset physical senior capital, to the throughout progress we base, management all XXXX. on remainder to and additional of development

for these items, review second Before Paolantonio Ernie results financial quarter our on commenting Ernie? XXXX. further the will De of

Ernie De Paolantonio

good has lower absorption. XX, million effects morning, months revenues the increased the primarily as prior fair with the $XX.X increase expenses value versus million to million from costs. of resulting for and research liabilities. and in professional of $XX.X for expenses. decrease $X.X $X.X and derivative driven million debt ended for current a generic for to Product as volume testing development $XX.X cost period XX% cost personnel-related and was period $X.X $X.X period, Selling, to API-related attributable decreased of of due was was $XX.X increased stockholders reserves by expenses $X.X the other million the period. XXXX; prior the prior by of lost the $X million inventory current by million for offset current period activities; by million common for of or mainly product and prior our decrease revenues $XX.X of from in expenses outside general interest expenses remediation the was ongoing a Cost million X costs, price the COVID-XX due Thank net the the administrative the Net million Total restructuring prior million expenses expenses, to higher The result were loss the $XX.X you, higher million well overall personnel fees due in everyone. million in were period The period and primarily decrease decrease erosion loss period a for million $XX.X decrease the versus $X.X pandemic; change in for to June the product competition. slightly The Tim, to XXXX, primarily and from Operating the of above. million increase -- as period to period. modest from versus due million $X.X and $X.X discussed due cost decreases to for lower remediation-related and to by pilot period. a to offset batch increased and revenues product the to attributable for contract continuing current in primarily combined

December I cash June Tim? versus $X.X Our and have XX, we will estimate call million We $XX.X at approximately to cash XXXX. the XXXX the will $XX.X XX cash until XXXX, over were quarter sufficient and now or turn at the first end compared to equivalents at XXXX. operating XX, March of of Tim. that million million into back

Tim Sawyer

the for Realizing November remediation investors, let provide Thank our now issued a on company our you, our letter that of update ongoing the with in of interactions XXXX Ernie. a FDA. focal me and recent is warning FDA brief point our

Buena, May, of stated, status during manufacturing facility, we previously of on in believe remediation third our be would the first inspection ready at of we our the quarter during of our call assessment New inform based FDA readiness our Jersey efforts quarter to XXXX. the As the

and how of by the results to may FDA, readiness, and available of imposed on FDA predict that good cannot manufacturing the of impact removal FDA of restrictions inspection inspection letter. would will reinspection current the will formal Therefore, to also by should in completed, specifically unable as of the this FDA the that or periodic, made abating reinspection not on may existing and informing company the letter when a available those no noted our of reinspection results reinspection the the the communication as time. warning the letter we when FDA's the review warning have a practices results It will time warning in analyze be, and This the had is or were we us inspection we whether until imposed and ample Therefore, to still to the are more the of follow specifics the importantly, FDA impact, opportunities results the warning and our action when and reinspection FDA advisers. and the up by to and our reinspection have provide if of formally with may letter. be our be inspection FDA result commence us, and on may consultants on by the they of restrictions control results such informed the inspection the predict the and are inspection the company and any, the inspection those ongoing and what made the inspection results when remediation be prior those to However, results we mid-July.

comment this further no have matter. will We on

our best base financial, them leverage FDA shareholder also to continuing strategic to to continue forward are of asset strengths capabilities, resolve diligently our moving and maximize issues, manufacturing and critical we assessment we with operational to value. and pursue the we work legal can strategic advisers these As with how

and further decision a are and provide our An why towards utilization most manufacturing technology, proprietary consultation future over the comprehensive in external outsourcing has refining services by end of and of take the market opportunity. to industry providing highest There regards pharmaceutical in strategic upon advantage As fully within and can opportunities sector, part company. and analysis proprietary evolving for to of Teligent, and end represent manufacturing current with major so our advisers, to our determining improved our prospects manufacturing our believe ability Based last significantly of one growth for this development months, trends. trends of we assessing for examining market. that the review, and of these services the a products position we injectable. reasons part important company business long-term detail quality assess can several To this base, the optimizing growth our is that we efforts the financial be development and in our our end, integral several believe growth strategic directing asset our injectable review experts of the and future undertaken is

utilize services growth core would in market we expect and First offering, our end and at that our will for sustainable trends fully higher our our only time. than We potential these improve a profitability. foremost, enable the base the Teligent which and believe significantly demand-driven us and tailwind provide topical, trends continue proprietary within manufacturing over rates asset time, should markets to over strong growth injectables are

many drug pipeline back assets, continue developers, formulations, companies sources manufacturing small to pharmaceutical key to midsize to XX% up outsourcing particularly manufacturing the the Industry complex XX% their particularly end manufacturing, midsized by require indicate injectable-based drug of processes. which more Secondly, oftentimes that approximately XXXX, of small in all companies, of outsource from were their XXXX.

with strong trend lack out assets, with see and internal cost surprising the the structure such over associated operating towards continue of it's variable building capabilities, not Given coupled to time. outsourcing

why provide that of outsourcing our dynamics outsourced about And services creates the we years and pipeline seen manufacturing manufacturing benefit growth see for like come. Thus, business, model. Having business provide side pricing optimizing markets a the the believe address assets prospects. towards believe could with injectable-based and industry and capabilities, internal for in directing highly another growth Teligent these our natural we potential constraints our pharmaceutical benefit potential trends our optimistic provide also in these demand-driven for I'd yet for also capabilities that believe to in existing capacity the we trends sustainable injectable supply-driven we future the touched services. Additionally, attractive to the our end we're our upon

major production vial ampule know, for to As capabilities within into upon our presentations. a FDA investment us our Buena product our the enable will expand our capabilities, Buena facility sterile manufacturing expanding represents significantly approval, investors manufacturing both and injectable

designed production a million the units also between sterile vial of Buena facility versatile filling is the capable line producing the per million X isolator-based X around technology, and addition, and includes facility year. area In and of ampule

line. moving We we as that by Thus, injectable We keep critical we once our secure in have believe this additional presentation, a already and utilities growth services. also private we advance to and manufacturing work label our related to our And posted have in plan strategic you and still these plans. to and regard complete pipeline FDA, will long-term and we forward. support that speed for expansion will capability contract in continue products production approved ampule will finalize higher filling in Buena's of the potential and vial anticipate sterile build-out future the sterile space

this However, it's proprietary to session. manufacturing prospects directing Devin? products. stage, current the the like we taking our believe the unit, our developed at base based we'll for future services asset the you of investors and Thank on important injectable turn I'd improved thinking We today. optimizing apprised towards and believe us our by over our operator that be and to growth And share future for now to preliminary in to to with call you would keep continue question-and-answer quarters. back time join the our

Operator

[Operator comes with Hewitt Instructions] of question line Matt the first Our from Craig-Hallum.

Matt Hewitt

back I too comes be how and the and you give transition What into all required First you that getting say, into but up? think all do do remediation so? would guess they me, quickly ramp quickly that you without clear. to that, to back -- deep for let's can going the once into efforts FDA How the facility question

Tim Sawyer

Thanks, Okay. it. Appreciate Matt.

understand time upgrades I question, a FDA the injectable if saying for facility? the the sure line inspection, make for to to just to finalize provide positive the were us you're looking to So you're the

Matt Hewitt

not I on you've speed have can mean side, you even running manufacturing. how been that mean, got I'm mean, quickly that got -- guessing full just I pending that ANDAs of a number ramp I you I'm at back No, drugs approval, that the and now. you're up? right you've I know been have topical that

the the topicals, So even guess the all topical the on quickly side get can gotten I injectables clear in on we second. you've to a But -- just once how and yes,

Tim Sawyer

Right.

I Sorry, understand you I make want didn't sure. there. to just

today, So manufacturing obviously. topicals are we

necessary FDA make and the of we're doing sure products work So the meet those to all guidelines. we're --

So we today. manufacturing are

for but time, time be able to will number a able is on able to be will be products ramp we those of to applications would a But It the approve up. Then launch. up. of any to FDA that do say it be We you take We dependent to I the to bit applications. the that for takes new it to new approve be will that dependent line going have on us are will little ramp to that FDA pending.

Matt Hewitt

guess Do on ready you Okay. need on Fair flip that the the been an enough. have And side? inspection and on injectables side, FDA all then clear. remediations? I facility, would with feel primarily injectable the the an focused like Or you're still you

Tim Sawyer

ready at I be point that We've PAS tell will to focused product primarily to good -- you key We've a continued that question. we're for been would key on additional obviously, the there, that to manufacturing. this to ourselves for been have We do filing focused -- there, need filing, going a we do very to time inspection. have to in so The inspection. have definitely is that prepare to we're real that though, But PAS the going remediation. work injectables trigger work real

Matt Hewitt

Fair enough.

-- can the And go from injectable topical on there's -- side, forward just how I maybe let's once from flow couple or ongoing to Or clear of are fast to quarter But we of that you've bottom complete how much work will of are the the to always do. of away efforts are go costs whether a Okay. talking not a cost that remediation the the once these know, much be? to mean, I then away I year that know costs a and back the and start FDA, on whatever, a the side? but dollars don't complete, savings facilities current line? all through those what million Once cleared, now remediation is it's gotten

Tim Sawyer

and that I whatnot we our consultants the know away Obviously, could improve third-party manufacturing then would spend it's go on we don't that and additional high. efficiency. costs that

-- But flow out because tell year. you would looks I it right. a while a that million -- would So of it you're takes it's dollars probably be couple a that to for it

Ernie De Paolantonio

is this Matt, Yes. Ernie.

those You'd also because have on profit be those. products on working gross higher you'd CMO a as

would your costs be So offset.

Matt Hewitt

guess And efforts if developing last continued on have update, pipeline have the Okay. new Fair currently pipeline one, one, maybe the products right. sits? All enough. where on you for maybe you the and I an

Tim Sawyer

at and agency a variety agency and We at X that Sure. have X prosecuting, currently products, injectables products pending pending we're topical products application. so the ANDA NDA the of

prosecuting And are at this the in so those moment time. actively we're ones

the been product recently have efforts majority of spending We ensure the research our viability to remediation most on product in individual their market. --

So we been on product new focused development. have not

Ernie De Paolantonio

clearance. products that to Matt, we due paused into guidance again. concerns been FDA and may remediate may those quality satisfaction, to would may have market. the products fully we paused spotted picking the back quality issues once we into the spotted. the they part start I be the the were products those just you topical sort when generating or Therefore, might will think they any going products. them for of require paused have we've back some finish remediation don't it your those initial But our be we remediated of that we'll those have to on reintroduced we the looking reintroducing may efforts They We from paused, right may Once on again remediation to question, up revenue start revenue have market. voluntarily

Operator

like over no to Sawyer to turn We this closing comments. the questions have for time. Tim further back at I'd floor

Tim Sawyer

Devin. you your you. and Thank We all We joining Bye-bye. great appreciate a us your continued support, you Listen, Thank I you, appreciate today. wish for thank time. day.

Operator

does This today's teleconference. conclude

this have a your you time. your disconnect Thank for and lines participation, at day. wonderful may You