Mallinckrodt (MNKTQ) 5 May 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2020 Mallinckrodt Earnings Conference Call. At this time, all participant lines are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Daniel Speciale. Thank you. sir. ahead, go Please

Good earnings and conference Brandi. first to quarter XXXX call. morning, you, welcome everyone our Thank

Joining me Reasons, this Steve Romano, morning are Mark Chief Officer; Trudeau, Scientific and Bryan our our CFO. our CEO;

let me of important Before we remind begin, a you few details.

you us hear these be it’s assume could expectations for some forward-looking even to such different to no of if encourage or note, forward-looking materially. in we from our refer obligation filings you’ll possible call future cautionary statements, actual update SEC that change the statements actual more contained the statements of make forward-looking statements. the On Please We to results materially results and explanation stated inherent expectations. our limitations in-depth

reconciliation We earnings will to time-critical mallinckrodt.com. a to page of of and in are distribute our which adjusted release, We Investor as you and Relations should also on our included measures for use provide information. non-GAAP selected our this A channel be website important measures. these found can website website, the information, our non-GAAP company look adjusted

conducting take unless should constant bear us handoffs press if would like with comparisons ranges under longer net today’s to at will different any We please to growth issues locations, are little with or on we’re period earnings that participants and otherwise comparable I than pandemic. release, there call you given the specified, ask the COVID-XX sales a technical usual. all our we discussing are be to currency As basis. the a quarterly XXXX note also

Mallinckrodt's through business the the start on walk our on financial COVID-XX will Mark of update for the update technology our and response will and an today’s including our and provide status opioid Gel of to activities overview an and quarter. Acthar litigations. the then the Turning science to will pandemic quarter, Bryan and an Steve results agenda, with

provide products and present you in COVID-XX the quarters. attempt expected business pandemic, coming to some the how is about we to pandemic our thoughts relation in will our talks Mark the As directional impact to

incredibly the largely the However, an following in and or is practices behaviors easing timing we business any recognize situation driven this pandemic. be changes and of by fluid restriction will

to updates the necessary. turn over me In will situation very we guidance. provide let call pandemic, closely that, We of not Mark. and the monitor providing to continue as Mark? further light are With the formal

us. by to are all and you, loved Thank and and saying I morning good dealing your safe Dan, thanks with joining start thoughts you this staying are our morning, like COVID-XX. would I ones and those everyone, with for hope healthy. of

our grateful as globe who thank serving to are our have responders, patients first around ability of how been health mind COVID-XX to in over crisis. and to of working and We to communities aspects the to and I live, take I will respond Mallinckrodt a pandemic. continue everyone, company, all work and like world. affected maintaining customers. we commitment for with past the social during for continuity instrumental begin a an workers while and adapt essential so two distancing moment professionals, of nearly top healthcare their as continues months. has resiliency frontline and this this out team, has practicing overview also been the and Their has the would individuals, the It's a continued for employees in as all around business across how to

supply, initiatives we’ve continued ensuring products like to MNK-XXXX we while such while to studies, keeping our as continue on employees franchise modernization we deliver clinical some on patients to medicines self-injector that EVOLVE. to important have our our well we’re share make largely access progress Gel focused seeing the without Acthar in continued and programs INOmax interruption. and serve therapies. as Further, delays I’m we to manufacture, and safe, First, pleased date as

continue we to this the terlipressin FDA are year. engagement for from StrataGraft Importantly, to and see and later looking potential approvals forward

is outcomes to COVID-XX market our mission and unique efforts to by developing healthcare over critical conditions few workers to how us few severe this for and presents past to a examples bringing pandemic. against also improve the weeks the our in Our have support evolved. opportunities I'd health and overall industry of with and therapies like fight share

leave medically paid a trained treat instituted with care our we with to employees program to First, provides volunteer COVID-XX. time off patients that or for

healthcare supplies organizations. protective personal to donated equipment, and we ventilators, and Second, providers other

to part finally, and we And we mitigate to of Third, in partnered help operations management we to our centralized manufacture key production on groups impact advocacy are of with patients. pandemic located. sanitizers transitioned emergency where donate the hand the states

treat about addition, providing families, severe employees meeting and are patient the and and needs industry, we're our move I'll authorities our In care other is key COVID-XX impact Canada materials committed ventilators to patients, to to help, health with will as on remain and this we shortly. research to forward what help protecting potential investigator-initiated we're pandemic and help We in to can patients effective to research funding provide to priorities. society talk find medications understand more we hospitals continuing the respect therapies, this with options. collaborating access to our scientific having treatment conducting do on and and U.S to

procedures anticipate processes to so or not continuing related supply opportunities do normal new refine disruptions. to appropriately chain Looking find are going portfolio that chain ahead, most aligned significant the across we We're COVID-XX we forward assess the in. manufacturing supply ourselves our and we evaluate our any and currently to

our an plaintiff remained to the settlement proposed for We State, rest Since hand. York gaining were moving debt progress to legal that with facing cash business maturity time, our debt In and private a we near-term made resolution issues XXXX litigation. important for principle on the received outstanding we’ve turning the maturities. on and including debt from those opioid the Now New we in near-term we reached forward address Notably, a our global focused our on maturities. able February, exchange settlement, agreement additional addressing the and through and fronts. support proposed with partially to support

addition, our CMS relating ongoing legal dispute there developments In two Acthar to with were gel. regarding recent

Medicaid on method First, Acthar U.S the March in July filed DC time Massachusetts intervened rebates the our X, gel. same use the the the XXXX, the violations the lawsuit will alleging relating government's Due to that delayed Claims be Attorney's a at to Act answer the in for company agreement pending the with due. government, of has False Office to been XXXX, underlying complaint against which issue calculate drug to we action the on Washington in until District and Court in action of

for suit, against applying CMS Medicaid Second, that the of Acthar the refused result future if our writing stand, the Acthar loss based to retroactive correct. and the do its Medicaid ruling court The and rebate disappointing retroactively. revenue allowed DC that roughly date on of liability agency. we annual In received would lawsuit on a confirmed incorrect then an AMP rebates change to administrative Medicaid Gel had for CMS the in $XXX calculation disagree change that of believe District position a court company, was under asked Surprisingly, an million XX, $XXX and we the we twice in and decision court's the against fact misinterpreted about from changing correct million. careful believe underlying failed block Gel despite March decision, law. arguments We Gel in that strongly of the analysis in key has Acthar with Washington obligations the statute government's the a Court the address we and following court the decision, the from to about to so

a to Medicaid exhausted we've change such, the the ruling, U.S. rights. the the appeal Appeals company this file rebate requests, impact company from to the would Court asked own the to decision to significant Circuit. such should negative to if right a the these matter issue either appeal reconsider immediately and Acthar allowed as we stay to its expect appeal necessary. will in the of calculation Due until an of we've of fully deny If for of As a DC be court our government court requiring to prevent gel's

timing, May, and of agreed Acthar not in has Medicaid the change require the it In indicated court least month. government gel's terms a has middle to at the that same the rebate rule of calculation in to until intends

ourselves in parties related various gel. to in opioids and and plaintiffs and we're vigorously, outstanding them are a While false to ongoing. no discussions issues we with choice hope manner. defend consider all with working left these the of the These and opioid vehemently We're other intend options CMS matters reasonable with the Acthar with but disagree to allegation resolving to claims resolve decision the

our our strategic first despite quarter, line on to created by priorities, maximizing of our include the challenges the value pipeline. advancing execute portfolio which COVID-XX, turning in the continued diversified and unique to Now we

to We overall on stay-at-home expect orders, procedures. drop a combination a pandemic patient due and the that the surgeries have business of COVID-XX significant our of will reduction impact elective in

sensitive these We and are most expect OFIRMEV, to the of the performance the Therakos as restrictions. an impact products Acthar predominantly gel, in

recovery the on able the be As for trajectory and months, both get open estimate country next business. to the a over few the clear of up begins should to we the timing

the toward our of strong, elimination procedure performance we primarily including end to result began significant widespread the as to While elective be volumes, of March, patient quarter orders. surgeries due declines stay-at-home by COVID-XX started a affected demand and in the of

And show of being that the ways of appropriate customers. receptive We about implementing products. our with ways care are new different indications our use they early educated provider health actively are interacting of to

COVID-XX as promotion we know will else, how confident the that everyone subsides, business will long impact like this While last. are of don't we and recover

continue will impact second the least. to at this the we expect quarter We in of feel

this progress last pipeline, important us the in we potential of year, to Tissue. the approval few two key regenerative closer later bringing and made months to Turning StrataGraft products terlipressin the

patients remain Acthar subscription and issues, the by advancements product. executing Gel For to and potentially modernization improve to stabilize data will which we on believe model strategy including generation for despite we customer the continuing for the reimbursement the brand, Acthar focus Gel landscape legal self-injector, committed the the

the positive Gel visits we new orders patient patient starts Acthar to affected were being While before by is reduced demand currently stay-at-home instituted. see on due for encouraged were to trends COVID-XX,

XXX we're base. to where COVID-XX which INOmax, an in customer more currently than at being quarter mainly for our treatment of is Looking is its used in COVID-XX, it consumption a a increase use seeing as for critical approximately hospitals patients due

the unlimited to most is utilization contracts. of incremental from type use However, coming our

served sales. which we us model, well our has care best partner the a INOmax has product patients impact a to this factor potential translated total meaningful We serve pandemic. not we believe on So remain hospitals between as that into competitors to is during with the and committed and differentiating

As they we on care move forward, health as to in need. can and everything treat patients we doing institutions remain we focused assist providers

expect that expected For health are We're to performance. the institutions being OFIRMEV, to orders time. well working will pandemic, downturn their treat surgeries institutions normalize with customers in to we product public patients due elective ensure the closely to COVID-XX our as that these and focused are impact on responding over equipped to trends

quarter Therakos of we during the down direct million quarter in the pandemic. result the be that procedures For $XX in reductions net specifically, million as roughly to first by expect sales $XX could second from a

of short-term specialty COVID-XX. disruption to resolved from poised long-term continue a believe of integration. is this which performance in manufacturing overall was our acetaminophen, the despite and unrelated the be to that We U.S. with business for based generics vertical benefiting growth, We now manufacturing pleased the business,

as that, details year to segment growth and pipeline be our the efforts. it to or show turn to even With over let data the stable some Steve? more expect Steve generation progresses. slight We provide me on sequential

Thanks, Mark.

critical of rolling achieved for and challenges we skin contents requirements during submission recently received mentioned, lead previously of the our StrataGraft for X. the an completed I'm two the milestones Mark of development unforeseen the quarter, tissue. the of of to terlipressin generative for that phase report hepatorenal with that the that the treatment As despite programs COVID-XX, March, terlipressin complete we met submission of response confirmation for we pleased type syndrome issued patients letter. NDA And In

Also Review partial this will submission As the burns. a confirmed of for StrataGraft expect initiated regenerative summer. BLA an thermal patients rolling deep we for the tissue committee for March, with meeting, skin we need anticipated, Division occur a which in advisory thickness

to as the We many deep unmet to coming both well expect science in these filing extensive and regulatory needs suffering our oxide to begin commitment with weeks Several from patients high associated patients exploring lung of partnership a Canada trial from maturing of as complete capabilities direct complications with technology of critical inhaled end, -- the means study our physiology will a substantial organization, weeks. weeks. ago, and We'll nitric INOmax the to Health achievement and antiviral of The the potential we dose of the this to and of COVID-XX milestones effect effect patient we development of inhaled of our enrollment used the of demonstrates also received understanding with INOmax To conditions. oxide be lung COVID-XX. for Novoteris, potential advanced in evaluation identify nitric that associated gas. in in clearance are in and using infection Including severe we INOmax complications. coming be expect first begin pilot of leveraging

investigator be trial initiated COVID-XX. oxide by inhaled Massachusetts clinical acute supporting Hospital to INOmax We with multinational conducted effectiveness to or an also syndrome in of nitric General respiratory announced distress assess will recently that due patients we're the

evidence pandemic hospital how settings as opportunity is the used to real the more to we medical retrospective This are in world inhaled patients. immediate, challenging about gather Finally, to complex progresses, oxide allow manage nitric information us these evaluating currently would chart being and reviews. collect through

platform ensure of In request terms support in use made use setting. systems needs our any of who respiratory INOmax the support patients, the safe therapist with hypertension of on hospitals for persistent have and available of work in management health pulmonary INOmax newborns the COVID-XX our also themselves to routinely the to

In customer the center this inquiries difficult addition, clock time. provider during to our continues around respond to care

an in Our enrollment handful employees, X protect Acthar trials of clinical caution. ongoing the and pandemic, paused and is to pandemic a this mind out of we context priority in patients top safety in this of X the during abundance the of temporarily health Phase customers. COVID-XX our and of With

and Notably, the to improves. prepared L-ornithine disease so well-positioned are so. continually Our trials, COVID-XX do investigators, as with patients our once treatment the from progress and those advanced situation is start administrative we’ve are clinical that our for also of we'll new to contract X with and to teams of of MNK-XXXX, phenylacetate, activities touch we continue in liver be several hepatic organization suffering to reopen enrollments global research we initiation continued it as the trials though trial partners startup of has soon to the new delayed Phase prepare for encephalopathy. safe

challenges to due through with and recall trial, conducting them registration study large closely procedure, to finalize assessment of requirements. the complexity alignment FDA working saw You'll of the protocol this condition a with the we the are special of and pivotal single utilization

trial anticipate important to continue of We later this this the year. start

We've Acthar device, development our to efforts new self-injector. Gel next we the XXXX. in we ability Turning of to the ECP expect our brands, versus weeks. programs Therakos available the advance host resubmission applications platform in the to with of our the chronic finalized our to in-line complete INOmax Both in disease plans to to of generation launch delivery graft position continue be well EVOLVE, Japan, which coming also scheduled expand our as a to as

demonstrated observed have in conducted on infants. to Finally, the premature XX% release effect interim infant you completion yesterday near-term regarding and seen than similar the allows This treatment term registry. anticipated. earlier population to much our issued that us our of end analysis premature Demonstrating was trial the may planned data INOmax the in was essentially and morning press the successful

those are we development early and research Transimmune. with progressing Therapeutics a our including Silence of and Lastly, number collaborations,

which advisory with Silence's new of of technology you the In selection PDUFA the CX the StrataGraft we've organization the the in preclinical with and Bryan across significant complement various a options to and of Work which has this include of compound, over COVID-XX a quarter. as CX well complement recall the of progress terlipressin, associated specific our optimize Major additional its the catalysts generation license the Therakos coming to financials. us And discuss quarters rolling for data, the date greater mechanism two benefit allow progressing year Therapeutics, license Phase to eye pandemic will will completion based be conditions. turn regarding BLA, to to Brian? now additional spite in science for as clarity RNA progressing technology will we our confirmed terlipressin made anticipated committee it Regarding in the and I'll assets targets, Transimmune, two targeted asset X the for proprietary to up underlying interruptions. this September, finalize including gain been the the work on obtained preclinical FDA Silence trial is of initiation for platform. the MNK-XXXX. to summary,

decline of you, the The continued overall we net and In challenges and million. continued was on net everyone. sales spending, addition of Acthar contributed quarter $XXX net in impacting Thank were Specialty quarterly diluted driven Gel new share morning, adjusted by primarily COVID-XX pharmaceutical sales in good reported to quarter. $XXX segment specialty of million. XXXX, first Steve, patients The payer scrutiny with per impact million. and earnings sales the later Brands of $XXX returning reimbursement $X.XX

modest than $XX by INOmax is inhaled results. in driven a potential competition progressed sales a dispute, institutions in to is slower including the decrease pandemic. ongoing the a nitric quarter and this reduction net to increase in from quarter-to-quarter the focused decrease not navigates $XXX financial patients which impact outcome COVID-XX oxide, responding be a Medicaid to due sales, contributed in sales, X%, of anticipated. due bit and orders million was to Gel CMS revenue to as Acthar public elective company on a to net ability provided and in $XX impacted which health due impacting will a the treatment. million As negative million delivered on Therakos reflected continue to And stay-at-home variability directives matter of sales, to surgeries significant in net any recognized, COVID-XX, order X% XX% OFIRMEV receive

in Lastly, to the the short-term to driven now price was AMITIZA $XXX which generated due U.S the resolved a Specialty million, The decrease X%, Generics sales net the APAP, sales quarter $XX in net and The the in in was reduction were disruption increased unrelated biannual COVID-XX. competition of quarter primarily million. segment in of manufacturing of decrease by Japan.

net our and levels, XX.X%. sales quarter. deferred percentage decline for company cost fully compared expense was expenses operational sales percentage a to sales compared XX.X%, payments XXXX. impacted containment The the with declined the profit as actually due XX.X%, primarily continued Turning while to focus in which decreased XXXX to has net gross adjusted due with obligations Overall was by Total the satisfied company in tax R&D to for total of tax adjusted as to the the product the being thus, in measures reductions. adjusted recurring was interest SG&A mix. sales, rate was primarily as X% XXXX, compared quarter, company of XX.X%, effective net SG&A Adjusted on net a as percentage a in XX.X% bearing from ratio of due to XX.X%, first no tax

expect expense closely higher XXXX the rate. We more statutory adjusted tax the reflect will tax XX.X%

$XX quarter operating by flow million cash liquidity, $XX of provided was first free in activities the Turning to with cash million.

notes recently of maturity our cash the to XXX to a mentioned, off We pay the of -- million exchange. with extending notes, need of private following we of in maturity certain million our use the did the maturities, holders $XXX XXXX effectively exchange XXXX as XXXX. Mark to remainder $XXX the near-term completed debt April terms exchange In

current million. of Our is balance excess in $XXX cash

of quarter higher call Lastly, Mark? remarks hand slightly our and to was I'll adjusted to for to our the on net end committed at questions. lower debt final back net debt debt the EBITDA We your $X.X before billion Mark throughout remain net the reducing XXXX. moved leverage X.Xx.

Bryan. Thanks,

Q&A, to floor let a conclude the main open me emphasizing of we points. couple by Before

is job adapting been to and a has disruption. we rising an maintain minimal of new very time, First, we've to team they're our normal with to done challenging but excellent the COVID-XX. able occasion the believe business This continuity

this business of to we've Second, approach. as had our a modify result situation,

we While take. we're don't know as our will recover COVID-XX confident how will the of subside, impact that this long operations

of We feel this will second least quarter. expect the we continue through to at impact the

to and we of possible our Fourth, execute quarter strategic advancing continuing important priorities the to matters. deal we will our These to opioids debt finally, and we're our made company's circumstances. pipeline risks continue relating evaluate available as maturities context first near-term current quarter. Third, specifically all this and these overall the moving progress are during efforts and the rapidly liabilities, resolved Acthar on with the options as given in gel, to

turn will me let call Now, us Dan? back Q&A. to into take the who Dan,

Mark. limit With queue brief questions like and you if question. as put to get follow-up please a with I'd Q&A to be let's a work Brandi, many remind question afterwards as back start the to through possible. and first yourself to yourself please we'll Thanks, free have single that, to Feel maybe in needed. to

Certainly.

line question comes from Samimy first of Annabel Stifel. with Your the

few my guys. a situation. for Thanks the had just Hi, related to questions. I COVID taking

environment, for reduced seeing would surprised the hospitals offset kind were using acetaminophen you that you're surgeries there. would this OFIRMEV assume of that mentioned that fevers, in down. So I'm any I just be elective because not and

infants situation, So premature COVID, how to what going had I have COVID forward? Is from was a not there And protective that? and what provide to what you would expect if wasn't to clarification boost you that it but and any you're to in used? COVID contribute? extent going that the extent provide you much, did with the of all to regard been it's right INOmax been kind regard the with studies on doing COVID now Thanks. to could declines mentioned that also to you mechanisms think then

some color take can and may want of well. both I to Annabel. as add these, Thanks, Bryan

that patients mind volume keep is largely for surgeries. range whole in patient OFIRMEV, in by a to OFIRMEV coming and of regard with First, driven

we are well, to be have last can to see things clearly of One hospital hospitals in eliminated surgeries Visits that clearly to the elective COVID-XX appear of couple is that pivoted in overall months patient environments, many certainly have been down. hospitals and the patients. volumes largely treating down and as

a of conspired together the OFIRMEV recognize really IV typically down. use certainly which fevers, of would of expect in acetaminophen, whole be surgical in down but to visits fact, the surgeries factors utilization to as these that patient those if, And or is all used of to drive is variety And be utilization acetaminophen processes. is are should that used so, going down, you OFIRMEV And OFIRMEV treat well. of

me question around INOmax. the Let turn to

in I go described back as to that competition. the decline we in would INOmax INOmax expected we our earnings So, had should digits what decline to call low-double expect a last that result again, of or we

Of expected nitric offset the we of to than impact single-digit effect, additional in part, believe, course, first in the for consumption we by less utilization quarter, decline, and of maybe utilization COVID-XX the saw oxide, somewhat was we patients. due competitive the or mainly which

contracts. additional use, because of of customers, that is larger I much consumption translating sales into said we're to impact So the see you don't our really us, much activity response, the appears the the unlimited for through prepared because impact be use coming net which seeing think because are what typically consumption on a is I less or the added in less competitive predominantly competitive as here remarks, of

INOmax we our afford fact performance. is on that with the And I differentiator platform this the real quite total of be and the think degree between something service this because also our finding care and to So, seeing value we what platform any of that other total pandemic, particular we're what with unusual competitive we're during a offerings pleased INOmax really is this crisis, of the customers time. offering see customers, the flexibility customer real we're during care relying the of aspect to is actually that

infants? is maintain in going relative just a that on position premature To I competitors? extent to Can the you what to follow-up help ask the the Okay. that market

were study or response to a pleased the that the used today whole early. we we’ve Certainly, of in INOmax such we're that know in stop infants study variety dramatically positive Well, certainly shows data range have conducting a that to been the is ages. of able we

I it because positive provides overall to consumption INOmax data Certainly support but incrementally the and the market we and platform. should extent a be see evidence think drive the it which this of to it it utilization additional that from provides the significant additional still help to will we the see. seen, consumption remains as

Great. Thanks, Annabel.

please. question, Next

Your with Nachman of comes BMO Gary Markets. from line next the question Capital

morning, Good Hi. guys.

about cash CMS $XXX the the to retroactive with On be the out? to and to generate just, liability, any and also maturities you divesting on hand? that And said have you any near-term do save in initiatives major try are going you forward, would pay Remind that cash us, what potentially million, what's earliest able given that and more will when restructuring are next forward? big then assets business? headwinds the considering And going debt you the costs

Gary. Thanks,

Gary. Thanks, Yes.

very a just ask to the I’m on business is branded see of think number that that address to some So business. and let overall and business cash our a me continue generator, questions. despite Recognize comments. applies strong I and Bryan pressures going the to both to the we that your generics give business, flow

been very our expenses stewards also even saw in in cost reduced absolute we've that and terms. think good you of as the SG&A quarter we I management,

you combination cash I certainly to comment in to Bryan, lot on the may a and the specific to Mallinckrodt Gary have look generating we'll and flow. of cash continue look business. flexibility between do again, But of questions we asked. would generics at flow branded business, the as continue So, optimize want a some to that solid very

And $XXX talk March are We’ve the also March. in next revolver that Yes. The bonds our in have then maturities. Thanks, XXXX. so we million XXXX. Mark. I'll about due coming debt in million XXXX, March $X.X about million, maturities of due $XXX

of look million these that, as on I liquidity sheet, the and as far we'd cash potential we near-term retroactive now front CMS, build the of -- continue to $XXX uncertainties. think about in to of right balance you're the have

and build capital sheet the right from volatile, satisfy obviously in the continue time to retroactive we'll COVID-XX the liquidity could environment with the balance So now liquidity to utilize we operations; markets of being potentially, macro that liability. if comes needed, if CMS very kind so

for Maybe back the recognize comments the situation that that a We've taken. prepared obviously stay, they've comments resolve disagree an other the just the to of think has with because Again, on go the really just we this asked government CMS we frankly, issue. and judgment a our the judge need I -- which vehemently is couple to we error. decision We granted.

need that topic. And we all the we exhausting we particular so range have of options around this are and of

of don't We said comments, stay the extended least that the any as is issue it the is I prepared which middle at until stay think specifics, extend of this through would looking terms May. in by the In we fully resolved, be to measure. is

say resolved, or on difficult these so decision the I And we'll be this it's when are legal this at and particular to CMS call that if say challenges until around issues very point, cash. would how, addressing

concept the And Bryan, to divestitures the maybe discuss or want restructuring? of you

you. Thank Yes.

Yes.

maximize to So, we're the value looking yes, look, always assets.

divest opportunity an that. there's favorable would do terms, non-strategic to look we to if assets at So,

activities, point, OFIRMEV, and obviously year to a this from restructuring to as we've going certainly create I a that's to got far be mean, line that top generic Gary, as pressure And recognize, going the mean, product with that perspective. think, that's Yes. I later going we to I

years been continue we at coming have over the to do historically, our the And looking and last cost structure so, that we'll in few quarters.

question, please. Next

you. Thank

the Piper of from comes question next line David Amsellem with Your Sandler.

Thanks.

Acthar us regarding liability this the remind payers opioid given we product, how what pressure situation the Acthar? are remind talk that you see pretty impact. settlement, what's you number liability as more and can about plaintiffs about it was just what's more had that be can already on process even the there And relates outcomes? is And to negotiate payers view commercial that? the may us may the two, Acthar, even the with extent to not on to impact and is That's settlement -- underway, it or should How then and now transpired think is your one. really significant you number So renegotiation restrictive emboldened incremental given or potential shouldn't transpired, from commercial contemplated we which a

Thanks. Thanks, David.

second take comment opioid had then specifically. one on I’m to settlement, the ask contemplated to going that question, Acthar And the Bryan bit me in first. you the little we had Let what a

First one, and we've with date. data around pleased very of that made think we're all, generation progress the with I Acthar to payers,

RA And have a as data initiated little with for that payers. optimism we've some enabled date result the we've of gotten been to certainly approach in to subscription the helpful. a very and significant our that And us attention negotiations to Of referred many we we reported exploring positive in there. that been that's in That's in traction of we've been disruption, prior type COVID-XX to But I been a company there's lot got publishing fact payers, quarters. and course, still is which Acthar new has that for And the be investigator negotiation. saw a most the based trial. going think sponsored the data particular, of some delay calls data several on earnings now have results model Acthar, of has level the on the different we've

absolutely been been already Whether we've or payer quite now and that There that pressure it's payer quarters. for right. pressure significant number increases high. of not, experiencing a has You're

our is of initiation are look, starts finding quite as we what And COVID-XX, efforts Acthar. with new the were with patient so before are positive in with we prepared comments, generation actually the we're said impacts. And we saw pleased dealing some with that. data we having But that

improve is discussions. time, that has objective we we've the clinical to our but been and can been stabilize potentially to reimbursement in everything do do for Acthar. the think that some take the that's data going very to So helpful generating landscape We certainly

around decision Let the about CMS me there. we and contemplated the to Bryan opioid ask little comment a bit what settlement

Mark. Thanks. Thanks, Yes.

modeling So differ start of agreement and focus CMS with now $XXX come And XXXX once principle in right would out, care the from that. opioid taking item. agree yes, care time that as reopen the we Yes, part plaintiffs, And million the if disclosed. agreement that discussions decision that's we would was that it on around did that that been the that, materially the in contemplated and did take the of upon the they we company to us. focused are and since we did of on the took maturities

So, any going I around details go right not am into yes, now we'll this but reengage, now. to discussion

come we're that with also very proposed to opioid support plaintiffs. I got that pleased very that is were helpful the able to add just ultimately resolving think litigation. And that additional we very, settlement a the fact might the towards we for I Yes,

why to forward we an and are account comments two this the XX to proposed these supported evaluate And the now my prepared issue look, that's solution we litigation. up believe indicated, pursuing complexity take we Bryan best important next territorial in why company. came that options state and quite was with the that about we that into somewhat We that what's how is currently earlier Acthar issue, the need additional by there widely for together are we to a the put Gel As comments to have step opioid of AGs. all is elegant for resolve our into table and path CMS account which the connected. understanding the on And with litigation settlement the said, effective need best that the again, and CMS take and

thanks. Great,

question, please. Next

the from Your the Jefferies. of comes with next Anthony question line Petrone

hope I staying everyone healthy. you. Thank Great.

just continue Generics the the current to conditions, a that follow-up processes let's on there. like maybe on Given follow-up one, on; various say, that the update just potential, the just given one. quick spend just front, market XX two global in still XX next for a months Specialty conditions, Is opioid as be the questions -- would quick the

Acthar, was maybe where doing out? last terms in push still Do maybe And would the conditions conditions? most business recapture? well OFIRMEV expect just to the well, what of RA be, little of then In that color seeing pressured? the of doing actual other a you in and terms of where is elective procedure then bit of the amount of is Is or the Lupus pressure maybe terms on pressure? just there an you're Thanks. update one

try if I'll to questions, you've of of to all And number the capture color, jump them. Bryan, got feel so in additional please Yes, here.

So, first of all, let's talk about Specialty Generics.

for the had course, time, how think process put and have settlement the manage these to opioid business we through generics that to businesses reemergence, different of that we've are as directions. business some the the a upon consider strategic the as XX Specialty I we of now we Chapter there surgical, Generics describe But, quite litigation over time it, proposed then process we going given forward. moving believe range in would options to described on

a you is a very business. got diversified a the got a this for well And bit portfolio. Chapter maximize elements, of it a time. us point, total some do a strong benefit. during to well the clearly and we At COVID-XX, the think to after go enterprise, It's on that see, both as certainly and for that's a period provides before a options to whole think As Surgical base like during then can going it's that road, we XX cash, lot through nice pipeline, stability sense make down fair the would take Surgical some would the to and It's a the of we branded Chapter we're business. experiencing occur. XX of going supply that and business as operate continue And to it's range with If value business consider we that's based how process, U.S. fact generics to chain. process manufacturing best largely generates as

process through go described. some just I time that's say would I So that off as the we

now Let to move me Acthar.

general, pressure consistently Lupus longer we've we're of we've think and typically continuing syndrome. prescriptions. like to that and on the indications seen is These those a XX I where seen longer require than typically typically And pressure. longer of see require duration in that this Acthar, nephrotic patients are many pressure that And days. So are RA therapy indications

data the when that us data of rheumatologist. new enable -- is -- translated prescription relaxation However, and a coming payer directly a significant introduce new RA of we we're the payers, intent -- And of period. actually is to again, yet every What look subscription it from like a patients primarily from where days at classify prescribers, that coming prescribing clinical have shorter they with things also and a we've to thing focused that's the right hasn't negotiating as because that's data payers tend as an or XX restrictions, the from we to for the correlated restrict on to with prescriptions based seen patients. either treatment positive impact into duration Acthar the in model, so increase with support think on does why

In recapture, it's amount OFIRMEV, far of terms of as determine. to the as really tough

If of OFIRMEV the expect that surgeries volume everything the being drives to normal, the OFIRMEV overall it's but would think business that certainly, it surgery the it, number rebound that patient I usage. and you of elective accordingly. of done part is piece goes are back to

and back will to be come of downturn specifically ultimate recapture. do the by destination us some amount expect other levels? prior what for at emerged degree this may in driven difficult very what new the project a from OFIRMEV procedures We that OFIRMEV patient look and is the like it'll project Is of pandemic. significant to at fast after a Is any better of normal to COVID-XX be, online. what's think that it's how right is very degree of have that what we that difficult Until of back I and idea trajectory now level? come we

Great. Thanks.

please. question, Next

you. Thank

Fadia Ami next with question SVB. from comes Your

CMS regards with I resolution, my of just of should that? little you. terms? some reengaging these bit assume to of continued taking comment impact Hi. of settlement beyond different that continue resolving expense quarter, the second in impact you're And you dependent expect at to pressure, Good more appeal, through you COVID-XX? you of kind to sort the in expect expect quarter? continue And indicated what on morning. should sort on wanted to that. from would are of to Thanks especially least it second Can If Thank or opioid we with we you could you on expecting Acthar, on them you litigation questions. COVID-XX that to headwinds payer elaborate to on is negotiating due the for addition Acthar a not see the type some the see,

Thanks, Ami.

in impact end to quarter. be the down one patient earnings towards be the second second to why we talk see we that increased to of out of discussed Trying place point, going that of products at let's in Acthar the so of are said, this volume, we expect restrictions. result their in is as payer what probably believe that we and is again, or of we you certainly and about have Yes, as it's in parse portfolio, started have at impact restricted it Acthar now least comments, the difference restrictions Acthar by COVID-XX. impact to Therakos. put most is are sensitive prepared incrementally quarter, go going patients the point, OFIRMEV, at And see funnel, similar top if to to case through and call, reduced. will, -- driven And between new talked restrictions the very don't first back their been to And our to at payer our Again, in we that did to the going XXXX that this is more COVID to the with as in patient that's across that ability patients that physician, Acthar the are a come about the that. number just volume the of prescriptions, is number see quarter be OFIRMEV to on if Acthar, because and prior the of the we

first very the rate to fourth and at quarter third and restrictions volumes because of with and back. I And it's how if loosened patient think you I start of in quarter. the and regards right to well, get when, some think what again, saw it's difficult that quarter, to that come now unclear impact project the

probably be fourth see buying in to to how going it's And third so have that fast and much come wave quarter, going to we'll the back. like to to second what, of we're a a quarter start of see in going is COVID and better view what second this the

CMS so but only already and they point, question discussions, why see we're are directly quarter. while fourth definitely last at earlier, on quarter, it's We this impact may then yes, linked. suggesting it's early going impact regarding and It too third that's a that. opioid to tell. little your related, second as not can the And the to I And described

And very AGs. what support challenges totality We and on with the think factor which opioid York to quite it's we side, now litigation. working to both we both the for the additional State going again. the so is be includes state opioid proposed settlement important we're this challenge, have the and of Acthar rest litigation. AGs, Acthar But issue New had we that in particularly of had the the for there elements from have that solve we're potentially to in see, pleased though, the CNS a We the to us solution CMS to have elegant very

Ami. Thanks,

question, Next please.

comes the question with next of SunTrust. Gregg Your from Gilbert line

support from lastly, at nitric do And based what Thank expected Romano, oxide. When on antiviral the data also for your study? to study, dose from review we that literature would kicked Canadian When the data band-aid be once? not answer. and But you. a that rip now? and Thank model at Secondly, way Acthar why quarter? off the what the make I all APAP the Could multifaceted imagine goes and you quantify happen it's you portion the of get experience? in mass activity? issue subscription of Mark, you. can talk in or that about general Steve the And the prior business on can the

So on I'll take to the Steve first two. comment ask one. the I third will

this the to again, that internal It this deal probably had and unreally look issue, unrelated business is the an growth forward potentially as Absent was the we In of see again showing -- over sequential issue flat. process would in some I been prepared terms closer to -- mentioned APAP And stable next COVID comments, as with. actually much again, have quarters. of generics that, couple into coming performance we an quite we simply quarters, was issue. the

So real during generics challenging particularly we the performance, with pleased are period. this

would in for today would for subscription have couple having not makes have makes with we company at out specific least intervened, We model, anticipate that And do On payers have customers. several We interesting that patients. very we model. and the any progressed under would a contract we of sense this already we lot marketplace. It makes subscription we payers. these COVID-XX had the a and think for a discussions have the don't a think Acthar anticipated the had sense conversations that sense be number it of to of

However, if like changing you're going things, go the any to before commercial people experiment water are stick and of model, the their these in in, typically toe they completely.

with relative that's very So information. and following Acthar, works similar the successful. it our with may in customers. many to and these But We're market we it turned if time objective what our you to to like and for for a is of something of the anything see to see Steve, get be adopt historically. experience new, ways do into how to model INOmax, as an it successful people a would we done on that's to hope comment increasing for customers takes number that couple the that INOmax see be out will and that expect We they them did want they've positive. how out same people can process

actually, I'll a and comments. few make Yes,

is remind for our Just to patients approach INOmax to folks, three-pronged. COVID-XX data on generating really

with agreement already obviously, and doing we Novoteris with an So is things, Novoteris. the first we're had

of So at given of to oxide the XXX look day. in this high through -- dose, nitric parts agreement per million that the repeatedly expands range throughout

at earlier looking -- which as concentrations that's preclinical high antiviral locally from an data, delivered suggests effect. could what antiviral effective expect an So we as be having

patients. we're are With we Mass that. So at moderate looking MGH, to severe looking at ARDS General Hospital,

And that's provided moderate also the oxide. we're looking We're are to concentrations of with take with syndrome typically these there severe at distress and a COVID-XX. going acute nitric range to at respiratory look world So where associated real patients evidence.

the Mark out to going months, to rapidly know because actually of not and prior for the it's referred, two in have the over hospitals collect longer, studies, in since this INOmax we marketplace its there that data. indication, if product we So as an to information opportunity being that used more is collect take XXX in

come of pandemic, given assume, -- it the pandemics months circumstances that manner in should But than still, the a we Although other from speedy be we captured expect many clinical to now. trials. more

real extract have to should So matter a we reviews, able from in evidence a dataset. relatively months, robust we be chart of can world but

are partners. those ourselves with three-pronged that's with approach and -- of sort that So the a the we've had

Thanks, Gary.

Next question, please.

Chris question JP Schott comes from of with next Your line the Morgan.

very much Thanks Great. for questions. the

Just two here.

This First the Acthar some well, thought held with on erosion. up fairly have gross I mix margins. was what despite adverse would year-over-year

about decent to company what for think level versus a XX% challenges kind assets? a of we I your look as So was, of just to portfolio? margins near-term put ahead go-forward cash Thank then you. in ability how and investment, the flow my you and of this into StrataGraft resources launches, And on given are And the balancing rate against preserving those guess, more second is to the kind the facing terlipressin generally, you're some basis? is question elsewhere

Yes, thanks, Chris.

question margin. Let gross I comment first. the ask then to about me take will your second Bryan

dealing StrataGraft that that severe and are going pretty and some focus. terli innovations real That’s with our patient challenging to strategic that believe we So benefit are specific represent critical conditions. patients

is And products primarily Recognize to put both current hospital our strategically, within squarely products -- are our right primary these into fall based focus. designed infrastructure. within So these have infrastructure that that products. we these hospital that of that the team to

of StrataGraft. So much are year, these product investment, of launches, same of will terms towards resourcing lose in of that in again, as teams now turn this support exclusivity the and today structural terlipressin perspective. And to critical it's to end folks infrastructure promoting future. OFIRMEV and our that new from these incremental those we terms modest And the

so peak exceed at appropriately. be spend do incremental And that against of two these see to able to these and their sales Again, expect We products together peak we think that just we're combination, year be would we're the promotional going OFIRMEV. resource we expenses well would that. these in resourced launch should, normal to will

a in very position good there. And so we're

it a terlipressin as regulatory progress on potential and these As have a pathways, you September. heard for could from that standpoint we continue Steve, does appear approval as to from expected early

marketplace good certainly And year and right think and is, we're our to to as now today. able being of a the things towards the to to I new going at try from project to terms pandemic, or the have us COVID-XX for do very to approach evolution start the a we're be look But expect be in these we're the those what forward. products. the may evaluating normal new that modified what and very options would approach we of as might companies resource able the contemplating country of be these, high in priority very, launching be end somewhat to position any for reemerges

you're margins, right. gross the on And

goes I a gross is I not out a are normal either But a gross looks controlling see quarter-to-quarter of right a be a the to good margins or XX operating volatility, of product because bit. a bit the where in a pandemic lot's kind stronger, and little normal Acthar good is just quite in I little by you job costs margin driven we're take done by on long gross going quarters point driven has once of And overall Yes, going up give team now how what new give pop we think it like. margin, the think to think mix. times, manufacturing. the direction. The guidance come

well too, one I'd give think sales push in net Acthar that a OFIRMEV a of regards, OFIRMEV. maybe I have you with pull in and dropping also the Yes, is and and bit highlight, as thing some

quarter. going you're perhaps ebb some result of to a that this influence as see So that and that, XX% we and the flow printed

one Next question, maybe try or more please. questions. We'll get two to

the of Wilbur question next Elliot Raymond line comes Your with from James.

on morning, This is Elliott. Lee guys. Good Lucas

to behind you. from in XXXX? could the cash will appears in to upon the regarding So two weaker the you four flow products, immediately remainder reason playing position be quarters. year, them Thank long launch you how -- the do be prior expect of was approval? this this a than And operation weakness? the What out that be approved And potentially

launch with They and just those the we clearly as they I those additional gave products. in be on to we how Yes, to a some But reiterate, two products, on think and see would position be about think conditions on and immediately patients these opportunities address company, unmet again, that to critical critical comments severe patients. intent. promote And launch focus need. for we those our we strategic And the our mission present in with and that significant innovation. have line severe significant would much

as for to the quickly into we us. the those of want those resource two market products are these possible for get as very So patients. appropriately, important And benefit

first our flow a operations, have -- cash is always little of cash some fourth is from timing the the little is quarter payments kind strongest On more did it quarter the from of Yes, and volatility usually we a receipts. part flows. yes, weaker in quarter and the

look cause of a working -- sequential capital kind balance you on operating moved if can bit at our little flows. cash in that that see of So the sheet, volatility that you

other that I'd of there, Yes, obviously thing matters legal we've the is highlight number are too, a one got ongoing.

last spend move than where maybe Maybe be would well. with as historically consultancy things please. certainly and question, are to higher a obviously legal of result And those one so they ticking that, we'll as spend,

the And your of Deutsche with final line Highsmith question Myles does Bank. come from

guys. morning, Good Hi.

get the that give non-elective what was is the be to -- Again, then So Or held deeper talk in just a can the be dive of, revenue the I so talk the like broadly OFIRMEV. there. associated maybe on that terms can with versus a echo on little proportion trends were Can in what about Any first question us there in versus you color our quarter. the months revenue the month? terms last of of sense two just maybe it's better first trying on dynamics of outpatient? maybe And cost in the you own given will you the up versus well guys elective little we side. follow-up will appreciated. question inpatient just pretty costs about

talk of make to some wanted that, in the there's of about qualitatively a you. too? to about you and can see Just that what SG&A the appreciated, terms a if event Can over side, see you little more COGS reductions on you Thank that decisions discretion us do proportion some be QX you we or certainly have could on side, in revenue do talk the can in you number that bit significant would if those share, thereafter? dollar

Thanks, Miles.

Yes, I'll asked question comment to and Bryan take the cost will on I OFIRMEV the question.

the expect So, was that to to for the again, shortfall anticipating product like to We the is quarter, little that patient a what is given the we quarter, which the and sales the to of the going quarter coming expect more be didn't we back how we that returns direct a largely that rebound. think return what patient on that the pretty based similar seeing would quarter-to-quarter normal volumes There volumes. like. impact likely significant of going bit to between OFIRMEV we and under loss in market new in expect, question in and correlation result the this little of majority first is the to does rapid. normal variations, also OFIRMEV reduced levels, normalized first looks on would in things And saw that level? drop on pressure. we're would just if going dependent I And anticipate relatively see we it's quarter. be steep OFIRMEV would we the to kind OFIRMEV, second happen? bit do Again, fact some was the the What's experience believe and be this of earlier, The touched exclusivity, in that we new a trajectory to on is, closer of to a what fourth when

happen You But orders. of changing Again, that to terms tend lot do rationale that's loss closer see coming products with some not exclusivity. of a to customers their visibility that of that. we in the are for to something have does

by it's the patient it's but decline in So predominantly volumes. those driven factors, two

I OFIRMEV. be challenging So, going expect again, quarter would second to the pretty is for

the quarter patient and the from remains on to volumes seen Third and pandemic. be country fourth recover how based

too, Maybe, the is was last product. that I important should Bryan mean, think for -- pretty see to few quarters move note Mark, towards the that strong has event that expect that, variability maybe this And one QX as it's I'd incredibly really been that over add order to significant. thing something I this seen we've And year. to we later think that LOE we I

that think kind it COVID pandemic heightened happens the that so just quarter. of this I of some in

the was sequential of be a year-over-year there And on COVID mean, that that basis degradation as in that, to a I so notwithstanding impact. expected some going result we product and even

just to frame a it's reference as think I So when you're this of that important keep maybe number. looking at

maybe, want SG&A? handle you Bryan, sales [indiscernible] And to the and

We mean had knew -- that top year, we knew pressure. have some this we knew an into line we LOE. that leading OFIRMEV Yes, yes, I and

Generics a planned had also separation towards move business. of the We to

structure way things operate. all cost the looking these had So underway at we we plans the and

to So flexibility continue historically, to that. and you we SG&A think reduce responsible extent do P&L we've look a and very middle a at COGS our of certain ability I and manage the in the to have way. shown to And if look

expect of manage end that So the to in middle to continue P&L way. we'd the to able be

with obviously, And time. little I for a the bearing Great, us Thanks over bit appreciate everybody question. thanks. for

I'd morning. us joining all to you this thank So like for

us. will Be guys be of available And call may appreciate everyone is our you on well, Hope the you well. answer the throughout replay a reminder, have. day joining follow-up questions and a any later doing I'll As to be available today website.

conference your may you participation today's concludes now you for This call. disconnect. and Thank