Mallinckrodt (MNKTQ) 4 Aug 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Mallinckrodt Earnings Conference Call. At this time, all participant lines are in a listen-only mode. 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, Vice President of Finance and Investor Relations Officer. Please go ahead.

Sarah. you, Thank and call. everyone Mallinckrodt quarter second Good welcome conference earnings morning, to

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

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

you us you’ll 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 On possible hear future cautionary statements, actual update SEC that change the statements actual more contained the statements of make forward-looking statements. the call 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

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

uncertainties And the taking provide steps facing will impact quarter, we mitigate Mark start are business. an agenda, of including the then the with regarding today’s COVID-XX. to the the discussion Turning overview to of the

prepared with our provide to discussion results science following remarks. update their Mark? of financial creditors With understanding. We walks Q&A the holding Steve that, advisors, session will for through us turn and and appreciate technology have, the let Mark. our be we a recent quarter. ongoing litigation the to activities claimants financial not me light before your respective Bryan and today In also on We over call an

morning, and I hope all healthy. us. Dan. you thanks everyone, for you, and safe Thank Good staying are joining

business think to I recent challenges quarter, facing get for and its business. the important the the discussion events I to in the the Before various

two the Over and from opioid the the more Acthar Company course the one-time pressure liability. of retrospective the faced last litigation has claims significant Medicaid recently rebate Gel years,

and as opioid this risks, $XXX our financial creditors well the the considering levels, other engaging with rebate advisors. and and debt overall includes result coming liability of March, options their due ruling a in million in in matter been dialogue This as As the range plaintiffs of advisors. fall, calculation with having of we addition litigation Medicaid in our to adverse a and prospect the pressure litigation

interest is no its While considering for has by near-term. in stakeholders. all and the these in reorganization This decision in of potentially majority subsidiaries best situation made, of Mallinckrodt filing the what's Chapter of and been the discussions plc a are result the we could challenging XX our

resolution work matter. calculation rebate litigation and appeal toward to the comprehensive Medicaid our continue to We pursue a the of opioid

begin the and the appeal ruled argument lower it However, that is arrive. on matter schedule appeal our be adverse briefing before to the will unlikely due to of CMS in obligations ruling court payment

explore left of but As no comprehensive with have to matters. our these option, been we such, we feel resolution

maximizing inline our a to The swift took and businesses relatively our our the value customers customers and our the Turning our providing business our challenging to last times. continue specialty to priorities to testament operations and is uninterrupted pipeline medicine. uncertainties the have and specialty strategic commitment quarter portfolio, during with us the maintain second unprecedented and advance our actions continuity of enabled employees we patients operate brands to quarter. to we business, underlying patients work and smoothly access hard company's our and diversified continue adapt by generics continue compounded furthering Despite these and COVID-XX, which to to

continue from we customers products without use quarter meet ahead, continued supply we deliver to anticipate our operating supply of This needs leveraging the not evolve face-to-face for by to interactions manufacture, looking do model And interruption. COVID-XX. and technology largely of any We've disruption with the to our patients.

Biologics approval We FDA BLA committee from provide regenerative for a patients in launching Turning advisory significant terlipressin our we a terlipressin terlipressin. for treatment key past important on U.S. positive skin milestones in toward vote FDA after positive rolling received And who FDA liver an the Application for completion submission important will therapies. sales two of team achieved pipeline. the have with June, in or announced tissue. approved, to If July immediately hospital the the the to approval In September. StrataGraft License with of XX, the the disease. we anticipate complications We current option for

approval a with look early Gel self-injector Acthar our late We're modernization the continuing next INOmax and franchise to expect launch in year. XXXX. of if In products, we to initiatives potential we to addition, approved EVOLVE forward StrataGraft which progress on

Phase start trial In of MNK upcoming we X for addition, anticipate the XXXX. our

the of Later patients forward outcome clinical COVID-XX on look activities. in all our studies announced of and call, advanced further of color from this previously provide on will of suffering effect Steve INOmax lung the to development potential Additionally, several we complications.

make toward turning highlights in-line portfolio. Now in diversified value continue the progress the second the quarter. of portfolio unprecedented by created the to maximizing challenges to we Despite COVID-XX, significant

continued utilization double-digit offset as the to which nitric increase these and an INOmax. These procedures declines restriction. Gel, surgeries the growth OFIRMEV, oxide, in were orders, of decreases be elective resulted our business. we a Notably, Acthar stay-at-home saw drop patient sensitive and impacted reduction performance expected products of in the of combination most by the of to overall in As Therakos for

of the back trend We if will are in this uncertain year. persist the half

activity duration and pandemic business promotional recover there's uncertainty its that a confident of effects. and high subsides, the the as surrounding of still of will degree COVID-XX likely we're While impact the

will the back we the We of half continue expect the year. to impact feel into

Gel, has activities. improving returned primarily This will to new teams modernization the starts staying expectations. ahead open, therapy driven returning the of begun. the Gel was driven quarter interactions, are for markets is development our This retention Acthar of patients primarily and by recently field who efforts our be business face-to-face continue The performance was as certain than of historical patient our focus For to which longer clinical customer by on brand. brand in slightly the trends our Acthar with

be patients and COVID-XX local recovery to expect slow relatively restrictions. We physicians as the navigate

also essentially Medicaid on saw Acthar sales the We Acthar June basis, starting the annual revenue which be quantified has $XXX retrospective which of We've Gel million going prospectively. this partial net to an stream Medicaid will away. XX, eliminated liability now approximate an as million impact one-time $XX rebate

a in critical the use bolstered this of expect product for treatment We change Performance remainder the that nitric INOmax for factor of continues year. will sequential as a be the COVID-XX by patients. contributing oxide decline be additional of the to an to

the U.S. pulmonary INOmax virus have treating is caused a for newborns, hypertension syndrome, as in critical the the for suffering of Although, across therapeutic physician. as hospitals discretion of acute by therapy treatment the this at option respiratory patients chosen COVID-XX from the important indicated to utilize distress many

total marketplace an competition quarter, their as the the impact commitment of pressure device competitors. we exceeding next to as increase will technological against they to parts expect the continue in oxide During system. year, to the the potential We subside. be the the time. volume, half healthcare them from expectation The volume advancement which delivery INOmax level on we differentiate second confident the feel to has pandemic begins that price second broad the different in EVOLVE the for country INOmax of to COVID-XX. as the patients, of this generation INOmax We over the saw nitric continue significant both and of allowed approach speaks to the customer hits approach utilization of and believe a customers crisis care our believe for to battle will in COVID-XX health to in potentially our brand In

seen the demand due of related the injection. postponement surgeries for to COVID-XX product Turning United to in States. across We've significant downturn OFIRMEV elective the a

for As demand will we loss of expect of look the this prior at the to not the trends in the product market, year. we the early in do December recover exclusivity

that We expect into multiple the market generic entries at time.

that OFIRMEV multimodal is management. back accounts for analgesia brand available to ensure from will elective surgeries schedule benefit approach can in that to into work be are with patients to focus that bringing the pain Our order closely to the their

reductions reflect quarter respect to reduction Therakos general in overall demand and visits on focused expenses. realigning said the related our shifting we As administrative quarter, down teams platform, due driving our this, procedures to to including last the in patient in and and to was With organization pandemic. immunology the patient the we're selling

CTCL however, see We beginning are patients return to to treatment.

the physicians in segment, be the due growth of of platform year do COVID-XX. as healthcare impact a second we choice the their to to important for We from the COVID-XX. in expect and expect the generic recover continue sequential to the quarter, down especially patients, to saw practices slight an while be business In half we

and growth driven vertical is long based to this term that continue U.S. We business believe poised for manufacturing a integration. by

provide some on turn efforts. more me let Now, Steve? over to our and details generation Steve data to it pipeline

Thanks, Mark.

working Advisory the our Cardiovascular achieve the approval investigational regenerative two regenerative data the Drugs that September the in the value On voted Committee As of terlipressin terlipressin can patients. Mark a challenges of advisory mentioned, development COVID-XX, to proof with type programs. late XX. hepatorenal X. skin are clinical with meeting and milestones continues therapies of to to adults syndrome bring in recommend to to despite quarter closely during anticipate on FDA skin U.S. critical phase XX, The of convened approval tissue there and July supports Particularly for and application date given to the the it our and look continued as committee's terlipressin of potential favor FDA StrataGraft the virtual Renal tissue, review forward PDUFA agent renal treat the committee of a we review recommendation no we terlipressin

with confident therapy completed adult thickness tissue burns. burn deep In step thickness in a we of US. important an June, rolling toward our patient FDA the providing partial The submission option goal to are as BLA StrataGraft. new regenerative partial to deep burns an thermal the StrataGraft treatment And if thermal the approved. of for our skin completion for License innovative a to submission for value we in Application its is patients early potential Turning of Biologics

increasing direct unprecedented the INOmax of to commitment complications development maturing We lines regulatory evaluating by therapeutic deep demonstrates end, option of providers these from gas nitric technology patients quarter, infection this we and front as associated severe advanced for health meeting potential and of understanding science nitric unmet conditions. Last to substantial associated of with of of inhalation of trials needs milestones the our continue as critical physiological our leverage with nitric understanding our this healthcare including potential achievement well gas announced effect. the therapy evaluation COVID-XX inhaled Our -- lung patients of To capabilities use the organization, for exploring and and we effects identify on suffering effect antiviral that INOmax oxide, lung two COVID-XX. in the potential the to emergency. of extensive remain means for of our complications, to committed oxide the

to Finally, nitric complex and settings weeks, oxide is challenging more evidence a hospital of retrospective initiate we're world in planning in being to cases. how gather on records used review real to manage the inhaled medical coming immediate currently

management of health therapists In hypertension support respiratory our ensure themselves safe pulmonary INOmax available platform and on continue in hospitals the any with routinely our use setting. of terms support work for to of use the the to the make who coronavirus newborns needs of request patients, and persistent systems to INOmax

Customer the clock Care this Center inquiries In continues around provider during respond time. addition, difficult to to our

sarcoidosis. in made including with end others sites, uveitis in we as prioritize difficulties factors, business challenges our ongoing and health arising the studies, to impact flares. two Turning studies efforts Mark. in one decision COVID-XX to This pressures compounded one was of ongoing decision relapsing-remitting multiple We've from for sclerosis on generation Acthar Gel, several two, activity investments need enrollment. due other our which And COVID-XX X the Phase which due patients of study of and to in difficult by and and a X were Phase several the other one, to including in logistical the keratitis temporarily to pandemic, the crisis paused one the of particular based noted resumed Acthar evidence on

from results data recently patients erythematosus expect processes, our patient all well additional work as recently we data as more communicate completed and systemic investments rheumatoid our this and registry along These as Acthar modernizing published the manufacturing arthritis addition, franchise. well later evaluations lupus with the relapse, clinical of retrospective complete mentioned results extensive and self-injector, In in results sarcoidosis above as MS our from support our previously MS in of and completed to the study, friendly underscore trial to modernize a activities our develop year. Gel with

with L-ornithine hepatic for patients the liver continue of to from some the our we experienced initiation advanced trial startup MNK phenylacetate administrative X XXXX, pandemic, related we delays encephalopathy. Phase treatment suffering progress the activities Although to of global for disease and of

phenylacetate, recall challenges of FDA greater and this PK/PD alignment XXXX. them this appropriate a also closely and to large L-ornithine, and due start Phase of trial year. now we anticipate will for the oral dosing requirements. worked We've registration complexity You the XXXX a later single quarter study finalize the to data X potent trial, the by this clarify of to study the condition We this first formulation with end expect with conducting of [ph] the report pivotal that completed of saw the to of MNK

other brands. Turning to in-line the

as delivery Acthar the We self-injector. our Gel as the our of INOmax continue generation to new complete next well efforts device, advance to development EVOLVE

expect and We the device both expanding to submitted also availability application dossier review half intolerant a XXXX. made therapy we of be important XXXX. supportive pharmaceuticals Therakos programs for the or late medical of disease devices conclude the We've in progress platform steroid this to Therakos indications. ECP our anticipate the of resistant position graft to agency an launch In to within versus in May, medical host the in We to second chronic in in of ECP Japan. the PMDA

on early conditions. other development our Lastly, research collaborations of we progress in to immune therapeutics and make area mediated advance and continue the autoimmune to

these Regarding to proprietary complement strides to you preclinical CX specific platform. a of mediated pursue Silence's treatment CX obtained exercised support targeted with two based our we we will underserved Therapeutics, tox a in GLP license The targets. to technology with into making strategy advances targets in recall, a further to leader filing, become studies new asset compound advance an IND additional In of compliment RNAi our option our collaboration nomination addition of immune a Silence July, on the addition diseases. to to the in patients

of the of our of include various PDUFA specific allow In will to us for clarity rolling across catalysts towards the organization, tissue, completion in a of Bryan. coming the MNK significant continue now addition, X platform XXXX preclinical quarter gain despite Major over the financials, including half end summary, the our I'll and of to challenges benefit discuss Phase to for progress data. initiation Bryan Therakos of this new of by for the conditions. deliver technology with regenerative terlipressin the underlying to a continue the work FDA science the submission September to of biologics in our In in the COVID-XX, and generation regarding first the goals year. date to XXXX. quarters Transimmune license we the This StrataGraft the for data turn trial mechanisms progress greater skin it we first of

responding compared decline $X.XX and a to And good share second of EPS sales while respectively. the million, by of results overall adjusted payer is patients, as and adjusted earnings scrutiny The partial impacting contributed to change sales extent of net a increase $XXX Steve. of diluted the driven returning within net specialty of impact driven of to to of reimbursement $XX increased which quarter second elective XX% was the specialty net everyone. net $XXX pandemic. a XX% by $X.XX In a quarterly contributed a overall reduction adjusted and oxide INOmax of with challenges million sales reported the on as by sales $XXX and COVID-XX in in continued in COVID-XX nitric result decline including brand segment, respect million, delivered million. pharmaceutical consumption patients. of institutions Medicaid due of per million, and segment in Thank strong spending, of net million morning the a sales we XX%. revenue pandemic, half utilization you, rebate anticipated With XXXX, in and year, reduction especially XX% continued public Acthar $XXX net to new Gel an decline on surgeries primarily sales, focused patients calculation. were segments, were of driven $XXX XX% contracts generic customers, sales, of to decrease health OFIRMEV in net our orders variable COVID-XX $XXX by continued million,

intangible also asset approach largely COVID-XX driven in light COVID quarter directives for exclusivity provided million impaired patient's saw to decrease of likely You the ability the OFIRMEV net Therakos this stay-at-home $XX receive in XX%, we December. as we by treatment. of sales, loss of a impacting impact in

while million, biannual measures impact and was due sales company were by quarter percentage SG&A in profit due net expected declined XX.X% our expense to quarter. Lastly, primarily gross X% decline of due mix. generic was net to XX.X% was continued increase. XX.X%, Adjusted with sales price in of Overall Japan. decrease the sales, actually a a Company's focus on a the million Specialty compared and AMITIZA R&D as as sales continued X.X% adjusted XX.X% the of XX.X% the net generated to SG&A compared adjusted the the with X.X%. as the impacted adjusted cost total is tax adjusted as The sequential effective a sales in in net slight compared percentage of was rate containment to expense operational company $XXX Turing Total adjusted net of sales quarter. the of reduction the product overall competition a in adjusted net reductions. segment, to for percentage second $XX in U.S.

with million. cash cash to-date in $XXX Turning free to with activities with of the the of quarter ended flows by $XXX million, was quarter operating million free provided the cash flows liquidity, $XXX second year of We the balance current hand debt, was quarter now $X.X end closing second cash million. back at net call in a and Mark Mark? the the few our remarks. billion $XXX I'll for to

Thanks, Bryan. In I'd points. emphasize main a closing, few like to

an First, job our patients pandemic. do customers excellent serving to ensuring uninterrupted throughout and medicines access team the continues our to our have

as of in uncertainty to we refine health surround will our amount that crisis, expect recover potentially the impact year. to approach. continue confident and we continue will our of see operations given Second, the the business of we COVID-XX the half that the back remain to we subsides, COVID-XX Though adjust continues challenges

diversified on path I the address the of to consider are in this to finally, with continued the we License and work business. continue morning challenges range Thanks these impacting important call as well relentlessly families maximizing closely for the a skin continuing on highly the submission And continuing business Application and financial the a on you a require to to to priorities best and for joining we us advisors work pipeline, FDA, tissue morning. for terlipressin, And personal the toward during to to forward work FDA with strategic matters. options for appreciate our unfortunate our The make focused positive resolution our your including completion drive addressing rolling StrataGraftregenerative interest be challenges note, We'll Biologics to to wish pandemic. want in-line our legal all this for them. portfolio. and we're on We finally, progress the advancing forward vote the a by drive Third, Committee us determine your to Mallinckrodt. and and of after Advisory a time appropriate

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

have Everyone disconnect. day. great now a may You