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Edited Transcript of EGRX earnings conference call or presentation 2-Mar-20 1:30pm GMT

Q4 2019 Eagle Pharmaceuticals Inc Earnings Call

WOODCLIFF LAKE Mar 24, 2020 (Thomson StreetEvents) -- Edited Transcript of Eagle Pharmaceuticals Inc earnings conference call or presentation Monday, March 2, 2020 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Pete A. Meyers

Eagle Pharmaceuticals, Inc. - CFO

* Scott L. Tarriff

Eagle Pharmaceuticals, Inc. - Founder, CEO & Director

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Conference Call Participants

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* Brandon Richard Folkes

Cantor Fitzgerald & Co., Research Division - Analyst

* Gregory B. Gilbert

SunTrust Robinson Humphrey, Inc., Research Division - Analyst

* Lachlan Hanbury-Brown

William Blair & Company L.L.C., Research Division - Associate

* Randall S. Stanicky

RBC Capital Markets, Research Division - MD of Global Equity Research & Lead Analyst

* Zachary Sachar

Piper Sandler & Co., Research Division - Research Analyst

* Lisa Wilson

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Presentation

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Operator [1]

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Good day, and welcome to today's program. My name is Bree, and I'll be your conference operator. At this time, I'd like to welcome everyone to Eagle Pharmaceuticals' Fourth Quarter and Full Year 2019 Earnings Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded today, March 2, 2020.

It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. Please go ahead.

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Lisa Wilson, [2]

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Thank you, Bree. Welcome to Eagle Pharmaceuticals' Fourth Quarter 2019 Earnings Call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals.

With me on today's call are Eagle Pharmaceuticals' Chief Executive Officer, Scott Tarriff; and Chief Financial Officer, Pete Meyers.

This morning, the company issued a press release detailing financial results for the 3 and 12 months ended December 31, 2019. This press release and a webcast of this call can be accessed through the Investors section of the Eagle website at eagleus.com.

Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future statements and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act.

These forward-looking statements are based on information available to Eagle Pharmaceuticals' management as of today and involve risks and uncertainties including those noted in this morning's press release and our filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Eagle Pharmaceuticals specifically disclaims any intent or obligation to update these forward-looking statements except as required by law.

A telephone replay will be available shortly after completion of this call. You'll find the dial-in information in today's press release. The archived webcast will be available for 1 year on our website at eagleus.com. For the benefit of those listening to the replay or archived webcast, this call was held and recorded on March 2, 2020. Since then, Eagle may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings.

And with that, I'll turn the call over to Eagle's CEO, Scott Tarriff.

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [3]

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Well, thank you, Lisa, and good morning, everyone. Let me begin by saying that we are very pleased with of all the recent developments that support the evolution of Eagle into an integrated pharmaceutical company. We are focused on capitalizing on the momentum from late 2019 that has continued into 2020.

Our efforts are paying off as evidenced by several recent announcements, including the final FDA approval and settlement with Lilly for PEMFEXY, our NDA filing for exertional heat stroke, or EHS, our partnership with NorthShore HealthSystem for traumatic brain injury, a collaboration with the University of Pennsylvania on Alzheimer's disease and a host of other important company milestones.

Building on 5 years of research, this year, we will have several data readouts to help us advance these important initiatives. With 10 projects underway and the potential for 5 commercial launches in the next 3 years, we are both proud and excited about the opportunities ahead.

We have continued to invest cash in our very active pipeline. On a non-GAAP basis, in Q4, we invested $14 million or $0.63 per share to advance our pipeline, bringing total R&D plus legal expenses related to vasopressin and PEMFEXY for the full year to $43 million or $2.30 per share.

I believe the following is important to point out. Based on current strength, the current strength of our marketed products, and assuming an on-time approval for RYANODEX for exertional heat stroke and an affirmation of our orphan drug decision by the appellate court for BENDEKA, 2020 could be the best year in Eagle's history in terms of total revenue and gross profit.

We are in what could be the start of a very valuable period for Eagle. Again, if EHS and ODE are successful, we can generate record revenue and gross profit, and that doesn't include the potential to launch vasopressin later this year or the SymBio milestone payment that we expect to receive in the second half.

As an example, we estimate that RYANODEX MH sales in Q1 2020 will not be too far off from all of 2019. In the meantime, we aspire to advance our pipeline, so as to launch EHS shortly followed by vasopressin, then file nerve agent before the end of the year, which will lead us into the likely exclusive launch of PEMFEXY in the beginning of '22, anticipated to be 4 months before ALIMTA ANDA entries.

Let's see how things unfold in the next few months, but we hope to be going through a significant acceleration in value starting this year and over the next several years in terms of revenue and gross profit, and at the same time, making great progress with our pipeline.

Now let's turn to more detail on the projects in our pipeline on the CNS, critical care side of the business, let's start there with the truly innovative work going on around RYANODEX. Beyond malignant hyperthermia, we have done a great deal of additional investigation on dantrolene sodium over the past 5 years. This has led to the discovery of what we believe are transformative uses across multiple disease state that have been urgent need of treatment options for many years.

Our proprietary research continues to yield insights into how dantrolene plays a role in restoring intracalcium -- intracellular calcium homeostasis. In fact, we believe that changes in intracellular calcium levels may be involved in neurological pathologies and may lead to neurodegeneration and neuron death.

Eagle's scientific teams in-house and with our great academic partners have the insight based on their years of work to identify those diseases and disorders that might benefit from treatments that work to resolve disruptions in calcium regulation.

Let me touch on each indication in turn. We have been working with FDA now on RYANODEX for exertional heat stroke for quite some time. And based on mutual agreement, we resubmitted our NDA on July 9 -- on January 9. We had a July 8 PDUFA date, and our expectation at this point is that we will receive approval on or before that date, with the potential to be on the market for this upcoming heat season. We believe this product will be a significant opportunity for the company.

As you may know, there is no currently approved drug product for the treatment of this acute and unpredictable life threatening condition. The ability to use RYANODEX to restore cognitive function in someone suffering from exertional heat stroke would represent a tremendous advancement in this treatment, which up until now has only been treated by cooling. We are evaluating RYANODEX for the treatment of brain damage secondary to nerve agent exposure for what would be a first-in-class treatment, if approved.

In animal models, we have seen that RYANODEX significantly reduces the death of neurons. We're working on the design of our second study under FDA's Animal Rule, which we will commence this year with the potential to file an NDA for this indication before year-end. This is a U.S. military supportive initiative where we are collaborating with the U.S. Army Medical Research Institute of Chemical Defense. If approved, RYANODEX would represent the first product available for this indication with the potential to benefit military personnel and civilians.

For acute radiation syndrome, we ran a pilot study last year and will run another animal model this year, after which we will meet with FDA. This indication is roughly a year behind nerve agent exposure. Ultimately, we expect that RYANODEX available for protecting the military and civilians from radiation exposure.

With respect to our traumatic brain injury indication and the new research agreement we recently entered into with NorthShore University HealthSystem, we are especially pleased to be working with the world-renowned neurologist, Dr. Julian Bailes, who is the Chairman of NorthShore's Department of Neurology and Co-Director of the NorthShore Neurology Institute. Dr. Bailes is a respected thought leader in the field and has dedicated his career to the diagnosis and treatment of TBI and concussion.

Specifically, we will be starting another more robust animal study to further explore our hypothesis that RYANODEX may have the potential to modulate some of the mechanisms that result in neuron cell damage and death. A readout of that data is expected later this year as well. After completion of this study, we plan to meet with FDA and discuss the path forward, including the designs of our human studies.

Our other big partnership news relates to the indication we're seeking for Alzheimer's disease. In January, we announced agreement on terms for an exclusive worldwide license with University of Pennsylvania for the development of dantrolene sodium for Alzheimer's disease. The data we shared at the 2019 Alzheimer's Association International Conference with UPenn in July was a proof-of-concept preclinical study and documented that intranasal administration of dantrolene sodium had a positive effect on memory and cognition in an animal study. The results showed improvement in behavioral tests such as cognition and memory in a mouse model of Alzheimer's disease, exploring the unique role of calcium dysregulation in Alzheimer's disease, represents a completely novel approach to the treatment. Readouts from this preclinical study will be available in about 12 months.

In addition to our work studying dantrolene sodium, we also see significant benefits in developing the next-generation of ryanodine receptor antagonist capable of intramuscular delivery. Our EA-111 project aims to do just that. This is a very exciting time for the RYANODEX franchise with the enormous upside potential to address unmet medical needs.

Now let me touch briefly on vasopressin. As a reminder, Eagle is the first to file an ANDA referencing Vasostrict 20 units per 1 ml. Vasopressin is also a very important product to us. We believe we are talented when it comes to Paragraph IV litigations, as evidenced by our settlement for PEMFEXY. We feel confident going into trial, which is coming up soon on May 18 already. It's possible that if we have a court victory and we receive our tentative approval, as we expect, we could go to the market as early as October of this year. We'll know a lot during the week of May 18, and we're looking forward for that trial.

Now let's turn to the oncology side of our business. Starting with fulvestrant, our product candidate for estrogen receptor positive advanced breast cancer. We have the initial results of our fulvestrant pilot study, and the program has not yet yielded the final results desired. We are modifying the program and remain encouraged on this important program. We will keep you updated on our progress and potential path forward. We continue to learn quite a bit about our product as we look forward to the best way to achieve our objective.

Turning now to PEMFEXY, our ready-to-dilute version of pemetrexed that doesn't require reconstitution. Upon settlement with Lilly in December of 2019, we recently received final approval from FDA for PEMFEXY in February. The good news is that Eagle will have an initial market entry of PEMFEXY on February 1, 2022, and a subsequent uncapped entry on April 1, 2022.

Also on the oncology side of the business, we announced in January an exciting collaboration, co-promotion agreement with Tyme Technologies, a company focused on developing therapeutics for difficult-to-treat cancers. We paid an initial $20 million upfront and have the option to invest an additional $20 million upon achievement of certain milestones, $10 million of which would be an additional purchase of equity in Tyme. Tyme will be responsible for all development, regulatory, manufacturing and marketing costs associated with SM-88 as well as 75% of the promotional effort with Eagle responsible for the remaining 25%. We will also receive 15% of all net sales in the United States. Tyme may also buy out our rights under the co-promotion agreement at any time for $200 million.

Before I turn the call over to Pete to discuss the financials, let me touch briefly on another important oncology asset, bendamustine. TREANDA generics are not expected before December 22. As I mentioned earlier, the outcome of litigation for 7 years of ODE for BENDEKA is pending. We expect the decision in the next few months. In addition, our marketing partner in Japan, SymBio, anticipates approval for its ready-to-dilute bendamustine product in September, which entitles us to a $5 million milestone payment. As we've stated before, starting next year, the royalties and milestones could be meaningful to the magnitude of $10 million to $25 million per year for SymBio first launching the 500 ml bag and then the 50 ml bag.

As I said upfront, this has been a very active period for Eagle, reflected by the recent news flow, representing years of research and hard work. With 10 projects underway and the potential for 5 product launches in the next 3 years, each with a distinct market advantage, we think there's never been a better time to be involved with Eagle.

And with that, I'll turn the call over to Pete to discuss our fourth quarter financials. Pete?

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Pete A. Meyers, Eagle Pharmaceuticals, Inc. - CFO [4]

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Thank you, Scott. In the fourth quarter of 2019, total revenue was $48.3 million compared to $56.1 million in Q4 of 2018. Full year 2019 revenue was $195.9 million compared to $213.3 million in 2018, and included $9 million in a milestone payment for BENDEKA. Product sales during the fourth quarter decreased by $4.9 million year-over-year, totaling $15.4 million compared to $20.3 million in Q4 2018, primarily driven by a $4.1 million decrease in BENDEKA product sales, $1.5 million decrease in RYANODEX sales, partially offset by an $800,000 increase in BELRAPZO sales.

For the year, total product sales increased $3.6 million in the year ended December 31, 2019, primarily driven by increases in sales of BELRAPZO and BENDEKA. The increased sales were partially offset by decreases in the product sales of RYANODEX due to lower volume on a low reorder cycle period and the discontinuation of nonalcohol docetaxel injection in September 2018. BELRAPZO product sales were $7.6 million in the fourth quarter compared to $6.8 million in Q4 2018. Eagle recognizes BELRAPZO revenue on shipments by Eagle to wholesalers. For the full year, BELRAPZO sales totaled $29.7 million as compared to $22.9 million in 2018. Based on IMS data, Eagle's market share of bendamustine wholesale shipments to end users was 5% of the U.S. bendamustine market for the fourth quarter and 7% for the year.

Fourth quarter RYANODEX product sales were $3.5 million compared to $5.1 million in Q4 of 2018. Orders for RYANODEX are cyclical, driven primarily by product expiry with few customers acquire dantrolene unless their stock is expiring. We anticipate an uptick in RYANODEX expiry opportunity in 2020. For the full year, RYANODEX sales totaled $13 million as compared to $20.2 million in 2018.

Q4 2019 royalty revenue was $32.8 million compared to $35.7 million in the prior year quarter. BENDEKA royalties were $32.4 million compared to $31.9 million in the fourth quarter of 2018. Q4 BENDEKA royalty revenue was negatively impacted by historical pricing trends. However, the 5-point increase in royalty rate, which was effective on October 1, 2019, translates into approximately $70 per vial in incremental Eagle EBITDA.

For the year, royalty revenue totaled $112.9 million compared to $142.9 million in 2018. BENDEKA royalties were $111.2 million in 2019 compared to $134.4 million in 2018.

Gross margin was 76% during the fourth quarter of 2019 as compared to 67% in the fourth quarter of 2018. The expansion in gross margin in the fourth quarter of 2019 was driven by a decrease in BENDEKA product sales to our marketing partner, on which Eagle earns no profit, and the increase in BENDEKA royalty revenue.

On the expense front, R&D expenses were $11.3 million in the fourth quarter compared to $5.9 million in the prior year quarter. The year-over-year increase is largely attributable to spending on fulvestrant and payroll expenses. Excluding stock-based compensation and other noncash and nonrecurring items, R&D expense during the fourth quarter was $9.1 million.

As Scott mentioned upfront, in Q4, we invested $14 million to advance our pipeline, $9.1 million in non-GAAP R&D expense plus legal expense of $4.6 million on vasopressin and pemetrexed. Full year R&D expense decreased to $36.8 million in 2019 compared to $44.4 million in 2018, primarily reflecting a decrease in project spending for the company's fulvestrant formulation, partially offset by the cost of bringing vasopressin to market.

Excluding stock-based compensation and other noncash and nonrecurring items, R&D expense in 2019 was $31.1 million. We expect R&D spend in 2020 on a non-GAAP basis will be $46 million to $50 million as compared to $31 million in 2019. The anticipated 2020 R&D spend includes: number one, the EA-114 pilot trial and CMC initiatives; number two, the RYANODEX trials for treatment of nerve agent exposure and acute radiation syndrome; number three, EA-111 IND-enabling tox studies and CMC scale up activities; number four, EA-112 formulation development and additional preclinical work at the University of Pennsylvania and NorthShore University HealthSystem; number five, regulatory advocacy for RYANODEX EHS; and lastly, number six, launch preparedness for vasopressin and PEMFEXY.

SG&A expenses in the fourth quarter of 2019 totaled $22.5 million compared to $15.5 million in the fourth quarter of 2018. External legal spend associated with litigation on pemetrexed and vasopressin as well as payroll costs account for most of the year-over-year increase. Excluding stock-based compensation and other noncash and nonrecurring items, fourth quarter 2019 SG&A expense was $17.8 million. Full year SG&A expenses increased by $15.9 million to $76.4 million in 2019 compared to $60.5 million in 2018.

External legal spend associated with litigation on pemetrexed and vasopressin as well as payroll costs account for most of the year-over-year increase. Excluding stock-based compensation and other noncash and nonrecurring items, SG&A expense in 2019 was $56.4 million.

We expect our SG&A spend in 2020 on a non-GAAP basis will be $61 million to $64 million as compared to $56 million in 2019. The year-over-year increase is largely attributable to higher sales and marketing, payroll and vasopressin marketing launch costs, partially offset by lower external legal spend.

If the RYANODEX EHS label expansion is approved, we will reset 2020 operating expense guidance.

Net income for the fourth quarter was $1 million or $0.07 per basic and diluted share compared to net income of $12.6 million or $0.88 per basic and $0.86 per diluted share in the prior year period. Net income for the year ended December 31, 2019, was $14.3 million or $1.04 per basic and $1.01 per diluted share as compared to net income of $31.9 million or $2.16 per basic and $2.09 per diluted share for the period ended December 31, 2018, as a result of the factors discussed above.

Adjusted non-GAAP net income for the fourth quarter of 2019 was $6.7 million or $0.49 per basic and $0.48 per diluted share compared to non -- to adjusted non-GAAP net income of $17.7 million or $1.23 per basic and $1.20 per diluted share in the prior year quarter.

Adjusted non-GAAP net income for 2019 was $36.9 million or $2.68 per basic and $2.61 per diluted share compared to adjusted non-GAAP net income of $59.2 million or $4.01 per basic and $3.87 per diluted share in 2018.

For a full reconciliation of non-GAAP net income to the most comparable GAAP financial measures, please see the tables at the end of our press release.

Our EBITDA for the fourth quarter of 2019 was $10.7 million compared to $22.1 million in the prior year quarter. Full year 2019 EBITDA was $49 million compared to $71.4 million in 2018. 2019 cash flow from operations, excluding shifts in receivables, was $37.5 million. As of December 31, 2019, the company had $109.8 million in cash and cash equivalents and $48 million in net accounts receivable, $38.3 million of which was due from Teva. The company had $39 million in outstanding debt.

Therefore, as of December 31, 2019, the company had net cash plus receivables of $118.8 million. In the fourth quarter of 2019, we purchased $3 million of Eagle's common stock as part of our $150 million share repurchase program. From August 2016 through December 31, 2019, we have repurchased $171.9 million of our common stock.

With that, operator, please go ahead and open the line for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from David Amsellem with Piper Sandler.

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Zachary Sachar, Piper Sandler & Co., Research Division - Research Analyst [2]

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This is Zach on for David. Just a couple of quick ones on vasopressin, if you don't mind. Could we talk about whether you've gone past the target action date on the filing or if you've gotten a complete response letter on the filing? And second, I know you've talked candidly about the potential for a settlement in the past. What is your level of confidence that you could settle with Endo on the litigation and how aggressively are you pursuing a settlement? And then one quick broader question, if you don't mind. Could you maybe provide any additional color on other 505 (b) (2) injectables in development?

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [3]

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Thank you. Thanks for the questions. So look, the timing what we've stated previously that I think is important to the follow-up to your question, is, we fully expect that we will receive our approval for vasopressin in time to make all the predictions that we have here possible. So we expect to get approval relatively shortly here. And then if we wind up having a good rest of the time in court, we expect to go to the market later this year. In terms of a settlement, it's so hard to predict these things. We just believe that we're in a very good position when it comes to the Paragraph IV litigation that we're in. And if all goes according to plan, we'll be in court here in May already, which, if we get a decision in the normal course of time, we would get a court decision before the year is over, we expect to have our approval well in advance of that.

And if that's the case, we have every opportunity to go to the market before the year is over. And so that launch is right around the corner. And so we'll just have to see how things go with the rest of the discussions that we may or may not have. But we just think we're in good shape. We're in good shape with PEMFEXY, we resolve that. We're in good shape here. The most important element is that we just expect that we'll monetize this very important asset to the company in the short term. That's the takeaway.

And I don't have any other 505 (b) (2) injectables to speak about at this point other than what we've already disclosed. We do have 10 projects in development. We have several launches coming up in the next 3 years, I think 5 we mentioned. And so it's a pretty robust pipeline. We're pretty excited about the growth that we can have now starting just around the corner. So it's a pretty exciting time to be involved with the company.

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Operator [4]

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Our next question comes from Randall Stanicky with RBC Capital Markets.

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Randall S. Stanicky, RBC Capital Markets, Research Division - MD of Global Equity Research & Lead Analyst [5]

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Scott, you called out potential for 2020 to be the best revenue, even the gross profit year for the company. If we just focus on revenue, I think that would imply better than $237 million, which is double-digit growth. So question is, can you help us think through the components of that, how you're thinking about BENDEKA royalties? It sounds like you've got some RYANODEX and also vasopressin in that expectation as well. And then the follow-up here. I didn't hear you talk about fulvestrant. But I saw in the release. It looks like there was a bit of a setback. Can you walk through where we're at with that product and how to think about the path forward?

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [6]

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Yes, great, Randall, thank you. Let me just make some general comments, and I'll turn the sales number over to Pete, if that's okay. But look, if we wind up having the affirmation of the appellate decision for ODE, obviously, that sets up very nicely to the next 3 years of the company. But in our view, we're expecting EHS to be approved on or before the July 8 date. And our internal forecast has a meaningful amount for EHS, if we get it approved in time for the heat season coming up.

But in addition to that, our MH business is also doing rather well. That's driven by expiries. In 2019, we had a cycle where there were just not a lot of expiries coming up. And that all turned in 2020, specifically in the first quarter. So I think I mentioned in my comments that we could have almost as many sales in Q1 here as we did all of last year. So you can see how that strengthens our revenue.

And then BENDEKA is doing well. BELRAPZO is doing well. We'll get a milestone, hopefully, out of the SymBio relationship at the end of the year, and we could very well have what's a pretty good year, a record year. And then you have to add potentially the vasopressin launch into that, which would really accelerate the growth pretty dramatically, if that should happen. And so that's where those numbers come from. Pete, did you want to add anything else to the revenue line?

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Pete A. Meyers, Eagle Pharmaceuticals, Inc. - CFO [7]

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Yes, if I may. Let's just spend a minute on the BENDEKA royalties, Randall, and thank you for the question. You will have noted that BENDEKA royalties for the full year 2019 were down about $23 million year-over-year. As we talked about in prior calls, substantial component of that is the price compression, call it, $20 million in price compression on the GTN and BENDEKA. Volume was down a little bit, not much, a little bit of an offset, of course, from the fourth quarter royalty pump, which is an incremental $5 million a quarter, if you do the mathematics around 5 points of royalty and so. That explains the diminution year-over-year of $23 million, Randall.

As we go into 2020, we would note 2 trends. One, that it appears, based on the same data you look at, Randall, that we look at, the IMS data appeared to be telling us that the GTN compression has abated in the bendamustine market. Let's hope that is accurate. And also, remember, we'll now have a full year of that royalty rate, frankly, 3 quarters of an incremental 5 and then, of course, another incremental point in the fourth quarter. And so we look for BENDEKA royalties to have a growth here. RYANODEX, even in the absence of an EHS label expansion, will be a growth here. We're confident in telling you that given the expiry cycle. And then, of course, EHS, if approved, would provide substantial ups on the RYANODEX number. And so we do feel that 2020, Randall, could indeed be our best year on revenue, if a few things break our way.

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [8]

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Yes. Thank you, Pete. And then, Randall, for fulvestrant, I wouldn't necessarily say that we have a setback at this point. We're just not quite there yet. These initial results didn't get us to where we want to be, but we have a number of plans in place and thoughts and work going on. And we're still very encouraged about that program. And hopefully, we'll have additional news relatively soon to talk about. Let's see what happens. It's obviously such an important product, I mean, just not for the company, but for the patient population. And we're working very diligently on it. And hopefully, we're making the right amount of progress. So let's just see how that continues to unfold. But we didn't quite get there on this last pass that we had. But we're continuing to study it. And hopefully, we'll have a breakthrough here soon.

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Operator [9]

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Our next question comes from Tim Lugo with William Blair.

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Lachlan Hanbury-Brown, William Blair & Company L.L.C., Research Division - Associate [10]

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This is Lachlan on for Tim. Just following up on the fulvestrant trial. So is that, I guess, requiring an additional study beyond the pilot study? Or is it just more sort of digging into the data that you have there to determine the path forward and overall what might that mean for the sort of the high-level time lines that you've provided in the past? And then second question, in terms of RYANODEX in EHS, is there any sort of change or any update on your level of confidence in the FDA's willingness to accept the combined data sets of the 3 years there?

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [11]

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See, let me go to the first question first, and maybe you have to repeat the second one. But in terms of fulvestrant, when we've spoken to everyone, we've recognized the fact that we reformulated last year and then we did a pilot study in healthy volunteers to gauge the direction of that reformulation. And we always realized in our timing models that we may have to go back in there and do a little bit more pilot work in humans, and that's where we are. So it's likely that we'll be doing a further human study prior to the pivotal. Not sure at this point what it does to the time lines. I can't tell you, as we sit here today, that there's a significant change in those time lines, there might be and there very well may not be. We just need to do a little bit more work and then we'll report back. But we have some pretty good thoughts. We've been studying this for quite a while. We continue to understand the requirements better and better every time we look at it. And so let's take a little bit of time, let's do a little bit more work. Let's see where we are. We're encouraged, but there's still work to be done. I don't think we know more than that to give you a better update than I just did. So let's see where we are.

And then in terms -- can you repeat your second question related to RYANODEX?

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Lachlan Hanbury-Brown, William Blair & Company L.L.C., Research Division - Associate [12]

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Yes. So I was just wondering, for EHS, the submission, as I understand, it was combining the data from the 3 years that you went to the Hajj and I was just wondering if, based on any discussions with the FDA, if your, I guess, perception of their willingness to use those combined data sets from across the 3 years has changed at all?

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [13]

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Yes, so I see. So look, we're expecting to have approval on or before the PDUFA date. In the dialogue we had and the work that we've done for the knowledge level that we have right now during this review process, our expectation is that we're going to be approved, and we're moving forward in turn to prepare for that launch. And hopefully, it will work this time for us. But as we sit on this call today, it's our expectation that we will be approved on or before that July 8 PDUFA date.

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Operator [14]

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(Operator Instructions) Our next question comes from Brandon Folkes with Cantor Fitzgerald.

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Brandon Richard Folkes, Cantor Fitzgerald & Co., Research Division - Analyst [15]

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Firstly, can you talk about the BELRAPZO strategy going forward, just given the step-up in BENDEKA royalty? Does that strategy remain the same? How should we think about peak sales -- sorry, peak market share there? And then secondly, can you just talk about capital allocation priorities in 2020? And given that you noted you have a number of launches over the coming years, do you feel the need to do what -- the need and willingness to do M&A? And if so, what are your priorities there?

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [16]

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Thanks, Brandon. So look, BELRAPZO strategy is not changed. We're pleased with where we are. Everything has come together well. We do have the step up in the royalty, which, as Pete mentioned earlier, has been working out well for us. We believe that we could have a really, obviously, very strong 2020, just staying in the way that we're approaching the whole bendamustine franchise. So I don't see any major changes in our view of that marketplace. And so that's all very positive, I think. We've seen stability in the market. And let's see what happens as we move through the year.

And on terms of capital allocation, it's -- I don't believe that there's anything that's changed in our thought process there either along the way. We do have these 10 projects, we could have 5 launches coming up in 3 years. I think the growth is right upon us, if all these things, that we just spoke about, work out for us in the near term. But we do have very good position and good opportunity to move forward. We have a lot of infrastructure that could support another product or two, and we continue to look, and we may or may not pull the trigger and look for things, as everything that we're looking at and exploring has to compete with the pipeline and where we think it is today internally. And we do aggressively look and obviously, we don't have anything to say today, but we'd like to get this company bigger and more profitable as quickly as we can through -- first and foremost, through organic growth and development. And should we find something that makes sense for us externally, we'd like to go ahead and do that to add on to everything we can do.

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Operator [17]

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And we'll take our next question from Gregg Gilbert with SunTrust.

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Gregory B. Gilbert, SunTrust Robinson Humphrey, Inc., Research Division - Analyst [18]

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Scott, I wanted to ask you about EHS. I'm curious where you think the stock -- the product would be stocked initially? And maybe you could characterize for us how the provider community, how their awareness is ahead of this potential approval and their readiness, given that it could be a practice-changing or would be a practice-changing kind of product?

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [19]

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Yes, great question, Gregg, and thanks for the question. So EHS and RYANODEX, in general, is just shaping up to be a very interesting situation. So the best way to describe that is there are, give or take, 5,000 hospitals in the U.S., of which half stock RYANODEX today. We have about a 50% share, give or take, of the number of hospitals stocking. That stocking is obviously in the operating room, in the event of an MH situation and not in the emergency room. So let's just focus first on the nonstockers today, the 2,500 hospitals that are not stocking the product. Once EHS is approved, we think just about all of those hospitals are going to need to stock. And if they don't stock immediately, they're going to have to stock most likely if the velocity that we think is potentially there, you start seeing a couple of patients, you're going to need to have the product. It's emergency product. You can't exactly call your wholesaler and have it delivered to you while you have a patient sitting there.

And so there may be 4 or 5 vials that need to be stocked in those other 2,500 hospitals right off the bat. And then the hospitals that are currently stocking in the operating room, they probably need to have some vials down in the emergency room. So this is clearly an emergency room product, where hospitals are going to have to stock and be ready because it's an emergency situation. So I think our growth is going to come from 2 areas, the stocking at the beginning and then whatever usage we get along the way as we have heat stroke subjects coming into the emergency room.

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Gregory B. Gilbert, SunTrust Robinson Humphrey, Inc., Research Division - Analyst [20]

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Do you see the product get into ambulances or in the hands of athlete trainers at schools or anything like that? Or is that a longer-term opportunity?

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [21]

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Yes, we don't see that happening in the short or midterm at all. I think it's going to be emergency room drug. Let's just get everybody used to use the drug and see how things go. But it's clearly an ER-driven process.

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Operator [22]

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And there are no further questions at this time. So I'll turn it back to the speakers for any closing remarks.

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Scott L. Tarriff, Eagle Pharmaceuticals, Inc. - Founder, CEO & Director [23]

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Thank you. So look, to wrap up, as I stated earlier, 2020 could really be the best year in Eagle's history in terms of total revenue and gross profit, though just followed by the accelerated period of growth over the next several years for the company. Now this includes affirming the orphan drug exclusivity for BENDEKA and the EHS approval. And then before the year is over, hopefully, launch vasopressin, file for nerve agents, you start to add in the $10 million to $25 million per year that we expect to get from SymBio, starting with the $5 million milestone payment later this year. And then you launch yourself into the PEMFEXY launch at the beginning of 2022, 4 months before anticipated ALIMTA ANDA entry. And this doesn't include the value that we may still find from hopefully fulvestrant, followed by traumatic brain injury, concussion and Alzheimer's disease. And then, it's the questions we had earlier today, anything that we still may acquire. And so we are excited about the growth trajectory and look forward to reporting on our progress over the upcoming weeks and months. So it's exciting time to be involved with the company, and thank you for the support and being on the call today. We greatly appreciate it. Thank you.

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Operator [24]

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This does conclude today's program. We appreciate your participation. And you may now disconnect.