Sign in

You're signed outSign in or to get full access.

EP

EAGLE PHARMACEUTICALS, INC. (EGRX)·Q1 2023 Earnings Summary

Executive Summary

  • Q1 2023 revenue was $66.305M and diluted EPS was $0.44; adjusted diluted EPS was $1.26 and adjusted EBITDA was $22.325M, while gross margin was 74% .
  • Year-over-year comparisons reflect a tough lap versus launch quarter dynamics and the decision to exit vasopressin: vasopressin sales fell to $3.5M from $34.3M in Q1 2022; royalty revenue also declined YoY to $20.084M from $25.786M .
  • PEMFEXY net sales reached $22.9M; management estimates commercial (non‑340B) pemetrexed share grew from 6% exiting Q4 2022 to ~15% Q2-to-date, supporting full-year expectations that PEMFEXY sales will exceed 2022 levels .
  • The company reaffirmed full-year 2023 guidance (adjusted EBITDA $74–$80M; adjusted non-GAAP EPS $4.20–$4.53; non-GAAP R&D $41–$45M; non-GAAP SG&A $86–$90M) and highlighted a potential accretive acquisition effort; CMS granted a unique J‑code for Byfavo effective July 1, 2023, potentially improving reimbursement and access .
  • Stock reaction catalysts: accelerating PEMFEXY share; bendamustine franchise resilience and extended exclusivity (settlements imply potential entry only in Nov 2027 for a key challenger); exit of vasopressin reduces near-term sales but simplifies focus; new Byfavo J‑code should aid hospital adoption; active exploration of accretive M&A in oncology .

What Went Well and What Went Wrong

What Went Well

  • PEMFEXY momentum: “Based on internal data and customer feedback, we estimate…our share has now grown to 15% [Q2-to-date],” with Q1 net sales of $22.9M and expectations to surpass 2022 full-year PEMFEXY sales .
  • Bendamustine durability: BENDEKA and BELRAPZO combined maintained ~89% U.S. bendamustine share in Q1 2023; management “remain confident in exclusivity into November of ’27,” positioning the franchise as a meaningful contributor for several years .
  • Reaffirmed guidance and structural enablers: Company reiterated 2023 guide and secured a unique Byfavo J‑code, with management noting the J‑code “is an important step in facilitating reimbursement and broadening access” .

What Went Wrong

  • YoY decline versus launch quarter: Total revenue fell to $66.305M from $115.874M in Q1 2022, driven largely by vasopressin ($3.5M vs $34.3M) and lower PEMFEXY versus launch quarter dynamics ($22.9M vs $37.2M) .
  • Margin and opex headwinds: Gross margin dipped to 74% (76% in Q1 2022) due to amortization from newly acquired products; R&D rose to $9.3M (from $6.1M) and SG&A to $28.0M (from $22.2M), reflecting pipeline investments and commercial expansion .
  • Working capital build and inventory dynamics: Accounts receivable rose to $115.0M as management noted customer inventory levels may be elevated while capturing share in PEMFEXY, adding near-term balance sheet sensitivity .

Financial Results

MetricQ1 2022Q4 2022Q1 2023
Revenue ($USD Millions)$115.874 $60.699 $66.305
Gross Margin %76% 67% 74%
Diluted EPS (GAAP)$3.41 $0.62 $0.44
Adjusted Diluted EPS (Non-GAAP)$4.04 $1.10 $1.26
Adjusted EBITDA ($USD Millions)$66.872 $19.985 $22.325
Product / Revenue LineQ1 2022Q4 2022Q1 2023
PEMFEXY Net Sales ($M)$37.2 $12.1 $22.9
Vasopressin Net Sales ($M)$34.3 $3.6 $3.5
RYANODEX Net Sales ($M)$6.6 $7.2 $8.8
BELRAPZO Net Sales ($M)$5.9 $11.0 $6.4
BARHEMSYS + BYFAVO Net Sales ($M)——~“just shy of $1M”
Royalty Revenue ($M)$25.786 $23.538 $20.084
Total Net Product Sales ($M)$90.088 $37.161 $46.221
KPIs and LiquidityQ4 2022Q1 2023
PEMFEXY Commercial (non‑340B) Share~10% through Feb 2023, exiting Q4 at 6%; target ~12% by end of Q1 ~15% Q2-to-date
Bendamustine U.S. Share (BENDEKA + BELRAPZO)~88% recent 4-week period ~89% in Q1 2023
Cash & Equivalents ($M)$55.321 $21.897
Net Accounts Receivable ($M)$72.439 $114.953
Total Debt ($M)$63.8 $77.5

Guidance Changes

MetricPeriodPrevious Guidance (Mar 13, 2023)Current Guidance (May 9, 2023)Change
Adjusted EBITDA ($M)FY 2023$74.0–$80.0 $74.0–$80.0 Maintained
Adjusted Non-GAAP EPSFY 2023$4.20–$4.53 $4.20–$4.53 Maintained
Adjusted Non-GAAP R&D ($M)FY 2023$41.0–$45.0 $41.0–$45.0 Maintained
Adjusted Non-GAAP SG&A ($M)FY 2023$86.0–$90.0 $86.0–$90.0 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2022 and Q4 2022)Current Period (Q1 2023)Trend
PEMFEXY adoptionQ3: launch inventory dynamics; demand outpaced reported sales; confidence to sell more in 2023 . Q4: exited Q4 at 6% share; captured 10% through Feb 2023; anticipated ~12% by end of Q1 .Q1: Net sales $22.9M; share ~15% Q2-to-date; expect share to continue increasing in 2023 .Improving
Bendamustine franchiseQ3: shift from TREANDA to RTD; 9% TREANDA share, bendamustine gross profit +9% YoY . Q4: ~88% share; royalty cap reached (10% bendamustine royalty ended) .Q1: ~89% share; settlements including Dr. Reddy’s; confidence in exclusivity to Nov 2027 .Stable/Resilient
VasopressinQ3: significant sales ($13.8M) but generic market pressures noted .Q1: formally withdrew from market; inventory depletion expected by end of Q2 .Discontinued
Hospital products (BARHEMSYS/BYFAVO)Q3: relaunch plans; sales force scaling .Q1: ~32% sequential growth vs Q4 from a small base; unique Byfavo J‑code effective 7/1/23 .Building
Pipeline (CAL02, ENA‑001)Q3: CAL02 IND and planned global Phase 2; ENA‑001 orphan designation; BARDA funding . Q4: reiterated timelines and potential impact .Q1: Global Phase 2 underway for CAL02; ENA‑001 multi‑indication development strategy reaffirmed .Progressing
Landiolol (SVT rate control)Q3/Q4: NDA under FDA review; PDUFA 5/31/23 .Q1: launch timing likely after summer to avoid disrupting hospital product momentum .Pending approval

Management Commentary

  • “We remain well‑positioned for another strong year in 2023…investments we are making for the future account for much of the expected difference of our earnings in 2023 versus 2022. We are investing to support our products and advance our pipeline, notably CAL02” (Scott Tarriff, CEO) .
  • “PEMFEXY…we estimate that…our share has now grown to 15% [Q2-to-date]. We expect growth to continue throughout the year” (Scott Tarriff, CEO) .
  • “Together, BENDEKA and BELRAPZO maintained approximately 89% share…We remain confident in exclusivity into November of ’27” (Scott Tarriff, CEO) .
  • “The establishment of a unique J‑code for Byfavo is an important step in facilitating reimbursement and broadening access” (Scott Tarriff, CEO) .
  • “Our guidance does not contemplate the completion and integration of any M&A” (Brian Cahill, CFO) .

Q&A Highlights

  • M&A financing and guidance: Management is “lining up lenders” to be able to transact quickly; 2023 guidance excludes any potential M&A integration .
  • Landiolol launch strategy: If approved near summer, likely to hold launch until later to avoid distracting hospital product momentum .
  • PEMFEXY cadence: Q1 performance robust; management expects 2023 PEMFEXY sales to exceed 2022; acknowledges pricing/inventory puts and takes .
  • Hospital portfolio feedback: Field feedback for BARHEMSYS and BYFAVO characterized as “extraordinary,” with 32% sequential growth off a small base; J‑code expected to help adoption .
  • Acquisition focus: Near‑term M&A is more likely in oncology given infrastructure capacity and synergy potential .

Estimates Context

  • S&P Global consensus estimates were not available for EGRX in our environment during this review; consequently, explicit revenue/EPS beat/miss versus Street is not included. We will update estimate comparisons once S&P Global mapping is available.

Key Takeaways for Investors

  • PEMFEXY is the central 2023 growth driver: share has expanded to ~15% in commercial (non‑340B) cohorts, with management expecting full‑year sales above 2022; inventory dynamics may cause quarterly lumpiness, but the trajectory is positive .
  • Bendamustine franchise remains a profit pillar: ~89% share and settlements support exclusivity through Nov 2027, helping fund pipeline and M&A despite modest market volume decline .
  • Vasopressin exit removes volatility: near‑term revenue headwind is already reflected; focus and resources shift to branded assets and pipeline .
  • Hospital adoption should improve with Byfavo J‑code: reimbursement simplification from July 1, 2023 is a tangible catalyst for uptake and revenue mix stabilization .
  • Guidance reaffirmation signals confidence: maintained FY23 adjusted EBITDA/EPS and non‑GAAP opex guide despite Q1 YoY headwinds; monitor AR/working capital and PEMFEXY inventory normalization into 2H .
  • Pipeline and regulatory milestones: CAL02 Phase 2 enrolling globally; landiolol approval decision anticipated with disciplined launch timing; ENA‑001 diversification option remains on track .
  • M&A optionality in oncology: management actively engaging lenders; potential accretive acquisition could reshape the medium‑term earnings base .