Teligent, Inc.
Q3 2018 Earnings Call Transcript

Published: 14 Nov 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the Teligent, Inc. Third Quarter 2018 Results Conference Call. [Operator Instructions] Except for historical facts, the statements in this presentation as well as oral statements or other written statements made or to be made by Teligent, Inc. are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. For example, without limitations, statements about the company's anticipated growth and future operations, the current or expected market size for its products, the success of current or future products offerings and the research and development efforts, and the company's ability to file for and obtain U.S. Food and Drug Administration approvals for future products are forward-looking statements. Forward-looking statements are merely the company's current predictions of future events. The statements are inherently uncertain, and actual results could differ mainly from the statements made herein. There are no assurance that the company will achieve the sales levels that will make its operations profitable or the FDA filings and approvals will be completed and obtained as anticipated. For a description of additional risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including in its latest annual reports on Form 10-K and its latest quarterly report on Form 10-Q. The company assumes no obligation to update its forward-looking statements to reflect new information and developments. I would now like to introduce your host for today's conference, Jason Grenfell-Gardner, President and CEO. Please go ahead.

[Jason Grenfell-Gardner:]

Thank you, Sara. And good afternoon, ladies and gentlemen. Welcome to the Teligent business update covering the third quarter of 2018. I'm Jason Grenfell-Gardner, the President and CEO of Teligent. And I'm joined today by Damian Finio, our Chief Financial Officer. Thank you for joining us today. I will be providing you an update on the core elements by business and the latest on our expansion plans. Damian will then provide a more detailed breakout of our financial performance for this third quarter. The third quarter 2018 has been as promised a very busy time here at Teligent as we move from construction and development to further growth. Revenue for the quarter was strong at $18.3 million, up 13% from the second quarter of this year and 42% from the same quarter last year. This has largely been as a result of new product launches in the U.S. and continued strong international performance in Canada, offsetting pressures around price erosions and molecules like Lidocaine ointment. Damian will provide a fuller overview of the individual components of the financial performance for the quarter. However, for my part, I would like to point out a couple of noteworthy achievements. First, new product launches in the second and third quarters of this year have allowed us to be more selective around the business in our established portfolio. As these products continue to ramp and as we add new product launches from the portfolio, Teligent is better able to navigate the potential for pricing complexity in its base business. Second, as a result of our efforts to realign wholesale acquisition costs with contract pricing, we've been successful at shrinking the gap between gross and net revenues. This has the important effect of improving and providing better visibility to the cash collection cycle. Also, during the quarter, we were pleased to inaugurate the manufacturing site in Buena, New Jersey after the completion of all construction and subsequently to receive our final certificate of occupancy for the site. Today, we are fully occupying the site, actively developing and manufacturing exhibit batches to support our sale injectable business and preparing to transfer both drug compounding into our new topical manufacturing rooms over the end-of-year break. I would like to congratulate our entire team on this phenomenal achievement from groundbreaking to final certificate of occupancy was barely 21 months. I don't think anyone has ever constructed a facility of this complexity and brought it online as quickly and as effectively as our team has. It's a great job. Looking ahead to the fourth quarter, we now need to stabilize the operations within the plant with so many new processes coming on board. As many of you know, we are required to implement serialization capabilities by the end of this month. And we are actively preparing the facility for a pre-approval inspection by the FDA, which we believe will occur in the first part of 2019. We also have a few products approved pending launch, a process which is resource intensive for the organization. Rather than rush these activities and risk getting them wrong or only partially right, I've instructed our team to take a deliberately moderated approach to this final quarter of the year. While this may have a short-term impact on revenue, this is the right call for ensuring our long-term success for this site. Having invested nearly $60 million to date, rushing to save a few weeks would not be in shareholders' long-term interest. We trust, as a management team, that you will share our long term view. Turning now to the pipeline. Teligent has continued to outdeliver on its approval rates with the FDA, with 3 NDAs approved during the quarter and even a further 3 NDAs approved in Q4 so far. It's striking that an organization of our size can be in the top 15 of ANDA approvals for the trailing 12 months in the country and speaks to the professionalism and dedication of the team. Now, one of the key projects that we were expecting FDA comment on for the third quarter was our generic orphan drug product. We and our development partner received a complete response letter from FDA related to this product in September. Subsequent to the receipt of FDA's comments, we held a teleconference with FDA to review the science behind some of the technical aspects of the FDA's review. It's perhaps not entirely surprising given the nature of what we're attempting to do with an orphan drug that there is complexity around the science. However, having reviewed our approach and the data further with FDA, we believe that we will be able to answer FDA's comments and questions by the end of 2018 for continued review. Finally, we also announced today our partnership with Ares to finalize the restructuring work on our balance sheet. Damian will speak more to the specifics, but we're very excited to be partnering with Ares. This facility not only provides us meaningful long-term visibility on our capital structure, it also removes the overhang of the remaining 2019 convertible notes. It also has the potential to reduce our near-term cash cost of debt, while providing the necessary facilities to accelerate our high-speed filling line capabilities for our sterile injectable business across 2019 and 2020. With all these achievements over the past quarter, I think, you can probably see the path forward to profitability and growth that we as a management team see. We made some significant changes to our manufacturing site, to our team, to our financial partners, even to our audit partners to be prepared to what comes next. But before we talk about that, let me turn the call over to Damian to update us on the financial progress. Damian?

[Damian Finio:]

Thank you, Jason, and good afternoon, everyone. As Jason mentioned, I will cover several items today on today's call, mainly amendments made to our second quarter financial results; Teligent's third quarter performance; the financing commitment with Ares and lastly an update to our full year guidance. So, let's begin with the amendment to the second quarter 10-Q. In the course of Teligent's quarterly and year-to-date review of financial results with our newly engaged external audit firm, Deloitte, we noted an error in how we accounted for our partial extinguishment of December 2019 convertible bonds in the second quarter. Per the FASB's Accounting Standards Codification, Topic 470 for Debt when the cash conversion feature of a convertible bond is partially extinguished, the resulting amount is allocated to interest expense in additional paid in capital, dependent on certain conditions relating to the transaction. Specific to our second quarter partial extinguishment, we recorded $10.3 million as interest expense, but the appropriate allocation is $2.7 million to interest expense and $7.6 million to additional paid in capital. Therefore, we over-stated the company's quarterly net loss by $7.6 million. In addition, as prescribed in the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 99, given we're amending the second quarter results, the company will also be recognizing less significant out of period adjustments relating to, but identified subsequent to, the conclusion of the second quarter. The impact of these adjustments is a reduction to second quarter net revenues of $0.5 million, a reduction to cost of revenues of $0.3 million and a reduction to selling, general and administrative expenses of $0.2 million, resulting in no net impact to EBITDA or the company's reported net loss. We are working diligently to file the 10-QA, but unlikely to meet tomorrow's deadline, which triggers a deficiency letter and subsequent 8-K filing by the company. Moving on to Teligent's financial results for the third quarter. Revenues for the third quarter were $18.3 million, which includes $5 million of revenues generated by our Canadian operations and is offset by $0.6 million of U.S. failure to supply charges. Third quarter total revenue reflects year-on-year growth of 42%, and an increase over the prior quarter of 13%. This strong increase in total revenues was driven by 9 U.S. topical product launches since the end of third quarter of 2017, offset by $0.7 million decline in Lidocaine 5% ointment revenues. Revenues from U.S. injectables and contract manufacturing are relatively flat in comparison to the third quarter of 2017, but revenues in Canada increased $1.4 million or 39%. Gross profit for the quarter of 2018 was $6.7 million, representing a gross margin of 37%. Although a substantial increase of $1.9 million or 40% over the prior quarter, on our last call, we projected a third quarter margin exceeding 40%. However, we experienced higher than anticipated demand on portions of our business subject to price protection. Except for a small portion of price protected volumes in October, these contractual obligations are now behind us. We incurred $4.8 million of selling, general and administrative costs in the third quarter, which includes $0.7 million of an unanticipated legal fees incurred to provide defense for ongoing litigation and $0.4 million of one-time external audit-related transition costs as we work through the hand-off from EisnerAmper to Deloitte. R&D investment for the quarter was $3.1 million, which represents a 33% decline from the same period a year ago. This is due to a decline in development costs as we move from topical to injectable-focused development and more efficient expense management supplies needed to run the labs. From an expense perspective, compared to the first half of 2018, we were successful in reducing by 18% what we consider internally to be short-term discretionary spending, a great achievement. We recorded an operating loss in the third quarter of $1.2 million, an improvement in comparison to the operating losses of $3.5 million and $4.9 million posted in the first and second quarters of 2018, respectively. Bridging from our reported operating loss to the net loss reported for the quarter, we posted a foreign exchange loss of $0.2 million. This amount fluctuates quarter-to-quarter based on changes in exchange rates between our 3 operating currencies, the U.S. dollar, the Canadian dollar and the euro. We also recorded $2.7 million of interest expense, $2 million of which is noncash and a $0.1 million tax credit, bringing us to a net loss of $3.9 million for the quarter compared to a $9 million loss in the same quarter of 2017. From a cash perspective, in the U.S., we collected $15.5 million in the third quarter, which represents a 63% increase over the average amount collected in the first 2 quarters of the year. The increase in cash collections is directly related to August 1 and September 1 WAC price reductions we initiated on several products. By reducing WAC pricing, we collect cash sooner. This helps to address the challenge mentioned on previous calls regarding the lag and realizing net positive cash flow from new U.S. product launches. One last thought regarding our third quarter financial performance. Although failure to supply charges from customers are common to many manufacturers, they are new to Teligent. For a company of our size, 12 ANDA approvals year-to-date adds an enormous workload across the organization, but most obviously, in the quality department where additional raw materials and finished goods require testing and inspection. We are committed to quality and understand the importance of getting it right. This additional testing and inspection, coupled with the test batches required to support this effort, draw on resources and the plants' capacity to manufacture commercial product. And during the quarter, we also completed the construction of our expanded manufacturing footprint in Buena and are now preparing for an FDA prior approval inspection. As Jason said, it has been a really busy quarter here at Teligent. We are adding additional resources in quality and manufacturing to meet these challenges, but similar customer charges are anticipated in the fourth quarter. These customer charges and investments are incorporated into the updated market guidance I will discuss momentarily. With the lower-margin business mostly behind us, adjusting for one-time audit and legal fees, taking the failure to supply charges on lost sales into consideration, we can see the future path to profitability in the underlying core of the business. Let's shift gears from financial results to our capital restructuring plan. Today, we announced the last step in that process, a $120 million financing commitment from Ares. Pursuant to the commitment, Ares will provide Teligent with a new senior-secured asset-based first lien revolving credit facility and second lien term loans in the principal amounts of $25 million and $95 million, respectively. The $25 million revolving credit facility and $80 million of the second lien term loans will be used to manage working capital, including a replacement of the existing $25 million term loan facility, also address the company's December 2019 convertible bonds and provide further liquidity. The remaining $15 million of second lien term loans will be available in 2019 to fund the installation of a high-speed filling line in the company's recently expanded sterile injectable manufacturing site in Buena, New Jersey. In addition, the term loans include a paid in kind interest option, which enables the company, if we choose, to defer the payment of interest for up to 24 months. This option reduces the cash outlay to service the debt by approximately $1 million per quarter, depending on fluctuations in LIBOR, of course. We expect to execute definitive documentation with Ares soon subject to the satisfaction of certain closing conditions. Let me conclude my portion of the call with an update on full year guidance. Taking into consideration the year-to-date unanticipated one-time reserve increases, the move of wholesaler fees from cost of revenues to contra-revenues and the delay in launching the orphan drug, we expect full year revenues of $66 million to $68 million, which is short of the $70 million lower boundary of our previous guidance. We project gross margin at or 100 basis points below the lower boundary of our previous guidance of 35% to 40%. And we remain on track to invest $13 million to $15 million in R&D this year. After adjusting for the foreign exchange loss, we are encouraged by the positive EBITDA realized in the third quarter. However, given losses posted in the first half of the year and the unanticipated increases in noncash reserves and one-time expenses, we are lowering our 2018 full year EBITDA guidance to a loss of $6 million to $8 million or adjusted for noncash foreign exchange losses incurred year-to-date, an adjusted EBITDA loss of $4 million to $6 million. Along with the challenges encountered scaling up this business, we have milestones to celebrate as well

[Jason Grenfell-Gardner:]

All right. Thank you, Damian. As you can tell, we have a lot going on here at Teligent, but if I could summarize where we are now in 3 short points, they would be these. First, we have the pipeline and development capabilities to continue to add new revenues in a market challenged by price erosion. We continue to be the disruptor in these markets. Second, we have the physical plant and infrastructure now fully under our control to be able to execute the delivery of this pipeline and control the costs of our base business, and this will allow us to continue to scale. And finally, third, we have the balance sheet now restructured to provide us the financial footing to be able to execute on our plan. With the implementation of these 3 elements, pipeline, plant and finance, we have effectively transformed Teligent and are ready for the next stage. I want to personally thank our entire team for the work that they've done to get us here. It has not been an easy path and many folks thought that we couldn't do it, but we have and we will continue to drive the execution of this plan. And just one last thing, because our business is developing real-time, just this afternoon, I received word that our first media fills for aseptic filling in sterile injectables have passed their testing period. This may seem a bit arcane, but it's further proof that the technology that we have installed and the team that we have built are ready to take on the next stage of our injectable project. Congratulations to the team on this. It is a remarkable achievement. As we open this up for questions, just a quick note. Because of the Jefferies conference, I'm in London tonight, Damian is in New Jersey. So, if there are any disconnects, our apologies for the challenges related to distance. With that, Sara, let's open up the line for questions.

[Operator:]

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

[Matt Hewitt:]

Thank you for providing the detailed update. Can you hear me, okay? Okay. First question, could we get an update on the TAM for the pipeline for the 22 ANDAs that are currently on file?

[Jason Grenfell-Gardner:]

I think the last count that we had in terms of the TAM was just under $2 billion. But I think looking at the latest IMS and taking into consideration the approvals for October, current TAM now is at $1.6 billion.

[Matt Hewitt:]

$1.6 billion. Okay. Great. And then shifting to the orphan generic. And I realized that this is a unique opportunity and situation. Maybe how complex was -- are the questions that the FDA came back with? And what is your confidence level that you will be able to get that through the process early next year?

[Jason Grenfell-Gardner:]

So, it was actually some really fascinating work that the team did and the conversations that we had with the FDA, primarily related to bioanalytical methods to determine the bioavailability of the compound that we're working on. If you think about the way that methods have evolved and analytical methods have evolved, and even our technologies to detect the methods that we have developed, they're significantly stronger today. And our science is significantly stronger today than perhaps it was when some of these molecules were originally developed. And so working with the FDA, we were able to lay out the science behind what actually is happening on a pharmacokinetic basis related to our product in a way, I think, that is probably never been done with the molecule that we have been working on. So I feel pretty confident that the team has a really good grasp of what's required from the science perspective. They explained very clearly to the FDA where the issues were and how they resolved them. And I feel confident that we are on a good track to be able to answer fully any of questions that they had outstanding by the end of this year.

[Matt Hewitt:]

And then regarding the new facility, it sounds like you're expecting them to swing through and hopefully give you an all-clear before the end of the year. What will be that lag time from that -- from the all-clear from the FDA to when you actually start manufacturing out of that facility, whether it's the topicals or I guess from my vantage point even more exciting injectables?

[Jason Grenfell-Gardner:]

So, the topicals are already capable of being manufactured -- are manufactured out of the facility. We are able to use the new parts of the facility for our topicals because they rely on the same equipment train and the process equipment is the same as in the legacy part of the facility. To be clear, our expectation at this point is probably that the FDA will be in the facility in 2019, not before the end of this year. But once they do come to that facility, I think, what you'll see is the ability to commercialize product very quickly. Normally, our expectation is that when the FDA has come specifically to inspect for a product approval as part of the pre-approval inspection, we get an answer relatively shortly within a matter of weeks and have the ability then to drive commercialization. So we want to make sure we have everything ready. We're making significant investments in time and resources and people to make sure that we're ready, but pretty excited about what that looks like as we get into 2019.

[Matt Hewitt:]

Maybe one last one from me and then I'll back into the queue. Regarding the portfolios or products that you had acquired a couple of years ago, is it still your intention to start to relaunch those products? And maybe an update on where some of those projects currently sit?

[Jason Grenfell-Gardner:]

So, the two portfolios that we acquired back in 2014 were products from AstraZeneca and from Valeant. We have some of those products already going through various processes with CMOs to come back to market. But I think as we have said publicly in the past, some of these products require our own internal capabilities to be able to bring them back officially and economically. The first of the products that will from the legacy portfolio have actually already been made and have been put on stability at the site. The news that I announced today about aseptic filling opens up another tranche of those products to be able to bring back to market. And so the goal is still definitely to use those as an accelerator for bringing product back to market more quickly.

[Operator:]

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

[Elliot Wilbur:]

Couple of questions specifically related to the current pipeline, maybe more specifically upfront -- I think I'm losing track of the numbers here, but there either 5 or 6 current approvals that have yet to be launched, just wanted to get an update on the status of those in terms of when they will be launched? And how many additional action dates are pending before year-end?

[Jason Grenfell-Gardner:]

Sure. Thanks for the questions, Elliot. In terms of the products that have been approved, but yet pending launch, there are 2 products that have been approved, that will be launched now before the end of this year and, in fact, are slated to launch this month. There are a couple of those products where we're looking at markets and determining whether we want to launch into them or whether we're going to reengineer some of the cost structure related to the batches to be able to be competitive down the road. These are often products that are kind of in the legacy portfolio, things that were filed very early on in 2010, 2011 and 2012. We're reexamining the viability of some of those products as they come to market. And some of that may just require work in terms of sourcing new and more cost-effective sources of API and determining how we can cost engineer them. And there are a couple that are eligible for launch, but as we mentioned in our prepared remarks, that we'll hold off some of those launches until the beginning of 2019 just because of the complexity that launching new products creates in the system. And every new product that we launch requires validation batches, requires incremental work in terms of our raw material releases and in terms of all the work we do to validate the process. Given some of the other stuff that's going on, we may trade off some of that into 2019 as we think about the importance of getting PAI correct and getting serialization correct as well.

[Elliot Wilbur:]

Okay. And then just want to ask you question on the macro environment as well. You seem to be suggesting that maybe you saw a little bit more price erosion in the base portfolio than what you've seen over the last couple of quarters. Perrigo also revised expectations lower due to accelerated price erosion. They didn't specifically call out topicals, but obviously, they're kind of a key player in the market. And it just seems like the space is getting a little bit more competitive. So I'm not sure if I'm reading too much into the -- all the commentary here. Or if there has, in fact, been a bit of shift in the environment here and you're seeing a little bit more price erosion than you'd seen year-to-date?

[Jason Grenfell-Gardner:]

So as we actually look at our market year-to-date and I compare the third quarter to second quarter, we actually had positive price variance in the third quarter. Now some of that is driven by the impact of new product launches and so strip some of that out. But core price erosion wasn't too strong second quarter 2018 compared to third quarter 2018. That being said, if I compare third quarter 2018 to third quarter 2017, we see some pretty significant impacts. We called out specifically Lidocaine ointment, which has been a challenging market all around and has become a much more competitive market than what we saw back in 2017. And this is where, I think, it's important for us as a management team to be pretty mindful of what our cost structures look like and where we want to play and in which markets we want to play. We will be pretty active in managing both our cost structures as well as choosing the business that we want. And we will walk away from things that we think don't make sense. So we've been very mindful of the cost structure of the business as we've gone into the third quarter of this year.

[Elliot Wilbur:]

Okay. Last question. Just more of a big question in terms of the evolution of the injectable pipeline. Just curious how we should expect that to evolve as you get full capabilities kind of underneath you in terms of the types of products that you will be filing on. Obviously, a lot of injectables don't require BE studies. So I'm not sure if that's sort of where your initial strategy will be focused in terms of trying to bring in revenue in relatively short order. Or if there are specific areas or particular product categories that you think are well suited to your internal capabilities, obviously, kind of a wide -- large bucket of products that you could be focused on. Just want to get a little bit better sense on where some of the initial activities are going to be targeted?

[Jason Grenfell-Gardner:]

So as we look at the go-to-market strategy, I think, it starts with capabilities. Our goal is to make sure that having put in place the physical infrastructure, that what we call the software of the business, the SOPs, the processes, the all-in support systems of our quality systems, work appropriately and effectively to make sure that we are making drugs that are safe and efficacious and live up to the quality that we expect according to the market. So capabilities is really core. And as we think about capabilities, we use some of the tools in these pipelines that we acquired back in 2014 as a catalysts to drive capabilities. So if we start with terminally sterilized products, we may start with terminally sterilized vials and then terminally sterilized ampules and then move into aseptically-filled vials and so on as we add incremental complexity to the portfolio. So the first thing that you see come out of this facility, will probably not be dramatic in terms of the revenue capability. It is about really bedding down the capabilities of the facility and proving that we can do what we need to do. The second part of this then comes to revenue generation. Obviously, there is an installed base of overhead and work that needs to be done to be covered in that facility. So we will be looking at parts of the existing portfolio that we have to drive incremental revenue at the site. But the third part and I guess, the part that I get excited about is scale, right. I've just come from our development lab in Estonia today where the team is raring to go to add incremental products into our pipeline as are our colleagues at the facility in Buena and those R&D teams. And if you look at what we've been able to do in R&D from the topical side, turning these folks loose on the injectable portfolio is really exciting. We have to throttle that a little bit because, if we try to do everything at once, I think, it will be challenging for all of us. But that being said, you will start to see an incremental pickup in the cadence of filings and then the news flow related to injectables as we work our way through 2019.

[Operator:]

[Operator Instructions] The next question comes from the line of Scott Henry with Roth Capital Partners.

[Scott Henry:]

First, I apologize if I missed it. But, Jason, did you answer the question on the number of action dates before year-end that Elliot had? I didn't catch that.

[Jason Grenfell-Gardner:]

I don't know that I have the actual number in hand. I believe that I'm right in saying there are 2 to 3 action dates before the end of this year, but I don't have the exact number to my hand.

[Scott Henry:]

Fair, fair enough. Okay. And Damian, I don't know if you can help me with this. Typically, when you file the 10-Q, we get a little granularity about the product sales within the quarter. Given the delay, I'm wondering if you can give us any color on some of the bigger products which you may allude to typically in the 10-Q, at least get a sense of contract manufacturing sales or any of the major drivers?

[Damian Finio:]

Yes, sure. Scott, you're right. Without the Q filed, we tend to not give as much granularity, but I can give you a little bit of color. So contract manufacturing for the quarter was about $1.9 million of our $18.3 million of revenues. The larger drivers from a revenue perspective in the third quarter, we had Diflorasone Diacetate Ointment and Lidocaine Hydrochloride Topical were the 2 larger products. And a strong quarter for Lidocaine 5% ointment as well. I'm not sure if Jason wants to add any color to those also.

[Jason Grenfell-Gardner:]

Yes. I think the other thing I would add is, as I mentioned in the earlier remarks, we launched a number of products in the second quarter that started to pick up scale in the third quarter. So if you think about products like Clobetasol cream and, as Damian mentioned, the Diflorasone Diacetate, those were all products that started to pick up scale throughout the third quarter as well.

[Scott Henry:]

Okay. Great. And just one more for Damian. Damian, with the new capital structure, just trying to get an idea on any kind of quick color you can provide on how and, equally important, when we should expect this to start to hit the income statement? How should we factor this in with regards to today's press release?

[Damian Finio:]

Yes. So we expect to close the agreement in the next couple of weeks, Scott. From there, I think, our first step will be to swap out the existing revolving loan or term loan facility we have that we opened in the second quarter. From there, we'll address the convertible bonds that mature in December 2019. As I mentioned in my script, there is a paid in kind interest option that the company has the option to choose. I mentioned that will reduce our cash outlay for debt service by about $1 million per quarter, so we choose that option. And so our cost of capital actually under that option drops by about 250 basis points to what we've been paying in the last quarter or 2 with our existing cap structure. So I think, to answer to your question, that's kind of the timing. And I think it will hit the P&L towards the end of this year and into next year.

[Scott Henry:]

Okay. Great. And I guess, final big picture question and I'm not looking for any guidance on 2019, but your revenues are somewhat flat for '16, '17 and '18. I'm just trying to get your sense of -- if we expect that pattern to end significantly in 2019, obviously, you're bringing the plant up to speed, but at some point, we're looking for an inflection point. Just trying to get your color on when you think that inflection point may be?

[Jason Grenfell-Gardner:]

I can certainly start on that. I mean, I think, you're right. These past few years have seen some pretty remarkable trends from a macro basis throughout the generic pharma industry. One of the things I'm incredibly proud of is that we've actually managed to keep revenues flat to slightly up over the course of these years, when we look at an environment when most people have seen double-digit decreases in revenue in our industry. So what speaks to, of course, is the power of the pipeline and our ability to get drugs approved and to drive new revenues. The challenge, of course, is that what we are replacing with new revenues is often lost margin. And we have to do that more quickly and that has had the impact of depressing margins in the near term. Where we're excited for 2019 and beyond is not only what's in the installed pipeline for the 22 ANDAs that are still on file with the FDA, but also the 20 ANDA and NDAs that we own that are yet to go back to market from the AstraZeneca and Valeant portfolios that we acquired. And then finally, the ability to add incremental products into the pipeline through our R&D teams. If you look at what we have achieved in R&D and the rate and the time that we have been able to bring products to market, we are often leading products approved now on a first cycle review or a second cycle review at FDA. That means that we're getting drugs approved somewhere between 10 and 15 months from the date of submission, that's pretty effective. And those things will be the items that help drive revenue beyond where we have been over the course of the past few years. So I'm actually pretty optimistic right now with where we are and what we have coming up.

[Operator:]

This concludes our question-and-answer session for today. I would now like to turn the call back to Jason Grenfell-Gardner for closing remarks.

[Jason Grenfell-Gardner:]

Okay. Thank you, Sara. And thank you, everyone, for taking the time to participate in today's call. I look forward to speaking to some of you tomorrow at the Jefferies Healthcare Conference here in London, but also at other events throughout the remainder of the year. Thank you for your continued support of Teligent. Have a great evening.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.