Good day and welcome to the Impax Laboratories Incorporated third quarter 2010 earnings conference call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Mark Donohue, please go ahead sir.

Thank you, Rachel. Good morning everyone. Welcome to our third quarter 2010 earnings conference call and webcast at www.impaxlabs.com. On today’s call we have with us, Dr. Larry Hsu, our President and Chief Executive Officer, and Art Koch, our Chief Financial Officer. Following their prepared remarks, both will be available to take any questions you may have as time permits. Should you have any questions after the call, please feel free to telephone myself at Investor Relations at 215-933-3526. A replay of today’s call will be available starting at 2:00 PM today through November 9th. Please refer to our third quarter earnings release for replay details. Our discussion today may include certain forward-looking statements and actual results may differ from those presented here. The factors that could cause such a difference are outlined in our SEC filings and on our website. In addition, our discussion today includes certain non-GAAP measures as defined by the SEC. Please refer to our earnings release and reconciliation tables posted on our website. With that, it’s a pleasure to turn our call over to Dr. Larry Hsu.

Thank you, good morning and well thanks for joining us. Our third quarter performance was driven by continuous strong demand for several of our global label products. Total adjusted revenue excluding the impact of the change in revenue recognition discussed in the earnings release this morning includes approximately 40% to $180 million lead by our generic Adderall XR, and the fenofibrate products. Adjusted EBITDA includes a 78% to almost $28 million from $16 million last year. This solid result lead to a $7 million increase in adjusted net income and a $0.09 or 60% increase in earnings per diluted share. Sales within our global business have benefited since the launch of our generic Adderall XR in October of 2009. It continues to be an important component of our generic business and we are working hard to build a significant and a lasting customer relationship. However, ongoing supply issue with our supplier continues to constrain our ability to fill strong customer demand leading to lower than expected sales and a market share. Keep in mind that we will always be dependent on supply and hitting our target depends on consistent product supply. We’re encouraged with our receipt of overdue deliverers in the third quarter, and we’ve began a new initiative to retain some of the customers we had lost due to our inability to supply. Since then however, other shipments we’ll promise have come in late and our supplier has told us recently to expect lower volume than previously committed for the balance of the 2010. We have been very disciplined in our M&A approach checking deals that are strategically appropriate driving toward high value product, technologies, or business with meaningful R&D capabilities that are financially attractive with manageable execution risk. We remained very active on the business development front, as…

Thank you, Larry and good morning. Before discussing our quarterly results, I want to update you on our business development activities as there have been several recent deal announcements in our industry. We have very aggressive business development activities ongoing to accelerate growth in both our generics and brand divisions and we are devoting significant amounts of time and attention to this area. With our cash and short-term investments having increased to more than $358 million, and our clean balance sheet with no debt, the range of business development activities we can pursue is very large. Our approach is very diligent as we are searching for assets that are strategically right and financially attractive. We won’t do a deal just for the sake of doing a deal, unless it meets our strict criteria. Opportunities exists in the generic space for us to acquire products, technologies and/or businesses in complementary dosage forms, while our core competency in drug delivery and formulation expertise can be combined to produce above average growth in high-value products. On the brand side, we continue to actively pursue marketing partners for our Parkinson’s disease product outside the US as well as additional products for our US based sales force. We are excited about the opportunities available and we will continue to be very thorough in our evaluation ensuring that any transaction will provide the best fit for our company. We are pursuing opportunities that will complement our business well into the future rather than businesses with limited capabilities to develop high-value products and pipeline. Moving to our third quarter results; in our third quarter earnings release, we have provided GAAP to non-GAAP tables adjusting for the accounting change to our Teva agreement, as well as a couple of other adjustments including share-based compensation in order to present…

Thank you. (Operator Instructions) And our first question we’ll hear from Chris Schott with JPMorgan.

Hey, good morning. This is actually Dewey Steadman for Chris. I was just wondering on the fenofibrate market with the additional competition in the market and how is pricing holding on?

Thanks, Dewey, nice to hear from you. The pricing has been intense and increasingly intense. But not on the wholesale or order of magnitude kind of level we’ve seen in the past. So I would characterize it as, present there is pricing competition, but not the wholesale kind of experience we saw, the first time Ranbaxy was in the market.

Two parts of the question Dewey, first is, the agreement has a prescribed course for legal Action and we are following that under the agreement and with regard to future share, so much of the fourth quarter result will be dependent on product shipments as we said it’s very difficult to predict fourth quarter from current levels. We have been seeing them we do have significant customer demand we just need the product to be able to fill that. Dewey Steadman – JPMorgan: Alright, great. Thanks.

Welcome.

Next I’ll move to David Amsellem with PiperJaffray

Thanks. Just a couple. So, I know you said that this summer the supply constraints eased somewhat and you expect that your share to rebound. Now you are saying you’re having trouble meeting customer demand. So just help us understand better, what changed here between July and now?

The easiest way to explain it is, in this early second half, we had worked with Shire to develop the expectations for product supplies that we could expect for the remainder of the year. And we in fact saw the first bits of those expectations come to fruition with product deliveries in July and August. As regard to October, another key delivery month, we saw shipments being delayed. And during that same time, they came to us with revised expectations of what additional product we could expect during the second half of the year, for the remainder of the year. And very recently, delivery dates were missed and recent statements indicate that they don’t intend to ship us what we had believed we will be receiving to the balance of the year. And that’s really the chronology of events. We have been working all along to avoid litigation but we just felt that, or with these most recent turn of events that it’s customer’s best interest to get in there with this litigation and compel them to deliver the product we believe is a fair – pursuant to our orders under the agreement.

Okay, that’s helpful. And as a follow-up, is an expansion of the DEA quota a possible outcome here if you and Shire can and do settle out of Court as was the case with Teva?

Well, David as you know, the quota issue is really between Shire and its supplier and the DEA. We are not really ready to or interested in whatever the allocations are we would just like – invest the product that we work and how they do that is really of little interest to us, we just need them to fill our orders.

Okay and then one last question if I may. If it’s becomes clear that the litigation will be protracted, what are the remedies are at your disposal to move share and more specifically is lowering the price of uridine or something that you may consider?

Well, we certainly believe and we are pursuing this on an expedited basis. Time is critical here for the reasons you mentioned. We have demand for several times over our current supply. So, a change in price wouldn’t really help us in terms of serving our customers. We worked hard to get these customers and we intend to keep them in product until additional shipments arrive.

Okay, thanks. Mark Donohue: Thanks David. Next question please. Rachel, next question please.

Yeah, we’ll move to Louise Chen with Collins Stewart

Hi, just a few questions. First question I had was, given the settlement with J&J and also Watson on Concerta today can you comment or give an update on where you are with your ANDA filings for that product?

Well, this is Larry. We continue working with the FDA try to get the FDA approval. Now obviously, the news this morning that the Watson settled with J&J, we have spoken each for them. But at this point it does not prevent any other generic on the market and we continue working with the FDA and try to get our ANDA approved. So we can launch the product.

And then second question I had was just with respect to 2011. It looks like consensus estimates are obviously very low in terms of earnings for the following year. I’m just wondering if you could comment on, what you think the growth might be in 2011 at least qualitatively? What kind of opportunities people might be missing in the market there?

Well go ahead, Art.

Well, I was just going to say Larry that, the traditional sources of growth comes from our pipeline of the new products and our – and the progress of our brand business towards ultimate approval of that ANDA. In terms of the short-term horizon for 2011, we have a number of products where the 30 month day expires and we will be looking forward to those they include important products like Doryx and Rubella and there are other products that we are not involved in litigation that will come through the approval process as well.

And then a last question is just on Adderall XR, again just curious if there is anyway, if you give us a framework for how to think of the sales quarter-to-quarter just I think it’s a little bit harsh or keep it a model or if you could even possibly talk about what sales would have been this quarter? Had you have the sufficient supply something, even just to give us a benchmark?

Larry, would you like to take that?

Yes, go ahead.

Okay. So Louise, it’s not really possible to predict what it would have been under different circumstances, because the circumstances drive demand so heavily. I think it is important to explain that we went out to obtain new accounts on a case-by-case, account-by-account basis and we had some success. But we had to curtail those activities, because we didn’t have sufficient products to continue to obtain new customers. We have sufficient products, we believe to service our current account, but we couldn’t go get anymore. Clearly, we think our market share can grow from here, but quantifying it is really a function of how much product we receive by when.

Thank you.

Thank you Louise, next question please.

Next question will come from Corey Davis with Jefferies

Thanks very much. First question is, how long do you think it will take for the lawsuit to resolve itself either through the Courts or just through outright settlement with Shire?

Well, go ahead Larry?

Go ahead Art.

Okay. The path we are on Corey is an expedited path in the Courts. We stressed the urgency of this situation. The Courts have been willing to listen so far and I think we will be able to address this on an expedited basis. There’s really no way to put a time sense on this? Could it be a month? Could it take a little longer? It’s very hard to know. But we think it is something that can be resolved either through litigation or outside of litigation in the relatively near time.

And just to be clear how the process actually works. Are they – I am assuming they are not shipping you zero right now, but are they shipping you supply that’s in line with the prescription demand that everybody can see in IMS? Or are they shipping you zero?

No, no, they are not shipping zero. It’s very hard to say that’s it’s in line with the prescription percentage Corey, because we have significant demand over current prescription share. So they are clearly, what has us upset is we have a very clear need for the product. We have customers behind and documenting that need and they are not shipping us. They are not selling our orders and we really need them to sell our order.

Okay. And then just switching to the model for next year and thinking about R&D spend without giving a specific guidance shouldn’t – with these trials kind of running down, I would expect your R&D line to go way down, but are there other plans ramp upped in R&D, just the question is, in aggregate should R&D go up down or stay the same in 2011 over 2010?

Larry, the expectation for R&D, we’ll go through the budget outlook in 2011 in the January conferences Corey. But, we have a number of initiatives that are underway to continue to ensure that we continue to deliver above average returns. So our studies finishing upon the brand business, but we have a pipeline of additional products that are queued up behind IPX066, and you are likely to see us talk about those more in the early part of next year.

And are those big projects moving into Phase III that I just can think of right now?

The number of – the closest project is our IPX056, which is specificity in MS patients. There are others in the pipeline that we disclose very little about that are also – and they’ve demonstrated proof-of-concept and are ready to proceed. And you’ll get more color on that as we go through the outlook for 2011.

Alright, so continued investment in the brand side, I guess is the message I’m hearing?

Correct.

Great. Thanks guys.

Thanks Corey. Next question please.

And next we’ll hear from Sumant Kulkarni with Bank of America. Sumant Kulkarni – Bank of America: Good morning. Thanks for taking my questions. First a question on the generic side. Could you comment on the departure of Chris Mengler and if your strategy for the generics division has changed or remain the same after he left?

Can you repeat the question again? I didn’t get very well, I’m sorry. Sumant Kulkarni – Bank of America: Sure, yes, could you comment on the strategy for the generics division after Chris Mengler left the company?

Okay. We do not believe that there will be any change on the strategy. I don’t want to make a comment. The separation of Chris Mengler with the Impax was is under a amicable situation with the difference in the management style and a different view of the management. We feel it’s better that the, we separate from that point of view. But as far as the one in the generic, as far as the company’s overall direction, I think it has not been changed and we do not expect we will have a dramatic change in the future, at least in the near term. Sumant Kulkarni – Bank of America: And just moving on to the Adderall XR situation. Could you comment on where the ANDAs for your own product stands? Have you had any interactions with the FDA? And is there anything, any movement on that front?

Well, as you know that we’ve been continue working with the FDA on the approval. We had the, our only ANDA on the Adderall XR as well. And as you are aware that the FDA had a meeting, the Advisory Committee Meeting in April to talk about two products, Concerta and the Ambien, but it did not include the Adderall at this point. So at this point, while we continue working with the FDA and FDA has not – we hadn’t issued any guidance or any specific requests on the profile requirement for the Adderall XR at this point. Sumant Kulkarni – Bank of America: And my final question is on your business development efforts. So, at the target that you have looked at already, what has been the source of them not meeting your expectations?

The product development target, I mean, we obviously been working aggressively in the past and try to looking at the opportunity. But the important is, I think in both my talks and then the past comment was that we need to look for something, which fit in our strategy at this point. And obviously that the – with the both competitive landscape and in terms of M&A, we will continue working on it, but at this point, we don’t have anything to report yet. Sumant Kulkarni – Bank of America: Thank you.

And next we’ll move to Elliot Wilbur with Needham & Company. Elliot Wilbur – Needham & Company: Maybe, just going back to the Shire supply agreement. Is there anything that you can detail or elaborate on or explain to us that kind of gives us some sense that there is some minimum quantity for the agreement that you’re going to be able to sell even if it’s just at the current level?

Elliot Wilbur - Needham & Company: Understood Art, but I guess, what I’m trying to get at is, if you asked for volume that effectively works to 40% in the market and they only want to ship you volume that works out for 2.5% in the market. I mean, I got to believe that there’s something in this agreement that gives you some sort of floor downside protection in the incident, in the circumstance that frankly they’re just not sort of cooperative with or not behaving in the spirit of the agreement?

Yes, that is the part of this. There is no kind of floor. There is an absolute obligation that they fill our order. So, there is no kind of floor. We just expect them to ship product. Elliot Wilbur - Needham & Company: Okay. But there is – it sounds like there's a clause in there that they are contractually obligated to fulfill your orders, which is in effect of law.

Okay. Elliot Wilbur - Needham & Company: Anything that you guys can say there that can provide some assurances that the settlement you reached isn’t going to basically windup being of de minimis economic value, there is some sort of downside protection causes build into that, that gives you a net present value that’s relatively close to what you would have realized, had you been able to launch the product?

Elliot, what we said and there’s been really no change to what we said is that, we have downside protection, but it’s an important relationship for us, and it’s a positive relationship and under the terms of the relationship, we’re obligated not to disclose the specifics behind that. But we are satisfied that we have adequate downside protection. Elliot Wilbur - Needham & Company: So I don’t know if there is something specific to their application or something more general with FDA. But anything that you could provide us with in terms of color on sort of your dialogue with the agency that gives you more less or no change, I guess in terms of sort of expectation on what’s going to be needed to eventually get the product approved and monetize that asset?

Well let me help answer that question, Art, was it, okay?

Sure

Obviously, – only Watson knows about that what kind of a profile they have and whether they can get approval. And again, in the communication between Impax and FDA will continue try to learn more about this, unfortunately, as you're aware of that. Other than that the Advisory Panel Meeting back in April, there’s really not much movement in that side. Although, you are aware of that this we do see some Ambien CR approval, which are obvious also indicate FDA is looking at is some of these products. Obviously, those are the possible scenario is that now with the – Watson be will be on the market as AG, that possible can take some pressure off the FDA even further slowing down in terms of looking at the two generic sort of approval on this one. It may be, may be not, I do not know. And we don’t have a crystal ball to see what the FDA would do. But if it does happen, you draw a parallel line between the Concerta and the Adderall XR. With the Adderall XR, will now have two authorized generics on the market. It probably will even be less reason or less pressure for FDA to continue pursuing the two generic approvals on that. So again, on the Concerta side, we are obviously anxious to want to get our ANDA on the market, but at this point we don’t see the FDA have any movement on that. But on the other hand the Adderall XR has continued in status quo, will be able to continue market, the authorized generic. Elliot Wilbur - Needham & Company: Alright. Thank you for taking the questions.

Thanks Elliot. Next question please.

(Operator Instructions) We’ll next move to Michael Tong with Wells Fargo. Michael Tong – Wells Fargo: Hi good morning guys. Maybe a bigger picture question. Clearly, in last several years, you’ve done pretty well in terms of bolstering the pipeline. But, in this fairly near term, I’m saying six to 12 months from now, you are still pretty dependent on a handful of products. So, is there anything strategically that you can do to try to minimize or at least reduce the dependence on things that you can control or the Adderall XR or situation? Is that, could it come from the brand side? Could it come from the generic side? Just some thoughts on that Larry, if you could.

Okay, I think it’s a bulk there is bulk of questions and I think we obviously are looking at the type of issue everyday. You mentioned about the brand program, obviously that’s one very important thing for us to help us - the overall company’s strategy. But, going back to the generic side, there is a couple things I do want to comment. Number one, it is important working on itself, we do have first own pipeline at this point. Okay, and may be we cannot pinpoint one product, say we know this product is going to sell $200 million just like the Tamsulosin, Flomax today. However, recall that a year ago before we launched the Tamsulosin within now well it’s going to be a good product. So, as a matter of fact, if you look at that Impax history in the last several years, we have several experience like this from the OxyContin, from the XR and also looking at the Wellbutrin XL. So all these things which demonstrated – as long as we continue to have a strong pipeline when the opportunity is here, we will be ready to grab that opportunity. So from that point of view, I think it is really important to point it out a strong pipeline means we will be able to get the opportunity when it comes. The other important thing is that we are working very hard, is working on the M&A side. Okay, we are looking at the company which fit in our strategy and either acquire or partner or do whatever we have to do. And I think it’s more than just skilled – well you look at as the board than in the – board in the next couple of years, but more importantly, I think it will accelerate the growth of impact. So we are doing many things from the client side, from the M&A, as well as looking at the opportunity to do a monetize our pipeline to help us to grow the company. Michael Tong – Wells Fargo Securities: Great, thanks. That’s helpful.

And next I’ll move to Tim Chiang with CRT Capital.

Right, thanks. Larry, my question is really just about the timing of an acquisition. I think certainly about we are focusing on 2011 and is that a right point and already even with all these Adderall issues, but how far along are you in terms of closing in on an acquisition? And sort of – you’ve talked about this for a while now; have you sort of refined, what sort of companies you are particularly interested in or what particular segments that you want to grow in the generic and branded space?

But again, I think we wanted to stick with that, because in our point of view, Impax assumes grow beyond the next two years. We are going to, find anyway to grow the company in the next five to ten years and that’s what we have to focus on. And we are looking for a target that will not only help us in the short-term, but also help us to grow in the next five to ten years.

Thanks, Larry. I just had a one follow-up just looking at your pipeline on the generic side, could you just provide an update on, where you guys sort of stand on Effexor XR?

Where we out of the Effexor XR?

Yes.

Well, obviously this is something we continue working with the FDA on that at this point.

Okay, great. Thanks Larry.

And there are no further questions at this time. I would like to turn the call back over to the speakers.

Thank you Rachael and thanks for joining us today. Please turn into our presentation next Friday morning at 9:00 am at the Credit Suisse Conference in Phoenix. Thanks again, take care. Have a nice weekend.

And that will conclude today’s call. We thank you for your participation. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!