Amneal Pharmaceuticals, Inc. (AMRX) Q2 2015 Earnings Report, Transcript and Summary

Good morning. My name is Tabatha, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Impax Laboratories' Second Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I'll now turn the call over to Mr. Mark Donahue. Please go ahead. Mark J. Donohue - VP-Investor Relations & Corporate Communications: Thank you. Good morning, everyone. Welcome to Impax's second quarter 2015 financial results conference call. Copy of the press release issued this morning, as well as a copy of the slide presentation are available on the Investor Relations section of Impax's website. Also, a link to a webcast of this call is available on our website. Our discussion today may include certain forward-looking statements, and actual results may differ from those presented here. Factors that could cause such a difference are outlined in our SEC filings and on our website. Our discussion today includes certain non-GAAP measures as defined by the SEC. Management uses both GAAP financial measures and the disclosed non-GAAP financial measures internally to evaluate and manage the company's operations and to better understand its business. Further, management believes the inclusion of non-GAAP financial measures provides meaningful supplementary information to and facilitates analysis by investors in evaluating the company's financial performance, results of operations and trends. A reconciliation of GAAP to non-GAAP measures is available in our second quarter 2015 earnings release and in today's slide presentation, both of which can be found on the company's website. The agenda this morning will include our President and Chief Executive Officer, Fred Wilkinson, providing an overview of the second quarter highlights and subsequent events. He will also provide an update on our four key areas of focus. Then Bryan Reasons, our Chief Financial Officer, will provide additional details on the financial results and discuss our updated financial guidance. We'll then open the lines up for questions-and-answers. Also joining us for the Q&A session is Michael Nestor, President of the brand division. With that, I'll turn the call over to Fred. George Frederick Wilkinson - President, Chief Executive Officer & Director: Thank you, Mark, and good morning, everyone. Thanks for joining us. This quarter was a very, very busy quarter, as I think you all saw. We launched six generic products. We integrated the Tower acquisition. We enhanced our capital structure and we pursued numerous business development opportunities and M&A opportunities. And as a reminder, our 2Q is the first quarter with the full impact of the Tower acquisition. Turning to the next slide that outlines our highlights for the quarter. We had a solid second quarter, delivering approximately 14% growth on revenue over 2Q 2014, and about 50% growth over the last quarter. We are up against a tough comparison for both revenue and gross margin from the prior year, primarily due to the prior year's exclusive launch and strong sales of authorized generic RENVELA. The addition of the generic products from the Tower acquisition and the launch of six new generic products helps us to offset and more than offset the loss in revenue from the exhausted supply of the AG RENVELA. The brand division benefited from strong launch of RYTARY, continued positive results from Zomig Nasal Spray, and the addition of the Tower product or the brand products from Tower. The integration of Tower acquisition is essentially complete, and we are now focusing on achieving the strategic benefits. We have captured some of the previously identified synergies and now sharpening our focus on improving the supply chain efficiencies. To that end, we initiated the project to optimize our packaging and distribution strategy by announcing the closure of the packaging operation in Philadelphia and the transfer of our in-house distribution capabilities to UPS. This project will be completed by the end of the year and will result in a few million in annual savings, but will generate much greater efficiency in our supply chain. During the second quarter, we took steps to enhance our balance sheet flexibility via the convertible debt vehicle that will have the effect of reducing our annual interest expense, and Bryan will cover this in his remarks. And today, we announced the sale of Daraprim for $55 million, and I'll cover this in more detail shortly. So, now let's turn to the four planks of how we intend to grow this company. First of all, our primary focus will remain on quality, so let me give you a quick update on that. I'm now on slide 6. Starting with Hayward, on June 1, we submitted our response to the Hayward 483 as received in May. We have now completed all of our commitments to the agency, and we have been notified in writing that the recent inspection has been closed. So, now, we wait for the formal update on the Warning Letter and are closely monitoring any published changes in our GMP status. As before, we're engaged in open constructive dialog with the three critical areas of the agency related to our compliance status as well as the outcome of the PAI inspections that occurred on multiple products during the May inspection in Hayward. The Taiwan facility was inspected by MHRA in July related to the European filing of IPX066, which is RYTARY in the United States. At the conclusion of the inspection, we're informed of no critical or major deficiencies and the next anticipated step is the receipt of the GMP certificate. Turning to the maximization of our portfolio and the generic side, we've successfully launched six products during second quarter and recently launched the seventh product in July. For your reference, these products are listed on the left side of slide number 7. We have a potential to launch seven additional products in the second half of the year with five of those already being approved. I'll provide some update on a few of the critical products that make up most of the focus of the questions that come inbound. For epinephrine auto-injector, as outlined in our press release, our second quarter revenue and margins were negatively impacted after we experienced a short-term supply issue due to failure to order a component of the product prior to the close of acquisition. So this is a component that has a 12 to 15-week lead time. Orders were not placed in January, caused us to have some short-term delay of supply during the last month, month and a half. As most of you have seen in the prescription data, this issue has been resolved and we are now in the process of restocking our customers. We see no issue in recapturing our share during the third quarter, and we'll take advantage of the promotional effort being implemented throughout the rest of 2015. Regarding Adderall XR and our supplier position going into 2016, we've implemented strategies to better bridge our current inventory position to match the timing of the possible approval of either of the CorePharma ANDA or the Hayward ANDA. The CorePharma ANDA may provide an additional option towards maximizing our market position with this product as we go forward. As most of you know, another generic competitor for digoxin has entered the market, making this the six player market. As previously disclosed and expected, margin and pricing have been impacted as is typical in the generic multiplayer market. This product is still more valuable than prior to the market disruption that happened 18 to 20 months ago. A little color on OPANA ER. Right now, we have a 30% share since launch, and as most of you are aware, litigation has concluded with us and all the other ANDA filers, which we're closely monitoring. We anticipate an action by the judge sometime this month or possibly next month. And two things are really possible on the outcome, either status quo, everybody stays where they are; or a potential removal of one of the generic competitors, which could be an opportunity for us. As a reminder, we're functioning under a license and will not be affected by whatever decision is made. Turning to our Specialty Division, our Specialty Division achieved profitability in the second quarter of 2015, and delivered adjusted operating income of almost $15 million. This is the first time this Division has achieved profitability in the last two years, and the first time since my arrival. With the solid growth of RYTARY since launch and the ongoing strength from Zomig Nasal Spray, as well as the addition of Albenza from the Tower acquisition, adjusted gross margin for the Specialty Division were over 80% in the second quarter. We are pleased on how RYTARY growth is tracking. Weekly scripts were 1,466 for the week ending July 31, which is up 14% over the prior four weeks. Our sales representatives are getting enhanced physician access due to the strong interest in understanding the attributes of this product. And we're driving awareness in adoption with approximately 80% of our prescriptions now being approved by payers. Zomig Nasal Spray continues to perform well, even though it has been moved to the second position in the detail bag. In June, we received the approval for the use for the pediatric indication and we're planning promotional activities in August to target approximately 1.4 million pediatric patients in the United States to take advantage of this new approval. I want to spend a minute on Albenza and talk about the life cycle since this is one of the newer products in our armamentarium. As you can see by this chart, Core grew the product nicely at about a 20% CAGR from fourth quarter 2011 to the end of 2013, and this was primarily due to the conversion of albendazole which came off the market. Once this conversion was completed, Tower has been holding share with virtually no promotion. There is some seasonality to this product which many of you have been asking about, and you can see in this chart. Finally, what we're getting ready for is the next phase of this product which involves the approval of the next gen and the initiation of promotional programs. So stay tuned. Turning to our R&D pipeline, our generic R&D pipeline remains rich with 33 ANDAs pending at the FDA, including generic opportunities such as RENVELA, WELCHOL and Adderall XR. We have an additional 20 in various stage of development. For the past 15 months, the majority of our R&D team in Hayward has been focused primarily on remediation and on pre-approval readiness. Recently, we slightly shifted this focus back towards true generic R&D projects and recently initiated several new projects between our two generic facilities, that being Hayward and Middlesex. As depicted, the ANDA filing will be coming from both those facilities as well as our internal partnerships. On the brand side, the primary focus has been towards the adjudication of the IPX066 EU file. We recently received approval for the trade name Numient, which is how it'll be marketed outside the United States, and will progress through the 180-day letter with MHRA. As a reminder, we've received the official designation of therapeutic innovation, which include 10 years of marketing exclusivity. We also recently prioritized IPX203 as the lead product for this group and are preparing to initiate the Phase II clinical program very soon. On the business development front, listed on slide 10, obviously, it's been a very, very active time. We have been involved in many, many of the transactions that have been announced, either as observers or participants and are continuing along that front. This morning, we announced the divestiture of Daraprim for $55 million. This was an asset acquired in the Tower acquisition, and it is a non-core asset toward our ongoing brand strategies. The amount received represents about a 14 times trailing 12-month sales, and an 8% return to our $700 million purchase price. This further enhances our cash position, which was $190 million as of June 30. As discussed on our last call, we closed the Tower acquisition in March, and have essentially completed the integration work. The team remains focused on ensuring that we capture the strategic benefit and the previously identified synergies. At the end of the second quarter, we improved our capital structure through the issuing of a convert to replace the restrictive float rate term loan, and Bryan will cover this. We continue to operate with a solid balance sheet and a significant capacity to pursue generic and brand companies, as well as products. And with the numerous M&A deals announced in the last couple of months, we will be pursuing the opportunity to pick up the best of products that will enhance our existing portfolio. So, at this time, let me turn it over to Bryan to provide greater depth to the financials. Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: Thanks, Fred. Good morning, everyone. Turning to slide 12, I'll begin by providing some color on our total company results before discussing our segment results. Our total revenues in the second quarter increased $26 million or approximately 14% to $214 million compared to last year as a result of the addition of the Tower products and new branded generic product launches, partially offset by a loss of sales of authorized generic RENVELA in the current quarter compared to revenues of $49 million last year. New product launches increased revenues during the second quarter by $25 million, partially offset by unfavorable product selling price, which decreased revenues by $21 million. We delivered solid revenue gain without the benefit of additional sales from the epinephrine auto-injector product due to the supply issue, as Fred noted. Our adjusted gross profit declined as well as our adjusted gross margin, which decreased to 50% from approximately 64% last year. The primary drivers of this decline were, the loss of sales of high margin generic RENVELA, the prior-year period receipt of more than $9 million from third-party profit share and milestone payments, and the impact of additional competition on generic digoxin. Moving on to our operating expenses. Adjusted research and development expenses in the second quarter 2015 decreased approximately $4 million compared to last year, primarily due to a reduction in brand R&D spend and the impact of the R&D restructuring we announced last year, partially offset by the inclusion of R&D expense from the Tower acquisition. The decline in adjusted R&D was more than offset by higher adjusted selling, general and administration expenses. Our second quarter 2015 adjusted SG&A expense increased by approximately $12 million. This was primarily driven by expenses related to the Tower acquisition, failure to supply fees, higher information technology cost, higher business development and share-based compensation expenses and advertising promotion related to RYTARY. Adjusted EBITDA declined about $16 million to $60 million in the second quarter 2015 compared to last year due to the previously noted decline in gross profit. Our adjusted interest expense increased $6.1 million due to the $435 million term loan used to fund the Tower acquisition. Our second quarter 2015 adjusted effective tax rate of 37.6% came in slightly higher than the 35.8% rate last year as a result of a change in the timing of the mix of U.S. and foreign income. Our adjusted rate doesn't include the impact of the currently expired R&D tax credit. The full year impact is typically included in the fourth quarter results when the tax credit is typically extended. We estimate that the full year impact of the R&D tax credit would reduce our full year tax rate by approximately 1.5%. Adjusted earnings per diluted share decreased to $0.34 in the second quarter of 2015 compared to $0.60 last year. This decrease was primarily attributable to the loss of $49 million of high margin generic RENVELA sales, the loss of approximately $9 million of gross profit from third-party profit share and milestone payments, a decline in gross profit earned on generic digoxin due to additional competition, higher interest expense of $6 million and a higher adjusted tax rate. And comparing our sequential performance, second quarter 2015 compared to the first quarter, you can see a full quarter's benefit of the Tower acquisition, the launch of RYTARY and the launch of new generic products. Our gross margin also improved from just over 47% in the first quarter to 50% in the second quarter. Unfortunately, the temporary epinephrine supply issue resulted in our second quarter margins being lighter than we had hoped. Turning to slide 13, within the Generic Division, revenues were down slightly in the second quarter of 2015 compared to last year. The main drivers of this decline was a loss of authorized generic RENVELA, lower sales of digoxin and a loss the profit share and milestone payment. This decline was almost entirely offset by the addition of the revenues from Tower acquisition; the launch of six new generic products, including first to file Lamotrigine ODT; and higher sales of the Solaraze and Lidocaine. Generic Division adjusted gross profit and adjusted gross margin declined in the second quarter 2015 compared to last year, primarily due to the loss of profit from higher margin products as previously noted. In addition, higher sales of lower margin products in the second quarter and the epinephrine supply issue resulted in lower Generic Division margin in the second quarter. As discussed, we remain focused on the supply chain both internally and externally to improve product flow and cash or cost efficiencies. We expect our recent actions to streamline our packaging and distribution facilities will enable us to build upon the sequential margin improvement we experienced this quarter. Within the Specialty Pharma division, total revenues increased approximately $28 million primarily driven by the launch of RYTARY and the addition of revenues from the Tower acquisition. Specialty Pharma adjusted gross profit and adjusted gross margin in the second quarter 2015 increased significantly over the prior year period driven by higher sales. The adjusted gross margin was 81%, up from 31% in last year's second quarter. The increase in Specialty Pharma sales in the second quarter 2015 drove a $33 million improvement in adjusted operating income. For the first time in two years, the division generated operating profit compared to a loss. Moving to slide 14, when we closed the Tower acquisition, we secured a $435 million term loan with an effective minimum interest rate of 5.5%. In late June, we issued a $600 million unsecured senior convertible note at a rate of 2% with semi-annual interest payments and repaid the higher interest loan with much of the proceeds. At the same time, we entered into a convertible note hedge and warrant transaction that covers any dilution between the conversion price of $63.35 per share and a warrant strike price of $81.28 per share. In addition to lowering our interest expense, we have greater balance sheet flexibility through business development and M&A opportunities. As of June 30, 2015, we had $190 million in cash and cash equivalents. This will be further enhanced by the receipt of $55 million received from the sale of Daraprim. Moving to slide 15 and our full year guidance update. We modestly revised two items with our full year 2015 financial guidance. We lowered our adjusted gross margin guidance from the mid-50% range to the low 50% range. This is driven by the lower gross margins in the first half of 2015 and the impact of the delayed epinephrine supply, which has recently been resolved, and we reduced full year R&D expense slightly to $75 million to $80 million. We also included adjusted cash interest expense in our guidance, which we expect to be approximately $14 million in 2015. The $14 million includes the first six months of 2015 adjusted amount of approximately $8 million. Therefore, cash interest expense will be about $3 million per quarter under the new convertible debt note. Moving to slide 16, our key priorities. In closing, we are continuing to make progress on our four key focus areas. We'll continue to focus on quality across the company and closing out the warning letter of the Hayward facility so that we can begin to unlock the pending ANDAs at the FDA, and launch new products from that facility. We have a track record of maximizing existing and new product opportunities, and we'll continue to make the most of the markets we operate in. Now that the Tower integration is largely complete, we are sharpening our focus on our global supply chain to ensure sufficient product to meet customer demand, as well as identify cost efficiencies across our network to maximize profitability. We'll continue to target investments internally and externally in sustainable generic and branded specialized markets that can drive growth. And we are aggressively looking at multiple external business development and M&A opportunities that will enhance our existing business and create long-term shareholder value. Thank you for your attention and I'll now turn the call back to Tabatha for questions.

Your first question comes from the line of Gregg Gilbert with Deutsche Bank.

Can you hear me okay? George Frederick Wilkinson - President, Chief Executive Officer & Director: Yes.

Sorry, I jumped on a little late. So I apologize if I missed this, but for RYTARY sales, can you disclose the total sales in the quarter and talk about how much was demand versus recognition of deferred revenue versus stocking? And secondly, can you quantify the impact on the gross margin from that auto-injector supply issue? Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: Well, I'll start a little bit on RYTARY. We deferred in Q1 about $3 million – $3.1 million of net sales and we've gone to full revenue recognition in the second quarter and going forward, we'll recognize revenue upon shipping.

Yeah. Relative to demand versus stocking, the majority of the sales of RYTARY have been driven by demand. From an inventory standpoint, there's only a couple of months as you would expect in the pipe for product that's growing as it is at the moment. So as I said, most of its being driven by prescription demand. George Frederick Wilkinson - President, Chief Executive Officer & Director: So, turning to auto-injector, the impact was about a month's worth of activities and had we been able to ship that product, we would've far exceeded the – both the revenue and the EPS guidance previously provided.

And Fred, one follow-up on biz dev. Clearly, your financial bandwidth is there, but operationally, are you in a good place right now in terms of readiness to pick on additional sizable assets on brand or generics? George Frederick Wilkinson - President, Chief Executive Officer & Director: Yeah, we are. I think the teams, the integration teams are – have been pretty well shutdown. Probably, the only remaining piece that's where we're working on is the supply chain and that's the constant ongoing process. We have our hunting team out there working pretty aggressively right now and are engaged in a serious of diligent activities as we speak.

Your next question comes from the line of Andrew Finkelstein, Susquehanna.

Hi. Good morning, and thanks for taking the question. I was hoping you could talk a bit more about the pace and the progression for the branded segment over the next coming quarters, given the profitability of this quarter and whether that's likely to remain profitable as we go throughout the rest of the year? And then also if you could talk in terms of your business development appetite, what the interest would be in assets that might come with the expanded sales force and whether at this point, that would be a benefit to RYTARY? Thanks.

Sure. Thanks for the question. Certainly, from the standpoint of a brand business going forward, we do expect to maintain that profitability dimension. We expect that RYTARY prescriptions will continue to grow. We're very pleased with the market response relative to Zomig Nasal Spray. As we continue to grow Zomig Nasal Spray month-on-month, for the year so far, we're about 16% up on prescriptions versus the same period last year. And the contribution of the branded products from the Amedra product line, we certainly welcome those to the brand family, if you will, and look forward to being able to implement our product lifecycle strategy for that program product set as we progress. George Frederick Wilkinson - President, Chief Executive Officer & Director: So on the business development front, obviously, we've kind of talked about this quite a bit, is that what we've seemed to find out there in the marketplace is opportunity for generic companies. Although, I think with the series of M&A transactions that occurred and that have been announced, the opportunity to pick up divestiture product kind of changes that profile and we're obviously heavily in the hunt on those. On the brand side, we can't seem to find that perfect brand company to match up with, so we've got ourselves in a series of conversations on late-stage branded products, primarily in the CNS area, and that would be something that should enhance the profile of our brand business. What I'm most pleased about actually on the brand side is not only the growth of RYTARY, but the ability to make sure that they've covered well that second product in the bag. So, during launch time, it's always a good commercial when you grow your second position product month-over-month, quarter-over-quarter. So we're very, very pleased with the performance of the group.

Your next question comes from the line of Louise Chen with Guggenheim Security (sic) [Guggenheim Securities]. George Frederick Wilkinson - President, Chief Executive Officer & Director: Good morning. Mark J. Donohue - VP-Investor Relations & Corporate Communications: Good morning. Louise? Why don't we move to the next question?

Your next question comes from the line of Marc Goodman with UBS. George Frederick Wilkinson - President, Chief Executive Officer & Director: Good morning, Marc.

(30:20) on behalf of Marc. George Frederick Wilkinson - President, Chief Executive Officer & Director: Okay.

I have a couple of quick questions. On RYTARY, I don't know if you disclosed the sales number for the quarter, if you could do that. And also, could you comment on the weekly NRx growth rate? It seems to go up and down if you look at the weekly IMS data. If you could comment on the IMS data, if that's really giving us the best view on the progress of the product. And then I have another question. George Frederick Wilkinson - President, Chief Executive Officer & Director: Yeah. So we are not going to be reporting the individual product revenues. I think we are reporting our segment revenues, which is the brand division which contains RYTARY, Zomig, Albenza and a few other legacy products. That's the approach we've taken. On RYTARY, as far as prescriptions, the lumpiness that you see many times is related to holidays. I mean, as you'll see some weeks that are down 14%, but if you look at prescription for almost all products, they are down that because there was a four-day week because of a holiday situation and generally it rebounds or recovers the following week. Weeklies I've never believed are the best indicator. Monthlies are better. But I think the weeklies have gotten – there's been an improved process so that when you start to total weeklies, you do get a monthly draw out of it. But I think what we've shown is month-over-month, quarter-over-quarter solid growth in the product, just about what you'd expect for a launched product in this category.

Yeah, I would agree with Fred. There's an inherent choppiness usually in the weeklies that gets smoothed out relative to the monthly.

Got it. Thank you. My second question is on the next-generation versions of RYTARY and Albenza, if you could comment on the type of product profile you're exploring for both? George Frederick Wilkinson - President, Chief Executive Officer & Director: Yeah. So we've communicated very openly that we are not going to be communicating what the profile is on the next-gen Albenza primarily because we would like this to come to the marketplace and people recognize what it is at that particular point. So these are general product improvements that I think you've seen from other companies. This was work that was created by the Tower or Core team. You saw one approval during the quarter, which was a 200-milligram chewable tablet. We've elected not to launch that product because we're not sure that that provides substantial value to the customer. We are waiting for the next generation to come and we'll then be putting some promotional effort behind it. 203, which is a follow-on to RYTARY, it's really not a next-generation, is designed to continue to improve the profile that RYTARY provides, which is reducing fluctuations, enhancing the on-time, and reducing the number of doses that need to be administered.

Yeah. What we're looking for relative to 203 is a clinical improvement over RYTARY, so that's the objective for that.

All right. And my last question is just on the Hayward, the progress there. Did I hear you say that you submitted the response to the FDA and they came back saying that the inspection has been officially closed in response to that, or could you just clarify the order of events there? George Frederick Wilkinson - President, Chief Executive Officer & Director: Yeah. So sequence was receiving 483s. We then received documentation that while we were responding – we actually responded in the 30-days, so they had our response. There were some continued commitments that are generally made in those responses. And during that timeframe, while we were completing our commitments, we did receive written correspondence that this inspection had been closed.

Got it. Thank you. George Frederick Wilkinson - President, Chief Executive Officer & Director: Okay.

Your next question comes from the line of David Amsellem of Piper Jaffray. David A. Amsellem - Piper Jaffray & Co (Broker): Thanks. I joined late, so I may have missed some of this. But maybe talk about RYTARY, the managed care landscape, covered lives in terms of unrestricted access. I also wanted to get a sense of what kind of traction you're getting on Part D and just remind us what your exposure to Part D is in terms of percentage of the addressable market you're targeting on RYTARY. Thanks.

Sure. Thanks, David. So relative to your question, Medicare Part D comprises about 52% of the Parkinson's population. It's about 46% on the commercial side. In terms of covered lives, we have about 80% on the commercial side. And from Medicare Part D coverage, we have coverage already at Express Scripts, Coventry, Kaiser and Aetna. And that's in the non-preferred brand, no-restrictions category, so there's no step-edits, so it's probably comparable to about a Tier 3 and a Tier 4 plan. What we see is that from an overall perspective, about 82% of the prescriptions for RYTARY that have been written in the commercial sector have been filled. And I think that number is around about 75% in the Medicare Part D side. That percentage of prescriptions for RYTARY have been filled as well. So we're extremely pleased with the coverage that we're getting coming out of the Medicare Part D as well as the commercial realm at this relatively early stage in the launch of RYTARY. David A. Amsellem - Piper Jaffray & Co (Broker): Okay. That's helpful. And then just another one on RYTARY. I realize this may be a little bit early to address this, but you're probably going to start getting a lot of questions about your intellectual property and potential Paragraph IV challenges on RYTARY. So I guess the question here is, obviously, you're going to say that you could defend your – your IP is defensible. But the real question here is can you give us some color on whether or not you're looking at line extensions, and maybe when we may get some more color on your thinking about life cycle management? Thanks. George Frederick Wilkinson - President, Chief Executive Officer & Director: So you're right, we will be vigorously pursuing. We're not surprised – defending the patent. We're not surprised by a P IV filing. I mean, we had anticipated that this would come, not surprised by who it came from, so I think there's no real surprises here. And we've been working since well before launch on how the defense over the IP would occur. As far as follow-on, we don't have a true line extension for RYTARY. What we have is a next-generation, which is IPX203 that we mentioned. It is a Parkinson's product and it's designed to build on the benefits of RYTARY and enhance the overall outcome that the patient receives, meaning fewer doses, more on-time, and less fluctuations. And that's going into Phase II as we speak. David A. Amsellem - Piper Jaffray & Co (Broker): Thank you.

Your next question comes from the line Chris Schott with JPMorgan.

Hi. Thanks. This is Dana Flanders on for Chris. Just on the Generics business, can you talk about the price outlook for the remainder of this year and heading into next year? Are things getting better or worse, kind of staying the same? I guess, we've just had a couple of companies mention some greater price erosion. So any just comments on your base business would be appreciated. Thanks. George Frederick Wilkinson - President, Chief Executive Officer & Director: Thank you. We've not seen anything – any dramatic shift. I mean, obviously, most of this is product related. A new competitor on digoxin caused some incremental price reductions and so, therefore, some margin decline. We're seeing a little more aggressiveness on a couple of our competitors on some of our other products that we have to respond to. But there's nothing that is out of line from what we've seen in the last six quarters sequentially. So price declines are anticipated in the industry. And as more competition comes in and as competitors sharpen their pencil, obviously there's a need to respond to pricing. But nothing that's out of the ordinary.

Your next question comes from the line of Elliot Wilbur with Raymond James. Elliot Wilbur - Raymond James & Associates, Inc.: Thanks. Good morning. First question is with respect to the Specialty segment sales reported in the quarter, just trying to get a sense as to whether or not you think those reflect kind of normalized end market demand, whether or not there were sort of any under or over-accumulation of inventory that you found in connection with the Tower acquisition? George Frederick Wilkinson - President, Chief Executive Officer & Director: Yeah. So let me just kind of jump in on that. The Tower acquisition, there was no impact on that. Clearly, we had managed the inventory as it went out. And actually if you saw, they were a little bit light in first quarter and kind of made up the demand side in 2Q. For RYTARY, the only thing that's unusual for 2Q is that it did have revenue recognition from products sold in the first quarter. As you remember, we launched this and stocked it with not a broad stocking plan, but more of a geographically-based stocking plan, so we put products near where the movement disorder centers were. All of that's been pulled through, which is why we're now on revenue recognition based on demand and there's no unusual amount of product that's in the marketplace today. We've been watching that very closely.

Yeah. So to underscore Fred's point, Elliot, it's pretty much driven by demand. Elliot Wilbur - Raymond James & Associates, Inc.: Okay. Thanks. And then, just a follow-up question on digoxin. You've called this out now, I think two quarters in a row in terms of base product that has undergone maybe more than normalized competitive erosion. I guess, sort of two-part question. At one point there was some chatter about API issues around that product, suggesting there may be some shortages at some point. Obviously, it doesn't look like that's happening. I'm just wondering if that's sort of still kind of an active dynamics there that might actually result in some improvement? And then, I guess, sort of exiting 2Q, I mean, nothing happened on the API front. You think that that product has normalized or at least stabilized relative to sort of rates that existed kind of on average to the quarter? George Frederick Wilkinson - President, Chief Executive Officer & Director: Yeah. Well, we called this product out because for probably four quarters, five quarters, it's been called out because of the opportunity that was there. Obviously, both the API supply and some of the other issues around the product resulted in a market disruption of which there were two of us left out there, substantial price increase and then as competitors resolved both their API position and reignited interest in the product, they came back in. This is now probably the poster child of products that had a lot of competitors, then few and then a lot. I think it's probably pretty well stabilized, although the new competitor will need some share. And so, we should anticipate that there will be a slight diminution of all of our share and price as everybody makes room for a new competitor. Probably, the last quarter we called it out, too, because I think it's pretty well stabilized into what's still an interesting product, but not as large a contributor to the company. Elliot Wilbur - Raymond James & Associates, Inc.: Okay. And then just one last question on Adderall XR. I think at the – well, I guess with respect to the full year 2015, you had previously said you had enough inventory on hand, essentially managed through the year and be able to generate revenue that was sort of in line with your percentage prescription share at the time you sort of made this commentary. And it sounded like maybe from your prepared commentary today, there's been a slight change there and maybe the management process will sort of stretch out over a longer period of time. I wasn't sure if I interpreted that correctly, if there's any change relative to your prior inventory process management on that product. And then, Fred, you talked specifically about the CorePharma and not something I think really heard you talk about previously obviously in the public domain, and it's relatively recent filing. But I'm wondering if there's anything there in terms of update from FDA, in terms of the product or potentially didn't necessarily open the door for potential settlement discussions that sort of led to the obvious calling out the fact that you have two shots on gold with respect to that product. Thanks. George Frederick Wilkinson - President, Chief Executive Officer & Director: Yeah. No. There's not much change in the way we're managing the product. We do have sufficient supply to take us through 2015. No change in that process. And we've called out the Adderall or the CorePharma to at least expose initially the idea that we've got two ANDAs that we could potentially be working off of. So, depending upon what date the approval occurs on either one, we may be flipping back and forth between introducing from Core or introducing from the Impax ANDA, and I think it provides opportunity that were not reliant on anything that could be slow coming out of Hayward or taking advantage of something that's not – we hadn't put much revenue on or benefit on coming out of the Core transaction. So it's another shot, another opportunity to make sure that the share that we've developed we're going to hold on to throughout the life cycle of the product.

Your next question comes from the line of Gary Nachman with Goldman Sachs. Gary, your line is open. George Frederick Wilkinson - President, Chief Executive Officer & Director: Good morning, Gary.

Hi. This is Divya Harikesh on behalf of Gary Nachman. George Frederick Wilkinson - President, Chief Executive Officer & Director: Hello.

Hello. Can you hear me? Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: Yes. Go ahead. George Frederick Wilkinson - President, Chief Executive Officer & Director: Difficult, but yes.

I have two questions. One is on the Hayward facility. You've highlighted your pipeline opportunities from current and under development. I'm just curious to know how much of that is kind of out of Hayward and how do you think about that pipeline as you look out in to 2016? Then you spoke about how the opportunity has changed based on consolidation that's happening in the sector. I'm just curious to know what kind of challenges you faced as you try and close any of these transactions in this atmosphere as well as where you are when it comes to leverage and how much are you willing to use your balance sheet in order to do a transaction? George Frederick Wilkinson - President, Chief Executive Officer & Director: Yeah. Okay. So if I understood the question, it was what are opportunities in our ANDA pipeline coming out of Hayward versus outside. Obviously as we put on slide 9 I believe it is, it lists both the internal and the external opportunities that are pending down at FDA in slide – and then the products that are under development right now. So from a pipeline position, you can see the mix there. From a launch perspective, you can see that on slide 7 we have seven more launches that we could potentially put into the marketplace that we've communicated, of which there are eight that are internal, but only three that are coming out of Hayward. And two of those actually are – or one of those is actually an approved product. I think the next question was on divestitures if I heard you correctly. And, obviously, there's – depending upon how people are treating the divestiture process, there's a multitude of transactions that have occurred that will inevitably result in some form of a divestiture. We have been a recipient of a couple of products through that process in the past and we are actively at the table trying to become the ideal partner for the different parties that are conducting those transactions.

The next question...

And then on your leverage? George Frederick Wilkinson - President, Chief Executive Officer & Director: Excuse me?

On your leverage and how much you'd be willing to go up to? Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: So, on leverage, I mean we said this in the past. We're willing to go up to 4.5 times EBITDA as long as the target acquisition allows us a clear pathway to de-lever quickly, and that's our position. Mark J. Donohue - VP-Investor Relations & Corporate Communications: Thank you.

Thank you. Mark J. Donohue - VP-Investor Relations & Corporate Communications: Next question, please.

Your next question comes from the line of Jason Gerberry with Leerink Partners.

Hi. Good morning. Thanks for taking my question. So I guess, on the M&A side, it sounds like CNS specialty brands is the focus. Just kind of curious, with the Teva-Allergan acquisition. If you see divestitures as an opportunity to pick up any interesting products on the generic side? And then on IPX203, you indicated Phase II as the next step. Can you just confirm because I guess this is a full clinical program, and what would you look at – see as sort of a timeframe to market for that program? Thanks. Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: Yeah. So on the divestiture front, I mean obviously, there are at least five transactions that divestitures could be a part of, and you've mentioned one of them, the Teva, Actavis. I'm sure we won't be the only people lining up to have a discussion with those parties. So I think the idea is – and the critical piece is how efficient are you on the negotiations? How effective you are putting the appropriate price forward and how well do you work on making sure that the tech transfers and whatever supply arrangements need to be made in an appropriate timeframe to make the party want to bring those products to you. But there are a myriad of products that could land in that list of divested products, and we're waiting to – and are currently participating in many of the processes that are ongoing. Regarding 203, I'll turn it over to Michael.

So, relative to 203, obviously, it's our intent to move through the clinical trial process as quickly as possible. As a frame of reference, we took RYTARY through the clinical process and filed the NDA in three-and-a-half years, so that's our benchmark and that's kind of the timeframe we would anticipate. Obviously, we'd be looking to clip out any timing that we'd be able to save in that regard.

Okay. Great. And if I could just squeeze in a follow-up, just on the Adderall XR and having sort of two shots on goal with the Core and the Impax ANDAs. My recollection is that there were generic settlements with Shire in place. I think they have IP out to 2018-2019. So does the CorePharma ANDA have a license through Shire to access the market or would that product be gated by expiry of Orange Book patents? Thanks. Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: So, they do not. We have not had a settlement effective in the – from the Core ANDA. But that does not necessarily mean that it'll be gated by the patents that are sitting there.

Great. Thank you.

Your next question comes from the line of Sumant Kulkarni with Bank of America.

Good morning. Thanks for taking my questions. The first one is a clarification. I am sorry if I missed it. But could you talk about the most recent annualized sales rate of Daraprim? Do we know how much Tower sales can be reduced by? And the second one is on a conceptual one in business development. Based on your prepared remarks, I guess it's fair to say that Impax has been involved in the mix in most of the recent small to mid-transactions out there. Specifically, on the generics side, on the transactions that others have been involved and closed on, what has held Impax back from making those purchases? Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: Okay. So, let me do the second one first. We've been engaged in some of the transaction discussions. We've done some evaluation of some of the companies and have watched some of the – and have watched those products go in through at least announcement of a transaction. There was one process that was – I think everybody's well aware of that was shortened and was cut off and many of us did not get a chance to continue in the process, so we were – there were several of us left on the sidelines. There were others that we watched the prices kind of move away from us. We have not seen anything that we wanted to close transaction on that we've not been able to proceed on appropriately, short of the one that was abruptly stopped. And then, as far as Daraprim, Bryan? Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: Daraprim, the last 12 months, it was sales of under – a little under $4 million and it's not a growth asset for us. It was a – it's certainly not strategic on the brand side.

Thank you.

Your next question comes from the line of Louise Chen with Guggenheim Security (sic) [Guggenheim Securities].

Hi. It's Brandon Folkes on for Louise. Could you just give us some color on what's the uptake for RYTARY has been in mild to moderately severe patients? And then just a follow on, maybe just any update on a U.S. partner for RYTARY and the potential economics there? Thank you. Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: Okay. Thanks for the question. In terms of the designation of the patient for whom a prescription is being filled, we don't actually get that data. Anecdotally, what I can tell you since we have approval for RYTARY for early through advanced patients. Anecdotally, what I can tell you is that the movement disorder specialists seem to be pushing RYTARY towards the more advanced end of the spectrum at this point. Our push is to have RYTARY utilized in that more mild to moderately advanced patient who is starting to experience wearing off of their control of the motor symptoms prior to the next dose because we think that's actually the best spot for RYTARY. From a standpoint of a partner for Numient outside of the United States, we are continuing in the process. We hope to be able to have a partner this year, and we are hopeful that the approval of Numient by the EMA will in fact help to trigger the closing of the transaction.

Thanks very much. Bryan M. Reasons - Chief Financial Officer & Senior VP-Finance: You're welcome. Mark J. Donohue - VP-Investor Relations & Corporate Communications: Thank you. Well, that concludes our call for today and we appreciate your time. And should you have any questions, follow-ups, please contact Investor Relations. Thank you very much.

Thank you. That does conclude today's conference call. You may now disconnect.