Mallinckrodt plc (MNK) on Q2 2022 Results - Earnings Call Transcript
Operator: Good morning, and welcome to the Mallinckrodt Q2 2022 Earnings Announcement and Business Update Conference Call. All participants will be in listen-only mode. After todayâs presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Daniel Speciale, Global Corporate Controller and Chief Investor Relations Officer. Please go ahead.
Daniel Speciale: Thanks, Anthony. Good morning, everyone, and thank you for joining us today. With me this morning are Siggi Olafsson, Mallinckrodt's new President and Chief Executive Officer; and Bryan Reasons, EVP and Chief Financial Officer. Before I turn the call over to Siggi, let me remind you that you'll hear us make some forward-looking statements, and it's possible that actual results could be materially different from our stated expectations. Please note, we assume no obligation to update these looking statements, even if actual results or future expectations change materially. We encourage you to refer to the cautionary statements contained in our SEC filings for a more in-depth explanation of the inherent limitations of such forward-looking statements. We will also provide selected non-GAAP adjusted measures related to our financial performance. A reconciliation of these non-GAAP measures is included in our earnings release, which can be found on our website, mallinckrodt.com. We use our website as a channel to distribute important and time-critical company information, and you should look at the Investor Relations page of our website for this information. As noted in the earnings release, our second quarter ended July 1, 2022, included a predecessor period from April 2 to June 16, 2022, and a successor period from June 17 to July 1, 2022, as a result of the emergence from Chapter 11 bankruptcy on June 16. The second quarter operating results we will be discussing today are for those periods combined with comparisons against the predecessor, second quarter ended June 25, 2021. And unless otherwise specified, the net sales percentage changes we mentioned here will be on a constant currency basis. With that, I'll turn the call over to Siggi. Siggi?
Sigurdur Olafsson: Thanks, Dan, and good morning, everyone. I'm pleased to be speaking to you for the first time as Mallinckrodt's President and CEO. I'd like to start by telling you a little bit about myself and why I'm excited to be here. I'll then share my perspective on our business -- how our business is today, on the challenges and opportunities we see ahead of us. I've been in the pharmaceutical industry for nearly 30 years, working in both branded and generic drugs. I most recently served as the CEO of Hikma Pharmaceuticals. Earlier in my career, I had the leadership positions at Teva Pharmaceuticals, Watson Pharmaceuticals, which became Actavis and then Allergan and Pfizer. It's been a pleasure to join Mallinckrodt alongside the company's new Board. Each director has already brought highly valuable insight and input as we plan for Mallinckrodt's future. In fact, I've been reunited with an old colleague, our Chairman, Paul Bisaro. Paul and I previously worked together at Watson Pharmaceuticals, where he served as CEO. Under his visionary leadership, we transformed the company into a global-branded pharmaceutical leader. This experience will be deeply beneficial to our work to put Mallinckrodt on the path to long-term value creation. While the company has no doubt faced many challenges and changes in the past few years with the recently completed financial reorganization and global pandemic, I believe Mallinckrodt is at an important inflection point. Today, we have the opportunity to bring the focus back on to delivering innovative solutions to patients. A lot of work has been done already to establish a strong foundation in the business, which is underpinned by significant liquidity, meaningful cash flows from operation, a solid U.S. commercial platform and competitive positioning in critical care and immunology. Although I believe there is a lot of potential at Mallinckrodt, significant challenges exist that we will have to work hard to address. These challenges include stabilizing the performance of Acthar Gel and INOmax, driving growth for Therakos, executing the launch of StrataGraft, gaining approval for terlipressin in the U.S. and protecting the bottom line in generics, all while continuing to balance careful cash management and reinvest in the business. Bryan will go into the details of the quarter shortly, but our financial results for the quarter and the guidance we are sharing today reflect the opportunities we are pursuing and the headwinds our business is currently facing. Importantly, we are working with urgency to navigate these headwinds by focusing our organization on three near-term priorities: strengthening the balance sheet, stabilizing our portfolio and making the right investment in our pipeline. Further, there's been a real opportunity and need to reenergize our teams and to increase engagement and communication with the wider organization. I am clear that we need to redouble our relationship with many of our stakeholders. I recognize that the reorganization, combined with some of the litigation has led to -- has had an impact on how Mallinckrodt is perceived. This is something I am personally committed to fixing. Injecting new optimism into our company culture and strengthening Mallinckrodt's relationship with healthcare providers, customers, partners, patients, payers and of course, our shareholders will be a vital complement to our near-term business priorities. This is Mallinckrodt's first investor call in some time. As a refresher, Iâm going to say, let's dig into where we are today. I'll begin by providing some information on our business segments and then we'll talk in more details about our priorities moving forward. Our company has approximately 2,700 talented employees, serving patients through two segments, Specialty Brands and Specialty Generics. Starting with Specialty Brands. This is a global business focused on innovative branded drug development and commercialization for underserved patients with severe and critical conditions. This segment benefits from core products that bring established track records, strong brand recognition and visibility to high margin revenue streams, a robust foundation to drive value. In addition to our in-market products, we are in the midst of an exciting launch of StrataGraft and look forward to the potential U.S. launch of terlipressin, along with future line enhancements to help to stabilize our base business. Let me highlight our branded in-market products and opportunities. First, INOmax nitric oxide gas is a vasodilator and the leader in the inhaled nitric oxide market. INOmax brand recognition and superior customer service and technology, coupled with international expansion, have allowed it to remain the leader in the inhaled nitric oxide market. Moreover, long-term contracts for the product provides significant revenue visibility as we continue to navigate competitive pressure and work towards stabilization. We continue to drive innovation in the franchise and look forward to launching INOmax EVOLVE, which I will talk more about in a moment. Next, Therakos immunology platform enhances a patient's ability to fight disease. We are the world's only fully integrated and validated extracorporeal photopheresis or ECP system. Therakos is a drug device combination with niche indication and very well-established safety profile. We also plan to launch Therakos in Japan in 2024 and are pursuing additional opportunities to expand labeling, including adding graft versus host disease to the U.S. label and expand into additional geographies. While product utilization has been impacted by COVID-19 and competitive pressure from oral therapies, it remains the market leader in ECP therapy and we expect this product will continue to grow over time. On the immunology side of our offerings, Acthar Gel, the repository corticotropin injection is our biggest product currently in the market and the leader backed by decades of clinical evidence supporting its efficacy and safety. Acthar Gel is a complex mixture of ACTH and other peptides that has 19 indications across multiple therapeutic specialties. We currently promote 11 of these indications with a focus on later line of treatment for patients living with acute and episodic autoimmune disorders. We also continue to drive innovation in the Acthar franchise and are committed to delivering our self-delivery injector device, which we'll talk about in a minute. Amitiza, lubiprostone is a CIC-2 activator for the treatment of constipation and the globally partnered product, for which Mallinckrodt retains manufacturing and select S&T responsibilities. We see continued strong utilization for this partnered product in the Japanese market, where exclusivity extends to 2026. StrataGraft, which launched in January is the first FDA-approved alternative to autograft for adults with deep partial-thickness burns. It is designed to handle like an autograft and support the bodyâs own ability to heal. It has a large total addressable market with approximately 40,000 patients being hospitalized annually in the U.S. for the treatment of severe burns. We have been deliberate with the launch to ensure a positive outcome and ensure that the healthcare providers understand the role of StrataGraft can play in helping burn victims. While we recognize this will be a slow launch due to the thorough educational approach we are taking with surgeons, we are encouraged by our progress to date. We have made presentations to surgeons in over 50% of burn centers in the U.S., in line with our internal goals, and we are pleased with the feedback we have received from doctors and key opinion leaders. Moreover, we have a remaining 11-year exclusivity period, providing ample runway that will enable us to invest in the life cycle of this therapy and expand into indications, including full thickness burns and pediatrics, where we think StrataGraft can be a game changer. We are very excited about this new innovation. Turning now to our branded pipeline. Let me start with terlipressin. This is a synthetic selective vasopressin analogue indicated to improve kidney function in adults with Hepatorenal Syndrome or HRS. In June, we resubmitted our NDA to the FDA and the agency established a PDUFA date of December 9. Since we have an Orphan Drug exclusivity, if approved, we will have a seven years exclusivity period for this therapy. Terlipressin is recommended as a preferred treatment for HRS according to global treatment guidelines, including the American Associations for the Study of Liver Disease and the European Association for Study of the Liver in countries where it's approved. Terlipressin has a strong history of treating patients in global markets. And we are confident that it will be a growth driver, if approved, with high doctors awareness, good clinical demand and use as a first-line treatment. If approved, terlipressin will be the first and only FDA-approved treatment for HRS in the U.S. Next is INOmax EVOLVE, which I mentioned earlier. This is our next-generation device with enhanced automation, streamlined design and improved transportability. We are targeting a 2023 launch. In addition, we have our new Acthar alternative delivery device, alternate delivery device, an easier and more patient-friendly version of Acthar Gel for single unit dosage indications. We expect innovation will help stabilize the performance of our Acthar Gel franchise by expanding reach to a broader appropriate patient population. Due to the substantial patient benefit in terms of self-administration, we expect over time a full conversion to the device in most of our therapeutic indications. In terms of where we are in the process, device development has been completed. While we are ready to proceed with submission, an ongoing regulatory matter involving one of our partners remains, which must be resolved before we can move forward. Turning to our specially -- Specialty Generics segment. This is a vertically integrated business producing high-quality generic medicines and active pharmaceutical ingredients or APIs, in complex markets that provide stable and highly diversified global revenue streams. Vertical integration affords a number of important competitive advantage, including quality, quantity and consistency of supply that positions this business as a skilled-strategic partner to a large purchasing organization. It also provides visibility across finished dosage and API opportunities. In addition, we have proven capabilities in complex formulation, state-of-the-art laboratories and a highly-engaged R&D organization. Our diversified Specialty Generics portfolio has over 50 product families across APIs and generics, more than 250 SKUs and the diversified portfolio of complex ANDAs to drive long-term value creation. We are also proud of our strong execution in Specialty Generics. I'm pleased to report that we missed zero shipments during the pandemic as the leading API supplier for COVID-related analgesics. Now at the top of the call, I mentioned our three near-term strategic priorities, which I will now discuss in further details. Starting with the balance sheet. While the company made critical strides reducing that through reorganization process, we will prioritize further reducing debt and continuing to drive strong cash flows. Building on the actions the company has taken over the last year plus, we will start by reducing costs and spending wisely. Over the last 12 months, there were a number of changes made across the segment to achieve a lower cost base, protect the EBITDA margin and support the long-term growth. This includes realigning segment leadership and refocusing R&D priorities, shifting to a shared service model to reduce SG&A costs and containing spend in the R&D and operations. We will continue efforts like this across the organization. One of my key priorities is taking a close look at everything we do and how we do it. And I'm confident that we can continue to streamline and enhance the way we operate to better suit the size of market today. In doing so, we will become more efficient, spend less and maximize the impact of each dollar spent. At the same time, we will also be evaluating opportunities to divest noncore assets to further delever. On the other part of strengthening our balance sheet, of course, is continuing to generate strong cash flow, which takes me to our second and third priorities. Our second priority is stabilizing and maximizing opportunities for our in-market products. On this front, we are starting with a strong portfolio, which is critical. We will align the organization's focus around executing on the existing opportunities to bring these products to new markets. We will also continue driving innovation to bring more patient-friendly solutions to market. And our third priority is our pipeline. While we have several exciting new products in development, our focus here will be on investing in the expansion of our pipeline with a goal of establishing a regular cadence of bringing new value-enhancing therapies to market. Before I turn it over to Bryan, I want to note that since joining Mallinckrodt approximately seven weeks ago, I've spent a great deal of time engaging with our employees and hearing directly from them about what they think Mallinckrodt is doing well, and what we can do better. I also look forward to doing the same with our customers, healthcare providers, patients and partners in the near future. The valuable insight we learned from this conversation will feed into the process we are undertaking to redefine who we are on the chart Mallinckrodt's path forward. And while we have our work cut out for us, I want to reiterate that these conversations have already reinforced my belief that we have a foundation to create a successful future for the company. The teams here possesses extraordinary grit, focus, resilience and above all, a desire to serve patients that will be crucial for our success. I wouldn't be here speaking with you today but didn't have every confidence in Mallinckrodt's ability to create value for shareholders and make a positive impact on patients' lives every day. With that, I'll turn it over to Bryan to discuss our second quarter results and our outlook for the remainder of the year.
Bryan Reasons : Thank you, Siggi. We're thrilled to have you on board with us. I'd also like to thank everyone for joining us today. We're excited to be back in the public markets and look forward to moving to the stock to a national exchange as soon as possible. Before I dive into this quarter's financial results, I want to touch briefly on what Mallinckrodt accomplished through the financial reorganization completed in June. First, Mallinckrodt meaningfully improved financial position by eliminating more than $1.3 billion in debt principal and by raising new $200 million accounts receivable credit facility, which contributes to our strong liquidity position; second, the company resolved significant litigation uncertainties. This included resolving litigation related to opioids and Acthar Gel, including both governmental and private matters; and third, during the reorganization process, the company executed a number of organizational enhancements and cost-cutting reduction initiatives, meaning that Mallinckrodt today is leaner and more efficient than in recent history. Turning to our results. Mallinckrodt total net sales in the second quarter were $469 million as compared to $546 million, reflecting a decrease of 13.8%. Our Specialty Brands segment reported net sales of $306 million as compared to $382 million. This reflects a decrease of 19.2% primarily due to the impact of competition on certain products, including Acthar Gel, INOmax and Therakos, the continued impact of the COVID-19 pandemic to product utilization and continued payer scrutiny on overall specialty pharmaceutical spending. During the quarter, the company incurred a onetime $9 million adjustment to its historical Medicaid rebates related to Acthar Gel program, which impacted this performance in the quarter. For the year, the company anticipates net sales of approximately $500 million for Acthar Gel. Our Specialty Generics segment reported net sales of $163 million as compared to $155 million. This reflects a decrease of 1.2%, primarily due to a reduction of dosage opioid and controlled substances API and net sales, offset partially by the net sales growth in APAC. The company's net loss in the second quarter was $257 million as compared to a net loss of $106 million, driven primarily by the impacts of emergence and fresh start accounting adoption. Mallinckrodt's adjusted EBITDA was $156 million in the quarter as compared to $200 million, a decrease of 21.7%. This was primarily due to lower net sales, the negative impact from foreign currency, expenses associated with the launch of StrataGraft, the and launch preparedness for terlipressin, primarily offset by other reductions in SG&A and R&D expenses as the company has undertaken specific actions over the past year to reduce its overall cost structure. With respect to operating metrics in the quarter, adjusted gross profit as a percentage of sales was 67.1%, adjusted SG&A as a percentage of net sales was 28.3% and adjusted R&D as a percentage of net sales was 7.1%. Like most companies, we've seen unfavorable impacts from foreign currency during 2022, resulting in approximately $10.6 million in incremental SG&A expense in the quarter. Throughout the tendencies of the bankruptcy, the company generated strong cash flow, allowing us to satisfy a number of plan-related settlement payments and debt repayments at emergence in mid-June. We expect the business will continue to generate cash flows moving forward. And as Siggi mentioned, the company will evaluate noncore asset sales as we look to continue improving the balance sheet. In fact, as you may have seen, we recently announced and closed on the $100 million sale of the priority review voucher obtained in the approval of StrataGraft, of which we received $65 million. The company has more than $550 million in liquidity. Our cash and cash equivalents as of July 1, 2022, were $355 million. This is net of all cash outflows at emergence and includes $65 million retained from the proceeds of the sale of the priority revenue voucher. We continue to maintain a new undrawn $200 million accounts receivable financing facility established as part of our exit financing. Total principal debt outstanding at the end of the second quarter was $3.604 billion with net debt of $3.249 billion, which differs from the balance sheet due to fresh start accounting and it excludes annual settlement payments. This reflects a $650 million financing we completed in June and the pay down in full of a $900 million revolver. Looking ahead for the full year 2022, we expect to achieve total net sales of between $1.875 billion and $1.925 billion. Total net sales in Specialty Brands of between $1.25 billion and $1.28 billion. Total net sales in Specialty Generics are between $625 million and $645 million. And adjusted EBITDA of between $630 million and $660 million. Now I'll hand the call back to Siggi for some closing remarks.
Sigurdur Olafsson : Thank you, Bryan. I want to restate that Mallinckrodt today has a strong foundation underpinned by significant liquidity, meaningful cash flows from operation, a solid U.S. commercial platform and competitive positioning in critical care and immunology. And while we still have challenges ahead, I believe we are well equipped to meet them. We have a clear path forward to stabilize the business by executing our near-term priorities and the top priority for me will be to reenergize our teams and helping to reinduce our stakeholders to Mallinckrodt. These efforts truly go hand in hand. Finally, the more I've learned about the company, the further my conviction has become that Mallinckrodt has a strong future rooted in an unwavering focus on improving outcome for patients. I'm pleased to be working alongside teams that share a passion for putting patients first and making a difference in people's lives. We are excited what comes next at Mallinckrodt. And with that, I will now open it up for Q&A. Operator?
Operator: Our first question will come from Greg Fraser with Truist.
Gregory Fraser : Congrats on getting to this point. First question, just on the stock, when do you anticipate getting relisted on exchange, if you could walk through that process and the timing, that would be helpful.
Daniel Speciale : Yes, sure. So from a relisting on the exchange perspective, this is something obviously that we worked on in advance of emerging from bankruptcy. We didn't quite meet the requirements from a listing perspective due largely in respect to the concentrated nature of our shareholders at that point. It's something we're very much committed to, as you heard Bryan make specific reference to. He didn't -- wanting to do that as quickly as possible. We're in the steps of working through the application requirements and ensuring that we need to meet the requirements, and we'll look to make application in short order.
Gregory Fraser : Got it. A couple of questions on the guidance and the key specialty products. Can you talk about the assumptions for INOmax and Therakos that are factored into the specialty brand guidance? And on Acthar, can you talk about the steps that you've taken to protect that franchise and kind of mitigate share loss with the new competitor on the market?
Sigurdur Olafsson : Yes. So let me start on Acthar, then Bryan will talk about -- more about the INOmax and Therakos. So Acthar, I think clearly, the product has been under pressure what we have seen is mainly a pricing pressure. As you mentioned, there is a new competitor on the market. But what we have seen with a new competitor is that really the market has expanded. And we can see that from Symphony data that really the introduction of the new products coming to the market, a 505(b)(2) product has expanded the market itself, not so much affected our prescription rate. I think the big thing for us will be the new injection device, the self-injector that we hope to introduce soon. We have a challenge with one of our suppliers, one of our partners which is working very hard with the FDA to resolve an issue. But we hope as soon as we can to bring that product to the market. And I feel and looking at the opportunity and getting the feedback from doctors some patients, that will be the real opportunity of turning this around and giving a better boost and a tailwind into the Acthar franchise. Still a very good product. You have to keep in mind that this is a product that has 18 different clinical trials behind it. It's promoted in 11 different indications. We are very pleased with the product and how it's performing. But clearly, over the last few years, it has been under pressure, mainly due to the pricing pressure in the market. Bryan, maybe on INOmax and Therakos.
Bryan Reasons : Yes. Thanks, I'll make a couple of comments. So when we look at INOmax, as you know, Praxair has been in the market for a couple of years now. We're largely through kind of the customers, the renewal of contracts in a kind of a round of competitive markets. So we are starting to see that product stabilize. And we are seeing the market start to bifurcate between institutions that are view, could -- the delivery of nitric oxide as a commodity versus that value technology and kind of white glove service. We are seeing that, and we obviously compete in the latter. On Therakos, that's historically been -- has been a very consistent growth asset for us. During the pandemic, we did see stem cell transplant dip quite a bit, and there's a bit of a lag to when these patients go on to therapy. So we did see that dip. We do expect to see that kind of the stem cell return to kind of normal levels and Therakos to the return to growth. There are a couple oral competitors out there very, very early stage on that. But we -- we do see it as a market in which there's room for both types of therapies.
Daniel Speciale : Yes. Maybe one thing I'd add to, Greg, I appreciate the question. And you mentioned specifically about guidance. I think one of the comments that we made today was really just try to set an expectation for Acthar for the remainder of 2022 or 2023, maybe in totality and -- so we referenced specifically, an approximately $500 million mark for that product this year. So if you take that into consideration with respect to the net sales guidance we provided for Specialty Brands in total, that should help you kind of frame what the rest of the portfolio looks like.
Gregory Fraser : Got it. Very helpful. Just a quick follow-up on INOmax. How much of the customer base is locked in with long-term contracts? And how do those contracts roll off over the next two or three years?
Sigurdur Olafsson : Yes. So on INOmax, it basically it's a contracting. So some customers are on a yearly contracting, other customers are on a multiyear contract in the last two, three years. So that gives me at least coming new into this business at a much more visibility. I think we are still the market leader. We have our market, that healthy gross market share. But whenever a contract comes up, we need to negotiate and go back. But we have a good visibility at least 12 months at front, but some of the contracts are multiyear contracts.
Daniel Speciale : Any other questions, Greg?
Gregory Fraser : I'm good. I'll hop back in the queue.
Operator: Our next question will come from David Amsellem with Piper Sandler.
David Amsellem : And just had a couple. So first, I know you're talking about trying to stabilize Acthar, but there is the reality of competition. So Siggi, I wanted to get your thoughts on how you're thinking about ways to just further diversify the business away from Acthar. Do you look at generic assets, you're looking at brand assets? And can you articulate how you're thinking about that in terms of business development? And then as related to that, can you also talk about your M&A bandwidth in terms of deal size, that would also be helpful.
Sigurdur Olafsson : Yes. So thanks, David. So we -- as I mentioned in my prepared remarks, I think the first point of -- first thing we are focusing on is the balance sheet. How we can lower our debt. And we do that with two ways. In a way, we have this opportunity of reducing debt, reducing costs and increasing hopefully the EBITDA or keep stabilizing the EBITDA that we have, but doing that by reducing the debt in the company. And the team really has done a great job over the last 12 months in preparing the landscape there. But there is more to come. I think we need to look at the opportunities of rightsizing this business for the future of Mallinckrodt and the size of the revenue and product offerings that we will have. The second thing, obviously, is this opportunity of selling noncore assets for the business to reduce debt, but also to give us a little bit of an opportunity for the in-market product. In terms of the business itself, you highlighted it. The key thing for us now is to stabilize Acthar Gel and INOmax. We have been under pressure over the last three years. We went through that in detail what's the reasoning for that. And we feel that everything we have in hand now and the understanding -- we understand that we will still be under pressure for the next 12 months, but we really feel we have the opportunity of turning this around because there is a line extension in for both products that we have in the pipeline, and hopefully, we will bring soon to the market, which will help us to stabilize the business more than anything else. In terms of how we can grow the business, it has to be around the pipeline that we have. First of all, I'm very excited about StrataGraft. I know there is a slow uptake, but really, this is a game changer in the treatment of burns for burn victims around that. I mentioned 40,000 burn victims. And if anyone knows how autograft works, I think StrataGraft is a great alternative for the patients to be able to utilize. So I'm excited about that. We know it's a slow epic. It will be a slower epic and the reason for that is -- we need to work with the burn surgeons to change their behavior and how they utilize, how they treat burns in the surgery. But we have a big belief in this product. And therefore, we are, in a way, working on line extension, both on food thickness, but also on pediatrics, where I personally believe will be a game changer for this product going forward. I'm also excited about terlipressin, I think terlipressin is a key product. We have a PDUFA date on December 9. There is no product approved in the U.S. for the treatment of HRS. And HRS is a very critical condition. In the U.S. today, there's over 40 people -- 40,000 people that get liver failure every year. So this is a real issue where the kidneys stop functioning, the type 1 HRS, we expect the indication to be there is a real patient need. And this is a well-known product outside of the U.S., the safety profile that's well known and U.S. doctors know this product from abroad, from their colleagues that work outside of the U.S. In terms of other pipeline opportunities, I think we need to look at both the generics and brands. I think on brands is to expand a little bit more on the Phase II, Phase III product. We are actively looking for partnership on that. We still have cash flow in our cash projections. We are paying down debt, but we also are building up the pipeline and supporting the in-market products. So there won't be maybe the same as we saw maybe four, five years ago, but we still have a significant opportunity to invest in our pipeline, and we'll continue to do that. I -- as you know, I've been in generics a few years, I'm impressed with the generics business we have. It's relatively small in comparison to maybe what they've been used to in the last 10 years. But overall, I feel that the niche part of this business is the exciting part by introducing one or two or three products to the market, that could make a difference for this business, which wouldn't make a difference for the big giant company of Viatris or Teva or Sandoz in the market, that really makes a difference for us. So in terms of M&A, I don't expect us to do any big M&A in the next 10 to 24 months, we simply don't have that cash flow. Our focus will be on paying down debt. And then utilizing if we have some remaining cash availability to enable us to continue to grow the business going forward. Bryan, anything from you?
Bryan Reasons : No, I think that's a great answer. I'd just add to the -- any M&A or BD in the next 12 to 18 months, I think, there's an opportunity to do smaller type transactions with creative-type structures that wouldn't require a large upfront. And obviously, we focus on delevering. But where we could maybe bring an asset in, have some back-end royalties with an opportunity to drop that in and utilize our commercial -- our current commercial infrastructure. So a big upfront and long-term diluted-type asset. We're not going to be doing that in the near term. But there is wait to creatively structure transactions and have some near-term accretion, and we'll look to attack those on in the next year.
David Amsellem : Okay. That's helpful. And if I may follow up, guys. So Siggi, when you're at Hickman, I mean, obviously, that was a big there is a big hospital injectable franchise there. And you're certainly no stranger to that piece of the business. So I guess what I'm asking here is, you do have hospital infrastructure. And as you think about the evolution of Mallinckrodt, how do you think about further build out of a hospital injectable franchise, whether it's regular generics, some 505(b)(2)s, maybe some brands. But how do you think about that going forward, given your expertise and your experience in that piece of the business?
Sigurdur Olafsson : Yes. So I think the first thing is I'm impressed with the infrastructure that we have in our critical care business. We really know the doctors, we know the need. We have a amazing relationship. We just answered the question about INOmax, but the INOmax is such a relationship product due to the nature of the service we provide. StrataGraft is a relationship. We are working with the burn unit. Keep in mind, burn units in the U.S., there's only 100 of them in the whole of the U.S. We've already spoken to more than half. We really are building up because of the relationship we have. And I think that will help us with terlipressin coming into a market, which is an injectable product. And really -- there is a trust in our hospital and critical care business unit. I think there is an opportunity to expand that. I think we would be an ideal partner for somebody that has one or two products that needs a commercial partner to take it to the market. We really would be in the short term, we have an opportunity in our bags to take on more products. We have the bandwidth. We have the expertise. We have the market access team, we have the customer service. So coming into this, having seen really the need for a good service to the hospital, that's where the focus is. What type of product is impossible to say now. I doubt that we would do that for generics. But I think with any differentiation, specialty differentiation, no matter if it is 505(b)(2) or a special department protected drugs, I think we couldn't be a good partner for the reason you mentioned. I -- what I've seen, I'm impressed with. I think we have an early products. We have two products in the launch phase with StrataGraft and terlipressin, which hopefully will be in the launch phase later this year when approved. But really, the opportunities is we have this infrastructure. We have this expertise. We have this very positive feedback from the hospitals that would allow us to expand our product offering. And that's really part of the BD and M&A opportunities that we have to expand into that part of the business.
Daniel Speciale : Operator any more questions?
Operator: There are currently no further questions. This concludes our question-and-answer session. I'd like to turn the conference back over to Daniel Speciale for any closing remarks.
Daniel Speciale : Yes. Thanks, Anthony. We want to thank you all for your interest in the company. And we certainly look forward to engaging with you guys in the coming days and weeks ahead. If you have any questions, the best way to get a hold of Derek and I today will be the e-mail, and we'll certainly get back with you as soon as possible. And we look forward to obviously having Siggi and Bryan engage with investors here moving forward as well. All the best to you and your families and have a nice day. Thank you.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
