Eagle Pharmaceuticals Inc (EGRX) 2018 Q3 法說會逐字稿

Good day, and welcome to today's program. My name is Leo, and I will be your conference operator. At this time, I'd like to welcome everyone to Eagle Pharmaceuticals' Third Quarter 2018 Earnings Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded, November 1, 2018.

It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. Please go ahead.

Thank you, Leo. Welcome to Eagle Pharmaceuticals' Third Quarter 2018 Earnings Call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. With me on today's call are Eagle's Chief Executive Officer, Scott Tarriff; and Chief Financial Officer, Pete Meyers.

This morning, the company issued a press release detailing financial results for the 3 months ended September 30, 2018. This press release and a webcast of this call can be accessed through the Investors section of the Eagle website at eagleus.com.

Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act.

These forward-looking statements are based on information available to Eagle Pharmaceuticals' management as of today and involve risks and uncertainties, including those noted in this morning's press release and our recent filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Eagle Pharmaceuticals specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law.

A telephone replay will be available shortly after completion of this call. You'll find the dial-in information in today's press release. The archived webcast will be available for 1 year on our website, eagleus.com.

For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on November 1, 2018. Since then, Eagle may have made announcements related to the topics discussed and please reference the company's most recent press releases and SEC filings.

And with that, I'll turn the call over to Eagle CEO, Scott Tarriff.

Thank you, Lisa, and good morning, everyone. I'd like to begin the call with an overview of the strategic actions we've recently taken, reflecting our belief in the long-term earnings potential of the business and in support of our business strategy. And now I would like to articulate the rationale behind the authorized buyback and entering into the $50 million ASR.

Clearly, we're disappointed with the results of the fulvestrant study. Having said that, we do believe in the strength of our current portfolio of products, our pipeline and the ability to grow the company utilizing our cash and balance sheet, if needed. So let me give you some color on our franchise, why we are bullish on our future and why are we buying back our stock. Let me focus on the products in the quarter first.

Our bendamustine foundation remains strong and continues to grow. Big Bag, Eagle's 500 ml liquid form of bendamustine solution that does not require reconstitution, is performing as expected, filling a need in the market for a lower-cost alternative to BENDEKA. Sales were consistent with the second quarter at approximately $8 million during Q3. But bear in mind that we are beginning to see pull-through in addition to stocking, suggesting that our market share should be on pace to reach 12% over time. Remember, we recognize revenues upon sales to wholesalers, while market share reflects shipments from wholesalers to customers.

With the increased pull-through that we are seeing, we expect Big Bag market share to rise from 5%, which it was at the end of October, to a meaningfully higher number by the end of Q4 even if revenue during the quarter doesn't increase in tandem. Royalties on sales of BENDEKA by Teva continue to drive top line growth during the quarter, delivering $34 million in revenue. With BENDEKA and Big Bag both available in the market, we believe we are maximizing the long-term value of our bendamustine assets. BENDEKA is -- clearly continues to be the most important asset in our portfolio.

Furthermore, when combined with what we believe to be the appropriate application of the Orphan Drug Exclusivity regulations, which would first allow generic TREANDA entrants no sooner than December 2022, we believe we can extend and protect the life cycle of our bendamustine products well beyond 2022.

Now turning to RYANODEX. We continue to believe this asset has tremendous potential beyond its current indication. While our EHS study at the Hajj did not yield the number of subjects we had hoped for, we believe our work has been sufficient to demonstrate efficacy. We look forward to engaging with the agency to review the data we have collected in support of the indication. Although we had fewer patients than we had hoped, we are focused on the treatment effect. And once again, to remind everyone, there is a 6x greater likelihood that a patient will have full cognitive restoration when using RYANODEX versus standard of care all alone.

Although our p-value did not meet 0.05, it was at 0.08. And with the new data, it's likely to come down to around 0.07 if combined. As a reminder, EHS is a Priority Review orphan indication. There are no drugs in the market to treat the disease. We have now conducted 2 well-controlled, randomized studies. The 2 results are similar, further removing randomness from the equation.

We clearly recognize that we did not achieve the 0.05 target. However, it also supports our view that this is a very difficult disease state in which to run a well-controlled, randomized study. This is not unlike many orphan drugs approved by FDA. We plan to engage with FDA shortly and discuss a path forward. Based on the positive treatment effect of RYANODEX, we're hopeful that future conversations will yield positive results.

In early October, we entered into an agreement with the United States Army Medical Research Institute of Chemical Defense to conduct a study to evaluate the neuroprotective effects of RYANODEX. The study is being conducted under a cooperative research and development agreement. If approved, RYANODEX would represent a first-of-its-kind neuroprotective treatment to combat neurological damage due to nerve agent exposure, which often results in death.

In our pilot study, over 50 rodents were exposed to high dose of nerve agent, soman. Those rodents were treated with the known antidote for acute poisoning, atropine. Data showed that rodents treated with RYANODEX and AEDs had better performance in neurobehavior testing compared to animals treated with AEDs only and substantially less brain damage. Given this encouraging data, we are excited to continue our work with the U.S. Military to evaluate RYANODEX for nerve agent indication.

Once available for this indication to the -- with the U.S. government, we hope to be able to stock RYANODEX in that business. We're developing the next generation of ryanodine receptor modulators to allow IM administration, which is not possible with the current RYANODEX product or with any other dantrolene product. The IM administration would make the product even more relevant for the treatment of life-threatening indications requiring fast administration.

With regard to our other pipeline programs, we continue to advance those that we believe offer the best return to shareholders, including vasopressin 1 ml injection and PEMFEXY, which references Eli Lilly's Alimta, the litigation for which is scheduled to begin September 9, 2019.

As announced 2 days ago, the primary endpoint for the fulvestrant study was not met. That said, our clinical data showed an overall improved safety profile over FASLODEX. We have a large database of 600 patients. We will continue to evaluate the data, and if there's anything further to discuss, we will bring it to your attention at the appropriate time.

Before I turn the call over to Pete to review our financial results, I'd like to remind everyone that the company continues to generate quite a bit of cash. Even with the $50 million share repurchase, Eagle continues to build cash, and we expect next year's cash position to grow even further. This provides us with flexibility in how we deploy our resources in the opportunities we pursue.

As I indicated earlier, Eagle remains committed to expanding and protecting the value of our products and pipeline over the long term. We believe the market has not adequately priced the earnings potential of our business, and repurchasing our shares at this time reflects the commitment of the board and management to enhance shareholder return.

And with that, I'll turn the call over to Pete to provide the third quarter financial results. Pete?

Thank you, Scott. I'd like to reiterate Scott's comments on the company's financial position. Our base business is strong with additional potential on our pipeline and the business continues to generate cash. In fact, we expect to finish 2018 with a substantial net cash position.

On October 30, we repurchased $50 million in Eagle's common stock through an accelerated share repurchase agreement as part of an expanded $150 million share repurchase program, replacing the $100 million program. We previously purchased a total of $104 million of Eagle's stock, bringing our total share buyback to $154 million. Based on the currently marketed products and the conservative view of the pipeline, we believe this is a good use of our cash on behalf of our shareholders and reflects our confidence in the earnings capacity of the business.

With that, I'd like to now review the financial results for the quarter. In the third quarter of 2018, total revenue was $51.3 million compared to $63 million in Q3 2017. Third quarter 2017 revenue included a $12.5 million milestone payment. Big Bag product sales were $8 million in the quarter. Based on IMS data, Big Bag's market share of wholesaler shipments to end users was 2% of the U.S. bendamustine market in the third quarter. Over the past 3 weeks, Big Bag's market share has grown to 5%. So we are beginning to build momentum toward our aspirational 12% market share.

As Scott mentioned earlier, Eagle recognizes Big Bag revenue on shipments by Eagle to wholesalers. In the second and third quarters, we stocked various wholesalers for the launch period. While we are encouraged by the recent uptick in market share, fourth quarter 2018 shipments to wholesalers may be below that of the third quarter even as our market share continues to grow.

RYANODEX product sales reached $3.5 million, up 9% on a year-over-year basis. RYANODEX market share in the third quarter was 44% in normalized unit terms and 67% share of dollars. Third quarter RYANODEX sales were driven largely by new customer acquisitions. We had 338 customers engaging in new business.

Royalty revenue was $35.2 million compared to $43.6 million in the prior year quarter. BENDEKA royalties were $33.8 million compared to $41.4 million in the third quarter of 2017. Gross margin was 75% during the third quarter of 2018 as compared to 81% in the third quarter of 2017.

On the expense front, R&D expenses were $6 million for the quarter compared to $9 million in the prior year quarter. The year-over-year decrease reflects a substantial reduction in fulvestrant and pemetrexed expenses in the third quarter 2018, partially offset by the cost of the EHS trial. Excluding stock-based compensation and other noncash and nonrecurring items, R&D expense during the quarter was $5 million.

We are reiterating our 2018 R&D expense guidance, which we expect to be in the range of $46 million to $50 million. Excluding stock-based compensation and other noncash and nonrecurring items, R&D expense would be in the range of $40 million to $44 million. While we are developing additional opportunities with the fulvestrant spend behind us, it is likely that our R&D spend in 2019 will be lower than that in 2018.

SG&A expenses decreased to $13.9 million in the third quarter of 2018 compared to $16.7 million in the third quarter of 2017. The year-over-year decrease reflects lower external legal costs as well as a reduction in EHS marketing expenses. Excluding stock-based compensation and other noncash and nonrecurring items, third quarter 2018 SG&A expense was $9.7 million.

2018 SG&A expense is expected to be in the range of $61 million to $64 million consistent with our prior guidance. Excluding stock-based compensation and other noncash and nonrecurring items, SG&A expense would be in the range of $44 million to $47 million.

Net income for the third quarter was $14 million or $0.94 per basic and $0.91 per diluted share compared to net income of $15.4 million or $1.03 per basic and $0.98 per diluted share in the prior year period due to the factors discussed above.

Adjusted non-GAAP net income for the third quarter of 2018 was $18.3 million or $1.22 per basic and $1.18 per diluted share compared to adjusted non-GAAP net income of $19.2 million or $1.27 per basic and $1.22 per diluted share in the prior year quarter. For a full reconciliation of non-GAAP net income to the most comparable GAAP financial measures, please see the tables at the end of our press release.

Our EBITDA for the third quarter of 2018 was $23.9 million compared to $30.7 million in the prior year quarter.

During the second quarter, we completed $12 million in share repurchases as part of our $100 million expanded share repurchase program. In October, the Board of Directors approved that the company's current $100 million share repurchase authorization be replaced by $150 million authorization.

On October 30, 2018, the company entered into an ASR agreement with JPMorgan. The initial ASR settlement is today. So today, Eagle will pay $50 million to JPMorgan in exchange for 702,988 shares, representing approximately 80% of the notional amount of the ASR based on the closing price of $56.90 on October 29.

Following the end of a 6-week repurchase period, the number of shares repurchased will be trued up based on the average of the daily volume weighted average share prices of the company's common stock, less the discount during the term of that 6-week period.

Since our IPO, we have repurchased $104 million of Eagle stock plus $50 million of stock through the ASR for a total of nearly $154 million, which exceeds $110 million of capital the company has raised in aggregate in the public equity markets.

And I'll remind you that even with the $50 million ASR, we expect to end the year with a strong net cash position. As of September 30, 2018, the company had $91.2 million of cash and cash equivalents and $78.5 million in net accounts receivables, $53.2 million of which was due from Teva. The company had $45 million in outstanding debt.

With that, I'd like to open the call for questions. Operator, please go ahead and open the line for questions.

(Operator Instructions) We'll take a question from Randall Stanicky of RBC Capital Markets.

This is Dan Busby on for Randall. A few questions, starting off with a big picture one. You talked about it a little bit, but can you speak about how your strategic priority is currently ranked in light of the recent clinical developments? Clearly, share repurchases remain a focus, but in particular, has your appetite for business development changed especially in the context of potentially restocking your pipeline?

Thank you, and good morning. Yes, so look, I think that's a really fantastic question. Obviously, we are bullish on the future or we wouldn't be buying back this much stock as we have been. And what we've been saying over the last 6 months or so, I think, is very consistent, that we believe that over the next 4 years, assuming that we're correct about our view of the Orphan Drug Exclusivity, we will continue to generate quite a bit of cash over the next 4 years and have very nice earnings in this company as reflected upon the products that we already have in the market. Then you have to take a look at the pipeline. And although we've had the setback to fulvestrant over the last couple of days, we still believe in the rest of the pipeline. We believe in our ability to have heat stroke approved. We believe in nerve agents, and we have belief in the other products that we're working on. The great thing about those products is that we don't need much more infrastructure in this company to bring those products to fruition and market them. And so there'll be a tremendous amount of leverage on the P&L if and when we get those drugs to the market. But like all companies in this industry, it would be really wonderful to be able to do this all with internal development. The company has been around for 11 years, and we've been able to grow the business to where we are today and generate all the cash we have and have a net positive cash after 11 years in the business through organic development in the pipeline. If we have to buy products, if we have to go out and acquire companies, we can and we will. We have the cash on the balance sheet to do it. So I would say that one way or another, we will have significant growth in this company, either through organic growth or external growth or a combination of the both. I don't think our priorities have really shifted. But obviously, we're paying more attention that we may decide to go out and do something externally. But right now, let's see how things unfold. We have a lot of cards to turn over, a lot of clinical results over the next 90, 120 days.

Okay, that's helpful. And then just sticking on that growth trajectory. Clearly, there are a lot of moving parts with the pipeline. Should we be thinking about pipeline contribution at this point as more of a 2020-plus story?

I think it's hard to tell at this point. Let's see how conversations go with the FDA regarding EHS. The nerve agent study, keep in mind that this is a confirmatory study. We -- this is essentially the same study that we ran as a pilot previously this year. And we think those results will be out at the -- around the end of Q1. And so it's really hard to see. Let's see how things go with these conversations, and we'll be able to give you a better update on the timing of these launches as we progress.

Okay, great. And then just one last one on nerve agent. Have you any sense of what the market opportunity for that could be?

It's harder to tell. But let's look at it this way. If that drug is approved -- I mean, clearly, working with the chemical defense team in the U.S., there's an immediate need to protect our troops around the world. It's a little bit difficult to quantify how much purchases there'll be from the government on that. And then it's not just the U.S., it's the other countries, specifically the NATO countries around the world, that need the drug to stockpile for the troops.

The real question comes in, does RYANODEX with the nerve agent indication wind up being added to the strategic stockpile. So what we do know is atropine, which should be a companion drug for RYANODEX, atropine is in the civilian stockpile. And the best we can tell, those sales per year to the government, to the U.S. government, are about $100 million a year, give or take, right? So the opportunity for nerve agents, if it winds up in the strategic stockpile, keep in mind, we would have the only product of its kind to treat the neuro effects of nerve agent gas, and that would be a very significant opportunity for the company. And that $100 million is just in the U.S., and that doesn't reflect the need of the rest of the world. And again, hard to quantify, but that should give us some level of range of what it could be. And that's why we continue to believe that it's a overlooked, very significant asset for a clinical trial that is really confirmatory study that we've already ran once before. And with the government's -- with the military's backing, backing us at the FDA, hopefully we'll get through that process. And we'll just have to wait and see, and those results are not that far away.

(Operator Instructions) We'll move next to David Amsellem of Piper Jaffray.

This is Mickey Ingerman on for David. Just a question regarding your pipeline. I know you guys discussed it on the call this morning and then it was also referenced in the press release. Can you guys elaborate a little bit more about when you'll go into more detail about these opportunities? And do you have any other Paragraph IV filings planned in the near term?

Yes. So to take the lot, we don't have any other PIVs in the near term to discuss. And the rest of the pipeline, I think that will just unfold in time. Hopefully in the relative near term, we'll have some more information. Right now, we're focused on how we move RYANODEX forward in the pipeline, continue to engage in the courts on vasopressin and PEMFEXY. As we just discussed, the nerve agent results will be out early next year, hopefully end of Q1, and we can move forward with that. And as normal, we'll have news flow on the pipeline regularly as time progresses in the near term.

Got it. And then one quick follow-up regarding capital deployment. If it comes to looking for other assets or companies to acquire, are you guys primarily looking at generic injectables or at brands? And are you guys also considering accessing capital to execute on these acquisitions?

Yes. So look, we do not consider ourselves a generic drug company. We do have the vasopressin, which was a unique opportunity that we entered into, that we had, I think, unique capability in the company to take advantage of that and be first to file a large product. But we're a brand company and we are meeting unmet medical needs. BENDEKA turned out to be really a fantastic drug for CLL and NHL patients. I think we found a solution to a problem that existed. In EHS, we could have the only drug on the market to treat this really terrible disease state. In nerve agents, we would have the first in drug -- first-in-class drug to treat the effects of nerve agents like soman. And those are the opportunities we would be looking for is gaps in the marketplace where we could use our capability of reformulating drugs or finding drugs on the market that meet unmet needs. And now that we have a commercial team that's doing really well, you can see the 5% share of Big Bag, we're really excited about it. And we believe we have the commercial capability to sell these drugs. So if we look to the outside, the focus will be on specialty products in either oncology and/or critical care, mostly focused on the hospital.

Our next question is from Tim Lugo of William Blair.

Can you talk about the current status of ODE for BENDEKA? And I know lyophilized formulations are set to come out in 2022 in your opinion. But are there still possibilities for earlier entrants? And what does the BENDEKA market look like if those lyo formulations do come earlier?

Yes. Thanks, Tim, and a really very pertinent question. As everybody probably remembers, we did have a positive decision on the ODE in litigation recently, and that decision clearly provides 7 years of exclusivity for BENDEKA. So I think it's pretty clear that there will not be any BENDEKA -- any drug referencing BENDEKA on the market until the end of '22. That case is on appeal, but we feel very strongly. And I think everybody who's looking at it would agree with us that the likelihood of that being [unresolved] is pretty small. And so let's assume that BENDEKA has exclusivity until the end of '22. To answer your last question next, we maintain our belief, now that we're in the Big Bag market, I think we understand it even that much better, and we are under the belief that we'll maintain 70% of that market for BENDEKA even when TREANDA generics come to the market. I think that's a good number to use. I think most of us who have been discussing it have come to conclude that, that 70% number is really the best number that we have, which makes us believe that BENDEKA will be a very important asset for this company at least into '23. And then remember, we have these 16 patents protecting BENDEKA that run from '31 (sic) [2026] to '33. In our view, and a large part of our view of why we're buying back our stock at the rate that we are is the fact that the bendamustine franchise will be a very important part of this company, regardless of what happens to R&D or external acquisitions for a very long time to come. And now to explain the TREANDA piece. So the question that we have in front of us now is what is the scope of that exclusivity and does it cover TREANDA as well as BENDEKA. Last month, the FDA requested public comment regarding the scope of BENDEKA's exclusivity and whether generic versions of TREANDA should be allowed to come onto the market before December of '22. Our view, which is supported by both the plain language of the statute and FDA precedent, is that our exclusivity applies to all bendamustine products that treat the same indications. We did not find any of the submissions by the generics to be particularly compelling, and we remain very confident that there will be no generic competition in the bendamustine market. And we're just going to have to wait to see how it unfolds. But as you dig into it and as the other people that we discussed this with, I think there's a growing consensus that our -- that the likelihood of us maintaining this market at least through the end of '22 is reasonably high.

Understood. And could you talk about RYANODEX's potential to be out into the stockpile pending clinical success? Is that dependent at all on the formulation? I know you have the IM formulation in development.

Yes, that's a good question, Tim. And I don't know if we have sufficient color on it yet. I think a lot of it depends on the global political environment in the time. It seems to us that the world is a little uneasy place right now. And very sadly, if we pay attention to the news, and maybe we do a little bit more because we have a drug in development for it, nerve agents are being deployed around the globe far more frequently than any of us would like to see. We're proud of the work that we're doing with RYANODEX for nerve agents. So as it comes to the stockpile, is there a chance that there could be a nerve agent attack on our soil? Who knows? But certainly, the world and the country is more concerned about it today than ever. The government does stockpile atropine, Pfizer's atropine now in the civilian stockpile. As I mentioned earlier, that's about $100 million a year in sales. There are 39 locations around the country in which these emergency medicines are stockpiled. RYANODEX, if approved, would be a companion drug to atropine. And if the study results of the second trial winds up to be the same as the first trial and then it's clear that if you have a nerve agent attack, there isn't any reason why you wouldn't need to have RYANODEX along with atropine. So based on that, I think there is a good chance that we wind up in that stockpile. Now clearly, when we get the IM, and we'll speak more about that may be before the year's over or early next year, we'll talk a little bit more about what we're doing there and the progress that we're making, when we get into the IM, clearly, it's going to make the drug easier to use in these emergency situations and we'll have a tremendous benefit. But at the same time, what we need to keep in mind that although RYANODEX is an IV today, it's only a 5 ml dose or maybe a 10 ml dose. So it's not that lengthy of a time to deliver if you're going to wind up with an IV line in any way. And so what we would suspect because of the strength of the results that we're seeing, if it holds, is that the IV version would not be a problem with using it. But I think the military and the government would want to switch out to the IM as quickly as they could once it's approved. So maybe we will have to work out a program with them. As soon as the IM is approved, we have some type of a switch opportunity. But I can't believe that the IV would stop us from stockpiling it because we just need the drug in case there is an attack.

(Operator Instructions) Our next question is from Brandon Folkes of Cantor Fitzgerald.

Firstly, on RYANODEX, the IM formulation, can you help us think through what this does to the RYANODEX franchise? How much does it help the franchise grow versus extending the durability of the current franchise? And then secondly, just a margin question. Can you help us think through, obviously without giving guidance, the operating expenditure next year, where SG&A and R&D may be going?

Yes, thanks, Brandon. Let me take the IM first, and then Pete will take the guidance portion of it. Yes, the IM is just really important all the way around. Let's talk about the durability first. We haven't disclosed yet the details of the program. I think we're ready to do that relatively soon, but the product that we are developing is quite unique and should provide us, I would hope and think, another 7 years of exclusivity for a number of reasons. It will be significantly patented. You'll see, as the information unfolds, what we've done and why we believe in it and how it helps the durability. But the product that we hope to develop will be able to be used for an IV and an IM with the same product. And so when you look at how the drug is used and what would happen in the hospital, it's very unlikely that a hospital would want to stock a product that could only be used for an IV for a whole host of reasons. It would be wasteful to have 2 different RYANODEXes in stock. There would be the issues of potentially using the old product the wrong way, and the treatment effect is just going to be helpful to everything. So between the patents and the use of it, I think you'll see, once we tell you more about it, why we think it helps so dramatically with the durability. But when it comes to growth, there are a lot of emergency situations that you could see where having an IM drug could expand the use of the drug. In emergency situations, ultimately, on the battlefield, on the football field, on the soccer field, people who have these disease states, it's an emergency situation, the drug has to be delivered as quickly as possible. I think it'll just give people access and capability to use the drug that are not able to use the drug today. We're excited about it. It could be a really important transition from RYANODEX to this new product. And we'll explain more, I think, over the next few months, I would hope. And then with that, Pete, you want to take the financial questions?

Sure. Brandon, we are -- as you mentioned, we are not at the moment providing guidance on 2019 op expense, other than to say that on the R&D line, we would potentially have a lower R&D non-GAAP on 2019 than we have in 2018. Obviously, we've already seen a substantial diminution in the R&D line through 2018 largely because the fulvestrant trial costs, from an accounting perspective, were accrued in the first and second quarters. And so we had non-GAAP R&D of $15 million in the first quarter, $13 million in the second quarter and then obviously, a very substantial reduction in the third quarter. So we're comfortable at this point saying that the 2019 R&D non-GAAP margins will be less than that of 2018. But obviously, there could be additional opportunities we would pursue, which would change that perspective. On the SG&A line, you'll recall that last year, we took out $10 million in expenditures. That was the goal and we actually overshot it because the non-GAAP SG&A for 2017, you'll remember, was $57 million. We just told you that we're adhering to our non-GAAP SG&A for 2018 of $44 million to $47 million. And so we've actually overshot our expense reduction initiatives announced a year ago, which is good news. And I would just point out that that's in the face of a sales and marketing payroll that frankly has grown in 2018 because remember, in 2017, we didn't have the expanded sales force onboard for all 12 months. So we're quite proud of that. At this point, we're not in a position to provide guidance on SG&A for 2019, but we'll come back to you once we've been through our budgeting process.

(Operator Instructions) We have a follow-up question from Tim Lugo of William Blair.

There's been some discussion from both local parties about ending ASP plus 6%. How -- can you just talk to a bit how exposed you would think BENDEKA would be to any changes to ASP plus 6%? And what does that do to your thoughts around pipeline and just further investments in your current product pipeline?

On oncology, the [reverse is now on] ASP plus 4.3%, so it's no longer 6%. Obviously, we are focused on that issue. We think that there's been a lot of chatter over a number of years about changing the Medicare reimbursement, but it's -- we don't see that going away any time soon. And bear in mind, that's a substantial proportion. You've heard Scott say that we expect -- we anticipate retaining 70% of the market once TREANDA is genericized, and that is in fact J-code driven, right, because the 340B institutions are not ASP plus reimbursed.

This concludes our question-and-answer session. I'd be happy to return the call to Mr. Scott Tarriff for any concluding remarks.

Thank you, everybody. I appreciate the time you spent with us today, and look forward to continuing these discussions with you over the weeks. Thank you again.

This does conclude today's Eagle Pharmaceuticals' Third Quarter 2018 Earnings Results Conference Call. You may now disconnect your lines. And everyone, have a great day.