Lannett Company, Inc (LCI) Q1 2021 Earnings Call Transcript

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Lannett Company, Inc (LCI)
Q1 2021 Earnings Call
May 5, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Lannett Company's Fiscal 2021 Third Quarter Financial Results Conference Call. My name is Hilda and I will be your operator for today. Later, we will conduct a question-and-answer session. [Operator Instructions]

I will now turn the call over to Mr. Robert Jaffe, Investor Relations for Lannett. Mr. Jaffe, you may begin.

Robert Jaffe -- Investor Relations for Lannett

Good afternoon, everyone, and thank you for joining us today to discuss Lannett Company's fiscal 2021 third quarter financial results. On the call today are Tim Crew, Chief Executive Officer; John Kozlowski, the company's Chief Financial Officer, Maureen Cavanaugh, our Chief Commercial Operations Officer and Steve Lehrer, who leads our insulin biosimilar initiatives. This call is being broadcast live at www.lannett.com. A playback will be available for at least three months on Lannett's website. I would like to make the cautionary statement and remind everyone that all of the information discussed on today's call is covered under the Safe Harbor provisions of the Litigation Reform Act. The Company's discussion will include forward-looking information reflecting management's current forecast of certain aspects of the Company's future and actual results could differ materially from those stated or implied.

In addition, during the course of this call, we refer to non-GAAP financial measures that are not prepared in accordance with U.S. Generally Accepted Accounting Principles and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review Lannett's press release announcing its fiscal 2021 third quarter financial results for the Company's reasons for including non-GAAP financial measures in its earnings announcement. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is also contained in the Company's earnings press release issued earlier today. This afternoon, Tim will provide brief remarks on the Company's financial results, as well as recent developments and initiatives. Then John will discuss the financial results in more detail, we will then open the call for questions.

With that said, I will now turn the call over to Tim Crew. Tim?

Timothy C. Crew -- Chief Executive Officer

Thanks, Robert, and good afternoon, everyone. We trust you all remain safe and well. Despite the pandemic and ongoing headwinds specific to our industry and our company, we are proud of our significant progression on several strategic fronts these past months. First, we refinanced our debt providing significant balance sheet runway to execute on our growth plan. Second, we advanced the development of key large pipeline assets, third, we expanded our pipeline of key assets and more such assets are being actively pursued and fourth, we maintained our operating discipline and are tracking to our near-term goals.

I thank our Lannett team twice over actually, along with our partners, suppliers, customers and advisors for helping us navigate and move forward through all the turbulence over the last year. I'll begin my specific remarks with a brief review of our financial results. For fiscal 2021 third quarter, we had net sales of $112 million, adjusted gross margin of 27%, adjusted EBITDA of $17 million and adjusted net income of $1 million equal to $0.02 per diluted share. Gross margin, adjusted EBITDA and adjusted net income were all better than we anticipated. Moreover, our cash position significantly improved to more than $80 million at the end of Q3 from $34 million at the end of the preceding quarter. While we are pleased with our overall results, we believe the most important recent news was the April refinancing transaction I earlier mentioned.

We used the proceeds from the refinancing on some cash to retire our outstanding Term B loan balance of approximately $540 million. The financing was significant for several reasons including, first, we have extended the maturity of our debt to 2026 from 2022 and that maturity is now after several of our larger and more durable pipeline assets are expected to launch and make meaningful contributions to our business. Second, our free cash flow improved substantially, primarily due to the elimination of mandatory principal payments until maturity. We estimate that the transaction will add approximately $50 million of free cash flow in the first year alone. Our plan is to use a portion of the extra cash to invest in additional growth opportunities. And third, the new debt did not have leverage covenants. We are obviously delighted with this refinancing, which we have contemplated for some time and thank our pre-existing and new investors for their support. To our view, we believe the successful offering provides investors' validation of our future expected cash flows.

Similarly, I'd like to note that the part of this financing, the second-lien investors received warrants in Lannett, which have historic price of $6.88. We believe the support of these experienced investors to accept the second-lien position in exchange in part for these warrants further validates our assessment of the future earnings anticipated from our pipeline. So now let's turn to our pipeline. Most recently, we launched two products in Q3 including Levorphanol, IR tablets 3 mg a partnered product and Chlorpromazine, an internally developed product. Thus far in Q4, we launched Venlafaxine ER tablets 75 mg and expect to launch a few more products in the next few months. In addition, we have more than 18 products in development, another 11 pending with the FDA including partnered products, plus four additional products that are approved and pending launch. We will now turn to larger more durable opportunities in our near-term pipeline, dealing with products in the respiratory arena. As we recently announced, we achieved a key milestone with the filing of our generic ADVAIR DISKUS product on April 1. This asset is a partnered product and of the larger products in our pipeline is currently the closest to expected commercialization.

The investments in technology, dedicated manufacturing infrastructure and development of assets are very significant. So we are quite pleased to be so far along the development and expect only a handful of competitors. While we do expect more than one FDA review cycle, and we need FDA feedback to firm up our expectations, we continue to believe an approval and U.S. launch of the product is possible in calendar year 2022 and given our listing in the market, we anticipate the product will generate substantial net sales soon after launch. Another drug device combination product in our pipeline is generic Flovent DISKUS. The pivotal clinical trial for this product has been initiated. So we are tracking to a possible launch in 2023. As a reminder, we are co-developing this product with the same partner generic ADVAIR DISKUS. This relationship means that the generic Flovent product leverages the same R&D and manufacturing platforms that support the generic ADVAIR product and will likely follow similar clinical development assets.

For both the generic ADVAIR and Flovent products, we are increasingly confident of our path to launch for three primary reasons. First, the FDA now has clear guidance for companies developing its complex products and our development programs have been advancing rapidly. Second, our partners already built R&D and commercial scale manufacturing facilities, both dedicated to inhalation products. And lastly, our partnered senior management team includes members of GlaxoSmithKline team that was intently involved in developing, filing and manufacturing the ADVAIR into their product. As we said previously, we are evaluating and in late-stage negotiations for additional product opportunities in the drug device inhalation respiratory space, particularly dry powder inhalers, and Metered Dose inhalers. These markets are, as we have stated before, generally quite large, growing and durable.

Turning to our biologic insulin products. The situation is similar to what we noticed for the drug device inhalation opportunities, namely, we are relatively well advanced in the programs and the investments in technology, dedicated manufacturing infrastructure and development are even more significant, it takes multiple hundreds of millions of dollars. Let me say that again, multiple hundreds of millions of dollars. Thus we expect only a handful of competitors in what is expected to be a multi-billion dollar market even at competitive biosimilar pricing. And as we have shared, our partner HEC is shouldering the significant majority of these infrastructure related costs. With regard to biosimilar insulin glargine, we believe we remain on track to; submit an IND later this calendar year, commence the clinical trial early next calendar year, submit the biologics license application later in calendar year 2022, and launch in 2023, just over two years from now. You'll recall that representatives from Lannett and HEC's both received guidance from the FDA on the biosimilar insulin glargine clinical advancement program in June of 2020.

The FDA then requested that we submit a protocol and the statistical analysis plan for the pivotal trial for review which we did in November of 2020. The FDA has since completed its review and provided feedback, which we incorporated into design of the upcoming pivotal trial including the type and sized of the trial, as well as primary and secondary endpoints. Importantly, the upcoming conforming pivotal human healthy trial plan is similar to our previously completed normal healthy volunteered pilot study. It's a modestly larger study and will be conducted at the same site as the previous study. So the FDA's feedback is very encouraging as they reviewed in detail our human pilot study where our insulin glargine met all the primary pharamakinetic and pharmadynamic safety endpoints and the FDA has indicated the same type of study with glargine produced at commercial scale to complete the new facility will be sufficient to file a 351(k) biosimilar application.

Note, we believe we will be the first glargine outpatient to take advantage of new biosimilar insulin rules published in November of 2019, which have helped speed our progression. In the related positive development, our partner HEC has completed virtually all the required process development scale of work required to producing insulin glargine at commercial scale at the new insulin facility, which is an important next step. Production of clinical trial materials should occur in the upcoming quarter. On a further positive related note, in February, we announced we have expanded our agreement with HEC to include the biosimilar insulin aspart, a fast-acting insulin, separate and distinct from longer acting insulin glargine. Similar to the two asthma product opportunities, the experience, knowledge, dedicated infection infrastructure and investment supporting insulin glargine can be directly leveraged from the development of insulin aspart. Accordingly, while we still need to get FDA feedback on the development plan, we currently anticipate a potential launch of the aspart product in calendar 2024. As you can see, and I think our investors understand, we are now advancing for within our overall launch parade, a steady stream of significant new product launches in the not too distant future.

To sum up today's remarks. We completed our refinancing transaction where we retired our Term Loan B and extended the maturity of our debt beyond the expected launch dates of our larger pipeline assets. Moreover, the structure of the new debt substantially increased our free cash flow potential around $50 million in the first year alone that will allow us to further invest in growth opportunities. The ANDA for our generic ADVAIR DISKUS product was submitted on April 1, 2021 and pending FDA feedback, we believe this product is tracking to a launch in calendar year 2022. The clinical development of our other large opportunity assets including generic flovent and biosimilar insulin glargine continues to advance the launch of insulin glargine possible in 2023. And in February, we added to our pipeline another large opportunity product biosimilar insulin aspart. That biosimilar development should track perhaps the year behind insulin glargine and potentially launch in 2024, along with generic flovent, setting up a series of potentially significant product launches in the not too distant future.

With all of that, I turn the call over to John. John?

John Kozlowski -- Vice President of Finance and Chief Financial Officer

Thanks, Tim, and good afternoon, everyone. I will begin with our financial results on a non-GAAP adjusted basis. For the 2021 third quarter, net sales were $112.4 million, compared with $144.4 million for the third quarter of last year. Gross profit was $30.4 million or 27% of net sales, compared with $52.3 million or 36% of net sales for the prior year third quarter. Our gross margin for the quarter grew from the previous quarter largely due to improved manufacturing efficiencies, and to a lesser extent sales mix. More specifically, increased sales of certain higher margin products. Net sales for the quarter were lower than expected, primarily due to the competitive market pressure for both Levothyroxine tablets and capsules. Research and development expenses declined to $6.0 million from $7.4 million. SG&A expenses declined to $14.4 million from $17.7 million. Interest expense decreased to $9.8 million from $12.7 million in last year's third quarter.

Net income was $1.0 million or $0.02 per diluted share, compared with $11.7 million or $0.27 per diluted share. Adjusted EBITDA was $17.0 million, which was positively impacted by lower R&D expenses in the quarter due to timing. We expect some of that R&D spend to move to our fourth quarter. Turning to our balance sheet. At March 31, 2021, cash and cash equivalents totaled approximately $81 million, up significantly from $34 million at December 31. The increase was due to the receipt of income tax refunds, as well as benefits derived from initiatives to improve our working capital. With that, I would like to provide additional details on our recently completed refinancing transaction, which was leverage neutral and as Tim mentioned, extended the maturity of our debt and enhances our cash flow. For background, in November 2015, we acquired Kremers Urban Pharmaceuticals, primarily using debt to finance the transaction.

For the last six plus years, we have made excellent progress paying down this debt reducing by more than half the original outstanding debt balance of approximately $1.3 billion. With the Term B loan scheduled to mature in November 2022, we made the strategic decision to refinance our debt. The refinancing included two new debt instruments, specifically, $350 million of first lien senior secured notes and $190 million of second lien loans, which were used to retire the approximately $540 million outstanding balance of our Term B loan. As part of the transaction, we also upsized our revolving credit facility to $45 million from $30 million. The new first lien secured notes will mature in five years that will be secured on a first lien basis by all non-ABL collateral and a second lien basis on ABL collateral. The second lien facility is junior in priority to the new first lien senior secured notes and included 8.28 million warrants exercisable into the company's common equity at a strike price of $6.88. The second lien facility also matures in 2026.

The refinancing improved our financial flexibility in a couple of ways. First, neither of the two new debt instruments include financial maintenance covenants. And second, with no principal payments due until maturity, it considerably increases our cash flow. Now, moving to our outlook, we made minor revisions to our guidance for the fiscal 2021 full year which were largely due to the refinancing. Specifically, changes to our guidance were in the interest expense line and the income tax line. Otherwise, our adjusted guidance range remains unchanged from the guidance we provided on February 3. I would note that, given the sales pressure on our Levothyroxine products, combined with an expected delay to our zolmitriptan launch due to an API matter, we would anticipate to be at the lower end of our sales guidance range. I would also add that an API issue surrounding our thalidomide product has still not yet been resolved. The launch for the product was most recently expected for late in calendar 2022. But as of now, we are not estimating a launch timeframe.

With that context, the revised guidance items are as follows: adjusted interest expense of approximately $44 million, up from $41 million to $42 million. And income tax in the range of $1 million of expense to $1 million of benefit. Please note we replaced in the income tax line of our adjusted guidance the dollar amount to provide additional clarity.

With that overview, we would now like to address any questions you may have. Operator?

Questions and Answers:

Operator

[Operator Instructions] We have a question from Greg Gilbert from Truist Securities.

Greg Gilbert -- Truist Securities -- Analyst

Good afternoon. Tim, I was hoping you could comment on generic Advair. Is the need for more than one review cycle always been the plan in this case? Or did you get clarification?

Timothy C. Crew -- Chief Executive Officer

Thanks, Greg. No, we all would expect at least one review cycle given the complexity of this file drug device combination along with micrograms and all sorts of FDA requirements. So we're assuming at least one review cycle. And with any good fortune we'll be launching in calendar year 2022. But we need to firm that up post some FDA feedback, which we have not yet received.

Greg Gilbert -- Truist Securities -- Analyst

Okay. When might you get that feedback?

Timothy C. Crew -- Chief Executive Officer

Well, the first issue is to be passed to file acceptance and the disciplined review of letters occur within four or five months from then.

Greg Gilbert -- Truist Securities -- Analyst

Okay. And then for the existing generic players, the penetration has been a slog. Do you think that it takes a few more players to really knock loose the environment there and allow for more share capture for the generics, including yourselves?

Timothy C. Crew -- Chief Executive Officer

Well, so far, until Hikma's most recent reentry with an incomplete line, I believe, I think only had two of the three strengths. It has really just been the former Mylan approval. which means the pricing typically is a little higher, and that has constrained, we think, a little bit of substitution. Once more players come in, we would expect more normalized substitution rates.

Greg Gilbert -- Truist Securities -- Analyst

Okay. And then in terms of the generic environment in the U.S., maybe this is for Maureen or, but have there been any notable changes in the pricing environment recently in terms of the pace of -- for any other structural changes? And I realize it's very portfolio-specific for every company, but asking more about the environment, if it's possible, to opine on that.

Timothy C. Crew -- Chief Executive Officer

Well, Greg, I think you've heard me say before, as you just alluded to, portfolio is really about your company and your competitive environment, the supply and demand of what's in your portfolio. I think overall, portfolios broadly have been declining in the upper single digits for a very long time, plus or minus based on any sort of particular change in supply and demand. The question is always about for your company, what's the step function associated with those products that have fewer competitors. And from a Lannett perspective, we unfortunately -- or fortunately, unfortunately, had a number of larger step functions this last year and now quite a bit more diversified. So from our perspective, things are looking better. And our long-term aspirations in the generic space, as most folks are, to launch new products and get some of that concentration back and hopefully from more durable products. But overall, I think it's a supply and demand question, not an RFP question.

Greg Gilbert -- Truist Securities -- Analyst

Okay. And lastly, is there anything tangible that you're doing to secure business or seek to secure business with particular customers or channels that would link to your U.S.-centric model? I know you've talked about it as an important trait of the company. Wondering if it links to anything specific other than future sort of manifesting share broadly?

Timothy C. Crew -- Chief Executive Officer

Yes. We still see opportunities in that space. The new administration, along with the previous one, are certainly looking to bring back more medicine manufacturing to U.S. shores. It is an area of fairly rare, I would say, bipartisan agreement. I would note, however, we have nothing resident in our forward forecasts related to specific initiatives in that sort of space. We believe they will occur. We think they're a little hard to measure and monetize. We've been doing a pretty good job with existing rules around favorable treatment to U.S. manufacturing of products in the government arena. But I think, ultimately, whatever does transpire, given that we're U.S. domiciled and our U.S. manufacturing base will benefit from it, but it's -- I think, as a pragmatic matter, we better see what that looks like before we would plan for it in our numbers. We don't see any downside here. We see upside, but it's not significant enough or material enough at this point to plan for.

Greg Gilbert -- Truist Securities -- Analyst

Ok. Thank you.

Operator

Our next question comes from Elliot Wilbur from Raymond James.

Lucas Lee -- Raymond James -- Analyst

Hi. How are you. This is Lucas Lee on for Elliot. I have a couple of questions. I think You set the EBITDA gross profit and EPS were ahead of your expectations, but revenue came in slightly below. Was adjusted gross margin better due to overall mix? Or was it more of a favorable pricing? That's my first question. And second question is pending ANDAs have declined from roughly 20s to around 11 today. Given the best and reach into the development network, when should we expect that number to begin to increase? And should we still expect new deals to have margins in the 30% to 35% range?

John Kozlowski -- Vice President of Finance and Chief Financial Officer

Good afternoon, Lucas, this is John. I'll take the first part of that. So the improved margins were really based on our improved manufacturing efficiencies. So we had larger output for the quarter, and we saw that fall right to the bottom line. The sales mix had less of an impact. It was impactful but less than impactful. Antipsychosis was down Q2 into Q3 but it was up slightly more than what we had originally been modeling. So came in a little bit stronger. that did help with our overall margins, but again, mostly around the manufacturing efficiencies.

Timothy C. Crew -- Chief Executive Officer

All right. And Lucas, relative to the pipeline, a couple of contextual pieces, We currently have, as we referred in our comments, order magnitude of 20 in development, kind of a little bit more in with the FDA and another three or four that are approved pending launch. That's comfortably over 30. For a company of our size, that means our pipeline is 1/3 of our in-line market. That's pretty significant, again, relative to where we are in industry in terms of portfolio breadth. We've also spoken to desire to put a little bit more emphasis on all our products for quality but higher value product launches as we've articulated with our more durable partnered products along with what we're developing internally.

So we're committed to the sort of $75 million year-on-year of annualized value from new product launches. We'd like to do it on the back of a few fewer launches, more targeted, more durable and, we believe, therefore, more valuable. So that's the context for our pipeline situation. We certainly see what we call that big blue ocean of generics. There's thousands of products out there. We still have 100 in our end market portfolio and we have plenty of partners and plenty of capabilities internally to continue to drive where we see sustainable value, which is a bit of a shift from when we first got -- go in our launch, parade kind of the launch that we have our hands on. Now we're spending more time trying to target things that we see sustainable value for.

Regarding the sort of margin component moving forward, we have been consistently saying something in the 30s is where we would expect to be as we approach our $1 billion aspiration in 2025. That is largely driven, of course, by higher end market margins of these more durable high-value assets, but showing back a chunk of those profits with our partners. We have plenty of products that are well above that sort of company range but they tend to be smaller products. And we also have plenty of products that are below it, that range. So there's quite a continuum out there in the marketplace. But as we see our pipeline mature, the blend of what we do internally, probably higher than that number, offset by end market products that are lower. And then the addition of those partner products, that's the mix number that we expect in the outer years.

John Kozlowski -- Vice President of Finance and Chief Financial Officer

Thank you.

Operator

Our next question comes from Gary Nachman from BMO.

Gary Nachman -- BMO -- Analyst

Hi guys. Good afternoon. The additional free cash flow you'll have from the refinancing, what are your priorities on for use of that cash? What types of deals are you focusing on? Are you still keeping with the strategy of looking aggressively for distributor partnerships or maybe now focus more on high-value pipeline like you were just talking about? Just want to get a lay of the land there.

Timothy C. Crew -- Chief Executive Officer

Look, the way forward is not so different from the way in the past, that is we're looking for some balance between internal products. which typically have higher margins, which we fully capture and have a little bit more control over the development cycles in combination with opportunistic issues that pop up, which is -- or the embedded results in the last few years, combined with more selective partnering on some of these more bespoke relationships of particularly high-value and durable assets.

We are very pleased that the additional cash flows that will be available to us gives us more flexibility. We still want to be extremely disciplined in how we invest that money. When we talk about, quite frankly, the issue of free of leverage covenants, that's kind of what we're getting at. We have some room to make an investment that otherwise we would have been unable to do if the covenant has got in the way of of that investment when it hits the income statement. So we're -- we've got a long on-deck list.

We've maintained a bullpen, if you will, or an on-deck list of new opportunities, and we are able to now explore those with a little bit more resources and firepower that will -- in our pocket relative to our scale, it's not a huge bucket of money, but we do have more latitude to pursue those bullets -- those opportunities. And I'm suggesting they'll be in the same sort of mix, this balance, internal, near-term opportunistic long-term bespoke partnerships. That message is still selling to our partners. It's still selling to our internal organization. We continue to maintain that launch parade with a little bit more latitude to raise up that value over time as we're discussing it as more larger assets come online.

Gary Nachman -- BMO -- Analyst

Okay. And then are you still going through the process of looking through the portfolio and rationalizing products that may not make sense to keep from a profitability standpoint? We did a bunch last year. I think it was like 22 or so that you had mentioned. I'm curious if there's more to go on that front and if that could help accelerate the margin profile for the company in any way.

Timothy C. Crew -- Chief Executive Officer

Yes, Gary, we are constantly looking at portfolio optimization, life cycle management, what we wish to call it, and it's always a mix of factors. As you noted, we did remove about 20 products from our portfolio. We don't do that lightly. Those products have customers who want an ongoing continuity of supply. At the same time, they also have choices and you get to a point where your economics aren't relevant vis-a-vis somebody else. And so that process will indeed continue.

We do still have a large footprint in our manufacturing base. We have to be thoughtful about how do we keep those plants operating efficiently, and it's a mix these factors that result in the pruning, right? We've launched 50 products for the last three years. We still have around 100 products, which is about when we started. So I think that ebb and flow, you could expect to continue over time. And for sure, we have other lower-margin assets in our portfolio that, if we can't find a way to cut the cost down, competitors may rationalize it for us if we don't rationalize ourselves.

Gary Nachman -- BMO -- Analyst

Okay. And what's the onus of Numbrino? I had that was supposed to launch maybe later this year. Is that still going to be

Timothy C. Crew -- Chief Executive Officer

Pandemic? So its impact has been muted to our expectations. We've been averaging a little under $1 million a quarter for that product this fiscal year. And that lower result was largely related to a substantial reduction in elective surgeries, which this product is -- figures prominently in for its primary use. And until those elective surgeries pick back up, we're hopeful that occurs as we get into next fiscal year. We think the sales there will, in fact, be constrained. But our longer-term target is sort of closer to $1 million a month as opposed to $1 million a quarter. It remains a very high-margin product for us and one of the things that will help anchor our growth as we get into next year.

Gary Nachman -- BMO -- Analyst

Okay. And then just last question. It seemed like you may have cut back a little bit in SG&A in this last quarter. So I'm just curious, do you expect that to ramp up again? Or will it stay at that level? I know you're managing expenses quarter-to-quarter. But just want to get a sense of what that run rate is going to look like.

John Kozlowski -- Vice President of Finance and Chief Financial Officer

Yes. No, this is John. So the run rate for -- the SG&A expense for this quarter is actually a pretty good run rate. It's actually ticked up a bit from the first half of the year, and Q4 should be similar.

Timothy C. Crew -- Chief Executive Officer

Maybe under operating expenses, you're seeing a little bit lower number because of the R&D number being slightly lower on timing.

Gary Nachman -- BMO -- Analyst

Okay. Well, what about just thinking into next year? I know you're not giving guidance for next year. But just do you feel comfortable with where the expense base is based on this last quarter?

John Kozlowski -- Vice President of Finance and Chief Financial Officer

For the SG&A line, yes. The SG&A line, it's a good number for us. It supports our base

Timothy C. Crew -- Chief Executive Officer

And growth.

Gary Nachman -- BMO -- Analyst

Okay. But R&D will likely pick up, I'm assuming, going into next year?

John Kozlowski -- Vice President of Finance and Chief Financial Officer

Yes. The R&D for this quarter, the R&D for this quarter is similar to last quarter but still a little light versus our expectations. Some of that's going to push into Q4. And then we would expect to continue to invest into next fiscal year.

Gary Nachman -- BMO -- Analyst

Okay. Great. Thank you.

John Kozlowski -- Vice President of Finance and Chief Financial Officer

Thank you.

Operator

The next question comes from Matt Hewitt from Craig-Hallum Capital.

Matt Hewitt -- Craig-Hallum Capital -- Analyst

Good afternoon. Thank you for taking the question. Actually, just a follow on the Numbrino question there a little bit. We have noticed an uptick in elective procedures here this spring. As people are getting vaccinated, offices are opening back up. I'm just curious if you have seen at least the initial steps in an uptick in Numbrino.

Timothy C. Crew -- Chief Executive Officer

Well, from your lips to our patients, their cosmetic needs. we are seeing some preliminary signs a bit early to call the ball again. From a quarterly perspective, we've been pretty flat around $800,000 or so and would expect to see some recovery as we get into really next fiscal year.

Matt Hewitt -- Craig-Hallum Capital -- Analyst

Okay. Fair enough. And then I'm curious, this is more high level, but as you continue to look for distribution agreements and then potentially assets to acquire, how have those discussions changed today versus where we were pre-pandemic? Are you seeing a more desire for upfront cash? Is it a change in the profitability or the profit share? Just how have those discussions changed over the past 1.5 years?

Timothy C. Crew -- Chief Executive Officer

Well, I think, on average, the discussions haven't changed that much, right? We have a very explicit and defined offering, which is to say, partners are looking for help across a variety of functional support we are particularly well suited to. We have a very experienced team that's worked across industry for, unfortunately, unfortunately, a decade. And we bring that experience and the monies and investments we made across many of the companies to bear on those partnerships, and that sells so well. As you know, the industry has been somewhat set by a lot of challenges and headwinds, as you might say.

But we've been historic in our ongoing commitment to the space. We do think it as an incredibly affordable part of medicines, and we see lots of opportunities for us to go forward. And that obviously is message that partners who may find their markets overseas more challenging than the average day here in the U.S. respond well to. So from both an opportunistic perspective, a transparency perspective, an experience perspective, those transactions that pop up on a regular basis continue to avail themselves to it. I'm sure you'll hear more of them in the coming quarters. And then specifically to the more bespoke assets, the larger, more durable assets, which take often a lot of capital and a lot of technology often coming from overseas partners, we're particularly strong in that offering.

Again, given that same cross-functional experience up and down the organization, our willingness to embrace those products is really differentiated from our internal portfolio. And I think the proof of that pudding is, a, our success with the launches we've had; and that so many of our partners come back for additional engagement with us even if we have not yet launched all of the products. So we feel pretty good about that flow of opportunity. We are actively pursuing any number of transactions similar the bespoke down to the opportunistic as we speak. I do think getting on a plane, having a meal and breaking bread, as they say, helps deepen those relationships and cement some perhaps a little bit faster and more enduringly than purely Zoom meetings, but we've done a pretty good job on the computer advancing assets that we discussed just on this call and expect to see more of it as this year proceeds.

Operator

At this moment, we show no further questions in queue. I would like to turn the call back to management for final remarks.

Timothy C. Crew -- Chief Executive Officer

Again, I'll close out with our customary shout-out to all of our employees, customers and partners working extra hard to provide high-quality, low-cost medicine for patients. We look forward to sharing our progress on our next call, and good night.

Operator

[Operator Closing Remarks]

Duration: 39 minutes

Call participants:

Robert Jaffe -- Investor Relations for Lannett

Timothy C. Crew -- Chief Executive Officer

John Kozlowski -- Vice President of Finance and Chief Financial Officer

Greg Gilbert -- Truist Securities -- Analyst

Lucas Lee -- Raymond James -- Analyst

Gary Nachman -- BMO -- Analyst

Matt Hewitt -- Craig-Hallum Capital -- Analyst

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