Neos Therapeutics, Inc. (NEOS)

[chainma1l]

Good call this morning. I expected a little bigger pump in pps today. Volume wasn't even interesting.
Sounds like they are on the right track and progressing according to plan. I like the sound of "cash flow positive" over the next year. However, CEO said "the next year or so". Sooner is definitely better than later.

So from a timing perspective, at least for the internal programs, things are lining up quite nicely because what we are seeing is that over the next year or so the expense would be fairly limited in terms of the work that would be done in our laboratories. As we move into the clinical development, we expect to be cash flow positive at that point and be able to fund some of those activities from the cash that we will be generating from the sale of our products. So that’s how we are balancing the internal programs.

With regards to your second question regarding the R&D programs, we continue to make progress internally. The main reason we haven’t been able to discuss or talk too much about them is really we need to secure IP around each one of the new program that we are working with. And sometimes – actually most of the times in order to get good IP protection or good patent filings, you actually have to do quite a bit of work including some in vivo work. So those things take time unfortunately and we are making good progress. At this point, my guess is that by the second half of this year we’ll be in a position to talk about some of those programs. But that’s where we are but we are making good progress on the pipeline.

And then sales and marketing we’ll spend somewhere – probably not over $50 million but approaching $50 million, so $45 million to $50 million in sales and marketing. Our gross margin percent in Q4 was about 64% and we’ll continue to make progress there. As you know, since we manufacture in-house, we have a fixed cost that we have to overcome as opposed to just buying product directly from a third party. So we’re making improvement on gross margins as our capacity utilization continues to increase. So we expect continuing improvements on gross margin percentage.