Hello and welcome to the Lannett Company Fiscal 2015 Fourth Quarter and Full-Year Conference Call. My name is Joe, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and please note that this conference is being recorded. I would now like to turn the call over to Mr. Robert Jaffe, Head of Event Relations for the Lannett Company. Mr. Jaffe, you may begin.

Thanks, Joe. Good afternoon, everyone, and thank you for joining us today to discuss Lannett Company's fiscal 2015 fourth quarter and full-year financial results. On the call today are Arthur Bedrosian, Chief Executive Officer; and Marty Galvan, Chief Financial Officer. This call is being broadcast live at www.lannett.com. A playback will be available for 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. This afternoon, Arthur will provide a brief overview and Marty will discuss the financial results in more detail, followed by Arthur's concluding remarks. We will then open the call for questions. With that said, I'll now turn the call over to Arthur Bedrosian. Arthur? Arthur P. Bedrosian: Thanks, Robert, and good afternoon, everyone. I hope you enjoyed our latest theme song, A Moment Like This. Before I begin, I would like to mention that Lannett was recently recognized by Fortune magazine as the fastest growing company in the United States. All of us at Lannett appreciate the honor and look forward to maintaining the status. Turning to our financial results, we reported another solid quarter driven by strong sales across multiple product categories and strong gross margin. On June 1, 2015, we completed the acquisition of Silarx Pharmaceuticals. Our financial results for both the fiscal 2015 fourth quarter and full year include approximately one month of operations for Silarx, which were not material. For the fiscal 2015 fourth quarter, net sales were $99 million with gross margin of 72%. Net income was $34 million equal to $0.91 per diluted share. For the full year, net sales were $407 million with gross margin of 75%. Net income was $150 million equal to $4.04 per diluted share. We have now reported 14 consecutive quarters in which net sales and adjusted earnings per share exceeded the comparable prior year period. With that brief overview, I'd like now to turn the call over to Marty to review the financials in more detail, then I will provide an update and will open the call to questions. Marty? Martin P. Galvan: Thank you, Arthur, and good afternoon, everyone. As Arthur mentioned, we reported a solid fiscal 2015 fourth quarter, with net sales increasing 23% to $99.3 million from $80.6 million in last year's fourth quarter. Net sales for our largest product category, thyroid deficiency, grew to $38.9 million or 39% of our total net sales. Our two other largest categories, gallstone and cardiovascular, had net sales of $16.3 million and $9.4 million, respectively, representing 16% and 10% of our total net sales. As to net sales of our remaining categories: pain management was $9.0 million, migraine was $6.3 million, glaucoma was $5.2 million, antibiotic was $3.0 million, muscle relaxants was $2.4 million. This is a new product category, which we reintroduced into the marketplace earlier this year. Obesity was $1.1 million, and other represented $7.6 million. Gross profit rose 29% to $72.0 million or 72% of net sales from $55.9 million or 69% of net sales. Research and development expenses increased to $7.0 million compared with $6.6 million in the same quarter of the prior year. Selling, general and administrative expenses increased to $13.9 million compared with $12.0 million. SG&A expenses for the fiscal 2015 fourth quarter included acquisition-related expenses of $1.6 million. Operating income grew 37% to $51.0 million from $37.4 million in the fourth quarter of last year. The effective tax rate was 34% compared to 37% for last year's fourth quarter. The lower effective tax rate was due primarily to changes in the Philadelphia local tax laws, as well as higher federal domestic manufacturing deductions recorded in fiscal 2015 related to a shift in our product mix. Net income attributable to Lannett Company increased 44% to $33.9 million or $0.91 per diluted share from $23.5 million or $0.64 per diluted share for the fourth quarter of fiscal 2014. Now, turning to our results for the full year fiscal 2015 compared with the prior year. Net sales increased 49% to $406.8 million from $273.8 million. Continuing with the remainder of the income statement and for completeness and comparative purposes, I will provide both GAAP and adjusted amounts for last year results. As you may recall, in last year's first quarter, we issued 1.5 million shares of our common stock in connection with the signing of the contract extension with Jerome Stevens Pharmaceuticals. Accordingly, cost of sales included a non-recurring pre-tax charge of $20.1 million related to this contract extension. Gross profit was $306.4 million or 75% of net sales. This compares to gross profit last year of $154.4 million or 56% of net sales. Gross profit excluding the JSP contract renewal charge was $174.5 million or 64% of net sales. R&D expenses increased to $30.3 million compared with $27.7 million in the prior year. SG&A expenses increased to $49.5 million compared with $38.6 million. SG&A expenses for fiscal 2015 included acquisition-related expenses of $4.3 million. Operating income was $226.5 million compared with $88.1 million, excluding the JSP contract renewal charge, last year's operating income was $108.2 million. Net income attributable to Lannett Company was $149.9 million, or $4.04 per diluted share, compared with $57.1 million or $1.62 per diluted share. Adjusted net income in fiscal 2014, excluding the contract renewal charge, was $69.7 million or $1.98 per diluted share. Our balance sheet at June 30, 2015, remained strong with cash, cash equivalents and investment securities totaling $213.8 million. As previously announced, we completed an amendment to our revolving credit facility during the fourth quarter of fiscal 2015, which increased our borrowing capacity from $50 million to $120 million, with an accordion feature for an additional $30 million. The increased credit facility together with our strong balance sheet provides additional financial resources and flexibility to fund our acquisition and our organic growth strategy. Now, turning to our guidance. For the fiscal 2016 full year, we currently expect net sales in the range of $425 million to $435 million. Gross margin as a percentage of net sales of approximately 71% to 73%, R&D expense in the range of $33 million to $35 million, SG&A expense ranging from $57 million to $59 million, which includes approximately $5 million in acquisition-related expenses. The full year effective tax rate to be in the range of 34% to 35%. Regarding the phasing of quarters in fiscal 2016, we expect net sales this quarter to increase over the prior quarter. We anticipate EPS growth to follow the net sales trend with the exception of the first quarter, which we expect to be slightly lower than the fourth quarter of fiscal 2015 because it includes the majority of the $5 million of acquisition-related expenses in SG&A. And lastly, capital expenditures in fiscal 2016 in the range of $60 million to $70 million, which includes $30 million to continue the partial fit-out of company-owned buildings. As mentioned on our last conference call, we were not anticipating any significant price increases in fiscal 2016. In addition, while we have a deep pipeline, including a large number of product applications currently pending at the FDA, our guidance does not include sales from these products, nor does our guidance include any benefit from any potential acquisitions or strategic alliances. With that, I will now turn the call back over to Arthur. Arthur P. Bedrosian: Thank you, Marty. For the quarter, we recorded strong sales across a number of product categories. As I mentioned earlier, during the fourth quarter, we completed the acquisition of Silarx Pharmaceuticals. The purchase price was approximately $42 million and was paid using our existing cash. I'm delighted to report that the integration is proceeding smoothly and is nearly complete. We were interested in Silarx for several reasons. First the products we acquired diversify our product offerings. Silarx currently markets 44 products, all of which are complementary to Lannett's offerings with no overlap. Second, its pipeline at the agency "four Paragraph IV" opportunities among its eight product applications pending. In addition, they have a number of compelling products in development. Third, Silarx adds R&D expertise; and fourth, it provides needed manufacturing and warehousing capacity. It is worth mentioning that Silarx has expertise in dosage forms fundamental to an aging population, and we expect to increase the development of these products. Last week, we announced the approval and launch of Aripiprazole, our generic ABILIFY Oral Solution, an antidepressant drug. This is the first approval from the Silarx pipeline. We believe our product is one of two generics on the market. The brand version of the product, which had annual revenues of approximately $70 million, was recently discontinued. We hope to capture significant market share before additional competitors enter this market. We are pleased that the Silarx acquisition is already adding value and our current expectation is that the acquisition will be accretive to earnings per share in fiscal 2016. On the business development and M&A fronts, we continue to evaluate potential acquisitions both domestically as well as in European market and seek out other opportunities for both products and companies. Our team continues to look at opportunities that are strategic fit and accretive to our business. We are particularly interested in opportunities that expand and complement our existing product portfolio and further vertically integrate our operations. We also continue to seek out opportunities to enhance shareholder value through an acquisition in a tax favorable jurisdiction. With regard to our pipeline, including Silarx, we currently have 28 ANDAs, including nine with a Paragraph IV certification pending at the FDA. We continue to develop a number of other products, which are at various stages of development. We expect to submit several additional product applications in the near future. Our plans call for continued significant investments in R&D, and while biosimilars are challenging opportunities, we are in discussions to co-develop three forms of insulin with an alliance partner. I want to welcome our new Silarx team members to our growing family. I thank them as well as our entire staff for doing an outstanding job. We remain very positive about Lannett's future. Marty and I would now like to address any questions you may have, Operator?

Thank you. We will now begin the question-and-answer session. And our first question here comes from Mr. Elliot Wilbur from Raymond James. Please go ahead sir.

Thanks. Good afternoon. The theme song threw off my rhythm a little bit, sorry about that. First question, I want to ask Arthur is around the Silarx acquisition. You mentioned that the integration is going well, but maybe you can provide us just a little bit more details in terms of the actual capacity that you obtained, and sort of what the level of near-term investment there is going to be vis-à-vis, the buildout of your other two buildings, obviously, there's a pretty significant step-up in year-over-year CapEx plans. I don't know how much of that is just reflective of incremental investment in Silarx versus investment in some of the other facilities that I think was pushed back over the course of the last fiscal year, but maybe you can just give a little bit more detail there. And then thinking about that acquisition as a platform, not really sure what the capacity or what the utilization of the existing capacity is on the liquid side, but curious if it really puts you in position to really go after much larger and higher volume product opportunities on the liquid side of the business, or are they relatively tight on capacity there and you have to be looking at potentially adding additional lines before you made another move into liquid market? Arthur P. Bedrosian: Okay. Did you expect me to remember all that lengthy question see how good I am...

Like I said, it threw me off a little bit, but... Arthur P. Bedrosian: Threw you off? You're on top of your game, who you're kidding? Let's see. First of all, we did buy those two IRS buildings that we've talked about previously. The problem was in fitting them out and waiting for FDA approval was going to take at least a couple of years and the problem or the benefit actually is that we're very busy and we're manufacturing and running a capacity in our existing plant. And at the margins we make on our products, the last thing I want to do is not supply products to my customers. So my customers in the commercial aspect of our business comes first. So it was holding up R&D, so by making the research and development team ready for commercial time on my equipment – we were delaying our applications. The Silarx facility actually was giving me not only a facility of 111,000 square feet, roughly 56 employees, an ongoing facility that's been in business 28 years with no regulatory problems. So I was able to consider moving research and development up to that facility as well as dosage forms not only in the oral solutions market, but also on solid orals that they develop up there as well. So it immediately relieved the problem for me in my facilities here in the Philadelphia market. It actually would save me the investment in fitting out the buildings in Philadelphia under our original timeframe, which was considerable and over a 10-year span I think it was somewhere in the neighborhood of $180 million. Now we have a facility, we're able to pick up a lot cheaper and use immediately and not have to wait FDA approval. So those were some of the drivers behind the Silarx acquisition. I have to admit when we got involved with the company, we were pleasantly surprised that as at the time, we had nine applications at the agency. This is a very small company as you can imagine and yet four of the nine were (18:40) challenges. Something I thought showed a lot of courage on his side and he made a good job of picking the products. On the market currently (18:49) with a period of exclusivity for one of his drugs. He did get the approval for the generic of the ABILIFY, so now there's eight products remaining at the agency. So he picked up a measure of expertise that we didn't realize was there. So not only are we getting a facility, a manufacturing plant, a place we could do R&D that will alleviate some bottlenecks here in the Philadelphia plants, but I'm getting a talented group of people who brought a different approach to research and development for ANDAs than we were using here. So overall, I think the investment in that facility is going to be marginal in the sense that it's already up and running. We certainly have to make some cosmetic additions to it to cover the different products we want to make there, move some of the liquids that we make at our Cody facility to that plant as well, remove some of the liquids that we were planning to make in Philly, and did make here, as well to that facility. So, there's really a reconfiguring of our operations going on with regards to Silarx's operation, but no major investment in the facility is seen vis-à-vis, any CapEx, for example. And I believe the only additions there are probably going to be additional staff to support the R&D effort that we plan on developing from there. We also picked up some talented officers. So, we have two officers joined our team from that company. One is heading up scientific affairs. His background, he's involved in R&D, and of course, the founder or co-founder of Silarx, Rohit Desai. So, he really made an unusual find in thinking about this company. Previously sometimes the company (20:29) ones you don't pay attention to, and this was one of those sleeper companies we just didn't think which was valuable as we discovered when we looked into it. So I hope that answered all your questions. If I missed something, let me know.

No, thanks. If I could – just a follow-up question for yourself and for Marty as well. In thinking about full year fiscal 2016 outlook on the top-line and on gross margin, obviously, the message seems to be one of relative stability versus the second half of fiscal 2015. But maybe you guys could just talk a little bit about some of the key product categories and sort of what you're expecting there, if in fact that we should see relatively straightforward carry through kind of run rates in the second half of the year throughout fiscal 2015, whether there's any particular category that you're expecting more movement up or down versus sort of what we saw in the fourth quarter. Martin P. Galvan: I can start, Elliot. I can start with some numbers here. I think for the most part it is pretty consistent with the second half of our fiscal 2015. Some of the main products – and we've kind of discussed some of this in some of our Investor presentations, things like our largest single product, levothyroxine, we see that as looking fairly similar in fiscal 2016 as 2015. Digoxin, as you know, the second half is much lower than first half, and we expect that second half run rate to continue now into fiscal 2016. Cocaine topical, we expect to see some increase there. We were looking there – for the C-Topical right now, we're looking at sales somewhere in the high 20%s, maybe 27%, 28%, 29% something like that. On ursodiol, we are expecting some growth in ursodiol. The product is holding up, and so we do expect some growth there. And then of course, you do have some incremental business in fiscal 2016 from the Aripiprazole approval that we announced and Arthur discussed in his prepared remarks. And, Arthur, if you want to add anything to that in terms of color. Arthur P. Bedrosian: No, not so. I think you've covered it with regards to all the products. I know a lot of people are wondering whether this was going to be a down year maybe we're not anticipating a down year per se. And everybody keeps bringing up the sustainability of price increases. Well, they seem to be sustainable. I'm not saying that there hasn't been some weakness here and there, but overall, I feel the price increases have been sustainable and we're going into almost the third year now with some of these increases. So we think it's a more rationale market we're in.

Well, if I could follow that up with one final question, Arthur. You've been, on the record, several times in the past is famously or perhaps infamously predicting the end of the favorable pricing dynamic cycle at the end of 2016, do you still feel that way? Arthur P. Bedrosian: Yes. My instincts tell me that the larger generic drug company because they're all public need to show growth and one way to grow the business if you don't have periods of exclusivity is going to be grabbing market share. We saw a recent example by one of the larger companies with one of the products called econazole, where they went into the market, tried to pick up and did successfully pick up an additional $200 million revenue, but they did it by lowering the price. So this was a company that's normally raising prices, went out there and behaved in a manner I was afraid they might behave in December of 2016. Now I am not always been right and I certainly hope I'd be wrong on this one, but it's just a feeling I have that the kind of price increases we've seen are starting to come to an end. In some cases, I don't see them growing to the levels that we've seen them grow in the past, but there's still price increases out there every week. You ask a wholesaler what's going on, they'll tell you that someone's raising a price weekly. So the trend continues, but again I think by December 2016, it may come to an end. And I say may, again, I'm no prophet. We're operating accordingly. We're trying to keep our overhead lean and making sure we can live with lower margins if we have to.

All right. Thank you. Arthur P. Bedrosian: You're welcome. Martin P. Galvan: Thanks, Elliot.

And thank you. Our next question here comes from Matt Hewitt from Craig-Hallum Capital. Please go ahead. Matt G. Hewitt: Good afternoon. Thank you for taking the questions. First one for me, I wanted to – on the last call you had kind of given preliminary guidance for the year one, very low single-digit growth. You've obviously increased that today. I'm wondering if you could break down the increase that we're seeing today between the ABILIFY approval versus the Silarx contribution. Martin P. Galvan: Overall, the increase year-on-year if you go to the midpoint, the $430 million midpoint, it's $24 million of additional business year-on-year, I'm sorry, yeah, $24 million. So about half of the $20 million is the base Silarx business that we acquired. So at that point in time Silarx was running about $12 million annually. Then the remainder of the difference, you have the $12 million is – so part of it is Aripiprazole. We're not giving a specific number for that that we're thinking, but it's somewhere between $5 million and $10 million in that range and then the remainder of the growth is the legacy Lannett business. Matt G. Hewitt: I guess looking at that contribution, the $5 million to $10 million, given that it was a $70 million market, the brand has exited, I haven't seen any indications that the other generic company that received approval had inventory at risk, you guys per your press release were launching, so you clearly were ready. I'm confused that the disconnect between the $70 million with the $5 million to $10 million that you're anticipating or forecasting for? Arthur P. Bedrosian: Well, the reason for that is – first of all, we're always very conservative and it's always to end a promise and we don't know just exactly how much of the brand market was lost, because it's been about five weeks since the brand company removed their product from the market to our launch. So it's possible people that came to renew their product prescription weren't able to get the ABILIFY product and would switch to something else and those people now may be lost to us. Optimistically, we're hoping to capture a lot more of that market maybe in the neighborhood of $20 million, $30 million for ourselves, if that market continues to exist. But we don't know, it's hard to tell. This is unusual situation, so better to be conservative in our forecast than to be optimist. Martin P. Galvan: It's too early. Arthur P. Bedrosian: Yeah. It's too early. Matt G. Hewitt: Okay. Arthur P. Bedrosian: But you're right, the market should still be there, the refills now coming in, should be filled with the generics that are available. Matt G. Hewitt: Okay. And then, I guess kind of sticking with that topic, one more question, because the brand is left, is it safe for us to assume that you didn't need to follow normal pricing patterns where you enter the market at 20% discount, or is it safe to assume that you've entered at the existing price and so you'll capture the full market with that full price at least over the near term? Arthur P. Bedrosian: No. The reason for that is the other company that also received their approval had only booked orders that are lower priced and even though he didn't fill those orders initially because both our company, meaning Silarx and their company received tentative approvals that nevertheless the damage was done so to speak because they have that low price out there. We were curious to see what they're going to do with their pricing, now that the brand is off the market and just the two of us have launched. But at the moment, it looks like they're filling the orders that they committed to at the lower price, which handicapped us from introducing our product at a higher price. We were higher than them in our initial launch, but we were handicapped by – my Sales Vice President says, you're smart as your dumbest competitor. Matt G. Hewitt: All right. One more for me, then I'll hop back into queue. Regarding C-Topical, it looks like you had nice bounce back from some of the issues last quarter. How much of the $9 million or so in the fourth quarter was just some catch-up from orders that were missed in the third quarter versus run-rate, and should we anticipate growth off of this, Q4 number will step back a little bit in Q1? Martin P. Galvan: We have some additional impact in C-Topical in the fourth quarter roughly about $2 million or so. Matt G. Hewitt: And that was upside of the normal run-rate, or you've grown the business by $2 million, just so I understand that? Martin P. Galvan: No, that $2 million was doubling up... Matt G. Hewitt: Catch out? Martin P. Galvan: ...a catch out. Matt G. Hewitt: Okay. Martin P. Galvan: Yes, exactly. Matt G. Hewitt: Okay. Great. Thank you very much for taking our questions. Martin P. Galvan: Okay. Arthur P. Bedrosian: Thank you. Martin P. Galvan: You're welcome.

And thank you. Our next question here comes from Andrew Finkelstein from Susquehanna. Please go ahead. Andrew J. Finkelstein: Hi. Thanks very much for taking the questions. Could you talk a little bit more about your gross margin assumption and outlook for the year? Obviously, if there's price competition on individual products that can swing you within your range, but to what extent are your revenue range and gross margin range correlated, and are there any particular changes on individual products or other factors we should have in mind in trying to predict where you might you end up within that range? And then, as you look at business development opportunities, has recent market volatility changed anything in your approach, or how you might think about your willingness to execute on transactions and at what valuation? Thanks. Martin P. Galvan: Sure, Andrew. So this is Marty. I'll go first here. So as far as the gross margin, which was your first question, I believe, from our perspective, as far as predicting fiscal 2016, it's essentially looking at our last two quarters now and in particular our fourth quarter, and we kind of see that run-rate continuing and that as you can see it pretty much spot on where we put our full year 2016 range at. So right now, that's our best indicator as to what to expect for fiscal 2016. As far as sales goes, as we said, we do expect to see sequential growth through the quarters of fiscal 2016 that's basically just driven by additional volume as the business grows and the product lines grow. There isn't anything unusual there. As I mentioned in my prepared remarks or in my comments earlier with Elliot, ursodiol is showing some good growth in fiscal 2016 from our expectation perspective. So that's probably the one product that is doing very well, at least as far as guidance is concerned. And with that, I think I'll hand off over to Arthur. Maybe just want to repeat, Andrew, the second part of your question there. Andrew J. Finkelstein: In terms of business development, given markets had become more volatile and particularly you talked about international deals as well, does that volatility changes in your own valuation affect your approach at all in terms of what you might execute on and at what valuation? Arthur P. Bedrosian: Well, it's funny you bring that up. Yeah, the question came up earlier today when I was speaking to one of my colleagues, and the feeling is all the anxiety that's going on there is all international. It really does not impact the generic drug space we're in. So in terms of the drug market price here or in Europe, we don't see any particular changes in the valuation. We know some of the valuations were heady, so let's just say maybe some of the headiness has now ended. And they'll probably stay around this area. But we don't see any particular change though. The company we've been looking at in Europe continues to be attractive to us, and it's been growing nicely and in the United States we've been looking at a few companies here, and we're hoping that we can do some acquisitions and the valuations of those companies is similar to the way everyone is valuing them. Now if you look at the past two days, you could say everyone's valuation has dropped, but would I pay more if the market went another 1,000 points, probably not, so am I going to pay less because it dropped, probably not. We value things based on what we think our business is worth and what that acquisition is worth to the Lannett shareholders. It's probably the best way I can answer that. We've done a lot of due diligence here, let's just say a lot of searches, a lot of studies, a lot of investigations, a lot of forecasting, and we've got a lot of experience at it, and if nothing else even though you don't close on every transaction you look at, we've gained a lot of experience in looking at how we value something and what has turned out to be worth later on in the real world. So I think my staff here and I compliment Marty for putting the staff together that he's put together, has really done a great job in valuing companies. Andrew, any other questions? Andrew J. Finkelstein: No, that's good, thanks very much. Arthur P. Bedrosian: Okay. Martin P. Galvan: Thank you, Andrew. Arthur P. Bedrosian: Thank you.

And thank you. Our next question here comes from Scott Henry from ROTH Capital. Please go ahead.

Thank you and good afternoon. Martin P. Galvan: Hi, Scott.

I guess starting on thyroid deficiency, I didn't quite hear that category, Marty, could you give me that number again? Martin P. Galvan: Let me just find my script here. Okay, the thyroid, I don't have it. Scott, why don't you ask your next question – okay, here we go, sorry.

Okay. Martin P. Galvan: Thyroid was $38.9 million.

Okay. And could you give any comments on what you expect for that category in the next 12 months and along with that, I mean, obviously, it's an important product category to you, are you hearing anything out in the marketplace that could change the competitive dynamics over the next 12 months or would you expect pretty much more of the same? Martin P. Galvan: Well, first of all, on the numbers piece, I'll just say that for fiscal 2016, we expect to see a similar sales dollar number something in $150 million to $155 million, a number like that for fiscal 2016, so it's pretty consistent with fiscal 2015. And then... Arthur P. Bedrosian: And I haven't heard anything about, I mean, we've spoken before about another brand entering the market sometime next year besides the Levothroid, we haven't heard of anybody else entering the market, and we still don't see any particular change in the market. There has been some shifting amongst some of the suppliers where the distant third company picked up some market share from the number one supplier. We've had no impact on our sales of that product though. So, we continue to grow it every year, and I expect that this year as well.

Okay. And so Levothroid, we would still expect that to be a brand nothing has changed on that front? Arthur P. Bedrosian: That's correct.

Okay. And then shifting as well, cardiovascular, Marty, I apologize, but that number, I just wanted to make sure I took it down correctly? Martin P. Galvan: Yes. Cardiovascular was $9.4 million.

Okay, which I guess was up over Q3, is that just a timing issue or should I expect it to kind of decline off that $9.4 million number? Martin P. Galvan: In the fourth quarter, what popped it up a little bit was Digoxin, that category is primarily Digoxin. So, maybe (37:28) we had a weak third quarter for Digoxin. So, the second half of fiscal 2015 being $15 million that we thought is a pretty reasonable run-rate for what we're expecting now in fiscal 2016.

Okay. And if I recall, there was potential for supply issues on Digoxin, is that still the case? Arthur P. Bedrosian: Well, not with ours, but we're in very good shape, but we do know that one of our newer competitors took a customer away and then was unable to supply that customer after three months and that customer went to another competitor of ours. So, we know some people have had supply issues on the raw material, but we're okay. We have no issues there.

Okay. Shifting down, I'm just kind of staying on some of the product categories. Pain management, Marty, I know you said you were thinking $27 million to $29 million for C-Topical. Martin P. Galvan: Right.

What about the entire category? I mean, is it significantly north of that? Just trying to get an idea of what kind of contribution we're getting from some of the other products. Martin P. Galvan: Yeah. I would say for fiscal 2016, the other products are fairly consistent with 2015 the other products, so the growth in the category is primarily C-Topical. I mean, Essentially, the other products aren't as large as C-Topical. So, the whole category is moving as C-Topical moves.

Okay, perfect. That's helpful. And then, so ursodiol, that's in the gallstone prevention line, I assume, obviously.

Right.

Now, you talked about some growth in that product. I just want to get a sense, because the numbers are so volatile from quarter to quarter, are you thinking about growth off of the fourth quarter numbers? Obviously, third quarter was a large number, closer to $20 million, fourth quarter was $10 million. How should I think about the category? Or should I just take the annual 2015 and think about some growth off of that? Martin P. Galvan: Well, Scott, fourth quarter was $16 million. Yes, in my commentary, it was $16.3 million, which was about where we are expecting three months ago or four months ago now for that category. So that gives you a full year number of about $66 million.

Okay. Yeah, that makes sense now. I had that number in the wrong place, but... Martin P. Galvan: That's more (40:04) – yeah, okay.

That helped. So that clears that up. Okay, I think that should do it for me. Thank you for taking all those questions. Arthur P. Bedrosian: And thank you, Scott. Martin P. Galvan: (40:16)

We also have a question here from Rohit Vanjani from Oppenheimer. Please go ahead. Rohit G. Vanjani: Hi, Arthur, Marty. Thanks for taking the question. Congrats on the quarter. Martin P. Galvan: Thank you. Rohit G. Vanjani: For the liquid ABILIFY, I think another competitor was the first to file, is there any kind of an economic share with that competitor that allows you to launch? Arthur P. Bedrosian: Yes, there was. Rohit G. Vanjani: Can you talk about any kind of details (40:51)? Arthur P. Bedrosian: Well, nothing that we're going to repeat here, but there was a relinquishing of their position to the two tentative approvals to Silarx and to our competitor, so the two of us did agree to share some of the economics with the company that held the first to file position. Rohit G. Vanjani: Okay. And then, so do you anticipate a reeducation period for that liquid ABILIFY or will there be any costs for you if you do anticipate that to kind of reeducate the market to bring back scripts? Arthur P. Bedrosian: No, not really that's something the pharmacists will probably be best suited to do. They certainly know that the generic is available. They know the brand is in. So when they get a refill for the brand prescription, they have no choice but to shift them to the generic product that's available. So it should enhance the substitution, let's say. The only concern is that the doctors that are prescribing the product anymore for anybody new because no one is detailing it, but the market that exists, the $70 million brand market was just recently abandoned by the brand company. Optimistically, I'm expecting a big market share. But again, we don't predict things like that because it's hard for us to make those predictions. Optimism is not something we want to give out on the call. We'd rather be conservative and let our salespeople say, this is what we think can do, and then if there's a change in the marketplace, we'll be happy to take advantage of that. But it's one of the unusual situations where the brand left so quickly from the market so that's why I'm more optimistic than if they left the market a year ago, for example. Rohit G. Vanjani: And then for Digoxin I think last year the guidance was $50 million, have you seen aggressive discounting in that market with the latest competitive entry, I think, from Sun? Arthur P. Bedrosian: I wouldn't say aggressive, there's been some discounting, but essentially the prices held up. Let's put this way, they're nowhere near the prices that existed a few years ago. So while it may be getting a little more competitive, I wouldn't call it aggressive. Rohit G. Vanjani: Okay. And then deal talks with the Italian company that you mentioned a couple of quarters ago, where does that stand? Arthur P. Bedrosian: Well, they know we were doing some due diligences and they agreed to stand by. So we will continue to have discussions As a matter of fact, we speak to them I would say monthly, and we are waiting for some additional paperwork from them. So, just give us – they had a better year than they anticipated this year. We're waiting for some of those financials. Rohit G. Vanjani: Okay. And then the last one for me. Have you received any target action dates from the FDA? Arthur P. Bedrosian: Not that I'm aware of and quite frankly some of the ones, we did receive didn't really turn out to be of any use to us, but I believe that they're supposed to be sending some additional ones out. But no, we're still complaining about the same problem. The lack of communication, and some other issues, too. In regards to misunderstandings on guidances, meaning, they don't even know what the guidances say when we submit applications. We're running into issues, where they're constantly wrong, and they refer to guidances, and then when you read the guidance, you realize it doesn't say what they say it says. So, we're finding a lot of delays there, and it's hard to understand why. I mean, they can read just like we do, but we are running into a lot of frustrations in that scenario. We hear a lot of promises. And my regulators, I don't want to sit here and criticize them, but we just don't see the improvements. Rohit G. Vanjani: Okay. All right. Thanks for taking the questions. Appreciate it. Arthur P. Bedrosian: Okay. Martin P. Galvan: Thank you, Rohit.

We do have Mr. Matt Hewitt, back online with a question from Craig-Hallum Capital. Please go ahead, sir. Matt G. Hewitt: Just one follow-up for me. The $5 million of acquisition-related expenses here in the first quarter, how much of that is, I guess, follow through on the Silarx versus new spending for bankers, consultants, new deals that you're working, whatnot? Martin P. Galvan: Yes. Matt, the latter is predominantly just consultants and other folks we have involved. We do have so many in there, some consultants helping us with the integration of Silarx. But it's a bit more towards the consultants and legal people and things of that nature related to the things we're working on. Matt G. Hewitt: Okay, great. Thank you. Martin P. Galvan: Okay. Thank you.

Speakers, at this time I'm showing no further questions. I'll now turn the call back over to Robert for closing remarks.

Actually, Arthur, do you want to close or do you want me to? Arthur P. Bedrosian: Yeah. And let me thank everybody for their participation today, and we look forward to speaking to you again.

Thanks, everyone. The call is over. Arthur P. Bedrosian: Thank you. Martin P. Galvan: Thank you.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you for participating and you may now disconnect.