Assertio Holdings, Inc. Price & Performance (ASRT)

Such forward looking statements are not guarantees of future performance and involve risks and uncertainties. Including those noted in this afternoon's press release, well as Assertio's filings with the SEC. These and our other risks are more fully described in the Risk Factors section and other sections of our annual report on Form ten ten ks and in our Form 10 Q filings. Our actual results may differ materially from those projected in the forward looking statements. Nestorio specifically disclaims any intent or obligation to update these forward looking statements except as required by law.

And with that, I will turn the call over to Brendan. Please go ahead.

Thank you, Matt. I'd like to start by welcoming everyone to today's call and thanking you for joining us. I'll begin my comments with some overall and then turn the call over to AJ to discuss Q4 and 2024 full year financials. I'll then come back after AJ to discuss our 2025 outlook before we take questions from our covering analysts. As you know, I've been in the CEO chair for about nine months now.

During that time, I've been able to assess the overall business, the growth drivers, structure operating model, BD landscape and talent. I'm happy to say that over the course of my first nine months, we have addressed needs in all of those areas and are making progress to return Assertio to growth sooner rather than later. My perspective is that from late 'twenty three to 2026, is a pivotal time in Assertio's evolution. Companies go through cycles as lead assets transition and Assertio is no different.

That is why I think of 2024 as our year of stabilization. When this transition phase was new. I think of 2025 as our year of transformation as we prepare for the future, And I think of 2026 as the year that the growth phase begins and we are aligning our strategy accordingly. To explain a little more why I characterize 2024 as the stabilization year, Assertio is coming off the acquisition and integration of Spectrum. And the subsequent loss of exclusivity of Endosin. In addition to managing the loss of exclusivity of Indusen, 2024 was focused on making the transition from Endocin to Rovadan as the lead asset. Part of that transition was adjusting to the reality that Rolvedon is a very different asset than Indusen. It competes in a very different market, with different economics and requires a different go to market approach. However, it has given us a good foundation to build from especially in oncology and oncology supportive care. So I think stabilization is the correct word to describe that journey. Overall, I am proud of what we've accomplished in 2024. Not only with Rolledon and Indusen, but across the board we have made great strides.

Specifically, we exceeded $60,000,000 enrollment on sales, growing our share in the Community Oncology Clinic segment where we have primarily focused manage the erosion of Indusen due to generic competition and optimize the rest of the portfolio stabilizing the P and L in the process. We generated good cash flow and financial contributions from all our assets and now have a stronger balance sheet to deploy We completed and presented the Rolvedon same day dosing trial that we believe supports the use of Rolvedon as a safe and effective agent when given the same day as chemotherapy treatment. We completed a commercial pilot project for SYMPAZAN to confirm that growth is not only possible, but probable with the addition of in person promotion. We also added new talent to our leadership team with the appointment of Mary Petriga, as Chief Commercial Officer and in tandem appointed former Chief Commercial Officer and former Chief Financial Officer Paul Schlichtenberg, as Chief Transformation Officer.

Lastly, we made changes and added new talent to our Board with the appointment of David Stark, a former colleague of mine and former Chief Legal Officer of Teva Pharmaceuticals, Mark Reisenauer, a seasoned pharmaceutical senior executive with thirty plus years of commercial experience including significant oncology experience. And of course, Heather Mason, Board Member, the Interim CEO prior to my arrival also became Chair of our Board. As I sit here today, we are in a stronger position on all levels than we were just nine months ago to deliver on our commitment to return Assertio to growth. With that as a prelude, will turn it over to A. J. To discuss our financial performance in 2024. Thanks, Brendan.

Today, I'll walk through our financial results for the fourth quarter and full year 2024. Before I begin, I want to highlight a key few key points. My commentary will focus on quarter over quarter comparisons as year over year comparisons are less relevant due to the Spectrum acquisition and Innocence generic competition in late twenty twenty three. Rovadon is now our lead asset and brings with it associated changes in margin, operating cost structure, and cash flows as seen in the 2024 results.

Q4 product sales were $29,600,000 up $900,000 from Q3, driven by strong Orobadan and OTRUxup sales.

Orovitan sales were $15,400,000 up $400,000 driven by higher volume partially offset by changes in pricing. The Q4 step up in volume was inclusive of new customer stocking which helps to diversify our base and expand our opportunities. We do expect the stocking pull through to occur throughout the first quarter. In addition sales, $5,500,000 slightly down from $5,700,000 in Q3 due to pricing impacts from generic competition Reported gross margin was 61% down from 74% in Q3, due to $2,900,000 in higher excess inventory write [indiscernible] primarily for Indusen due to generic competition.

Excluding these charges, gross margin was 71% with the decline from Q3 driven by changes in product mix. Turning to operating expenses, SG and A expense was $21,400,000 up from $16,700,000 in Q3. R and D expense was $1,200,000 slightly up from $1,000,000 in Q3. Adjusted operating expenses which excludes stock compensation, D and A and changes in fair value and was $21,600,000 in Q4 compared to $16,400,000 in Q3. Fourth quarter adjusted operating expenses reflected a net $5,400,000 increase in litigation contingencies which was partially offset by lower general operating expenses. GAAP net income for the fourth quarter was a loss of $10,500,000 compared to a loss of $2,900,000 in the third quarter. Fourth quarter was impacted by an impairment charge on intangible assets of $5,200,000 Adjusted EBITDA for the fourth quarter was a loss of $500,000 compared to income of $5,300,000 in the prior quarter. Fourth quarter adjusted EBITDA was impacted by the inventory write downs and litigation contingencies. A detailed reconciliation of adjusted EBITDA was available in our press release. Turning to full year results. I wanted to highlight key takeaways in comparison our 2024 guidance and related commentary previously provided. Total product sales were $120,800,000 at the high end of our sales guidance range Rovadone sales exceeded our expectation at $60,100,000 Invisin sales exceeded our expectations at $26,800,000 Gross margins performed largely as expected based on the change in product mix from Indusent to Robodone.

However, it was negatively impacted by $4,200,000 in write down for Indusen Access inventory as a result of generic competition. Which is now behind us. Adjusted operating expenses were $73,700,000 which was higher than expectations This was mainly due to higher litigation related costs including about $1,000,000 in net contingency reserves. Full year adjusted EBITDA was $17,100,000 below the $20,000,000 low end guidance range mainly due to the $4,000,000 in addition inventory write downs and $1,000,000 in higher litigation contingencies. The business generated $26,400,000 in operating cash flows in 2024. Allowing us to exceed the high end cash goal of $100,000,000 As a reminder, in 2024, we began to invest cash into short term investments, Our total cash position includes cash and cash equivalents and short term investments. With that, I will turn the call back to Brendan to discuss 2025 priorities and outlook.

Thanks, A. J. So now with 2024 behind us, I would like to turn to 2025 our year of transformation. I'd like to begin by explaining clearly what I mean when I say transformation. It really comes down to four strategic priorities in 2025. Number one, is simplifying our structure and processes. This really started late last year with the appointment of Mary Petriga Chief Commercial Officer and Paul Swichtenberg as Chief Transformation Officer. Mary will focus on go forward commercial strategy and aligning the commercial organization to execute on our growth priorities. While Paul will work directly with me AJ and the entire management team to streamline overall structure and processes, to enable a successful transformation of our business. Number two is focusing on growth Assertio. Which today are primarily Rolled It On and Simpazan which we hope to build upon. Number three is reducing our legal exposure and associated OpEx.

Like many companies that have grown through M and A, we have inherited a significant amount of legal baggage over the years. We have made significant progress in reducing this exposure in 2024 and will continue to do so in 2025. This will ultimately have a beneficial effect on OpEx and EBITDA going forward. Number four is deploying our capital in a smart and accretive way to generate long term value. We are currently in the process of evaluating numerous strategic opportunities to better position Assertio for near term and sustainable growth.

I want to emphasize that we are engaging in many transformative strategic discussions I am not able to disclose additional details at this time. I also want to remind all our stakeholders that while we have strengthened our balance sheet, which will expand our hunting grounds, and improve our odds for closing a strategic deal any deal must be synergistic, complementing our omni channel commercial approach and must make economic sense.

As I look at 2025, we believe modest growth in RollvardON as possible this year combined with double digit SYMPAZAN growth but being largely offset by continued Indusen decline and the rest of the While we have made realistic assumptions as it relates to Endocin, the market is uncertain and difficult to predict. In addition, the long acting GCSF market is very competitive and continues to be dynamic from quarter to quarter. That said, I want to be clear that we are focused on growing Rovadon and continue to add new Rovadon accounts and customers late in 2024. While expanding payer access early this year to better position us for expansion into the commercial and institutional segments. To enable that growth, as A. J. Mentioned, we increased inventory at the end of Q4 to support customer and TAM expansion. As we bring those customers online, it will take time to pull through some of the inventory. Hence, you should not expect to see equal quarters as you saw in 2024 where we will primarily focus on the Part B Community Oncology Clinic segment. However, to achieve continued growth in Rolvedon, we must expand beyond the community oncology clinic segment. This will also be critical for continued growth in 2026 and beyond.

For these reasons, Q1 rollover on sales will likely be lower than Q4 but Q2 should see growth from Q1. In addition, as a result of previously mentioned pilot project, we have increased our promotional efforts on SYMPAZAN combining our non personal promotion with a small field sales team to call on high desk cell prescribers in key markets. Lastly, as I stated, we are currently evaluating numerous strategic options impact our go forward strategy should they play out. Given that background and the uncertainty of 2025, I'm giving guidance ranges for net sales between $108,000,000 and $123,000,000 and adjusted EBITDA of $10 to $19,000,000 I hope to be in position to lay out our strategy in more detail during the May earnings call and provide updates to our strategy and guidance ranges as appropriate throughout the year. And with that, I think we're ready for Q and A. Operator, please go ahead with the instructions.

Your first question comes from the line of Jim Sidoti with Sidoti and Company. Please go ahead.

Hi, good afternoon. Thanks for taking the question. So it's a pretty broad guidance range What What are the factors that can change that gets you from the $108,000,000 to 123 Yes.

Hi, Jim. Thanks for the question. Yes, I know it's a pretty high guidance range. Range. There's a lot of puts and takes this year as we look at the business. We're still not quite certain how Indusen will evolve. And of course, Indusen has traditionally had a pretty good margin. So that could have an impact on EBITDA one way or the other. I mentioned that the long acting GCSF market is dynamic from quarter to quarter. We've done very well in the Medicare Part B space. We've grown share but we really need to expand beyond that into commercial and institutional segment. So to continue to fuel that growth. So there's a lot of uncertainty. There's uncertainty with the rest of our portfolio. So as we look at 2025, we felt it appropriate to give a wide guidance range. And as some of the strategic options that aren't included in that guidance whether they come to fruition or not, we will come back and narrow that guidance as appropriate.

All right. I know you said I asked one question, but I just just throw one more in. How likely is it that you do acquisition in the next twelve months?

I mean, I think it's I think the odds are above fifty-fifty. It's hard to put a number on it. I mean, we've certainly strengthened the balance sheet. Which puts us really in a different range of assets that we look at. So there's a broader range of assets that we can look at.

So that's all good. But the important thing here is we're trying to find the right fit for the organization. We certainly don't want to overpay. It's been a little bit of a seller's market. And it has to fit our model So we've seen some things. We've had numerous discussions. We have discussions ongoing today. But it's hard to tell when or if they'll pan out. But I'm optimistic that we will do something in this year.

Okay. Thank you.

Next question comes from the line of Thomas Flaten. With Lake Street Capital Markets, LLC. Please go ahead.

Good afternoon, guys. Thanks for taking the questions. Brendan, maybe I could start. You had an entire kind of pillar for 2025 around legal exposure. And you had the relatively large legal reserve that was taken in the fourth quarter. Can you maybe provide some color around what those exposures are and just how we should think about what that means for you guys going forward?

Yes. No, I mean, and we've talked about in the past, and thanks for the question Thomas. But I mean, I think the legal exposure is well known. I mean, we've got the ongoing opioid legal exposure that's there. We've worked through that. We've had I don't know, 140, 140 some cases to miss dismissed to date and we're optimistic that we'll continue on a good trajectory there. But it just takes time, right? We don't control the MDL. We don't control what that looks like. But we're making progress in reducing that exposure. We've had some shareholder lawsuits that we're working through and some other things. So I think without divulging any confidential information, we made progress last year. As said, and I think we'll make progress this year. And as we clear some of those issues, our OpEx on legal comes down and that has a direct impact on EBITDA. So So it's a little bit of a journey, but things are going in the right direction.

And then switching gears, the April ASP files from yesterday look like you had a little bit of an uptick in the Rolodex ASP. Can you confirm that? And then also talk about what you guys have been doing to manage JSP?

Yes. Thomas, I can take that. Thanks for the question. You are right. Yes, if you kind of look at it sequentially over quarters, we did see about a 2% increase in our published ASP that just came out It's primarily been a function of ensuring we can continue to get the volume gains as we penetrate more more in the market and then being really disciplined on the pricing side. So I think a combination of that and execution by our commercial team has really paid dividends in that.

Excellent. Thanks for taking the questions.

Your next question comes from the line of [indiscernible] Maxim Group. Please go ahead.

Hi, everyone. Congrats on the quarter and thanks for taking my question. Just a few on rovonone. So obviously you have the same day dosing data come out in December. I guess at this point two questions. One, are you seeing any physicians prescribe Rovidone for same day dosing or have you seen like an uptick in that? And two, could you kind of walk us through I guess, now the logistics and timelines for getting that into the NCCN guidelines and when we could really start seeing the benefits of that data Yes, sure. Hi, Nats. Thanks for the question. I think that we haven't really seen the impact of same day dosing or an impact of same day dosing with Rolodone yet. We just presented the results at the San Antonio Breast Cancer Conference in December. So that was when the information really became publicly available. We presented the results again, I think at the Miami Breast Cancer Conference just a week or two ago here in March. And the process now is that to put the manuscript in a peer reviewed journal and then in the back half of the year approach NCCN for potential inclusion in the guidelines.

So it's an evolving strategy throughout the year. I think up until this point when we were asked by providers or physicians, if Rolvedon was safe or if there had been any studies with Rolvedon in same day, we basically say we don't have any information. There's been no data to support that. That would be the end of the conversation. I think now we're able to direct them into our medical department and Doctor. Howard Franklin, our Head of Medical is able to have a dialogue with physicians about that study. So think we're making progress the same day.

And getting that information out there. But I don't think we've seen much of a commercial uptick as of yet.

So when you say get it into density and guidelines on the back end of the year, are you suggesting that we may see more of an impact from this, I guess, in 2027?

Or are you still do you still think it'd be a 2020 like a second half twenty twenty six event? 2025, I'm sorry. 2020? No, I think it's a a I think it's a built, right? I don't think you're going to see all of a sudden this big step up in same day dosing, whether it's in the guidelines or whether it isn't. I think it's just kind of an awareness that it's that there's data to support we believe, supports that it's safe and effective.

There's no guarantee that it will be included in the NCCN guidelines either. I mean, as we present the data twice, we get it into a peer reviewed journal. We'll certainly approach NCCN and ask for an inclusion in the guidelines, but there's no guarantee there. That's up to NCCN as to what they do there. But I just think in general having the the trial completed and with positive results as that information is disseminated and becomes more aware in the public domain, then we'll see a gradual Sure.

Your next question comes from the line of Raghuram Selvaraju with H. C. Wainwright and Company. Please go ahead.

Good afternoon. This is Dan on for Ram. Thanks for taking our questions.

So regarding Indusen, how many generics are there at this point in time? And how many you expecting to be at the end of 2025 and 2026? And as a follow-up regarding the SYMPAZAN initial commercial study, have there been any noteworthy changes on uptake there recently? So what and how is that shaping up? Thank you.

Sure. Okay. So let me address into first and then I'll take SYMPAZAN. So I think it was September, August or September 2023 when Zydis launched the first generic formulation of Endocin. And then we had one generic competitor as well as a compounder in the market for most of '20 all of twenty twenty four.

In December, Hikma received approval for a generic formulation of Indusin that they launched in January. So where we stand today is we have two generic competitors as well as a compounder. And I would expect one or two other generic competitors throughout the year. So I don't know exact timing.

I don't know exact numbers. It could be more than that. It could be less than that. If it's If it's more than that, then that's a headwind. And if it's less than that, then it's probably a tailwind. So we'll see where that ends up. Ultimately, I don't know how many generic filers there are and how many we'll see, but generally once you get five in the market doesn't five or more, it doesn't really matter that the value is pretty much totally gone at that point. So we're optimizing Edison the best that we can. I think today, as we sit in the market, we've retained the amount of share that we hope to retain and our pricing has been somewhat stable the last month or two. So we'll see how long that lasts. In regard to SYMPAZAN, yes, no SYMPAZAN showed in our pilot project last year that it was promotionally sensitive. I don't think that's really a big shock. But we did add, as I mentioned, four field reps back in concentrated high decile markets to call on high decile prescribers. And we have seen one of the highest months of prescriptions for SYMPAZAN since we acquired it.

In January. So we believe that they are having an impact. And we'll evaluate as we go through the year what the right FTE equivalent is for field promotion for SYMPAZAN and the best way to achieve that, whether it's adding more of our own reps or augmenting that with a contract sales force or maybe partnering with somebody for secondary details. But we'll we'll explore that as the year goes on. But it does appear that the SYMPAZAN is responding to in person promotion.

Awesome. Thank you for the insight.

You're welcome.

Your next question comes from the line of Scott Henry with AGP. Please go ahead. Thank you and good afternoon. Starting with a follow-up question on the legal exposure.

Was there something new on the opioid legal front that drove that in the quarter? Or has that been steady? I'm just trying to get an idea, is this a transitory event or is this something that may take a little longer to play out? Just any color on why now and why the magnitude there?

Hey, Scott, it's thanks for the question. The short answer is there's nothing new there, but I'll let Ajay provide the detail.

Yes. Scott, thanks for the question. Yes, the contingency was not related to the legal. There's not a lot of nuance as I can go into the topic. Due to the ongoing matters. We will have further disclosures on them in our 10 ks. I think for the contingency itself, you can look at it as kind of a one time thing. From a transitory perspective.

Okay. And then just a couple just notes in the release. First, the inventory write down not insignificant. Does Endocin have a short shelf life? Why the write down? You're still selling it? Is it I would assume the shelf life, Yes. No, thanks for that question. Good question. Yes, so we had about $4,000,000 as I noted in my commentary of addition excess inventory write downs throughout the year. Really kind of the genesis is, as a virtual pharma company, our production plan starts several years in advance. So this would have been inventory we had committed to and purchased based on projections prior to generic competition. So as the generic competition came through and that baseline level set we had to adjust our production plans on a go forward basis and that kind of results in a bit of inventory between historical production and future production that's going to be leftover. And that we rolled off throughout this year. But we're hoping most of that is behind us now as '24 kind of work its way through.

Okay.

And then another clarification. The loss on impairment of Otrxa intangible assets I'm used to impairment losses being good, gains being bad. But it doesn't seem to be the case here. But But what happened with the Otrxa intangible assets?

Yes. I'll generalize this as primarily an accounting topic here. Like you've seen in our past, right, last year and throughout this year, we've been with where our stock price has been and where our market cap has been, we've been under kind of the accounting rules of evaluating impairment indicators. From our book value of our assets versus the fair value of our Assertio. So as we continue to kind of evaluate that gap, the valuation really kind of necessitated this impairment charge.

Okay. So it doesn't sound like it was [indiscernible] an allocation issue. You had to put it somewhere and that's where you guys decided.

Is that correct? This one was Otraccept specific.

Yes. But was there anything that happened to the franchise that [indiscernible] impaired anything new that impaired it? Or just a general allocation?

Yes, I think it's just generally taking a look at the trended it accomplished during the 2024 period. And as we look at it from future perspective as well.

Okay. And just one final question. Maybe over the two limits.

You mentioned cash flow from operations of $11,500,000 positive, but then adjusted EBITDA of $500,000 negative Normally, I think of those terms somewhat synonymous. Why the big discrepancy between cash flow from operations and adjusted EBITDA?

Yes. If you're looking at discrete Q4, you're going to see that gap. I would kind of say I would look at a broader for the whole year because during between Q3 and Q4 you also had a working capital impact.

If you rewind back to Q3, we had positive EBITDA but negligible operating cash flow. So that's just the working capital turning in Q4. Partially impacted it.

But if you look at the full year impact of our $17,000,000 EBITDA versus the $26,000,000 in operating cash flow, That was primarily driven by kind of excess inventory write down, which would have been a non cash event. In 2024.

Okay. So basically adjustments to working capital? Are driving that discrepancy?

Adjustments to working capital and then kind of the excess inventory charges, which are [indiscernible] Okay.

All right, great. Thank you for taking the question.

I will now turn the call back over to Brendan O'Grady, Chief Executive Officer. For closing remarks. Please go ahead.

Thank you. And I appreciate everyone who has joined us today. I want to reiterate that we are transforming the company to better position Assertio for sustainable near term growth.

We have a proven platform capable of delivering positive long term financial results We have an excellent team, a sound strategy and a balance sheet poised to unlock growth. I hope today's call has continued to demonstrate our ability to deliver steady execution on the commercial business we have today as well as our commitment to finding the right assets and opportunities to further grow that platform. If you'd like to arrange a meeting at an upcoming event, or an update call with management, please contact Matt Kreps directly using his information provided in the press release and we will be happy to schedule a time. And thank you all once again for joining us today.

Ladies and gentlemen, that concludes today's call. Thank you all for joining and you may now disconnect.