Assertio (US:ASRT)2022-11-11 02:40Financial Data and Key Metrics Changes - Net product sales for Q3 2022 were $34.3 million, up from $26 million in the prior year quarter and down from $35.4 million in the previous quarter [20] - Adjusted EBITDA for Q3 2022 was $21.4 million, compared to $22.9 million last quarter and $15.8 million in the prior year quarter [24] - Net income for Q3 2022 was $4.2 million, compared to $7.8 million last quarter and $3.7 million in the prior year quarter [26] - Gross margin for Q3 2022 was 88.3%, with a slight adjustment due to a one-time returns accrual benefit [23] Business Line Data and Key Metrics Changes - INDOCIN family net sales increased by $7.3 million year-over-year, primarily due to higher net pricing [21] - Otrexup net sales for Q3 2022 were $3 million, up from $2.6 million in the prior quarter [21] - CAMBIA net sales decreased by $400,000 compared to the prior year quarter due to lower volume [22] Market Data and Key Metrics Changes - The company exited the Medicaid drug rebate program, which is expected to increase annual net revenue and profit by $6 million [12][14] - The acquisition of Sympazan is projected to add between $4 million to $4.5 million in annual adjusted EBITDA [15] Company Strategy and Development Direction - The company has pivoted towards growth after restructuring and improving profitability [7] - Key priorities include retaining employees, proving the efficacy of the new commercial model, reducing concentration in INDOCIN, and improving the balance sheet [8][10] - The company aims to diversify its business and has a robust M&A pipeline, with a goal of acquiring products that bring an additional $50 million in gross profit by 2024 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand from the 340B hospital segment despite limited data [36] - The company is confident in its ability to grow and meet its goals, with a favorable M&A environment and capabilities to evaluate multiple transactions simultaneously [60] - The company expects to see a return to normal channel inventory levels, which should positively impact net product sales for INDOCIN [32] Other Important Information - The company raised its guidance for 2022, expecting product net sales to exceed $141 million and adjusted EBITDA to be greater than $86 million [31] - The company has successfully extended its debt maturity and reduced its cost of debt capital from 13% to 6.5% [7][10] Q&A Session Summary Question: Insights into demand from the 340B hospital segment - Management indicated limited insight due to data lag but remains optimistic about future demand [36] Question: Status of Otrexup sampling - Management confirmed that deliveries are on schedule and manufacturing timelines are being met [38] Question: Details on the pre-IND meeting with the FDA - Management stated that a single-arm trial is proposed, with specifics pending FDA feedback [40] Question: Impact of exiting the 340B program on revenues - Management clarified that exiting the program will save costs as previous sales were unprofitable [44] Question: Comfort level with returning to R&D - Management is actively recruiting for a Head of Medical to support clinical programs and is confident in the approach [47] Question: Long-term sales expectations for Otrexup - Management believes reaching a $4 million quarterly run rate is achievable [50] Question: Amortization expense for Sympazan - Management confirmed an amortization of $1.6 million per year over 10 years [52] Question: Expectations for Sympazan's growth - Management plans to integrate existing payer contracts and is optimistic about the asset's performance [66] Question: Overall growth expectations for 2023 - Management aims for growth in 2023 but did not provide specific guidance [68]