Assertio (US:ASRT)2023-05-10 03:04Financial Data and Key Metrics Changes - Net product sales increased by 55% year-over-year, reaching $49.9 million in Q4 2022 compared to $32.2 million in Q4 2021 [6][17] - Adjusted EBITDA rose by 87% to $33.4 million in Q4 2022, with adjusted EBITDA margins improving to 66% from 53% in the prior year [6][20] - Adjusted EPS increased by 52% to $0.32 in Q4 2022, compared to $0.21 in the prior year [6][21] - Cash flow from operations surged nearly 6.5-fold to $26.7 million in Q4 2022 [6][23] Business Line Data and Key Metrics Changes - INDOCIN family net sales in Q4 2022 increased by $15.9 million year-over-year, primarily due to a shift to more profitable channels and normalization of customer inventory levels [18][39] - Combined net sales for OTREXUP and SYMPAZAN in Q4 2022 were $4.2 million, with SYMPAZAN outperforming internal expectations [6][18] - CAMBIA net sales remained flat at $7.3 million, while SPRIX net sales increased by $900,000 to $2.7 million [18][19] Market Data and Key Metrics Changes - The company noted a significant opportunity for INDOCIN due to updated ASGE guidelines recommending pre-procedure rectal NSAIDs for all patients, potentially expanding the market size [10][12] - The estimated annual use of INDOCIN in ERCP procedures is approximately 160,000, with the potential market being three times larger than the current usage [11][12] Company Strategy and Development Direction - The company aims to enhance its non-personal commercial platform, maintain INDOCIN, and pursue M&A opportunities to diversify its portfolio [7][16] - Assertio plans to invest in its commercial platform to improve ROI and demand growth [8] - The company is actively seeking acquisitions, with a goal to acquire an additional $32 million in gross profit by the end of 2023 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, highlighting the successful acquisition of Sympazan and the positive impact of recent strategic actions [6][7] - The company anticipates product net sales for 2023 to be between $150 million and $160 million, despite the loss of exclusivity for Cambia [26][28] - Management acknowledged potential headwinds but indicated that these have been factored into the guidance provided [67] Other Important Information - The company generated $78.6 million in cash flow from operations for the full year 2022, a significant increase from the prior year [24] - Assertio's long-term debt balance was $66 million as of December 31, 2022, following a convertible debt refinancing that reduced cash interest rates [25][26] Q&A Session Summary Question: Update on 340B customers reordering - Management confirmed that reordering from 340B customers is north of 90% [32] Question: Direct distribution strategy update - Management stated that they are experiencing tremendous success in increasing direct distribution but kept specific metrics confidential for competitive reasons [34] Question: Impact of new ASGE guidelines on protocol design - Management indicated that the FDA recognizes the prior standard of care and does not anticipate significant impacts on the protocol design due to the new guidelines [36] Question: INDOCIN sales level in Q4 - Management clarified that INDOCIN sales in Q4 increased by $15.9 million year-over-year, with a $5 million inventory benefit [39][41] Question: Growth expectations for OTREXUP - Management expects OTREXUP to grow sequentially in 2023, having resolved previous supply issues [43] Question: R&D trial follow-up duration - Management noted that the follow-up for the trial would be 30 days, depending on enrollment speed [45] Question: Updates on orphan drug compound - Management refrained from providing specific timelines for the orphan drug compound, stating progress is slower than desired [47] Question: Tax rate and shares outstanding - Management projected a tax rate in the low double-digits and estimated shares outstanding to be in the mid-60s million range [49][50] Question: Transition speed for ASGE guideline change - Management expressed caution in predicting the growth opportunity from the guideline change but acknowledged it as a significant opportunity [53] Question: Inventory and manufacturing capacity - Management confirmed ample inventory and ongoing discussions with suppliers to accelerate purchase orders [55] Question: Pricing strategy - Management is comfortable with current pricing and does not anticipate supply shortages [57] Question: Upside for Sympazan - Management reported about $300,000 of upside for Sympazan in Q4, with strong early uptake [59][61] Question: SG&A expenses outlook - Management indicated a step-up in SG&A expenses for 2023 due to investments in Sympazan and clinical studies for INDOCIN [63] Question: Valuations in the current acquisition environment - Management noted that valuations are more reasonable now compared to previous years, with many attractive opportunities available [66] Question: Anticipated headwinds - Management stated that there are no new headwinds beyond those already included in the guidance [68]