Assertio Holdings, Inc.

Good morning and welcome to the Assertio Holdings Inc. first quarter 2023 financial results conference call. All participants will be in listening only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Matt Kreps from Darrow Associates Investor Relations for Assertio. Please go ahead.

Good morning, and thank you all for joining us today to discuss Asserdio's first quarter 2023 financials. The news release covering our earnings for this period is now available on the investor page of our website at investor.asserdiotx.com. I'd encourage you to review the release and tables in conjunction with today's discussion. With me today are Dan Fizer, President and CEO, and Paul Schwichtenberg, Senior Vice President and CFO. Dan will open the remarks and provide an overview of the business followed by Paul, who will review our financials. After that, we'll open the call for your questions. During this call, management will make projections and other forward-looking statements regarding our future performance. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in this morning's press release, as well as the Serdios filings with the SEC. These and other risk factors are more fully described in the risk factor section and other sections of our annual report on Form 10-K. Our actual results may differ materially from those projected in the forward-looking statements. And Assurdio specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. And with that, I'll now turn the call over to Dan.

Thank you, Matt. I want to start by welcoming our long-term shareholders, new shareholders, and those that are considering investing in Assurdio. On my very first public call as CEO of Assertio, a short 26 months ago, I laid out my go-forward strategy and priorities. My strategy was ambitious but necessary to put Assertio on a path for success. We needed to develop a sustainable business model that repositioned a business to compete more effectively in a changing environment, improve our profitability and cash flow generation, improve our balance sheet and reduce our cost of capital, protect Indusyn, add new products to diversify our business and extend the portfolio's duration, create internal opportunities for growth, and mitigate our legacy legal uncertainties. The recent announcement of the acquisition of Spectrum Pharmaceuticals and their key asset, Rolvidon, was just one of the many tactics that we have completed in the aim of achieving that strategy. I'm proud to say that by the time we close the acquisition, currently expected to be sometime this third quarter, we will have largely checked the box on everything we set out to do. I want to offer a heartfelt thank you to not only the executive team, but to all of the employees of Assertio who have worked so hard in helping us achieve our goals. After the close of the acquisition, we'll have a business aligned with the realities of the business environment of today and the future, where contracting and market access are critical to success as opposed to pure Salesforce size. In addition, we'll soon have complimentary digital and in-person promotional platforms that we can continue to add products into, providing further value to patients, our customers, and our shareholders. The execution of our strategy has had the most profound impact on our balance sheet to date. On March 31, we had $68.6 million of cash and $40 million of long-term debt with a 2027 maturity. This is the first time we've been in a positive net cash position since March 2020. For an even more dramatic comparison, in December of 2020, when Paul and I took over as CEO and CFO, we had $20.8 million of cash and $85 million of debt maturing early 2024. In just a little over two years, we flipped from net debt to net cash, a positive swing of almost $94 million, extended our maturities by three and a half years, reduced our cost of debt from 13% to 6.5% and achieved this, all while spending $60 million in cash to acquire two new assets with patents extending into the 2030s. This was a strong first quarter for Assertio. We started with a $5 million hole due to the loss of exclusivity for both Cambia and Zipzor and the discontinuation of the Solumatrix product line. Instead of declining, net product sales grew 18% versus the prior year quarter. Growth in Innocent and the addition of Simpazan more than made up for those losses. We entered the year expecting to see some of the normal seasonality in our business affect our top line, but it didn't materialize to the extent we thought, and the products outperformed our demand forecast, including Cambia. Adjusted EBITDA also grew 7% year-over-year, maintaining our margin at 60% while making investments in our non-personal platform and putting marketing effort behind our two newest products in Simpazan and Otrexa. As a result of the strong performance this quarter, we're increasing our full-year guidance for both net product sales and adjusted EBITDA. We now expect net product sales to be 157 to 167 million, representing growth of 1.2% to 7.7% versus the prior year. And adjusted EBITDA to be between 90 and 98 million. Those numbers do not include the full potential benefit of the ASGE guidance change on Induson or our spectrum acquisition. In the first quarter, Induson's volumes are flat with the prior year quarter, yet net product sales increased 42%. 98% of this growth was from the channel strategies we executed in the fourth quarter last year, where we have dramatically improved our gross to net on this product by eliminating non-commercial discounts. We've also begun to roll out awareness campaigns about the recent guideline changes from the American Society of Gastrointestinal Endoscopy, or ASGE. The first was an email campaign in mid-April, which was well-received, but it's too early to see if the additional awareness has or will change any behavior. We also recently attended an important medical conference this last weekend to conduct some advisory boards as we plan our next effort, which is to sponsor a continuing medical education program that is expected to launch in July. We've increased our outlook for Innocence slightly in our revised guidance based on trends, but it's still too early to say definitively if there will be a material increase in demand as a result of the change in treatment recommendations from the ASGE. We remain focused on our lifecycle extension efforts for Indicent, primarily our label expansion strategy for the prevention of pancreatitis and ERCP procedures. We announced the appointment of Dr. Howard Franklin, our SVP of medical, in early March. Dr. Franklin has been busy working with the biostatisticians and incorporating the feedback we received from our pre-IND meeting with the FDA. We now believe that we need to go back to the FDA and seek some clarification through a Type D meeting request before filing the I&D. This will delay the I&D submission. However, based upon our revised timelines, we still expect the I&D approval sometime later this year, and we still have the same expected three to four million of clinical spend in the back half of this year included in our adjusted EBITDA guidance as we did last quarter. Symphizan is performing well so far with the expanded promotional reach and frequency from our non-personal platform. In our first full quarter with the product, we achieved record quarterly prescription demand. Looking at TRX count as measured by Symphony Health, we beat the previous record in the third quarter of 2022 by 1.5% and beat the prior year quarter by 7.3%. The March 2023 TRX count was also a new monthly high, beating the previous peak in August of 2022 by 2% and the prior year month by 8.2%. While one month does not make a trend, this new high is important since the comparison is to a peak before the Salesforce disruption and transition to non-personal promotion. In addition, our ex-factory shipments this quarter were 7% above the previous peak, and we're starting to see a mixed shift towards the higher strengths, which come at a higher ASP, further benefiting revenue growth. I'm sure our friends at Equestiv who developed this drug will agree that to date, we're just scratching the surface of this drug's potential. As we continue to learn more about this market and the role Simpazan can fill, we're getting more excited about its potential. We will give investors more clarity on what we think that potential could mean as we improve and refine our longer-term plans for the product. And finally, turning to our pending acquisition of Spectrum, which released their results for the quarter earlier today. They reported 54% sequential sales growth to $15.6 million in the first quarter. That team is clearly doing a tremendous job with the launch of Rollbidon. What's great about that number is that if integrated under Asserdio's platform, Rolvidon is now recording revenue at an annual run rate that would be nearly break-even for adjusted EBITDA, since we expect to only bring over approximately $60 million of operating expenses from legacy Spectrum. Our number one priority is a meticulously planned integration of Spectrum into Asserdio after closing to ensure the continued successful launch of Rolvidon. The combination of these two companies increases the business development opportunities we can pursue and effectively commercialize. Our business environment has been moving more towards one of contracting and market access as contrast to the historical share of voice. And both Spectrum and Assertio have positioned themselves in this manner. Combined, we're stronger than apart now with both digital and personal promotional execution. We believe that oncology is an area that is both receptive to non-personal communication and has many assets that fit our objectives of size, growth potential, patent protection, and exclusivity. The oncology offices and clinics were almost forced to adapt to non-personal communication during COVID because of the immunocompromised nature of their patient populations and the importance of guidelines like NCCN in setting treatment algorithms. There are many interesting patent-protected commercial and late-stage products in oncology and supportive care that are below the size of large pharma's purview. The combination of the two companies doubling down on our contracting and market access capabilities and optimizing the strengths of each other's promotional platforms is what opens the door to a larger M&A opportunity set. With that, I'll turn the call over to Paul.