Endo International plc

Thank you for standing by. Welcome to the ENDO International PLC First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that this conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Laurie Park, Senior Vice President of Investor Relations and Corporate Affairs. Please go ahead.

Thank you. Good morning, and thank you for joining us to discuss our first quarter 2021 financial results. Joining me on today's call are Blaise Coleman, President and CEO of Endo, Mark Bradley, Executive Vice President and Chief Financial Officer, and Patrick Berry, President, Global Commercial Operations. We have prepared a slide presentation to accompany today's webcast, and that presentation, as well as other materials, are posted online in the Investor section at endo.com. I would like to remind you that any forward-looking statements made by management are covered under the U.S. Private Securities Litigation Reform Act of 1995 and the applicable Canadian securities laws and are subject to the changes, risks, and uncertainties described in the press release and in our U.S. and Canadian securities filings. In addition, during the course of this call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review Endo's current report on Form 8K furnished with the SEC for Endo's reasons for including those non-GAAP financial measures in our earnings release and presentation. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings press release issued last night, unless otherwise noted therein. I'd now like to turn the call over to Blaise. Blaise?

Thank you, Lori, and good morning, everyone, and thank you for joining us this morning. I'm proud of the way our endo team executed this quarter across all parts of our business. We delivered better than expected first quarter results, continued to make progress against our strategic priorities, including the achievement of an important milestone with the launch of Quo in March. It maintained our relentless focus on transforming our business in order to deliver long-term value for all of our stakeholders. Before moving to further review of the quarter, I want to recognize the ongoing challenges of COVID-19 in many parts of the world, including in India, where many of our team members live and work. To provide for the continued safety of our team members, we've expanded our safety protocols and support services and are working to provide vaccines and treatment services if needed. Additionally, we are making donations to assist with the release efforts in India, including donations to the Indian Red Cross. On behalf of our ENDO team members, I want to express our deepest sympathies to those who have been affected by the ongoing COVID-19 pandemic in India. If we move to the agenda on slide two, I will start with our strategic priorities, followed by a discussion of our first quarter business performance and an update on our pipeline. Then Mark will address our first quarter financial results and provide updates on our financial expectations for 2021. Turning to slide three, our strategic priorities guide all that we do as we work to transform our company. Being a force for good and creating sustainable value that benefits all of our stakeholders is one of our three priorities. and is the foundation around which our environmental, social, and governance strategy is built. Earlier this week, we published our 2020 Corporate Responsibility Report, which serves as an annual accounting of our performance and our progress to adopt more sustainable practices to help people live their best life. While we are early in our ESG journey and have much to do on this front, I'm pleased with our progress to date as reflected in our latest report. Moving to slide four, this is a snapshot of our segment and consolidated revenues and our adjusted EBITDA for the quarter. First quarter revenues of $718 million decreased 12% compared to prior year. This revenue decrease was primarily due to anticipated lower generic pharmaceuticals and sterile injectable segment revenues. Reported first quarter adjusted EBITDA of $365 million decreased by 13% compared to prior year. This decrease was primarily due to lower consolidated revenues, coupled with higher adjusted operating expenses, reflecting our investment in the launch of Quo and our continued strong commercial investment in Zyaflex. First quarter 2021 consolidated revenues and adjusted EBITDA exceeded our previously communicated expectations due to better than expected performance in certain key products across our segments. Higher adjusted gross margin partly due to favorable product mix and lower adjusted operating expenses, mainly due to phasing. Turning to slide five, our branded segment first quarter revenues increased compared to the prior year, driven by specialty products portfolio revenue growth of 7%. Xiflex revenues increased by 7% in the first quarter compared to prior year, driven by strong demand growth for both the Xiflex indications, partially offset by channel inventory destocking, that occurred in the first quarter of 2021 compared to prior year. As we discussed earlier this year, we're investing in a Xiflex commercial strategy that includes increasing patient awareness through expanded promotion to empower patients to seek non-surgical options coupled with physician education and training. We're encouraged by the strong patient interest to seek treatment, which is fueling underlying demand across both indications as measured by consumer traffic to our website and physician locator sites. This is a good early indicator of patient interest and initial consumer activation. Patient office visits for elective procedures in the first quarter continued to be below pre-COVID levels and were fairly in line with our expectations. We're encouraged by the increasing levels of vaccinations nationally and expect patient office visits for elective procedures to steadily increase over the remainder of the year. Based on this, we continue to expect utilization of our physician-administered products, such as Xiflex, to be weighted toward the second half of the year. Revenues from our established products portfolio declined by 9 percent compared to the same period in the prior year, primarily due to ongoing competitive pressures. Revenues from our sterile injectable segment declined by 8 percent compared to the first quarter of 2020. VASER-strict revenue growth of 10 percent in the quarter was more than offset by the decrease in revenue for certain products, such as adrenaline and uropenem, due to the impact of generic competition. Vasostrict first quarter utilization, specifically in the month of March, was higher than we expected. However, as we look forward, we expect vasostrict volumes to begin to decrease toward pre-COVID-19 levels during the second quarter of 2021, as COVID-19-related hospitalizations continue to decline. Moving to slide six, Revenues from our generic segment decreased by 28 percent in the first quarter compared to the prior year. The decrease was primarily due to the impact of anticipated competitive pressures on certain key products, coupled with accelerated prescription fulfillment related to COVID-19 that occurred in the first quarter of 2020. This decline was partially offset by the successful launch of Luby ProStone capsules, the authorized generic for Ametiza, in January of this year. Generic segment first quarter revenues exceeded our expectations primarily due to higher than expected Luby-Proston launch performance, coupled with the delayed impact of anticipated generic competition on certain products. Finally, the expected decrease in international segment revenues for the first quarter was primarily due to ongoing generic competition. Turning to slide seven, we are excited by our entry into the medical aesthetics with the launch of Quo in March. Quo is the first and only injectable approved for the treatment of cellulite and provides a non-surgical option that addresses the underlying causes of cellulite. We believe Quo's unique profile provides the medical aesthetics practitioners an opportunity to create a new vertical and grow their business. We launched Quo through an early experience program that targeted select practices. The program focused on product education, patient selection, managing patient expectations, and building practice success. As we discussed earlier this year, we are taking a deliberate and progressive approach to our launch of Quo and the process we are undertaking for activating and onboarding accounts. During the month of April, after the successful rollout of our early experience program, we began the process of onboarding additional accounts. Activated accounts are being supported with a strong injector training program delivered both virtually and in person. Ongoing education will continue to be important and will be delivered through virtual educational webinars and peer-to-peer programming. We also recognize the need to equip practices with the tools they need to support practice integration and activation. To accomplish this goal, we have launched our Quo healthcare professional portals. Additionally, we announced our launch pricing and believe the price point represents a strong value proposition for practices and consumers who are seeking treatment. To date, we have received positive feedback on Quo from the medical aesthetic community. Activated practices have generated a strong buzz by announcing availability of Quo and posting their own before and after pictures on social media. Additionally, consumer and trade media interest and excitement remain strong, with more than 300,000 unique visitors to the Really Cellulite webpage and greater than 5.3 billion media impressions in the first quarter. including top-tier print and broadcast outlets. While only about one month post-launch, we are on target with our planned account onboarding, purchase and utilization rates. As we progress, we will share more information as it becomes more meaningful. Moving to slide eight and discussing our ongoing branded segment, clinical studies and pipeline. Starting with Quo, our data generation plan and development remains focused on dosing, injection techniques, and responses in target patient populations, as well as rollover studies on durability. For example, our 305 Phase 3b real study looked at co-effectiveness in a real-world population, as well as thigh injection technique and overall investigator experience. At day 90, investigator-perceived improvement scores were greater than 90 percent in cellulite appearance. and 90% of investigators agreed or strongly agreed to incorporate quo into their practice. Results and analysis from these studies are key to our publication and presentation strategies. We continue to make progress on Xiflex development programs. Starting with the treatment of plantar fibromatosis, we are looking forward to the date of publication of our proof of concept study results in the coming months. We plan to progress our plantar fibromatosis program with the initiation of a Phase II study in the second half of this year. In terms of adhesive capsulitis, our Phase IIb study interim analysis is anticipated towards the end of the year. We believe both plantar fibromytosis and adhesive capsulitis represent an opportunity to bring innovative treatment option to address a potential large unmet need for patients who are seeking a non-surgical approach to treatment. Turning to slide nine. We continue to evolve our R&D pipeline and manufacturing capabilities to support the introduction of more sterile products, focusing on the evolving needs of our customers. Almost 80% of our R&D pipeline consists of projects across the sterile injectable product continuum, with approximately two-thirds in ready-to-use and other more differentiated products. Across our sterile injectables and generic segments, we plan to launch approximately 10 products in 2021, which includes the successful launch of the Luby ProStone capsules, the authorized generic of Ametiza, in the first quarter of this year. Now, let me turn the call over to Mark to further discuss the company's financial results and our financial guidance. Mark?

Thank you, Blaise, and good morning, everyone. First, on slide 10, you will see a snapshot of our first quarter GAAP and non-GAAP financial results. Blaise covered company and segment revenues earlier, so I will not review that again. On a GAAP basis, income from continuing operations was approximately $47 million or 20 cents per share on a diluted basis in the first quarter of 2021 compared to income from continuing operations of approximately $158 million or 68 cents per share on a diluted basis in the first quarter of 2020. This decrease was primarily attributable to a discrete tax benefit arising from the CARES Act that was recorded for GAAP purposes in the first quarter of 2020 but not in the first quarter of 2021. On an adjusted basis, income from continuing operations was $175 million or 73 cents per share on a diluted basis in the first quarter of 2021 compared to income from continuing operations of $220 million or 95 cents per share on a diluted basis in the first quarter of 2020. This decrease was primarily due to lower revenues and higher adjusted operating expenses in the first quarter of 2021 one compared to the prior year. Turning to slide 11, based on better than expected performance across all of our segments in the first quarter, we are raising the low end of our 2021 full-year financial guidance. We now expect full-year 2021 total revenues to be between $2.65 billion and $2.79 billion, adjusted EBITDA to be between $1.18 billion and $1.28 billion, and adjusted diluted net income per share from continuing operations to be between $1.95 and $2.30. Our full-year 2021 guidance continues to assume an adjusted gross margin of approximately 70% to 71%. However, we updated our adjusted operating expenses as a percentage of revenue assumption to be between approximately 28.5% and 29%. Additionally, we now assume adjusted interest expense will be approximately $560 million, which reflects the impact of the recently completed debt refinancing. With respect to quarterly phasing, we expect total revenues to decline between approximately $30 million and $70 million in the second quarter of 2021 compared to the first quarter of 2021. This decline is expected to be driven by anticipated lower sterile injectable segment revenues due to expected lower vasostrict revenues as demand begins to return to more normalized levels. Second quarter generic pharmaceutical segment revenues are also anticipated to be lower due to expected lower Luby ProStone revenue following the launch load that occurred in the first quarter, coupled with expected competition on other generic products. These declines are anticipated to be partially offset by an increase in branded pharmaceutical segment revenues primarily due to the continued expected growth in Ziaflex in the second quarter. Additionally, we expect adjusted gross margin in the second quarter to be slightly lower than the low end of the full year 2021 guidance range, reflecting the change in product mix. Finally, we expect the total dollar amount of operating expenses and the adjusted effective tax rate in the second quarter to remain relatively flat compared to the first quarter of 2021. Switching to slide 12, this is a summary of full-year segment and total enterprise revenue assumptions. As you will notice, we have slightly updated the full-year revenue assumptions for our sterile injectables and generic pharmaceutical segments. Advancing to slide 13 and wrapping up the financial discussion, unrestricted cash flow prior to debt payments was $250 million in the first quarter of 2021 compared to $86 million in the prior year. This increase was primarily due to an increase in cash flow from the change in net working capital and a decrease in distributions to settle mesh claims. We ended the first quarter of 2021 with approximately $1.4 billion of unrestricted cash and a net debt to adjusted EBITDA leverage ratio of approximately 5.1 times. For the full year 2021, we are updating our expectation for unrestricted cash flow prior to debt payments to be between approximately $140 million and $240 million compared to our prior estimate of between $80 million and $240 million. This change reflects the increase in the low end of the adjusted EBITDA guidance range previously discussed. Let me now turn the call back over to Blaise.

Blaise? Thank you, Mark. Prior to turning the call over to Laurie to manage our question and answer period, I understand there are many questions on the recent developments as it pertains to the ongoing opioid litigation. including the recent default order on liability in Tennessee and the ongoing trial in California. However, as I'm sure you can appreciate, we're limited in what we can say. What I will say with respect to Tennessee is first to reiterate our prior statement that we strongly disagree with the court's default order on liability. I'd also like to clarify that despite certain press reports that there has been no finding to date that Endo owes any amount as a result of the default order. Instead, a damages trial is currently scheduled to begin on July 26. That said, we did recently file a notice of appeal with respect to the default order, and we are seeking a stay of the damages trial pending the outcome of that appeal. With respect to California, we're in the midst of the liability phase of that trial, so I'm not going to comment on that ongoing proceeding. With respect to the opioid litigation as a whole, we continue to be open to identifying and executing on a constructive path for resolution. And it is important to note that while constructive resolution remains our goal, there can be no assurances that this will be achieved, and we are prepared to continue to litigate if necessary. More importantly, while our legal team is focused on litigation, the rest of the endo team is highly focused on our day-to-day business execution, advancing our strategic priorities, and delivering our portfolio of life-enhancing products to our customers and the patients they serve. Lori, let's please move now to the question-and-answer period.

Thank you, Blaise. Thank you, Blaise. In the interest of time, if you could limit your initial questions to allow us to get in as many as possible, we would appreciate it. Operator, can we have our first question, please?

Your first question comes from the line of Chris Schott with JP Morgan. Your line is open.

Hey, this is Ekaterina on for Chris. Thank you so much for taking your questions. And I guess the first one is there's been some mixed data points on the generics environment recently. So just your thoughts on this and any changes that you're seeing in that market in terms of pricing or overall competitive environment. And the second question is on basis. As we think about the impact that COVID-19 has had on volumes and the normalization of that product as we move through the year, is there any stickiness at all to that higher utilization that we've seen through the epidemic that you think can persist as we move kind of into 2022, 2023? Or is it just a matter of how steep the ramp down as the product returns to pre-COVID-19 levels? Thank you.

Great. Thank you very much for those questions. So, first on the generics piece, for us right now, when we think about the generics portfolio, we've been very clear that we are seeing a fair amount of competition impact to our outlook for 2021. It has to do with competitive events that occurred in 20, and some events are going to happen in 21. So, our outlook there for our portfolio, you know, is a challenging one for 21 because of those competitive events. On the vasostrict point, as we noted, we are planning for vasostrict levels to return to pre-COVID-19 levels, really starting in the beginning in the second quarter of this year, and then sort of as we move through the rest of the year. At this point, when we think about our range, we are considering the possibility that there may be some additional elevated levels of vasostrict above that level. and that's considered in the range, but as of now, our going-in assumption is that we're going to see the district levels return more back to that pre-COVID-19 level as we move into the second half.

Thank you.

Next question, please.

Our next question comes from the line of Greg Gilbert with Truist Securities. Your line is open.

Thanks. Good morning. First one's on Quo. I know the company has been very proactive in and setting expectations on bruising and tolerability, but how would you characterize the real-world feedback so far? And on frozen shoulder, you mentioned an interim look. Should we view that as sort of a go, no-go decision, or how would you frame the interim look and the potential sort of outcomes of that, since it's a this-year event? And lastly, Blaise, when you think about your sterile injectables line excluding vaso, and maybe we can lump generics into this, too, conceptually over the years, do you see a business that can be flattish with the pipeline offsetting natural erosion? Do you expect growth? Again, more conceptual over time. I realize you're not going to guide, but wanting to understand your expectations there based on what you've built so far. Thanks. Yep.

Greg, thank you very much for those questions. On the quo piece, I'll ask Patrick to give you some feedback. I mean, obviously, the market receptivity on quo to date we've been really excited about, but I'll, in a minute, turn over to Patrick on the quo piece. On the Xiflex piece, in terms of adhesive capsulitis and frozen shoulder, yeah, we have an interim data point coming up at the end of the year, and it's like any other data point. There is the possibility that that could be a go-no-go decision based on what we see in that interim data, but we'll have to see what that looks like. And then from a sterile injectable standpoint, Again, you're right, Greg, we're not going to guide on that. And there is a lot of variables at play in terms of what the durability of vasostric looks like over time. But as you know, we are hyper-focused on continuing to transform our sterile injectable portfolio to what I would call probably less absolute number of projects in sterile injectables, but what we consider to be more high-value injectable opportunities as we think about the transformation we're trying to make in terms of moving up that product continuum to more what we would consider differentiated opportunities. So maybe with that, I'll turn it over to Patrick to give you some feedback on not just your specific question, but overall how we're seeing the market react to a quota date.

Thanks for the question, Greg. As you cited, it is certainly early days, but we're very pleased and encouraged by the receptivity in the marketplace. I would point to a couple things in terms of positive momentum. We launched with an early experience program where we focused on about 350 to 360 of the top market influencers, key investigators. We gave some early access to Quo. We had over a 90% participation rate post-registration. Really terrific if you consider this was their free time, a Friday night, a Saturday, so that they can learn about Quo and have early access to it. And that generated a tremendous amount of social media buzz and a lot of – I think, a positive uptake in the market relative to social media streams. We mentioned on the call a really strong pickup on our Release Cellulite campaign with over 105 million impressions to date and a really, really high completion rate. In terms of how the product is performing in the marketplace, the other thing I would note is the receptivity to our price. We did launch, coming out of the Early Experience Program, we launched our our introductory price to great fanfare. And the feedback generally has been, hey, you guys got it right. This creates an opportunity for them to create a new vertical, grab good margin, yet have a price that's very, very accessible to their consumers. So we were pleased with that. And specifically to your questions, one of the things that's really important to us is to set proper expectations in the marketplaces. And so as we go to deeply integrate in each and every account, it's all about patient selection. It's not running from adverse events. It's really setting an expectation for the injectors as to what to expect, how to manage that. Bruising is one of those things. That was one of the more prominent AEs in our phase three pivotal trials. I would note that it's not necessarily deep bruising associated with a great deal of pain. So it's And what we've heard from clinicians is that it's been very manageable. They've appreciated how we've gotten out front of this and allowing them to properly set expectations with their patients. And so far, the other thing that's important is that the product's behaving well and performing well in real-life patients. So we're really pleased with what's happening.

Thank you, Greg. Next question, please.

Next question is from David Anselm with Piper Sandler. Your line is open.

Um, thanks. So on VASA strict, um, with the, uh, with the trial, I wanted to get your latest thoughts on, um, your openness to settlement with Eagle, particularly in the context of Eagle struggling with its filing, its complete response, the letter and the fact that it has to do another trial. So how does that impact your strategic calculus regarding, um, a settlement there? Just your latest thoughts there. And then on quo, um, David was interested in when we may get duration of effect data. I noticed in the slides you had that laid out, the five-year extension, when we might start to see that. And what's the perception around duration of effect in the marketplace? Thanks.

Great. Thanks, David. And I'll turn over in a minute for Patrick to help on the quo question. On vasostrict, David, let me just tell you where we're at. Just for everyone's benefit, we continue to be scheduled to have a trial in Delaware in July, and we are well prepared for that trial. We do continue to remain open to the opportunity to resolve this matter through a constructive settlement. That's been our position from the beginning. It continues to be our position, and that's where things really stand right now in the Bay District matter. So maybe I'll turn it over to Patrick to comment a little bit around our durability study aspect of things.

Thanks for the question, David. As you know, our label is silent on durability, but what I would say is we do have very positive durability data that's emerging from our, even going back to our Phase 2B rollover and our Phase 3 has a rollover design. So we do have positive durability data right now as we speak that goes out to over 720 days in some patients. So that's something, as that data becomes available, that data generation becomes available, it'll begin to be discussed at podium. We obviously have to consider our publication strategy behind that. And then that becomes a strategic question over time in terms of what we might want to introduce in terms of a label update. So for now, it's somewhat open-ended with some really, really strong positive durability data emerging. I mean, scientifically, hypothetically, you know, clinicians tell us that once that fiber septi is lysed, it's lysed. So hypothetically, you know, it makes sense that we're seeing this type of durability in real-world patients.

Thank you, David. Next question, please.

It's from the Bounty, Wood City.

Your line is open. Hi. Good morning. Thanks for taking my question. On opioids, I understand you are limited in what you can say, but can you describe the next maybe date we should look out for and how confident is your legal team about the appeal in Tennessee? And then I have a second question on quo. If you could let us know early feedback regarding pricing and the next step after the early experience program. Thank you.

Great. Thank you for the quote. So I'll first let Patrick take the question on pricing as well as the next steps that we've already taken post-dealer experience program on quo. And then we'll come back to the opioid question.

Yeah, let me start with price. And I touched on it earlier. I would say that in general, the feedback from our customers is that you got it right. That was probably one of the more important strategic decisions that we made. And as we've said for the last year, we wanted to introduce a price that created a good opportunity for a new vertical for customers, but wide-scale adoption for consumers as well. And we feel like we hit the mark with an introductory price of $200 for the 4ml and $350 for the 8ml. Ideally, what that does is that allows physicians to address all patients that they would have who would be bothered by cellulite in seeking treatment. So we're very pleased by that because we think over time, that will establish a very accessible price point. And we've already articulated for the last year that we see this as a big opportunity and a big market. In terms of what's next, we're going to continue to take a very progressive and focused approach to targeting onboarding of our accounts. So we want to, again, continue to talk about with our accounts ensuring proper patient selection and a lot of focus on injector training over the shoulder and virtual to make sure that injection technique is understood. And then we're going to focus on building and expanding to a broader market over time. What we are doing this year is some strong digital and social consumer activation, which is very targeted. We're leveraging paid search, social, digital. And then as we get later into the year, after we have an established base of accounts, we'll continue to evaluate more focused direct-to-consumer rollout, leveraging geofencing and geotargeting and targeted DMAs where we know we have a critical mass of injectors because we recognize over time as this brand grows, there's a consumer activation opportunity for us, and so we view it as a category-creating opportunity for us that will require us to activate the market through creating brand awareness with consumers.

And then on your question on Tennessee, as we send the prepared remarks, we reiterate our comments that we strongly disagree with the default judgment in the Tennessee matter. And we have submitted briefings and filed notices of appeal where we are seeking a stay of the damages trial pending the outcome of that appeal. And the damages trial is currently scheduled for July 26 in terms of the timing.

Next question, please.

Our next question is from Balaji Prasad with Barclays. Your line is open. Excuse me, Mr. Prasad. Your line is now open.

Next question. We can go to the next queue until Balaji can get back on.

Your next question is from Daniel Busby with RBC Capital Markets. Your line is open.

Hey, good morning, everyone. Two questions. First, a follow-up on Quo. You used the term introductory price. Should we take that to mean you intend to adjust price going forward as you move further through launch? And second, given the strong first quarter performance relative to your own first quarter guidance, can you talk a little bit more about why your guidance wasn't raised further? Thank you.

Yeah, well, why don't I turn the pricing question over to Patrick, and I'll let Mark handle the question on guidance.

Yeah, it takes place for the question. Again, we did launch an introductory price. We wanted to make it simple, understandable in terms of how to really integrate quo into the practice. We have not made any comment as of yet in terms of how long that introductory price will run. So that's a bit of an open-ended question for us for now that went at the right time. we will be commenting further. But for now, again, we're going to stick with the introductory price.

Yeah, so with respect to the question on four-year guidance, I think one thing we need to think about is first quarter and what impacted first quarter. And there's a couple of things that we mentioned in our prepared remarks, the first of which was elevated vasostrict utilization, particularly in January and February. which, as Blaise mentioned, you know, we expect to see vasostrike utilization decline over time and return to pre-COVID levels, you know, as soon as the second quarter here. We also saw, you know, Luby ProStone launch load, which is, you know, kind of one time in nature. And then, you know, we also saw operating expenses come in at the lower end of our range. As we go forward through the year, You know, we expect to see increased demand for our physician-administered products, specifically Zyaflex, so that'll provide a tailwind into the remainder of the year. And we also expect to see offsetting that higher generic competition in the back half of the year that we didn't see. It was kind of delayed from our expectations. And then finally, operating expenses. Again, we saw a little bit of favorability in the first quarter, and that's really just due to phasing. We expect to see higher operating expenses at the end of the year. When you take all of those things into consideration, that's why we were able to adjust the lower end of our guidance range. Thanks a lot, Mark. Next question, please.

Your next question is from Gary Mackman with BMO Capital Markets. Your line is open.

Hi, thanks. Good morning. First on generics, how much did lubiprostone actually contribute in the quarter? Next on the other sterile injectables that dropped off a fair amount, what happened with adrenaline and ertapenem in terms of competitive dynamics since those products had been a lot stickier in the past? And then just lastly on quo, are patients coming back to get follow-up injections? Is it too early to know yet? I'm curious if you've seen that yet since you did launch it back in March. Thank you.

Great. Thank you, Gary, for those questions. Yeah, Gary, we're not disclosing the Luby ProStone sales contribution, but as we said, we saw better performance there, and really the better performance came from, quite frankly, a faster conversion of the generic than we had anticipated. It's just a much quicker conversion curve. On the other sterile injectable question, there's two components to that. So one is, and I'm defining other sterile injectables as presented in our press release, there's two components to why we saw the change that we did. One is there was a destocking component, and then two, there were some competitive events, and there's a number of products that are in that basket, including Erdapenem, that were impacted. In terms of adrenaline, I think if you look from Q4 to Q1, our adrenaline sales were relatively flat, and what you're seeing from Q1 of last year to Q1 of this year is really the impact from the entry of adrenaline competition in the first half of last year in the second quarter, actually, of 2020. And then I'll turn it over to Patrick for your question on quo.

Thanks for the question. Obviously, it's really early. We're essentially only a month in, so we wouldn't anticipate that we're seeing patients come back in when they're still arguably going through a full correction on their first course of therapy. But as it relates to retreatment, that is something that we look at as a potential upside. Hypothetically, we could see over time patients coming back for touch-ups or perhaps based on a good patient experience, migrating to other targeted areas. And so as we think about the outlook over time, that could potentially create some positive momentum for us in terms of retreatment.

Thanks. Next question, please.

Your next question is from Annabelle.

Hi, thanks for taking my question. I was wondering on Quo, just going forward, are you going to be sharing any specific metrics for us in terms of accounts that you've penetrated, what your target account numbers are, as well as metrics for, I don't know, injections, anything that we can sort of start wrapping our head around? And then in terms of some of the feedback that you're receiving, not just on the product performance, but on anecdotal demand. You mentioned 105 million social impressions, but what are some of your target or some of your early adopters saying in terms of the demand that they're receiving from their patients? So anything that you can give us to help us translate 105 million impressions into an actual patient. Thanks.

Yeah, no, Annabelle, thank you very much. Your first question around metrics, yeah, as over time we will be coming and sharing more information around what we consider to be the key performance indicators as they become more meaningful. And then in terms of the question around overall market receptivity and some of the feedback we're receiving, maybe more qualitatively, I'll let Patrick provide some more color on that.

Yeah, no, I appreciate your question. And again, as Blaise said, as we look at number of accounts onboarded and we look at how the brand is performing in the form of reorder rates, those are things we will obviously be looking at. I mean, keep in mind for the month of March, we launched with early experience program and we're really literally less than one month in on launch. So in terms of our ability to onboard accounts, we're really establishing those initial orders And as I talked about, it's important to integrate this deeply into their practice. It's an injectable. It's simple to operationalize. But this is new. This is new. Obviously, physicians have lots of experience with injectables. Some have experience with body contouring and injectables. But this is a brand new vertical. So it's important that we go deep into each and every account. We really drive towards good outcomes on making sure their entire staff understands patient selection. how to manage adverse events, that we really help them prop up their marketing plan in terms of how to drive consumer activation within their practice. Certainly, we're going to be doing activities in the market ourselves to support that. But again, we're about three and a half weeks in. I would say that as we approach accounts, our targeted accounts, in terms of initiating an initial stocking order for them to get the product in, that we've been very encouraged by the receptivity of accounts willing to bring it in. And then once The product is brought in. Our aesthetic business managers go to work in terms of putting together an integrated plan to pull that through and to drive patient demand within each of the clinics.

Thank you. Next question, please.

Next question is from Balaji Prasad with Barclays. Your line is open.

Hi, good morning, and thanks for getting me back on. So two questions from my side, one on sterile injectables. Could you maybe give broadly the nature of the products that you are planning to launch in 2021 and also kind of juxtapose this with current shortages on the injectable side and any broad observations that you can throw on the pricing front for injectables. Secondly, on quo, I would be interested to get your insights into how you think the use is likely to evolve. I want to expert conversations kind of lead us to believe that Coe would be ideal in combination with fat reduction and body contouring procedures, I think you just called out previously, and commercial potential or expansion of commercial potential if such a use evolves. Thank you.

Thanks, Balaji. Thanks for those questions. On the sterile injectable front, in terms of the launches we have planned for 2021, We're not going to comment on anything specifically, but we'll have a combination of products that would be more traditional A-rated vials, but also introducing some products that are more ready to use, starting to reflect that transition we're making from an overall portfolio perspective. In terms of just general commentary, you asked for, I think, on the sterile injectable and pricing trends. You know, again, depending on, you know, what product we're speaking to and what the pricing trend is for that product really has to do with the competitive landscape. And so we are, you know, when we think about the more traditional A-rated vials, you know, we are seeing on certain products, you know, increased competition, which is somewhat normal. And then as we move forward, again, our focus is going to be on what we consider to be more differentiated products where we think there will be a bit more durability and pricing power. in the market going forward. And then I'll let Patrick comment for you on the quote question, how the use of that may or may not evolve over time.

Yeah, thank you for the question. As you cite, based on your work with actual clinicians, we know that cellulite is multifactorial. There's an element of, you know, dermal quality, skin laxity. There's some fat production. There's a fat component there. There's also the underlying cause of cellulite, which is the fiber septi. And so when we look at the mechanism, we believe the mechanism of Quo to really address enzymatically the lysings of that fiber septi. We also have some interesting data that is suggesting that maybe even Quo's a mechanism might be multifactorial as well. But certainly as an injectable that addresses the underlying cost of cellulite being the fiber septi, we believe that Quo can be a cornerstone treatment for the treatment of cellulite. And again, a new category for them. So it's really about getting it in the hands of accounts, getting it in the real world, having them inject. As an injectable, we feel like it could be the central product And certainly, as you cite, we have heard doctors are interested in trying to figure out what else to wrap around quo, and certainly that presents opportunities for them to put packages together so that they can effectively treat cellulite. But we do believe operationally that as an injectable quo can be a cornerstone treatment for cellulite, and we think physicians will adopt it in that way.

Thank you. Next question, please.

There are no further questions at this time. I'll turn the call back over to our presenters.

Great. Thank you, everyone, for joining us this morning. We look forward to providing you with updates as we move forward. I hope everybody has a great weekend. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.