Assertio Therapeutics, Inc. (NASDAQ: ASRT) today reported financial
results for the quarter ended June 30, 2019 and provided an update
on its business performance and strategic initiatives.
Second-Quarter Financial
Highlights:(unaudited)
|
Second Quarter 2019 |
(in millions, except earnings per share) |
GAAP |
Non-GAAP(1) |
Total Revenues |
$57.2 |
$59.3 |
Net Income/(Loss) |
$(13.6) |
$18.5 |
Earnings/(Loss) Per Share |
$(0.21) |
$0.25 |
Adjusted EBITDA |
- |
$36.7 |
(1) |
All non-GAAP measures included in this earnings release are
reconciled to the corresponding GAAP measures in the schedules
attached. |
“We continue to make steady progress toward building a leading
diversified biopharmaceutical business as we deliver strong results
and de-lever our balance sheet,” said Arthur Higgins, President and
CEO of Assertio. “We remain focused on improving our financial
position as we pursue business development opportunities across a
range of new therapeutic areas.”
Second Quarter Business Highlights:
- Neurology Franchise Net Sales: Gralise net
sales in the second quarter were $17.8 million, primarily due to
favorable year-over-year gross to net reflecting payor mix. In
August, the Company executed an agreement that provides expanded
access for Gralise through new coverage with one of the top three
Medicare Part-D insurers, representing more than 6 million lives.
Obtaining expanded Medicare Part-D access is important for Gralise
as a majority of patients with postherpetic neuralgia are more than
65 years old. In the second quarter, Zipsor net sales were $1.5
million, adversely impacted by short-dated product sales returns;
however, underlying prescription demand for Zipsor continues to
grow double digits year-over-year. CAMBIA net sales in the second
quarter were $6.8 million, primarily due to unfavorable
year-over-year gross to net reflecting payor mix. Underlying
prescription demand for CAMBIA increased mid single digits
year-over-year.
- Debt Reduction and Cash Position: As of August
7, 2019, the Company has made scheduled principal repayments of
$100.0 million in 2019, reducing the Company’s senior secured
debt to $182.5 million. The Company will make an additional $20
million principal payment before year end, reducing senior secured
debt to $162.5 million. As of June 30, 2019, the Company had cash
and cash equivalents and short-term investments of $75.5
million.
- One-Year Anniversary of Headquarters Relocation,
Reincorporation and Name Change to Assertio Therapeutics,
Inc.: Approximately one year ago, the Company completed
its reincorporation from California to Delaware and changed its
name from “Depomed, Inc.” to “Assertio Therapeutics, Inc.” In
connection with the reincorporation and name change, the Company’s
common stock began trading under a new ticker symbol “ASRT.” The
Company also completed the relocation of its corporate headquarters
from Newark, CA, to Lake Forest, IL.
|
Revenue
Summary: |
(in thousands,
unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Product sales, net |
|
|
|
|
|
|
|
Gralise |
$ |
17,800 |
|
|
$ |
13,815 |
|
|
$ |
31,078 |
|
|
$ |
28,642 |
|
CAMBIA |
6,758 |
|
|
8,089 |
|
|
15,566 |
|
|
14,505 |
|
Zipsor |
1,524 |
|
|
3,988 |
|
|
5,755 |
|
|
8,734 |
|
Total neurology product sales, net |
26,082 |
|
|
25,892 |
|
|
52,399 |
|
|
51,881 |
|
|
|
|
|
|
|
|
|
NUCYNTA products |
(163 |
) |
|
626 |
|
|
(101 |
) |
|
18,771 |
|
Lazanda |
18 |
|
|
320 |
|
|
89 |
|
|
540 |
|
Total product sales, net |
25,937 |
|
|
26,838 |
|
|
52,387 |
|
|
71,192 |
|
|
|
|
|
|
|
|
|
Commercialization
agreement: |
|
|
|
|
|
|
|
Commercialization rights and facilitation services |
31,003 |
|
|
31,179 |
|
|
61,859 |
|
|
59,274 |
|
Revenue from transfer of inventory |
— |
|
|
— |
|
|
— |
|
|
55,705 |
|
Royalties and Milestone
Revenue |
263 |
|
|
5,257 |
|
|
886 |
|
|
5,507 |
|
|
|
|
|
|
|
|
|
Total
revenues |
$ |
57,203 |
|
|
$ |
63,274 |
|
|
$ |
115,132 |
|
|
$ |
191,678 |
|
2019 Financial Guidance:The Company is
confirming its previous 2019 earnings guidance range and adjusting
its Neurology Franchise net sales guidance to low-single digits,
reflecting the adverse impact of Zipsor short-dated product sales
returns.
|
Prior 2019 Guidance |
Current 2019 Guidance |
Neurology FranchiseNet Sales |
Low to Mid-Single Digit Growth |
Low-Single Digit Growth |
GAAP Net Loss(1) |
($68) to ($58) million |
($68) to ($58) million |
Non-GAAPAdjusted EBITDA(1)(2) |
$118 to $128 million |
$118 to $128 million |
(1) |
Guidance
includes $2.8 million of non-cash Collegium warrant related income
and excludes any future warrant mark-to-market adjustments, which
cannot be estimated. |
(2) |
Guidance excludes any Collegium warrant mark-to-market
adjustments. |
Conference Call and Webcast:Assertio will host
a conference call today, Wednesday, August 7, 2019 beginning at
4:30 p.m. ET to discuss its results. This event can be accessed in
three ways:
- From the Assertio website: http://investor.assertiotx.com.
Please access the website 15 minutes prior to the start of the
call to download and install any necessary audio software.
- By telephone: Participants can access the call by dialing (877)
550-3745 (United States) or (281) 973-6277 (International)
referencing Conference ID 7769879.
- By replay: A replay of the webcast will be located under the
Investor Relations section of Assertio’s website approximately two
hours after the conclusion of the live call.
About Assertio Therapeutics, Inc.Assertio
Therapeutics is committed to providing responsible solutions to
advance patient care in the Company’s core areas of neurology,
orphan and specialty medicines. Assertio currently markets three
FDA-approved products and continues to identify, license and
develop new products that offer enhanced options for patients that
may be under served by existing therapies. To learn more about
Assertio, visit www.assertiotx.com.
“Safe Harbor” Statement under the Private Securities
Litigation Reform Act of 1995This news release contains
forward-looking statements. These statements involve inherent risks
and uncertainties that could cause actual results to differ
materially from those projected or anticipated, including risks
related to regulatory approval and clinical development of
long-acting cosyntropin, expectations regarding royalties to be
received based on sales of NUCYNTA and NUCYNTA ER, expectations
regarding potential business opportunities and other risks outlined
in the Company’s public filings with the Securities and Exchange
Commission, including the Company’s most recent annual report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q. All
information provided in this news release speaks as of the date
hereof. Except as otherwise required by law, the Company undertakes
no obligation to update or revise its forward-looking
statements.
Investor and Media Contact:John B. ThomasSenior
Vice President, Investor Relations and Corporate
Communicationsjthomas@assertiotx.com
Non-GAAP Financial MeasuresTo supplement the
Company’s financial results presented on a U.S. generally accepted
accounting principles (GAAP) basis, the Company has included
information about non-GAAP revenue, non-GAAP adjusted earnings,
non-GAAP adjusted diluted earnings per share, non-GAAP adjusted
EBITDA and other non-GAAP financial measures as useful operating
metrics. The Company believes that the presentation of these
non-GAAP financial measures, when viewed with results under GAAP
and the accompanying reconciliation, provides supplementary
information to analysts, investors, lenders, and the Company’s
management in assessing the Company’s performance and results from
period to period. The Company uses these non-GAAP measures
internally to understand, manage and evaluate the Company’s
performance, and in part, in the determination of bonuses for
executive officers and employees. These non-GAAP financial measures
should be considered in addition to, and not a substitute for, or
superior to, net income or other financial measures calculated in
accordance with GAAP. Non-GAAP financial measures used by us may be
calculated differently from, and therefore may not be comparable
to, non-GAAP measures used by other companies.
Specified ItemsNon-GAAP measures presented
within this release exclude specified items. The Company considers
specified items to be significant income/expense items not
indicative of current operations, including the related tax effect.
Specified items include non-cash adjustment to Collegium agreement
revenue and cost of sales, release of NUCYNTA and Lazanda sales
reserves for products the Company is no longer selling, interest
income, interest expense, amortization, acquired in-process
research and development and non-cash adjustments related to
product acquisitions, stock-based compensation expense, non-cash
interest expense related to debt, depreciation, taxes, transaction
costs, CEO transition, restructuring costs, adjustments to net
sales related to reserves recorded prior to the Company’s exit of
opioid commercialization activities, legal costs and expenses
incurred in connection with opioid-related litigation,
investigations and regulations pertaining to the company’s
historical commercialization of opioid products, certain types of
legal settlements, disputes, fees and costs, and to adjust for the
tax effect related to each of the non-GAAP adjustments.
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share amounts) |
(unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues: |
|
|
|
|
|
|
|
Product sales, net |
$ |
25,937 |
|
|
$ |
26,838 |
|
|
$ |
52,387 |
|
|
$ |
71,192 |
|
Commercialization agreement, net |
31,003 |
|
|
31,179 |
|
|
61,859 |
|
|
114,979 |
|
Royalties and milestones |
263 |
|
|
5,257 |
|
|
886 |
|
|
5,507 |
|
Total revenues |
57,203 |
|
|
63,274 |
|
|
115,132 |
|
|
191,678 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of sales (excluding amortization of intangible assets) |
2,124 |
|
|
2,753 |
|
|
4,699 |
|
|
14,797 |
|
Research and development expenses |
1,263 |
|
|
2,180 |
|
|
3,056 |
|
|
3,708 |
|
Selling, general and administrative expenses |
24,755 |
|
|
31,308 |
|
|
49,800 |
|
|
60,341 |
|
Amortization of intangible assets |
25,443 |
|
|
25,444 |
|
|
50,887 |
|
|
50,888 |
|
Restructuring charges |
— |
|
|
5,814 |
|
|
— |
|
|
14,831 |
|
Total costs and expenses |
53,585 |
|
|
67,499 |
|
|
108,442 |
|
|
144,565 |
|
Income (loss) from
operations |
3,618 |
|
|
(4,225 |
) |
|
6,690 |
|
|
47,113 |
|
Other (expense) income: |
|
|
|
|
|
|
|
Interest expense |
(14,842 |
) |
|
(17,010 |
) |
|
(31,396 |
) |
|
(35,078 |
) |
Other (expense) income, net |
(1,240 |
) |
|
67 |
|
|
(1,849 |
) |
|
296 |
|
Total other expense |
(16,082 |
) |
|
(16,943 |
) |
|
(33,245 |
) |
|
(34,782 |
) |
Net (loss) income before
income taxes |
(12,464 |
) |
|
(21,168 |
) |
|
(26,555 |
) |
|
12,331 |
|
Income taxes (expense)
benefit |
(1,141 |
) |
|
120 |
|
|
(1,351 |
) |
|
445 |
|
Net (loss) income |
$ |
(13,605 |
) |
|
$ |
(21,048 |
) |
|
$ |
(27,906 |
) |
|
$ |
12,776 |
|
Basic net (loss) income per
share |
(0.21 |
) |
|
(0.33 |
) |
|
(0.43 |
) |
|
0.20 |
|
Diluted net (loss) income per
share |
(0.21 |
) |
|
(0.33 |
) |
|
(0.43 |
) |
|
0.20 |
|
Shares used in computing basic
net (loss) income per share |
64,480 |
|
|
63,719 |
|
|
64,405 |
|
|
63,611 |
|
Shares used in computing
diluted net (loss) income per share |
64,480 |
|
|
63,719 |
|
|
64,405 |
|
|
64,107 |
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
(in thousands) |
(unaudited) |
|
|
June 30, 2019 |
|
December 31, 2018 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
68,348 |
|
|
$ |
110,949 |
|
Short-term investments |
7,114 |
|
|
— |
|
Accounts receivable, net |
34,311 |
|
|
37,211 |
|
Inventories, net |
3,005 |
|
|
3,396 |
|
Prepaid and other current assets |
26,231 |
|
|
56,551 |
|
Total current assets |
139,009 |
|
|
208,107 |
|
Property and equipment,
net |
13,050 |
|
|
13,064 |
|
Intangible assets, net |
641,212 |
|
|
692,099 |
|
Investments |
8,589 |
|
|
11,784 |
|
Other long-term assets |
11,014 |
|
|
7,812 |
|
Total assets |
$ |
812,874 |
|
|
$ |
932,866 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
2,188 |
|
|
$ |
6,138 |
|
Accrued rebates, returns and discounts |
63,808 |
|
|
75,759 |
|
Accrued liabilities |
19,648 |
|
|
31,361 |
|
Current portion of Senior Notes |
80,000 |
|
|
120,000 |
|
Interest payable |
9,194 |
|
|
11,645 |
|
Other current liabilities |
2,100 |
|
|
1,133 |
|
Total current liabilities |
176,938 |
|
|
246,036 |
|
Contingent consideration
liability |
953 |
|
|
1,038 |
|
Senior Notes |
117,527 |
|
|
158,309 |
|
Convertible Notes |
297,550 |
|
|
287,798 |
|
Other long-term
liabilities |
22,467 |
|
|
19,350 |
|
Total liabilities |
615,435 |
|
|
712,531 |
|
Commitments and
contingencies |
|
|
|
Shareholders’ equity: |
|
|
|
Common stock |
6 |
|
|
6 |
|
Additional paid-in capital |
407,944 |
|
|
402,934 |
|
Accumulated deficit |
(210,506 |
) |
|
(182,600 |
) |
Accumulated other comprehensive loss |
(5 |
) |
|
(5 |
) |
Total shareholders’ equity |
197,439 |
|
|
220,335 |
|
Total liabilities and
shareholders' equity |
$ |
812,874 |
|
|
$ |
932,866 |
|
|
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP
ADJUSTED EBITDA |
(in thousands) |
(unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
GAAP net (loss)/income |
$ |
(13,605 |
) |
|
$ |
(21,048 |
) |
|
$ |
(27,906 |
) |
|
$ |
12,776 |
|
Commercialization agreement revenues (1) |
1,933 |
|
|
3,198 |
|
|
3,863 |
|
|
(49,288 |
) |
Commercialization agreement cost of sales (2) |
— |
|
|
— |
|
|
— |
|
|
6,200 |
|
NUCYNTA sales reserve (3) |
— |
|
|
— |
|
|
— |
|
|
(10,711 |
) |
NUCYNTA and Lazanda revenue reserves (4) |
145 |
|
|
(946 |
) |
|
12 |
|
|
(1,166 |
) |
Expenses for opioid-related litigation, investigations and
regulations (5) |
2,350 |
|
|
2,220 |
|
|
4,850 |
|
|
3,047 |
|
Intangible amortization related to product acquisitions |
25,443 |
|
|
25,444 |
|
|
50,887 |
|
|
50,888 |
|
Contingent consideration related to product acquisitions |
(142 |
) |
|
(260 |
) |
|
(142 |
) |
|
(462 |
) |
Stock-based compensation |
2,634 |
|
|
2,970 |
|
|
5,336 |
|
|
4,946 |
|
Interest and other income |
(172 |
) |
|
(70 |
) |
|
(673 |
) |
|
(164 |
) |
Interest expense |
14,842 |
|
|
17,010 |
|
|
31,396 |
|
|
35,078 |
|
Depreciation |
279 |
|
|
1,454 |
|
|
616 |
|
|
2,929 |
|
Income taxes (expense) benefit |
1,141 |
|
|
(120 |
) |
|
1,351 |
|
|
(445 |
) |
Restructuring and related costs (6) |
— |
|
|
6,974 |
|
|
— |
|
|
15,299 |
|
Other costs |
— |
|
|
(31 |
) |
|
— |
|
|
178 |
|
Fair value for warrants |
1,848 |
|
|
— |
|
|
3,477 |
|
|
— |
|
Non-GAAP adjusted EBITDA |
$ |
36,696 |
|
|
$ |
36,795 |
|
|
$ |
73,067 |
|
|
$ |
69,105 |
|
|
(1) For the period from January 8, 2018 through November 8,
2018, the adjustment relates to the non-cash value assigned to
inventory transferred to Collegium. As of the date of the
Commercialization Amendment, on November 8, 2018, the Company
ceased recognition of fixed revenues and began the recognition of
variable revenues when they become due beginning in January
2019. The adjustment for the three and six months ended June
30, 2019 relates to non-cash expense for third-party royalties,
which are expected to have no net impact for the full year period,
as well as the amortization of the contract asset.
(2) Represents the cash received for inventory transferred to
Collegium at the commencement of the Commercialization
Agreement.
(3) Represents a $12.5 million benefit related to the release of
sales reserves for which the Company is no longer financially
responsible, net of $1.8 million in royalties payable to a third
party during the three months ended March 31, 2018.
(4) Removal of the impact of revenue adjustment estimates
related to products that we are no longer commercializing.
(5) Legal costs/expenses related to opioid-related litigation,
investigations and regulations pertaining to the Company’s
historical commercialization of opioid products.
(6) Restructuring and other costs represents non-recurring costs
associated with the Company’s restructuring, reincorporation,
headquarters relocation and CEO transition.
|
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP
ADJUSTED EARNINGS |
(in thousands, except per share amounts) |
(unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
GAAP net (loss)/income |
$ |
(13,605 |
) |
|
$ |
(21,048 |
) |
|
$ |
(27,906 |
) |
|
$ |
12,776 |
|
Commercialization agreement revenues (1) |
1,933 |
|
|
3,198 |
|
|
3,863 |
|
|
(49,288 |
) |
Commercialization agreement cost of sales (2) |
— |
|
|
— |
|
|
— |
|
|
6,200 |
|
Nucynta sales reserve (3) |
— |
|
|
— |
|
|
— |
|
|
(10,711 |
) |
Non-cash interest expense on debt |
6,056 |
|
|
5,390 |
|
|
12,220 |
|
|
10,808 |
|
Nucynta and Lazanda revenue reserves (4) |
145 |
|
|
(946 |
) |
|
12 |
|
|
(1,166 |
) |
Expenses for opioid-related litigation, investigations and
regulations (5) |
2,350 |
|
|
2,220 |
|
|
4,850 |
|
|
3,047 |
|
Intangible amortization related to product acquisitions |
25,443 |
|
|
25,444 |
|
|
50,887 |
|
|
50,888 |
|
Contingent consideration related to product acquisitions |
(142 |
) |
|
(260 |
) |
|
(142 |
) |
|
(462 |
) |
Stock-based compensation |
2,634 |
|
|
2,970 |
|
|
5,336 |
|
|
4,946 |
|
Restructuring and related costs (6) |
— |
|
|
6,974 |
|
|
— |
|
|
15,304 |
|
Other costs |
— |
|
|
(31 |
) |
|
(332 |
) |
|
178 |
|
Fair value for warrants |
1,848 |
|
|
— |
|
|
3,477 |
|
|
— |
|
Income tax effect of non-GAAP adjustments (7) |
(8,124 |
) |
|
(9,067 |
) |
|
(16,163 |
) |
|
(5,623 |
) |
Non-GAAP adjusted
earnings |
$ |
18,538 |
|
|
$ |
14,844 |
|
|
$ |
36,102 |
|
|
$ |
36,897 |
|
Add interest expense of
convertible debt, net of tax (8) |
1,703 |
|
|
1,703 |
|
|
3,406 |
|
|
3,406 |
|
Numerator |
$ |
20,241 |
|
|
$ |
16,547 |
|
|
$ |
39,508 |
|
|
$ |
40,303 |
|
Shares used in calculation
(8) |
82,411 |
|
|
82,201 |
|
|
82,336 |
|
|
82,039 |
|
Non-GAAP adjusted diluted
earnings per share |
$ |
0.25 |
|
|
$ |
0.20 |
|
|
$ |
0.48 |
|
|
$ |
0.49 |
|
(1) For the period from January 8, 2018 through November 8,
2018, the adjustment relates to the non-cash value assigned to
inventory transferred to Collegium. As of the date of the
Commercialization Amendment, on November 8, 2018, the Company
ceased recognition of fixed revenues and will begin recognition of
variable revenues when they become due beginning in January 2019.
The adjustment for the three and six months ended June 30, 2019
relates to non-cash expense for third-party royalties, which are
expected to have no net impact for the full year period, as well as
the amortization of the contract asset.
(2) Represents the cash received for inventory transferred to
Collegium at the commencement of the Commercialization
Agreement.
(3) Represents a $12.5 million benefit related to the
release of sales reserves for which the Company is no longer
financially responsible, net of $1.8 million in royalties payable
to a third party during the three months ended March 31, 2018.
(4) Removal of the impact of revenue adjustment estimates
related to products that we are no longer commercializing.
(5) Legal costs/expenses related to opioid-related
litigation, investigations and regulations pertaining to the
Company’s historical commercialization of opioid products.
(6) Restructuring and other costs represents non-recurring costs
associated with the Company’s restructuring, reincorporation,
headquarters relocation and CEO transition.
(7) Calculated by taking the pre-tax non-GAAP adjustments
and applying the statutory tax rate.
(8) The Company uses the if-converted method to compute
diluted earnings per share with respect to its convertible
debt.
|
RECONCILIATION OF GAAP NET INCOME (LOSS) PER SHARE
TO |
NON-GAAP ADJUSTED EARNINGS PER SHARE |
(unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
GAAP net (loss)/income per share |
$ |
(0.21 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.43 |
) |
|
$ |
0.20 |
|
Conversion from basic shares to diluted shares |
0.05 |
|
|
0.07 |
|
|
0.09 |
|
|
(0.05 |
) |
Commercialization agreement revenues |
0.02 |
|
|
0.04 |
|
|
0.05 |
|
|
(0.60 |
) |
Commercialization agreement cost of sales |
— |
|
|
— |
|
|
— |
|
|
0.08 |
|
NUCYNTA sales reserve |
— |
|
|
— |
|
|
— |
|
|
(0.13 |
) |
Non-cash interest expense on debt |
0.07 |
|
|
0.06 |
|
|
0.15 |
|
|
0.14 |
|
NUCYNTA and Lazanda revenue reserves |
— |
|
|
(0.01 |
) |
|
— |
|
|
(0.01 |
) |
Expenses for opioid-related litigation, investigations and
regulations |
0.03 |
|
|
0.03 |
|
|
0.06 |
|
|
0.04 |
|
Intangible amortization related to product acquisitions |
0.31 |
|
|
0.31 |
|
|
0.62 |
|
|
0.62 |
|
Contingent consideration related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
(0.01 |
) |
Stock based compensation |
0.03 |
|
|
0.04 |
|
|
0.06 |
|
|
0.06 |
|
Restructuring and related costs |
— |
|
|
0.08 |
|
|
— |
|
|
0.18 |
|
Change in fair value of warrants |
0.02 |
|
|
— |
|
|
0.04 |
|
|
— |
|
Income tax effect of non-GAAP adjustments |
(0.10 |
) |
|
(0.11 |
) |
|
(0.20 |
) |
|
(0.07 |
) |
Add interest expense of convertible debt, net of tax |
0.03 |
|
|
0.02 |
|
|
0.04 |
|
|
0.04 |
|
Non-GAAP adjusted diluted
earnings per share |
$ |
0.25 |
|
|
$ |
0.20 |
|
|
$ |
0.48 |
|
|
$ |
0.49 |
|
|
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED
INFORMATION |
For the three months ended June 30, 2019 |
(in thousands) |
(unaudited) |
|
|
Commercializationagreementrevenues |
|
ProductSales |
|
Royaltiesandmilestones |
|
Cost ofsales |
|
Researchanddevelopmentexpense |
|
Selling,general andadministrativeexpense |
|
Amortization of intangible assets |
|
Interest expense |
|
Other(Expense)Income, Net |
|
Incometaxes(expense)benefit |
GAAP as reported |
$ |
31,003 |
|
|
$ |
25,937 |
|
|
$ |
263 |
|
|
$ |
2,124 |
|
|
$ |
1,263 |
|
|
$ |
24,755 |
|
|
$ |
25,443 |
|
|
$ |
(14,842 |
) |
|
$ |
(1,240 |
) |
|
$ |
(1,141 |
) |
Commercialization agreement revenues and cost of sales |
1,933 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
NUCYNTA sales reserve |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Non-cash interest expense on debt |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6,056 |
|
|
— |
|
|
— |
|
NUCYNTA and Lazanda revenue reserves |
— |
|
|
145 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Expenses for opioid-related litigation, investigations and
regulations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,350 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Intangible amortization related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(25,443 |
) |
|
— |
|
|
— |
|
|
— |
|
Contingent consideration related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
142 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock based compensation |
— |
|
|
— |
|
|
— |
|
|
(50 |
) |
|
(76 |
) |
|
(2,508 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Change in fair value of warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,848 |
|
|
— |
|
Other costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Income tax effect of non-GAAP adjustments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,124 |
) |
Non-GAAP adjusted |
$ |
32,936 |
|
|
$ |
26,082 |
|
|
$ |
263 |
|
|
$ |
2,074 |
|
|
$ |
1,187 |
|
|
$ |
20,039 |
|
|
$ |
— |
|
|
$ |
(8,786 |
) |
|
$ |
608 |
|
|
$ |
(9,265 |
) |
|
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED
INFORMATION |
For the six months ended June 30, 2019 |
(in thousands) |
(unaudited) |
|
|
Commercialization agreementrevenues |
|
ProductSales |
|
Royaltiesandmilestones |
|
Cost ofsales |
|
Researchanddevelopmentexpense |
|
Selling,generaland administrativeexpense |
|
Amortization of intangible assets |
|
Interest expense |
|
Other(Expense)Income,Net |
|
Incometaxes(expense)benefit |
GAAP as reported |
$ |
61,859 |
|
|
$ |
52,387 |
|
|
$ |
886 |
|
|
$ |
4,699 |
|
|
$ |
3,056 |
|
|
$ |
49,800 |
|
|
$ |
50,887 |
|
|
$ |
(31,396 |
) |
|
$ |
(1,849 |
) |
|
$ |
(1,351 |
) |
Commercialization agreement revenues and cost of sales |
3,863 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Non-cash interest expense on debt |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
12,220 |
|
|
— |
|
|
— |
|
NUCYNTA and Lazanda revenue reserves |
— |
|
|
12 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Expenses for opioid-related litigation, investigations and
regulations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,850 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Intangible amortization related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(50,887 |
) |
|
— |
|
|
— |
|
|
— |
|
Contingent consideration related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
142 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock based compensation |
— |
|
|
— |
|
|
— |
|
|
(50 |
) |
|
(349 |
) |
|
(4,937 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Change in fair value of warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,477 |
|
|
— |
|
Other costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(332 |
) |
|
— |
|
Income tax effect of non-GAAP adjustments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(16,163 |
) |
Non-GAAP adjusted |
$ |
65,722 |
|
|
$ |
52,399 |
|
|
$ |
886 |
|
|
$ |
4,649 |
|
|
$ |
2,707 |
|
|
$ |
40,155 |
|
|
$ |
— |
|
|
$ |
(19,176 |
) |
|
$ |
1,296 |
|
|
$ |
(17,514 |
) |
|
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED
INFORMATION |
For the three months ended June 30, 2018 |
(in thousands) |
(unaudited) |
|
|
Commercializationagreementrevenues |
|
ProductSales |
|
Royaltiesandmilestones |
|
Cost ofsales |
|
Researchanddevelopmentexpense |
|
Selling,generalandadministrativeexpense |
|
RestructuringCharges |
|
Amortizationofintangibleassets |
|
Interest expense |
|
Other (Expense) Income, Net |
|
Income taxes (expense) benefit |
GAAP as reported |
$ |
31,179 |
|
|
$ |
26,838 |
|
|
$ |
5,257 |
|
|
$ |
2,753 |
|
|
$ |
2,180 |
|
|
$ |
31,308 |
|
|
$ |
5,814 |
|
|
$ |
25,444 |
|
|
$ |
(17,010 |
) |
|
$ |
67 |
|
|
$ |
120 |
|
Commercialization agreement revenues and cost of sales |
3,198 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Non-cash interest expense on debt |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,390 |
|
|
— |
|
|
— |
|
NUCYNTA and Lazanda revenue reserves |
— |
|
|
(946 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Expenses for opioid-related litigation, investigations and
regulations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,220 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Intangible amortization related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(25,444 |
) |
|
— |
|
|
— |
|
|
— |
|
Contingent consideration related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
260 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock based compensation |
— |
|
|
— |
|
|
— |
|
|
(16 |
) |
|
(14 |
) |
|
(2,940 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Restructuring and other costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
31 |
|
|
(6,974 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Income tax effect of non-GAAP adjustments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(9,067 |
) |
Non-GAAP adjusted |
$ |
34,377 |
|
|
$ |
25,892 |
|
|
$ |
5,257 |
|
|
$ |
2,737 |
|
|
$ |
2,166 |
|
|
$ |
26,439 |
|
|
$ |
(1,160 |
) |
|
$ |
— |
|
|
$ |
(11,620 |
) |
|
$ |
67 |
|
|
$ |
(8,947 |
) |
|
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED
INFORMATION |
For the six months ended June 30, 2018 |
(in thousands) |
(unaudited) |
|
|
Commercializationagreementrevenues |
|
ProductSales |
|
Royaltiesandmilestones |
|
Cost ofsales |
|
Researchanddevelopmentexpense |
|
Selling,generalandadministrativeexpense |
|
RestructuringCharges |
|
Amortizationofintangibleassets |
|
Interestexpense |
|
Other(Expense)Income,Net |
|
Incometaxes(expense)benefit |
GAAP as reported |
114,979 |
|
|
71,192 |
|
|
5,507 |
|
|
14,797 |
|
|
3,708 |
|
|
60,341 |
|
|
14,831 |
|
|
50,888 |
|
|
(35,078 |
) |
|
296 |
|
|
445 |
|
Commercialization agreement revenues and cost of sales |
(49,288 |
) |
|
|
|
— |
|
|
(6,200 |
) |
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
NUCYNTA sales reserve |
— |
|
|
(10,711 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Non-cash interest expense on debt |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10,808 |
|
|
— |
|
|
— |
|
NUCYNTA and Lazanda revenue reserves |
— |
|
|
(1,166 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Expenses for opioid-related litigation, investigations and
regulations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,047 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Intangible amortization related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(50,888 |
) |
|
— |
|
|
— |
|
|
— |
|
Contingent consideration related to product acquisitions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
462 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock based compensation |
— |
|
|
— |
|
|
— |
|
|
(30 |
) |
|
(67 |
) |
|
(4,849 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Restructuring and other costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(178 |
) |
|
(15,304 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Income tax effect of non-GAAP adjustments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5,623 |
) |
Non-GAAP adjusted |
65,691 |
|
|
59,315 |
|
|
5,507 |
|
|
8,567 |
|
|
3,641 |
|
|
52,729 |
|
|
(473 |
) |
|
— |
|
|
(24,270 |
) |
|
296 |
|
|
(5,178 |
) |
|
SECOND-QUARTER RECONCILIATION OF GAAP to NON-GAAP
REVENUES |
(in thousands) |
(unaudited) |
|
|
Three Months
Ended June 30, |
|
Six Months
Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018(1) |
Total
revenues (GAAP basis) |
$ |
57.2 |
|
|
$ |
63.3 |
|
|
$ |
115.1 |
|
|
$ |
191.7 |
|
Non-cash adjustment to commercialization agreement
revenues(2) |
2.1 |
|
|
2.2 |
|
|
3.9 |
|
|
(48.7 |
) |
Release of NUCYNTA sales reserves(3) |
— |
|
|
— |
|
|
— |
|
|
(12.5 |
) |
Total revenues (non-GAAP basis) |
$ |
59.3 |
|
|
$ |
65.5 |
|
|
$ |
119.0 |
|
|
$ |
130.5 |
|
(1) Year-to-date 2018 total GAAP revenues include one-time items
described in our quarterly report on Form 10-Q for the six months
ended June 30, 2018.
(2) The adjustments for the three and six months ended June 30,
2019 relate to non-cash adjustments for third-party royalties,
which were a net expense but are expected to have no net impact for
the full year period, the amortization of the contract asset, and
the impact of revenue adjustment estimates related to products that
we are no longer commercializing. For the three months ended
June 30, 2018 the adjustment relates to non-cash adjustments
for third party royalties and for the six months ended June 30,
2018 the adjustment relates primarily to the non-cash value
assigned to inventory transferred to Collegium.
(3) Represents a $12.5 million benefit related to the release of
sales reserves for which the Company is no longer financially
responsible.
|
FULL-YEAR 2019 NON-GAAP GUIDANCE
RECONCILATION |
(in millions) |
(unaudited) |
|
|
Earnings (1) |
|
Low End |
High End |
GAAP |
$ |
(68 |
) |
|
$ |
(58 |
) |
Specified
Items(2) |
$ |
186 |
|
|
$ |
186 |
|
Non-GAAP |
$ |
118 |
|
|
$ |
128 |
|
|
|
|
|
|
|
|
|
(1) GAAP net income guidance refers to GAAP net income and
non-GAAP earnings guidance refers to non-GAAP adjusted EBITDA.
(2) For purposes of this forward-looking reconciliation, a
description of the categories of specified items included in this
reconciliation are detailed in the tables above.
SENIOR SECURED NOTE COVENANT
DISCLOSURES
The Company was in compliance with its covenants, including the
Senior Secured Debt Leverage Ratio and Net Sales covenants, with
respect to the Company’s senior secured notes as of June 30,
2019. Set forth below are additional disclosures that the
Company is required to make in connection with the senior secured
notes.
RECONCILIATION OF GAAP NET INCOME (LOSS)
TO NON-GAAP ADJUSTED EBITDAFor the Rolling Twelve
Month Period Ended June 30, 2019(in
thousands)(unaudited)
The below reconciliation is presented to disclose the
calculation of Adjusted EBITDA (as defined in our senior secured
notes) on a rolling 12 month basis to support covenant compliance
in connection with our senior secured notes.
|
Twelve Month Period |
|
Ended June 30, 2019 |
|
(unaudited) |
GAAP net (loss)/income |
$ |
(3,774 |
) |
Commercialization agreement revenues (1) |
27,987 |
|
Nucynta and Lazanda revenue reserves (2) |
(384 |
) |
Expenses for opioid-related litigation, investigations and
regulations (3) |
9,700 |
|
Intangible amortization related to product acquisitions |
101,773 |
|
Contingent consideration related to product acquisitions |
(195 |
) |
Stock-based compensation |
10,829 |
|
Purdue Litigation |
(62,000 |
) |
Interest and other income |
(1,706 |
) |
Interest expense |
65,199 |
|
Depreciation |
(382 |
) |
Income taxes (expense) benefit |
2,863 |
|
Restructuring and related costs (4) |
5,965 |
|
Other costs |
(55 |
) |
Fair value for warrants |
3,477 |
|
Adjusted EBITDA |
$ |
159,297 |
|
(1) The adjustment for the twelve months ended June 30,
2019 relates to non-cash expense for third-party royalties, which
are expected to have no net impact for the full year period, as
well as the amortization of the contract asset.
(2) Removal of the impact of revenue adjustment estimates
related to products that we are no longer commercializing.
(3) Legal costs/expenses related to opioid-related litigation,
investigations and regulations pertaining to the Company’s
historical commercialization of opioid products.
(4) Restructuring and other costs represents non-recurring costs
associated with the Company’s restructuring, reincorporation,
headquarters relocation and CEO transition.
Additional Covenant Disclosures
Long-acting cosyntropin has not yet been launched for commercial
sale and therefore no revenue in respect of this product was
recognized by the Company as of June 30, 2019.
During the rolling twelve month period ended June 30, 2019,
the Company collected $128.2 million in cash receipts, net of cash
payments made, in connection with the Company’s Commercialization
Agreement with Collegium.
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