-- Confirms Full-Year Net Sales Guidance Range
for the Neurology Franchise ---- Raises Full-Year Earnings Guidance
and Confirms Adjusted EBITDA Guidance ---- Amends and Strengthens
Commercial Agreement with Collegium ---- Confirms Regulatory Plan
to File for FDA Approval of Cosyntropin Depot by Year End --
Assertio Therapeutics, Inc. (NASDAQ: ASRT) today reported financial
results for the quarter ended September 30, 2018, and provided
an update on its business performance and strategic initiatives.
“Our third-quarter performance positions us well to achieve our
neurology franchise net sales and adjusted EBITDA goals for the
full year,” said Arthur Higgins, President and CEO of Assertio. “We
remain focused on diversifying our commercial portfolio and
advancing the development of cosyntropin depot, which we plan to
file for FDA approval by year end. In addition, this year we’ve
secured $97 million in non-dilutive cash, which improves our
leverage position as we continue to focus on debt reduction.
Lastly, and significantly, we amended and strengthened our
commercial agreement with Collegium.”
Financial Highlights
- Third-quarter GAAP net revenues of $77.5 million(1) or $81.2
million(1)(4) on a non-GAAP basis(4)
- Third-quarter GAAP net income of $48.3 million
- Third-quarter GAAP EPS of $0.65 per diluted share(2) and
non-GAAP EPS of $0.42(3) per diluted share
- Third-quarter non-GAAP adjusted EBITDA of $45.0 million(1)
- Third-quarter ending cash and cash equivalents of $121.9
million(2)
Business Highlights
- Strengthened NUCYNTA Collaboration with Collegium
- Extends Minimum Term; Annual Royalty Payments Through
2021: On November 8, 2018, the Company announced an
amendment to the Commercialization Agreement with Collegium
Pharmaceutical, Inc. relating to the NUCYNTA® franchise. The
amendment strengthens the collaboration and further aligns the
parties’ mutual interest in growing the franchise:
- Secures a minimum term of the Commercialization Agreement
through at least December 31, 2021, prior to which Collegium may
not terminate.
- Ensures that if annual net sales remain between $180 million to
$233 million, the maximum financial impact per annum between the
existing and amended agreement will never exceed $9 million for the
next three years.
- Provides Assertio and its shareholders an opportunity to
realize further value from a successful collaboration with
Collegium’s issuance to Assertio of a four-year warrant to purchase
$20 million of Collegium common stock at an exercise price of
$19.20.
- Reduces Assertio’s ongoing costs and expenses relating to
NUCYNTA beginning in 2019 by requiring Collegium to reimburse
Assertio for minimum annual royalties payable to Grünenthal GmbH
through 2021 and for certain other costs and expenses relating to
the NUCYNTA franchise currently carried by Assertio.
- Compensates Assertio with a $5 million termination fee if
Collegium terminates after December 31, 2021 and before
December 31, 2022.
(1) Includes $20 million in cash
received from PDL BioPharma..(2) Includes
$20 million in cash received from PDL BioPharma and a recognized
gain of $62 million from the settlement agreement with Purdue
Pharma L.P.(3) All non-GAAP measures
included in this earnings news release are reconciled to the
attached corresponding GAAP measures in the schedules.
(4) The $81.2 million is calculated by
adding an adjustment for the anticipated $3.7 million royalty
payable to Grünenthal in accordance with our minimum
royalty agreement to the GAAP net revenue of $77.5
million.
- Confirmed Cosyntropin Depot Strategy: The
Company continues to expect to file a New Drug Application with the
U.S. Food and Drug Administration for cosyntropin depot by year
end. The Company will be filing a 505(b)(2) application for a
diagnostic indication. The Company believes this filing strategy is
the most efficient and expeditious way to make available this
important product to patients. As previously announced, Assertio
and its development partner also began enrolling and dosing
pediatric patients in a new clinical trial evaluating cosyntropin
(synthetic ACTH Depot) for the treatment of infantile spasms, a
specific seizure type present in infantile epilepsy syndrome, a
rare pediatric disorder. Cosyntropin depot is a long-acting,
alcohol-free synthetic ACTH analogue that the Company believes, if
approved, will offer patients, physicians, and payers in the United
States an important treatment alternative.
- Settled Purdue Pharma Litigation: In the third
quarter, the Company recognized a gain of $62 million related to
its previously announced patent litigation settlement with Purdue
Pharma L.P. The settlement resolves all pending claims
relating to Purdue’s alleged infringement of certain of the
Company’s patents in relation to Purdue’s commercialization of
Oxycontin® (oxycodone hydrochloride-controlled release).Under the
terms of the settlement agreement, Purdue will pay Assertio a total
of $62 million, of which $30 million in cash was paid on
August 28, 2018 and an additional $32 million will be paid on
February 1, 2019.
- Monetized Royalty Stream: In the third
quarter, the Company received $20 million in cash in connection
with its sale to PDL BioPharma of the Company’s remaining interest
in royalty payments payable under license agreements relating to
the Company’s Acuform® technology in the Type 2 diabetes
therapeutic area. Substantially all of the Company’s interest in
such royalty payments were initially sold to PDL in 2013.
- Completed Delaware Reincorporation, Corporate
Headquarters Relocation and Name Change: In the third
quarter, 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” and a new CUSIP number, 04545L 107, on August 15,
2018.On August 15, 2018, the Company completed the relocation of
its corporate headquarters from Newark, CA, to Lake Forest, IL. The
relocation is consistent with the Company’s strategy to attract new
pharmaceutical talent based in the Chicagoland area.Additionally,
the Company has entered into a sublease for the majority of its
Newark facility and anticipates being able to sublease the
remaining office space.
Revenue Summary(in thousands, unaudited)
|
|
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
Product sales, net: |
|
|
|
|
|
|
|
Gralise |
$ |
14,630 |
|
|
$ |
21,103 |
|
|
43,272 |
|
|
57,777 |
|
Cambia |
10,365 |
|
|
8,164 |
|
|
24,870 |
|
|
23,862 |
|
Zipsor |
4,441 |
|
|
3,232 |
|
|
13,175 |
|
|
12,286 |
|
Total neurology product sales, net |
29,436 |
|
|
32,499 |
|
|
81,317 |
|
|
93,925 |
|
|
|
|
|
|
|
|
|
Nucynta products (1) |
11 |
|
|
58,665 |
|
|
18,782 |
|
|
183,299 |
|
Lazanda (2) |
(12 |
) |
|
4,040 |
|
|
528 |
|
|
13,239 |
|
Pharmacy benefit manager dispute reserve |
— |
|
|
— |
|
|
— |
|
|
(4,742 |
) |
Total product sales, net |
29,435 |
|
|
95,204 |
|
|
100,627 |
|
|
285,721 |
|
|
|
|
|
|
|
|
|
Commercialization Agreement (3) |
|
|
|
|
|
|
|
Commercialization rights and facilitation services,
net |
27,781 |
|
|
— |
|
|
87,055 |
|
|
— |
|
Revenue from transfer of inventory |
— |
|
|
— |
|
|
55,705 |
|
|
— |
|
Royalties and milestone revenue |
20,277 |
|
|
209 |
|
|
25,784 |
|
|
596 |
|
|
|
|
|
|
|
|
|
Total revenues |
$ |
77,493 |
|
|
$ |
95,413 |
|
|
$ |
269,171 |
|
|
$ |
286,317 |
|
(1) The Company transitioned the commercial rights to sell
NUCYNTA to Collegium on January 9, 2018. NUCYNTA product sales
for the three months ended September 30, 2018 relate to sales
reserve estimate adjustments. NUCYNTA product sales for the nine
months ended September 30, 2018 reflect the Company's sales of
NUCYNTA during a stub period between January 1st and
January 8th, and also includes a $12.5 million benefit related
to the release of sales reserves for which the Company is no longer
financially responsible.
(2) The Company divested Lazanda in November 2017. Product
sales for the three and nine months ended September 30, 2018
relate to sales reserve estimate adjustments.
(3) The Commercialization Agreement revenues for the nine months
ended September 30, 2018 includes $87.1 million related to the
commercialization rights and facilitation services provided to
Collegium and $55.7 million related to the fair value of inventory
transferred to Collegium. The $27.8 million of the
Commercialization Agreement revenues recognized in the third
quarter is net of a $3.7 million royalty payable to Grünenthal.
2018 Financial GuidanceThe Company confirms its
full-year net sales guidance range for the neurology franchise and
its full-year adjusted EBITDA guidance ranges. The Company is
raising its full-year net (loss)/income guidance to be within the
range of $40 million to $50 million from the previous range of ($8)
million to ($18) million related to the positive impact of the
Purdue Pharma litigation settlement, offset by the impact of
taxes.
|
|
|
(in millions) |
Prior 2018 Guidance |
Current 2018 Guidance |
Neurology Franchise Net Sales |
$105 to $110 million |
$105 to $110 million |
GAAP SG&A Expense |
$118 to $128 million |
$118 to $128 million |
GAAP R&D Expense |
$9 to $14 million |
$9 to $14 million |
Non-GAAP SG&A Expense |
$100 to $110 million |
$100 to $110 million |
Non-GAAP R&D Expense |
$7 to $12 million |
$7 to $12 million |
GAAP Net (Loss)/Income |
($8) to ($18) million |
$40 to $50 million* |
Non-GAAP Adjusted EBITDA |
$145 to $155 million |
$145 to $155 million |
*Connotes modified 2018 guidance
Conference Call and WebcastAssertio will host a
conference call today, Thursday, November 8, 2018 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 (844)
839-0046 (United States) or (857) 270-6032 (International)
referencing Conference ID 2462479.
- 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 1995The statements that are not
historical facts contained in this release are forward-looking
statements that involve risks and uncertainties including, but not
limited to, the commercialization of Gralise, CAMBIA, and Zipsor,
royalties associated with Collegium’s commercialization of NUCYNTA
and NUCYNTA ER, regulatory approval and clinical development of
cosyntropin depot, Assertio’s financial outlook for 2018 and
expectations regarding financial results and potential business
opportunities and other risks detailed in the Company’s Securities
and Exchange Commission filings, including the Company’s most
recent Annual Report on Form 10-K and most recent Quarterly Report
on Form 10-Q. The inclusion of forward-looking statements should
not be regarded as a representation that any of the Company’s plans
or objectives will be achieved. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to
publicly release the result of any revisions to these
forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Investor and Media Contact:John B. ThomasSVP,
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 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.
|
|
CONSOLIDATED STATEMENTS
OF OPERATIONS(in thousands, except per share
amounts)(unaudited) |
|
|
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(unaudited) |
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
Product sales, net |
$ |
29,435 |
|
|
$ |
95,204 |
|
|
$ |
100,627 |
|
|
$ |
285,721 |
|
Commercialization agreement, net |
27,781 |
|
|
— |
|
|
142,760 |
|
|
— |
|
Royalties and milestones |
20,277 |
|
|
209 |
|
|
25,784 |
|
|
596 |
|
Total revenues |
77,493 |
|
|
95,413 |
|
|
269,171 |
|
|
286,317 |
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of sales (excluding amortization of intangible
assets) |
2,975 |
|
|
17,396 |
|
|
17,772 |
|
|
54,895 |
|
Research and development expenses |
2,127 |
|
|
1,761 |
|
|
5,835 |
|
|
12,459 |
|
Selling, general and administrative expenses |
33,409 |
|
|
48,850 |
|
|
93,750 |
|
|
147,379 |
|
Amortization of intangible assets |
25,443 |
|
|
25,734 |
|
|
76,331 |
|
|
77,204 |
|
Restructuring charges |
3,911 |
|
|
434 |
|
|
18,742 |
|
|
3,875 |
|
Total costs and expenses |
67,865 |
|
|
94,175 |
|
|
212,430 |
|
|
295,812 |
|
|
|
|
|
|
|
|
|
Income/(loss) from operations |
9,628 |
|
|
1,238 |
|
|
56,741 |
|
|
(9,495 |
) |
Litigation Settlement |
62,000 |
|
|
— |
|
|
62,000 |
|
|
— |
|
Interest and other income |
677 |
|
|
72 |
|
|
973 |
|
|
604 |
|
Loss on prepayment of Senior Notes |
— |
|
|
— |
|
|
— |
|
|
(5,364 |
) |
Interest expense |
(17,190 |
) |
|
(17,815 |
) |
|
(52,268 |
) |
|
(55,697 |
) |
Benefit (expense) from income taxes |
(6,845 |
) |
|
513 |
|
|
(6,400 |
) |
|
560 |
|
Net income/(loss) |
$ |
48,270 |
|
|
$ |
(15,992 |
) |
|
$ |
61,046 |
|
|
$ |
(69,392 |
) |
|
|
|
|
|
|
|
|
Basic net income (loss) per share |
$ |
0.76 |
|
|
$ |
(0.25 |
) |
|
$ |
0.96 |
|
|
$ |
(1.11 |
) |
Diluted net income (loss) per share |
$ |
0.65 |
|
|
$ |
(0.25 |
) |
|
$ |
0.93 |
|
|
$ |
(1.11 |
) |
Basic shares used in calculation |
63,917 |
|
|
62,997 |
|
|
63,714 |
|
|
62,556 |
|
Diluted shares used in calculation |
82,690 |
|
|
62,997 |
|
|
82,282 |
|
|
62,556 |
|
|
|
|
CONSOLIDATED CONDENSED BALANCE
SHEETS(in
thousands)(unaudited) |
|
|
|
|
|
September 30, 2018 |
|
December 31, 2017 |
|
|
|
|
Cash, cash equivalents
and marketable securities |
121,904 |
|
|
128,089 |
|
Accounts
receivable |
43,912 |
|
|
72,482 |
|
Inventories |
4,255 |
|
|
13,042 |
|
Property and equipment,
net |
11,808 |
|
|
13,024 |
|
Intangible assets,
net |
717,542 |
|
|
793,873 |
|
Prepaid and other
assets |
84,086 |
|
|
18,107 |
|
Total
assets |
983,507 |
|
|
1,038,617 |
|
|
|
|
|
Accounts payable |
17,394 |
|
|
14,732 |
|
Income tax payable |
— |
|
|
126 |
|
Interest payable |
10,260 |
|
|
13,220 |
|
Accrued
liabilities |
26,075 |
|
|
60,496 |
|
Accrued rebates,
returns and discounts |
80,913 |
|
|
135,828 |
|
Senior notes |
302,466 |
|
|
357,220 |
|
Convertible notes |
283,061 |
|
|
269,510 |
|
Contingent
consideration liability |
877 |
|
|
1,613 |
|
Other liabilities |
20,052 |
|
|
16,364 |
|
Shareholders’
equity |
242,409 |
|
|
169,508 |
|
Total
liabilities and shareholders’ equity |
983,507 |
|
|
1,038,617 |
|
|
|
|
RECONCILIATION OF GAAP
NET LOSS TO NON-GAAP ADJUSTED EBITDA(in
thousands)(unaudited) |
|
|
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
GAAP net income/(loss) |
$ |
48,270 |
|
|
$ |
(15,992 |
) |
|
$ |
61,046 |
|
|
$ |
(69,392 |
) |
Commercialization agreement revenues (1) |
2,862 |
|
|
— |
|
|
(46,426 |
) |
|
— |
|
Commercialization agreement cost of sales (1) |
— |
|
|
— |
|
|
6,200 |
|
|
— |
|
Nucynta sales reserve (2) |
— |
|
|
— |
|
|
(10,711 |
) |
|
— |
|
Nucynta and Lazanda revenue reserves (3) |
2 |
|
|
— |
|
|
(538 |
) |
|
— |
|
Expenses for opioid-related litigation,
investigations and regulations (4) |
1,313 |
|
|
— |
|
|
4,360 |
|
|
— |
|
Managed care dispute reserve |
— |
|
|
— |
|
|
— |
|
|
4,742 |
|
Intangible amortization related to product
acquisitions |
25,443 |
|
|
25,734 |
|
|
76,331 |
|
|
77,204 |
|
Contingent consideration related to product
acquisitions |
(117 |
) |
|
(1,194 |
) |
|
(658 |
) |
|
(6,525 |
) |
Stock-based compensation |
2,944 |
|
|
2,911 |
|
|
7,890 |
|
|
9,870 |
|
Purdue litigation settlement |
(62,000 |
) |
|
— |
|
|
(62,000 |
) |
|
— |
|
Interest and other income |
(677 |
) |
|
(72 |
) |
|
(973 |
) |
|
(332 |
) |
Interest expense |
17,190 |
|
|
17,584 |
|
|
52,268 |
|
|
59,829 |
|
Depreciation |
(1,252 |
) |
|
605 |
|
|
1,677 |
|
|
1,839 |
|
Provision for (benefit from) income taxes |
6,845 |
|
|
(513 |
) |
|
6,400 |
|
|
(560 |
) |
Restructuring and related costs (5) |
4,079 |
|
|
434 |
|
|
19,383 |
|
|
3,875 |
|
Other costs |
75 |
|
|
612 |
|
|
123 |
|
|
3,142 |
|
Non-GAAP adjusted EBITDA |
$ |
44,977 |
|
|
$ |
30,109 |
|
|
$ |
114,372 |
|
|
$ |
83,692 |
|
(1) Adjustment for the non-cash value assigned to inventory
transferred to Collegium.
(2) 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
Grünenthal.
(3) Removal of the impact of revenue adjustment estimates
related to products that we are no longer commercializing.
(4) Legal costs/expenses related to opioid-related litigation,
investigations and regulations pertaining to the Company’s
historical commercialization of opioid products.
(5) 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 September
30, |
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
GAAP net income/(loss) |
$ |
48,270 |
|
|
$ |
(15,992 |
) |
|
$ |
61,046 |
|
|
$ |
(69,392 |
) |
Commercialization agreement revenues (1) |
2,862 |
|
|
— |
|
|
(46,426 |
) |
|
— |
|
Commercialization agreement cost of sales (1) |
— |
|
|
— |
|
|
6,200 |
|
|
— |
|
Nucynta sales reserve (2) |
— |
|
|
— |
|
|
(10,711 |
) |
|
$ |
— |
|
Non-cash interest expense on debt |
5,490 |
|
|
4,839 |
|
|
16,298 |
|
|
15,613 |
|
Nucynta and Lazanda revenue reserves (3) |
2 |
|
|
— |
|
|
(538 |
) |
|
— |
|
Managed care dispute reserve |
— |
|
|
— |
|
|
— |
|
|
4,742 |
|
Expenses for opioid-related litigation,
investigations and regulations (4) |
1,313 |
|
|
— |
|
|
4,360 |
|
|
— |
|
Purdue Settlement |
(62,000 |
) |
|
— |
|
|
(62,000 |
) |
|
— |
|
Intangible amortization related to product
acquisitions |
25,443 |
|
|
25,734 |
|
|
76,331 |
|
|
77,204 |
|
Contingent consideration related to product
acquisitions |
(117 |
) |
|
(1,194 |
) |
|
(658 |
) |
|
(6,525 |
) |
Stock-based compensation |
2,944 |
|
|
2,911 |
|
|
7,890 |
|
|
9,870 |
|
Restructuring and related costs (5) |
4,079 |
|
|
434 |
|
|
19,383 |
|
|
3,875 |
|
Valuation allowance on deferred tax assets |
— |
|
|
4,172 |
|
|
— |
|
|
19,274 |
|
Other costs |
75 |
|
|
612 |
|
|
123 |
|
|
3,142 |
|
Income tax effect of non-GAAP adjustments (6) |
4,551 |
|
|
(11,846 |
) |
|
(1,159 |
) |
|
(38,249 |
) |
Non-GAAP adjusted earnings |
$ |
32,912 |
|
|
$ |
9,670 |
|
|
$ |
70,139 |
|
|
$ |
19,554 |
|
Add interest expense of convertible debt, net of tax (7) |
1,704 |
|
|
1,348 |
|
|
5,110 |
|
|
2,695 |
|
Numerator |
$ |
34,616 |
|
|
$ |
11,018 |
|
|
$ |
75,249 |
|
|
$ |
22,249 |
|
Shares used in calculation (7) |
82,690 |
|
|
81,376 |
|
|
82,282 |
|
|
81,607 |
|
Non-GAAP adjusted earnings per share |
$ |
0.42 |
|
|
$ |
0.14 |
|
|
$ |
0.91 |
|
|
$ |
0.27 |
|
(1) Adjustment for the non-cash value assigned to inventory
transferred to Collegium.
(2) 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 Grünenthal.
(3) Removal of the impact of revenue adjustment estimates
related to products that we are no longer commercializing.
(4) Legal costs/expenses related to opioid-related
litigation, investigations and regulations pertaining to the
Company’s historical commercialization of opioid products.
(5) Restructuring and other costs represents non-recurring costs
associated with the Company’s restructuring, reincorporation,
headquarters relocation and CEO transition.
(6) Calculated by taking the pre-tax non-GAAP adjustments
and applying the statutory tax rate.
(7) The Company uses the if-converted method to compute
diluted earnings per share with respect to its convertible
debt.
|
|
|
RECONCILIATION OF GAAP
NET LOSS PER SHARE TO NON-GAAP ADJUSTED EARNINGS PER
SHARE(unaudited) |
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
GAAP net income/(loss) per share |
0.76 |
|
|
(0.25 |
) |
|
0.96 |
|
|
(1.11 |
) |
Conversion from basic shares to diluted shares |
(0.17 |
) |
|
0.06 |
|
|
(0.22 |
) |
|
0.26 |
|
Commercialization agreement revenues |
0.03 |
|
|
— |
|
|
(0.57 |
) |
|
— |
|
Commercialization agreement cost of sales |
— |
|
|
— |
|
|
0.08 |
|
|
— |
|
Nucynta sales reserve |
— |
|
|
— |
|
|
(0.13 |
) |
|
— |
|
Non-cash interest expense on debt |
0.07 |
|
|
0.06 |
|
|
0.20 |
|
|
0.19 |
|
Nucynta and Lazanda revenue reserves |
— |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
Managed care dispute reserve |
— |
|
|
— |
|
|
— |
|
|
0.06 |
|
Expenses for opioid-related litigation,
investigations and regulations |
0.01 |
|
|
— |
|
|
0.05 |
|
|
— |
|
Litigation settlement |
(0.75 |
) |
|
— |
|
|
(0.75 |
) |
|
— |
|
Intangible amortization related to product
acquisitions |
0.31 |
|
|
0.32 |
|
|
0.92 |
|
|
0.95 |
|
Contingent consideration related to product
acquisitions |
— |
|
|
(0.01 |
) |
|
— |
|
|
(0.08 |
) |
Stock based compensation |
0.03 |
|
|
0.04 |
|
|
0.10 |
|
|
0.12 |
|
Restructuring and related costs |
0.05 |
|
|
0.02 |
|
|
0.23 |
|
|
0.09 |
|
Valuation allowance on deferred tax assets |
— |
|
|
0.05 |
|
|
— |
|
|
0.24 |
|
Income tax effect of non-GAAP adjustments |
0.06 |
|
|
(0.15 |
) |
|
(0.01 |
) |
|
(0.47 |
) |
Add interest expense of convertible debt, net of
tax |
0.02 |
|
|
0.02 |
|
|
0.06 |
|
|
0.03 |
|
Non-GAAP adjusted earnings per share |
0.42 |
|
|
0.14 |
|
|
0.91 |
|
|
0.27 |
|
|
|
|
RECONCILATIONS OF GAAP
REPORTED TO NON-GAAP ADJUSTED INFORMATIONFor the
three months ended September 30, 2018(in
thousands)(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercialization agreement
revenues |
|
Product Sales |
|
Royalties and
milestones |
|
Cost of sales |
|
Research and development
expense |
|
Selling, general and
administrative expense |
|
Restructuring
Charges |
|
Amortization of intangible
assets |
|
Interest
expense |
|
Other Income |
|
Provision for (benefit from)
income taxes |
GAAP as reported |
|
$ |
27,781 |
|
|
$ |
29,435 |
|
|
$ |
20,277 |
|
|
$ |
2,975 |
|
|
$ |
2,127 |
|
|
$ |
33,409 |
|
|
$ |
3,911 |
|
|
$ |
25,443 |
|
|
$ |
(17,190 |
) |
|
$ |
62,677 |
|
|
$ |
(6,845 |
) |
Commercialization agreement revenues and cost of sales |
|
2,862 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Nucynta sales reserve |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Non-cash interest expense on debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,490 |
|
|
— |
|
|
— |
|
Nucynta and Lazanda revenue reserves |
|
— |
|
|
2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Expenses for opioid-related litigation, investigations and
regulations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,313 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Intangible amortization related to product acquisitions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(25,443 |
) |
|
— |
|
|
— |
|
|
— |
|
Contingent consideration related to product acquisitions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
117 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock based compensation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(270 |
) |
|
(2,674 |
) |
|
173 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Restructuring and other costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(168 |
) |
|
(4,084 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Other costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(75 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Purdue litigation settlement |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(62,000 |
) |
|
— |
|
Income tax effect of non-GAAP adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,551 |
|
Non-GAAP adjusted |
|
$ |
30,643 |
|
|
$ |
29,437 |
|
|
$ |
20,277 |
|
|
$ |
2,975 |
|
|
$ |
1,857 |
|
|
$ |
29,296 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(11,700 |
) |
|
$ |
677 |
|
|
$ |
(2,294 |
) |
|
|
|
RECONCILATIONS OF GAAP
REPORTED TO NON-GAAP ADJUSTED INFORMATIONFor the
nine months ended September 30, 2018(in
thousands)(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercialization agreement
revenues |
|
Product Sales |
|
Royalties and
milestones |
|
Cost of sales |
|
Research and development
expense |
|
Selling, general and
administrative expense |
|
Restructuring
Charges |
|
Amortization of intangible
assets |
|
Interest
expense |
|
Other Income |
|
Provision for (benefit from)
income taxes |
GAAP as reported |
|
$ |
142,760 |
|
|
$ |
100,627 |
|
|
$ |
25,784 |
|
|
$ |
17,772 |
|
|
$ |
5,835 |
|
|
$ |
93,750 |
|
|
$ |
18,742 |
|
|
$ |
76,331 |
|
|
$ |
(52,268 |
) |
|
$ |
62,973 |
|
|
$ |
(6,400 |
) |
Commercialization agreement revenues and cost of sales |
|
(46,426 |
) |
|
— |
|
|
— |
|
|
(6,200 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Nucynta sales reserve |
|
— |
|
|
(10,711 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
Non-cash interest expense on debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
16,298 |
|
|
— |
|
|
— |
|
Nucynta and Lazanda revenue reserves |
|
— |
|
|
(538 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Expenses for opioid-related litigation, investigations and
regulations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,360 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Intangible amortization related to product acquisitions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(76,331 |
) |
|
— |
|
|
— |
|
|
— |
|
Contingent consideration related to product acquisitions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
658 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock based compensation |
|
— |
|
|
— |
|
|
— |
|
|
(30 |
) |
|
(337 |
) |
|
(7,523 |
) |
|
(2,385 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Restructuring and other costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(641 |
) |
|
(16,357 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Other costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(123 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Purdue litigation settlement |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(62,000 |
) |
|
— |
|
Income tax effect of non-GAAP adjustments |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
(1,159 |
) |
Non-GAAP adjusted |
|
$ |
96,334 |
|
|
$ |
89,378 |
|
|
$ |
25,784 |
|
|
$ |
11,542 |
|
|
$ |
5,498 |
|
|
$ |
81,761 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(35,970 |
) |
|
$ |
973 |
|
|
$ |
(7,559 |
) |
|
|
FULL-YEAR 2018 NON-GAAP
GUIDANCE RECONCILATION(in
millions)(unaudited) |
|
|
|
Full Year 2018 Guidance |
|
Earnings(1) |
|
R&D |
|
SG&A |
|
Low End |
|
High End |
|
Low End |
|
High End |
|
Low End |
|
High End |
GAAP |
$ |
40 |
|
|
$ |
50 |
|
|
$ |
9 |
|
|
$ |
14 |
|
|
$ |
118 |
|
|
$ |
128 |
|
Specified Items(2) |
$ |
105 |
|
|
$ |
105 |
|
|
$ |
(2 |
) |
|
$ |
(2 |
) |
|
$ |
(18 |
) |
|
$ |
(18 |
) |
Non-GAAP |
$ |
145 |
|
|
$ |
155 |
|
|
$ |
7 |
|
|
$ |
12 |
|
|
$ |
100 |
|
|
$ |
110 |
|
(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.
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