Assertio Holdings, Inc. (“Assertio” or the “Company”) (Nasdaq:
ASRT), a commercial-stage pharmaceutical company, today reported
financial results for the second quarter ended June 30, 2020.
During the second quarter, Assertio completed its merger with Zyla
Life Sciences (“Zyla”).
“Even in what has been an unprecedented time with patient volume
and elective surgeries down due to COVID-19, we completed our
merger and achieved second quarter 2020 pro forma net product sales
of $27.7 million—slightly ahead of pro forma net product sales for
the first quarter of 2020 and better than what we had expected,”
said Todd Smith, president and chief executive officer. “During the
quarter, we launched our new commercial strategy which included
establishing a Neurology-focused sales team, training our sales
force on our combined portfolio and improving our distribution. In
addition, we established a medical science liaison team to gather
medical insights and provide access to current scientific
information about our products. Along with commercial execution, we
believe we are in a strong financial and operational position to
focus on bringing in additional
products.”
Pro Forma Projections for 2020
- Assertio is projecting mid-to-high-single digit pro forma net
product sales growth for 2020 from the 2019 pro forma net product
sales of $126.3 million.
- The Company is projecting pro forma non-GAAP adjusted EBITDA
margin of greater than 25 percent for the full year 2020.
- The Company is on track to recognize $40.0 million annually in
projected synergies from the merger with Zyla.
2020 Second Quarter and Recent Financial
Highlights
- Payments received. Assertio negotiated with
Golf Acquiror LLC, an affiliate to Alvogen, Inc. to advance its
payment of all remaining royalties owed to Assertio for the sale of
Gralise® (gabapentin), accelerating the collection of $38.8
million, net of discount, in the second quarter. Additionally in
May 2020, the Company sold its Collegium warrants for $6.0
million.
- Debt reductions. Assertio paid down $76.7
million of its convertible debt upon the close of the merger with
Zyla, and $13.0 million of Zyla’s debt was extinguished. In
addition, the Company repaid $10.0 million of the Senior Secured
Notes in July.
- Net product sales. The Company achieved $27.7
million in second quarter 2020 pro forma net product sales which
was slightly above the first quarter 2020 pro forma net product
sales. Zyla net product sales only partially contributed to second
quarter net product sales of $20.2 million since the merger closed
on May 20, 2020.
- Cash position. The Company ended the second
quarter with $59.4 million in cash and cash equivalents, a 40 plus
percent increase over year-end 2019.
2020 Second Quarter Business Highlights
- The Company closed its merger with Zyla on May 20, 2020 and
effectively completed the integration of the two companies in the
second quarter.
- Zyla and Assertio merged the two sales forces into one,
educated its representatives on the combined product portfolio,
provided new healthcare provider targets to the representatives and
began promotion to healthcare providers.
- The Company launched a Neurology sales team focused on
promotion of Cambia® (diclofenac potassium) for Oral solution and
SPRIX® (ketorolac tromethamine) Nasal Spray to key prescribers who
treat migraines and pain associated with headaches.
- The Company established a medical science liaison team to
support the further development and education of INDOCIN®
(indomethacin) Oral Suspension and Suppositories.
- Assertio launched a new distribution approach for SPRIX that
was designed to decrease the amount of time needed to fill
prescriptions and reduce costs.
COVID-19
Assertio continues to closely monitor the COVID-19 pandemic and
its impact on the patients who are treated with the Company's
products and the communities where it operates. Over the past
quarter, the Company has taken steps to help minimize the spread of
COVID-19 and at the same time, is working to ensure continued
patient access to its medicines. Because COVID-19 impacted the
Company’s ability to make office visits to providers who prescribe
its products, the Company adapted its approach and increased
virtual visits. Due to the limitations on elective surgeries,
Assertio experienced a decline in prescriptions associated with
those elective procedures. The Company believes that it is prepared
with sufficient product inventory, technology to facilitate virtual
office visits and operations prepared to adapt its work environment
as needed.
Earnings Conference Call Information
Assertio’s management will host a conference call to discuss the
second quarter 2020 financial results today:
Date: |
Friday, August 7, 2020 |
Time: |
8:30 a.m. ET |
Webcast (live and archive): |
assertiotx.com (Events & Webcasts, Investor page) |
Dial-in numbers: |
1-877-870-4263 (domestic) |
|
1-412-317-0790 (international) |
Replay numbers: |
1-877-344-7529 (domestic) |
|
1-412-317-0088 (international) |
Conference number: |
10134065 |
The live webcast and replay may be accessed at
http://investor.assertiotx.com/. Please connect to the Company’s
website at least 15 minutes prior to the live webcast to ensure
adequate time for any software download that may be needed to
access the webcast. Individuals also may participate in the call by
dialing 1-888-346-2615 (domestic) or 1-412-902-4253 (international)
and asking for the "Assertio Q2 Earnings Call." The replay will be
available approximately two hours after the call on the Assertio
website.
About AssertioAssertio is a leading commercial
pharmaceutical company bringing differentiated products to
patients. The Company has a robust portfolio of branded
prescription products in three areas: neurology, hospital and pain
and inflammation. Assertio has grown through business development
including licensing, mergers and acquisitions. The Company seeks to
leverage its commercial excellence to be the partner of choice. To
learn more about Assertio, visit www.assertiotx.com.
Forward Looking StatementsStatements in this
communication that are not historical facts are forward-looking
statements that reflect Assertio's current expectations,
assumptions and estimates of future performance and economic
conditions. These forward-looking statements are made in reliance
on the safe harbor provisions of Section 27A of the Securities Act
of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements relate to, among other things, future events or the
future performance or operations of Assertio. All statements other
than historical facts may be forward-looking statements and can be
identified by words such as "anticipate," "believe," "could,"
"design," "estimate," "expect," "forecast," "goal," "guidance,"
"imply," "intend," "may", "objective," "opportunity," "outlook,"
"plan," "position," "potential," "predict," "project,"
"prospective," "pursue," "seek," "should," "strategy," "target,"
"would," "will," "aim" or other similar expressions that convey the
uncertainty of future events or outcomes are used to identify
forward-looking statements. Such forward-looking statements are not
guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond the
control of Assertio. Factors that could cause Assertio's actual
results to differ materially from those implied in the
forward-looking statements include: (1) risks related to disruption
of management time from ongoing business operations due to the
integration of the merger with Zyla Life Sciences (the "Merger");
(2) unexpected costs, charges or expenses resulting from the
Merger; (3) the ability of the Assertio to retain key personnel;
(4) potential adverse changes to business relationships resulting
from the Merger; (5) the combined company's ability to achieve the
growth prospects and synergies expected from the transaction, as
well as delays, challenges and expenses associated with integrating
the combined company's existing businesses; (6) negative effects of
the Merger on the market price of Assertio's common stock, credit
ratings and operating results; (7) legislative, regulatory and
economic developments, including changing business conditions in
the industries in which Assertio operates; (8) Assertio's ability
to successfully pursue business development, strategic
partnerships, and investment opportunities to build and grow for
the future; (9) the commercial success and market acceptance of
Assertio's products; (10) coverage of Assertio’s products by payors
and pharmacy benefit managers; (11) Assertio’s ability to execute
on its sales and marketing strategy, including developing
relationships with customers, physicians, payors and other
constituencies; (12) the entry of any generic products for any of
Assertio’s products; (13) the outcome of Assertio’s opioid-related
investigations, Assertio’s opioid-related litigation brought by
state and local governmental entities and private parties, and
Assertio’s insurance, antitrust, securities class action and other
litigation, and the costs and expenses associated therewith; (14)
Assertio's estimates regarding expenses, future revenues, capital
requirements and needs for additional financing; (15) Assertio's
ability to generate sufficient cash flow from its business to make
payments on its indebtedness, Assertio's ability to restructure or
refinance its indebtedness and Assertio's compliance with the terms
and conditions of the agreements governing its indebtedness; (16)
compliance or non-compliance with legal and regulatory requirements
related to the development or promotion of pharmaceutical products
in the U.S.; (17) Assertio's plans to acquire, in-license or
co-promote other products, and/or acquire companies; (18)
Assertio's ability to raise additional capital, if necessary; (19)
variations in revenues obtained from collaborative agreements; (20)
Assertio's collaborative partners' compliance or non-compliance
with obligations under its collaboration agreements; (21) the
ability of Assertio's common stock to regain compliance with
Nasdaq's minimum closing bid requirement of at least $1.00 per
share; (22) the impact of Zyla's bankruptcy and acquisition of
products from Iroko Pharmaceuticals; (23) obtaining and maintaining
intellectual property protection for the Company’s products; (24)
Assertio’s ability to operate its business without infringing the
intellectual property rights of others; (25) the impact of
disasters, acts of terrorism or global pandemics; (26) general
market conditions; and other risks listed in Assertio's filings
with the United States Securities and Exchange Commission ("SEC").
These risks are more fully described in the joint proxy
statement/prospectus filed with the SEC in connection with the
Merger and Assertio's Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q filed with the SEC and in other filings
Assertio makes with the SEC from time to time. While Assertio may
elect to update these forward-looking statements at some point in
the future, it specifically disclaims any obligation to update or
revise any forward-looking-statements contained in this press
release whether as a result of new information or future events,
except as may be required by applicable law.
Media and Investor Contact E. Blair
Clark-Schoebir@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 measures of EBITDA and adjusted EBITDA
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.
This release also includes estimated non-GAAP adjusted EBITDA
margin information, which the Company believes not only provides
the Company's management with comparable financial data for
internal financial analysis but also provides meaningful
supplemental information to investors. Non-GAAP adjusted EBITDA
margin information enables investors to better understand the
anticipated performance of the business, but should be considered a
supplement to, and not as a substitute for or superior to,
financial measures calculated in accordance with GAAP. No
reconciliation of estimated non-GAAP adjusted EBITDA margin is
provided in this release because some of the excluded information
is not yet ascertainable or accessible and the Company is unable to
quantify certain amounts that would be required to be included in
the most directly comparable GAAP financial measures without
unreasonable efforts.
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. Specified items include non-cash
adjustments to Collegium agreement revenue and cost of sales,
adjustments to sales reserves for products the Company is no longer
selling, interest income, interest expense, amortization expense,
stock-based compensation expense, depreciation expense, income
taxes, transaction-related costs, CEO transition and restructuring
costs, 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, gains or losses resulting from debt refinancing or
extinguishment, gains or losses from non-cash adjustments to
long-lived assets and assets not part of current operations, and
amortization of fair value inventory step-up as result of purchase
accounting.
Pro forma ItemsThe Company is providing pro
forma net product sales to show the net product sales as if the
Zyla Merger had been completed as of January 1, 2019, and therefore
the Company operated on a combined basis, including Zyla, for the
entirety of 2019 and 2020 periods presented in this release. The
Company believes this supplemental information is useful to help
investors understand the results of the combined operations,
including Zyla, and assess the Company’s performance from period to
period.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except per share
amounts)(unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
Product sales, net |
$ |
20,165 |
|
|
|
$ |
25,937 |
|
|
|
$ |
29,417 |
|
|
|
$ |
52,387 |
|
|
Commercialization agreement, net |
— |
|
|
|
31,003 |
|
|
|
11,258 |
|
|
|
61,859 |
|
|
Royalties and milestones |
452 |
|
|
|
263 |
|
|
|
859 |
|
|
|
886 |
|
|
Total revenues |
20,617 |
|
|
|
57,203 |
|
|
|
41,534 |
|
|
|
115,132 |
|
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of sales (excluding amortization of intangible assets) |
5,238 |
|
|
|
2,124 |
|
|
|
6,637 |
|
|
|
4,699 |
|
|
Research and development expenses |
1,626 |
|
|
|
1,263 |
|
|
|
2,667 |
|
|
|
3,056 |
|
|
Selling, general and administrative expenses |
28,131 |
|
|
|
24,755 |
|
|
|
55,445 |
|
|
|
49,800 |
|
|
Amortization of intangible assets |
4,855 |
|
|
|
25,443 |
|
|
|
12,650 |
|
|
|
50,887 |
|
|
Restructuring charges |
6,519 |
|
|
|
— |
|
|
|
6,519 |
|
|
|
— |
|
|
Total costs and expenses |
46,369 |
|
|
|
53,585 |
|
|
|
83,918 |
|
|
|
108,442 |
|
|
(Loss) income from
operations |
(25,752 |
) |
|
|
3,618 |
|
|
|
(42,384 |
) |
|
|
6,690 |
|
|
Other income (expense): |
|
|
|
|
|
|
|
(Loss) Gain on sale of Gralise |
(850 |
) |
|
|
— |
|
|
|
126,655 |
|
|
|
— |
|
|
Loss on extinguishment of convertible notes |
(16,272 |
) |
|
|
— |
|
|
|
(47,880 |
) |
|
|
— |
|
|
Gain (Loss) on sale of NUCYNTA |
1,006 |
|
|
|
— |
|
|
|
(14,749 |
) |
|
|
|
0 |
|
|
Interest expense |
(1,604 |
) |
|
|
(14,842 |
) |
|
|
(10,278 |
) |
|
|
(31,396 |
) |
|
Loss on prepayment of Senior Notes |
— |
|
|
|
— |
|
|
|
(8,233 |
) |
|
|
— |
|
|
Other loss |
(499 |
) |
|
|
(1,240 |
) |
|
|
(3,824 |
) |
|
|
(1,849 |
) |
|
Total other (expense)
income |
(18,219 |
) |
|
|
(16,082 |
) |
|
|
41,691 |
|
|
|
(33,245 |
) |
|
Net loss before income
taxes |
(43,971 |
) |
|
|
(12,464 |
) |
|
|
(693 |
) |
|
|
(26,555 |
) |
|
Income tax benefit
(expense) |
9,472 |
|
|
|
(1,141 |
) |
|
|
7,424 |
|
|
|
(1,351 |
) |
|
Net (loss) income and
Comprehensive (loss) income |
$ |
(34,499 |
) |
|
|
$ |
(13,605 |
) |
|
|
$ |
6,731 |
|
|
|
$ |
(27,906 |
) |
|
|
|
|
|
|
|
|
|
Basic net (loss) income per
share |
$ |
(0.35 |
) |
|
|
$ |
(0.21 |
) |
|
|
$ |
0.07 |
|
|
|
$ |
(0.43 |
) |
|
Diluted net (loss) income per
share |
$ |
(0.35 |
) |
|
|
$ |
(0.21 |
) |
|
|
$ |
0.07 |
|
|
|
$ |
(0.43 |
) |
|
Shares used in computing basic
net (loss) income per share |
98,558 |
|
|
|
64,480 |
|
|
|
89,835 |
|
|
|
64,405 |
|
|
Shares used in computing
diluted net (loss) income per share |
98,558 |
|
|
|
64,480 |
|
|
|
90,236 |
|
|
|
64,405 |
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS(in
thousands)(unaudited)
|
June 30, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
59,403 |
|
|
|
$ |
42,107 |
|
|
Accounts receivable, net |
34,753 |
|
|
|
42,744 |
|
|
Consideration receivable from sale of Gralise |
— |
|
|
|
— |
|
|
Inventories, net |
25,398 |
|
|
|
3,412 |
|
|
Prepaid and other current assets |
15,909 |
|
|
|
15,688 |
|
|
Total current assets |
135,463 |
|
|
|
103,951 |
|
|
Property and equipment, net |
7,349 |
|
|
|
3,497 |
|
|
Intangible assets, net |
179,716 |
|
|
|
400,535 |
|
|
Goodwill |
14,147 |
|
|
|
— |
|
|
Investments, net |
1,579 |
|
|
|
13,064 |
|
|
Other long-term assets |
7,470 |
|
|
|
6,123 |
|
|
Total assets |
345,724 |
|
|
|
527,170 |
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
28,535 |
|
|
|
16,193 |
|
|
Accrued rebates, returns and discounts |
52,440 |
|
|
|
58,943 |
|
|
Accrued liabilities |
31,564 |
|
|
|
18,948 |
|
|
Current portion of long-term debt |
7,374 |
|
|
|
80,000 |
|
|
Contingent consideration, current portion |
8,700 |
|
|
|
— |
|
|
Interest payable |
2,754 |
|
|
|
8,375 |
|
|
Other current liabilities |
3,005 |
|
|
|
2,094 |
|
|
Total current liabilities |
134,372 |
|
|
|
184,553 |
|
|
Long-term debt |
91,834 |
|
|
|
271,258 |
|
|
Contingent consideration |
20,859 |
|
|
|
168 |
|
|
Other long-term liabilities |
13,681 |
|
|
|
13,233 |
|
|
Total liabilities |
260,746 |
|
|
|
469,212 |
|
|
Commitments and contingencies |
|
|
|
Shareholders’ equity: |
|
|
|
Common stock |
11 |
|
|
|
8 |
|
|
Additional paid-in capital |
478,037 |
|
|
|
457,751 |
|
|
Accumulated deficit |
(393,070 |
) |
|
|
(399,801 |
) |
|
Total shareholders’ equity |
84,978 |
|
|
|
57,958 |
|
|
Total liabilities and shareholders' equity |
$ |
345,724 |
|
|
|
$ |
527,170 |
|
|
RECONCILIATION OF GAAP NET INCOME (LOSS)
TO NON-GAAP EBITDA and ADJUSTED EBITDA (in
thousands)(unaudited)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Financial Statement
Classification |
Net (loss) income (GAAP) |
|
$ |
(34,499 |
) |
|
|
$ |
(13,605 |
) |
|
|
$ |
6,731 |
|
|
|
$ |
(27,906 |
) |
|
|
|
Interest expense |
|
1,604 |
|
|
|
14,842 |
|
|
|
10,278 |
|
|
|
31,396 |
|
|
|
Interest expense |
Income tax (benefit)
expense |
|
(9,472 |
) |
|
|
1,141 |
|
|
|
(7,424 |
) |
|
|
1,351 |
|
|
|
Income tax benefit
(expense) |
Depreciation expense |
|
396 |
|
|
|
279 |
|
|
|
669 |
|
|
|
616 |
|
|
|
Selling, general and
administrative expenses |
Amortization of intangible
assets |
|
4,855 |
|
|
|
25,443 |
|
|
|
12,650 |
|
|
|
50,887 |
|
|
|
Amortization of intangible
assets |
EBITDA
(Non-GAAP) |
|
$ |
(37,116 |
) |
|
|
$ |
28,100 |
|
|
|
$ |
22,904 |
|
|
|
$ |
56,344 |
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
NUCYNTA, Lazanda and Gralise revenue reserves (1) |
|
(462 |
) |
|
|
145 |
|
|
|
(1,108 |
) |
|
|
12 |
|
|
|
Product sales, net |
Commercialization agreement revenues (2) |
|
— |
|
|
|
1,933 |
|
|
|
1,846 |
|
|
|
3,863 |
|
|
|
Commercialization agreement,
net |
Inventory Step-up (3) |
|
2,422 |
|
|
|
— |
|
|
|
2,422 |
|
|
|
— |
|
|
|
Cost of sales |
Transaction-related costs (4) |
|
8,377 |
|
|
|
— |
|
|
|
16,071 |
|
|
|
— |
|
|
|
Selling, general and
administrative expenses |
Expenses for opioid-related litigation, investigations and
regulations (5) |
|
1,097 |
|
|
|
2,350 |
|
|
|
3,225 |
|
|
|
4,850 |
|
|
|
Selling, general and
administrative expenses |
Contingent consideration related to product acquisitions (6) |
|
— |
|
|
|
(142 |
) |
|
|
— |
|
|
|
(142 |
) |
|
|
Selling, general and
administrative expenses |
Loss on debt extinguishment, net (7) |
|
16,272 |
|
|
|
|
|
56,113 |
|
|
|
— |
|
|
|
Multiple |
Stock-based compensation (8) |
|
3,593 |
|
|
|
2,634 |
|
|
|
5,527 |
|
|
|
5,336 |
|
|
|
Multiple |
Other (9) |
|
— |
|
|
|
(172 |
) |
|
|
1,854 |
|
|
|
(673 |
) |
|
|
Multiple |
(Gain) loss on sale of NUCYNTA (10) |
|
(1,006 |
) |
|
|
— |
|
|
|
14,749 |
|
|
|
— |
|
|
|
Gain (Loss) on sale of
NUCYNTA |
Change in fair value of warrants (11) |
|
484 |
|
|
|
1,848 |
|
|
|
3,629 |
|
|
|
3,477 |
|
|
|
Other loss |
Restructuring cost - related to merger (12) |
|
5,520 |
|
|
|
— |
|
|
|
5,520 |
|
|
|
— |
|
|
|
Restructuring charges |
Loss (gain) on sale of Gralise (13) |
|
$ |
850 |
|
|
|
$ |
— |
|
|
|
$ |
(126,655 |
) |
|
|
$ |
— |
|
|
|
(Loss) Gain on sale of
Gralise |
Adjusted EBITDA
(Non-GAAP) |
|
31 |
|
|
|
36,696 |
|
|
|
6,097 |
|
|
|
73,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refer to the next page for table footnotes
(1) Removal of the impact of revenue adjustment estimates
related to products that we are no longer
commercializing.
(2) Adjustments relate to non-cash expense for third-party
royalties, which have no net impact for the full year period, as
well as the amortization of the contract asset.
(3) Fair value of inventories acquired with the Zyla Merger
included an inventory step-up in the value of product inventories
acquired. The three and six months ended June 30, 2020 included
$2.4 million of amortization of inventory step-up related acquired
inventories sold.
(4) Represents one-time transaction-related costs related
to legal and consulting for the disposition of Gralise and NUCYNTA,
and the merger with Zyla, including CEO transition related
expense.
(5) Legal costs/expenses related to opioid-related
litigation, investigations and regulations pertaining to the
Company’s historical commercialization of opioid products.
(6) Represents the change in fair value of the Company’s
contingent consideration related to product acquisitions.
(7) Represents the loss on debt extinguishment associated
with the settlement of all but $0.3 million in aggregate principal
outstanding of the Company’s 2021 and 2024 Notes and settlement of
all the remaining outstanding principal of the Company’s Senior
Notes.
(8) Stock based compensation for the three months ended
June 30, 2020 and 2019, included $0.1 million and $0.0 million in
Research and development expense, respectively, $2.5 million and
$2.9 million in Selling, general and administrative expenses,
respectively, and $1.0 million and $2.3 million in restructuring
expense, respectively. Stock based compensation for the six
months ended June 30, 2020 and 2019, included $0.2 million and $0.3
million in Research and development expense, respectively, $4.2
million and $4.9 million in Selling, general and administrative
expenses, respectively, and $1.0 million in restructuring
expense.
(9) Represents a credit loss reserve recognized in the
first quarter of 2020 related the Company’s $3.0 million investment
in a company engaged in medical research. This investment is
structured as a long-term loan receivable with a convertible
feature and is valued at amortized cost.
(10) During the three months ended June 30, 2020, the
Company recognized $1.0 million of other income related to NUCYNTA
expense reimbursements. During the six months ended June 30,
2020, the Company recognized a net loss of $14.7 million in Other
income which was comprised of $367.9 million in upfront
consideration received less $369.1 million carrying value of the
NUCYNTA intangibles derecognized, $5.6 million in inventory
transferred, $9.0 million in accrued third-party consent fees
partially offset by $1.0 million in expense reimbursements.
(11) Represents the change in fair value of the Company’s
Collegium warrant which was sold during the first quarter of
2020.
(12) During the three months ended June 30, 2020, the
Company executed a limited reduction to its sales force due to the
impact of COVID-19 on its ability to see in-person providers who
prescribe our products. As a result, $0.6 million of severance and
benefits costs was recognized. Additionally subsequent to the Zyla
Merger in May 2020, the Company began implementing reorganization
plans of its workforce and other restructuring activities to
realize the synergies of the Zyla Merger and to re-align resources
to strategic areas and drive growth. As a result, $4.8 million of
severance and benefits costs was recognized.
(13) On January 10, 2020, the Company completed the sale of
Gralise to Alvogen for $127.5 million. The total value included
$75.0 million in cash at closing, with the balance receivable as
75% of Alvogen’s first $70.0 million of Gralise net sales after the
closing (consideration receivable). On June 3, 2020, the Company
entered into an agreement with Alvogen to settle the remaining
balance of $39.7 million in consideration receivable as of
June 3, 2020, whereby the Company reduced the consideration
receivable by $0.9 million and Alvogen paid $38.8 million in
cash.
PRO FORMA PRODUCT SALES
(in thousands)(unaudited)
The following pro forma product sales, net is presented to
illustrate the effects of the Zyla Merger as if the transaction had
occurred on January 1, 2019. The unaudited proforma information for
the three and six months ended June 30, 2020 and 2019 excludes
product sales related to Assertio’s Gralise and NUCYNTA products
which were sold in January 2020 and February 2020, respectively.
This supplemental pro forma financial information has been prepared
for comparative purposes only, and is not necessarily indicative of
what actual results would have occurred, or of results that may
occur in the future. Supplemental unaudited proforma information is
based upon accounting estimates and judgments that the Company
believes are reasonable.
The unaudited pro forma product sales, net for the three and six
months ended June 30, 2020 and 2019 are as follows:
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
GAAP product sales, net |
|
$ |
20,165 |
|
|
|
$ |
25,937 |
|
|
|
$ |
29,417 |
|
|
|
$ |
52,387 |
|
|
Add: |
|
|
|
|
|
|
|
|
Zyla product sales prior to Merger (1) |
|
8,036 |
|
|
|
22,142 |
|
|
|
27,102 |
|
|
|
39,492 |
|
|
Less: |
|
|
|
|
|
|
|
|
Product sales for divested products (2) |
|
(462 |
) |
|
|
(17,655 |
) |
|
|
(1,109 |
) |
|
|
(31,066 |
) |
|
Pro forma product sales, net |
|
27,739 |
|
|
|
30,424 |
|
|
|
55,410 |
|
|
|
60,813 |
|
|
(1) Zyla product sales prior to the Merger on May
20, 2020 for the respective periods.(2) Product sales
of Gralise, NUCYNTA, and Lazanda, which we are no longer
commercializing.
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