Assertio Holdings, Inc. (NASDAQ:ASRT) is a commercial pharmaceutical company offering differentiated products to patients. The company has built its commercial portfolio through a combination of increased opportunities with existing products, as well as through the acquisition or licensing of additional approved products.
Product Portfolio
Assertio's primary marketed products include INDOCIN® (indomethacin) Suppositories, INDOCIN® (indomethacin) Oral Suspension, ROLVEDON™ (elflapegrastim-xnst) injection for subcutaneous use, Otrexup® (methotrexate) injection for subcutaneous use, Sympazan® (clobazam) oral film, SPRIX® (ketorolac tromethamine) Nasal Spray, CAMBIA® (diclofenac potassium for oral solution), and Zipsor® (diclofenac potassium) Liquid filled capsules.
Financials
In 2023, Assertio reported annual net income of -$331,942,000, annual revenue of $152,069,000, annual operating cash flow of $49,604,000, and annual free cash flow of $48,976,000. The company's quarterly results for the first quarter of 2024 showed total sales of $31.9 million, down slightly from $32.5 million in the fourth quarter of 2023. Rolvedon sales were $14.5 million, up 32% from $11 million in the prior quarter, primarily due to volume growth. Indocin sales were $8.7 million, down from $10.8 million in the fourth quarter, as expected, due to the impact of generic competition on volume and pricing.
Gross margin in the first quarter of 2024, excluding the impact of inventory step-up, was 78% compared to 79% in the fourth quarter of 2023. SG&A expenses were $18.5 million, down 23% from $24 million in the prior quarter, reflecting the benefits of the company's actions to reduce and align expenses to its current asset portfolio. Adjusted EBITDA for the first quarter was $7.4 million, up from $4.5 million in the fourth quarter, driven by the sales and operating expense favorability.
Assertio's cash flow generation remains a key focus, with the company generating $7.5 million in cash flow from operations in the first quarter of 2024. Cash at the end of the quarter was $80.7 million, and debt stood at $40 million. The company is maintaining its previously announced guidance for 2024, expecting net product sales in the range of $110 million to $125 million and adjusted EBITDA between $20 million and $30 million.
Recent Developments
Rolvedon, Assertio's novel long-acting granulocyte colony-stimulating factor for the treatment of chemotherapy-induced neutropenia, has been a key driver of the company's growth. In the first quarter of 2024, Rolvedon sales increased 32% sequentially, reflecting the fifth consecutive quarter of demand growth. Assertio believes its market share in the clinic Medicare Part B market, which accounts for about one-third of the total market, is approximately 34%. The company is focused on further penetrating this segment through its dedicated contracting and commercial access capabilities, as well as expanding into new hospital customers.
Indocin, Assertio's NSAID products, continue to face generic competition, with one generic competitor currently on the market. The company is working to maintain its volume at a competitive price while anticipating a second generic entrant. Assertio's efforts have resulted in approximately a 50% volume share in the market, although the generic competitor has priced aggressively.
Sympazan, Assertio's benzodiazepine indicated for the adjunctive treatment of seizures associated with Lennox-Gastaut Syndrome, is another product in the company's portfolio. Assertio is making a strategic investment in Sympazan to change its marketing mix and raise awareness, with the goal of driving incremental volume growth starting in 2025.
Outlook
Assertio's focus on diversifying its revenue streams and generating more predictable cash flows is a key part of its strategy. The company is actively pursuing business development opportunities that can grow sales and profitability in a manner that increases the durability and predictability of the business. Assertio is open to various go-to-market models, including direct sales and more digital interaction, and is considering a broad range of product categories beyond its current focus on pain management and cancer treatment drugs.
The company's CEO search is on track, with the board committed to finding the best candidate with a balance of commercial, financial, and business development skills. Assertio believes that driving sustainable long-term shareholder value is best achieved by growing sales and profitability, diversifying its revenue streams, and generating more predictable cash flows.
Conclusion
Assertio Holdings is navigating a dynamic market environment, with both challenges and opportunities. The company's focus on diversifying its revenue streams, driving growth in key products like Rolvedon, and pursuing strategic business development opportunities positions it for long-term success. Assertio's commitment to financial discipline and cash flow generation, coupled with its experienced management team and pipeline of potential acquisitions, make it a compelling investment opportunity in the pharmaceutical sector.