Ladies and gentleman, thank you for standing by, and welcome to the Q4 2020 and Full-Year Assertio Holdings Incorporated Earnings Conference Call. At this time, all participants’ line are in a listen-only mode. After the speakers' presentation, there will be question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Max Nemmers. Thank you. Please go ahead, sir.

Thank you, Bueno,. Good afternoon and thank you all for joining us today to discuss Assertio's fourth quarter and full-year 2020 financial results. The news release covering our earnings for this period is now available on the Investor page of our website at investor.assertiotx.com. I would encourage you to review the release as it's important to today's discussion. With me today are; Dan Peisert, President and Chief Executive Officer; and Paul Schwichtenberg, Senior Vice President and Chief Financial Officer. Dan will open the remarks and provide an overview of the business followed by Paul who will review our financial results. After that we will open the call for your questions. During this call management will make projections and other forward-looking statements regarding our future performance. Such forward-looking statements are not guaranteed of future performance and involves risks and uncertainties including those noted in this afternoon's press release as well as Assertio's filings with the SEC. These and other risks are more fully described in the risk factors section and other sections of our annual report on form 10-K. Our actual results may differ materially from those projected in the forward-looking statements and Assertio specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. With that I will now turn the call over to Dan. Dan?

Thank you, Max, and thank you, everyone, for joining us this afternoon. Trust you're all staying safe and healthy during these challenging times. I want to start by welcoming our long-term shareholders, new shareholders and those that are considering investing in Assertio. I am excited to share my priorities, our new strategy and the results that position our company for future success. Since becoming CEO, I have taken some time to reflect upon the comments and concerns I have heard from investors over the past year. A few themes kept repeating such as our ability to service our debt and reduce the cost of the debt, our operating costs and how we could reduce expenses and how we could deliver on our $45 million of restructuring synergies, especially after having just delivered on $40 million of mergers synergies; understanding our legal challenges, their risks and what management is doing to address them; our ability and financial wherewithal to acquire new assets and refresh our portfolio; and finally, our ability to address the near-term impact of COVID-19. As I establish my goals and priorities as a new CEO of Assertio, I wanted to make sure I addressed some historical investor concerns, so we can put them to rest and pivot the discussions towards the progress we've made in the significant transformation of the company since I arrived in 2017. The priorities for 2021 are as follows: build a strong and committed team with a culture of teamwork, inclusion and results; delivering on our $45 million of restructuring synergies; ensuring the company generates strong operating cash flow; ensuring our debt never becomes a constraint in running the business; mitigate our legacy legal uncertainties; and develop a sustainable business model that reflects a changing environment. It's been an incredibly busy 10 weeks of…

Thank you Dan. This afternoon I will review the financial highlights from our fourth quarter and full-year 2020. As was the case in the last two quarters our year-over-year comparisons are challenging due to the many changes in our business. For clarity any references to the pro forma results are reflective of our product investitures and the Zyla merger. Pro former net product sales were $30.1 million for the three months ended December 31, 2020 compared to pro forma net product sales of $31.1 million in the prior year quarter and $33.7 million last quarter. Full-year pro forma net sales were $119.2 million in line with our guidance of a 5% decrease from the prior year pro forma net sales of $125.7 million. The Zipsor fourth quarter net sales showed growth over the third quarter and prior year quarter. In addition, the fourth quarter net sales reflect better than expected sales from the value matrix brands as we prepared to exit commercialization of these products. Indecent sales were lower than the prior quarter which was our highest quarterly result in the past two years primarily due to lower volume and price mix. The remainder of the portfolio continues to be impacted by lower volume due to COVID and the third quarter commercial coverage change for SPRIX . For cambia and Zipsor we are continuing to shift towards the hub model. A portion of the prescriptions that go through the hub model are considered consignment sales and are specifically for non-covered patients. These consignment sales are not reported by the major prescription reporting services which will result in a decline of overall reported prescription volume. However, our net sales will not reflect the same level of decline. In fact this model will generate overall cost savings for the company due to…

Thanks, Paul. Bueno, we can open up the call for Q&A.

Absolutely, sir. [Operator Instructions] Your first question is from Scott Henry of ROTH Capital. Your line is open.

Thank you, and good afternoon. A couple of questions. First, could you give any color on the revenues for, I mean, I know you gave some directional comments, but could you give us sales for like INDOCIN and SPRIX, and maybe Zipsor and Cambia? And I'm just trying to get a sense of what those numbers were in the quarter?

We'll report those or they'll be available in a 10-K that will be filed tomorrow.

Okay. All right. Fair enough. And then I think you - I mean I know you gave some color around it, but could you talk about what real-time cash and debt are right now? I just want to make sure I have those - there's a lot – correct, there's a lot of moving levers.

So real-time cash right now is going to be north of high 50s?

High 50s, yes.

Got it. And then the debt is $80.2 million of principal outstanding.

Okay, perfect. And I'm going to go over the two limit on questions. My apologies. The SG&A, I mean, I thought I heard you say non-GAAP SG&A was around $16 million in the quarter and I just did it back in the envelope and got around $15 million. When we but then when I look at your guidance for 2021, it sounds like it may even come down from those levels. I just want to get your thoughts and how we should think about that SG&A line?

Yes. I mean, what I would say is that if you – and what I was trying to explain in the script, this is Paul here, is that if you take our back half run rate for 2020 in the last two quarters, you add in our opioid legal expense and you look at what that annualized number will be, we'll save about $40 million off of that number in 2021. So the short answer is yes, the SG&A will come down.

Okay. Yes. I guess it all depends what you include and what you don't include. And then I promise this is the final question. I want to get a sense under the new business model, you've got some experience through COVID. You've got some experience through the last quarter. When you do less face-to-face promotion for a product, what kind of script declines do you typically see? I mean, is it reasonable to think the scripts would decline 10%, which maybe you'll make some of that up on pricing or maybe you're doing better than that or worse than that? I just want to get kind of your thoughts based on your early experience?

Well, I don't want to comment too much on the early experience that we've seen so far this year. What I can say is, unfortunately, there's not a great analog and we're also not just giving up. So yes, we are not going to be doing the same in person that we would have been doing in the past. But I'd say that COVID last year could be very good case study. We had 80 reps in the field or 80 territories that we had. At best, we were seeing 40%, 50% of our calls made in person. So we had a very strong virtual promotion last year just because of what COVID did and COVID was also in some ways worse than what you'd expect normally because patients weren't going to go visit their physicians. So I think we saw a resilience in the portfolio last year and that does bode well for what we expect going forward. The biggest thing that I'd point out for and it might be obvious to you for our portfolio going forward is SPRIX did have that payer reimbursement change in early September of 2020. So the go forward run rate for 2021 will be more like what we saw here in the fourth quarter. And then also notable is that the SOLUMATRIX products, of which Paul will comment in a second on what the total sales were that we recognized this year, that will not be happening or will not be continuing going forward as we exited the promotion of those brands and the distribution of those brands at the end of the year. So do you have the…

On a pro forma basis, the SOLUMATRIX sales were $8.2 million.

So we will not be seeing that same level of sales for those products going forward. I know that doesn't help you, Scott, and I apologize that I can't give you a good solid answer there, but I hope the commentary –

Yes. When you say on a pro forma basis, does that mean on a pro forma annualized basis?

Those are the sales for SOLUMATRIX for both Zyla and Assertio. So the full calendar year of 2020 across both companies.

Okay. Okay, perfect. Thank you, and thank you for taking the questions.

Your next question is from Kevin Kedra of G. Research. Your line is open.

All right. Thanks for taking the questions. Dan, you mentioned the shift in the commercial model. I am wondering how's that impacted what you're looking at in the business development arena? I know you guys have been looking for a while. But has that – has the shift in the model changed the sort of opportunities that you're looking for business development?

So when it comes to business development, I think, the types of products that would work well for us if we looked at a product level acquisition are a lot like the products that we have in the portfolio today. We think that what we've got now will benefits a lot from this digital virtual platform that we want to build in combination with the hub and pharmacy network that we have. So I think what it does for us is it actually opens up more opportunities for us to possibly bid on assets that we might have not chased in the past because we had a fixed infrastructure calling on a certain set of physicians. That isn't the case today. We can send an e-mail across any therapeutic category. We can display a banner ad or an ad in a electronic prescribing platform across any therapeutic category, and we can leverage our distribution model to effectively get that to patients. So I think it creates more opportunities and combined with the liquidity on the balance sheet, will actually put us in a better position to be able to go after these assets.

Great. Think more about business development opportunities about a year ago when you guys announced the Zyla merger, it seems fair to say things haven't gone quite the plan with that. Obviously, there's a lot that's been going on that’s out of your control with COVID. But any learnings you can take from the combination with Zyla over the past year that you can apply to future business development opportunities, positives and negatives relative to your expectations going into that merger?

It's a very good question, Kevin. And I reflect on some of the other BD - I made a mistake once in my career here to Assertio where I almost promised a BD deal and it didn't happen. And now reflecting on what has happened since and seeing in hindsight what that company did with those assets, COVID was - has really ruined that acquisition for them and COVID did play a big hand in what we experienced last year. What I would still say though is our revenues were not down materially from what we did expect. It wasn't as bad as it probably could have been, and I think that speaks to how resilient this portfolio is. Going forward, one of the things that we will do is we're taking possibly a more conservative approach to underwriting these opportunities and making sure that we've got a conservative forecast and can build an infrastructure that if it needs to be built will be included in that evaluation.

Great. If I can squeeze one more, you talked about some of the changes that that we can expect to see with CAMBIA and Zipsor where some of the scripts may not come through third-party. So that that's going to obviously make revenue look better than what the scripts would see. But in terms of gross to net, should we expect improvement there in 2021 given the distribution model shift that you have?

Yes. We will see a profound impact on gross to net actually. But what it does is it's also a lowering of gross revenue for any product that is dispensed via consignment we won't recognize the gross nor the gross to net. So it better aligns the two components where what goes in and what goes out are closer together. So it does have an impact, a positive impact on gross to net but it also has a reduction in gross sales.

Great. Thanks.

Thank you. That's it for Q&A today. I will turn the call to Dan Peisert for closing comments.

So in conclusion we have clear and ambitious priorities for the year ahead and I trust that you can see from our excellent start that we're truly focused on execution and results. Of course this cannot be possible without people. I'm very proud of the team we have here at Assertio and I want to thank all of my colleagues who helped shape our company and positioned it for an exciting future and I thank you all for joining us this afternoon and hope you have a good evening.

Ladies and gentlemen, this concludes today's conference call and thank you for participating. You may not disconnect.