10q10k10q10k.net

What changed in Assertio Holdings, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Assertio Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+477 added−388 removedSource: 10-K (2024-03-11) vs 10-K (2023-03-08)

Top changes in Assertio Holdings, Inc.'s 2023 10-K

477 paragraphs added · 388 removed · 286 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

76 edited+54 added−41 removed100 unchanged
Biggest changeThe following table reflects the percentage of consolidated revenue by customer and the percentage of accounts receivable by customer related to product shipments for the years ended December 31, 2022 and 2021. 7 Consolidated Revenue Accounts Receivable related to product shipments For the years ended December 31, For the years ended December 31, 2022 2021 2022 2021 AmerisourceBergen Corporation 28 % 26 % 21 % 29 % McKesson Corporation 28 % 24 % 25 % 23 % Cardinal Health 23 % 34 % 42 % 44 % All others 21 % 16 % 12 % 4 % Total 100 % 100 % 100 % 100 % The change in the percentage of consolidated revenue by customer and the percentage of accounts receivable by customer related to product shipments for the year ended December 31, 2021 to December 31, 2022 was primarily driven by the impact of change in product mix.
Biggest changeConsolidated Revenue Accounts Receivable related to product shipments For the years ended December 31, For the years ended December 31, 2023 2022 2023 2022 AmerisourceBergen Corporation 35 % 28 % 57 % 21 % McKesson Corporation 21 % 28 % 12 % 25 % Cardinal Health 18 % 23 % 14 % 42 % Other significant customer 10 % 4 % 10 % 4 % All others 16 % 17 % 7 % 8 % Total 100 % 100 % 100 % 100 % The change in the percentage of consolidated revenue by customer and the percentage of accounts receivable by customer related to product shipments for the year ended December 31, 2022 to December 31, 2023 was primarily driven by the impact of change in product mix, including the addition of ROLVEDON from the Spectrum Merger and the decrease in INDOCIN net product sales.
The study protocol and informed consent information for subjects in clinical trials must also be submitted to an IRB for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements, concerns about subjects, or may impose other conditions.
The study protocol and informed consent information for subjects in clinical trials must also be submitted to an IRB for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or concerns about subjects, or may impose other conditions.
Federal statutes that apply to us include the federal Anti‑Kickback Statute, which prohibits persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration in exchange for, or to generate business, including the purchase or prescription of a drug, that is reimbursable by a federal healthcare program such as Medicare and Medicaid, and the Federal False Claims Act (“FCA”), which generally prohibits knowingly and willingly presenting, or causing to be presented, for payment to the federal government any false, fraudulent or medically unnecessary claims for reimbursed drugs or services.
Federal statutes that apply to us include the federal Anti‑Kickback Statute, which prohibits persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration in exchange for, or to generate business, including the purchase or prescription of a drug, that is reimbursable by a federal healthcare program such as Medicare and Medicaid, and the Federal False Claims Act (“FCA”), which generally prohibits knowingly and willingly presenting, or causing to be presented, for payment by the federal government any false, fraudulent or medically unnecessary claims for reimbursed drugs or services.
The federal Anti‑Kickback Statute prohibits any person or entity, including a prescription drug manufacturer, or a party acting on its behalf, from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, to induce another to (i) refer an individual for the furnishing of a pharmaceutical product for which payment may be made under a federal healthcare program, such as Medicare or Medicaid (“covered product”); (ii) purchase or order any covered 16 product; (iii) arrange for the purchase or order of a covered product; or (iv) recommend a covered product.
The federal Anti‑Kickback Statute prohibits any person or entity, including a prescription drug manufacturer, or a party acting on its behalf, from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, to induce another to (i) refer an individual for the furnishing of a pharmaceutical product for which payment may be made under a federal healthcare program, such as Medicare or Medicaid (“covered product”); (ii) purchase or order any covered product; (iii) arrange for the purchase or order of a covered product; or (iv) recommend a covered product.
Otrexup is folate analog metabolic inhibitor indicated for the: • Management of patients with severe, active rheumatoid arthritis (RA) and polyarticular juvenile idiopathic arthritis (pJIA), who are intolerant of or had an inadequate response to first-line therapy. • Symptomatic control of severe, recalcitrant, disabling psoriasis in adults who are not adequately responsive to other forms of therapy.
Otrexup is a folate analog metabolic inhibitor indicated for the: • Management of patients with severe, active rheumatoid arthritis (RA) and polyarticular juvenile idiopathic arthritis (pJIA), who are intolerant of or had an inadequate response to first-line therapy. • Symptomatic control of severe, recalcitrant, disabling psoriasis in adults who are not adequately responsive to other forms of therapy.
Insufficient availability of our products or the active pharmaceutical ingredients and other raw materials necessary to manufacture our products, or the inability of our suppliers to manufacture and supply our products, will adversely impact our sales upon depletion of the active ingredient and product inventories.” 8 Intellectual Property We regard the protection of patents, designs, trademarks, and other proprietary rights that we own as critical to our success and competitive position.
Insufficient availability of our products or the active pharmaceutical ingredients and other raw materials necessary to manufacture our products, or the inability of our suppliers to manufacture and supply our products, will adversely impact our sales upon depletion of the active ingredient and product inventories.” Intellectual Property We regard the protection of patents, designs, trademarks, and other proprietary rights that we own as critical to our success and competitive position.
Recently, there has been considerable public and government scrutiny of pharmaceutical pricing, resulting in proposals to address the perceived high cost of pharmaceuticals, and drug pricing continues to be an agenda item at both the federal and state level. The U.S. pharmaceutical industry has already been significantly affected by major legislative initiatives, including, for example, the U.S.
Recently, there has been considerable public and government scrutiny of pharmaceutical pricing, resulting in proposals to address the perceived high cost of pharmaceuticals, and drug pricing continues to be an agenda item at both the federal and state level. The U.S. pharmaceutical industry has already been significantly affected by major legislative initiatives, including, for example, the ACA.
HITECH also increased the civil and criminal penalties that may be imposed against covered 17 entities, business associates, and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.
HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates, and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.
With respect to any of our products sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable privacy laws and post‑marketing requirements, including safety surveillance, anti‑fraud and abuse laws, and implementation of corporate compliance programs, and reporting of payments or transfers of value to healthcare professionals.
With respect to any of our products sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable privacy laws and post‑marketing 20 requirements, including safety surveillance, anti‑fraud and abuse laws, and implementation of corporate compliance programs, and reporting of payments or transfers of value to healthcare professionals.
During the review process, the FDA also reviews the drug’s product labeling to ensure that appropriate information is communicated to healthcare professionals and consumers. 11 As part of an application, the FDA may require submission of a Risk Evaluation and Mitigation Strategy (“REMS”) plan to mitigate any identified or suspected serious risks.
During the review process, the FDA also reviews the drug’s product labeling to ensure that appropriate information is communicated to healthcare professionals and consumers. As part of an application, the FDA may require submission of a Risk Evaluation and Mitigation Strategy (“REMS”) plan to mitigate any identified or suspected serious risks.
Additionally, new government requirements may be established that could delay or prevent regulatory approval of our products under development. 13 Third‑Party Payor Coverage and Reimbursement The commercial success of our products is partially dependent on the availability of coverage and adequate reimbursement from public (i.e., federal and state government) and private (i.e . , commercial) payors.
Additionally, new government requirements may be established that could delay or prevent regulatory approval of our products under development. Third‑Party Payor Coverage and Reimbursement The commercial success of our products is partially dependent on the availability of coverage and adequate reimbursement from public (i.e., federal and state government) and private (i.e . , commercial) payors.
If the FDA determines the application, data or manufacturing facilities are not acceptable, the FDA may note the deficiencies in the submission and request additional testing or information. After evaluating the NDA, including all related information and clinical and manufacturing inspection reports, the FDA may issue an approval letter, or, in some cases, a complete response letter (“CRL”).
If the FDA determines the application, data or manufacturing facilities are not acceptable, the FDA may note the deficiencies in the submission and request additional testing or information. After evaluating the NDA or BLA, including all related information and clinical and manufacturing inspection reports, the FDA may issue an approval letter, or, in some cases, a complete response letter (“CRL”).
We make available, free of charge through our website, our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, and other periodic Securities and Exchange (“SEC”) reports, along with amendments to all of those reports, as soon as reasonably practicable after we file the reports with the SEC.
We make available, free of charge through our website, our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, and other periodic Securities and Exchange Commission (“SEC”) reports, along with amendments to all of those reports, as soon as reasonably practicable after we file the reports with the SEC.
Also, third‑party payors continue to control costs by limiting coverage through the use of formularies and other cost‑containment mechanisms, and the amount of reimbursement for particular procedures or drug treatments. The cost of pharmaceutical products continues to generate substantial governmental and third‑party payor interest.
Also, third‑party payors continue to control costs by limiting coverage through the use of formularies and other cost‑containment mechanisms, and the amount of reimbursement for particular procedures or drug treatments. 16 The cost of pharmaceutical products continues to generate substantial governmental and third‑party payor interest.
Before an NDA is approved, the FDA generally inspects one or more clinical sites and facilities at which the drug is manufactured to ensure they are in compliance with the FDA’s cGCPs and Current Good Manufacturing Practices (“cGMP”).
Before an NDA or BLA is approved, the FDA generally inspects one or more clinical sites and facilities at which the drug is manufactured to ensure they are in compliance with the FDA’s cGCPs and Current Good Manufacturing Practices (“cGMP”).
A CRL generally contains a statement of specific conditions that must be met in order to obtain final approval of the NDA and may require additional clinical or preclinical testing in order for the FDA to reconsider the application.
A CRL generally contains a statement of specific conditions that must be met in order to obtain final approval of the NDA or BLA and may require additional clinical or preclinical testing in order for the FDA to reconsider the application.
Preclinical and Clinical Studies Governmental approval is required of all potential pharmaceutical products prior to the commercial use of those products. The regulatory process takes several years and requires substantial funds.
Preclinical and Clinical Studies Governmental approval is required of all potential pharmaceutical and biological products prior to the commercial use of those products. The regulatory process takes several years and requires substantial funds.
If the ANDA applicant does not challenge the applicability of the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced NDA product have expired.
If the 14 ANDA applicant does not challenge the applicability of the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced NDA product have expired.
Department of Health and Human Services (“HHS”) (e.g., the Office of Inspector General, “OIG”), the U.S. Department of Justice, state Attorneys General, and other state and local government agencies.
Department of Health and Human Services (“HHS”) (e.g., the Office of Inspector General, “OIG”), the U.S. Department of Justice (“DOJ”), state Attorneys General, and other state and local government agencies.
We used the net proceeds from the 2027 Convertible Notes to repurchase the remaining $59.0 million aggregate principal amount of our outstanding 13.0% Senior Secured Notes due 2024 (the “2024 Secured Notes”) and $3.0 million in associated interest payment pursuant to privately negotiated exchange agreements entered into concurrently with the pricing of the 2027 Convertible Notes.
We used the net proceeds from the issuance of the 2027 Convertible Notes to repurchase the remaining $59.0 million aggregate principal amount of our then outstanding 13.0% Senior Secured Notes due 2024 (the “2024 Secured Notes”) and $3.0 million in associated interest payment pursuant to privately negotiated exchange agreements entered into concurrently with the pricing of the 2027 Convertible Notes.
In addition, under the Pediatric Research Equity Act of 2003, certain NDAs or supplements to an NDA must contain adequate data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
In addition, under the Pediatric Research Equity Act of 2003, certain NDAs, or BLAs, or supplements to an NDA or BLA must contain adequate data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
Our Employee Handbook and Code of Business Conduct and Ethics outlines our commitment to diversity and inclusion, where all employees are welcomed in an environment designed to make them feel comfortable, respected, and accepted regardless of their age, race, national origin, sex, gender, identity, religion, disability, or sexual orientation.
Our Employee Handbook and Code of Business Conduct and Ethics outline our commitment to diversity and inclusion, where all employees are welcomed in an environment designed to make them feel comfortable, respected, and accepted regardless of their age, race, national origin, sex, gender, identity, religion, disability, or sexual orientation.
For further information regarding risks associated with the protection of our intellectual property rights, please also refer to “Item 1A.
For further information regarding risks associated with the protection of our 10 intellectual property rights, please also refer to “Item 1A.
We offer discounted pricing or rebates on purchases of pharmaceutical products under various federal and state healthcare programs, including: (i) Centers for Medicare & Medicaid Services’ Medicaid Drug Rebate Program, (ii) Medicare Part B 15 Program and Medicare Part D Coverage Gap Discount Programs, (iii) the U.S.
We offer discounted pricing or rebates on purchases of pharmaceutical products under various federal and state healthcare programs, including: (i) Centers for Medicare & Medicaid Services’ (“CMS”) Medicaid Drug Rebate Program, (ii) Medicare Part B Program and Medicare Part D Coverage Gap Discount Programs, (iii) the U.S.
“Risk Factors - We are not always able to protect our intellectual property and are subject to risks from liability for infringing the intellectual property of others.” Competition We face competition and potential competition from several sources, including pharmaceutical and biotechnology companies, generic drug companies, and medical devices and drug delivery companies.
Risk Factors - We are not always able to protect our intellectual property and are subject to risks from liability for infringing the intellectual property of others.” Competition We face competition and potential competition from several sources, including pharmaceutical and biotechnology companies, generic drug companies, and medical devices and drug delivery companies.
Manufacturing Requirements We, our suppliers, contract manufacturers, and other entities involved in the manufacturing and distribution of approved drugs are required to comply with certain post-approval requirements and are subject to periodic unannounced inspections by the FDA and state agencies to assess compliance with cGMP requirements.
Manufacturing Requirements We, our suppliers, contract manufacturers, and other entities involved in the manufacturing and distribution of approved drugs and biological products are required to comply with certain post-approval requirements and are subject to periodic unannounced inspections by the FDA and state agencies to assess compliance with cGMP requirements.
The False Claims Act has been used to assert liability based on inadequate care, kickbacks and other improper referrals, improperly reported government pricing metrics, such as Best Price or Average Manufacturer Price, improper use of Medicare numbers when detailing the provider of services, improper promotion of off‑label uses not expressly approved by FDA in a drug’s label, and allegations as to misrepresentations with respect to the services rendered.
The False Claims Act has been used to assert liability based on alleged kickbacks and other improper referrals, improperly reported government pricing metrics, such as Best Price or Average Manufacturer Price, improper use of Medicare numbers when detailing the provider of services, improper promotion of off‑label uses not expressly approved by FDA in a drug’s label, and allegations as to misrepresentations with respect to the services rendered.
Orange Book Listing In seeking approval for a drug through an NDA, applicants are required to list with the FDA certain patents whose claims cover the applicant’s product, active ingredient, or method of use.
Orange Book Listing and Generic Drugs In seeking approval for a drug through an NDA, applicants are required to list with the FDA certain patents whose claims cover the applicant’s product, active ingredient, or method of use.
Sponsors have ongoing submission and reporting obligations to the FDA and IRBs, and the FDA and IRBs may exercise continuing oversight of a clinical trial. Marketing Approval FDA approval of an NDA is required before a product may be marketed in the U.S.
Sponsors have ongoing submission and reporting obligations to the FDA and IRBs, and the FDA and IRBs may exercise continuing oversight of a clinical trial. 12 Marketing Approval FDA approval of an NDA or BLA is required before a product may be marketed in the U.S.
In addition, quality control, drug manufacture, packaging, and labeling procedures must continue to conform to cGMPs and NDA specifications after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and obtain licenses from certain state agencies.
In addition, quality control, drug or biological product manufacture, packaging, and labeling procedures must continue to conform to cGMPs and NDA or BLA specifications after approval. Drug and biological product manufacturers and certain of their subcontractors are required to register their establishments with the FDA and obtain licenses from certain state agencies.
Dates) Otrexup ® 8,021,335 (October 4, 2026) 8,480,631 (March 19, 2030) 8,562,564 (January 24, 2026) 8,579,865 (March 19, 2030) 8,814,834 (May 27, 2031) 8,945,063 (March 19, 2030) 9,421,333 (March 19, 2030) 9,533,102 (January 24, 2026) 9,629,959 (January 24, 2026) 9,867,949 (March 10, 2029) 10,709,844 (March 10, 2029) 11,446,441 (January 24, 2026) 11,497,753 (March 19, 2030) Sympazan ® 8,603,514 (April 3, 2024) 8,765,167 (February 20, 2024) 11,541,002 (January 31, 2040) SPRIX ® (1) 8,277,781 (March 13, 2029) (2) 8,551,454 (March 13, 2029) (2) CAMBIA ® (3) 7,759,394 (June 16, 2026) 8,097,651 (June 16, 2026) 8,927,604 (June 16, 2026) 9,827,197 (June 16, 2026) Zipsor ® (4) 7,662,858 (February 24, 2029) 7,884,095 (February 24, 2029) 7,939,518 (February 24, 2029) 8,110,606 (February 24, 2029) 8,623,920 (February 24, 2029) 9,561,200 (February 24, 2029) OXAYDO ® 7,510,726 (November 26, 2023) 7,981,439 (November 26, 2023) 8,409,616 (November 26, 2023) 8,637,540 (November 26, 2023) 9,492,443 (May 26, 2024) 7,201,920 (March 16, 2025) (1) Directed to processes of manufacture related to SPRIX.
Dates) Sympazan ® 8,603,514 (April 3, 2024) 8,765,167 (February 20, 2024) 11,541,002 (January 31, 2040) Otrexup ® 8,021,335 (October 4, 2026) 8,480,631 (March 19, 2030) 8,562,564 (January 24, 2026) 8,579,865 (March 19, 2030) 8,814,834 (May 27, 2031) 8,945,063 (March 19, 2030) 9,421,333 (March 19, 2030) 9,533,102 (January 24, 2026) 9,629,959 (January 24, 2026) 9,867,949 (March 10, 2029) 10,709,844 (March 10, 2029) 11,446,441 (January 24, 2026) 11,497,753 (March 19, 2030) SPRIX ® (1) 8,277,781 (March 13, 2029) (2) 8,551,454 (March 13, 2029) (2) CAMBIA ® (3) 7,759,394 (June 16, 2026) 8,097,651 (June 16, 2026) 8,927,604 (June 16, 2026) 9,827,197 (June 16, 2026) Zipsor ® (4) 7,662,858 (February 24, 2029) 7,884,095 (February 24, 2029) 7,939,518 (February 24, 2029) 8,110,606 (February 24, 2029) 8,623,920 (February 24, 2029) 9,561,200 (February 24, 2029) (1) Directed to processes of manufacture related to SPRIX.
SPRIX and INDOCIN products compete with currently marketed oral opioids, transdermal opioids, local anesthetic patches, stimulants and implantable and external infusion pumps that can be used for infusion of opioids and local anesthetics, non-narcotic analgesics, local and topical analgesics and anti-arthritics.
INDOCIN and SPRIX products compete with currently marketed oral opioids, transdermal opioids, local anesthetic patches, stimulants and implantable and external infusion pumps that can be used for infusion of opioids and local anesthetics, non-narcotic analgesics, local and topical analgesics and anti-arthritics. There are no patents covering the INDOCIN products.
The Federal Food, Drug and Cosmetic Act and other federal and state statutes and regulations govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.
The Federal Food, Drug and Cosmetic Act and, for biological products, the Public Health Service Act, as well as other federal and state statutes and regulations govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.
The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.
The FDA reviews an NDA or BLA to determine, among other things, whether the drug is safe and effective, or for BLAs, whether the biological product is safe, pure, and potent, and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.
For additional information and risks regarding the above-described government regulations, please also refer to “Item 1A. Risk Factors.” 18 Employees As of March 6, 2023 we ha d 30 fu ll‑time employees, all employed in the U.S. None of our employees are represented by a collective bargaining agreement, nor have we experienced any work stoppage.
For additional information and risks regarding the above-described government regulations, please also refer to “Item 1A. Risk Factors.” Employees As of March 6, 2024 we had 53 full‑time employees, all employed in the U.S. None of our employees are represented by a collective bargaining agreement, nor have we experienced any work stoppage.
The DEA regulates controlled substances as Schedule I, II, III, IV and V substances. Schedule I substances, by definition, have high potential for abuse, no currently accepted medical use in the U.S., and lack accepted safety for use under medical supervision, and may not be marketed or sold in the U.S. except for research and industrial purposes.
Schedule I substances, by definition, have high potential for abuse, no currently accepted medical use in the U.S., and lack accepted safety for use under medical supervision, and may not be marketed or sold in the U.S. except for research and industrial purposes.
Failure to comply with applicable U.S. 10 requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA delay or refusal to approve pending new drug applications (“NDAs”) or other marketing applications, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.
Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA delay or refusal to approve pending NDAs or, for biological products, biologics license applications (“BLAs”), or other marketing applications, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.
We acquire ketorolac tromethamine and indomethacin from European-based manufacturers while we secure oxycodone hydrochloride from a U.S.-based manufacturer. Both CAMBIA and Zipsor use diclofenac potassium as the API, which we source from suppliers in Italy and Taiwan. OTREXUP uses Methotrexate as the API, which is sourced by our supplier from a manufacturer based in Germany.
OTREXUP uses Methotrexate as the API, which is sourced by our supplier from a manufacturer based in Germany. The API used in SPRIX is ketorolac tromethamine, which we acquire from European-based manufacturers. Both CAMBIA and Zipsor use diclofenac potassium as the API, which we source from suppliers in Italy and Taiwan.
For further discussion of the risks related to the development INDOCIN Product generics and those related to 503B compounders, please refer to “Item 1A. Risk Factors - Cambia and Zipsor recently began facing competition from generics and INDOCIN suppositories recently began facing competition from a 503B outsourcing facility (commonly referred to as a 503B compounder) which adversely affects our business.
For further discussion of the risks related to the development of INDOCIN Product generics and those related to 503B compounders, please refer to “Item 1A. Risk Factors - Cambia, Zipsor and the INDOCIN products recently began facing competition from generics, which adversely affects our business.
The review and approval process for an NDA requires substantial time, effort and financial resources. Data obtained from preclinical and clinical testing are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The FDA may not grant approval of an NDA on a timely basis, or at all.
The review and approval process for an NDA or BLA requires substantial time, effort and financial resources. Data obtained from preclinical and clinical testing are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval.
We also entered into a long-term supply agreement with Aquestive for Sympazan. 5 On August 22, 2022, we issued $70.0 million aggregate principal amount of Convertible Senior Notes which mature on September 1, 2027 and bear interest at the rate of 6.5% per annum, payable semi-annually in arrears on March 1 and September 1 of each year beginning March 1, 2023 (the “2027 Convertible Notes”).
On August 22, 2022, we issued $70.0 million aggregate principal amount of Convertible Senior Notes which mature on September 1, 2027 and bear interest at the rate of 6.5% per annum, payable semi-annually in arrears on March 1 and September 1 of each year beginning March 1, 2023 (the “2027 Convertible Notes”).
Government enforcement agencies and private whistleblowers have asserted liability under the FCA for claims submitted involving inadequate care, kickbacks, improper promotion of off‑label uses, and misreporting of drug prices to federal agencies.
Government enforcement agencies and private whistleblowers have asserted liability under the FCA for claims submitted involving kickbacks, improper promotion of off‑label uses, material product manufacturing or contamination issues, and misreporting of drug prices to federal agencies.
(2) Expiration date excludes any potential patent term adjustment. (3) Certain parties who have entered into settlement agreements with us are able to market generic versions of CAMBIA starting January 2023.
(2) Expiration date excludes any potential patent term adjustment. (3) Certain parties who have entered into settlement agreements with us are able to and have begun marketing generic versions of CAMBIA starting January 2023. (4) Certain parties who have entered into settlement agreements with us are able to and have begun marketing generic versions of Zipsor starting in March 2022.
We are responsible for the supply and distribution of our marketed products. Our approved products are manufactured at contract manufacturing facilities in the U.S., Canada, and Italy. We have manufacturing, packaging, and supply agreements with sole commercial suppliers for each of our marketed products, as follows: • INDOCIN products - Patheon Pharmaceuticals, Inc.
We are responsible for the supply and distribution of our marketed products. Our approved products are manufactured at contract manufacturing facilities in the U.S., Canada, Italy, and South Korea. We have manufacturing, packaging, and supply agreements with sole commercial suppliers for each of our marketed products, as follows: • ROLVEDON - Hanmi Pharmaceutical Co.
A pharmaceutical product may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest risk of abuse and Schedule V substances the lowest relative risk of abuse among such substances. Sympazan Sympazan, a Clobazam lingual film product, is regulated as a Schedule IV controlled substance by the DEA.
A pharmaceutical product may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest risk of abuse and Schedule V substances the lowest relative risk of abuse among such substances.
The false statements statute prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious, or fraudulent statement about the delivery of or payment for healthcare benefits, items or services.
The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third‑party payors. The false statements statute prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious, or fraudulent statement about the delivery of or payment for healthcare benefits, items or services.
In addition, other regulatory action, including, among other things, warning letters, the seizure of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations, civil penalties, and criminal prosecution may be pursued. 12 Prescription Drug Marketing Act The Prescription Drug Marketing Act of 1987 and the Prescription Drug Amendments of 1992 govern the storage, handling, and distribution of prescription drug samples.
In addition, other regulatory action, including, among other things, warning letters, the seizure of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations, civil penalties, and criminal prosecution may be pursued.
Our activities relating to the reporting of discount and rebate information and other information affecting federal, state, and third-party reimbursement of our products, and the sale and marketing of our products and our service arrangements or data purchases, among other activities, may be subject to scrutiny under these laws.
Our activities relating to the reporting of discount and rebate information and other information affecting federal, state, and third-party reimbursement of our products, and the sale and marketing of our products and our service arrangements or data purchases, among other activities, may be subject to scrutiny under these laws. 19 We are unable to predict whether we would be subject to actions under the False Claims Act or a similar state law, or the impact of such actions.
Any future healthcare reform efforts, including those related specifically to the ACA, and any that further limit coverage and reimbursement of pharmaceutical products, may adversely affect our business and financial results. Any reduction in reimbursement from Medicare, or other government programs may result in a similar reduction in payments from private payors.
Any future healthcare reform efforts, including those related specifically to the ACA, and any that further limit coverage and reimbursement of pharmaceutical products, may adversely affect our business and financial results.
Competing products developed in the future may prove superior to our products, either generally or in particular market segments. These developments could make our products noncompetitive or obsolete. Government Regulation FDA Approval Process In the U.S., pharmaceutical products are subject to extensive regulation by the FDA.
These developments could make our products noncompetitive or obsolete. 11 Government Regulation FDA Approval Process In the U.S., pharmaceutical and biological products are subject to extensive regulation by the FDA.
Our Patents and Proprietary Rights As of December 31, 2022, the U.S. patents we own or have in-licensed, and their expiration dates and the marketed products they cover, are as follows: Product U.S. Patent Nos. (Exp.
All other trademarks and trade names referenced in this Annual Report on Form 10-K are the property of their respective owners. 9 Our Patents and Proprietary Rights As of December 31, 2023, the U.S. patents we own or have in-licensed, and their expiration dates and the marketed products they cover, are as follows: Product U.S. Patent Nos. (Exp.
Other Healthcare Laws and Compliance Requirements In the U.S., the research, manufacturing, distribution, sale, and promotion of drug products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services (“CMS”), other divisions of the U.S.
Any reduction in reimbursement from Medicare, or other government programs may result in a similar reduction in payments from private payors. 18 Other Healthcare Laws and Compliance Requirements In the U.S., the research, manufacturing, distribution, sale, and promotion of drug products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the CMS, other divisions of the U.S.
The law prohibits the sale, purchase, or trade (including an offer to sell, purchase or trade) of prescription drug samples.
Prescription Drug Marketing Act The Prescription Drug Marketing Act of 1987 and the Prescription Drug Amendments of 1992 govern the storage, handling, and distribution of prescription drug samples. The law prohibits the sale, purchase, or trade (including an offer to sell, purchase or trade) of prescription drug samples.
Drug Substances The active pharmaceutical ingredient (“API”) used in SPRIX is ketorolac tromethamine and in OXAYDO is oxycodone hydrochloride. Both INDOCIN oral suspension and suppositories use indomethacin as the API. We currently procure these APIs on a purchase order basis, some of which are pursuant to an agreement with one of our suppliers.
Both INDOCIN oral suspension and suppositories use indomethacin as the API. We currently procure these APIs on a purchase order basis, some of which are pursuant to an agreement with one of our suppliers. Sympazan uses Clobazam as the API, which is procured on a purchase order basis by our supplier from a manufacturer based in Italy.
These laws are broad in scope and there may not be regulations, guidance or court decisions that definitively interpret these laws and apply them to particular industry practices. In addition, these laws and their interpretations are subject to change. 14 Controlled Substances The DEA is the federal agency responsible for domestic enforcement of the Controlled Substances Act of 1970 (“CSA”).
These laws are broad in scope and there may not be regulations, guidance or court decisions that definitively interpret these laws and apply them to particular industry practices. In addition, these laws and their interpretations are subject to change. 17 Controlled Substances Sympazan, a Clobazam lingual film product, is regulated as a Schedule IV controlled substance by the DEA.
To date, substantially all of our revenues are related to product sales in the U.S. Three large, national wholesale distributors represent the vast majority of our revenues from net product sales.
Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions, and assesses operating performance. To date, substantially all of our revenues are related to product sales in the U.S. Three large, national wholesale distributors represent the vast majority of our revenues from net product sales.
Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act (“ACA”). The ACA, among other things, imposes a significant annual fee on companies that manufacture or import branded prescription drug medicines.
The ACA, among other things, imposes a significant annual fee on companies that manufacture or import branded prescription drug medicines.
Collaboration and License Agreements Miravo Pharmaceuticals: The Company has a license agreement with Tribute Pharmaceuticals Canada Ltd. (known as Miravo Pharmaceuticals, or “Miravo”) granting them the rights to commercially market CAMBIA in Canada. Miravo independently contracts with manufacturers to produce a specific CAMBIA formulation in Canada.
Refer to Note 11 , Debt, of the accompanying Consolidated Financial Statements for additional information on the 2027 Convertible Notes. Collaboration and License Agreements Miravo Pharmaceuticals: The Company has a license agreement with Tribute Pharmaceuticals Canada Ltd. (known as Miravo Pharmaceuticals, or “Miravo”) granting them the rights to commercially market CAMBIA in Canada.
Foreign regulatory approval of a product must also be obtained prior to marketing a product internationally. The clinical testing requirements and the time required to obtain foreign regulatory approvals may differ from that required for FDA approval and the time required for approval may delay or prevent marketing in certain countries.
The clinical testing requirements and the time required to obtain foreign regulatory approvals may differ from that required for FDA approval and the time required for approval may delay or prevent marketing in certain countries. 13 Post-Approval Requirements Ongoing adverse event reporting and submission of periodic reports is required following FDA approval of an NDA or BLA.
We are also aware of a 503B outsourcing facility (commonly referred to as a 503B compounder) that recently began compounding 100 mg indomethacin suppositories in what we believe to be violation of certain provisions of the Food, Drug and Cosmetic Act (the “FDCA”), including, among others, Section 505 approval requirements for new drugs and labeling requirements related to adequate directions for use.
In addition, we also face competition for INDOCIN Suppositories from hospitals and other institutions, including a 503B outsourcing facility (commonly referred to as a 503B compounder), which began compounding 100 mg indomethacin suppositories in 2022 in what we believe to be violation of state and federal requirements for new drugs and labeling requirements related to adequate directions for use.
We receive royalties on net sales on a quarterly basis as well as certain one-time contingent milestone payments upon the occurrence of certain events. We may receive additional one-time contingent milestone payments upon the achievement of scaling twelve-month cumulative sales targets and certain development milestones in the future.
We may receive additional one-time contingent milestone payments upon the achievement of scaling twelve-month cumulative sales targets and certain development milestones in the future. Business Strategy Our success depends on our people, our commercial capabilities and the financial position we have created, and the opportunities that exist in the marketplace.
In addition, other commonly used pharmaceutical treatments for rheumatoid arthritis include analgesics, NSAIDs, corticosteroids and biologic response modifiers. Sympazan competes with other generic and branded products in the treatment of LGS, including clobazam tablets and oral solution options. Competition in the LGS marketplace includes branded and generic anti-seizure medications, surgery, neuromodulations, and diet.
Approval of additional generic versions of our products would have an adverse effect on our business.” Sympazan competes with other generic and branded products in the treatment of LGS, including clobazam tablets and oral solution options. Competition in the LGS marketplace includes branded and generic anti-seizure medications, surgery, neuromodulations, and diet.
Both products are nonsteroidal anti-inflammatory drug (NSAID), indicated for: • Moderate to severe rheumatoid arthritis including acute flares of chronic disease • Moderate to severe ankylosing spondylitis INDOCIN ® (indomethacin) Oral Suspension • Moderate to severe osteoarthritis • Acute painful shoulder (bursitis and/or tendinitis) • Acute gouty arthritis Otrexup ® (methotrexate) injection for subcutaneous use A once weekly single-dose auto-injector containing a prescription medicine, methotrexate.
Both products are nonsteroidal anti-inflammatory drug (NSAID), indicated for: • Moderate to severe rheumatoid arthritis including acute flares of chronic disease • Moderate to severe ankylosing spondylitis INDOCIN ® (indomethacin) Oral Suspension • Moderate to severe osteoarthritis • Acute painful shoulder (bursitis and/or tendinitis) • Acute gouty arthritis Sympazan® (clobazam) oral film A benzodiazepine indicated for the adjunctive treatment of seizures associated with Lennox-Gastaut Syndrome (LGS) in patients aged two years of age or older.
Our strategy is to grow through product acquisitions, commercialization agreements, licensing or technology agreements, equity investments, and business combinations. Our products have been acquired or licensed through business development activities. We continue to seek additional products, with a preference for accretive, on-market products that have 6 patent life or exclusivity remaining that we can add to our portfolio of medicines.
Our strategy is to focus on sales growth of our current products while expanding our product portfolio through product acquisitions, commercialization agreements, licensing or technology agreements, equity investments, and business 7 combinations. Our products have been acquired or licensed through business development activities.
We believe the following key elements enable us to be commercially successful: • Leadership with a proven track record of successful results; • significant experience in completing business development transactions in the healthcare space such as mergers, asset acquisitions, asset divestitures, and commercialization/licensing arrangements; • a strategy that leverages digital and non-personal promotion to engage our customers and drive efficiency; • experience in key elements of commercialization including, but not limited to, market access, patient services, distribution, brand and digital marketing, non-personal promotion, analytics, and market research; • impactful brand promise for physicians and patients that reduces hassle and improves accessibility through access programs; and • commercial capabilities and financial position that enable us to seamlessly expand our product offerings.
We believe the following key elements enable us to be commercially successful: • significant experience in completing business development transactions in the healthcare industry such as mergers, asset acquisitions, asset divestitures, and commercialization/licensing arrangements; • proven ability to sell products through both a sales force and a non-personal promotion model supported by analytics, along with a differentiated market access program through payor contracting; and • access programs for physicians and patients that reduces hassle and increases accessibility.
(“Patheon”) and Cosette Pharmaceuticals, Inc. • Otrexup - Antares Pharma, Inc. and Pharmascience Inc. • Sympazan - Aquestive Therapeutics, Inc. • SPRIX - Jubilant HollisterStier LLC and Sharp Packaging Solutions • CAMBIA - MiPharm, S.p.A. and Tioapack (formerly Pharma Packaging Solutions) • Zipsor - Catalent Ontario Limited (“Catalent”) and Mikart Inc. • OXAYDO - UPM Pharmaceuticals, Inc.
Ltd., Ajinomoto Bio-Pharma Services, and PCI Pharma Services • INDOCIN products - Patheon Pharmaceuticals, Inc. and Cosette Pharmaceuticals, Inc. • Sympazan - Aquestive Therapeutics, Inc. • Otrexup - Antares Pharma, Inc. and Pharmascience Inc. • SPRIX - Jubilant HollisterStier LLC and Sharp Packaging Solutions • CAMBIA - MiPharm, S.p.A. and Tioapack (formerly Pharma Packaging Solutions) • Zipsor - Catalent Ontario Limited and Mikart Inc. 8 Drug Substances The active pharmaceutical ingredient (“API”) used in ROLVEDON is eflapegrastim-xnst, which is sourced by our supplier in South Korea.
Food and Drug Administration (“FDA”) relating to indomethacin, which could indicate the development of one or more INDOCIN product generics or other formulations of indomethacin.
In addition, we are aware of other drug companies that have had interactions with regulatory agencies including the FDA relating to indomethacin, which could indicate the development of one or more additional INDOCIN product generics or other formulations of indomethacin.
On February 27, 2023, we completed a transaction with a limited number of holders of our outstanding 2027 Convertible Notes (the “Exchanged Notes”) to exchange $30.0 million aggregate principal amount of Exchanged Notes pursuant to separate, privately negotiated exchange agreements for a combination of (a) a cash payment and (b) an agreed number of shares of our common stock.
On February 27, 2023, we completed a privately negotiated exchange of $30.0 million principal amount of the 2027 Convertible Notes (the “Convertible Note Exchange”). Pursuant to the Convertible Note Exchange, 6,990,000 shares of the Company’s common stock, plus an additional $10.5 million in cash, were issued to settle a portion of the 2027 Convertible Notes (the “Exchanged Notes”).
Also, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created several federal crimes, including healthcare fraud and false statements relating to healthcare matters. The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third‑party payors.
However, the cost of defending such claims, as well as any sanctions imposed, could adversely affect our financial performance. Also, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created several federal crimes, including healthcare fraud and false statements relating to healthcare matters.
Sympazan® (clobazam) oral film A benzodiazepine indicated for the adjunctive treatment of seizures associated with Lennox-Gastaut Syndrome (LGS) in patients aged two years of age or older . Sympazan is the only product to offer clobazam in a convenient film with PharmFilm® technology. Sympazan is taken without water or liquid, adheres to the tongue, and dissolves to deliver clobazam.
Sympazan is the only product to offer clobazam in a convenient film with PharmFilm® technology. Sympazan is taken without water or liquid, adheres to the tongue, and dissolves to deliver clobazam. Otrexup ® (methotrexate) injection for subcutaneous use A once weekly single-dose auto-injector containing a prescription medicine, methotrexate.
The ANDA application also will not be approved until any applicable non‑patent exclusivity listed in the Orange Book for the referenced product has expired.
The ANDA application also will not be approved until any applicable non‑patent exclusivity listed in the Orange Book for the referenced product has expired. 505(b)(2) NDAs Section 505(b)(2) of the Federal Food, Drug & Cosmetic Act provides an alternate regulatory pathway to obtain FDA approval for product candidates that represent modifications to formulations or uses of previously approved drug products.
Our Trademarks Assertio™, Zyla™, INDOCIN ® , Otrexup ® , Sympazan ® , SPRIX ® , CAMBIA ® , Zipsor ® and OXAYDO ® are trademarks owned by or licensed to Assertio. All other trademarks and trade names referenced in this Annual Report on Form 10-K are the property of their respective owners.
Our Trademarks Assertio™, Zyla™, ROLVEDON TM , INDOCIN ® , Sympazan ® Otrexup ® , SPRIX ® , CAMBIA ® , and Zipsor ® are trademarks owned by or licensed to Assertio.
Certain parties who have entered into settlement agreements with us began to market generic versions of Zipsor in March 2022. Otrexup competes with other branded methotrexate products, including other injection and auto-injector products. Competition in the methotrexate market also includes tablets and parenteral dosage forms.
Certain parties who have entered into settlement agreements with us began to market generic versions of Zipsor in March 2022. Competing products developed in the future may prove superior to our products, either generally or in particular market segments.
We have built our commercial portfolio through a combination of increased opportunities with existing products, as well as through the acquisition or licensing of additional approved products. Our primary marketed products are: INDOCIN ® (indomethacin) Suppositories A suppository and oral solution of indomethacin used both in hospitals and out-patient settings.
INDOCIN ® (indomethacin) Suppositories A suppository and oral solution of indomethacin used both in hospitals and out-patient settings.
ITEM 1. BUSINESS Our Company We are a commercial pharmaceutical company offering differentiated products to patients utilizing a non-personal promotional model. Our commercial portfolio of branded products focuses on three areas: neurology, rheumatology, and pain and inflammation.
ITEM 1. BUSINESS Our Company We are a commercial pharmaceutical company offering differentiated products to patients. We have built our commercial portfolio through acquisition or licensing of approved products. Our comprehensive commercial capabilities include marketing through both a sales force and a non-personal promotion model, market access through payor contracting, and trade and distribution.
Secondarily, we also remain open to late-stage assets or other investments into medical devices, informatics, or technology. We are seeking products that are a fit with our commercial platform and can be leveraged and distributed via digital and non-personal promotional means.
We continue to seek to acquire or license additional assets and products, with a preference for accretive, on-market products that have patent life or exclusivity remaining that we can add to our portfolio of medicines. We also remain open to acquiring or licensing late-stage assets or other investments into medical devices, informatics, or technology.
Removed
Zipsor uses proprietary ProSorb® delivery technology to deliver a finely dispersed, rapid and consistently absorbed formulation of diclofenac. Other commercially available products include OXAYDO® (oxycodone HCI, USP) tablets for oral use only —CII.
Added
Our primary marketed products are: ROLVEDON TM (eflapegrastim-xnst) injection for subcutaneous use A long-acting granulocyte colony-stimulating factor (G-CSF) with a novel formulation that is indicated to decrease the incidence of infection, as manifested by febrile neutropenia, in adult patients with nonmyeloid malignancies receiving myelosuppressive anti-cancer drugs associated with clinically significant incidence of febrile neutropenia.
Removed
On October 27, 2022, we completed a transaction to acquire an exclusive license for Sympazan® (clobazam) oral film and Sympazan product inventory (the “Sympazan Acquisition”) from Aquestive Therapeutics, Inc. (“Aquestive”).
Added
Zipsor uses proprietary ProSorb® delivery technology to deliver a finely dispersed, rapid and consistently absorbed formulation of diclofenac. On July 31, 2023 (the “Effective Date”) , pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as of April 24, 2023, we completed the acquisition of Spectrum Pharmaceutical, Inc.

… 91 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

123 edited+59 added−23 removed151 unchanged
Biggest changeFactors affecting our operating results and that could adversely affect our stock price include: • the degree of commercial success and market acceptance of our products, including the coverage of our products by payors and pharmacy benefit managers; • our ability to successfully develop and execute our sales, marketing and non-personal and digital promotion strategies, including developing and maintaining relationships with customers, physicians, payors and other constituencies; • the entry and sales of generics of our products (including the INDOCIN products which are not patent protected and may face generic competition at any time) and/or other products competitive with any of our products (including compounded indomethacin suppositories that a 503B compounder recently began selling in what we believe to be violation of certain provisions of the FDCA and which compete with our INDOCIN suppositories); 37 • our ability to successfully execute our business strategy, business development, strategic partnerships, and investment opportunities to build and grow for the future, including through product acquisitions, commercialization agreements, licensing or technology agreements, equity investments, and business combinations; • the outcome of, and our intentions with respect to, any litigation or investigations, including antitrust litigation, opioid-related investigations, opioid-related litigation and related claims for negligence and breach of fiduciary duty against our former insurance broker, and other disputes and litigation, and the costs and expenses associated therewith; • filings and other regulatory or governmental actions, investigations or proceedings related to our products and any future product candidates and those of our commercialization and collaborative partners; • developments concerning proprietary rights, including patents, infringement allegations, inter parties review proceedings and litigation matters; • legal and regulatory developments in the U.S.; • actions taken by industry stakeholders affecting the market for our products; • our ability to generate sufficient cash flow from our business to fund operations and make payments on our indebtedness; • our and our commercialization and collaborative partners’ compliance or noncompliance with legal and regulatory requirements and with obligations under our collaborative agreements; • adverse events related to our products, including recalls; • interruptions of manufacturing or supply, or other manufacture or supply difficulties; • variations in revenues obtained from commercialization and collaborative agreements, including contingent milestone payments, royalties, license fees and other contract revenues, including nonrecurring revenues, and the accounting treatment with respect thereto; • adverse events or circumstances related to our peer companies or our industry or the markets for our products; • adoption of new technologies by us or our competitors; • our compliance with the terms and conditions of the agreements governing our indebtedness; • sales of large blocks of our common stock; and • variations in our operating results, earnings per share, cash flows from operating activities, deferred revenue, and other financial metrics and non-financial metrics, and how those results are measured, presented and compare to our financial and operating projections and analyst expectations.
Biggest changeFactors affecting our operating results and that could adversely affect our stock price include: • our ability to grow sales of ROLVEDON and the commercial success and market acceptance of ROLVEDON and our other products, including the coverage of our products by payors and pharmacy benefit managers; • our ability to successfully develop and execute our sales, marketing and promotion strategies using our sales force and non-personal promotion model capabilities, including developing and maintaining relationships with customers, physicians, payors and other constituencies, and our ability to capitalize on opportunities that exist in the marketplace; • the entry and sales of generics of our products and/or other products competitive with any of our products (including indomethacin suppositories compounded by hospitals and other institutions, including a 503B compounder which we believe is violating certain provisions of the FDCA); • the timing and impact of additional generic approvals and uncertainty around the recent approvals and launches of generic INDOCIN products (which are not patent protected and now face generic competition as a result of the August 2023 approval and launch of generic indomethacin suppositories and January 2024 approval of a generic indomethacin oral suspension product); • our ability to successfully execute our business strategy, business development, strategic partnerships, and investment opportunities to build and grow for the future, including through product acquisitions, commercialization agreements, licensing or technology agreements, equity investments, and business combinations; • our ability to attract and retain executive leadership and key employees, including in connection with our ongoing search for a permanent CEO; • the outcome of, and our intentions with respect to, any litigation or government investigations, including pending and potential future shareholder litigation relating to the Spectrum Merger and/or the recent approval and launch of generic indomethacin suppositories, antitrust litigation, opioid-related government investigations, opioid-related litigation and related claims for negligence and breach of fiduciary duty against our former insurance broker, as well as Spectrum’s legacy shareholder and other litigation, and other disputes and litigation, and the costs and expenses associated therewith; • the timing, cost and results of our clinical studies and other research and development efforts, including the extent to which data from the ROLVEDON same-day dosing trial, if and when completed, may support our ongoing commercialization efforts; • filings and other regulatory or governmental actions, investigations or proceedings related to our products and any future product candidates and those of our commercialization and collaborative partners; • developments concerning proprietary rights, including patents, infringement allegations, inter parties review proceedings and litigation matters; • legal and regulatory developments in the U.S.; • actions taken by industry stakeholders affecting the market for our products; • our ability to generate sufficient cash flow from our business to fund operations and make payments on our indebtedness; • our and our commercialization and collaborative partners’ compliance or noncompliance with legal and regulatory requirements and with obligations under our collaborative agreements; • adverse events related to our products, including recalls; • interruptions of manufacturing or supply, or other manufacture or supply difficulties; • variations in revenues obtained from commercialization and collaborative agreements, including contingent milestone payments, royalties, license fees and other contract revenues, including nonrecurring revenues, and the accounting treatment with respect thereto; • adverse events or circumstances related to our peer companies or our industry or the markets for our products; • adoption of new technologies by us or our competitors; • our compliance with the terms and conditions of the agreements governing our indebtedness; 43 • sales of large blocks of our common stock; and • variations in our operating results, earnings per share, cash flows from operating activities, deferred revenue, and other financial metrics and non-financial metrics, and how those results are measured, presented and compare to our financial and operating projections and analyst expectations.
In addition, if material weaknesses are found in our internal controls in the future, if we fail to complete future evaluations on time or if our external auditors cannot attest to the 34 effectiveness of our internal control over financial reporting, we could fail to meet our regulatory reporting requirements and be subject to regulatory scrutiny and a loss of public confidence in our internal controls, which could have an adverse effect on our stock price or expose us to litigation or regulatory proceedings, which may be costly or divert management attention.
In addition, if material weaknesses are found in our internal controls in the future, if we fail to complete future evaluations on time or if our external auditors cannot attest to the effectiveness of our internal control over financial reporting, we could fail to meet our regulatory reporting requirements and be subject to regulatory scrutiny and a loss of public confidence in our internal controls, which could have an adverse effect on our stock price or expose us to litigation or regulatory proceedings, which may be costly or divert management attention.
The initiation of any additional investigation, inquiry or lawsuit relating to us, the costs and expenses associated therewith, or any assertion, claim or finding of wrongdoing by us, could: • adversely affect our business, financial condition and results of operations; • result in reputational harm and reduced market acceptance and demand for our products; • harm our ability and our commercial partners’ ability to market our products; • cause us to incur significant liabilities, costs and expenses; and 28 • cause our senior management to be distracted from execution of our business strategy.
The initiation of any additional investigation, inquiry or lawsuit relating to us, the costs and expenses associated therewith, or any assertion, claim or finding of wrongdoing by us, could: • adversely affect our business, financial condition and results of operations; • result in reputational harm and reduced market acceptance and demand for our products; • harm our ability and our commercial partners’ ability to market our products; • cause us to incur significant liabilities, costs and expenses; and • cause our senior management to be distracted from execution of our business strategy.
For example, it could: • make it more difficult for us to meet our payment and other obligations under our indebtedness; • result in other events of default under our indebtedness, which events of default could result in all of our debt becoming immediately due and payable; • make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; 32 • limit our ability to borrow additional amounts for working capital and other general corporate purposes, including funding possible acquisitions of, or investments in, new and complementary businesses, products and technologies, which is a key element of our corporate strategy; • subject us to the risk of increased sensitivity to interest rate increases on any future indebtedness with variable interest rates; • require the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes, including working capital, business development activities, any future clinical trials and/or research and development, capital expenditures and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; and • put us at a disadvantage compared to our competitors who have less debt.
For example, it could: • make it more difficult for us to meet our payment and other obligations under our indebtedness; • result in other events of default under our indebtedness, which events of default could result in all of our debt becoming immediately due and payable; • make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; • limit our ability to borrow additional amounts for working capital and other general corporate purposes, including funding possible acquisitions of, or investments in, new and complementary businesses, products and technologies, which is a key element of our corporate strategy; • subject us to the risk of increased sensitivity to interest rate increases on any future indebtedness with variable interest rates; 37 • require the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes, including working capital, business development activities, any future clinical trials and/or research and development, capital expenditures and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; and • put us at a disadvantage compared to our competitors who have less debt.
We are or may be involved in various legal proceedings, lawsuits and certain government inquiries and investigations, including with respect to, but not limited to, patent infringement, product liability, personal injury, antitrust matters, securities class action lawsuits, breach of contract, Medicare and Medicaid reimbursement claims, opioid-related matters, promotional practices and compliance with laws relating to the manufacture and sale of controlled substances.
We are or may be involved in various legal proceedings, lawsuits and certain government inquiries and investigations, including with respect to, but not limited to, patent infringement, product liability, personal injury, antitrust matters, securities 33 class action lawsuits, breach of contract, Medicare and Medicaid reimbursement claims, opioid-related matters, promotional practices and compliance with laws relating to the manufacture and sale of controlled substances.
If we were delisted from The Nasdaq Capital Market, it would constitute a “fundamental change” under the 2027 Convertible Notes, which would require us to offer to repurchase the 2027 Convertible Notes and would allow the holders of the 2027 Convertible Notes to convert their 2027 Convertible Notes into our common stock at an increased conversion rate, which would make conversion of the 2027 Convertible Notes more dilutive.
If we were delisted from The Nasdaq Capital Market, it would constitute a “fundamental change” under the 2027 42 Convertible Notes, which would require us to offer to repurchase the 2027 Convertible Notes and would allow the holders of the 2027 Convertible Notes to convert their 2027 Convertible Notes into our common stock at an increased conversion rate, which would make conversion of the 2027 Convertible Notes more dilutive.
We cannot be certain that, upon inspection, the FDA or other applicable regulatory agencies will determine that any of our clinical trials or our collaborative partners comply with good clinical practices. In addition, clinical trials must be conducted with product produced under the FDA’s cGMP regulations and similar regulations outside of the U.S.
We cannot be certain that, upon inspection, the FDA or other applicable regulatory agencies will determine that any of our clinical trials or those of our collaborative partners comply with good clinical practices. In addition, clinical trials must be conducted with product produced under the FDA’s cGMP regulations and similar regulations outside of the U.S.
Our current marketing activities associated with our products, as well as marketing activities related to any other products that we may acquire, or for which we or our collaborative partners obtain regulatory approval, are and will be subject to numerous federal and state laws governing the marketing and promotion of pharmaceutical products.
Our current marketing activities associated with our products, as well as marketing activities related to any other products that we may acquire, or for which we or our collaborative partners obtain regulatory approval, are and will be subject to numerous federal and state laws governing the marketing and promotion of pharmaceutical and biological products.
There can be no assurance that our efforts to preclude corporate veil-piercing, alter ego, control person, or other similar claims by creditors of any one particular entity within our corporate structure from reaching the assets of the other entities within our corporate structure to satisfy claims will be successful.
There can be no assurance that our efforts to preclude corporate veil-piercing, alter ego, control person, or other similar claims by creditors of 32 any one particular entity within our corporate structure from reaching the assets of the other entities within our corporate structure to satisfy claims will be successful.
Even if we receive regulatory approval, this approval may entail limitations on the indicated uses for which we can market a product. We are subject to risks associated with NDAs submitted under Section 505(b)(2) of the FDCA.
Even if we receive regulatory approval, this approval may entail limitations on the indicated uses for which we can market a product. 41 We are subject to risks associated with NDAs submitted under Section 505(b)(2) of the FDCA.
Risks Related to Our Industry • We are impacted by changes in laws and regulations applicable to, and increased scrutiny and investigations of, the pharmaceutical industry. • We may fail to comply with applicable statutes or regulations. • We may incur significant liability if it is determined that we have promoted “off-label” use of drugs. • Healthcare reform may increase our expenses and impact our products. • We are not always able to protect our intellectual property and are subject to risks from liability for infringing the intellectual property of others. • Settlements to ANDA litigation can be challenged and have the potential to lead to significant damage awards.
Risks Related to Our Industry • We are impacted by changes in laws and regulations applicable to, and increased scrutiny and investigations of, the pharmaceutical and biological product industry. • We may fail to comply with applicable statutes or regulations. • We may incur significant liability if it is determined that we have promoted “off-label” use of drugs. • Healthcare reform may increase our expenses and impact our products. • We are not always able to protect our intellectual property and are subject to risks from liability for infringing the intellectual property of others. • Settlements to ANDA litigation can be challenged and have the potential to lead to significant damage awards.
In addition, we are aware of other drug companies that have had interactions with regulatory agencies including FDA relating to indomethacin, which could indicate the development of one or more INDOCIN product generics or other formulations of indomethacin.
In addition, we are aware of other drug companies that have had interactions with regulatory agencies including the FDA relating to indomethacin, which could indicate the development of one or more additional INDOCIN product generics or other formulations of indomethacin.
In circumstances where we settle patent litigation claims asserted against generic drug companies, the terms of these settlements have the potential to generate new litigation, such as our recent litigation over a term of our Glumetza (metformin) ANDA settlement.
In circumstances where we settle patent litigation claims asserted against generic drug companies, the terms of these settlements have the potential to generate new litigation, such as our litigation over a term of our Glumetza (metformin) ANDA settlement.
For a 503B compounder to qualify for exemptions from these requirements, the 503B compounder must meet certain conditions set forth in Section 503B of the FDCA, including (1) using only bulk drug substances (i.e., indomethacin) that appear on a list identifying the bulk substances for which the FDA has determined that there is clinical need to use in compounding or that the drug product compounded from a bulk drug substance appears on FDA’s drug shortage list; and (2) compounding a drug product that is not “essentially a copy” of an FDA-approved product.
For a 503B compounder to qualify for exemptions from these state and federal requirements, the 503B compounder must meet certain conditions set forth in Section 503B of the FDCA, including (1) using only bulk drug substances (i.e., indomethacin) that appear on a list identifying the bulk substances for which the FDA has determined that there is clinical need to use in compounding or that the drug product compounded from a bulk drug substance appears on the FDA’s drug shortage list; and (2) compounding a drug product that is not “essentially a copy” of an FDA-approved product.
Even assuming our or our collaborative partners’ products obtain regulatory approval, successful commercialization requires: • market acceptance; • a cost-effective commercial-scale production; and • reimbursement under private or governmental health plans.
Even assuming our or our collaborative partners’ products obtain regulatory approval, successful commercialization requires: • market acceptance; • a cost-effective commercial-scale production; and 40 • reimbursement under private or governmental health plans.
We may face significant competition in seeking potential strategic partners and transactions, and the negotiation process for acquiring any product or engaging in strategic transactions can be time-consuming and complex.
We face significant competition in seeking potential strategic partners and transactions, and the negotiation process for acquiring any product or engaging in strategic transactions can be time-consuming and complex.
To the extent these risks materialize and adversely affect such third-party manufacturers’ and/or suppliers’ performance obligations to us, and we are unable to contract for a sufficient supply of required products on acceptable terms, or if we encounter delays and difficulties in our relationships with manufacturers or suppliers, our business, results of operation and financial condition could be adversely affected.
To the extent these risks materialize and adversely affect such third-party manufacturers’ and/or suppliers’ performance obligations to us, and we are unable to contract for a sufficient supply of required products on acceptable terms, or if we encounter delays and difficulties in our relationships with manufacturers or suppliers, our business, results of operations and financial condition could be adversely affected.
For example, Assertio Therapeutics is currently named as a defendant, along with numerous other manufacturers and distributors of opioid drugs, in multiple lawsuits alleging common-law and statutory causes of action for alleged misleading or otherwise improper marketing and promotion of opioid drugs. Such litigation and related matters are described in “Item 8. Financial Statements and Supplementary Data - Note 13.
For example, Assertio Therapeutics is currently named as a defendant, along with numerous other manufacturers and distributors of opioid drugs, in multiple lawsuits alleging common-law and statutory causes of action for alleged misleading or otherwise improper marketing and promotion of opioid drugs. Such litigation and related matters are described in “Item 8. Financial Statements and Supplementary Data - Note 15.
If our executive management team is not able, in a timely manner, to develop, implement and execute successful business strategies and plans to maintain and increase our product revenues, our business, financial condition and results of operations will be materially and adversely affected, and the existing business may be required to take steps to reduce its costs at some point in time.
In addition, if our executive management team is not able, in a timely manner, to develop, implement and execute successful business strategies and plans to maintain and increase our product revenues, our business, financial condition and results of operations will be materially and adversely affected, and the existing business may be required to take further steps to reduce its costs at some point in time.
We may also assume liabilities and legal risks in connection with a transaction, including those relating to activities of the seller prior to the consummation of the transaction and contracts that we assume.
We also assume liabilities and legal risks in connection with a transaction, including those relating to activities of the seller prior to the consummation of the transaction and contracts that we assume.
These data breaches and any unauthorized access or disclosure of our information or intellectual property could compromise our intellectual property and expose sensitive business information, including our financial information or the 27 information of our business partners.
These data breaches and any unauthorized access or disclosure of our information or intellectual property could compromise our intellectual property and expose sensitive business information, including our financial information or the information of our business partners.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Risks Related to Future Product Development The development of drug candidates is inherently difficult and uncertain, and we cannot be certain that any of our future product candidates or those of our collaborative partners will be approved for marketing or, if approved, will achieve market acceptance.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 39 Risks Related to Future Product Development The development of drug and biological product candidates is inherently difficult and uncertain, and we cannot be certain that any of our future product candidates or those of our collaborative partners will be approved for marketing or, if approved, will achieve market acceptance.
In addition, any public announcements 31 related to litigation or interference proceedings initiated or threatened against us, even if such claims are without merit, could cause our stock price to decline. Settlements to ANDA litigation can be challenged and have the potential to lead to significant damage awards.
In addition, any public announcements related to litigation or interference proceedings initiated or threatened against us, even if such claims are without merit, could cause our stock price to decline. 36 Settlements to ANDA litigation can be challenged and have the potential to lead to significant damage awards.
If any of these events should occur, it may have a material adverse effect on our business, financial condition and results of operations. Pharmaceutical marketing is subject to substantial regulation in the U.S. and any failure by us or our commercial and collaborative partners to comply with applicable statutes or regulations can adversely affect our business.
If any of these events should occur, it may have a material adverse effect on our business, financial condition and results of operations. 34 Pharmaceutical and biological product marketing is subject to substantial regulation in the U.S. and any failure by us or our commercial and collaborative partners to comply with applicable statutes or regulations can adversely affect our business.
Any stock out, quality concern or failure to obtain sufficient supplies of our products, or the necessary active pharmaceutical ingredients, excipients or components, from our suppliers, including as a result to disruptions to supplier operations resulting from factors such as supply chain delays, public health emergencies, climate events or political unrest, or failures by us to satisfy minimum order requirements due to declines in product demand or otherwise, would adversely affect our business, results of operations and financial condition.
Any stock out, quality concern or failure to obtain sufficient supplies of our products, or the necessary APIs, excipients or components, from our suppliers, including as a result of disruptions to supplier operations resulting from factors such as supply chain delays, public health emergencies, climate events or political unrest, or failures by us to satisfy minimum order requirements due to declines in product demand or otherwise, would adversely affect our business, results of operations and financial condition.
Engaging in strategic transactions, such as acquisitions of companies and product rights, divestitures and commercialization arrangements, may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, pose integration challenges and fail to achieve the anticipated results or synergies or distract our management and business, which may harm our business.
Engaging in strategic transactions, such as acquisitions of companies and product rights, divestitures and commercialization arrangements, have in the past and may in the future require us to incur non-recurring and other charges, increase our near- and long-term expenditures, pose integration challenges and fail to achieve the anticipated results or synergies or distract our management and business, which may harm our business.
Other factors could delay or result in the termination of our or our collaborative partner’s future clinical trials and related development programs, including: • negative or inconclusive results; • patient enrollment requirements and rates; • patient noncompliance with the protocol; • adverse medical events or side effects among patients during the clinical trials; • any findings resulting from FDA inspections of clinical operations; • failure to meet FDA preferred or recommended clinical trial design, end points or statistical power; • failure to comply with good clinical practices; • failure of third-party clinical trial vendors to comply with applicable regulatory laws and regulations; • compliance with applicable laws and regulations; • inability of third-party clinical trial vendors to satisfactorily perform their contractual obligations, comply with applicable laws and regulations or meet deadlines; • delays or failures in obtaining clinical materials or manufacturing sufficient quantities of the product candidate for use in clinical trials; • delays or failures in recruiting qualified patients to participate in clinical trials; • unexpected external medical threats such as the COVID-19 pandemic or future outbreaks; and 35 • actual or perceived lack of efficacy or safety of the product candidate.
Other factors could delay or result in the termination of our or our collaborative partner’s future clinical trials and related development programs, including: • negative or inconclusive results; • patient enrollment requirements and rates; • patient noncompliance with the protocol; • adverse medical events or side effects among patients during the clinical trials; • any findings resulting from FDA inspections of clinical operations; • failure to meet FDA preferred or recommended clinical trial design, end points or statistical power; • failure to comply with good clinical practices; • failure of third-party clinical trial vendors to comply with applicable regulatory laws and regulations; • compliance with applicable laws and regulations; • inability of third-party clinical trial vendors to satisfactorily perform their contractual obligations, comply with applicable laws and regulations or meet deadlines; • delays or failures in obtaining clinical materials or manufacturing sufficient quantities of the product candidate for use in clinical trials; • delays or failures in recruiting qualified patients to participate in clinical trials; • unexpected external medical threats such as epidemics, pandemics, or other disease outbreaks; and • actual or perceived lack of efficacy or safety of the product candidate.
If we or any third-party manufacturer or supplier fails to perform as required or fails to comply with the regulations of the FDA and other applicable governmental authorities, our ability to deliver adequate supplies of our products to our customers on a timely basis, or to conduct clinical trials, could be adversely affected.
If we or any third-party manufacturer or supplier fails to perform as required or fails to comply with the regulations of the FDA and other applicable governmental authorities, our ability to deliver adequate supplies of our products to our customers on a timely basis and on commercially reasonable terms, or to conduct clinical trials, could be adversely affected.
The ACA also includes provisions known as the Physician Payments Sunshine Act, which require manufacturers of drugs, biologics, devices and medical supplies covered under Medicare and Medicaid to record any transfers of value to physicians and teaching hospitals and to report this data to the Centers for Medicare and Medicaid Services for subsequent public disclosure.
The ACA also includes provisions known as the Physician Payments Sunshine Act, which require manufacturers of drugs, biologics, devices and medical supplies covered under Medicare and Medicaid to record any transfers of value to physicians and teaching hospitals and to report this data to the CMS for subsequent public disclosure.
In addition, the discovery of previously unknown problems with a product or manufacturer may result in restrictions on the product, manufacturer or manufacturing facility, including withdrawal of the product from the market. Manufacturers of approved products are also subject to ongoing regulation and inspection, including compliance with FDA regulations governing cGMP or Quality System Regulation (“QSR”).
In addition, the discovery of previously unknown problems with a product or manufacturer may result in restrictions on the product, manufacturer or manufacturing facility, including withdrawal of the product from the market. Manufacturers of approved products are also subject to ongoing regulation and inspection, including compliance with FDA regulations governing cGMP.
Beginning in 2023, the IRA enables Medicare to negotiate prescription drug prices with manufacturers of certain high-cost drugs for the first time. A separate provision requires drug manufacturers to pay rebates to Medicare if their drug prices increase at a higher rate than the rate of inflation (the so-called inflation rebate provision).
The IRA enables Medicare to negotiate prescription drug prices with manufacturers of certain high-cost drugs for the first time. A separate provision requires drug manufacturers to pay rebates to Medicare if their drug prices increase at a higher rate than the rate of inflation (the so-called inflation rebate provision).
These threats can come from a variety of sources, ranging in sophistication from an individual hacker to a state-sponsored attack and motives (including corporate espionage). Cyber threats may be generic, or they may be custom-crafted to target our information systems. Cyber-attacks are becoming increasingly more prevalent and much harder to detect and defend against.
These threats can come from a variety of sources, ranging in sophistication from an individual hacker to a state-sponsored attack and motives (including corporate espionage). Cyber threats may be generic, or they may be custom-crafted to target our information systems or those of our third-party vendors. Cyber-attacks are becoming increasingly more prevalent and much harder to detect and defend against.
Moreover, if the orange book patents covering Otrexup (which expire in 2031) and/or Sympazan (which expire in 2040) are not upheld in litigation or if a generic competitor is found not to infringe these patents, the resulting generic competition for Otrexup and/or Sympazan would have a further adverse effect on our business, financial condition and results of operations.
Moreover, if the patents covering ROLVEDON (which expire in 2042), Sympazan (which expire in 2040) and/or Otrexup (which expire in 2031) are not upheld in litigation or if a generic competitor is found not to infringe these patents, the resulting generic competition for ROLVEDON, Sympazan and/or Otrexup would have a further adverse effect on our business, financial condition and results of operations.
Our commercialization or collaborative partners, or customers or other third parties, may also terminate their relationships with us or otherwise decide not to proceed with the development, commercialization or purchase of our products. 25 We and our commercial partners may be unable to compete successfully in the pharmaceutical industry.
Our commercialization or collaborative partners, or customers or other third parties, may also terminate their relationships with us or otherwise decide not to proceed with the development, commercialization or purchase of our products. 29 We and our commercial partners may be unable to compete successfully in the pharmaceutical and biological product industry.
Additionally, effective in 2024, the IRA will eliminate the 5% coinsurance for catastrophic coverage under Medicare Part D; in 2025, the IRA will cap the beneficiary annual out-of-pocket expenditure. These efforts to reduce aggregate beneficiary spending are expected to shift some costs to drug manufacturers.
Additionally, beginning in 2024, the IRA eliminates the 5% coinsurance for catastrophic coverage under Medicare Part D; in 2025, the IRA will cap the beneficiary annual out-of-pocket expenditure. These efforts to reduce aggregate beneficiary spending are expected to shift some costs to drug manufacturers.
These cost-containment measures may include, among other measures: requirements for pharmaceutical companies to negotiate prescription drug prices with government healthcare programs; controls on government-funded reimbursement for drugs; new or increased requirements to pay prescription drug rebates to government healthcare programs, including if drug prices increase at a higher rate than inflation; controls on healthcare providers; challenges to or limits on the pricing of drugs, including pricing controls or limits or prohibitions on 30 reimbursement for specific products through other means; requirements to try less expensive products or generics before a more expensive branded product; and public funding for cost effectiveness research, which may be used by government and private third-party payors to make coverage and payment decisions.
These cost-containment measures may include, among other measures: requirements for pharmaceutical companies to negotiate prescription drug prices with government healthcare programs; controls on government-funded reimbursement for drugs; new or increased requirements to pay prescription drug rebates to government healthcare programs, including if drug prices increase at a higher rate than inflation; controls on healthcare providers; challenges to or limits on the pricing of drugs, including pricing controls or limits or prohibitions on reimbursement for specific products through other means; requirements to try less expensive products or generics before a more expensive branded product; and public funding for cost effectiveness research, which may be used by government and private third-party payors to make coverage and payment decisions. 35 For example, the ACA includes numerous provisions that affect pharmaceutical companies.
ITEM 1A. RISK FACTORS In addition to other information in this report, please consider the following discussion of factors that make an investment in our securities risky. The risks or uncertainties described in this Form 10‑K can materially and adversely affect our business, results of operations or financial condition.
ITEM 1A. RISK FACTORS In addition to other information in this report, please consider the following discussion of factors that make an investment in our securities risky. The risks or uncertainties described in this Form 10‑K can materially and adversely affect our business, reputation, stock price, results of operations, cash flows or financial condition.
A number of companies in the pharmaceutical industry have suffered significant setbacks in clinical trials, even in advanced clinical trials after showing positive results in preclinical studies or earlier clinical trials.
A number of companies in the pharmaceutical and biological product industry have suffered significant setbacks in clinical trials, even in advanced clinical trials after showing positive results in preclinical studies or earlier clinical trials.
The introduction of one or more generic versions of our products, as well as sales of indomethacin suppositories by compounders, or disclosure of ANDA filings and/or similar applications in respect to any of our products, have and in the future could adversely impact our business, financial condition, results of operations and stock price.
The introduction of known and potential additional generic versions of our products, as well as sales of indomethacin suppositories by compounders, or disclosure of ANDA filings and/or similar applications in respect to any of our products, have and in the future could adversely impact our business, financial condition, results of operations and stock price.
Commitments and Contingencies.” If any of these legal proceedings, inquiries or investigations were to result in an adverse outcome, the impact could have an adverse effect on our competitive position, business, financial condition, results of operations and cash flows.
Financial Statements and Supplementary Data – Note 15. Commitments and Contingencies.” If any of these legal proceedings, inquiries or investigations were to result in an adverse outcome, the impact could have an adverse effect on our competitive position, business, financial condition, results of operations and cash flows.
Any significant drops in our stock price could give rise to shareholder lawsuits, which are costly and time-consuming to defend against and which may adversely affect our ability to raise capital while the suits are pending, even if the suits are ultimately resolved in our favor.
Any significant drops in our stock price, including those we experienced in 2023, could give rise to shareholder lawsuits, which are costly and time-consuming to defend against and which may adversely affect our ability to raise capital while the suits are pending, even if the suits are ultimately resolved in our favor.
There are no patents covering the INDOCIN products (which accounted for 64% of our revenue in 2022), which means that a generic drug company could introduce a generic for these drugs at any time.
There are no patents covering the INDOCIN products (which accounted for 57% of our revenue in 2023), which means that a generic drug company could introduce a generic for these drugs at any time.
Conditions that could indicate impairment of long-lived assets include, but are not limited to, a significant adverse change in market conditions, significant competing product launches by our competitors, significant adverse change in the manner in which the long-lived asset is being used, and adverse legal or regulatory outcomes.
Conditions that could indicate impairment of long-lived assets include, but are not limited to, our market capitalization declining below the book value of our equity, a significant adverse change in market conditions, significant competing product launches by our competitors, significant adverse change in the manner in which the long-lived asset is being used, and adverse legal or regulatory outcomes.
Although we are currently in compliance with the Bid Price Rule, we have been unable to comply with this rule in the past and for periods in 2021 our continued listing on the Nasdaq Capital Market required the grant of a grace period from Nasdaq and the implementation of a one-for-four reverse stock split.
We have also been unable to comply with the Bid Price Rule in the past and for periods in 2021 our continued listing on The Nasdaq Capital Market required the grant of a grace period from Nasdaq and the implementation of a one-for-four reverse stock split.
Additional risks and uncertainties of which we are unaware or that we currently deem immaterial may also become important factors that can harm our business, results of operations and financial condition.
Additional risks and uncertainties of which we are unaware or that we currently deem immaterial may also become important factors that can harm our business, reputation, stock price, results of operations, cash flows, or financial condition.
We believe that the 503B compounder compounding 100 mg indomethacin suppositories does not meet these conditions as indomethacin is not on FDA’s list of bulk substances for which there is a clinical need and INDOCIN suppositories are not on the FDA’s drug shortage list; and we believe that the 100 mg indomethacin suppositories being compounded are “essentially a copy” of Zyla’s FDA-approved INDOCIN suppositories.
We believe that the 503B compounder compounding 100 mg indomethacin suppositories does not meet these conditions as indomethacin, while it is included on the FDA’s Category 1 list of bulk substances it is evaluating, is not on the FDA’s list of bulk substances for which there is a clinical need and INDOCIN Suppositories are not on the FDA’s drug shortage list; and we believe that the 100 mg indomethacin suppositories being compounded are “essentially a copy” of our FDA-approved INDOCIN Suppositories.
These incidents could also subject us to liability, expose us to significant expense and cause significant harm to our business. Our insurance coverage may not be sufficient to prevent or recover from cyberattacks, including coverage of applicable resulting losses arising from any such incident.
These incidents could also subject us to litigation and regulatory investigations, expose us to significant expense and cause significant harm to our business. Our insurance coverage may not be sufficient to prevent or recover from cyber-attacks, including coverage of applicable resulting losses arising from any such incident.
Our results of operations have and may continue to fluctuate and affect our stock price. The trading price of our common stock has been, and is likely to continue to be, volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.
The trading price of our common stock has been, and is likely to continue to be, volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.
With respect to Cambia and Zipsor (which accounted for 16% and 2% of our revenue in 2022, respectively), we have entered into settlement agreements with generic drug companies, under which generic versions of these products can be marketed beginning in January 2023 and March 2022, respectively. As a result, we face generic competition for Cambia and Zipsor.
With respect to Cambia and Zipsor (which accounted for 5% and 2% of our revenue in 2023, respectively), we entered into settlement agreements with generic drug companies, under which generic versions of these products were launched beginning in January 2023 and March 2022, respectively. As a result, we face generic competition for Cambia and Zipsor.
These products compete with currently marketed oral opioids, transdermal opioids, local anesthetic patches, stimulants and implantable and external infusion pumps that can be used for infusion of opioids and local anesthetics, non-narcotic analgesics, local and topical analgesics and anti-arthritics.
These products compete with currently marketed oral opioids, transdermal opioids, local anesthetic patches, stimulants and implantable and external infusion pumps that can be used for infusion of opioids and local anesthetics, non-narcotic analgesics, local and topical analgesics and anti-arthritics. There are no patents covering the INDOCIN products.
In addition, the CDI has issued a subpoena to Assertio Therapeutics seeking information relating to its historical sales and marketing of Lazanda. The CDI subpoena also seeks information on Gralise, a non-opioid product which Assertio Therapeutics divested to Alvogen in 2020.
In addition, the State of California Department of Insurance (“CDI”) has issued a subpoena to Assertio Therapeutics seeking information relating to its historical sales and marketing of Lazanda. The CDI subpoena also sought information on Gralise, a non-opioid product which Assertio Therapeutics divested to Alvogen in 2020.
Any of these factors can adversely affect our business, financial condition and results of operations. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.
Any of these factors can adversely affect our business, financial condition and results of operations. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase. We have incurred operating losses in the past and may incur operating losses in the future.
In addition to the risks discussed elsewhere in this section, our ability to successfully commercialize and generate revenues from our products depends on a number of factors, including, but not limited to, our ability to: • develop and execute our digital and non-personal sales and marketing strategies for our products; • achieve, maintain and grow market acceptance of, and demand for, our products; • obtain and maintain adequate coverage, reimbursement and pricing from managed care, government and other third-party payors; • maintain, manage or scale the necessary sales, marketing, manufacturing, managed markets and other capabilities and infrastructure that are required to successfully integrate and commercialize our products; • obtain adequate supply of our products; • maintain and extend intellectual property protection for our products; and • comply with applicable legal and regulatory requirements.
In addition to the risks discussed elsewhere in this section, our ability to successfully commercialize and generate revenues from our products depends on a number of factors, including, but not limited to, our ability to: • develop and execute our sales, marketing and promotion strategies for our products using our capability to market products through both a sales force and a non-personal promotion model; • achieve, maintain and grow market acceptance of, and demand for, our products; 23 • obtain and maintain adequate coverage, reimbursement and pricing from managed care, government and other third-party payors; • adapt our commercial strategies while minimizing disruption of relationships with prescribers and other decision-makers; • maintain, manage or scale the necessary sales, marketing, manufacturing, managed markets and other capabilities and infrastructure that are required to successfully integrate and commercialize our products; • obtain adequate supply of our products; • maintain and extend intellectual property protection for our products; and • comply with applicable legal and regulatory requirements.
The failure to comply with these regulations could result in, among other things, warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, non-renewal of marketing applications or authorizations or criminal prosecution, which could adversely affect our business, results of operations and financial condition.
The failure to comply with these regulations could result in, among other things, warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, non-renewal of marketing applications or authorizations or criminal prosecution, which could adversely affect our business, results of operations and financial condition. 28 We are also required to report adverse events associated with our products to the FDA and other regulatory authorities.
The FDCA, the CSA and other federal and foreign 24 statutes and regulations govern and influence the testing, manufacturing, packing, labeling, storing, record keeping, safety, approval, advertising, promotion, sale and distribution of our products.
The FDCA, the PHSA, the Controlled Substance Act of 1970 and other federal and foreign statutes and regulations govern and influence the testing, manufacturing, packing, labeling, storing, record keeping, safety, approval, advertising, promotion, sale and distribution of our products.
(almotriptan, eletriptan, frovatriptan, naratriptan, rizatriptan, sumatriptan, sumatriptan-naproxen and zolmitriptan). There are other products prescribed for or under development for the treatment or prevention of migraines that are now or may become competitive with CAMBIA, including CGRP inhibitor products.
Currently, eight triptans are available generically and sold in the U.S. (almotriptan, eletriptan, frovatriptan, naratriptan, rizatriptan, sumatriptan, sumatriptan-naproxen and zolmitriptan). There are other products prescribed for or under development for the treatment or prevention of migraines that are now or may become competitive with CAMBIA, including CGRP inhibitor products.
Changes in laws and regulations applicable to, and increased scrutiny and investigations of, the pharmaceutical industry, including the opioid market, could adversely affect our business and our ability to commercialize our products, thereby adversely affecting our financial condition and results of operations. For example, various federal and state governmental entities, including the U.S.
Changes in laws and regulations applicable to, and increased scrutiny and investigations of, the pharmaceutical industry, including the opioid market, could adversely affect our business and our ability to commercialize our products, thereby adversely affecting our financial condition and results of operations.
Zipsor competes against other drugs that are widely used to treat mild to moderate pain in the acute setting. In addition, a number of other companies are developing NSAIDs in a variety of dosage forms for the treatment of mild to moderate pain and related indications. Other drugs are in clinical development to treat acute pain.
Both branded and generic versions of diclofenac are marketed in the U.S. Zipsor competes against other drugs that are widely used to treat mild to moderate pain in the acute setting. In addition, a number of other companies are developing NSAIDs in a variety of dosage forms for the treatment of mild to moderate pain and related indications.
We do not have, and we do not intend to establish in the foreseeable future, internal commercial-scale manufacturing capabilities. Rather, we intend to use the facilities of third parties to manufacture products for commercialization and clinical trials.
We have one qualified supplier for the active pharmaceutical ingredient (“API”) in each of our products. We do not have, and we do not intend to establish in the foreseeable future, internal commercial-scale manufacturing capabilities. Rather, we intend to use the facilities of third parties to manufacture products for commercialization and clinical trials.
Approval of generic versions of our other products, including the INDOCIN products which are not patent protected and may face generic competition at any time, would have an adverse effect on our business. • We may not succeed in executing business development, strategic partnerships and investment opportunities. • Failure to successfully identify and acquire complementary businesses, products or technologies will limit our business growth and prospects. • Strategic transactions may fail. • We may not be able to integrate any business, product or technology we acquire. • Our success is dependent in large part upon continued services of our executive management team with whom we do not have employment agreements. • The COVID-19 pandemic has been affecting the Company’s business and operations and may continue to do so. 19 • We depend on one qualified supplier for the active pharmaceutical ingredient in each of our products and single source suppliers to manufacture our products. • Failure to comply with ongoing regulatory requirements for approved products could adversely impact our ability to commercialize our products and result in increased costs. • Commercial disputes may adversely affect the commercial success of our products. • We may be unable to compete successfully in the pharmaceutical industry. • We may be unable to negotiate acceptable pricing or obtain adequate reimbursement for our products. • Business interruptions can adversely impact our ability to operate our business. • Data breaches and cyber-attacks can cause damage to our business. • Our corporate structure may not prevent veil piercing. • We are impacted by governmental investigations, regulatory actions and lawsuits regarding Assertio Therapeutics’ historical commercialization of opioids. • We may not be able to adequately protect ourselves from product liability losses and other litigation liability .
Approval of additional generic versions of our other products would have a further adverse effect on our business. • We may not succeed in executing business development strategies, strategic partnerships, acquisitions of businesses, products or technologies, and investment opportunities, which will limit our business growth and prospects. 21 • Strategic transactions that fail to achieve the anticipated levels of revenue, synergies and profit growth will cause our business to suffer. • We may not be able to integrate any business, product or technology we acquire. • Our success is dependent in large part upon continued services of our executive management team with whom we do not have employment agreements. • We depend on one qualified supplier for the active pharmaceutical ingredient in each of our products and single source suppliers to manufacture our products. • Failure to comply with ongoing regulatory requirements for approved products could adversely impact our ability to commercialize our products and result in increased costs. • Commercial disputes may adversely affect the commercial success of our products. • We may be unable to compete successfully in the pharmaceutical and biological product industry. • We may be unable to negotiate acceptable pricing or obtain adequate reimbursement for our products. • Business interruptions can adversely impact our ability to operate our business. • Data breaches and cyber-attacks can cause damage to our business. • Our corporate structure may not prevent veil piercing. • We incur significant costs and devote significant management focus on governmental investigations, regulatory actions and lawsuits regarding Assertio Therapeutics’ historical commercialization of opioids. • We may not be able to adequately protect ourselves from product liability losses and other litigation liability .
The market price of our common stock might also decline in reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us. A decrease in the market price of our common stock would likely adversely impact the trading price of the 2027 Convertible Notes.
The market price of our common stock might also decline in reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us.
For example, the ACA includes numerous provisions that affect pharmaceutical companies. For example, the ACA seeks to expand healthcare coverage to the uninsured through private health insurance reforms and an expansion of Medicaid.
For example, the ACA seeks to expand healthcare coverage to the uninsured through private health insurance reforms and an expansion of Medicaid.
Given the inherent subjectivity and uncertainty in projections, we could experience significant unfavorable variances in future periods or revise our projections downward. This would result in an increased risk that our long-lived assets may be impaired. 33 Our customer concentration can materially adversely affect our financial condition and results of operations.
Given the inherent subjectivity and uncertainty in projections, we could experience significant unfavorable variances in future periods or revise our projections downward. This would result in an increased risk that our long-lived assets may be impaired.
Risks Related to Commercial, Regulatory and Other Business Matters If we do not successfully commercialize our products, our business, financial condition and results of operations will be materially and adversely affected.
Risks Related to Commercial, Regulatory and Other Business Matters If we are not successful in driving the growth in sales and profitability of ROLVEDON and/or do not successfully commercialize our products, our business, financial condition and results of operations will be materially and adversely affected.
We cannot be certain that we will be able to successfully identify, pursue and complete any further acquisitions or whether we would be able to successfully integrate or develop any acquired business, product or technology or retain any key employees.
We cannot be certain that we will be able to successfully identify, pursue, finance and complete any future acquisitions or whether we would be able to successfully integrate or develop any acquired business, product or technology, successfully commercialize and realize the anticipated benefits from acquired products or retain any key employees.
Department of Justice (“DOJ”) and a number of state attorneys general, have launched investigations into the marketing and sales practices of pharmaceutical companies that market or have marketed opioid and non-opioid pain medications, including us.
For example, various federal and state governmental entities, including the DOJ and a number of state attorneys general, have launched investigations into the marketing and sales practices of pharmaceutical companies that market or have marketed opioid and non-opioid pain medications, including us.
We are a “smaller reporting company” as defined in SEC rules, and we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies including, but not limited to, not being required to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Prior to December 31, 2023, we were a “smaller reporting company.” As of December 31, 2023, we are no longer a smaller reporting company, but in accordance with the SEC’s transition rules, we continue to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies including, but not limited to, not being required to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Risks Related to Our Financial Position • We may not have sufficient capital resources or be able to obtain future debt or equity financing necessary to fund our future operations or product acquisitions and strategic transactions. • We may be unable to generate sufficient cash flow from our business to make payments on and repay our 2027 Convertible Notes. • Conversions of the 2027 Convertible Notes or future sales of our common stock or equity-linked securities in the public market could lower the market price of our common stock and adversely impact the trading price of the 2027 Convertible Notes. • We have incurred operating losses in the past and may incur operating losses in the future. • We have significant amounts of long-lived assets which depend upon future positive cash flows to support the values recorded in our balance sheet. • We may be impacted by our customer concentration. • Our product revenues have typically been lower in the first quarter of the year as compared to the fourth quarter of the preceding year. • The fair value of contingent consideration obligation assumed as part of the Zyla Merger may change. • We may be unable to satisfy regulatory requirements relating to internal controls. • Our financial results are impacted by management’s assumptions and use of estimates.
Risks Related to Our Financial Position • We may not be able to obtain future debt or equity financing necessary to fund our future operations or execute attractive product acquisitions and strategic transactions. • We may be unable to generate sufficient cash flow from our business to make interest payments on and repay our 2027 Convertible Notes. • We have incurred operating losses in the past and may incur operating losses in the future. • We have significant amounts of long-lived assets which depend upon future positive cash flows to support the values recorded in our balance sheet. • We may be impacted by our customer concentration. • The fair value of contingent consideration obligation incurred as part of our merger with Zyla Life Sciences (“Zyla”) in May 2020 (the “Zyla Merger”) may change. • We may be unable to satisfy regulatory requirements relating to internal controls. • Our financial results are impacted by management’s assumptions and use of estimates.
We have not established a formal disaster recovery plan, and our back-up operations and our business interruption insurance may not be adequate to compensate us for losses that occur. A significant business interruption could result in losses or damages incurred by us and require us to cease or curtail our operations.
We have not established a formal disaster recovery plan, and our back-up operations and our business interruption insurance may not be adequate to compensate us for losses that occur.
If we are unable to negotiate acceptable pricing or obtain adequate reimbursement for our products from third-party payors, our business will suffer.
Other drugs are in clinical development to treat acute pain. 30 If we are unable to negotiate acceptable pricing or obtain adequate reimbursement for our products from third-party payors, our business will suffer.
Consolidation among large third-party payors may increase their leverage in negotiations with pharmaceutical companies. If we are forced to provide additional discounts and rebates to third-party payors to maintain acceptable access to our products for patients, our results of operations and financial condition could be adversely affected.
If we are forced to provide additional discounts and rebates to third-party payors to maintain acceptable access to our products for patients, our results of operations and financial condition could be adversely affected.
Under the FDCA, the FDA can approve an ANDA for a generic version of a branded drug without the ANDA applicant undertaking the clinical testing necessary to obtain approval to market a new drug.
Approval of additional generic versions of our products would have a further adverse effect on our business. Under the FDCA, the FDA can approve an ANDA for a generic version of a branded drug without the ANDA applicant undertaking the clinical testing necessary to obtain approval to market a new drug.
Failure to integrate any business, product or technology we acquire, will cause our business, financial condition and operating results to suffer. Integrating any business, product or technology we acquire is expensive and time-consuming and can disrupt and adversely affect our ongoing business, including product sales, and distract our management.
Integrating any business, product or technology we acquire is expensive and time-consuming and can disrupt and adversely affect our ongoing business, including product sales, and distract our management.
Significant assumptions utilized in our projections include, but are not limited to, grouping long-lived assets at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other assets and liabilities, our evaluation of the market opportunity for our products, the current and future competitive landscape and resulting impacts to product pricing, future regulatory actions, planned strategic initiatives and the realization of benefits associated with our existing patents.
Significant assumptions utilized in our projections include, but are not limited to, our evaluation of the market opportunity for our products, the current and future competitive landscape and resulting impacts to product pricing, future regulatory actions, planned strategic initiatives and the realization of benefits associated with our existing patents.
If we are unable to successfully achieve or perform these functions, we will not be able to maintain or increase our revenues and our business, financial condition and results of operations will be materially and adversely affected.
If we are unable to successfully achieve or perform these functions, including our capabilities to market products through both a sales force and a non-personal promotion model, we will not be able to maintain or increase our revenues and our business, financial condition and results of operations will be materially and adversely affected.
Insufficient availability of our products or the active pharmaceutical ingredients and other raw materials necessary to manufacture our products, or the inability of our suppliers to manufacture and supply our products, will adversely impact our sales upon depletion of the active ingredient and product inventories. We have one qualified supplier for the active pharmaceutical ingredient in each of our products.
Insufficient availability of our products or the active pharmaceutical ingredients and other raw materials necessary to manufacture our products, or the inability of our suppliers to manufacture and supply our products on commercially reasonable terms, will adversely impact our sales and/or margins upon depletion of the active ingredient and product inventories.
We are also required to report adverse events associated with our products to the FDA and other regulatory authorities. Unexpected or serious health or safety concerns could result in labeling changes, recalls, market withdrawals or other regulatory actions. Recalls may be issued at our discretion or at the discretion of the FDA or other empowered regulatory agencies.
Unexpected or serious health or safety concerns could result in labeling changes, recalls, market withdrawals or other regulatory actions. Recalls may be issued at our discretion or at the discretion of the FDA or other empowered regulatory agencies.
The regulatory actions described above, as well as the related litigation and investigations, not only create financial and operational pressure on us, but could also put pressure on other companies in our industry and with which we have 29 contractual arrangements.
The regulatory actions described above, as well as the related litigation and investigations, not only create financial and operational pressure on us, but could also put pressure on other companies in our industry and with which we have contractual arrangements. Such pressures could negatively impact our contractual counterparties and may give rise to contract cancellations, breaches or rejections in bankruptcy.
The FDA may also reject our future Section 505(b)(2) submissions and may require us to file such submissions under Section 501(b)(1) of the FDCA, which could be considerably more expensive and time-consuming. Risks Related to Share Ownership and Other Stockholder Matters The market price of our common stock historically has been volatile.
The FDA may also reject our future Section 505(b)(2) submissions and may require us to file such submissions under Section 501(b)(1) of the FDCA, which could be considerably more expensive and time-consuming.
If we are unable to enhance and broaden our product offerings, our business and prospects will be limited. 22 Strategic transactions that fail to achieve the anticipated results and synergies will cause our business to suffer. We seek to engage in strategic transactions with third parties, such as product or company acquisitions, strategic partnerships, joint ventures, divestitures or business combinations.
Strategic transactions that fail to achieve the anticipated levels of revenue, synergies and profit growth will cause our business to suffer. We seek to engage in strategic transactions with third parties, such as product or company acquisitions, strategic partnerships, joint ventures, divestitures or business combinations.

… 125 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed0 unchanged
Biggest changeFor additional information regarding the Lake Forest Lease, Newark Lease, and Wayne Lease, see “Item 8. Financial Statements and Supplementary Data - Note 12. Leases.”
Biggest changeThese leased facilities were not used nor are expected to be used for any business purpose by the Company, nor do we expect to sublease the facilities due to the short remaining lease terms. For additional information regarding the Lake Forest Lease , see “Item 8. Financial Statements and Supplementary Data - Note 14. Leases.”
ITEM 2. PROPERTIES Our corporate headquarters is located in Lake Forest, Illinois, where we lease approximately 31,000 square feet of office space (the “Lake Forest Lease”). Unless renewed, the Lake Forest Lease will expire on January 31, 2024. Our facilities are used for office purposes only and no commercial manufacturing takes place at our facilities.
ITEM 2. PROPERTIES Our corporate headquarters is located in Lake Forest, Illinois, where we lease approximately 20,000 square feet of office space (the “Lake Forest Lease”). On May 1, 2023, the Company am ended the Lake Forest Lease to reduce the size of leased premises and extend the term of the lease through December 31, 2030.
Removed
Prior to our corporate headquarters relocation in 2018, we had leased our previous corporate office in Newark, California (the “Newark Lease”). The Newark Lea se terminated at the end of November 2022. In connection with the Zyla Merger, we assumed an operating lease for the corporate offices in Wayne, Pennsylvania, which terminated in February 2022 (the “Wayne Lease”).
Added
Our facility is used for office purposes only and no commercial manufacturing takes place at our facility. 45 In connection with the Spectrum Merger, we assumed leases for two facilities which Spectrum had previously been the lessee.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−2 removed2 unchanged
Biggest changeDividends We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not currently intend to pay cash dividends on our common stock for the foreseeable future.
Biggest changeAccordingly, the number of holders of record does not include beneficial owners whose shares are held by nominees in street name. Dividends We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business.
These shares may be deemed to be “issuer purchases” of shares. 41 ITEM 6. [RESERVED]
These shares may be deemed to be “issuer purchases” of shares. 47 ITEM 6. [RESERVED]
In addition, our ability to pay cash dividends on our common stock may be prohibited or limited by the terms of any future debt financing arrangement. Any return to shareholders will therefore be limited to the increase, if any, of our stock price.
We do not currently intend to pay cash dividends on our common stock for the foreseeable future. In addition, our ability to pay cash dividends on our common stock may be prohibited or limited by the terms of any future debt financing arrangement. Any return to shareholders will therefore be limited to the increase, if any, of our stock price.
(a) Total Number of Shares (or Units) Purchased (1) (b) Average Price Paid per Share (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1, 2022 - October 31, 2022 71,533 $2.27 N/A N/A November 1, 2022 - November 30, 2022 1,304 $2.81 N/A N/A December 1, 2022 - December 31, 2022 — — N/A N/A Total 72,837 $2.28 (1) Consists of shares withheld to pay employees’ tax liability in connection with the vesting of restricted stock units granted under our stock-based compensation plans.
(a) Total Number of Shares (or Units) Purchased (1) (b) Average Price Paid per Share (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 54,566 $2.45 N/A N/A November 1, 2023 - November 30, 2023 — — N/A N/A December 1, 2023 - December 31, 2023 — — N/A N/A Total 54,566 $2.45 (1) Consists of shares withheld to pay employees’ tax liability in connection with the vesting of restricted stock units granted under our stock-based compensation plans.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders of Common Stock Our common stock trades on the Nasdaq Capital Market under the symbol “ASRT.” As of December 31, 2022, there were 26 shareholders of record for our common stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders of Common Stock Our common stock trades on the Nasdaq Capital Market under the symbol “ASRT.” As of December 31, 2023, there w ere 264 shar eholders of record for our common stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
Stock Performance Graph We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and therefore are not required to provide the stock performance graph.
Recent Sales of Unregistered Securities None. Stock Performance Graph Prior to December 31, 2023, we were a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Removed
Accordingly, the number of holders of record does not include beneficial owners whose shares are held by nominees in street name. Securities Authorized for Issuance Under Equity Compensation Plans Information regarding securities authorized for issuance under our equity compensation plans is contained in Part III, Item 14 of this Annual Report on Form 10-K.
Added
As of December 31, 2023, we are no longer a smaller reporting company, but in accordance with the SEC’s transition rules, we are not required to provide the stock performance graph this year.
Removed
Recent Sales of Unregistered Securities We did not sell any equity securities during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

78 edited+75 added−35 removed30 unchanged
Biggest changeIncome Taxes” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report. 46 RESULTS OF OPERATIONS The following table reflects our results of operations for the years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, 2022 2021 Revenues: Product sales, net $ 155,121 $ 109,420 Royalties and milestones 2,403 2,579 Other revenue (1,290) (985) Total revenues 156,234 111,014 Costs and expenses: Cost of sales 18,748 15,832 Selling, general and administrative expenses 46,786 52,641 Fair value of contingent consideration 18,687 3,914 Amortization of intangible assets 32,608 28,114 Restructuring charges — 1,089 Total costs and expenses 116,829 101,590 Income from operations 39,405 9,424 Other (expense) income: Interest expense (7,961) (10,220) Other (loss) gain (278) 243 Total other (expense) income (8,239) (9,977) Net income (loss) before income taxes 31,166 (553) Income tax benefit (expense) 78,459 (728) Net income (loss) and comprehensive income (loss) $ 109,625 $ (1,281) 47 Revenues The following table reflects total revenues, net for the years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, 2022 2021 Product sales, net: INDOCIN products $ 100,338 $ 60,557 Otrexup 11,148 — Sympazan 1,768 — SPRIX 9,110 8,676 CAMBIA 24,720 24,972 Zipsor 3,364 10,185 Other products 4,673 5,030 Total product sales, net 155,121 109,420 Royalties and milestone revenue 2,403 2,579 Other revenue (1,290) (985) Total revenues $ 156,234 $ 111,014 Product sales, net For the year ended December 31, 2022, product sales primarily consisted of sales from INDOCIN products, CAMBIA, Otrexup and SPRIX.
Biggest changeIncome Taxes” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report. 53 RESULTS OF OPERATIONS The following table reflects our results of operations for the years ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 2022 Revenues: Product sales, net $ 149,451 $ 155,121 Royalties and milestones 2,433 2,403 Other revenue 185 (1,290) Total revenues 152,069 156,234 Costs and expenses: Cost of sales 27,020 18,748 Research and development expenses 2,843 — Selling, general and administrative expenses 78,638 46,786 Change in fair value of contingent consideration (25,538) 18,687 Amortization of intangible assets 27,527 32,608 Loss on impairment of intangible assets 279,639 — Restructuring charges 5,476 — Total costs and expenses 395,605 116,829 (Loss) income from operations (243,536) 39,405 Other (expense) income: Debt related expenses (9,918) — Interest expense (3,380) (7,961) Other gain (loss) 2,780 (278) Total other expense (10,518) (8,239) Net (loss) income before income taxes (254,054) 31,166 Income tax (expense) benefit (77,888) 78,459 Net (loss) income and comprehensive (loss) income $ (331,942) $ 109,625 54 Revenues The following table reflects total revenues, net for the years ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 2022 Product sales, net: ROLVEDON $ 18,175 $ — INDOCIN products 87,217 100,338 Sympazan 9,938 1,768 Otrexup 12,026 11,148 SPRIX 9,150 9,110 CAMBIA 8,070 24,720 Zipsor 3,460 3,364 Other products 1,415 4,673 Total product sales, net 149,451 155,121 Royalties and milestone revenue 2,433 2,403 Other revenue 185 (1,290) Total revenues $ 152,069 $ 156,234 Product sales, net We acquired ROLVEDON on July 31, 2023.
SPRIX is a non-narcotic nasal spray provides patients with moderate to moderately severe short-term pain a form of ketorolac that is absorbed rapidly but does not require an injection administered by a healthcare provider.
SPRIX is a non-narcotic nasal spray that provides patients with moderate to moderately severe short-term pain a form of ketorolac that is absorbed rapidly but does not require an injection administered by a healthcare provider.
Actual results may differ from those estimates under different assumptions or conditions. We believe the following critical accounting policies reflect the more significant judgements and estimates used in the preparation of our consolidated financial statements. A more detailed discussion of our critical accounting policies may be found in “Note 1.
Actual results may differ from those estimates under different assumptions or conditions. We believe the following critical accounting policies reflect the more significant judgements and estimates used in the preparation of our consolidated financial statements. A more detailed discussion of our significant accounting policies may be found in “Note 1.
(2) Other Sales Allowances consist of wholesaler and pharmacy discounts, prompt pay discounts, patient discount programs, and chargebacks. (3) Consists of sales adjustments for previously divested products recognized in Other revenue in the Consolidated Statements of Comprehensive Income (Loss).
(2) Other Sales Allowances consist of wholesaler and pharmacy discounts, prompt pay discounts, patient discount programs, and chargebacks. (3) Consists of sales adjustments for previously divested products recognized in Other revenue in the Consolidated Statements of Comprehensive (Loss) Income.
On August 22, 2022, we issued $70.0 million aggregate principal amount of Convertible Notes which mature on September 1, 2027 and bear interest at a rate of 6.5% per annum, payable semi-annually in arrears on March 1 and September 1 of each year beginning March 1, 2023.
On August 22, 2022, we issued $70.0 million aggregate principal amount of 2027 Convertible Notes which mature on September 1, 2027 and bear interest at a rate of 6.5% per annum, payable semi-annually in arrears on March 1 and September 1 of each year beginning March 1, 2023.
Cash Flows from Financing Activities Cash used in financing activities for the year ended December 31, 2022 was $7.8 million, which primarily consisted of $70.8 million in principal payments on the 2024 Secured Notes, $7.8 million in payments for contingent consideration, and $1.3 million in payments for Royalty Rights obligations, partially offset by $65.9 million in net cash proceeds from the issuance of the 2027 Convertible Notes, net of debt issuance costs paid of $4.1 million, and $7.0 million in cash proceeds from our ATM offering program.
Cash used in financing activities for the year ended December 31, 2022 was $7.8 million, which primarily consisted of $70.8 million in principal payments on the 2024 Secured Notes, $7.8 million in payments for contingent consideration, and $1.3 million in payments for Royalty Rights obligations, partially offset by $65.9 million in net cash proceeds from the issuance of the 2027 Convertible Notes, net of debt issuance costs paid of $4.1 million, and $7.0 million in cash proceeds from our ATM offering program.
Otrexup is folate analog metabolic inhibitor indicated for the: • Management of patients with severe, active rheumatoid arthritis (RA) and polyarticular juvenile idiopathic arthritis (pJIA), who are intolerant of or had an inadequate response to first-line therapy. • Symptomatic control of severe, recalcitrant, disabling psoriasis in adults who are not adequately responsive to other forms of therapy.
Otrexup is a folate analog metabolic inhibitor indicated for the: • Management of patients with severe, active rheumatoid arthritis (RA) and polyarticular juvenile idiopathic arthritis (pJIA), who are intolerant of or had an inadequate response to first-line therapy. • Symptomatic control of severe, recalcitrant, disabling psoriasis in adults who are not adequately responsive to other forms of therapy.
Accordingly, we may have to adjust these estimates, which could have an effect on product sales and earnings in the period of adjustments. Managed Care Rebates - We offer discounts under contracts with certain managed care providers. We generally pay managed care rebates one to three months after prescriptions subject to the rebate are filled.
Accordingly, we may have to adjust these estimates, which could have an effect on product sales and earnings in the period of adjustments. 50 Managed Care Rebates - We offer discounts under contracts with certain managed care providers. We generally pay managed care rebates one to three months after prescriptions subject to the rebate are filled.
We used the net proceeds from the 2027 Convertible Notes to repurchase the remaining $59.0 million aggregate principal amount of our outstanding 2024 Secured Notes and $3.0 million in associated interest payment pursuant to privately negotiated exchange agreements entered into concurrently with the pricing of the 2027 Convertible Notes.
We used the net proceeds from the 2027 Convertible Notes to repurchase the remaining $59.0 million aggregate principal amount of our then outstanding 2024 Secured Notes and $3.0 million in associated interest payment pursuant to privately negotiated exchange agreements entered into concurrently with the pricing of the 2027 Convertible Notes.
Fair value determinations and useful life estimates are based on, among other factors, estimates of expected future net cash flows, estimates of appropriate discount rates used to present value expected future net cash flows, the assessment of each asset’s life cycle, the impact of competitive trends on each asset’s life cycle and other factors.
Fair value determinations and useful life estimates are based on, among other factors, estimates of expected future net cash flows, estimates of appropriate discount rates used to calculate the present value of expected future net cash flows, the assessment of each asset’s life cycle, the impact of competitive trends on each asset’s life cycle and other factors.
Product sales allowances consist primarily of provisions for product returns, managed care rebates, and government rebates (managed care rebates and government rebates are collectively referred to as “rebates”), wholesaler and pharmacy discounts, prompt pay discounts, patient discount programs, and chargebacks.
Product sales allowances consist primarily of provisions for product returns, managed care rebates, commercial rebates, and government rebates (managed care rebates, commercial rebates and government rebates are collectively referred to as “rebates”), wholesaler and pharmacy discounts, prompt pay discounts, patient discount programs, and chargebacks.
LIQUIDITY AND CAPITAL RESOURCES Historically and through December 31, 2022, we have financed our operations and business development efforts primarily from product sales, private and public sales of equity securities, including convertible debt securities, the proceeds of secured borrowings, the sale of rights to future royalties and milestones, upfront license, milestone and fees from collaborative and license partners.
LIQUIDITY AND CAPITAL RESOURCES Historically and through December 31, 2023, we have financed our operations and business development efforts primarily from product sales, private and public sales of equity securities, including convertible debt securities, the proceeds of secured borrowings, the sale of rights to future royalties and milestones, upfront license, milestone and fees from collaborative and license partners.
Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences are reflected as increases or decreases to income tax expense in the period in which they are determined. Refer to “Note 19.
Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences are reflected as increases or decreases to income tax expense in the period in which they are determined. Refer to “Note 21.
Cost of Sales (excluding amortization of intangible assets) Cost of sales consists of costs of the active pharmaceutical ingredient, contract manufacturing and packaging costs, royalties payable to third parties, inventory write downs or scrap costs, product quality testing, internal employee costs related to the manufacturing process, distribution costs, and shipping costs related to our product sales.
Cost of Sales Cost of sales consists of costs of the active pharmaceutical ingredient, contract manufacturing and packaging costs, royalties payable to third parties, inventory write downs or scrap costs, product quality testing, internal employee costs related to the manufacturing process, distribution costs, and shipping costs related to our product sales. Cost of sales excludes the amortization of intangible assets.
The difference between the income tax benefit of $78.5 million and the tax at the statutory rate of 21.0% is principally due to the reversal of previously recorded valuation allowances.
The difference between the income tax benefit of $78.5 million and the tax at the statutory rate of 21.0% was principally due to the reversal of previously recorded valuation allowances.
Pursuant to the terms of the 2027 Convertible Note Indenture, the Company and its restricted subsidiaries must comply with certain covenants, including mergers, consolidations, and divestitures; guarantees of debt by subsidiaries; issuance of preferred and/or disqualified stock; and liens on our properties or assets.
Pursuant to the terms of the 2027 Convertible Note Indenture, we and our restricted subsidiaries must comply with certain covenants, including mergers, consolidations, and divestitures; guarantees of debt by subsidiaries; issuance of preferred and/or disqualified stock; and liens on our properties or assets.
Acquisitions We account for acquired businesses using the acquisition method of accounting under ASC 805, Business Combinations (“ASC 805”), which requires that assets acquired and liabilities assumed be recorded at date of acquisition at their respective fair values.
Acquisitions We account for acquired businesses using the acquisition method of accounting under ASC 805, which requires that assets acquired and liabilities assumed be recorded at date of acquisition at their respective fair values.
The fair value of the contingent consideration is determined using an option pricing model under the income approach based on estimated INDOCIN product revenues through January 2029, and discounted to present value.
The fair value of the contingent consideration obligation incurred in the Zyla Merger is determined using an option pricing model under the income approach based on estimated INDOCIN product revenues through January 2029, and discounted to present value.
Cash Flows from Investing Activities Cash used in investing activities was $42.7 million for the year ended December 31, 2022, which primarily consisted of $27.0 million in cash paid related to the Otrexup Acquisition and $15.4 million in cash paid related to the Sympazan Acquisition.
Cash used in investing activities was $42.7 million during the year ended December 31, 2022, which primarily consisted of $27.0 million in cash paid for the acquisition of Otrexup and $15.4 million in cash paid for the acquisition of Sympazan.
We used the net proceeds from the 2027 Convertible Notes to repurchase the remaining $59.0 million aggregate principal amount of our outstanding 2024 Secured Notes and $3.0 million in associated interest payment pursuant to privately negotiated exchange agreements entered into concurrently with the pricing of the 2027 Convertible Notes.
We used the net proceeds from the issuance of the 2027 Convertible Notes to repurchase the remaining $59.0 million aggregate principal amount of our then outstanding 13.0% Senior Secured Notes due 2024 (the “2024 Secured Notes”) and $3.0 million in associated interest payment pursuant to privately negotiated exchange agreements entered into concurrently with the pricing of the 2027 Convertible Notes.
The fair value of the contingent consideration is remeasured each reporting period, with changes in the fair value resulting from changes in the underlying inputs being recognized in operating expenses until the contingent consideration arrangement is settled.
The fair value of the contingent consideration obligation incurred in the Zyla Merger is remeasured each reporting period, with changes in the fair value resulting from changes in the underlying inputs being recognized in operating expenses until the contingent considerations arrangement is settled.
(4) Balance includes allowances for cash discounts for prompt payment of $0.9 million, $0.9 million and $1.3 million as of December 31, 2022, 2021 and 2020, respectively, which are recognized in Account receivable, net in the Company’s Consolidated Balance Sheets.
(4) Balance includes allowances for cash discounts for prompt payment of $0.9 million as of both December 31, 2023 and 2022, which are recognized in Account receivable, net in the Company’s Consolidated Balance Sheets.
We are in compliance with our covenants with respect to the 2027 Convertible Notes as of December 31, 2022.
We were in compliance with our covenants with respect to the 2027 Convertible Notes as of December 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Schedule II to the accompanying Consolidated Financial Statements for additional information about amounts charged as a reduction to revenue for product sales allowances, product return allowances, discounts, chargebacks, and rebates. 48 Royalties & milestone revenue In November 2010, we entered into a license agreement with Tribute Pharmaceuticals Canada Ltd.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Schedule II to the accompanying Consolidated Financial Statements for additional information about amounts charged as a reduction to revenue for product sales allowances, product return allowances, discounts, chargebacks, and rebates. 55 Royalties & milestone revenue In November 2010, we entered into a license agreement granting Miravo the rights to commercially market CAMBIA in Canada.
As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward‑looking statements contained in the following discussion and analysis.
As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward‑looking statements contained in the following discussion and analysis. Overview We are a commercial pharmaceutical company offering differentiated products to patients.
These judgments can materially impact the estimates used to allocate acquisition date fair values to assets acquired and liabilities assumed, and the resulting timing and amounts charged to or recognized in current and future operating results. For these and other reasons, actual results may vary significantly from estimated results.
These judgments can materially impact the estimates used to allocate acquisition date fair values to assets acquired and liabilities assumed, and the resulting timing and amounts charged to or recognized in current and future operating results.
Other revenue Other revenue consists of sales adjustments for previously divested products, which includes adjustments to reserves for product sales allowances (gross-to-net sales allowances) and can result in reductions to total revenue during the period.
Other revenue Other revenue consists of sales adjustments for previously divested products, which includes adjustments to reserves for product s ales allowances (gross-to-net sales allowances) and can result in a reduction to or an increase to total revenue during the period.
Our performance obligation is to deliver product to the customer, and the performance obligation is completed upon delivery. The transaction price consists of a fixed invoice price and variable product sales allowances, which include rebates, discounts and returns. Product sales revenues are recorded net of applicable sales tax and reserves for these product sales allowances (gross-to-net sales allowances).
The transaction price consists of a fixed invoice price and variable product sales allowances, which include rebates, discounts and returns. Product sales revenues are recorded net of applicable sales tax and reserves for these product sales allowances (gross-to-net sales allowances).
Our primary marketed products are: INDOCIN ® (indomethacin) Suppositories A suppository and oral solution of indomethacin used both in hospitals and out-patient settings.
INDOCIN ® (indomethacin) Suppositories A suppository and oral solution of indomethacin used both in hospitals and out-patient settings.
Cost of sales excludes the amortization of intangible assets described below under “Intangible Assets.” Fair value of inventories acquired through business combinations or asset acquisitions include an inventory step-up within the value of inventories. The inventory step-up value is amortized as the related inventory is sold, and included in cost of sales.
Fair value of inventories acquired through business combinations or asset acquisitions include an inventory step-up within the value of inventories. The inventory step-up value is amortized as the related inventory is sold, and included in cost of sales.
The significant assumptions used in the calculation of the fair value as of December 31, 2022 included revenue volatility of 40%, discount rate of 9.0%, credit spread of 3.8% and updated projections of future INDOCIN product revenues.
The significant assumptions used in the calculation of the fair value as of December 31, 2023 included revenue volatility of 15%, discount rate of 5.5%, credit spread of 9.2% and updated projections of future INDOCIN product revenues.
The significant assumptions used in the calculation of the fair value as of December 31, 2022 included revenue volatility of 40%, discount rate of 9.0%, credit spread of 3.8% and updated projections of future INDOCIN product revenues.
The significant assumptions used in the calculation of the fair value as of December 31, 2023 included revenue volatility of 15%, discount rate of 5.5%, credit spread of 9.2% and updated projections of future INDOCIN product revenues.
Prior to our suspension of the ATM offering program, 2,463,637 shares of our common stock had been issued and settled at an average price of $3.02, through which we received gross proceeds of $7.4 million, and net proceeds after commission and fees of $7.0 million.
During the year ended December 31, 2022, 2,463,637 shares of our common stock had been issued and settled at an average price of $3.02 through an at-the-market (“ATM”) offering program, through which we received gross proceeds of $7.4 million, and net proceeds after commission and fees of $7.0 million.
We also entered into a long-term supply agreement with Aquestive for Sympazan. On August 22, 2022, we issued $70.0 million aggregate principal amount of Convertible Senior Notes which mature on September 1, 2027 and bear interest at the rate of 6.5% per annum, payable semi-annually in arrears on March 1 and September 1 of each year beginning March 1, 2023.
On August 22, 2022, we issued $70.0 million aggregate principal amount of Convertible Senior Notes which mature on September 1, 2027 and bear interest at the rate of 6.5% per annum, payable semi-annually in arrears on March 1 and September 1 of each year beginning March 1, 2023 (the “2027 Convertible Notes”).
For the year ended December 31, 2022, net income was $109.6 million compared to a net loss of $1.3 million for the same period in 2021.
For the year ended December 31, 2023, net loss was $331.9 million compared to net income of $109.6 million for the same period in 2022 .
We believe that our estimates related to gross‑to‑net sales adjustments for wholesaler and pharmacy fees and discounts, prompt payment discounts, patient discount programs and chargebacks do not have a high degree of estimation complexity or uncertainty, as the related amounts are settled within a relatively short period of time, although the timing of ultimate settlement of returns and chargebacks-related allowances can be prolonged by our process to validate such adjustments before settlement is finalized.
We believe that our estimates related to gross‑to‑net sales adjustments for wholesaler and pharmacy fees and discounts, prompt payment discounts, patient discount programs and chargebacks do not have a high degree of estimation complexity or uncertainty, as the related amounts are settled within a relatively short period of time.
Our cash needs may vary materially from our current expectations because of numerous factors, including: • acquisitions or licenses of complementary businesses, products, technologies or companies; • sales of our marketed products; • expenditures related to our commercialization of our products; • milestone and royalty revenue we receive under our collaborative development arrangements; • interest and principal payments on our current and future indebtedness; • financial terms of definitive license agreements or other commercial agreements we may enter into; • changes in the focus and direction of our business strategy and/or research and development programs; • potential expenses relating to any litigation matters, including relating to Assertio Therapeutics’ prior opioid product franchise for which we have not accrued any reserves due to an inability to estimate the magnitude and/or probability of such expenses, and former drug Glumetza; • expenditures related to future clinical trial costs; and • effects of the COVID-19 pandemic on our operations.
Our cash needs may vary materially from our current expectations because of differences between the actual cash impacts and our expected impacts related to numerous factors, including: • acquisitions or licenses of complementary businesses, products, technologies or companies; • declines in sales of our marketed products, including those resulting from the entry and sales of generics and/or other products competitive with any of our products; • expenditures related to our commercialization of our products, including our efforts to manage supply costs and enhance the long-term prospects of ROLVEDON product sales; • milestone and royalty revenue we receive under our collaborative development arrangements; • interest and principal payments on our current and future indebtedness; • financial terms of definitive license agreements or other commercial agreements we may enter into; • changes in the focus and direction of our business strategy and/or research and development programs; • potential expenses relating to any litigation matters, including relating to Assertio Therapeutics’ prior opioid product franchise for which we have not accrued any reserves due to an inability to estimate the magnitude and/or probability of such expenses, and former drug Glumetza; • potential expenses relating to the Spectrum Reorganization Plan and/or termination expenses if a decision is made to cease development of Spectrum’s de-prioritized development asset poziotinib; and • expenditures related to future clinical trial costs.
We generally pay government rebates three to twelve months after prescriptions subject to the rebate are filled.
We generally pay government rebates three to twelve months after prescriptions subject to the rebate are filled. These rebates are subject to our active participation in the respective programs.
On August 22, 2022, we issued $70.0 million in aggregate principal amount of 6.5% Convertible Senior Notes due 2027. We used the net proceeds from the 2027 Convertible Notes issuance to repurchase the remaining $59.0 million aggregate principal amount of our 2024 Secured Notes, which had been outstanding for the entire period of 2021 and carried a higher interest rate.
On August 22, 2022, we issued $70.0 million in aggregate principal amount of 2027 Convertible Notes. We used the net proceeds from the 2027 Convertible Notes issuance to repurchase the remaining $59.0 million aggregate principal amount of our 2024 Secured Notes, which were outstanding during the three months ended September 30, 2022, and carried a higher interest rate.
SPRIX net product sales increased $0.4 million from $8.7 million for the year ended December 31, 2021 to $9.1 million for the year ended December 31, 2022, primarily due to higher volume, partially offset b y unfavorable payor mix.
Otrexup net product sales increased $0.9 million from $11.1 million for the year ended December 31, 2022 to $12.0 million for the year ended December 31, 2023, primarily due to higher volume, partially offset by unfavorable payor mix.
The difference between the income tax expense of $0.7 million and the tax at the statutory rate of 21.0% is principally due to the recording of a valuation allowance for the 2021 movement in deferred tax assets.
The difference between the income tax expense of $77.9 million and the tax at the statutory rate of 21.0% is principally due to the recording of a full valuation allowance in the current year.
The decrease between years is primarily due to lower interest expense and other loss of $0.3 million in the current year compared to other gain of $0.2 million in the prior year. 50 The following table reflects interest expense for the years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, 2022 2021 Interest on 2027 Convertible Notes $ 1,592 $ — Interest on 2024 Secured Notes 6,065 10,020 Amortization of Royalty Rights (1) 68 185 Amortization of debt issuance costs 236 15 Total interest expense $ 7,961 $ 10,220 (1) As a result of the extinguishment of the Royalty Rights obligation, there will be no additional amortization expense recognized in future periods.
The following table reflects interest expense for the years ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 2022 Interest on 2027 Convertible Notes $ 2,925 $ 1,592 Interest on 2024 Secured Notes — 6,065 Amortization of Royalty Rights (1) — 68 Amortization of debt issuance costs 455 236 Total interest expense $ 3,380 $ 7,961 (1) As a result of the extinguishment of the Royalty Rights obligation, there will be no additional amortization expense recognized in future periods.
Other (Expense) Income The following table reflects Other (expense) income: for the years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, 2022 2021 Interest expense $ (7,961) $ (10,220) Other (loss) gain (278) 243 Total other (expense) income $ (8,239) $ (9,977) Other (expense) income decreased by $1.7 million from expense of $10.0 million for the year ended December 31, 2021 to expense of $8.2 million for the year ended December 31, 2022.
Other (Expense) Income The following table reflects Other (expense) income: for the years ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 2022 Debt related expenses $ (9,918) $ — Interest expense (3,380) (7,961) Other gain (loss) 2,780 (278) Total other expense $ (10,518) $ (8,239) Total other expense increased by $2.3 million from $8.2 million for the year ended December 31, 2022 to $10.5 million for the year ended December 31, 2023.
The fair value of the contingent consideration is determined using an option pricing model under the income approach based on estimated INDOCIN product revenues through January 2029 and discounted to present value. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in fair value measurement accounting.
The fair value of the contingent consideration obligation incurred in the Zyla Merger is determined using an option pricing model under the income approach based on estimated INDOCIN product revenues through January 2029, and discounted to present value.
Contingent Consideration Obligation Pursuant to the May 2020 Zyla Merger, we assumed a contingent consideration obligation which is measured at fair value. We have an obligation to make contingent consideration payments for future royalties to an affiliate of CR Group L.P. (“CRG”) based upon annual INDOCIN product net sales over $20.0 million at a 20% royalty through January 2029.
Contingent Consideration Obligation In connection with the Company’s merger with Zyla Life Sciences (“Zyla”) in May 2020 (the “Zyla Merger”), we assumed a contingent consideration obligation for future royalties on annual INDOCIN product net sales which is measured at fair value. We have an obligation to make contingent consideration payments for future royalties to an affiliate of CR Group L.P.
Organization and Significant Accounting Policies,” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, and the impact and risks associated with our accounting policies are discussed throughout this Annual Report on Form 10‑K and in the Notes to the Consolidated Financial Statements. 43 Revenue Recognition Product sales revenue is recognized when title has transferred to the customer and the customer has assumed the risks and rewards of ownership, which typically occurs upon delivery to the customer.
Organization and Significant Accounting Policies” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, and the impact and risks associated with our accounting policies are discussed throughout this Annual Report on Form 10‑K and in the Notes to the Consolidated Financial Statements.
We follow the guidelines set forth in the applicable accounting guidance regarding the recoverability of any tax assets recorded on the consolidated balance sheet and provide any necessary allowances as required. Determining necessary allowances requires us to make assessments about the timing of future events, including the probability of expected future taxable income and available tax planning opportunities.
We follow the guidelines set forth in the applicable accounting guidance regarding the recoverability of any tax assets recorded on the consolidated balance sheet and provide any necessary allowances as required.
Sales adjustments for previously divested products primarily include Gralise, NUCYNTA, and Lazanda, and resulted in a revenue reduction of $1.3 million and $1.0 million for the years ended December 31, 2022, and 2021, respectively.
Sales adjustments for previously divested products resulted in an increase to total revenue of $0.2 million for the year ended December 31, 2023 and a reduction to total revenue of $1.3 million for the year ended December 31, 2022.
During the years ended December 31, 2022 and 2021, we recognized an expense of 45 $18.7 million and $3.9 million, respectively, for the change in fair value of contingent consideration.
During the year ended December 31, 2023, we recognized a benefit of $25.5 million for the change in fair value of contingent consideration, compared to an expense of $18.7 million for the year ended December 31, 2022.
We believe that our existing cash will be sufficient to fund our operations and make the required payments under our debt agreements due for the next twelve months from the date of this filing. We base this expectation on our current operating plan, which may change as a result of many factors.
We suspended use of the ATM offering program as a result of the issuance of the 2027 Convertible Notes and the ATM offering program has since expired. 60 We believe that our existing cash will be sufficient to fund our operations and make the required payments under our debt agreements due for the next twelve months from the date of this filing.
Product Returns - We allow customers to return product for credit with respect to that product within six months before and up to 12 months after the product expiration date.
The timing of ultimate settlement of returns and chargebacks-related allowances can be prolonged by our process to validate such adjustments before settlement is finalized. Product Returns - We allow customers to return product for credit with respect to that product within six months before and up to 12 months after the product expiration date.
Intangible Assets The following table reflects amortization of intangible assets for the years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, 2022 2021 Amortization of intangible assets—INDOCIN $ 12,841 $ 12,842 Amortization of intangible assets—Otrexup 5,511 — Amortization of intangible assets—Sympazan 202 — Amortization of intangible assets—SPRIX 5,572 5,571 Amortization of intangible assets—CAMBIA 7,950 7,247 Amortization of intangible assets—Zipsor 532 2,337 Amortization of intangible assets—Oxaydo — 117 Total amortization of intangible assets $ 32,608 $ 28,114 Amortization expense increased $4.5 million from $28.1 million for the year ended December 31, 2021 to $32.6 million for the year ended December 31, 2022 primarily due to the amortization of the Otrexup product rights acquired in December 2021 and Sympazan product rights acquired in October 2022, the full amortization of Zipsor intangible assets in the first quarter of 2022, and the full amortization of Oxaydo intangible assets in early 2021.
Amortization of Intangible Assets The following table reflects amortization of intangible assets for the years ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 2022 Amortization of intangible assets—ROLVEDON $ 5,270 $ — Amortization of intangible assets—INDOCIN 11,321 12,841 Amortization of intangible assets—Sympazan 1,213 202 Amortization of intangible assets—Otrexup 4,592 5,511 Amortization of intangible assets—SPRIX 5,131 5,572 Amortization of intangible assets—CAMBIA — 7,950 Amortization of intangible assets—Zipsor — 532 Total amortization of intangible assets $ 27,527 $ 32,608 Amortization expense decreased $5.1 million from $32.6 million for the year ended December 31, 2022 to $27.5 million for the year ended December 31, 2023, primarily due to the full amortization of CAMBIA intangible assets in the fourth 57 quarter of 2022 and a lower carrying value of intangible assets due to impairment charges recognized in the third and fourth quarters of 2023, partially offset by the additional amortization of the ROLVEDON and Sympazan product rights acquired in July 2023 and October 2022, respectively.
These rebates are subject to our active participation in the respective programs. 44 The following table reflects activity relating to the Company’s liability for rebates, returns and discounts as of December 31, 2022 and 2021 (in thousands): Product Returns Rebates (1) Other Sales Allowances (2) Total (4) Balance as of December 31, 2020 $ 19,870 $ 21,345 $ 23,227 $ 64,442 Provisions made in current period to Product Sales, net 14,998 19,906 60,443 95,347 Provisions made in current period to Other revenue (3) 210 378 397 985 Payments and credits made in current period (1,915) (35,549) (69,710) (107,174) Balance as of December 31, 2021 $ 33,163 $ 6,080 $ 14,357 $ 53,600 Provisions made in current period to Product Sales, net 7,247 23,299 71,535 102,081 Provisions made in current period to Other revenue (3) 1,290 — — 1,290 Payments and credits made in current period (10,413) (21,694) (74,552) (106,659) Balance as of December 31, 2022 $ 31,287 $ 7,685 $ 11,340 $ 50,312 (1) Rebates consist of managed care rebates and government rebates.
The following table reflects activity relating to the Company’s provision for product sales allowances as of December 31, 2023 and 2022 (in thousands): Product Returns Rebates (1) Other Sales Allowances (2) Total (4) Balance as of December 31, 2021 $ 33,163 $ 6,080 $ 14,357 $ 53,600 Provisions made in current period to Product Sales, net 7,247 23,299 71,535 102,081 Provisions made in current period to Other revenue (3) 1,290 — — 1,290 Payments and credits made in current period (10,413) (21,694) (74,552) (106,659) Balance as of December 31, 2022 $ 31,287 $ 7,685 $ 11,340 $ 50,312 Provisions made in current period to Product Sales, net 7,842 24,901 51,412 84,155 Provisions made in current period to Other revenue (3) — — 185 185 Payments and credits made in current period (9,340) (18,083) (48,183) (75,606) Balance as of December 31, 2023 $ 29,789 $ 14,503 $ 14,754 $ 59,046 (1) Rebates consist of managed care rebates, commercial rebates and government rebates.
Other (loss) gain for the year ended December 31, 2022 was primarily attributable to additional expected credit loss of $1.6 million recognized in the year associated with our investment in a Convertible Secured Promissory Note from NES Therapeutic, Inc. (“NES”).
The year over year change is primarily due to (i) interest income on our short-term cash and cash equivalent investments, which was $2.0 million higher for the year ended December 31, 2023 compared to the prior year, (ii) $1.6 million of additional expected credit loss recognized during the year ended December 31, 2022 associated with our investment in a Convertible Secured Promissory Note from NES Therapeutic, Inc.
For the year ended December 31, 2022, working capital contributed approximately $18.3 million more to operating cash flows compared to the same period in 2021 primarily due to: (i) less cash used in the payment of accounts payable and accrued liabilities due to timing, (ii) less cash used in the settlement of accrued rebates, returns and discounts due to the impact of sales product mix as well as timing of settlement, and (iii) receipt of $8.3 million in tax refund in the first quarter of 2022, partially offset by increased cash used due to the timing of inventory purchases and receipts as well as accounts receivable payments.
The favorable change of $13.2 million was primarily due to increased cash collected from accounts receivable, partially offset by (i) increased cash used in the payment of accounts payable and accrued liabilities due to timing, (ii) increased cash used in the settlement of accrued rebates, returns and discounts due to impact of sales product mix as well as timing of settlement, and (iii) the receipt of an $8.3 million one-time tax refund in the first quarter of 2022 not repeating. 61 Cash flows from operating activities are impacted by, among other things, product revenue, operating profit and changes in working capital.
Pursuant to the Zyla Merger, we acquired our current commercial products INDOCIN (suppository and oral solution), SPRIX, and OXAYDO. CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and U.S. Securities and Exchange Commission (“SEC”) regulations for annual reporting.
Refer to Note 11 , Debt, of the accompanying Consolidated Financial Statements for additional information on the 2027 Convertible Notes. 49 CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and U.S. Securities and Exchange Commission (“SEC”) regulations for annual reporting.
We expect to use the remaining net proceeds from the 2027 Convertible Notes for general corporate purposes . 51 On February 27, 2023, we completed a transaction with a limited number of holders of our outstanding 2027 Convertible Notes to exchange $30.0 million aggregate principal amount of Exchanged Notes pursuant to separate, privately negotiated exchange agreements for a combination of (a) a cash payment and (b) an agreed number of shares of our common stock.
The remaining net proceeds from the 2027 Convertible Notes were used for general corporate purposes . On February 27, 2023, we completed the Convertible Note Exchange pursuant to which we exchanged $30.0 million principal amount of our 2027 Convertible Notes for 6,990,000 shares of our common stock, plus an additional $10.5 million in cash.
There were no indicators of impairment of long-lived assets identified during the three months ended December 31, 2022. Income Taxes We record the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in our accompanying consolidated balance sheets, as well as operating loss and tax credit carryforwards.
During the years ended December 31, 2023 and 2022, we recognized a benefit of $21.6 million and an expense $18.7 million, respectively, for the change in fair value of contingent consideration obligation incurred in the Zyla Merger. 52 Income Taxes We record the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in our accompanying consolidated balance sheets, as well as operating loss and tax credit carryforwards.
Both products are nonsteroidal anti-inflammatory drug (NSAID), indicated for: • Moderate to severe rheumatoid arthritis including acute flares of chronic disease • Moderate to severe ankylosing spondylitis INDOCIN ® (indomethacin) Oral Suspension • Moderate to severe osteoarthritis • Acute painful shoulder (bursitis and/or tendinitis) • Acute gouty arthritis Otrexup ® (methotrexate) injection for subcutaneous use A once weekly single-dose auto-injector containing a prescription medicine, methotrexate.
Both products are nonsteroidal anti-inflammatory drug (NSAID), indicated for: • Moderate to severe rheumatoid arthritis including acute flares of chronic disease • Moderate to severe ankylosing spondylitis INDOCIN ® (indomethacin) Oral Suspension • Moderate to severe osteoarthritis • Acute painful shoulder (bursitis and/or tendinitis) • Acute gouty arthritis Sympazan® (clobazam) oral film A benzodiazepine indicated for the adjunctive treatment of seizures associated with Lennox-Gastaut Syndrome (LGS) in patients aged two years of age or older.
The inability to raise any additional capital that may be required to fund our future operations, payments due under our debt agreements, or product acquisitions and strategic transactions which we may pursue could have a material adverse effect on the Company. 52 The following table reflects summarized cash flow activities for the years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, 2022 2021 Net cash provided by operating activities $ 78,598 $ 5,523 Net cash used in investing activities (42,673) (18,525) Net cash (used in) provided by financing activities (7,794) 29,026 Net increase in cash and cash equivalents 28,131 16,024 Cash and cash equivalents at beginning of year 36,810 20,786 Cash and cash equivalents at end of year $ 64,941 $ 36,810 Cash Flows from Operating Activities C ash provided by operating activities was $78.6 million for the year ended December 31, 2022 compared to $5.5 million in the same period in 2021, primarily due to a combination of higher net income excluding non-cash items, and favorable working capital cash flows compared to last year.
The following table reflects summarized cash flow activities for the years ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 2022 Net cash provided by operating activities $ 49,604 $ 78,598 Net cash provided by (used in) investing activities 3,097 (42,673) Net cash used in financing activities (44,201) (7,794) Net increase in cash and cash equivalents 8,500 28,131 Cash and cash equivalents at beginning of year 64,941 36,810 Cash and cash equivalents at end of year $ 73,441 $ 64,941 Cash Flows from Operating Activities C ash provided by operating activities was $49.6 million for the year ended December 31, 2023 compared to $78.6 million in the same period in 2022, primarily due to lower net income including non-cash items, partially offset by favorable working capital cash flows compared to last year.
During the year ended December 31, 2022, we recognized $0.5 million of milestone revenue associated with the completion of certain service milestones. There was no such milestone revenue associated with the completion of similar service milestones during the year ended December 31, 2021.
We recognized revenue related to the CAMBIA license agreement of $2.0 million and $1.9 million during the years ended December 31, 2023 and 2022, respectively. We recognized Milestone revenue associated with the completion of certain service milestones of $0.4 million and $0.5 million during the years ended December 31, 2023 and 2022, respectively.
Other gain for the year ended December 31, 2021 primarily consisted of interest income and sublease income offset by sublease expense. Income Tax Provision During the year ended December 31, 2022, we recorded an income tax benefit of approximately $78.5 million, which represents an effective tax rate of (251.7)%.
The current year income tax provision also includes the valuation allowance for utilization of our deferred tax assets to offset the deferred tax liabilities of Spectrum recorded through acquisition accounting. During the year ended December 31, 2022, we recorded an income tax benefit of $78.5 million, which represents an effective tax rate of (251.7)%.
On October 27, 2022, we completed the Sympazan Acquisition, and on December 15, 2021, we completed the Otrexup Acquisition. Both of these acquisitions were accounted for under ASC 805. See “Note 2. Acquisitions” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report.
For these and other reasons, actual results may vary significantly from estimated results. 51 On July 31, 2023, we completed the Spectrum Merger, which was accounted for under ASC 805. See “Note 2. Acquisitions” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this annual report.
CAMBIA net product sales decreased $0.3 million from $25.0 million for the year ended December 31, 2021 to $24.7 million for the year ended December 31, 2022, primarily due to lower volume, partially offset by favorable payor mix. Certain parties who have entered into settlement agreements with us began to market generic versions of CAMBIA in 2023.
CAMBIA net product sales decreased $16.7 million from $24.7 million for the year ended December 31, 2022 to $8.1 million for the year ended December 31, 2023, primarily due to lower volume caused by generic entrants in 2023.
On February 27, 2023, we completed a transaction with a limited number of holders of our outstanding 2027 Convertible Notes (the “Exchanged Notes”) to exchange $30.0 million aggregate principal amount of Exchanged Notes pursuant to separate, privately negotiated exchange agreements for a combination of (a) a cash payment and (b) an agreed number of shares of our common stock.
On February 27, 2023, we completed a privately negotiated exchange of $30.0 million principal amount of the 2027 Convertible Notes (the “Convertible Note Exchange”). Pursuant to the Convertible Note Exchange, 6,990,000 shares of the Company’s common stock, plus an additional $10.5 million in cash, were issued to settle a portion of the 2027 Convertible Notes (the “Exchanged Notes”).
Total interest expense decreased $2.3 million from $10.2 million for the year ended December 31, 2021 to $8.0 million for the year ended December 31, 2022, primarily due to lower amounts of interest incurred on debt outstanding during the year ended December 31, 2022 compared to the prior year.
Refer to Note 11 of the accompanying Consolidated Financial Statements for additional information on the Royalty Rights obligation. Total interest expense decreased $4.6 million from $8.0 million for the year ended December 31, 2022 to $3.4 million for the year ended December 31, 2023, primarily due a lower weighted-average interest rate on the debt that was outstanding during each period.
INDOCIN net products sales increased $39.8 million from $60.6 million for the year ended December 31, 2021 to $100.3 million for the year en ded December 31, 2022, primarily due to favorable net pricing as a result of an increase in gross price and volume mix shift to more profitable channels, partially offset by lower volume.
INDOCIN net products sales decreased $13.1 million from $100.3 million for the year ended December 31, 2022 to $87.2 million for the year en ded December 31, 2023, primarily due to lower volume and pricing as a result of the August 2023 approval and launch of generic indomethacin suppositories and the sales by a 503B compounder of its competitive products.
Sympazan® (clobazam) oral film A benzodiazepine indicated for the adjunctive treatment of seizures associated with Lennox-Gastaut Syndrome (LGS) in patients aged two years of age or older . Sympazan is the only product to offer clobazam in a convenient film with PharmFilm® technology. Sympazan is taken without water or liquid, adheres to the tongue, and dissolves to deliver clobazam.
Sympazan is the only product to offer clobazam in a convenient film with PharmFilm® technology. Sympazan is taken without water or liquid, adheres to the tongue, and dissolves to deliver clobazam. Otrexup ® (methotrexate) injection for subcutaneous use A once weekly single-dose auto-injector containing a prescription medicine, methotrexate.
We did not receive any cash proceeds from the issuance of the shares of our common stock. The terms of the 2027 Convertible Notes are governed by an indenture dated August 25, 2022 (the “2027 Convertible Note Indenture”).
As a result of the Convertible Note Exchange, we expect our cash interest expense in future periods to decrease in accordance with the decrease in the aggregate principal amount of the 2027 Convertible Notes outstanding. The terms of the 2027 Convertible Notes are governed by an indenture dated August 25, 2022 (the “2027 Convertible Note Indenture”).
Cost of sales increased $2.9 million from $15.8 million for the year ended December 31, 2021 to $18.7 million for the year ended December 31, 2022, primarily due to the additional cost of sales from Otrexup and Sympazan, which began shipping in January and October 2022, respectively, and the impact of product mix that includes higher net sales of INDOCIN and SPRIX.
Cost of sales increased $8.3 million from $18.7 million for the year ended December 31, 2022 to $27.0 million for the year ended December 31, 2023, primarily due to: (i) $8.3 million of ROLVEDON cost of sales after acquisition in July 2023, including inventory step-up, (ii) $3.1 million increase in cost of sales attributable to Sympazan and Otrexup higher net product sales, (iii) $2.5 million in higher scrap costs, partially offset by $5.1 million decrease in cost of sales related to INDOCIN and CAMBIA due to lower net product sales and the impact of product mix.
Also contributing to the Other (loss) gain for the year ended December 31, 2022 was a loss of $0.3 million recognized for the fair value of a derivative liability associated with an embedded derivative feature of our 2027 Convertible Notes.
On February 27, 2023, we completed the Convertible Note Exchange pursuant to which we settled $30.0 million principal amount of the 2027 Convertible Notes. Other gain (loss) was a gain of $2.8 million for the year ended December 31, 2023, compared to a loss of $0.3 million for the year ended December 31, 2022.
Refer to Note 10 , Note 18 , Note 1, Note 13 and Note 12 , respectively, to the accompanying Consolidated Financial Statements. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS See “Item 8. Financial Statements and Supplemental Data - Note 1. Organization and Summary of Significant Accounting Policies” for additional information on recent accounting pronouncements. 53
Refer to Note 11 , Note 20 , Note 1, Note 15 and Note 14 , respectively, to the accompanying Consolidated Financial Statements. We generally expect to satisfy these requirements and commitments with cash on hand and cash provided by operating activities. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS See “Item 8. Financial Statements and Supplemental Data - Note 1.
During the year ended December 31, 2022, we reversed $89.3 million of our previously recorded valuation allowances against the net deferred tax asset. As part of our valuation assessment, we primarily relied on the projected availability of future taxable income from pre-tax income forecasts and reversing taxable temporary differences.
As part of our valuation allowance assessment as of December 31, 2023, we were no longer able to rely on our projected availability of future taxable income from pre-tax income forecasts.
Zipsor net product sales decreased $6.8 million from $10.2 million for the year ended December 31, 2021 to $3.4 million for the year ended December 31, 2022, primarily due to lower volume and unfavorable payor mix, as certain parties who previously entered into settlement agreements with us began to market generic versions of Zipsor in 2022.
Zipsor net product sales increased $0.1 million from $3.4 million for the year ended December 31, 2022 to $3.5 million for the year ended December 31, 2023, primarily due to favorable payor mix, partially offset by lower volume. Other net product sales include sales for OXAYDO and SOLUMATRIX products.
For the year ended December 31, 2022, non-cash items contributed approximately $56.1 million less to operating cash flows compared to the same period in 2021 primarily due to the $80.4 million reversal of a majority of our previously recorded valuation allowances against the net deferred tax asset in the fourth quarter of 2022 , partially offset by higher depreciation and amortization expense, stock-based compensation expense and expense for recurring fair value measurement of contingent consideration.
For the year ended December 31, 2023, adjustments for non-cash items contributed approximately $399.4 million more to operating cash flows compared to the same period in 2022, primarily due to a $279.6 million loss on impairment of intangible assets, and debt-related expenses of $9.9 million, of which t here were none in the prior year period, and the recording of the full valuation allowance for the year ended December 31, 2023 compared to a reversal of the valuation allowance against the deferred tax asset for the year ended December 31, 2022, which contributed approximately $156.6 million.
The significant assumptions used in the calculation of the fair value include projections of future INDOCIN product revenues including the probability assigned to the achievement of those projections , revenue volatility, discount rate, and credit spread.
The significant assumptions used in the calculation of the fair value as of December 31, 2023 included the discount rate of 18.0% and updated projections of future ROLVEDON product net sales, which resulted in no probability of achievement under the Monte Carlo simulation.
Cash provided by financing activities for the year ended December 31, 2021 was $29.0 million, which primarily consisted of $44.9 million of proceeds from the registered direct offerings in February 2021, partially offset by $9.8 million in payments on our debt, $4.8 million in payments for contingent consideration, and $1.0 million in payments for Royalty Rights obligations.
Cash Flows from Investing Activities Cash provided by investing activities was $3.1 million for the year ended December 31, 2023, which primarily consisted of $2.2 million of proceeds from the sale of investments, and $2.0 million of net cash acquired in the Spectrum Merger, partially offset by cash paid for the transaction costs incurred with the acquisition of Sympazan and cash paid for purchases of property and equipment.
Zipsor uses proprietary ProSorb® delivery technology to deliver a finely dispersed, rapid and consistently absorbed formulation of diclofenac. Other commercially available products include OXAYDO® (oxycodone HCI, USP) tablets for oral use only —CII. 42 On October 27, 2022, we completed the Sympazan Acquisition from Aquestive.
Zipsor uses proprietary ProSorb® delivery technology to deliver a finely dispersed, rapid and consistently absorbed formulation of diclofenac. 48 On July 31, 2023 (the “Effective Date”) , pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as of April 24, 2023, we completed the acquisition of Spectrum Pharmaceutical, Inc.
Removed
Overview We are a commercial pharmaceutical company offering differentiated products to patients utilizing a non-personal promotional model. Our commercial portfolio of branded products focuses on three areas: neurology, rheumatology, and pain and inflammation. We have built our commercial portfolio through a combination of increased opportunities with existing products, as well as through the acquisition or licensing of additional approved products.
Added
We have built our commercial portfolio through acquisition or licensing of approved products. Our comprehensive commercial capabilities include marketing through both a sales force and a non-personal promotion model, market access through payor contracting, and trade and distribution.

… 108 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+1 added−0 removed0 unchanged
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and therefore are not required to provide the information called for by this Item 7A. 54
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Prior to December 31, 2023, we were a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act.
Added
As of December 31, 2023, we are no longer a smaller reporting company, but in accordance with the SEC’s transition rules, we are not required to provide the information called for by this Item 7A in this report. 62

Other ASRT 10-K year-over-year comparisons