Q4 2020 Endo International PLC Earnings Call
If we look first at expanding and enhancing our portfolio in 2020, we developed and implemented a comprehensive plan to maximize the long-term value of xiaflex through incremental investment in both are on Market indications and potential future indications that are currently in clinical development.
We obtained FDA approval of quo the first injectable treatment for cellulite in adult women.
We completed the acquisition of biospecifics this acquisition immediately enhance at the profitability of xiaflex and coil and provides additional option ality for future xiaflex and indication that we continue to invest to enhance our sterile injectable R&D manufacturing capabilities. And we continue the evolution of our sterile injectables pipeline towards more durable and differentiate opportunity wage.
Looking at Reinventing how we work we implemented a comprehensive COVID-19 response plan with alternative working practices across every part of our organization. We believe the new ways of working. We implemented across tendo will continue to evolve and will lead to permanent changes in how we work we expect this will result in a more flexible efficient and effective company. We announced launch to set of business transformation issues and like 2020 that are designed to enhance our organizational Effectiveness increase the competitiveness of our generic segment and generate significant cost Savings Bank will be reinvested into our core growth areas. We also made progress on our priority of being a Force for good.
We are committed to the adoption of more sustainable practices. We showcase this commitment 2020 through the issuance of our first integrated ESG report, which is available on our company website. We took steps towards our commitment to diversity equity and inclusion by hiring a highly experienced Global head of and establishing a senior Leadership Council that's responsible for the development of our overall company denied strategy and do it was committed to embedding are denied strategy into every aspect of how we do business.
Finally, we're pleased to be partnering with novavax to support the national effort to deliver safe and effective COVID-19 vaccines. This partnership further underscores end is commitment to be a force for good in all she do for the benefit of all of our stakeholders.
As we move ahead in 2021, we will continue focusing our efforts on making meaningful progress against each of these strategic priorities our efforts in 2021 will include making significant investments in support of our own going xiaflex maximization plan our entry into US Medical Aesthetics market with the launch of quo and the continued evolution of our sterile injectables portfolio of capabilities.
We will also continue to move forward on our previous.
Announce business transformation issues targeting are generic pharmaceutical segment in certain enabling functions. In addition. We will work to advance or ESG and denied related efforts home overall 2021 will be a viewer of investment and focused effort in support of our goal to establish a strong Foundation to help us deliver sustainable value over the long term.
Switching the slide five. This is a snapshot of our segments and Consolidated revenues and our adjusted ebitda for the fourth quarter and full-year fourth quarter revenues of $700,000 decreased by less than 1% versus the prior-year. The decline in Revenue was primarily due to anticipated lower generic pharmaceutical segment revenues, which were largely offset by increased their injectable segment revenues reported fourth-quarter adjusted ebitda of $352 declined by approximately 3% compared to the prior-year. This was mainly due to an increase in adjusted operating expenses driven by higher selling and marketing expenses in support of xiaflex and quo Consolidated revenues and adjusted ebitda during the fourth quarter, exceeded our previously communicated expectations primarily due to higher-than-expected base restrict revenues driven by higher utilization associated with the increase in COVID-19 related hospitalizations.
Service like six revenues from Specialty Products portfolio of our branded pharmaceutical segment increased by 4% in the fourth quarter compared to the prior-year during by xiaflex Flex utilization rapidly recovering the third quarter as patients return to Physician Offices continued growth in the fourth quarter was hampered by the Resurgence of COVID-19 across the country in November and December.
We're encouraged by the strolling increasing levels of vaccinations nationally and the recent decreasing Trends in COVID-19 cases and hospitalizations. However, given the uncertainty surrounding the level piece of patient flow back into physician offices for elective procedures. We currently have a relatively wide estimated performance range for a physician administered products 2021 expect utilization of these products will be waited to the back half of the year.
Are established product portfolio declined by 8% in the fourth quarter compared to the same period in the prior year mainly driven by testopel Channel normalization after the restocking that occurred in the third quarter 2020.
Are sterile injectable segment perform better than expected in the fourth quarter with revenues up 16% compared to the fourth quarter of 2019. This performance was driven by higher of a destructive utilization do the Resurgence of COVID-19 and the corresponding increase in hospitalizations in November and December.
I will be the district utilization continued into January and early February this year. However recent utilization has been decreasing as hospitalizations related to COVID-19 have divorced.
Uncertainty presented by COVID-19 are 2019-2021 projected base restrict Revenue range contemplates different levels of utilization during the year, including the possibility of return to pre-k COVID-19 utilization levels as early as the second quarter of this year.
Moving to slide seven or generic stomach revenues decreased by 20% during the fourth quarter compared to the prior-year. The decrease was due to the impact of anticipated competitive events on Key Products off.
Or generic segment outlook for the full year 2021 is challenging and reflects the significant impact of competitive events in 2020 and the expected events in 2021 bought a 2021 outlook for this segment reflects a range of underlying assumptions related to the impact of competition in 2021. That will closely Monitor and update throughout the year.
Decrease International segment revenues for the fourth quarter versus the prior-year was primarily due to expect it on going generic competition in the segment.
Turning slightly maximizing long-term value of xiaflex is a critical element of our strategic priority to expand enhance our portfolio. We have a strong belief in a flexibility to satisfy the unmet need that exists for non-surgical options to treat Peyronie's disease and Dupuytren's contracture.
Grounded in a deep understanding of patient needs and Marketplace Dynamics. We are investing in a commercial strategy that includes increasing patient awareness of non-surgical options coupled with physician Education and Training.
We plan to continue to empower patience to seek a non-surgical treatment with diet Flex through expanded promotional channels and a consistent and integrated media presence on the Physicians side. We plan to enhance training and training and engagement with new injectors to accelerate appropriate adoption and use in advance existing injectors to feel as comfortable with xiaflex as they do with service what we've seen strong zyflex growth over the past several years. We believe that both approved indications remain under-penetrated diagnosis rates for those for those indications are still less than 5% and treatment rates remain modest as well as representing the potential for growth in both areas while continuing to improve upon our penetration rates of 25% chance contracture and just over 60% for Peyronie's disease.
We believe our twos iflix indications in development plantar fibromatosis and adhesive capsulitis represent additional opportunities to bring Innovative treatment options to address a potential large unmet need for patients who are seeking non-surgical alternatives.
Or adhesive capsulitis program continues to progress and we expect interim analysis results from the phase 2B study in the fourth quarter of 2021. We expect in term analysis results from the proof-of-concept study for plantar fibromatosis next month.
recent
Clinical development program assumptions and assuming regulatory approval we expect commercialization of these two indications in the 2025 to 2026 timeframe.
With robust intellectual property and enhance profitability following the acquisition of a specifics combined with multiple development and pre-clinical Stage indications. We are confident in the sustained long-term potential diflexx turning slide 9 our entry into the Aesthetics market with the launch of quo is another important element of our strategic priority to expand and enhance power.
As we near launch, we refreshed our Market sizing work and we've the US market opportunity for close significant nearly. Ninety percent of u.s. Women have cellulite and after taking into account age mass index ranges disposable income levels and motivation that treat cellulite including willingness to spend for an aesthetic treatment. We believe there are approximately 8.5 million women the way that our potential treatment candidates recoil
Is the first FDA-approved injectable treatment for cellulite represents the opportunity to meet the needs of this highly underserved Market?
Turn this light 10. We are excited to launch quota next month. We've developed a fully integrated Progressive launch plan and will be deliberate in our initial Approach at launch our approach. We took our strong belief that we have a big opportunity with quo yet early success will be key to long-term uptake. We're going to Target select practices in the right way and focus on generating early positive life is imperative that during our own boarding. We focus on product education patient selection and great outcomes and building practice success with quo because it represents a new category for the Medical Aesthetics Community or launch plan calls for us to progressively expand our account onboarding overtime as positive momentum builds our product Supply capacity control scale and we incorporate early practice learnings into our go-forward commercial best practices.
We were investing to promote quote of aesthetic clinicians and consumers. We recently launched our consumer unbranded campaign really cellulite which is setting the stage for quo later this year. I plan to activate our branded DTC campaigns with engaging social high-impact digital video and will also begin to hear from social media influencers to further Market enthusiasm.
Along the way and it remains committed to real-world data generation and data collection through clinical studies. We believe that quo will be welcomed by the Medical Aesthetics Community as an Innovative solution for patients bothered by Celluloid in addition. Co represents a new meaningful value stream for a set of clinicians who has the potential position and to Aesthetics as a recognizable leads in Medical Aesthetics.
Switching the slide 11:00. We continue to Volvo R&D pipeline in many manufacturing capabilities to support the introduction of more sterile products focusing on the evolving needs of our customer.
Your end almost eighty percent of R&D pipeline consists of projects across the sterile injectable product Continuum with approximately two-thirds in ready-to-use and more differentiated products across tables in generic segments. We plan to launch approximately ten products 2021, including the successful launch of lubiprostone capsules the authorized generic of Amitiza.
Now, let me turn the call over to Mark the further discuss the company's Financial results and introduce our financial guidance mark, thank you blaze and good morning. Everyone first month. You'll see a snapshot of her fourth quarter gaap and non-gaap financial results believe covered company and segment revenues earlier. So I will not review that again on a gaap basis reported income from continuing operations was approximately $141 or $0.60 per share on a diluted basis in the fourth quarter of 2020 compared to a loss from continuing operations of approximately $208 or $0.92 per share on a diluted basis in the fourth quarter of 2019.
This increase was primarily related to a decrease in asset impairment charges any non-recurring non-cash income tax benefits resulting from a change in deferred tax liabilities following the biospecifics life in the fourth quarter of 2020.
On an adjusted basis income from continuing operations was approximately $176 or $0.75 per share on a diluted basis in the fourth quarter of 2020 compared to income from continuing operations of approximately $185 million dollars or eighty cents per share on a diluted basis in the fourth quarter of 2019.
This decrease was primarily due to higher adjusted operating expenses.
slide 13 provides a summary of our first quarter and 2021 full-year Financial guidance
With respect to four-year 2021 we expect total revenues to be between 2.55 billion and 2.7 dollars adjusted ebitda to be between a 1.1 to billion dollars and one point two eight billion dollars and adjusted diluted. Net income per share from continuing operations to be between $1.80 and $5.30 per share with respect to first quarter 2021. We expect total revenues to be between $620 and $680 a month adjusted ebitda to be between $270 and $300 and adjusted diluted. Net income per share from continuing operations to be between $0.40 and fifty cents per chef.
We are providing both full year and first quarter 2021 guidance due to the uncertainties underpinning the assumptions in our guidance ranges for 20 21.
For instance while we expect a reduction in COVID-19 cases and hospitalizations throughout the year the Assumption for our critical care and physician administer products reflect continued uncertainty associated with the persistency of the COVID-19 pandemic and the timing and nature of the recovery during the year also the Assumption for our sterile injectables business contemplate a range of potential COVID-19 vaccine production levels during the year to support our partnership with novavax.
in addition the Assumption for
Business continue to reflect on certainty associated with the impact of competitive pressures in 2021.
With respect to four-year 2021 revenues or guidance range reflects a mid single-digit to low teens percentage Point decline compared to 2020.
This decline is primarily driven by an expected mid twenty to load 30 percentage Point decline in our generic pharmaceutical segment primarily due to the full-year impact of twenty-twenty competitive events may as well as additional competitive pressure in 2021.
with respect to full year 2021 sterile injectables Revenue
We anticipate a mid-single-digit to mid-teens percentage Point decline compared to 2020.
Just decline assumes a low single to low double-digit percentage Point decline invasive strict Revenue due to an expected decline in utilization driven by a decrease in COVID-19 hospital compared to 2020.
We also expect potential declines in several of our other sterile injectable products due to the foyer impact of twenty-twenty competitive events as well as additional competitive pressure in 2021.
With respect to four-year twenty Twenty-One Brandon Pharmaceuticals revenues, we expect growth in the low to High Teens compared to twenty twenty. This increase assumes xiaflex rep growth in the mid. Xxxii low, 40 percentage range as physician and patient activities continue to return towards pre COVID-19 levels.
Design, Flex guidance range also reflects the expected impact from investments in the commercial strategy The Blaze previously mentioned. However, the level of these investments in 2021 will be in fact by the pace of the recovery in zyflex demand.
Or full year 2021 guidance assumes an adjusted gross margin of approximately 70% to 71% reflecting a shift in sales mix towards higher-margin products. We also offer for your 2021 adjusted operating expenses as a percentage of Revenue to be between 28.5% and 29.5% this assumption reflects our commitment to invest in a long-term in our core areas of growth. This includes funding the commercial launch of quote investing in both on market and potential future new xiaflex indications and investing in the divorce is new sterile injectable products and capabilities.
We believe that these strategic investments in our portfolio will generate long-term value for Endo.
Additionally, we assume for your 2021 adjusted interest expense will be approximately $540.
Finally, we assume our full-year 2021 adjusted effective tax rate will be in the 13% to 14% range.
Or first quarter 2021 guidance assumes an adjusted gross margin of approximately 70.5% adjusted operating expenses as a percentage of Revenue of approximately 30.5% off adjusted interest expense of approximately a hundred thirty-five million dollars and an adjusted effective tax rate of approximately 16.5% off.
flight 14
summary of our full-year segment and select products specific assumptions previously discussed
advancing dislike 15 and wrapping up the financial discussion for the full year twenty-twenty or unrestricted cash outflows prior to debt payments were approximately $149 off accounting for the biospecifics acquisition. We ended 2020 with approximately 1.2 billion dollars of unrestricted cash and a net debt to adjusted ebitda leverage ratio of approximately 5.1 times.
For the full year 2021 we expect unrestricted cash flow prior to debt payments to be between $80 and $240. This reflects a project 230 million dollars of unrestricted cash disbursements for mesh claims and for mesh legal expenses. We also expect to incur approximately $110 in opioid-related legal expense. Just let me now turn the call back over to Lori to manage our question-and-answer. Laurie. Thank you Mark in the interest of time. If you could limit your initial questions to allow us to get in as many possible. We would appreciate it operator. Can we have the first question, please?
Ladies and gentlemen, if you have questions at this time, please press star to the number one key on your touch-tone telephone if your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question comes from the line of Chris fought with JPMorgan your lines open great. Thanks so much for the the questions and all the birthday detail with the guidance. I guess one a couple months. I was trying my hands around on on the guidance itself was maybe a little bit more color on the basis strict kind of a rosian as we go through this year. It seemed that the company took a substantial benefit for a number of quarters last year. I guess we just infection rates coming down pretty rapidly as surprised as only kind of modest erosion reflected in the 2021 guide. So confused elaborate a little bit more on the assumptions that down to that that guide and then the second one was on on Netflix just as we go through 2021. Do you anticipate that there's going to be pent-up demand or even a bolus of patients that correct?
She ate therapy. Once we move past somebody's cold Winters options. I'm trying to get a sense of that that growth forecast for the year. I guess I'm assuming maybe q1 still a little bit disrupted but then in acceleration going through the year, but just any thoughts you have about just as the world kind of normalized is a bit, you know, should we think of a prettier a pretty rapid acceleration of of that business? Thanks so much. Yeah, he Chris. Thank you very much for those questions, Let me comment on days or strict and so when we think about the guidance for vases direct, you know, we did put out a low single to double-digit decline for four days off. So, you know, while elevated visualization continued in in January February this year it it's been it's been pretty significant. And so that that we're getting some some Tailwinds in town first quarter here and then we'll have to see you know, how the rest of the year plays out in terms of you know, how what is normalization for business trip going forward, but you know, I think we feel good job.
the forecast we put out there so
Shoes what we're seeing in the in the first quarter, you know and and feel that there is a level of uncertainty, you know for the rest of the year, but the the range properly captures that Patrick why don't you just help Chris with the question of flex happy to thanks for the question. Chris is a release is a flex. Uh, we when we look back at what happened last year. We saw a very accelerated and pronounce recovery and quarter three coming off of the quarter to shelter-in-place and we we booked about fifty million dollars in sales Q3 over Q2. Now we've continued we continue to see really nice growth in Q4 as well. Looking over a hundred million dollars in sales actually a hundred five million dollars in sales and we saw Progressive growth across both of the indication. In fact, the Peyronie's indication grew at about 24% versus quarter 3 and the Dupuytren's contracture indication grew at about 11:11 % So as we have page
At 2 during our quarter three earnings call. We were seeing accelerated growth and really excellent growth. And while we continue to see that closed out in quarter for with Resurgence of of COVID-19. That growth has been hampered a bit. And so that's factored into how we viewed 20 21 in the early half of the year. And so we do anticipate demand, and we don't anticipate as a dramatic of a a drop-off as we saw on twenty-twenty, but we do see that full recovery and being somewhat hamper hampered based on patient flow and elective procedures being slightly impaired by the research and so as that recovers as Mark talked about as elective procedures normalize and patient flow normalize. We do anticipate accelerated growth more towards the back half of the year.
Next question, please. Your next question comes from the line of David Champlin with fiber lines open. Thank so just Thursday. So on the the base generics business the retail generics business. Can you talk about what's baked into your guidance regarding just overall pricing erosion life, and and then secondly you had, you know, these consistent, you know, pretty large declines. Maybe just help us understand longer-term how you're thinking about the trajectory business you did cite some competitive pressures this year. Maybe you can elaborate on specific products, but then just going forward, you know, do you expect that to moderate as you have new launches, or do you do you expect they, you know competitive pressures to ease? I'm just trying to get a flavor for how we should think about that. Thanks.
Yep. Thanks David. So yeah, in terms of our Outlook in terms of for guidance around you know, the base business, you know, what's really and price erosion, you know, what's wrong being reflected in the guidance David for 2021 is what you heard us talk about in the in the prepared remarks, which is you know, we saw a significant significant competition on a number of higher Revenue products for us, you know in 2020 and then you know expect to see some additional competition on some of those key products in twenty Twenty-One. And so I that's what's really driving it now in terms of products and culture scene albuterol just to name a few which are you know higher Revenue products for us. The one thing I would note is that those are authors generics those two in particular and they have a much lower gross margin than the overall, uh, generic segment gross margin and and significantly lower than the overall Endo margin. So those are you know larger top log
But lower from a gross margins.
Standpoint in terms of the Outlook of our of our generics business, you know, we we've been as we announced in early November we are taking some very definitive actions to make that business more compact from a cost standpoint and and that deals with both from a manufacturing standpoint and a g n a standpoint and so our plan is to continue to really focus on increasing the profitability of that business going forward in terms of the the the revenue profile. You know, we we do view 2021 as an outlier. I mean, we just have some a number of key Revenue projects here where we've got to convergence of competitive events happening at once. So we we certainly do not see this type of erosion going forward and as we we do launch additional products, we would see, you know, a more normalization around what the profile of that Revenue, uh Outlook looks like over time.
Next question, please. Your next question comes from the line of Greg Gilbert with Securities reminds open.
Thank you. It's starting with quo. I was hoping you could share some color on sales expectations for the year the size of the investment you're making and any comments on pricing and on base district. Is there any update on the FDA process to update your label and and work? Could you share when we hear about that? Thanks.
Yeah, thanks Greg. So on on your questions on quo, we're not going to be a position today to share a price or or really provide anything around that the sizing from a sales expectations to have Point what what I will do and I'll hand it over to Patrick and in one minute maybe Patrick just comment on how we're thinking of around that quote launch and the success. I'm not sure if we're going to be looking at in terms of your question on bassist Rick Craig. There's really nothing for us to to share on the on the label change other than you know, as as you know, we we submitted that. Uh prior approval supplement for Vaso strict with the FDA that the FDA has accepted as under current review, but at this time, you know, we're not going to be disclosing anything in terms of potential timing or outcomes just for competitive reasons. So Patrick if you just comment on I'll maybe some of the the key metrics were looking at for coil. That's great. Yeah happy happy to do. So. Thanks for the question Greg as Blaze mentioned in his in his opening page.
We do seek well as uh, quite a nice opportunity for us a big opportunity. There is about 8.5 million women that we feel could be candidates for Volvo. And as you look at the market and how we'll approach it. It's important understand that we're entering into a a facial injectable Market. That's quite large a body contouring Market that's grown up 500% over the last five years and so job one will be to establish a a base of injectors in the early phases of launch and that's that's what we will be focusing on is this building that Foundation of injectors and our long-term success will be based on early patient outcomes as we establish that you know, a progressive approach building advocacy in the marketplace. So what we will be doing as as we establish that base of injectors will be focusing in on helping them do patient selection patient education home.
the build-out practice
S uh-uh, and I'll also obviously making sure that we're driving consumer awareness and consumer activity into the practice. And so it'll be a a progressive approach that will take and job one will be to establish that base of injectors early on next question, please your next question comes from the line Randall with RBC Capital markets and Lounge is open great. Thanks, please you guys have been fairly active historically in repositioning the generic business when the business has seen pressure broadly. How do you guys think about deploying Capital here going forward? You've got a lot of a lot more opportunities across the platform to spend money and invest behind different products and and categories. Is there interest in biosimilars help us understand how you're thinking about 5:05 be too which has been really successful for you. So just overall generic strategy number one off.
Number to a quick one on basil strict. How important is Eagle having having an approved product in relation to you getting a deal done because presumably once they have an approval more pressure on you. Could we see a settlement potentially before they get approved? Thanks.
Yeah on that ladder question Randall. I'm really not going to comment on that. I mean just in terms of where we are. These are strict, you know, we the trial dates been, you know, as you know set to July would be ready for for trial. You know, when that day comes we remain open to finding a constructive settlement, um going forward if the opportunity presents itself. So if it's there, we'll hook up to we'll look to execute one in terms of your question on Capital allocation and how we're thinking about deploying it and generics, uh business, you know, as we've talked around, you know, we bought our number one priority is expanding enhancing our portfolio and we're really focused on you know, three key areas right now and that is I flex maximization obviously successful launch of quo and continue to evolve are sterile injectables portfolio into more ready to use and more differentiated opportunities. And so that's where we're going to be deploying Capital. So when we think about the generic retail biz
Business again, we're investing there right now to optimize that business. So we're taking actions to further optimize that we will be very selective in terms of how we deploy Capital against that part of the pipeline going forward and be heavily weighted towards those three hours that mentioned a moment ago in terms of the evolution of of of the pipeline. Our focus is on, you know, we think about quote unquote generics, you know from a sterile injector standpoint. We're really looking to invest in areas that are more differentiated actually have the opportunity to present intellectual property in other ways to to to drive differentiation. So that's where our focus is gonna be over time. And and then we're going to complement that, you know with really smart Target of Business Development in those three areas that I mentioned so that's the plan going forward.
Next question, please. During next question comes from the line of Gary nachman.
BMO Capital markets Airlines open
Hi, good morning. First talked about the expanded indications for xiaflex. So will you look to accelerate the programs for adhesive capsulitis and plantar fibromatosis in a meeting right away and how big those opportunities could be and then where are you at the opioid litigation? Are you having any sort of advanced discussions for settlement has the process been delayed because of Colby just an update there? Thank you. Yep. Thanks Gary. I'll I'll hand you over to Patrick to maybe talk about the the expanded. I'm sorry. The the new indications are looking at 4 precisely is in terms of the opportunity beforehand it over just in terms of you know, where we stand with opioid. So, you know in terms of an update, um, there's really nothing new for us to report, you know, we continue remain open to find a constructive resolution to this matter and we've continued have active engagement with the counterparties. I wouldn't say at this point that there's any delays due to COVID-19 there was previously but
But our put our engagement continues to remain active with those counterparties and you know, as always, you know, all that being said, we also continue to prepare for potential trials, you know, that could happen later in the year. That's just be very ready as a company to defend ourselves. If if we're not able to find a constructive resolution to this before Andrew Patrick on these I flex opportunities just in terms of acceleration of of any change of plans, you know, as we mentioned in the in the prepared remarks, we've got two pretty important data points coming up for us within our data on plan to a fire mitosis in next month. And then on at least of capsulitis sort of more towards the the fourth quarter and so those will be informative data points for us in and if we think there's an opportunity to accelerate development will do that but there's nothing really to say at this point in terms of any sort of acceleration around those clinical development programs, but maybe Patrick you just comment on why we really like those opportunities and and and and why we think they're they're important to us going forward dead.
We'll do both adhesive capsulitis and plantar fibromatosis. We really like those two opportunities for a couple of reasons. Number one. It's an opportunity to expand our presence in our in the area of Orthopedics. We have a strong foothold in upper extremity Orthopedics and hand surgery in with adhesive capsulitis. That's an opportunity to expand in that upper extremity area with frozen shoulder indication and a plantar fibromatosis allows us to go into lower extremity as well as an additional call Point potentially into age, but I actually and so strategically it makes a lot of sense for us based on where we are and based on how we could very easily expand the other thing strategically that makes a lot of sense is is both those two indications right now. When you look at the options available to patients, there's just not terrific non-surgical options. And so along the Strategic sort of vein of of what we've authors
Bush was already as a really strong viable non-surgical option that the
Just these two indications play right into that. And so when you look at the number of procedures that are that are performed in each of those areas frozen shoulder. There's about 230,000 surgeries and Thursday. It's a complicated surgery and and there's not a a terrific non-surgical option plantar fibromatosis. There are over 400,000 surgeries. Yep. That's a complicated. That's a complicated complicated prone surgery. It's not an easy surgery and patience. A lot of the patients are very systematic and outside of surgery. They don't have great options. So if we can get both of these indications over the goal line it it creates an opportunity for us to expand our presence in a foul ball point where we already have a reputation we a good presence and it's an opportunity to address nice markets with additional non-surgical options for us for patients.
Next question, please. Your next question comes from the line of the area with three lines open.
Hi, this is a recently Aunt Ronnie. Thanks for taking our questions. Maybe two on quo first. I'm convinced how the physician practices are operating right now with the current Hedwig and how would you expect the ignition and patient Dynamics to change, you know, if it had been proved and it may be second on sg&a. Maybe you can give us a little more color on the Cadence of both spared that should we expect this to be able to listen first half or gradually increase over the course of the Year. Thank you. Hey, thanks Ethan. So on the question on how COVID-19 might be impacting the Medical Aesthetics market and then maybe specifically I'll hand that to Patrick. And then for the sg&a question around the Cadence of quote spend all that Mark handle that so Patrick maybe on the first one is it relates to the the medical aesthetic Community. We've been obviously tracking and monitoring that closely, you know going back to last year and into this year and and I would say that the medical aesthetic Community birth
Has has I think adopted and and shown resilience as good as any other subspecialty in fact arguably better. And so what we've seen across medical aesthetic Community is is that they've really learned how to manage their practice put in the important safety protocols in terms of patient flow and essentially what we found in the back half of the year is a strong recovery within that within that physician community that clinician Community as you know, again, the other evidences we look at is the bounce back off of a facial and injectables neurotoxins and dermal fillers. And so they've done quite well and they've really establish strong safety protocols. And so we feel like we are entering into the market. We're at a time despite the fact that obviously covet is still hanging around unfortunately, but we are entering into the market at a time as vaccines or going to be becoming more. Yep.
And certainly addressing a clinician community that is really done quite well.
In terms of adapting safety protocols and seeing a consumer patient flow return to somewhat normal ranges. And so I think our timing is good on our launch.
Yeah, and with respect to operating expenses, you know as we mentioned in our prepared remarks, we do expect an elevated level of investment in 2021. And as we talked about, you know, that's to support the launch of quo investment in in xiaflex both the oil market and and pipeline indications and then the sterile injectables portfolio development, you know from a phasing perspective historically speaking first quarter is generally the higher-level spend in a given year and for 20 21, that's really no different. We anticipate the first quarter to be highest and that's really again due to the the spend associated with the launch of quote which is going to be front half way to Thursday and then the continued incremental investments in these I flex commercial strategy and then the timing of certain, you know, corporate related expenses would happen in the first half as opposed to the to the back. However, as we again as we mentioned into our prepared remarks, you know, the level of investment in the commercial strategy for xiaflex, you know will be informed by the pace of the recovery and this I flexed man. So yep.
Flux a little bit as we progress through the year. Next question, please next question comes from the line of Balaji Prasad with Barclays Orleans open.
I want to get run and thanks to the question two-part question from me first thing in cool and then generates on can you give us an update on since launch the light campaign the kind of impression generated and the feedback your garden from its traditions and consumers and maybe an operational question on quo is can you help us understand the processing time for an esthetician 400 injection versus versus Botox less than average time, or was it a filler and and I'm trying to understand if there is greater processing capacity for go with faith traditions. And so maybe it gives you more flexibility on pricing secondly on generics kind of a follow-up to Randall's question. I just want to think about the longer-term outlook here and see if there is any danger of an actual rate decline in general especially as a d emphasize does and your portfolio compressors or time. Thank you.
Great. Thanks Balaji. Let me I'll turn over to to Patrick to talk around the the say like the the really slightly campaign that we have going on and maybe what we're seeing them in terms of consumer Impressions. And then also talk a little bit around. You know, how quote could be used in the practice what it means in terms of processing time lines and it will come back to your generic question. I think thank you for the question as Place mentioned it is I'm in a scripted comments. We we really happy with the opportunity to be able to begin to create condition awareness with are really cellular wage campaign and we have entered into the market with really excellent pick up on that. In fact, we've generated over $150 million media Impressions at this stage of the game and its own knowing and it's continuing to give us an opportunity to engage with with consumers. And obviously that's a relationship that we can continue on as we would eventually transitioned to a branded wage.
teaching in the marketplace
In terms of quo, we do see that quo has the potential to be operationalized a relatively easily into practice has certainly shown that consumers are very accepting of injectables. And we know that our Medical Aesthetics Physicians are quite Adept at operationalizing and injectable. And so the actual injection itself is actually fairly straightforward and simple and so we do feel like this is a anywhere from a a 20 to 30-minute procedure for the very first consultation of the very first treatment, but outside of that for the repeat courses, it's very easy, and it would be operate very simply and very much like a dermal filler injectable products suck and so what's great about that is is there's a velocity and volume of patients that they would be able to get in and get out. And so it's something that we think will play really well.
And medical aesthetic practices and they will you know feel comfortable adopting and operationalizing quite efficiently.
And then in terms of your generic question, you know as a sort of mentioned, you know, as we look forward in that generics business again, we're focused on really driving, you know, margin and profitability in their faith in that business from a top-line perspective, you know, it's it's not we're not investing in that business to be, you know, a long-term growth segments for us. Uh, however, one of the Dynamics are seeing right now in terms of 2021 again, is this convergence of a number of higher Revenue products, uh, seeing competition happening serve at the same time and that's really obviously the reason we're seeing the off the level of decline were guiding to for twenty Twenty-One and as we move forward, you know at once we're we're sort of passed this 2021 set of events, you know, we're going to see a bit we're seeing more stable portfolio for us where will be, you know adding obviously new launches going forward, but also going to have a bit more of a normal, uh, a rosian rate.
From a base business standpoint again Focus here is on driving profitability in that segment. And that's why we're taking the actions we are around our business transformation initiatives. Next question, please next question comes from the line of Hannibal Santa me with the phone, you know, ask your question. Hi. Thanks for taking my question. I've got to one of them is quote-unquote with regard to the behind-the-scenes work that you had been doing between the approval and launch. I know that you've been working on some training of the physician's office on the injectors. Um, is that something that's been going on right now? Is that something that's going to happen at lunch and I guess I'm asking you're not necessarily commenting on the sales rep, but I'm asking whether that's an impact of sales ramp. I'm going forward how difficult is it to train these injectors to to administer this this product and then on on Zanaflex, I guess I'm a live birth.
That surprised about the guidance from xiaflex has somewhat remained strong.
Through the third and fourth quarter with some of the double-digit growth 18, and it is a relatively mature product. Um, so I guess I am surprised that that's 34000 expectation for next year and surprised about the additional investment. You're going to be making um, in terms of the the the campaign given that sort of been making an investment already. So what more are you going to get out of it? And maybe you can just help us understand what the next push is going to be. Thanks.
Yeah, why don't we on the Netflix piece? Listen, we if if we go back and look at 2020, you know, we we saw a significant impact desire Flex, you know, both the end of q1 and and through Q2 and quite frankly. We we know that our demand was suppressed, uh, certainly in Q4 as Patrick mentioned. Yeah, we had good sequential growth versus wage. But again, we're we're we're operating off a much lower lower Baseline. So as we move forward, you know, we we see an opportunity to to really get a flex back on track in 2021, especially as often see, you know a bit more normalization, uh, you know from a COVID-19 perspective and it's starting to see patients come back to the office and listen from an investment standpoint. There's a lot of things to invest behind the flex. Obviously, we've got our unbranded campaign and our disease awareness campaign around xiaflex, but there's other elements as well in terms of things that we need to be doing to support that brand dead.
Which could include medical Affairs and and and and other areas where we think we can make a real impact. So again feel really good about the long-term trajectory of xiaflex and believe that you know, despite took a quote amateur brand. This is a very under-penetrated Market that we believe has a lot of growth potential for both Peyronie's and Dupuytren's going forward Patrick. Do you want to maybe speak to around a 100 training of Physicians and and and how that may or may not impact the ramp-up. Yeah happy to do. So just maybe one comment on xiaflex as well. It's important to notice place that in 2019. Both indications were growing at double-digit and so certainly COVID-19.
Is the ease of the injection it's it's actually a fairly straightforward and easy injection. The way we're facing the launch is very intentional and deliberate. We're going to be launching next month with an early experience program where we'll be focusing in on market influencers and key opinion leaders and then shortly thereafter. We will be launching a an injector training program where we will be working to establish a strong foundation in a in a beachhead of injectors and then we would continue to progressively Advance against that what the training will certainly be focused in on on injection technique, which is fairly straightforward, but it also focus in on the opportunity to get a new category that doesn't exist today. So it's a terrific opportunity for Physicians early outcomes are going to be very very important. So during that injector training will be focusing in on Thursday.
the selection page
In education partnering with these practices to make sure that they are ready and and are ready to drive a practice success as they're building out a category within their own practice. And so it's really not only about injection technique. It's really about really integrating quo into their practice and capitalizing on the opportunity and driving to excellent patient outcomes. And so that'll be the Baptists, um that we will take to deliver approached in doing and and progressively expand upon that overtime next question, please your next question comes from the line of service with Raymond James here lines opens. Thanks. Good morning. Just following up on your account there Pat other than waiting for company report quarterly results and judging the uptake of quo by Dollar metrics anything you could point us to that. We should look at it from our vantage point in terms of trying to gauge something.
really progress points or success points
on the laundry. Yes. I appreciate the follow-up question. And I think there was that was an earlier question that may that I I missed so I'm glad I'm glad for the follow-up question that wasn't intentional in the home front question that I tried to answer before. Yeah. So so again early outcomes are going to be important. And so one of the things we'll be looking for is is physician adoption page position success. There's certainly a consumer awareness that's going to be important. There's going to be a buzz in the marketplace that's certainly very qualitative in nature that I know you will be monitoring and we will be offering the things that will be looking for as I suggested what's going to be important is that Foundation of of account. So we'll be looking at the number of accounts that we've trained will be looking at the activation rate post training and then certainly will be looking at things like reorder rates over time. And so those are the early things are going to be important. You know, our aim is to be very very successful.
In those, you know, early foundational accounts and continue to progress against that we've got a big opportunity here and we're going to approach it that way. We're going to approach it very deliberately and we're going to progress we build access upon success. And so we've got a really great opportunity here to build a new category. And so I we would definitely want to get that right in the early early stages of launch. Next question. Next question comes from the line of Flanders Guggenheim your lines open.
Great. Thank you for the questions. I just had two quick ones on quo actually and and maybe just building on an on Annabel's question. Just wondering if there was any more color you could provide on kind of the number of injectors. You're hoping to train. I guess over the course of twenty Twenty-One and how much of the market you would expect to have come back. Just trying to get a sense for us. We get into twenty twenty-two if you think that injector base will be big enough to to Really accelerate sales. And then secondly, you know, I know your International footprint is is small, but realizing the X US market for aesthetic is quite large wondering if that's something you are thinking about pursuing either with the partner or potentially am using as it relates to quo. Thank you. Thanks Dana. So on your second question, you know our Focus right now and it's been this way for some time is is on Thursday.
Great execution of our launch and building out the category. That's where we're going to be focused strategy.
Equally will continue to evaluate over time what may make sense from an actual standpoint but our Focus today is really on the US market and so maybe Patrick you want to just comment on sort of how we're thinking of the progressive launch as we move forward from the injector standpoint happy to do. So again, as I mentioned we're jumping into a a really pretty right market with the dog jumping in looking at injectors that are already doing a facial injectables already doing body contouring and so some many many facial injectors are doing body and bath and many body are doing facials. So there is some crossover there. So our aim is to establish that right base of accounts at the jump and so we will be focusing in on our early experience participants will be looking at our early adopters who are ready to go and who have been with us the last few years and really are ready to integrate a new category into their practice and so as we focus in on early outcome wage
Uh, the first phases of launch will probably be in about twelve hundred accounts in 2021 and will progressively build off that success as we go as you look in to the latter phases of launch. It's important to note that in terms of the market potential. We are really literally defining a market. We we have a great deal of confidence in terms of the number of accounts that will really drive the majority of the market. So as we get into the you know, the the the next Progressive phases of launch it'll be important for us to be in about 2500 or 3500 accounts and which will drive frankly the majority of the cellulite Market when were successful progressively building upon that we will certainly look to be adding to that Marketplace. But again, I think the the we're going to you know, the battle will be won and a select group of accounts that will establish that foundation and the market potential is certainly there for us and you know one month.
Build upon those early launch learnings. We feel like we'll be in a great position to be able to capture Market potential. Next question, please for next question comes from the line is Nathan Rich red with Goldman Sachs Orleans opening. Good morning. Thanks for the question, maybe to start the novavax. I think could get an easy way for COVID-19 is early as two Q. So I guess I'm curious is that happen? You know, how should we think about the number of doses? You could potentially supply for them that year and I know I think you assume the rain comes in your guidance, but any guide rails on how we should think about the potential Revenue contribution, um, and then as a follow-up for Mark on the one Q Revenue guidance, we were surprised at home in a little bit higher given that you know, the the strong basil strict Google edition in January and February that you highlighted. So could you maybe just talk about your expectations surveys District in 1 q and are there any authors?
factors to the top-line Outlook that
That we should have in mind as we think about the first quarter Revenue.
Yeah. Hey Nathan. Thank you very much. So in terms of novavax, we are we are really well positioned to support them and and have a really good relationship with novavax. We're not going to be commenting in terms of young adults is and what not in any questions around around that really should should be directed to to novavax and and we're not going to dimensional eyes at this time from a guidance standpoint. You know what that may or may not look like we we were clear that we've arranged of production levels, you know assumed in our guidance level and as we see actual performance materialized will be able to provide more information around that and I'll just turn over to Mark to to give you a little color on. What's Happening from a q1 standpoint from a revenue standpoint. Yeah. So I think the question was really around Q4 going into q1, right and so for thinking about thinking about that then you know, when we think about, you know, we did see a little bit of softness towards the as Patrick mentioned earlier a little bit of softness in the in the Branded segment towards the latter part of the fourth quarter and we're seeing a little bit of that, you know. Yep.
Over in debt q1 and in q1 in the brand new segment is generally kind of a lower just because the timing it's generally the lower period of time for for Revenue as we think about sterile injectables wage. You know, we are seeing we did see, you know, Spike towards the back half of the fourth quarter. We saw a little bit of that begin in the first quarter of this year off and of course as we mentioned we think that that'll kind of Trail off towards the back half of the year. And then as we said about generics, you know, we did see and are expecting competitive events wage begin to have an impact in the first quarter that we're not fully reflected in the fourth quarter of last year.
I think we should be done questions here. I think at this point. It's where the bottom of the hour great. So yeah. Thanks Lori. We appreciate everyone's continue to support of endo, and we look forward to providing you updates as we move forward. Thank you everybody for joining this morning. Have a great day.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.
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