Q1 2021 Endo International PLC Earnings Call

Good day, and thank you for standing by and what comes to the Endo International Plc first quarter 2021 earnings Conference call. At this time, all participants are in a listen only mode.

Two of the speaker's presentation, there will be a question and answer session for us.

A question during this session and I need to press Star one on your telephone. Please be advised today's conference is being recorded.

Do you require any further assistance please press star two.

I would now like to hand, the conference over to Speaker of today, Laurie Park Senior Vice President of Investor Relations and corporate Affairs. Please go ahead.

Thank you good morning, and thank you for joining us to discuss our first quarter 2021 financial results. Joining me on today's call are Blaise Coleman, President and CEO of Endo, Mark Bradley Executive Vice President and Chief Financial Officer.

And Patrick Barry President Global commercial operations, we have prepared a slide presentation to accompany today's webcast and that presentation as well as other materials are posted online and the investors section and Endo Dot com.

We'd like to remind you that any forward looking statements made by management are covered under the U S. Private Securities Litigation Reform Act of 1995, and the applicable Canadian Securities laws and are subject to the changes risks and uncertainties described and the press release and and our U S and Canadian Securities filings.

In addition, during the course of this call we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may be different from non-GAAP financial measures used by other companies and investors are encouraged to review and dose current report on form 8-K furnished with the SEC.

And for Endo as reasons for including those non-GAAP financial measures and our earnings release and presentation. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings press release issued last night, unless otherwise noted there and I'd now like to turn the call over to Blaise place. Thank you Lori and <unk>.

Good morning, everyone and thank you for joining us this morning.

And I'm proud of the way our endo team executed this quarter across all parts of our business, we delivered better than expected first quarter results continued to make progress against our strategic priorities, including the achievement of an important milestone with the launch of quo and March and.

And maintained our relentless focus on transforming our business in order to deliver long term value for all of our stakeholders.

Before moving to a further review of the quarter I want to recognize the ongoing challenges of COVID-19, and many parts of the world, including in India, where many of our team members to live and work.

To provide for the continued safety of our team members, we've expanded our safety protocols and support services and are working to provide vaccines and treatment services if needed.

Additionally, we're making donations to assist with their lease efforts in and in India, including donations to the Indian Red Cross.

And on behalf of our Endo team members I want to express our deepest sympathies to those who have been affected by the ongoing COVID-19 pandemic and India.

If we move to the agenda on slide two I will start with our strategic priorities Paul.

And I'll buy of discussion of our first quarter business performance and an update on our pipeline and then Mark will address our first quarter financial results and provide updates to our own our financial expectations for 2021.

Turning to slide three our strategic priorities guide all of that we do as we work to transform our company.

Being a force for good and creating sustainable value that benefits all of our stakeholders is one of our three priorities and is the foundation around which our environmental social and governance strategy is built.

Earlier this week, we published our 2020 corporate responsibility report, which serves as an annual counting of our performance and our progress to adopt more sustainable practices to help people live their best life.

While we are early and our ESG journey.

And have much to do on this front I am pleased with our progress to date as reflected in our latest report.

Moving to slide four.

This is a snapshot of our segment and consolidated revenues and our adjusted EBITDA for the quarter.

First quarter revenues of $718 million increased 12 ports of decreased 12% compared to prior year.

This revenue decrease was primarily due to anticipated lower generic pharmaceuticals, and sterile Injectables segment revenues.

Reported first quarter, adjusted EBITDA of $365 million decreased by 13% compared to prior year. This decrease was primarily due to lower consolidated revenues, coupled with higher adjusted operating expenses, reflecting our investment and the launch of quell and our continued strong commercial investment and XIAFLEX.

<unk>.

First quarter 2021, consolidated revenues and adjusted EBITDA exceeded our previously communicated expectations due to better than expected performance in certain key products across our segments higher adjusted gross margin, partly due to favorable product mix and lower adjusted operating expenses, mainly due to phasing.

Turning to slide five our branded segment first quarter revenues increased compared to the prior year driven by specialty products portfolio of revenue growth of 7%.

XIAFLEX revenues increased by 7% and the first quarter compared to prior year driven by strong demand growth for both of XIAFLEX indications, partially offset by channel inventory destocking that occurred and the first quarter of 2021 compared to prior year.

As we discussed earlier this year, we're investing in of XIAFLEX commercial strategy that includes increasing patient awareness through expanded promotion to empower patients to seek non surgical options, coupled with physician education and training.

We're encouraged by the strong patient interest to seek treatment, which is fueling underlying demand across both indications as measured by consumer traffic to our website and physician locator sites.

This is a good early indicator of patient interest and initial consumer activation.

Patient office visits for elective procedures and the first quarter continued to be below pre COVID-19 levels and were fairly in line with our expectations. We're encouraged by the increasing levels of vaccinations nationally and expect patient office visits for elective procedures to steadily increase over the remainder of the year.

Just on this we continue to expect utilization of our physician administered products such as <unk> flex to be weighted towards the second half of the year.

Revenues from our established products portfolio declined by 9% compared to the same period and the prior year, primarily due to ongoing competitive pressures.

Revenues from our sterile Injectables segment declined by 8% compared to the first quarter of 2000, and 'twenty visa strict revenue growth of 10% and the quarter was more than offset by the decrease in revenue for certain products, such as adrenalin and or Panama due to the impact of generic competition.

These are strict first quarter utilization specifically in the month of March was higher than we expected. However, as we look forward. We expect the days of strict volumes to begin to decrease towards pre COVID-19 levels. During the second quarter of 2021, as COVID-19 and related hospitalizations continue to decline.

Moving to slide six.

Revenues from our generic segment decreased by 28% in the first quarter compared to the prior year.

The decrease was primarily due to the impact of anticipated competitive pressures on certain key products, coupled with accelerated prescription fulfillment related to COVID-19 that occurred in the first quarter of 2020.

This decline was partially offset by the successful launch of Lubiprostone capsules. The authorized generic for Amitiza in January of this year.

Generic segment first quarter revenues exceeded our expectations, primarily due to higher than expected luby Prostoon launch performance, coupled with the delayed impact of anticipated generic competition on certain products.

Finally, the expected decrease and international segment revenues for the first quarter was primarily due to ongoing generic competition.

Turning to slide seven and we're excited by our entry into the medical aesthetics with the launch of quo and March 12 is the first and only injectable approved for the treatment of cellulite and provides a non surgical option that addresses the underlying causes of cellulite.

We believe quos unique profile provides the medical aesthetic practitioners and opportunity to create a new vertical and grow their business.

And we launched quote through and early experience program that targeted select practices.

The program focused on product education.

Patient selection, managing patient expectations and building practice success.

As we discussed earlier this year, we are taking a deliberate and progressive approach store and launch of quote and the process. We are undertaking for activating and onboarding of accounts.

During the month of April after the successful rollout of our early experience program. We began the process of Onboarding additional accounts Act.

Activated accounts are being supported with a strong injector training program delivered both virtually and in person.

Ongoing education will continue to be important and will be delivered through virtual educational webinars and peer to peer programming.

We also recognize the need to equip practices with the tools they need to support practice integration and activation.

To accomplish this goal we've launched our quote health care professional portals.

Additionally, we announced our launch pricing and believe the price point represents a strong value proposition for practices and consumers who are seeking treatment.

To date, we have received positive feedback on quote from the medical aesthetic community.

Activated practices of generated a strong buzz by announcing availability of quell and posting their own before and after pictures on social media.

Additionally, consumer and trade media interest and excitement remains strong with more than 300000 unique visitors to the real really cellulite webpage and greater than 5.3 billion media impressions and the first quarter, including top tier of print and broadcast outlets.

While only about one month post launch we are on target with our planned account onboarding purchase and utilization rates.

As we progress we will share more information as it becomes more meaningful.

Moving to slide eight and discussing our ongoing branded segment clinical studies and pipeline.

Starting with quell our data generation plan and development remains focused on dosing and injection technique and responses and target patient populations.

And as well as rollover studies on durability.

For example.

Three of five phase III B real study looked at quo effectiveness and of real world population as well as thigh injection technique and overall investigator experience.

At day, 90 investigator perceived improvement scores were greater than 90% and cellular and appearance.

And 90% of investigators agreed or strongly agreed to incorporate <unk> into their practice.

Results and analysis from these studies are key to our publication and presentation strategies.

We continue to make progress on XIAFLEX development programs, starting with the treatment of plantar Fibromatosis and we're looking forward to the date of publication of a proof of concept study results in the coming months.

We plan to progress our plantar Fibromatosis program with the initiation of a phase two study and the second half of this year.

In terms of adhesive capsulitis or phase <unk> study interim analysis is anticipated towards the end of the year.

We believe both plantar fibromatosis and adhesive capsulitis represent an opportunity to bring innovative treatment option to address of potential large unmet need for patients who are seeking and non surgical approach to treatment.

Turning to slide nine we continue to evolve our R&D pipeline and manufacturing capabilities to support the introduction of moral sterile products, focusing on and evolving needs of our customers and.

At least 80% of our R&D pipeline consists of projects across the sterile injectable product continuum.

With approximately two thirds and ready to use and other more differentiated products.

Across our sterile injectables and generic segments, we plan to launch approximately 10 products in 2021, which includes the successful launch of Lubiprostone capsules, the authorized generic of Amitiza and the.

First quarter of this year.

Now, let me turn the call over to Mark to further discuss the company's financial results and our financial guidance Mark.

Thank you Blake and good morning, everyone first on Slide 10, you will see a snapshot of our first quarter GAAP and non-GAAP financial result, Blaise covered company and segment revenues earlier, So I will not review that again.

And on a GAAP basis income from continuing operations was approximately $47 million or <unk> 20 per share on a diluted basis and the first quarter of 2021 compared to income from continuing operations of approximately $158 million or 68 cents per share one of diluted basis in the first quarter of 2020. This.

Decrease was primarily attributable to a discrete tax benefit arising from the cares Act that was recorded for GAAP purposes in the first quarter of 2020.

But not in the first quarter of 2021.

On an adjusted basis income from continuing operations was $175 million were <unk> 73 per share on a diluted basis in the first quarter of 2021 2021 compared to income from continuing operations of $220 million or 95 per share on a diluted basis in the first quarter of 2020.

This decrease was primarily due to lower revenues and higher adjusted operating expenses and the first quarter of 2021 compared to the prior year.

Turning to slide 11 based on better than expected performance across all of our segments and the first quarter. We are raising the low end of our 2021 full year financial guidance. We now expect full year 2021, total revenues to be between $2 $65 billion and $2 seven $9 billion.

Adjusted EBITDA to be between $1, one $8 billion and $1 two $8 billion.

And adjusted diluted net income per share from continuing operations to be between $1 95, and $2 30.

Our full year 2021 guidance continues to assume and adjusted gross margin of approximately 70% to 71%. However, we updated our adjusted operating expenses as a percentage of revenue assumption to be between approximately 28, 5% and 29%.

Additionally, we now assume adjusted interest expense will be approximately $560 million, which reflects the impact of the recently completed debt refinancing.

With respect of quarterly phasing, we expect total revenues to decline between approximately $30 million and $70 million in the second quarter of 2021 compared to the first quarter of 2021.

This decline is expected to be driven by anticipated lower sterile Injectables segment revenues due to expected lower visa strict revenues as demand begins to return to more normalized levels.

Second quarter generic Pharmaceuticals segment revenues are also anticipated to be lower due to expected lower lubiprostone revenue. Following the launch load that occurred and the first quarter, coupled with expected competition one other generic products.

These declines are anticipated to be partially offset.

By and increase and branded Pharmaceuticals segment revenues, primarily due to the continued expected growth and XIAFLEX in the second quarter.

Additionally, we expect adjusted gross margin and the second quarter to be slightly lower than the low end of the full year, 2020, one guidance range, reflecting the change and product mix.

Finally, we expect the total dollar amount of operating expenses and the adjusted effective tax rate in the second quarter to remain relatively flat compared to the first quarter of 2021.

Switching to slide 12.

This is a summary of full year segment and total enterprise revenue assumptions as you will notice we have slightly updated the full year revenue assumptions for our sterile injectables and generic pharmaceuticals segments.

Advancing to slide 13, and wrapping up the financial discussion unrestricted cash flow prior to debt payments was $250 million and the first quarter of 2021 compared to $86 million in the prior year.

This increase was primarily due to an increase and cash flow from the change in net working capital and a decrease and distributions to settle mesh claims.

We ended the first quarter of 2021 with approximately $1 $4 billion of unrestricted cash and of net debt to adjusted EBITDA leverage ratio of approximately five one times.

For the full year 2021 and we're updating our expectation for unrestricted cash flow prior to debt payments to be between approximately $140 million and $240 million compared to our prior estimate of between $80 million and $240 million. This change reflects the increase in the low end of the adjusted EBITDA guidance.

Range previously discussed.

Let me now turn the call back over to Blaise. Please.

Thank you Mark prior to turning the call over to Lori to manage our question and answer Pierre and I understand that there are many questions on the recent developments as it pertains to the ongoing opioid litigation.

Including the recent default order on liability and Tennessee, and the ongoing trial and California. However, as I'm sure you can appreciate we're living and what we can say.

And what I will say with respect of Tennessee is first to reiterate our prior statement that we strongly disagree with the court's default order and liability.

I'd also like to clarify that despite certain press reports that there has been no finding to date that endo of any amount as a result of the default order.

Instead of damages trial is currently scheduled to begin on July 26 that said, we did recently filed a notice of appeal with respect to the default order and we are seeking a stay of the damages trial pending the outcome of that appeal.

With respect to California were in the midst of the liability phase of that trial, so I'm not going to comment on that ongoing proceeding with respect to the opioid litigation as a whole we continue to be open to identifying and executing on a constructive path for resolution and.

And it is important to note that while constructive resolution remains our goal there can be no assurances that this will be achieved and we are prepared to continue to litigate if necessary.

More importantly, while our legal team is focused on litigation and the rest of the Endo team is highly focused on our day to day business execution, advancing our strategic priorities and delivering our portfolio of life enhancing products to our customers and the patients they serve.

Laurie let's please move now to the question and answer period. Thank you Paul. Thank you Blaze and the interest of time, if you could limit your initial questions to allow us to get in and as many as possible. We would appreciate it operator can we of our first question. Please.

Your first question comes from the line of Chris Schott with JP Morgan Your line is open.

Most of the carry on for Chris and Thank you. So much for taking your questions and I guess the first one is there is some mixed data points on the generic environment and they should be so just your thoughts around us and any changes that youre seeing and that market in terms of price and we're overall competitive environment.

And the second question and foundation.

And as we think about that.

All of impact of COVID-19, 19, and center volumes and the normalization of that political and move through the year.

Is there any sticking sort of cheetah high utilization that we've seen through the epidermis of TCT persist as we move kind of into 2020 teaches us in 'twenty three versus just a matter of how steep the ramp down of lithium product and touristic pre COVID-19 levels.

And you.

Great. Thank you very much of those questions. So first on the generic piece.

For US right now when we think about the generic portfolio. We've been very clear that we are seeing a fair amount of competition.

Impact to our outlook for 2021 and has to do with competitive events and that occurred in 'twenty and some events are going to happen in 'twenty, one so our outlook there for our portfolio.

And is a challenging one for 'twenty, one because of those competitive events on the visa strict point as we noted we are planning for.

Visa strict levels to return to pre COVID-19 levels really starting in the beginning in the second quarter of of this year and then sort of as we move through the rest of the year there isn't that we at this point when we think about our range. We are considering the possibility that there may be some additional elevated levels of a district of bulk.

That level and that's considered in the range of but as of now our going in assumption is that we're going to see of his district levels returned more back to that pre COVID-19 levels and moving to the second half.

Thank you.

Next question please.

Our next question comes from the line of Gregg Gilbert with true Securities. Your line is open.

Thanks, and good morning, first one zone quo I know the company's done and has.

Been very proactive and and setting expectations on bruising and Tolerability, but how would how would you characterize of the real world feedback so far.

And on frozen shoulder, you mentioned and interim look should we view that as sort of a go no go decision or how would you frame the interim look and the potential sort of outcomes of that since it's of this year event and lastly, please when you think about your sterile Injectables line, excluding visa and maybe we can lump generics into this too.

<unk>.

Conceptually over the years do you see of business that can can be flattish with the pipeline offsetting and natural erosion do you expect growth again, more conceptual overtime and I realize youre not going to guide but.

And wanting to understand your expectations there based on what you've built so far thanks.

Greg. Thank you very much of those questions on the quote piece and I'll ask Patrick to give you some feedback and obviously the market receptivity on quote to date, we've been really excited about but all in a minute turn it over to Patrick on the on the on the quo piece on the XIAFLEX piece in terms of adhesive Capsulitis and.

And frozen shoulder, yeah, we have and interim data point coming up at the end of the year and it's like any other data point. There is the possibility of that that could be a go no go decision based on what we see net and interim data, but what we'll have to see what that what that looks like and then from a sterile injectables standpoint, again, you're right Craig we're not going to guide on that and there is a lot of variables at play.

In terms of what the durability of interest check looks like overtime, but as you know we are hyper focused on continuing to transform our sterile injectable portfolio.

Two what I would call probably less absolute number of projects and sterile injectables, but what we consider to be more high value injectable opportunities as we think about the transformation. We're trying to make in terms of moving up that product continuum to more of what we would consider differentiated opportunities. So maybe with that I'll turn it over to Patrick to give you some feel.

Back on not just your specific question, but overall, how we're how we're seeing the market react to a quote of date.

For the question Greg you know as you cited it is certainly early days, but we're very pleased and encouraged by the receptivity and the marketplace I would point to a couple of things in terms of deposit momentum, we launched with and early experience program, where we focused on about 350 to 360 of the top market Influencers and key investigator.

There's a we gave some early access to quo, we had over a 90% participation.

Participation rate post registration.

A really terrific. If you consider this was their free time of Friday night Saturday, So that they can learn about quo and have early access to it and.

And that generated a tremendous amount of our social media buzz.

And a lot of I think of positive uptake and the market relative to you know social media streams.

We mentioned on the call are really strong pickup on our really cellulite campaign with over 105 million impressions to date and a really really high completion rate in terms of how the product is performing and the marketplace.

The other thing I would notice the receptivity to our price we did launch coming out of the early experience program, we launched our or an introductory price to great fanfare and the feedback generally has been hey, you guys got it right. This creates an opportunity for them to Korea and new vertical.

Grab good margin yet have a price that's very very accessible to their consumers. So we were pleased with that and specifically to your questions. One of the things that's really important to us is to set proper expectations and the marketplace and so as we go to deeply integrate and each and every account it's all about patient selection.

It's not running from adverse events, it's really setting an expectation for the injectors asked of what to expect how to manage that a bruising is one of those things.

That was one of the more prominent and Aes and our phase III pivotal trials I would note that it's not necessarily a deep bruising associated with a great deal of pain. So it's and what we've heard from clinicians is is that it's been very manageable they've appreciated how we've gotten out front of this and allowing them to properly.

Set expectations with their patients and so far.

The other thing that's important as of the products are behaving well and performing well in real life patients. So we're really pleased with what's happening. Thank you Gregg next question. Please.

Next question is from David and Slim with Piper Sandler Your line is open.

Okay.

Thanks, So on and vast district.

With the with the trial and I wanted to get your latest thoughts on.

Your openness to a settlement with Eagle, particularly in the context of Eagle struggling with its filing its complete response letter and the fact that and asked us to do another trial. So how does that impact your strategic calculus regarding.

A settlement there just your latest thoughts there and then on Clos.

Was interested in when we may get duration of effect that.

I noticed in the slides you had that are.

Laid out the five year extension, when we might start to see that and what's the perception around duration of effect and the marketplace. Thanks.

Great, Thanks, David and I'll turn over and a minute for us for Patrick to help on the quo question on days of strict David Let me just tell you where we're at so.

Just for everyone's benefit we are we continue to be scheduled to have a trial in Delaware.

And in July and we are well prepared for that trial. We do continue to remain open to the opportunity of resolve this matter through constructive settlement that's been our position from the beginning of it continues to be our position and that's where things really stand right now and the day of district matters. So maybe I'll turn it over to Patrick to comment a little bit around our durability study aspect of things.

Thanks for the question David as you know our label is silent on durability, but what I would say, it's we do have very positive durability data that's emerging from our <unk>, even going back to our phase two be rollover and our phase III has a rollover design. So we do have positive durability data right now as we speak that goes.

Out to over 720 days and some patients. So that's something as that data becomes available. That's a that data generation becomes available. It will begin to be discussed at podium. We obviously have to consider our our publication strategy behind that and then that becomes a strategic question over time and turn.

<unk> of what we might want to introduce in terms of labeling a label update so for now it's somewhat open ended with some really really strong positive durability data emerging I mean scientifically hypothetically.

Clinicians tell us that once that fiber step tie us licensed it twice so hypothetically there. It makes sense that we're seeing this type of durability and real world patients.

Thank you David next question please.

It's from the bank of <unk> with Citi. Your line is open.

Hi, Good morning, Thanks for taking my question and.

On the opioids and I understand you are limited and Neil and what you can say, but can you describe the next maybe base, we should look out for and how confident are you.

And your legal team about the appeal in Tennessee, and then it hasn't and second question on coal.

If you could let us know any feedback regarding pricing and the next step after the early ex Kevin's program. Thank you.

Great. Thank you for the call. So I'll first let Patrick take the question on on pricing as well as the are the next steps that we've already taken post dealer experience program on quo and then we'll come back to the opioid question.

Yeah, Let me, let me start with price and I touched on and earlier I would say that in general of the feedback from our customers is that you got it right that was probably one of the more important strategic decisions that we made and as we've said for the last year. We wanted to introduce a price that created a good opportunity for a new vertical for customer.

Worse, but widescale adoption for consumers as well and we feel like we hit the mark with an introductory price of $200 for the four of Mel and 350 for the eight ml.

Ideally what that does is that allows physicians to address all patients that they would have who would be bothered by cellulite.

And seeking treatment. So we're very pleased by that because we think over time that will establish a very it will establish a very accessible price point and we've already articulated for the last year that we see this as a big opportunity and a big market in terms of what's next we're going to continue to take a very progressive and are focused.

Approach to targeting on boarding or other accounts. So we want to again continue to talk about with our accounts ensuring proper patient selection a lot of focus on injector training over the shoulder and virtual to make sure that injection technique is understood.

And then we're going to focus and on building and expanding to a broader market over time, what we are doing this year is some strong digital and social consumer activation, which is very targeted we're leveraging paid search social and digital and then as we get and later into the year. After we have and established base of accounts will continue to evaluate our focus.

And more focused direct to consumer rollout.

Leveraging our geo fencing, and Geo targeting and targeted Dma's, where we know we have a critical mass of injectors, because we recognize over time as this brand grows.

There's there's the consumer activation opportunity for us and and so we view it as a category, creating opportunity for us that will require us to activate the market through creating brand awareness with consumers.

And then on the your question on Tennessee, and as we send and prepared remarks, we reiterate our comments that we strongly disagree with a default judgment in the Tennessee manner, and we have submitted briefings and filed notices of appeal.

And where we are seeking a stay of the damages trial pending the outcome of that appeal and the damages trial is currently scheduled for a fourth of July 26 in terms of the timing.

Next question please.

Our next question is from.

Best of luck.

And with Barclays. Your line is open.

Excuse me Mr. Prasad Your line is now open.

Next question and if we can go to the next killer until the lives he can get back on.

Your next question is from Danielle <unk> with RBC capital markets. Your line is open.

Hey, good morning, everyone.

Two questions first a follow up on Clos you used the term introductory price should we take that to menu and tend to adjust price going forward as you move further through launch.

And second and.

Given the strong first quarter performance relative to your own first quarter guidance can you talk a little bit more about why full year guidance wasn't raised further thank you.

Yeah, well why don't I turn the pricing question over to Patrick and I'll, let mark handle the question on us on guidance.

Yes. It takes place for the question and again, we did launch and introductory price we wanted to make it simple understandable in terms of how to really integrate quo into their practice, we have not made any comment as of yet in terms of how long that introductory price will run. So that's a bit of and open ended question for us for now that are at.

And at the right time.

We will be commenting further but for now we're again, we're going to stick with the introductory price.

Yeah, So with respect to the question on full year guidance. So I think one thing we need to think about us is first quarter.

And what impacted first quarter and there's a couple of things that we mentioned in our prepared remarks of first of which was <unk>.

Elevated pace of strict utilization, particularly in January and February which as Blake mentioned, we expect to see visa strict utilization decline over time and return to pre COVID-19 levels as soon as the second quarter here. We also saw.

Pro stone launch load.

Which is kind of onetime in nature.

And then we also saw operating expenses come in at the lower end of our range as we as we go forward through the year.

We expect to see.

Increased demand for our physician administered products, specifically XIAFLEX of that'll that'll provide a tailwind into the remainder of the year.

And we also expect to see offsetting that.

Higher generic competition and the back half of the year that we didn't see was kind of delayed from our expectations.

And then finally operating expenses and again, we saw a little bit of favorability and the first quarter and that's really just due to phasing we expect to see higher operating expenses at the end of the of when you take all of those things into consideration.

That's why we were able to adjust the lower end of our guidance range.

Thanks excellent Mark next question please.

Your next question is from Gary Nachman with BMO capital markets. Your line is open.

Hi, Thanks, Good morning, first on generic how much did moving crosstown and actually contribute in the quarter.

And next on the other sterile injectables that dropped off a fair amount of what happened with adrenalin and earn 10 of them in terms of competitive dynamics since those products had been a lot stickier and the past.

And then just lastly on quo or patients coming back to get follow up injections is it too early to know yet and I'm curious if you've seen that yet since you did launch it back in March. Thank you.

Great. Thank you Gary for those questions Yeah, Gary we we're not disclosing the luby Pro stone sales contribution, but as we said we saw better performance there and really the better performance came from quite frankly, a faster conversion of.

Of the generic and we had anticipated just a much quicker conversion curve on the the other and sterile injectable question.

And what happens is theres two components to that so one is and defining others sterile injectables as presented in our up and in our press release and Theres two components of why we saw the change that we did one is there was a destocking.

Component and then two there was some competitive events and theirs.

You know a number of products that are in that basket, including art of Panama.

That that were impacted in terms of adrenalin and I think if you look from Q4 to Q1 of our adrenalin sales were relatively flat and what you're seeing from Q1 of last year to Q1 of this year is really the impact from the upfront from the entry of other of our.

Adrenalin competition and the first half of of last year, and the second quarter actually of 2000, and 'twenty and then I'll turn it over to Patrick for your question on quote. Thanks for the question and obviously, it's really it's really early we're essentially only a month and so we wouldn't anticipate that we're seeing patients come back and when Theyre still arguably.

Going through a full correction on their first course of therapy, but as it relates to retreat meant that is something that we look at us as a potential upside.

Hypothetically, we could see over time patients coming back for touch ups or perhaps based on a good patient experience migrating to other targeted areas and so as we think about the outlook over time of that could potentially create some.

Some positive momentum for us in terms of recruitment.

Thanks next question please.

Your next question is from Annabel <unk>.

Hey, Paul Your line is open.

Hi, and thanks for taking my question and I was wondering on Clos just going forward are you going to be sharing a specific metric for us in terms of.

Accounts that you penetrated what your target account numbers are as well.

Metrics.

And for <unk>.

And sections of anything that we can sort of start wrapping our head of round and then in terms of.

Some of the feedback that you're receiving not just on the product performance that an anecdotal demand you mentioned.

Third and five nine and sexual impressions that what are some of your target.

Some of your.

And early adopters.

Saying in terms of the demand that they're receiving from.

And from their patients.

And so anything that you can give us to help us translate 105 million impressions and share and actual.

Thanks.

Yep No Annabel. Thank you very much and of your first your first question around metrics yeah. As over time, we will we will be coming and sharing more information around what we consider to be the key performance indicators.

And as they become more meaningful and then in terms of the question around overall market receptivity and some of the feedback where we're receiving but maybe more qualitatively I'll, let Patrick provide some more color on that yeah. No I. Appreciate your question and and again its place said as we look at number of accounts on boarded and we look at how the brand.

And is performing and the form of reorder rates those are things, where we will obviously be looking at I mean keep in mind for the month of March we launched with the early experience program and we're really literally less than one month and on launch so in terms of our ability to onboard accounts, we're really establishing those initial orders and as I talked about it.

It's important to integrate this deeply into their practice, it's an injectable it's simple to operationalize, but this is new this is new obviously physicians have lots of experience with injectables and some have experience with body contouring and injectables, but this is a brand new vertical so it's important that.

And we go deep and to each and every account, we really drive towards good outcomes on making sure their entire staff understands patient selection and how to manage adverse events.

We really help them prop up their marketing plan in terms of how to drive consumer activation within their practice, certainly we're gonna be doing activities and them and the market ourselves to support that but again, we're about three and a half weeks and I would say that as we approach accounts our targeted accounts in terms of initiating initial stocking order for them to.

Get the product and the.

And that we've been very encouraged by the receptivity of accounts willing to bring it in and then once the product is brought in our ASP.

Aesthetic business managers go to work in terms of putting together and integrated plan to pull that through and to drive patient demand within each of the clinics.

Thank you next question please.

Next question is from the lodging Prasad Barclays. Your line is open.

Good morning, and thanks for getting me back on.

So two questions from my side, one on sterile Injectables and could you maybe give broadly the nature of the products that you're planning to launch in 2020, one and also kind of juxtapose those but current chart and just leaned on the Injectables side and.

And then and broad observations that I can share of draw and the pricing front of Australia, and giftable and secondly on coal.

Non interest to get your insights into how you think of the year.

And is likely to of wall.

Our expert conversations kind of.

Our lead us to believe that.

Paul would be ideal laden culmination of that flat production and our body contouring procedures I think you just called out previously.

And commercial potential of expansion of commercial potential of such and yields evolve. Thank you.

Thanks, Paul Thanks for those questions.

And the sterile injectable front.

We are in terms of the launches we have planned for 2021, we're not going to comment on anything specifically, but we will have a combination of products that would be more traditional a rate of vials, but also introducing some products that are more ready to us starting to reflect that transition, we're making from an overall portfolio.

And.

Perspective.

In terms of just general commentary you asked for I think on the sterile injectables and pricing trends.

Again, depending on what product we're speaking to.

Is and what the pricing trends for that product really has to do with the competitive landscape and so we are you know and we think about the more traditional of a rate of vials we are seeing.

On certain products increased competition, which is somewhat normal and then as we move forward again, our focus is going to be on what we consider to be more differentiated products, where we think there will be a bit more of durability and pricing power in the market going forward and then I'll, let Patrick.

Patrick comment for you on the quote question, how the use of that may or may not evolve overtime. Yes. Thank you for the question as you cite based on your work with with actual clinicians, we know that cellulite us multifactor multifactorial, there's a there's an element of a thermal quality.

And skin laxity, there's there's some fat.

You know of fat component. There. There is also the underlying cause of cellulite, which is the five receptor and so when we look at the mechanism. We believe the mechanism of of quote to really address and thematically licenses of that fiber sub die.

We also have some interesting data that it's suggesting that maybe even close.

Mechanism might be multifactorial, as well, but certainly as an injectable that addresses the underlying cause of cellulite being the fiber sub di we believe that quo can be a cornerstone treatment for <unk> for the treatment of cellulite.

And again, a new category for them. So it's really about getting it in the hands of of accounts.

Getting it and the real world, having them inject as an injectable we feel like it could be us the central product and certainly as you cited we have heard doctors are interested and trying to figure out what else the wrap around quell and and certainly that presents opportunities for them to us to put packages together.

So that they can effectively treat cellulite, but we do believe operationally.

That as an injectable quo can be of cornerstone treatment for cellulite, and we think physicians will adopt it and that way.

Thank you next question please.

There are no further questions at this time I'll turn the call back over each of our presenters.

Great. Thank you everyone for joining us this morning, and we look forward to providing you with updates as we move forward of everybody has a great weekend. Thank you.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

[music].