Q3 2024 Assertio Holdings Inc Earnings Call
Operator: Thank you for standing by.
Thank you for standing by my name is John and I'll be your conference operator today at this time I would like to welcome everyone to the uncertainty of holdings third quarter results conference call all of life's up in place to meet to prevent any background noise. After the Speakers' remarks, there will be question and answer session. If you would like to start if you'd like to ask a question. During this time simply breast.
Operator: My name is John and I'll be your conference operator today.
Operator: At this time, I would like to welcome everyone to the Assertio Holdings third quarter results conference call. All lines have been placed in mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to start, if you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.
Speaker Change: Our fault, but the number one on your telephone keypad. If you would like to withdraw your question Brett Darwin again, I would now like to turn the call over to Matt Kreps Investor Relations. Please go ahead.
Matthew Kreps: I would now like to turn the call over to Matt Kreps, Investor Relations. Please go ahead.
Matthew Kreps: Thank you, John.
Thank you John Good afternoon, and thank you all for joining us today to discuss <unk> third quarter 2020 for financials. The news release covering our results for this period is now available on the Investor page of our website at Investor <unk>, TX Dot com.
Matthew Kreps: Good afternoon, and thank you all for joining us today to discuss Assertio's third quarter 2024 financials. The news release covering our results for this period is now available on the investor page of our website at investor.assertiotx.com. I would encourage you to review the release and tables in conjunction with today's discussion.
Matt Kreps: I encourage you to review the release and tables in conjunction with today's discussion.
Matthew Kreps: With me today are Brendan OGrady, our Chief Executive Officer, and Ajay Patel, Chief Financial Officer. In just a moment, Brendan will open the remarks and provide an overview of the business, then Ajay will cover our financial results. After that, we will take questions from our covering research.
Matt Kreps: With me today are Brian integrating our Chief Executive Officer, and Ajay Patel, Chief Financial Officer in just a moment Brendan will open our remarks and provide an overview of the business in Asia will cover our financial results.
Matt Kreps: After that we will take questions from our covering research analysts. Please note that during this call management will make projections and other forward looking statements regarding our future performance such forward looking statements are not guarantees of future performance involve risks and uncertainties, including those noted in this afternoon's press release as opposed to <unk> filings with the SEC.
Matthew Kreps: Please note that during this call, management will make projections and other forward-looking statements regarding our future performance. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in this afternoon's press release, as well as Assertio's filings with the SEC. These and other risks are more fully described in the risk factors section and other sections of our annual report on Form 10-K and in our Form 10-Q filings. Our actual results may differ materially from those projected in the forward-looking statements. Assertio specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law.
Matt Kreps: These and other risks risks are more fully described in the risk factors section and other sections of our annual report on Form 10-K, and in our Form 10-Q filings actual results may differ materially from those projected in the forward looking statements <unk>, specifically disclaims any intent or obligation to update these forward looking statements except as required by law.
Brendan OGrady: And with that, I will now turn the call over to Brendan. Please go ahead.
Speaker Change: I will now turn the call over to Brendan. Please go ahead.
Brendan OGrady: Thanks, Matt.
Thanks, Matt and welcome everyone to today's call and thank you for joining I'd like to start by wishing you all happy Veterans day, especially to a retired in active service members and their families.
Brendan OGrady: Welcome everyone to today's call and thank you for joining.
Brendan OGrady: I'd like to start by wishing you all Happy Veterans Day, especially to our retired and active service members and their families. In addition to our usual quarterly performance, there are two other relevant issues that I would like to begin my remarks by addressing. The first is the unwarranted attack on Assertio stakeholders by Mr. Alex Parker of Buxton-Hemsley Group that was launched this past Friday, November 8. I'm sure many, if not most of you, have seen the letter I released this morning addressing Mr. Parker's rambling manifesto that he put out last Friday. Normally, I would not validate such conduct by speaking about it.
Speaker Change: In addition to our usual quarterly performance there are two other relevant issues that I would like to begin my remarks by addressing.
Speaker Change: The first is that the unwarranted attack on a Saturday O stakeholders by Mr. Alex Parker of Buxton Hensley group that was launched this past Friday November eight.
Speaker Change: I'm sure. Many if not most of you have seen the letter I released this morning, addressing Mister Parker's rambling manifesto that he put out last Friday.
Speaker Change: Normally I would not validate such conduct by speaking about it but because of the numerous falsehood and baseless allegations that had such an impact on our share price I want to use this opportunity to address this head on.
Brendan OGrady: But because of the numerous falsehoods and baseless allegations that had such an impact on our share price, I want to use this opportunity to address this head on. While we have taken Mr. Parker's allegations seriously and have looked into every single one of them, we found them all to be without merit. We have communicated that to Mr. Parker on numerous occasions while at the same time refusing to bow to his demands of cash payments or a seat on Assertio's board to which he would add zero, and I stress zero, value, and most importantly, neither of which would be in the best interest of shareholders.
While we have taken Mr. Parkers allegation seriously and have looked into every single one of them. We found them all to be without merit, we have communicated that to Mr. Parker on numerous occasions, while at the same time refusing to about his demands of cash payments or a seat on the 30th board to which you would add zero.
And I stress zero value and most importantly, neither of which would be in the best interest of shareholders.
Brendan OGrady: If you happen to take the time to read through his less than cogent 24 page document, he's essentially making three baseless claims. While I do not want to rehash my entire letter, I do want to take a minute to set the record straight specifically on those claims. First and foremost, Wolvidon is a safe and effective product. I am 100% confident in that. Assertio was aware of the whistleblower claims around Rolvidon before the acquisition of Spectrum. In fact, those claims were investigated by three different professional outside firms. The experts involved in those investigations determined that the FDA was supplied with all relevant and required data that led to Rolvidon's approval.
Speaker Change: If you happen to take the time to read through his lesson Cogent 24 page document he is essentially making three baseless claims.
Speaker Change: Well I do not want to rehash my entire letter I do want to take a minute to set the record straight specifically on those claims.
First and foremost orthodontists are safe and effective product I am 100% confident in that.
Speaker Change: Sergio was aware of the whistleblower claims around would it on before the acquisition of spectrum.
Speaker Change: In fact, those claims were investigated by three different professional outside firms. The experts involved in those investigations determine that the FDA was supplied with all relevant and required data that led to <unk> approval.
Brendan OGrady: Wolvidon has now been in the market in the U.S. and South Korea for two and a half years and has demonstrated its safety and efficacy in the clinic with patients in real-world settings. It is well tolerated by patients and has been well received by providers. Second, the impairment charges had nothing to do with any purported roll it on safety claims. Assertio simply followed clearly established accounting principles, as we always do, in regards to any asset. Our disclosures clearly explain the impairment and how any and why it was calculated the way that it was. It is that simple.
Speaker Change: Well over time has now been in the market in the U S and South Korea for two and a half years and has demonstrated the safety and efficacy in the clinic with patients in real world settings.
Speaker Change: It is well tolerated by patients and has been well received by providers.
Speaker Change: Second the impairment charges had nothing to do with any reported role at Unsafety claims or 30 O simply followed clearly established accounting principles as we always do in regards to any asset or disclosures clearly explain the impairment and how any and why it was calculated the way that it was.
Speaker Change: It is that simple.
Brendan OGrady: Third, no payment to the alleged whistleblower were ever made. The proposed payments Mr. Parker is referring to is related to an employment claim that was raised by a disgruntled former employee. That employee brought claims forward about Rolvidon as leverage to boost the value of a settlement or reverse their pending termination. After a thorough investigation, it was determined those claims and allegations were false and without merit. The employee was subsequently terminated as part of a reduction in force, and the case was later dismissed without any payment ever being made. Finally, Mr. Parker's rambling rehash of connecting dots where none exist or misrepresenting long past settled issues is rife with false statements and mischaracterizations that we have pointed out to him numerous times, including the circumstances and reasons for the departure of a former board member.
Speaker Change: Third no payment to the alleged whistleblower wherever made the proposed payments Mr. Parker is referring to related to and is it related to unemployment claim.
Speaker Change: That was raised by a disgruntled former employee.
Speaker Change: That employee brought claims forward about roll, but on is leverage to boost the value of the settlement are reversed their pending termination after a thorough investigation.
Speaker Change: Determined those claims and allegations were false and without merit the.
The employee was subsequently terminated as part of our reduction in force and the case was later dismissed without any payment ever being made.
Finally, Mr. Parkers rambling rehash of connecting dots, where none exist. We're misrepresented long past settled issues is ripe with false statements and mischaracterizations that we have pointed out Tim numerous times <unk>.
Speaker Change: Including the circumstances are reasons for the departure of a Board Board Board member former Board member.
Brendan OGrady: Well, I don't expect his desperate attacks will stop. You should know that there is nothing here and we will vigorously defend our reputation using all legal and regulatory means at our disposal.
Don't expect his desperate attacks will stop you should know that there is nothing here and we will vigorously defend our reputation using all legal and regulatory means at our disposal today.
Brendan OGrady: Today will be my last comment on this matter as I turn 100% of my focus to the business. So now, with that out of the way, I'd like to focus my comments back to the business and the progress we are making in stabilizing the company and positioning it for transformational growth in the coming months.
Speaker Change: Today will be my last comments on this matter as I turned 100% of my focus to the business.
Speaker Change: So now with that out of the way I'd like to focus my comments back to the business and the progress we are making in stabilizing the company and positioning it for transformational growth in the coming months.
Brendan OGrady: As noted in our earnings release today, I would like to announce that during the November 7th Board of Directors meeting, Chairman of the Board Peter Staple retired from the board after 21 years of dedicated service and leadership. Peter was instrumental in bringing me to Assertio, and although our time together was short, I appreciated his calm demeanor, deep expertise, and presence on the board. I cannot thank him enough. In addition, Dr. Jeff Visurka has stepped back from the board to focus on as many other business interests. We thank Dr. Visurka for his service in providing continuity through the acquisition and integration of Spectrum.
Speaker Change: As noted in our earnings release today, I would like to announce that during the November seven board of Directors meeting Chairman of the board Peter staple retired from the board after 21 years of dedicated service and leadership.
Speaker Change: Peter was instrumental in bringing me to assert ale and although our time together with short I appreciated his calm demeanor deep expertise and presence on the board I cannot thank them enough.
Speaker Change: In addition, Dr. Jeff the circa has stepped back from the board to focus on as many other business interests.
We thank Dr. A circuit per service and providing continuity through the acquisition and integration of spectrum is insights into the gcs G CSF and oncology markets were invaluable and we will miss his contributions to the board.
Brendan OGrady: His insights into the GCS, GCSF and oncology markets were invaluable, and we will miss his contributions to the board. Both of these departures and continued transition of the board have long been in the planning.
Speaker Change: Both of these departures and continued transition the board have long been in the planning.
Brendan OGrady: With that, I'm also happy to announce that Heather Mason, independent director, has been appointed as chairwoman of the board. Heather has been on the Assertio board for over five years, serving as interim CEO prior to my joining, and she has a wealth of industry experience. I look forward to continuing to work with Heather in her newly expanded role.
Speaker Change: With that I'm also happy to announce that Heather Mason independent director has been appointed as chairwoman of the board.
Weather has been on the <unk> board for over five years, serving as interim CEO prior to my joining and she has a wealth of industry experience I look forward to continuing to work with Heather and her newly expanded role.
Brendan OGrady: I am also excited to announce that David Stark has joined the Assertio board effective November 7th. David is an experienced litigator and senior pharmaceutical executive, recently retiring from Teva as chief legal officer. David brings a wealth of industry and relevant legal expertise from his 20 plus years at Teva. David and I were colleagues at Teva, and I'm excited to be working with him again in this new capacity.
Speaker Change: I am also excited to announce that David Stark has joined the 30th Board effective November 7th David is an.
Speaker Change: Experienced litigator and senior pharmaceutical executive.
Speaker Change: Recently retiring from Teva as Chief legal officer.
Speaker Change: David brings a wealth of industry and relevant legal expertise from his 20 plus years at Teva, David and I were colleagues of Teva and I'm excited to be working with them again in this new capacity.
Brendan OGrady: Now on to the business. First and foremost, let me just say, I'm very pleased with where we are today, as a starting line for growth. As I've said previously, this year is about stabilizing the organization as we transition from Indusyn as our lead product to Rolodon, and at the same time, positioning ourselves for more transformational growth in the coming months. It is worth restating that we have a solid balance sheet, modest debt on favorable terms, and a good stable of growth, core and legacy assets led by Rolvida. We also have an excellent team of dedicated professionals who know this industry extremely well, giving us the opportunity to add or enhance key capabilities as we grow.
Speaker Change: Now onto the business.
Speaker Change: First and foremost let me just say I am very pleased with where we are today as a starting line for growth as I've said previously this year is about stabilizing the organization as we transition from <unk> is our lead product to roll it on and at the same time positioning ourselves for more transformational growth in the coming months.
Speaker Change: It is worth restating that we have a solid balance sheet modest debt on favorable terms and a good stable of.
Speaker Change: Growth core and legacy assets led by roll with that.
We also have an excellent team of dedicated professionals, who know this industry extremely well, giving us the opportunity to add or enhance key capabilities as we grow.
Brendan OGrady: Also important to note is that our capabilities and lean model will allow us to be relatively sector agnostic. broadening the landscape for new assets and letting us focus on those that best fit our commercial parameters. For all these reasons, we are well positioned to deliver value for patients and providers we serve, as well as shareholders and employees, as we build a significant branded specialty business through acquisition, integration, and a focused go-to-market strategy. As I said on my first call with you in August, our focus will remain on steady execution, driving cash flow, and identifying new assets we can add to bring further scale to Assertio's platform.
Speaker Change: Also important to note is that our capabilities and lean model will allow us to be relatively sector agnostic broadening the landscape for new assets and letting us focus on those that best fit our commercial parameters.
For all these reasons, we are well positioned to deliver value for patients and providers, we serve as well as shareholders employees as we build a significant branded specialty business through acquisition integration and our focus go to market strategy.
As I said on my first call with you in August our focus will remain on steady execution driving cash flow and identifying new assets, we can add to bring further scale to the <unk> platform.
Brendan OGrady: Now turning to performance and I'll first address Rolvidon. Rolvidon Q3 sales were essentially steady quarter over quarter, showing continued solid demand. We continue to retain a stable share around 33 percent in the oncology community, a community oncology clinic space, where we have primarily focused. We did see a dip in demand due to some typical seasonality that can occur in the third quarter, as well as some shifts in the community oncology clinic space, specifically Part B. This was offset by the addition of new customers, enabling further expansion into the hospital space and community oncology clinics where we did not have a presence.
Speaker Change: Now turning to performance and I'll first address raw bran.
Speaker Change: Robert on Q3 sales were essentially steady quarter over quarter showing continued solid demand.
We continue to retain a stable share around 33% in the oncology community a community oncology clinics space, where we have primarily focused.
Speaker Change: We did see a dip in demand due to some typical seasonality that can occur in the third quarter as well as some shifts in the community oncology clinics space, specifically part B.
Speaker Change: This was offset by the addition of new customers, enabling further expansion into the hospital space and community oncology clinics, where we did not have a presence.
Brendan OGrady: There are segments. These are segments that will be important for further future growth. We remain focused on using our position. a safe and effective non-biosimilar GCSF to offer stability to providers and patients, positioning ourselves as a predictable, reliable solution at a more stable price. And of course, this is a market dynamic, but our message continues to resonate.
Speaker Change: There are segments. These are segments that will be important for further future growth.
Speaker Change: We remain focused on using our position.
Speaker Change: A safe and effective non biosimilar G CSF to offer stability to providers and patients.
Listing ourselves as a predictable reliable solution at a more stable price and of course. This is a market dynamic, but our message continues to resonate.
Brendan OGrady: Additionally, Wobedon same-day dosing trial wrapped up in early Q2, and I'm excited to announce that the data will be presented as a poster exhibit at the San Antonio Breast Cancer Symposium in December. I'm excited about Wolvidon as it's going to play a key role for us over the next several years. both in our current clinic focused market, as well as hospital, as well as the hospital market, as we prepare to expand into those additional opportunities. As the only available GCSF approved under a BLA without biosimilar copies, there may also be opportunities for label expansion. We're in the very early phases of making that.
Speaker Change: Additionally, wolbert on same day dosing trial wrapped up in early Q2, and I am excited to announce that the data will be presented as a poster exhibit at the San Antonio breast cancer Symposium in December.
Speaker Change: I am excited about what <unk> is it's going to play a key role for us over the next several years.
Speaker Change: And our current clinic focused market as well as hospital as well as the hospital market as we prepare to expand into those additional opportunities.
Speaker Change: As the only available G CSF approved under a BLA without biosimilar copies. There may also be opportunities for label expansion. We're in the very early phases of making that assessment.
Brendan OGrady: Now a couple words about Indusyn. On Indusyn, we continue to manage the lifecycle process and drive cash flow generating from the asset. Although there is some compounding activity, to date, we have only one generic competitor. Our share of the market is holding steady at our internal target levels, which is around 50 percent of the X compounding market. We will compete to hold our rightful share of the market, and at the same time, we will work to maintain our share and optimize price. Having worked at Teva for more than 20 years, this is something I am very familiar with and know how to do.
Speaker Change: A couple of words about Anderson on.
Speaker Change: And in this and we continue to manage the lifecycle process and drive cash flow generating from the asset. Although there is some compounding activity to date, we have only one generic competitor our.
Speaker Change: Our share of the market is holding steady at our internal target levels, which is around 50% of the X compounding market.
Speaker Change: We will compete to hold our rightful share of the market and at the same time, we will work to maintain our share and optimized price having worked at Teva for more than 20 years. This is something I'm very familiar with and know how to do.
Brendan OGrady: Looking at Symposan, while this is a smaller asset, we believe that has underpenetrated the market and there is room for growth. We also understand that Symposan is especially responsive to key opinion leader awareness and support. I think I mentioned on the last call that we're piloting and executing sales and marketing tactics designed to drive prescriber awareness and prescription growth in key markets. Although early, we have seen record demand levels in Symposan prescriptions in July and August as a result of these activities. This is a product I like from the beginning of my time at Assertio.
Looking at symposium, while this is a smaller asset we believe that has under penetrated the market and there is room for growth.
Speaker Change: We also understand that <unk> is especially responsive to keel key opinion leader awareness and support.
Speaker Change: I think I mentioned on the last call that we're piloting and executing sales and marketing tactics designed to drive prescriber awareness and prescription growth in key markets. Although early we have seen record demand levels and synthesis and prescriptions in July and August as a result of these activities.
Speaker Change: This is a product of like from the beginning of my time at <unk> has served as specific unmet medical need we have a broad coalition of growing support among patients caregivers providers and look to expand both awareness and use of <unk> going forward.
Brendan OGrady: It serves a specific unmet medical need. We have a broad coalition of growing support among patients, caregivers and providers, and look to expand both awareness and use of Symposan going forward.
Brendan OGrady: And then lastly, just a quick word about some of our remaining assets. and I'd like to just talk a little bit about how to characterize the business. I see it really in three main buckets.
Speaker Change: And then lastly, just a quick word about some of our remaining assets.
Speaker Change: And I'd like to just talk a little bit about how to characterize the business I see it really in three main buckets IC a growth asset bucket. This is clearly roll it out and ive spoken about it.
Brendan OGrady: I see a growth asset bucket. This is clearly rolled out and I've spoken about it.
Brendan OGrady: I see a core asset bucket. This is Simpazan and Sprix. And while I discuss Simpazan and her plan there, I've not said much about Sprix. What I will say about Sprix is that it serves a significant unmet medical need by providing opioid-level pain relief. In fact, our indication states that Sprix is indicated in moderate to moderately severe pain that requires analgesia at the opioid level. There continues to be a focus on non-opioid pain relief. And the No Pain Act, which expands reimbursement for non-opioid post-surgical options starting January 1, 2025, could be an opportunity we are looking at, that we are looking at very seriously for Sprix.
I see a core asset bucket. This is simple Zen and spirits and while I discuss the present and our plan there I have not said much about spreads.
Speaker Change: What I will say about bricks is that it serves a significant unmet medical need by providing opioid level pain relief factor indication states that spritz as indicated in moderate to moderately severe pain that requires analgesia at the opioid level.
There continues to be a focus on non opioid pain relief and the no pain Act, which expands reimbursement for non opioid post surgical options.
Speaker Change: Starting January one 2025 could.
Speaker Change: Could be an opportunity we're looking at that we are looking at very seriously pursue bricks.
Brendan OGrady: If nothing else, it brings the need for non-opioid pain relief back to the forefront and reason to believe that Sprix could be a bigger asset for us than it currently is.
Speaker Change: <unk> nothing else it brings the need for non opioid pain really back to the forefront and reason to believe that <unk> could be a bigger asset for us that it currently is.
Brendan OGrady: The last bucket is our legacy assets. These are our tail products that have lost exclusivity or face very difficult market dynamics. In this bucket, it's all about asset optimization and includes Indusyn and Cambia, among others. I understand how to extract maximum value out of assets like this and will continue to focus on cash generation in this buck.
Speaker Change: The last bucket is our legacy assets. These are tail products that have lost exclusivity or face very difficult market dynamics. In this bucket is all about asset optimization and includes innocent and cambium among others I understand how to extract maximum value out of assets like this and will continue to focus on cash generation in this cycle.
Ajay Patel: With that, I'll conclude my remarks and I'll hand it over to Ajay Patel, our Chief Financial Officer.
Speaker Change: With that I'll conclude my remarks, and I'll hand, it over to a J Patel, our chief Financial Officer.
Ajay Patel: Thanks, Brendan. Today I would like to cover our financial results for the third quarter of 2024. Before I begin, I want to note that my commentary will focus on sequential comparisons to the prior quarter.
Thanks, Brendan today, I would like to cover our financial results for the third quarter of 2024.
J Patel: Before I begin I want to note that my commentary will focus on sequential comparisons to the prior quarter.
Ajay Patel: Comparisons to the prior year are less relevant given the acquisition of Spectrum and generic competition of Indusyn that occurred in the prior year third quarter. Also, I want to remind everyone that Rovidon is now our lead asset and brings with it the associated changes in margin, operating cost structure, and cash flows that you are seeing in our results throughout this year. For the third quarter of 2024, our total product sales were $28.7 million, down slightly from $30.7 million in the second quarter, primarily due to Rolvidon sales being offset by the expected decline in Indusyn. Groverdawn sales were $15 million in the third quarter, compared to $15.1 million in the second quarter.
J Patel: <unk> for the prior year are less relevant given the acquisition of spectrum and generic competition of <unk> that occurred in the prior year third quarter also I want to remind everyone that <unk> is now our lead asset and brings with it the associated changes in margin operating cost structure and cash flows that you are.
J Patel: Seeing in our results throughout this year.
J Patel: For the third quarter of 2024, our total product sales were $28 7 million.
J Patel: Down slightly from $30 7 million in the second quarter, primarily due to <unk> sales being offset by the expected decline in <unk>.
J Patel: <unk> sales were $15 million in the third quarter compared to $15 $1 million in the second quarter. The change was driven by continued volume growth offset by lower net pricing. We continue to hold about one third share in our served markets.
Ajay Patel: The change was driven by continued volume growth offset by lower net pricing. We continue to hold about one-third share in our served markets. Indus in sales were $5.7 million in the third quarter, down from $6.9 million in the second quarter, driven by lower net pricing as a result of generic competition. In terms of volume, we continue to target and hold an approximate market share split. Reported gross margin in the third quarter improved to 74 percent compared to 71 percent in the second quarter, primarily due to level of inventory step-up amortization and write-downs from prior quarter not repeating.
J Patel: In addition sales were $5 $7 million in the third quarter down from $6 $9 million in the second quarter, driven by lower net pricing as a result of generic competition in terms of volume, we continue to target and hold an approximate market share split.
J Patel: Reported gross margin in the third quarter improved to 74% compared to 71% in the second quarter, primarily due to level of inventory step up amortization and write downs from prior quarter not repeating.
Ajay Patel: Turning to operating expenses. SG&A expense was $16.7 million in the third quarter, decreased from $18.4 million in the second quarter. R&D expense in the third quarter was relatively flat at approximately $1 million. On an adjusted basis, excluding stock compensation, DNA, and change in fair value, adjusted operating expense was $16.4 million in the third quarter, down from $17.7 million in the second quarter. The decrease was primarily due to lower sales and marketing and other G&A costs, partially offset by net higher legal related charges. Gap net income for the third quarter was a loss of $2.9 million, down from a loss of $3.7 million in the second quarter.
J Patel: Turning to operating expenses SG&A expense was $16 $7 million in the third quarter decreased from $18 $4 million in the second quarter R&D expense in the third quarter was relatively flat at approximately $1 million.
J Patel: On an adjusted basis, excluding stock compensation DNA and change in fair value adjusted operating expense was $16 $4 million in the third quarter down from $17 7 million in the second quarter. The decrease was primarily due to lower lower.
J Patel: Sales and marketing and other G&A costs, partially offset by net higher legal related charges.
GAAP net income for the third quarter was a loss of $2 $9 million down.
J Patel: Down from a loss of $3 $7 million in the second quarter.
Ajay Patel: Because gap net income includes a number of non-cash expenses, we also use adjusted EBITDA as a good indicator of the operating performance of core business. Q3 Adjusted EBITDA was a positive $5.3 million, increased from $5 million in the second quarter due to lower operating expenses, partially offset by lower product sales. Please refer to our press release for detailed reconciliation of our adjusted EBITDA results.
J Patel: GAAP net income includes a number of noncash expenses. We also use adjusted EBITDA as a good indicator of the operating performance of core business.
J Patel: Q3, adjusted EBITDA was a positive $5 $3 million increased from $5 million in the second quarter due to lower operating expenses, partially offset by lower product sales. Please refer to our press release for detailed reconciliation of our adjusted EBITDA results.
Ajay Patel: crossing over to cash flow and our balance sheet. As a reminder, we invest cash into short term investment. Therefore, our reference to total cash position includes both cash and cash equivalents and short-term investment. Total cost cash at the end of the quarter was $88.6 million, effectively flat to the $88.4 million in the second quarter, and debt remained unchanged at $40 million. As we previously noted, quarterly operating cash flows will fluctuate due to timing of working capital in terms of cash receipts and payments due to shift in product mix from Indusin to Lovidon. Third quarter operating cash flows were negligible and were impacted by timing of working capital from cash collection and lower product sales.
J Patel: <unk> over to cash flow and our balance sheet. As a reminder, we invest cash into short term investments. Therefore, a reference to total cash position includes both cash and cash equivalents and short term investments.
J Patel: Total cost cash at the end of the quarter was $88 6 million effectively flat to the $88 $4 million in the second quarter and debt remained unchanged at $40 million.
As we previously noted quarterly operating cash flows will fluctuate due to timing of working capital in terms of cash receipts and payments due to shift in product mix from Indocin two overdone.
J Patel: Third quarter operating cash flows were negligible and we're impacted by timing of working capital from cash collection and lower product sales year to date, we have generated $15 million in cash flows from operations.
Ajay Patel: Year to date, we have generated $15 million in cash flows from operations.
Operator: With that, we will open the floor to questions from our covering research analysts.
Speaker Change: With that we will open the floor to questions from our covering research analysts operator. Please go ahead with the instructions.
Operator: Operator, please go ahead with the instructions. Thank you.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone key. If you would like to withdraw your question, simply press star 1 again. As a reminder, we'll ask everyone to stick to one question and one follow-up so we can take as many questions as possible. Thank you.
Speaker Change: Ladies and gentlemen, who will now begin the question and answer session. If you have dialed in and I'd like to ask a question. Please press star followed by the number one on your telephone keypad. If you would like to withdraw your question seemed suppressed our win again as a reminder, we will ask everyone to stick to one question and one follow up so we can take as many questions as possible. Thank you.
Thomas Flaten: Our first question comes from the line of Thomas Flaten with Big Street Cattle Markets. Please go ahead.
Speaker Change: Our first question comes from the line of Thomas Flaten with Lake Street Capital markets. Please go ahead.
Thomas Flaten: Hey, good afternoon, guys. Congrats on a good quarter.
Speaker Change: Hey, good afternoon, guys. Congrats on a good quarter AJ, you Didnt mentioned anything about guidance any thoughts on that for us.
Ajay Patel: Ajay, you didn't mention anything about guidance. Any thoughts on that for us? Yeah, thanks for the question, Thomas. You're right, you know, at this point, we would have liked to narrow the range, but we still see a flux in few key areas for the remainder of the year. Therefore, we're going to keep the remaining guidance range that's out there.
Speaker Change: Yes. Thanks for the question Thomas you are right at this point, we would've liked to narrow the range, but we still see a blocks and few key areas for the remainder of the year.
Speaker Change: Therefore, we're going to we're going to keep the remaining guidance range that's out there.
Ajay Patel: Some of the areas we're continuing to focus on is first, focus on stabilizing the business as we cross over from Indusyn to Rovodon. Secondly, as we continue to monitor the generic competitive landscape of Indusyn. And then third is the dynamic pricing and volume activity occurring in the GCSF market landscape. Great.
Speaker Change: Some of the areas, we will continue to focus on is first.
Speaker Change: Focus on stabilizing the business as we crossover from Indus into <unk> <unk>.
Speaker Change: We as we continue to monitor the generic competitive landscape of Anderson.
Speaker Change: And then third is the dynamic pricing and volume activity occurring in the DCF gcs up market landscape.
Great and then as a follow up.
Brendan OGrady: And then as a follow up, not a follow up, Brendan, you had spoken in the last quarterly call, and I think in some investor conferences about your desire to maybe do a smaller deal this year, and then maybe something more transformative in 2025. Could you give us your updated thoughts on that? Yeah, I know. So we continue to look at the landscape of what's available and what's out there. And there are assets there, you know, that we think we could execute, whether they're smaller, whether they're larger.
Speaker Change: Not a follow up.
Speaker Change: Brendan you had spoken in the last quarterly call and I think in some investor conferences about your desire to maybe do a small deal. This year and then maybe something more transformative in 2025 could you give us your updated thoughts on that.
Yeah. So we continue to look at the landscape of whats available whats out there and there are assets.
Speaker Change: But we think we could execute whether they're smaller whether the larger but the further we go.
Brendan OGrady: But, you know, the further we go, you know, I'm starting to think maybe we do something a little bit more robust in the near term than maybe a small tuck in. So it really kind of depends on what's out there, what the price is, what we can get and how we think it fits with our model. So, you know, I'm optimistic. I think there's lots of doable deals out there. But I've said before, I want to make sure it's the right fit. So I don't want to I don't want to jump into something just because we feel like we need to.
Speaker Change: I'm starting to think maybe we do something a little bit more robust.
Speaker Change: In the near term.
Speaker Change: Then maybe a small tuck in so it really kind of depends on what's out there what the price is what we can get and how we think it fits with our model. So.
I'm optimistic I think theres lots of doable deals out there.
But I've said before I want to make sure. It's the right fit so I don't want to I don't want to jump into something just because we feel like we need to I want to make sure that it's the right thing for our <unk> and we're paying the right price for it.
Brendan OGrady: I want to make sure that it's the right thing for Assertio and we're paying the right price for it.
Thomas Flaten: Excellent, appreciate you taking the question. Thank you. Sure, thanks.
Speaker Change: Excellent I appreciate you taking the questions. Thank you.
Speaker Change: Sure. Thanks.
Naz Rahman: Your next question comes from the line of Naz Rahman with Maxine Group. Please go ahead.
Speaker Change: Your next question comes from the line of Nat Sherman with vaccine group. Please go ahead.
Naz Rahman: Hi, thanks for taking my question. They're both on Robiton. I'll just start with this. In regards to pricing, where do you think the pricing declines sort of stable out? Do you think we've reached stable prices or do you think there's still room for that pricing to decline?
Nat Sherman: Hi, Thanks for taking my question.
Nat Sherman: Both enrollment on I'll start with this in regards to pricing.
Nat Sherman: Where do you think the pricing decline sort of stable or do you think we see you've reached stable prices or do you think there's still room for the pricing net pricing decline.
Ajay Patel: Hey Naz, this is Ajay. Thanks for the question. You know, I would say the GCSF landscape is very competitive, especially with the biosimilars and some of the more recent entrants in the last few years really driving pricing. Therefore, you know, in this market, we are somewhat hindered by what the market competitors will continue to do. We have seen pricing declines over the last few quarters, which we anticipate the trend would continue as market share starts to equalize. But one of the things we're absolutely focused on is the market that we operate in from a Medicare Part B perspective and maintaining our one of our leading market share position there.
J Patel: And as this is a J thanks for the question.
Speaker Change: I'd say the gcs app landscape is very competitive, especially with the biosimilars.
Speaker Change: And some of the more recent entrants in the last few years really driving pricing.
Speaker Change: Therefore in this market we are somewhat.
Speaker Change: Hindered by what the market competitors will continue to do we have seen pricing declines over the last few quarters, which we anticipate that trend would continue as.
Speaker Change: <unk> market share starts to equalize.
Speaker Change: One of the things we're absolutely focused on is the market that we operate in from a Medicare part D perspective, and maintaining our one of our leading market share position there.
Ajay Patel: and my follow up question is, following the same day dosing data, could you talk a little bit about the logistics and potential timeline to get that into NCCN guidelines? Like what has to happen there and how long does that take? Yeah, so thanks for the question. So, you know, again, we'll make the data public here in December. And then I think it is roughly about a six-month window for us to work with NCCN for them to consider. That doesn't mean that it would be mid-year, but I think the earliest it could potentially be is mid-year.
Speaker Change: Got it that's helpful and my follow up question is following the same day dosing data could you talk a little bit about the logistics and potential timeline to get that into end CCN guidelines like what has to happen there and how long does that take.
Speaker Change: Yes. So thanks for the question. So again, we'll make the data public.
Speaker Change: Here in December and then I think it is roughly about a six month window for us too.
Speaker Change: Work with N CCN for them to consider that doesn't mean that it would be midyear, but I think the earliest it could potentially be as bid is mid year. So.
Ajay Patel: So, you know, we haven't had those discussions or those conversations yet, but I think it would be somewhere between the middle and the back end of next year. Got it.
Speaker Change: We haven't had those discussions and those conversations yet, but I think it will be somewhere between the middle and the back end of next year.
Speaker Change: Got it thanks for taking my questions.
Naz Rahman: Thanks for taking my questions. Sure.
Speaker Change: Sure.
Operator: Again, if you would like to ask a question, please press star 1 on your telephone keypad. Thank you.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone keypad. Thank you. Our next question comes from the line of Scott Henry with AGP. Please go ahead.
Scott Henry: Our next question comes from the line of Scott Henry with AGP. Please go ahead.
Scott Henry: Thank you, and good afternoon. A couple questions. First on Rolvidon. You know, first quarter, roughly $14.5 million, second quarter, $15.1 million, third quarter, $15 million. Guidance, I assume, is still in place of roughly $60 million for 2024. So we've got about four quarters right around that $15 mark.
Scott Henry: Thank you and good afternoon.
A couple of questions.
Scott Henry: First on Rover Don.
Scott Henry: First quarter, roughly $14 5 million second quarter $15, one third quarter 2015.
Guidance I assume is still in place of roughly $60 million for 2024.
Speaker Change: We've got about four quarters right around that 15 Mark.
Speaker Change: Do you think it is.
Scott Henry: Do you think it's basing out here for future growth, or will maybe the growth be slower? Just trying to get your sense of, there's a lot of moving parts here in that market of how we should think about growth for Rolvidon in 2025 and beyond.
Speaker Change: Are you seeing out here for future growth or we will.
Speaker Change: Maybe the growth be slower just just trying to get your sense of there's a lot of moving parts here in that market of how we should think about growth for <unk> in 2025 and beyond.
Brendan OGrady: Yeah, no, it's a great question. So thank you. And you're right, right? We've seen about 15 million, you know, first quarter, second quarter, third quarter has been relatively stable. And, and, you know, I think if you think about the year that, you know, roughly 16 million in sales is, is right about where we think we'll be.
Speaker Change: Yes, no. It's a great question. So thank you and you're right we have seen about $15 million.
Speaker Change: First quarter second quarter third quarter has been relatively stable and I think if you think about the year that.
Speaker Change: Roughly $60 million in sales is is right about where we think will be.
Brendan OGrady: But as we enter 2025, I mean, in 2024, we've been very focused in the community oncology clinic space, as Ajay said, you know, focusing in the Medicare Part B space, where we maintain about a third of that market share. As we move into 2025, we do think that further growth is not only possible, but that's what we're planning for. As we expand beyond that clinic space into hospitals, and, and so forth. So We are planning for growth and we're approaching this category and we're approaching Rolvidon is a long-term play. You know, we're not looking for dramatic Spike in any one particular quarter.
Speaker Change: But as we entered 2025 and 2024, we've been very focused in the community oncology clinics spaces AJ said.
Speaker Change: Focusing in the Medicare part D space, where we maintain about a third of that market share as we move into 2025, we do think that further growth.
Speaker Change: Is not only possible, but that's what we're planning for.
<unk>.
Speaker Change: As we expand beyond that clinic space into hospitals, and so forth. So.
Speaker Change: We are planning for growth and we are approaching this category and we're approaching Ramadan is a long term play.
We're not looking for dramatic.
Speaker Change: A spike in any one particular quarter, we're looking at this asset over the long term. So we do think that we'll see continued growth and we have plans to drive continued growth of all of that.
Brendan OGrady: We're looking at this asset over the long term So we do think that we'll see continued growth and we have plans to drive continued growth with all the Okay, great.
Speaker Change: Okay, great and SG&A in the quarter was on the.
Scott Henry: And SG&A in the quarter was on the, you know, it seemed pretty low.
Speaker Change: Seem pretty low.
Speaker Change: So the good thing.
Ajay Patel: Good thing. Do you think that's a Fair number to extrapolate going forward. Is that kind of the run rate you have currently?
Speaker Change: Do you think Thats, a fair number to extrapolate going forward is that kind of the run rate.
Speaker Change: Currently.
Ajay Patel: Yeah, Scott, good question. Yeah, I would say, generally, in our business, the second half of the year from an SG&A is is generally lower as a lot of our S&M initiatives occur in the first half of the year. With that, we also additionally had additional kind of restructuring and re-transition we did with the company in the beginning, in the first quarter of the year. So that kind of reflected a higher run rate.
Scott Henry: Yes, Scott Good question, Yes, I would.
Scott Henry: Generally in our business the second half of the year from an SG&A is generally lower there's a lot of our <unk> initiatives occur in the first half of the year with that we also additionally had additional kind of restructuring and re transition we did with the company and now beginning in the first quarter of the year, so that kind of.
Scott Henry: Reflecting on a higher run rate I would say the average of the last two quarters is sufficient for the remainder of the year.
Scott Henry: I would say the average of the last two quarters is sufficient for the remainder of the year. Thank you. Okay, great.
Speaker Change: Okay, great and the final question.
Scott Henry: And the final question, I just wanted to ask on the board update, yeah, I've covered the company for a while.
Speaker Change: I just wanted to ask on the board update.
Speaker Change: Yes, I've covered the company for a while I believe there was a retired a mandatory retirement age for board members was that a factor in.
Scott Henry: I believe there was a mandatory retirement age for board members. Was that a factor in Peter Staple retiring, if I recall that correctly? And if you could give any color on Dr. Viserca retiring, I think he said something earlier, but I might have Yeah, sure.
Speaker Change: In Peter staple retiring if I recall that correctly.
Speaker Change: And if you could give any color on doctor circa retiring I think you said something earlier, but I might've missed it.
Speaker Change: Yeah sure I'd be happy to address both so.
Brendan OGrady: No, I'd be happy to address both. So, I mean, Peter's been on the board for 21 years. He's seen a lot of different versions of Assertio and I think has worked with six, seven or eight CEOs.
Speaker Change: Peter has been on the board for 21 years, we've seen a lot of different versions of the <unk> and I think has worked with six seven or eight CEO. So while I think Peter was approaching the term ager had approached it I think there was a plan for Peter.
Brendan OGrady: So, while I think Peter was approaching the term age or had approached it, I think there was a plan for Peter to step back for a while and retire from the board. He stayed on largely because there was the transition between the former CEO, Heather, becoming the interim CEO. to bring me on board. And then after I was on board, this transition between Peter and Heather was planned to take place. So this has been a while in the making. You know, I think Peter has been phenomenal, and he's served Assertio well over the years. He's, as I said in my opening comments, very calm demeanor, very experienced professional, and really, really what I believe a great board member and I appreciate his contributions.
Speaker Change: To step back for a while and retire from the board.
Speaker Change: He stayed on largely because there was the transition between the former CEO Heather becoming the interim CEO.
Speaker Change: To bring me on board and then after I was onboard this transition between Peter and Heather was planned to take place. So this has been a while in the making.
Speaker Change: I think Peter has has been phenomenal and he served as <unk> well over the years as I said in my opening comments very calm demeanor very experienced professional and really really what I believe a great board member and I appreciate his contributions.
Brendan OGrady: In regards to Dr. Visurka, Dr. Visurka came from Spectrum. He was on the Spectrum board, I believe. And I think what Dr. Visurka did for Assertio was really help with that integration and provide continuities. We integrated Spectrum into Assertio and started to really understand the GCSF market and the oncology market and the oncology clinic space. So I don't think, and I don't want to speak for Dr. Visurka, but I don't think it was ever his long-term intention to stay on the Assertio board forever. In fact, he probably stayed longer than planned, but I think he's thinking that he has a lot of outside other business interests that he needs to pay attention to.
In regards to.
Speaker Change: Dr. A circa a doctor or a circuit came from from spectrum. He was on the spectrum Board I believe and I think with Dr. A circuit did for Sergio was really help with that integration and provide continuity as we integrated our spectrum into <unk> and started to really understand the G. CSF market in the oncology market in the oncology.
Speaker Change: Clinic space, So I don't think.
Speaker Change: I don't want to speak for Dr. A circuit, but I don't think it was ever his long term intention to stay on the <unk> Board Forever. In fact, you probably stayed longer than planned, but I think he's thinking that he has a lot of outside other business interests that he needs to pay attention to so this is a good time for for him to step back from the board as well.
Scott Henry: So this was a good time for him to step back from the board as well. Okay, great. Thank you for that caller. And thank you for taking the questions. Sure.
Speaker Change: Okay, great. Thank you for that color and thank you for taking the questions.
Speaker Change: Sure.
Raghuram Selvaraju: Our next question comes from the line of Raghuram Selvaraju with H.C.
Speaker Change: Our next question comes from the line from solve that <unk> with H C. Wainwright. Please go ahead.
Raghuram Selvaraju: Wainwright.
Raghuram Selvaraju: Please go ahead. Thanks very much for taking my question.
Thanks, very much for taking my questions.
Brendan OGrady: I just wanted to ask first and foremost about what the underlying market dynamics are that you're seeing that are driving new customers to choose Rolvidon, if you could comment on that in some additional granularity. Well, I'll just give you my take first, and then Ajay, if you want to jump in and say anything, you're welcome to. But look, I think that Rolvidon is, you know, competes, as we said, in a very dynamic marketplace. It competes with other six or seven or eight other GCSFs. And it depends upon the actual slice of the market that you're competing in.
Speaker Change: I just wanted to ask first and foremost about what the underlying market dynamics are that youre seeing that are driving new customers to choose Rover, Don if you could comment on that and some additional granularity. Please.
Speaker Change: Well I'll just give you might take first and then Jay if you want to if you want to jump in and say anything Youre welcome two but look I think that <unk> is.
Speaker Change: Compete as we said in a very dynamic marketplace. It competes with other six or seven or eight other G. CSF.
Speaker Change: And it depends upon the actual slice of the market that you are competing and we know that we compete in the clinic Medicare part B space, we've been successful there.
Brendan OGrady: You know that we compete in the clinic Medicare Part B space. We've been successful there. I think physicians recognize and providers recognize that Rolvidon is a very safe and effective product. And I think that that will be underscored when, you know, we see the results of the same day dosing. Having said that, a lot of this is a contract play. And a lot of it is about access. And a lot of it is about do you have the right ASP formula? How are you managing ASP erosion? All of those things. So I think at the end of the day, a lot of times this comes to a contract play that is largely sometimes not even a physician that is making that choice.
I think physicians recognize providers recognize that <unk> is a very safe and effective product and I think that that will be underscored when.
Speaker Change: We see the results of the <unk>.
Speaker Change: Same day dosing, having said that a lot of this is a contract play and a lot of it is about access and a lot of it is about do you have the right ASP formula how are you managing ASP erosion all of those things. So I think at the end of the day a lot of times. This comes to a to a <unk>.
Speaker Change: Our contract play that is largely sometimes not even a position that is making that choice. It might be a practice manager. So patients may be unaware of the particular G CSF theyre getting.
Brendan OGrady: It might be a practice manager. So patients may be unaware of the particular GCSF they're getting. Some may be aware. Some may not be aware. But overall, it's decided kind of at the clinical level a lot of times by decision makers that way.
Speaker Change: Some may be aware, so it may not be aware, but overall, it's decided kind of at the at the clinical level a lot of times by decision makers that way.
Ajay Patel: Ajay, anything else to add? No, I think Brendan hit it spot on, right?
Speaker Change: JJ anything else that no I think Brendan hit it spot on right.
Ajay Patel: The former, in terms of the appeal of the product itself, helps us get kind of into the door. And then the second on the contracting side has helped us with the stickiness of sustaining our leading market share in the oncology space.
Before Marc in terms of the appeal of the product itself helps us get kind of into the door and then the second on the contracting side.
Speaker Change: It's helped us with the stickiness of sustaining our leading market share in the oncology space.
Raghuram Selvaraju: And then just as a follow up, I just wanted to see if Ajay, you wanted to comment on what you see as future trends on the gross margin front, if you think that sustainably maintaining gross margins and the sort of low to mid 70s is possible as the product and revenue mix evolves. Yeah, no, thanks for that question. Yeah, I think, as I mentioned to Thomas, right, I think we're keeping our previously announced guidance for 24 in line.
Speaker Change: And then just as a follow up I just wanted to see if Jay you wanted to comment on what you see as future trends on the gross margin front. If you think that sustainably maintaining gross margins in the sort of low to mid seventies as possible as the product and revenue mix evolves. Thanks.
Speaker Change: Yeah no. Thanks for that question, Yes, I think as I mentioned to Tom is right I think we're keeping our previously announced guidance for 'twenty for in line, we're not ready yet to comment anything beyond kind of 24 here. So previously stated comments on gross margin that year over year, there will be a gross margin erosion.
Ajay Patel: We're not ready yet to, you know, comment anything beyond kind of 24 here. So previously stated comments on gross margin, that year over year, there will be a gross margin erosion as we shift from Indison, which was a highly accretive gross margin product with very little commercial activity behind it to Rovidon, which is a biologic and carries a higher COGS rate and additionally has the commercial spend behind it. So we do continue to see that shift occurring into Q4 as well. But we are absolutely focused on, you know, from a pricing standpoint, maintaining that blended between 70 and 75% gross margin rate for 2024.
Speaker Change: As we shift from Indus and which was a highly accretive gross margin product with very little commercial activity behind it to <unk>, which is a biologic and carries a higher cogs rate and additionally has.
Speaker Change: Commercial spend behind it. So we do continue to see that shift occurring into Q4 as well.
Speaker Change: But we are absolutely focused on from a pricing standpoint maintain.
Speaker Change: Maintaining that blended.
Speaker Change: Between 70, and 75% gross margin rate for 2024.
Raghuram Selvaraju: Thank you.
Speaker Change: Thank you.
Speaker Change: As there are no further questions that concludes the Q&A session I would like to turn the conference back over to Brendan <unk> for any closing remarks.
Brendan OGrady: Since there are no further questions that concludes the Q&A session, I would like to turn the conference back over to Brendan OGrady for any closing remarks. Thank you. And I appreciate everyone who has joined us today. I just want to reiterate that I believe we have a great platform, an excellent team and a sound strategy, as well as a balance sheet that will help support further growth. I hope that today's call has continued to demonstrate our ability to deliver steady execution on the commercial business we have today, as well as our commitment to finding the right assets to further grow the platform.
Thank you and I appreciate everyone, who has joined US today I just want to reiterate that I believe we have a great platform and excellent team and a sound strategy as well as a balance sheet that will help support further growth.
Speaker Change: I hope todays call has continued to demonstrate our ability to deliver steady execution on the commercial business we have today.
Speaker Change: As well as our commitment to finding the right assets to further grow the platform.
Brendan OGrady: If you'd like to arrange a meeting or at an upcoming event or an update call with management, please contact Matt Kreps directly using his information provided in the press release, and we'd be happy to schedule a time to speak. And thank you all again for joining us today.
Speaker Change: If you'd like to arrange a meeting or at an upcoming event or an update call with management. Please contact Matt kreps directly using his information provided in the press release and we'd be happy to schedule, a time to speak and thank you all again for joining us today.
Operator: That concludes today's meeting. Thank you for your participation.
Speaker Change: That concludes today's meeting thank you for your participation you may now disconnect.
Operator: You may now disconnect.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.