Assertio Holdings, Inc. (ASRT) research, news, and more from GeoInvesting

Company description

Mon, 30 Jul 2012 04:00:00 GMT

Depomed, Inc. (Depomed), incorporated on August 7, 1995, is a specialty pharmaceutical company initially focused on neurology, pain and other diseases of the central nervous system. In January 2011, the United States Food and Drug Administration (FDA) approved Gralise (gabapentin) once-daily tablets for the management of postherpetic neuralgia. The Company is developing and commercializing a number of pharmaceutical products for neurology, pain and other central nervous system conditions and diseases. The Company’s products include Gralise, Glumetza, Serada and DM-1992. Gralise (gabapentin) is its once-daily formulation of gabapentin for the management of postherpetic neuralgia (PHN). Glumetza is the Company's once-daily treatment for adults with type 2 diabetes that is commercialized in the United States by Santarus, Inc. (Santarus). In March 2011, the Company completed enrollment in Breeze 3. In June 2012, the Company acquired all rights to Zipsor (diclofenac potassium) Liquid Filled Capsules from Xanodyne Pharmaceuticals, Inc.

Research

Tue, 08 Aug 2023 12:40:19 GMT

Additional Perspectives From GeoInvesting Contributor on ASRT

by Scott Weis, Semco Capital

I believe there were three bear concerns on ASRT going into the last earnings release.

Opioid risk.
Aggressive pricing.
The lack of patents on Indocin and potential threat of a generic competitor.

Two of those three are now gone as they are in the stock as of Thursday afternoon and Friday. The Opioid risk is still there but it's clear that risk is minimal, as explained on the Q2 call Thursday afternoon.

So the news Thursday was extremely disappointing. But here we are. And here are some updated thoughts and numbers:

There are lots of ways to value a company but here is my thinking:

ASRT at $3 has a $270m EV assuming 100m s/o.
They have net cash of $32m and I think $20m more from SPPI. Let's just assume $30m.
Roveldon will do about $90m in '23 Q1a -1$5m, Q2a $21m, Q3e $25m, Q4e $30m.
My '24e Rovledon estimate is $150m. The CVR is at $175m.

So the stock is trading at 1.8x EV/Rovledon '24 revs. Excludes all other revenue streams.

ASRT is now essentially a 1 product biotech company with a growing revenue stream, good b/s, and 5 other products that I'm excluding from the analysis. Most biotech companies can trade between 5-10x revs. Assuming 5x 2024 Rovlodon revenues, ASRT is worth $750m or $7.50 per share just on Rovledon alone.

Now, back to Indocin- it appears that Zydus will be pricing their generic at $412 vs Indocin at $434. See attachments below. This is a mere 5% discount. One - Zydus appears to be acting as a rational competitor and two I would surely prefer an established american manufacturer with no history of manufacturing issues for a mere $20 premium when the risk is pancreatitis and death. Given the historical manufacturing challenges it is unlikely a 3rd entrant comes to market anytime soon. Plus Zydus does have 6 months exclusive.

Lastly I'll point out that Zydus has in fact had manufacturing challenges in the past. See link for warning letter from the FDA.

https://www.americansforsafedrugs.org/post/indian-drug-manufacturer-zydus-violates-fda-regulations-again

This has been resolved as of 2022 but this does raise the question: can Zydus manufacture the product in volume to supply the market??? And without violating FDA regulations???

My takeaway is the reaction Friday was way overdone. Two of the three concerns that the shorts/bears have had are now fully built into the stock and should no longer be issues.

Given my valuation analysis above I believe ASRT is a great trade or long term hold from this price.
They have $70m in cash to go hunt for another acquisition and mgmt has been consistent that this has been the best environment they have ever seen for opportunities. I would expect another acquisition sooner vs later to broaden out the product portfolio and continue the drive to build a portfolio of durable, long term patented assets. And I think they want to focus on the cancer market and products they can push through their non touch channel.

To provide a more detailed model:

2024 assumptions/;

Indocin- 50m (down 50%+)- I am likely being way too conservative. It's more like $60-65m.
Rovledon - $150m.
Otrexup/Sympazan- $35m.
Other (Cambia, Sprix, Zipsor): $15m.
Total revs: $250m.
Ebitda margin: 50% (down from 65% in Q1 '23 and 60% in Q2"23).
Ebitda: $125m (let's be conservative and say 110m).
At $3 the stock trades at: EV $270m/110m= 2.45x.
Putting a 5x ebitda= 5.80 +93%.

I'm using $30m in net cash and 100m s/o.

Keep in mind this is a profitable company that is generating revenue growth of 28% '23/'22 and 25% '24/'23, and is generating real earnings. It should not be trading at 2.45x ev/ebitda. I would argue a multiple between 5x-7x (between $5.80- $8.00) is more accurate.

Scott Weis

(Original Article here)

Research

Tue, 21 Feb 2023 05:00:00 GMT

Assertio Holdings, Inc (NASDAQ:ASRT) (NASDAQ: $4.96; $239.5M market cap), a specialty pharmaceutical company, providing medicines in the areas of neurology, hospital, and pain and inflammation, announced preliminary Q4 2022 results:

Sales of $49 to $50 million vs $33.3 million in the prior year
Company issued non-GAAP EPS of $0.31 to $0.32 vs $0.10 in the prior year

“Assertio’s preliminary 2022 results demonstrated our ability to scale net product sales and generate substantial cash flow to fund our growth objectives, both organic and strategic,” said Dan Peisert, Chief Executive Officer. “We ended 2022 with cash and cash equivalents of $64.9 million, which was greater than our September cash balance even after funding $25 million of asset purchase payments for Otrexup and Sympazan in the fourth quarter.”

Recall that as part of a series of “Team USA” pitches at Bobby Kraft’s Stock Pitch World Cup™, Scott Weis of Semco Capital joined Maj Soueidan to pitch ASRT, a name on which he has been regularly updating his research for the GeoInvesting Premium community. Scott built on his previous literature on the company, which you can find at the link below.

February 8, 2022 Article - "Assertio Therapeutics - A Transformed Company With A New & Driven Management, And It Is Trading at 2x EBITDA"

Scott also followed up with an update on the ASRT story on December 12, 2022 which can be seen here.

Research

Mon, 12 Dec 2022 14:38:38 GMT

Assertio Holdings, Inc (NASDAQ:ASRT) (NASDAQ: $3.57; $172.4M market cap), a specialty pharmaceutical company, providing medicines in the areas of neurology, hospital, and pain and inflammation, was highlighted at the Planet Microcap Virtual Showcase.

In our December 8, 2022 email we highlighted the pitch on ASRT from Scott Weiss of Semco Capital. You can watch Scott’s pitch at 38:00 min mark of the “Team USA” pitches hosted by GeoInvesting Co-Founder Maj Soueidan, or go here to yesterday’s Sunday night email where that pitch is clipped out along with other pitches from the team.

Scott has provided us with an update based on the recent events:

On Nov. 9, 2022 ASRT posted a strong beat/raise for its Q3. Estimates generally went up across the board. On December 5, 2022 management raised revenue guidance for the Q4 (Dec ending qtr) by 20%, driven by their primary product Indocin but also cited strength throughout the portfolio. Note they only provided revenue guidance, and no other line items. There will be more to come on that. They followed that up with their first institutional NDR with Lake Street. The takeaways were bullish.

The Q4 pre-announcement upside was driven by the update of Indocin from hospitals that previously purchased it for $0.01 under 'caid 340B program. They pulled out of the program Oct. 1 so any hospital that needs the product has to buy it at commercial price. ASRT was losing a significant amount of money under this program and the volumes amounted to about 25-30% of Indocin volumes in any given quarter. The impact to the P&L will be significant not just on the top line but will also have a significant impact on the bottom line which we will see when they report their Q4 numbers in March.

The issue around lack of patent protection on Indocin-

Arguably the biggest reason ASRT trades at such a significant discount is their biggest and most profitable durg doesn't have protection. Ironically, it's been like that for 30 years. Several have tried to enter the market but all have failed due to the manufacturing challenges. Meanwhile, ASRT has filed a pre-IND to start studies in the Spring. These are 30-day studies that will ultimately result in a filing that could lead to 3 years exclusivity. I would make the case that as investors see this coming they will start to get some credit for the possibility of protection which should drive a higher multiple.

What is the Indocin opportunity?

As a reminder, Indocin is currently only used in the high risk segment of ERCP surgeries. ERCP is a procedure for the treatment of conditions involving the gallbladder, liver and pancreas. Patients under-going these types of procedures are at risk of developing pancreatitis. Indocin protects against that. So think of it like an insurance policy. The drug costs $750 and the hospital and doctors are protected from malpractice suits. It's basically a low cost insurance policy. There are 400k procedures annually. The high risk segment of the market represents about 20% of the annual procedures and Indocin is generally the standard of care.

If ASRT can successfully run studies next year they can accomplish 2 things.

Get exclusivity for 3 years
Market and promote the drug into the moderate risk patient segment which is 40% of the 400k annual procedures.

The point is there is a pathway to take this drug from $60 million in 2021 to $90 million in 2022 to $200m-$250m in 3 years.

As for M&A (a key part of the story)

Management has talked extensively about the M&A environment being increasingly more favorable over the last 3-4 months. And with the $70m (6% interest) in debt maturing in 2027 that is no longer a concern thanks to the convert in August 2022. In hindsight that arguably saved the company. Meanwhile they have $65 million in cash and generate $10-$20 million in free cash flow per quarter to transform the product portfolio.

Since Jan 2022 they have acquired 2 drugs. They bought Otrexup in January and acquired Sympazan in mid November. While both are small they have long term patents and significant potential. I expect more acquisitions to be announced sooner vs later to help diversify away from Indocin and to longer duration, patent protected assets. It's the primary focus of management at this time.

The valuation:

Management has raised guidance 6 times since the CEO took over in Dec 2020. The stock trades at 1.9x ev/ebitda and we have seen multiple contracts since last year. The analyst from Lake Street that launched coverage 35 days ago has raised his 2022 EBITDA estimate from $79 million to $97 million and his GAAP EPS estimate from $0.49 to $0.64 (all in the last 35 days).

I would make the case given mgmt's excellent execution, growth, acquisitions that it deserves a multiple higher than 1.9x. It's hard to find any public company trading at that low of a valuation and any that are are most likely near bankruptcy. A 3x multiple = $6/share vs last trade at $3.60. The analysts target are $8 based on 2.5x EV/'23 revs.

This is a story that is still in the early innings of its transformation and as that continues the valuation should rise on top of continued revenue/EBITDA/EPS upside.

Research

Thu, 08 Dec 2022 05:00:00 GMT

Assertio Holdings, Inc (NASDAQ:ASRT) (NASDAQ: $3.44; $166.1M market cap), a specialty pharmaceutical company, providing medicines in the areas of neurology, hospital, and pain and inflammation, was highlighted at the Planet Microcap Virtual Showcase.

Scott Weiss of Semco Capital presented the idea in the conference's “Stock Pitch World Cup” presentations. You can watch Scott’s pitch at 38:00 min mark of the “Team USA” pitches hosted by GeoInvesting Co-Founder Maj Soueidan.

This comes on the heels of the company recently raising its 2022 sales outlook, which we highlighted on Monday. ASRT now expects sales to be greater than $152 million, increased from prior guidance of greater than $141 million. The guidance implies Q4 2022 sales to be roughly $45 million, well ahead of current analyst estimates of $36.5 million.

Semco Capita wrote about ASRT in early February 2022 when the stock was trading at $2.60. You can see the article here and why Scott feels shares could reach targets of $4.73 to $9.78 based on EV/EBITDA multiples.

Research

Mon, 05 Dec 2022 15:14:06 GMT

Assertio Holdings, Inc.(NASDAQ:ASRT) (NASDAQ: $3.06; $147.7M market cap), a specialty pharmaceutical company, announced an increase in its full year 2022 outlook. The company now expects sales to be greater than $152 million, increased from prior guidance of greater than $141 million. The guidance implies Q4 2022 sales to be roughly $45 million, well ahead of current analyst estimates of $36.5 million.

Note that on August 23, 2022 we removed ASRT from our Model Portfolios due to a $60 million convertible senior note offering, but we recently stated that stock is back on our radar

Research

Tue, 23 Aug 2022 15:05:27 GMT

Closing Long Position in ASRT

Assertio Holdings, Inc.(NASDAQ:ASRT) (NASDAQ: $3.64; $175.3M market cap; 20 -25% markdown pre market), a specialty pharmaceutical company, announced a $60 million convertible senior note offering.

“The company announced the pricing of its offering of $60 million aggregate principal amount of 6.50% convertible senior notes due 2027 in a private offering to qualified institutional buyers. The issuance and sale of the Convertible Notes are scheduled to settle on August 25, 2022, subject to customary closing conditions. Assertio also granted the initial purchaser of the Convertible Notes an option to purchase, within a 13-day period beginning on, and including, the date on which the Convertible Notes are first issued, up to an additional $10 million principal amount of Convertible Notes."

This convertible note offering coupled with “At The Market” offering it has ongoing with Roth Capital (first tapped after our Fireside Chat with the CEO) has led us to make a decision to remove ASRT from our Select Long Disclosures Model Portfolio. We will look to see if the company plans to use the funds for possible acquisitions and re-evaluate the company if that occurs.

We added ASRT to our Select Long Disclosures Model Portfolio on July 25, 2022 when the stock was trading at $3.11 on the heels of an extremely bullish Fireside Chat we conducted with management. While the stock had a quick run and reached $4.44 (42% gain), it quickly retracted after its Q2 2022 results, where 2023 sales guidance was slightly below analyst estimates.

Having noted this, even with the dilution, the company is probably still in a position to report very strong EPS numbers, and the it’s balance sheet will probably improve . So, we could see the stock inching back up.

However, quite frankly, given our interpretation of the CEO’s negative position towards dilution, his belief that shares are extremely undervalued at the current prices, a large cash position, and that the company is producing a nice amount of cash, we’re a bit perplexed as to why the company entered into these dilutive actions at these prices. So, a lot of our decision is based on just not having a good read on the CEO at this time.

Our main question right now is how much more will the company have to dilute if they decide to go through with an acquisition? Furthermore, we still have to contend with the further potential selling pressure from the $100 million ATM.

Research

Mon, 08 Aug 2022 04:00:00 GMT

Assertio Holdings, Inc (NASDAQ:ASRT) (NASDAQ: $3.99; $181.2M market cap),a specialty pharmaceutical company, providing medicines in the areas of neurology, hospital, and pain and inflammation, reported strong Q2 2022 results:

Sales of $35.4 million vs $25.2 million in the prior year and ahead of analyst estimates of $31.8 million
Non-GAAP EPS of $0.28 vs a loss of $0.16 in the prior year and well ahead of analyst estimates of $0.08

“Second quarter results demonstrated diligent execution across our assets plus the benefit of ongoing efforts to optimize operating performance,” said Dan Peisert, President and Chief Executive Officer of Assertio. “As a result of the steady growth in sales and increased profitability through the first six months of 2022, we are raising our outlook for both revenue and non-GAAP adjusted EBITDA.

“Additionally, we are actively evaluating multiple asset acquisitions with an eye toward growing and diversifying our portfolio to take advantage of further operating leverage opportunities. The current business development pipeline includes both tuck-in candidates that could be funded through existing balance sheet cash and cash flows, as well as larger candidates that would create a robust transformation of our revenue base. While we remain committed to adding additional assets to achieve our business development goals and diversifying our business, our base business continues to perform well such that we anticipate 2023 revenues will exceed $120 million despite the loss of exclusivity for CAMBIA, and even in the absence of any additional acquisitions.”

Guidance:

2022 sales guidance of $129 to $137 million; up from $126 to $136; estimate is for $131.7 million
2022 Adjusted Ebitda of $66 to $74 million; up from $73 to $79; estimate is for $70.4 million
2023 sales guidance of at least $120 million; Estimates are for $121.9 million

While 2023 revenue guidance seems a bit light, it is our assumption that they do not include any sales from potential acquisitions.

It seems the company also raised $7 million at around three dollars a share. While this is not a huge negative when taking it into consideration that the stock has 45.4 million shares outstanding and that the proceeds were used to pay down high interest-rate debt, we were under the impression that there was no way the company would raise money at the current price levels, unless it was done for an acquisition. This is just a small piece of information to note as we continue covering the company.

After what we felt was a very bullish call with CEO Dan Peirsert on July 22, 2022, we decided to add ASRT to our Select Long Disclosures Model Portfolio.

ASRT was highlighted by GeoInvesting Member Semco Capital in early February 2022 when the stock was trading at $2.60. You can see the article here and why the author feels shares could reach targets of $4.73 to $9.78 based on EV/EBITDA multiples.

Research

Fri, 05 Aug 2022 15:50:27 GMT

Assertio Holdings, Inc.(NASDAQ:ASRT) (NASDAQ: $4.00; $181.7M market cap) - At the end of July we held a Fireside Chat with the company’s CEO, Dan Peisert. If you did not have a chance to attend the call, you can find the replay here. ASRT is a specialty pharmaceutical company that provides medicines in the areas of neurology, hospital, and pain and inflammation.

After what we felt was a very bullish call, we have decided to add ASRT to our Select Long Disclosures Model Portfolio.

As promised during yesterday’s August 2022 Open Forum (which has yet to be published and chaptered later today), we also broke out the video into several notable clip rewinds, which you can see here.

ASRT will report its Q2 2022 results on Monday morning.

Research

Mon, 25 Jul 2022 19:13:09 GMT

Assertio Holdings, Inc.(NASDAQ:ASRT) (NASDAQ: $3.11; $141.2M market cap) a specialty pharmaceutical company, provides medicines in the areas of neurology, hospital, and pain and inflammation.

On Friday we held a Fireside Chat with CEO Dan Peisert. If you did not have a chance to attend the call, you can find the replay here.

After what we felt was a very bullish call, we have decided to add ASRT to our Select Long Disclosures Model Portfolio.

On May 9, 2022, the company reported strong Q1 2022:

Sales of $35.5 million vs $26 million in the prior year
EPS of $0.20 vs $0.12 in the prior year
Adjusted EPS of $0.38 vs $0.27 (company adds back amortization of all intangible assets)
Adjusted EBITDA of $23.9 million vs $15.7 million

They Issued the following full year guidance:

Sales of $126.0 to $136.0 million (same as prior guidance)
Adjusted Ebitda of $66.0 to $74.0 million ( prio guidance $64 to $72 million)

ASRT was highlighted by GeoInvesting Member Semco Capital in early February 2022 when the stock was trading at $2.60. You can see the article here and why the author feels shares could reach targets of $4.73 to $9.78 based on EV/EBITDA multiples

Research

Wed, 08 Jun 2022 14:30:56 GMT

Assertio Holdings, Inc. (NASDAQ:ASRT) (NASDAQ: $3.37; $153.1M market cap) a specialty pharmaceutical company, provides medicines in the areas of neurology, hospital, and pain and inflammation. Shares of ASRT are nearing new 52 week highs of $3.52 on the heels of strong Q1 2022 results. On May 9, 2022 the company reported Q1 2022:

Sales of $35.5 million vs $26 million in the prior year
EPS of $0.20 vs $0.12 in the prior year

Issued the following full year guidance:

Sales of $126.0 to $136.0 million (same as prior guidance)
Adjusted Ebitda of $66.0 to $74.0 million ( prio guidance $64 to $72 million)

We are in the process of securing an interview with management to try determine if near and long term EPS analyst estimates need to be adjusted to reflect the strength of the first quarter. This is because future EPS estimates do not exhibit strong growth or the optimism that had been relayed to us at a conference we attended in Chicago earlier this year. Furthermore, the company beat analyst EPS estimates by $0.11 in Q1.

Research

Wed, 02 Sep 2015 15:44:26 GMT

PATK shares soar on acquisition and upgrade

It took it little longer than we anticipated, but the stock finally made a nice move to the upside. In our May 20, 2015 email when the stock was trading at $39.71 and via premium tweet on June 9, 2015 when the stock was trading at $37.25 we stated we had nibbled at shares as the stock has pulled back off highs despite reporting very strong Q1 2015 results. Yesterday, shares of PATK ($42.53) closed up 12% after hitting a new 52 week high of $44.95 on the heels of completing the acquisition of North American Forest Products and an upgrade to “strong buy” by CL King with a price target of $51.00. The acquisition of North American Forest Products will add roughly $165 million in revenue and be immediately accretive to earnings. Current estimates have PATK earnings at $2.49 EPS in 2015 and $3.18 EPS in 2016. We are currently reviewing analyst estimates to see if they fully reflect the recent acquisition. We are still long PATK.