— Company Implements New Cost Savings Initiatives Expected to Deliver Annualized Savings of $20.0 Million —

— Raises Full-Year 2019 Earnings Guidance Ranges —

— Lowers Full-Year 2019 Neurology Franchise Net Sales Guidance —

— Reduces Total Debt by $200.0 Million Year to Date —

 — Extends Significant Portion of Convertible Debt Maturity to 2024 —

LAKE FOREST, Ill., Nov. 06, 2019 (GLOBE NEWSWIRE) — Assertio Therapeutics, Inc. (NASDAQ: ASRT) today reported financial results for the quarter ended September 30, 2019 and provided an update on its business performance and strategic initiatives.

Third-Quarter Financial Highlights:
(unaudited)

  Third Quarter 2019(in millions, except earnings per share)GAAPNon-GAAP(1)Total Revenues$55.1—Net Income$3.3$23.2Earnings Per Share$0.05$0.24Adjusted EBITDA—$34.3

(1) All non-GAAP measures included in this earnings release are reconciled to the corresponding GAAP measures in the schedules attached.

“We reported another quarter of strong earnings growth, exceeding non-GAAP adjusted EBITDA expectations for the fifth time in the last six quarters, despite some softness in our top line,” said Arthur Higgins, President and CEO of Assertio. “As a result of this strong performance, as well as our outlook for the fourth quarter, today we are raising our non-GAAP adjusted EBITDA guidance range for the full year. We have achieved significant operational efficiencies over the past two years – and today we are announcing additional initiatives that we expect will deliver $15.0 million in annual savings beginning in 2020 and $20.0 million in annual savings thereafter. Our priority was, and remains, delivering strong cash flows as we rapidly de-lever the Company and better position it to pursue new growth opportunities.”

Third-Quarter Business Highlights:

  • Acceleration of Cost Savings Initiatives: Today the Company announced an acceleration of cost savings initiatives that it expects will deliver $15.0 million in savings beginning in 2020 and $20.0 million in annual savings thereafter. The Company will take a charge of approximately $4.0 million in the fourth quarter of 2019 related to these initiatives. This acceleration in cost savings was completed after a thorough review of the Company’s organizational structures, budgets, capital projects and capabilities.
  • Announced Debt Refinancing: The Company announced in August that it entered into separate, privately negotiated exchange agreements (Exchange Agreements) with a limited number of holders of Assertio’s currently outstanding 2.50% Convertible Notes due 2021 (2021 Notes). Pursuant to the Exchange Agreements, Assertio exchanged approximately $200.0 million aggregate principal amount of 2021 Notes for a combination of (a) $120.0 million of its 5.00% Convertible Senior Notes due August 15, 2024 (2024 Notes), (b) $30.0 million in cash plus accrued but unpaid interest on the 2021 Notes, and (c) the issuance of 15.8 million shares of Assertio’s common stock. This transaction reduces total outstanding debt, de-levers the balance sheet, extends maturity of a substantial portion of the Company’s convertible debt, and makes Assertio a potentially more attractive business development partner.
  • Significant Reduction in Secured Debt: As of September 30, 2019, the Company has made scheduled principal repayments of $100.0 million in 2019, reducing the Company’s senior secured debt to $182.5 million. The Company also paid an additional $20.0 million principal payment in October 2019, further reducing its senior secured debt to $162.5 million. Combined with the $80.0 million of debt reduced in our debt refinancing, the Company has reduced its gross debt leverage to 3.4x of the mid-point of its adjusted EBITDA guidance range.
  • Favorable NUCYNTA® Patent Ruling Upheld: In the third quarter, there was a period during which the defendants could have petitioned the U.S. Supreme Court for writ of certiorari. That period has now passed. As a result, the District Court’s favorable decision is final and non-appealable. Previously, the United States Court of Appeals for the Federal Circuit ruled in favor of Assertio with respect to the Company’s patent litigation against three filers of Abbreviated New Drug Applications (ANDAs) for the NUCYNTA franchise. The Federal Circuit’s ruling affirms the decision of the United States District Court (D.N.J.), which found U.S. patent No. 7,994,364 (the ’364 Patent) to be valid and infringed by the defendants. The ’364 Patent covers the entire NUCYNTA franchise until December 2025.*  The NUCYNTA franchise is commercialized by Collegium Pharmaceutical, Inc. (Collegium). The Company receives royalties from Collegium based on net sales of the franchise.
  • Cosyntropin: The Company announced on October 21, 2019 that its development partner West Therapeutic Development, LLC (West) has received a Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA) for its New Drug Application (NDA) for its injectable formulation of long-acting cosyntropin (synthetic adrenocorticotropic hormone, or ACTH). West is seeking approval for use as a diagnostic drug in the screening of patients presumed to have adrenocortical insufficiency. The primary focus of the CRL relates to the FDA determination that certain pharmacodynamic parameters were not adequately achieved. West and Assertio will work together to determine if the FDA’s comments set forth in the CRL can be adequately addressed.

*Patent expiration dates reflect the addition of six months of pediatric patent term extension Assertio anticipates securing from the United States Food and Drug Administration.

Revenue Summary:
(in thousands, unaudited)

 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018Product sales, net       Gralise$14,931  $14,630  $46,008  $43,272 CAMBIA8,135  10,365  23,701  24,870 Zipsor3,273  4,441  9,028  13,175 Total neurology product sales, net26,339  29,436  78,737  81,317 NUCYNTA products1,254  11  1,153  18,782 Lazanda(91) (12) (1) 528 Total product sales, net27,502  29,435  79,889  100,627 Commercialization agreement:       Commercialization rights and facilitation services27,304  27,781  89,163  87,055 Revenue from transfer of inventory—  —  —  55,705 Royalties and Milestone Revenue341  20,277  1,226  25,784 Total revenues$55,147  $77,493  $170,278  $269,171 

2019 Financial Guidance:
The Company is raising its previous 2019 earnings guidance range and lowering its Neurology Franchise Net Sales guidance to $102 to $105 million.

 Prior 2019 GuidanceCurrent 2019 GuidanceNeurology Franchise
Net Sales
Low Single Digit Growth$102 to $105 millionGAAP Net Loss(1)($68) to ($58) million($47) to ($42) millionNon-GAAP
Adjusted EBITDA(1)(2)
$118 to $128 million$124 to $129 million

(1) Guidance includes $2.8 million of non-cash Collegium warrant related income and excludes any future warrant mark-to-market adjustments, which cannot be estimated.

(2) Guidance excludes any Collegium warrant mark-to-market adjustments.

Conference Call and Webcast:
Assertio will host a conference call today, Wednesday, November 6, 2019 beginning at 4:30 p.m. ET to discuss its results. This event can be accessed in three ways:

About Assertio Therapeutics, Inc.
Assertio Therapeutics is committed to providing responsible solutions to advance patient care in the Company’s core areas of neurology, orphan and specialty medicines. Assertio currently markets three FDA-approved products and continues to identify, license and develop new products that offer enhanced options for patients that may be under served by existing therapies. To learn more about Assertio, visit .

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
This news release contains forward-looking statements. These statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to regulatory approval and clinical development of long-acting cosyntropin, expectations regarding royalties to be received based on sales of NUCYNTA and NUCYNTA ER, expectations regarding potential business opportunities and other risks outlined in the Company’s public filings with the Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. All information provided in this news release speaks as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to update or revise its forward-looking statements.

Investor and Media :
John B. Thomas
Senior Vice President, Investor Relations and Corporate Communications

Non-GAAP Financial Measures
To supplement the Company’s financial results presented on a U.S. generally accepted accounting principles (GAAP) basis, the Company has included information about non-GAAP revenue, non-GAAP adjusted earnings, non-GAAP adjusted diluted earnings per share, non-GAAP adjusted EBITDA and other non-GAAP financial measures as useful operating metrics. The Company believes that the presentation of these non-GAAP financial measures, when viewed with results under GAAP and the accompanying reconciliation, provides supplementary information to analysts, investors, lenders, and the Company’s management in assessing the Company’s performance and results from period to period. The Company uses these non-GAAP measures internally to understand, manage and evaluate the Company’s performance, and in part, in the determination of bonuses for executive officers and employees. These non-GAAP financial measures should be considered in addition to, and not a substitute for, or superior to, net income or other financial measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, non-GAAP measures used by other companies.

Specified Items
Non-GAAP measures presented within this release exclude specified items. The Company considers specified items to be significant income/expense items not indicative of current operations, including the related tax effect. Specified items include non-cash adjustment to Collegium agreement revenue and cost of sales, release of NUCYNTA and Lazanda sales reserves for products the Company is no longer selling, interest income, interest expense, amortization, acquired in-process research and development and non-cash adjustments related to product acquisitions, stock-based compensation expense, non-cash interest expense related to debt, depreciation, taxes, transaction costs, CEO transition, restructuring costs, adjustments to net sales related to reserves recorded prior to the Company’s exit of opioid commercialization activities, legal costs and expenses incurred in connection with opioid-related litigation, investigations and regulations pertaining to the company’s historical commercialization of opioid products, certain types of legal settlements, disputes, fees and costs, gains or losses resulting from debt refinancing transactions and disposal or impairment of long-lived assets, and to adjust for the tax effect related to each of the non-GAAP adjustments.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018Revenues:       Product sales, net$27,502  $29,435  $79,889  $100,627 Commercialization agreement, net27,304  27,781  89,163  142,760 Royalties and milestones341  20,277  1,226  25,784 Total revenues55,147  77,493  170,278  269,171 Costs and expenses:       Cost of sales (excluding amortization of intangible assets)2,243  2,975  6,942  17,772 Research and development expenses1,476  2,127  4,531  5,835 Selling, general and administrative expenses36,117  33,409  85,917  93,750 Amortization of intangible assets25,444  25,443  76,331  76,331 Restructuring charges—  3,911  —  18,742 Total costs and expenses65,280  67,865  173,721  212,430 (Loss) income from operations(10,133) 9,628  (3,443) 56,741 Other income (expense):       Litigation settlement—  62,000  —  62,000 Gain on debt extinguishment26,385  —  26,385  — Interest expense(13,872) (17,190) (45,268) (52,268)Other (expense) income, net(764) 677  (2,613) 973 Total other expense (income)11,749  45,487  (21,496) 10,705 Net income (loss) before income taxes1,616  55,115  (24,939) 67,446 Income tax benefit (expense)1,715  (6,845) 364  (6,400)Net income (loss)$3,331  $48,270  $(24,575) $61,046 Basic net income (loss) per share0.05  0.76  (0.36) 0.96 Diluted net income (loss) per share0.05  0.65  (0.36) 0.93 Shares used in computing basic net income (loss) per share72,747  63,917  67,332  63,714 Shares used in computing diluted net income (loss) per share72,747  82,690  67,332  82,282             

 CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

 September 30, 2019 December 31, 2018ASSETS   Current assets:   Cash and cash equivalents$54,181  $110,949 Accounts receivable, net43,427  37,211 Inventories, net3,314  3,396 Prepaid and other current assets23,480  56,551 Total current assets124,402  208,107 Property and equipment, net3,873  13,064 Intangible assets, net615,768  692,099 Investments7,244  11,784 Other long-term assets5,579  7,812 Total assets$756,866  $932,866 LIABILITIES AND SHAREHOLDERS’ EQUITY   Current liabilities:   Accounts payable$22,700  $6,138 Accrued rebates, returns and discounts60,979  75,759 Accrued liabilities33,270  31,361 Current portion of Senior Notes80,000  120,000 Interest payable6,687  11,645 Other current liabilities2,096  1,133 Total current liabilities205,732  246,036 Contingent consideration liability981  1,038 Senior Notes94,661  158,309 Convertible Notes190,923  287,798 Other long-term liabilities16,135  19,350 Total liabilities508,432  712,531 Commitments and contingencies   Shareholders’ equity:   Common stock8  6 Additional paid-in capital455,601  402,934 Accumulated deficit(207,175) (182,600)Accumulated other comprehensive loss—  (5)Total shareholders’ equity248,434  220,335 Total liabilities and shareholders‘ equity$756,866  $932,866         

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)

 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018GAAP net (loss)/income$3,331  $48,270  $(24,575) $61,046 Commercialization agreement revenues (1)3,804  2,862  7,667  (46,426)Commercialization agreement cost of sales (2)—  —  —  6,200 NUCYNTA and Lazanda revenue reserves (3)(1,163) 2  (1,152) (11,249)Expenses for opioid-related litigation, investigations and regulations (4)2,174  1,313  7,024  4,360 Intangible amortization related to product acquisitions25,444  25,443  76,331  76,331 Contingent consideration related to product acquisitions—  (117) (142) (658)Purdue litigation settlement—  (62,000) —  (62,000)Stock-based compensation3,004  2,944  8,340  7,890 Interest and other income(218) (677) (915) (973)Interest expense13,872  17,190  45,268  52,268 Depreciation278  (1,252) 894  1,677 Income tax (benefit) expense(1,715) 6,845  (364) 6,400 Restructuring and related costs  (5)—  4,079  —  19,383 Other costs—  75  —  123 Loss on disposal of equipment (6)10,070  —  10,076  — Gain on debt extinguishment, net (7)(25,968) —  (25,968) — Change in fair value of warrants1,423  —  4,900  — Non-GAAP adjusted EBITDA$34,336  $44,977  $107,384  $114,372 

(1) For the period from January 8, 2018 through November 8, 2018, the adjustment relates to the non-cash value assigned to inventory transferred to Collegium.  As of the date of the Commercialization Amendment, on November 8, 2018, the Company ceased recognition of fixed revenues and began the recognition of variable revenues when they become due beginning in January 2019. The adjustment for the three and nine months ended September 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Represents the cash received for inventory transferred to Collegium at the commencement of the Commercialization Agreement.

(3) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing. The three months ended March 31, 2018 included a $12.5 million benefit related to the release of sales reserves for which the Company is no longer financially responsible, net of $1.8 million in royalties payable to a third party.

(4) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products.

(5) Restructuring and other costs represents non-recurring costs associated with the Company’s restructuring, reincorporation, headquarters relocation and CEO transition.

(6) Recognition of $10.1 million loss on the September 2019 disposal of equipment residing at a manufacturing supplier that will no longer be used in future production.

(7)  In connection with the August 2019 debt refinancing of the convertible notes the Company recognized a net gain of $26.0 million, comprised of a $26.4 million gain on debt extinguishment offset by approximately $0.4 million of nonrecurring related expenses.

RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EARNINGS
(in thousands, except per share amounts)
(unaudited) 

 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018GAAP net (loss)/income$3,331  $48,270  $(24,575) $61,046 Commercialization agreement revenues (1)3,804  2,862  7,667  (46,426)Commercialization agreement cost of sales (2)—  —  —  6,200 Non-cash interest expense on debt5,870  5,490  18,090  16,298 Nucynta and Lazanda revenue reserves (3)(1,163) 2  (1,152) (11,249)Expenses for opioid-related litigation, investigations and regulations (4)2,174  1,313  7,024  4,360 Purdue litigation settlement—  (62,000) —  (62,000)Intangible amortization related to product acquisitions25,444  25,443  76,331  76,331 Contingent consideration related to product acquisitions—  (117) (142) (658)Stock-based compensation3,004  2,944  8,340  7,890 Restructuring and related costs (5)—  4,079  —  19,383 Other costs—  75  (332) 123 Loss on disposal of equipment  (6)10,070  —  10,076  — Gain on debt extinguishment, net (7)(25,968) —  (25,968) — Change in fair value of warrants1,423  —  4,900  — Income tax effect of non-GAAP adjustments (8)(4,800) 4,551  (20,963) (1,159)Non-GAAP adjusted earnings$23,189  $32,912  $59,296  $70,139 Add interest expense of convertible debt, net of tax (9)1,770  1,704  5,176  5,110 Numerator$24,959  $34,616  $64,472  $75,249 Shares used in calculation (9)105,322  82,690  90,198  82,282 Non-GAAP adjusted diluted earnings per share$0.24  $0.42  $0.71  $0.91 

(1) For the period from January 8, 2018 through November 8, 2018, the adjustment relates to the non-cash value assigned to inventory transferred to Collegium.  As of the date of the Commercialization Amendment, on November 8, 2018, the Company ceased recognition of fixed revenues and began the recognition of variable revenues when they become due beginning in January 2019. The adjustment for the three and nine months ended September 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Represents the cash received for inventory transferred to Collegium at the commencement of the Commercialization Agreement.

(3) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing. The three months ended March 31, 2018 included a $12.5 million benefit related to the release of sales reserves for which the Company is no longer financially responsible, net of $1.8 million in royalties payable to a third party.

(4) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products.

(5) Restructuring and other costs represents non-recurring costs associated with the Company’s restructuring, reincorporation, headquarters relocation and CEO transition.

(6) Recognition of $10.1 million loss on the September 2019 disposal of equipment residing at a manufacturing supplier that will no longer be used in future production.

(7)  In connection with the August 2019 debt refinancing of the convertible notes the Company recognized a net gain of $26.0 million, comprised of a $26.4 million gain on debt extinguishment offset by approximately $0.4 million of nonrecurring related expenses.

(8) Calculated by taking the pre-tax non-GAAP adjustments and applying the statutory tax rate.

(9) The Company uses the if-converted method to compute diluted earnings per share with respect to its convertible debt.

RECONCILIATION OF GAAP NET INCOME (LOSS) PER SHARE TO
NON-GAAP ADJUSTED EARNINGS PER SHARE
(unaudited)

 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018        GAAP net (loss)/income per share$0.05  $0.76  $(0.36) $0.96 Conversion from basic shares to diluted shares(0.02) (0.17) 0.08  (0.22)Commercialization agreement revenues0.04  0.03  0.09  (0.57)Commercialization agreement cost of sales—  —  —  0.08 Non-cash interest expense on debt0.06  0.07  0.20  0.20 NUCYNTA and Lazanda revenue reserves(0.01) —  (0.01) (0.14)Expenses for opioid-related litigation, investigations and regulations0.02  0.01  0.08  0.05 Purdue litigation settlement—  (0.75) —  (0.75)Intangible amortization related to product acquisitions0.24  0.31  0.85  0.92 Contingent consideration related to product acquisitions—  —  —  — Stock based compensation0.03  0.03  0.09  0.10 Restructuring and related costs—  0.05  —  0.23 Loss on disposal of equipment0.10  —  0.11  — Gain on debt extinguishment, net(0.25) —  (0.29) — Change in fair value of warrants0.01  —  0.05  — Income tax effect of non-GAAP adjustments(0.05) 0.06  (0.24) (0.01)Add interest expense of convertible debt, net of tax0.02  0.02  0.06  0.06 Non-GAAP adjusted diluted earnings per share$0.24  $0.42  $0.71  $0.91                 

RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the three months ended September 30, 2019
(in thousands)
(unaudited)

  Commercialization agreement revenues Product Sales Royalties and milestones Cost of sales Research and development expense Selling, general
and administrative expense
 Amortization
of intangible assets
 Interest expense Other
(Expense) Income, Net
 Income taxes
(expense) benefit
GAAP as reported $27,304  $27,502  $341  $2,243  $1,476  $36,117  $25,444  $(13,872) $25,621  $1,715 Commercialization agreement revenues and cost of sales 3,804  —  —  —  —  —  —  —  —  — Non-cash interest expense on debt —  —  —  —  —  —  —  5,870  —  — NUCYNTA and Lazanda revenue reserves —  (1,163) —  —  —  —  —  —  —  — Expenses for opioid-related litigation, investigations and regulations —  —  —  —  —  (2,174) —  —  —  — Intangible amortization related to product acquisitions —  —  —  —  —  —  (25,444) —  —  — Stock based compensation —  —  —  (28) (165) (2,811) —  —  —  — Restructuring and other costs —  —  —  —  —  —  —  —  —  — Loss on disposal of equipment —  —  —  —  —  (10,070) —  —  —  — Gain on debt extinguishment, net —  —  —  —  —  —  —  —  (25,968) — Change in fair value of warrants —  —  —  —  —  —  —  —  1,423  — Income tax effect of non-GAAP adjustments —  —  —  —  —  —  —  —  —  (4,800)Non-GAAP adjusted $31,108  $26,339  $341  $2,215  $1,311  $21,062  $—  $(8,002) $1,076  $(3,085)                                         

RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the nine months ended September 30, 2019
(in thousands)
(unaudited)

  Commercialization agreement
revenues
 Product Sales Royalties and milestones Cost of sales Research and development expense Selling, general
and administrative expense
 Amortization
of intangible assets
 Interest expense Other
(Expense) Income, Net
 Income taxes
(expense) benefit
GAAP as reported $89,163  $79,889  $1,226  $6,942  $4,531  $85,917  $76,331  $(45,268) $23,772  $364 Commercialization agreement revenues and cost of sales 7,667  —  —  —  —  —  —  —  —  — Non-cash interest expense on debt —  —  —  —  —  —  —  18,090  —  — NUCYNTA and Lazanda revenue reserves —  (1,152) —  —  —  —  —  —  —  — Expenses for opioid-related litigation, investigations and regulations —  —  —  —  —  (7,024) —  —  —  — Intangible amortization related to product acquisitions —  —  —  —  —  —  (76,331) —  —  — Contingent consideration related to product acquisitions —  —  —  —  —  142  —  —  —  — Stock based compensation —  —  —  (78) (514) (7,748) —  —  —  — Restructuring and other costs —  —  —  —  —  —  —  —  —  — Loss on disposal of equipment —  —  —  —  —  (10,076) —  —  —  — Gain on debt extinguishment, net —  —  —  —  —  —  —  —  (25,968) — Change in fair value of warrants —  —  —  —  —  —  —  —  4,900  — Other costs —  —  —  —  —  —  —  —  (332) — Income tax effect of non-GAAP adjustments —  —  —  —  —  —  —  —  —  (20,963)Non-GAAP adjusted $96,830  $78,737  $1,226  $6,864  $4,017  $61,211  $—  $(27,178) $2,372  $(20,599)                                         

RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the three months ended September 30, 2018
(in thousands)
(unaudited)

  Commercialization agreement revenues Product Sales Royalties and milestones Cost of sales Research and development expense Selling, general
and administrative expense
 Restructuring Charges Amortization of intangible assets Interest expense Other (Expense) Income, Net Income taxes (expense) benefitGAAP as reported $27,781  $29,435  $20,277  $2,975  $2,127  $33,409  $3,911  $25,443  $(17,190) $62,677  $(6,845)Commercialization agreement revenues and cost of sales 2,862  —  —  —  —  —    —  —  —  — Non-cash interest expense on debt —  —  —  —  —  —  —  —  5,490  —  — NUCYNTA and Lazanda revenue reserves —  2  —  —  —  —  —  —  —  —  — Expenses for opioid-related litigation, investigations and regulations —  —  —  —  —  (1,313) —  —  —  —  — Intangible amortization related to product acquisitions —  —  —  —  —  —  —  (25,443) —  —  — Contingent consideration related to product acquisitions —  —  —  —  —  117  —  —  —  —  — Stock based compensation —  —  —  —  (270) (2,674) 173  —  —  —  — Restructuring and other costs —  —  —  —  —  (243) (4,084) —  —  —  — Purdue litigation settlement —  —  —  —  —  —  —  —  —  (62,000) — Income tax effect of non-GAAP adjustments —  —  —  —  —  —  —  —  —  —  4,551 Non-GAAP adjusted $30,643  $29,437  $20,277  $2,975  $1,857  $29,296  $—  $—  $(11,700) $677  $(2,294)                                             

RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the nine months ended September 30, 2018
(in thousands)
(unaudited)

  Commercialization agreement revenues Product Sales Royalties and milestones Cost of sales Research and development expense Selling, general and administrative expense Restructuring Charges Amortization
of intangible assets
 Interest expense Other (Expense) Income, Net Income taxes (expense) benefitGAAP as reported 142,760  100,627  25,784  17,772  5,835  93,750  18,742  76,331  (52,268) 62,973  (6,400)Commercialization agreement revenues and cost of sales (46,426)   —  (6,200) —  —    —  —  —  — Non-cash interest expense on debt —  —  —  —  —  —  —  —  16,298  —  — NUCYNTA and Lazanda revenue reserves —  (11,249) —  —  —  —  —  —  —  —  — Expenses for opioid-related litigation, investigations and regulations —  —  —  —  —  (4,360) —  —  —  —  — Intangible amortization related to product acquisitions —  —  —  —  —  —  —  (76,331) —  —  — Contingent consideration related to product acquisitions —  —  —  —  —  658  —  —  —  —  — Stock based compensation —  —  —  (30) (337) (7,523) (2,385) —  —  —  — Restructuring and other costs —  —  —  —  —  (764) (16,357) —  —  —  — Purdue litigation settlement —  —  —  —  —  —  —  —  —  (62,000) — Income tax effect of non-GAAP adjustments —  —  —  —  —  —  —  —  —  —  (1,159)Non-GAAP adjusted 96,334  89,378  25,784  11,542  5,498  81,761  —  —  (35,970) 973  (7,559)                                  

FULL-YEAR 2019 NON-GAAP GUIDANCE RECONCILATION
(in millions)
(unaudited)

 Earnings (1) Low EndHigh EndGAAP $(47) $(42)Specified Items(2) $171  $171 Non-GAAP $124  $129 

(1) GAAP net loss guidance refers to GAAP net loss and non-GAAP earnings guidance refers to non-GAAP adjusted EBITDA.

(2) For purposes of this forward-looking reconciliation, a description of the categories of specified items included in this reconciliation are detailed in the tables above.

SENIOR SECURED NOTE COVENANT DISCLOSURES

The Company was in compliance with its covenants, including the Senior Secured Debt Leverage Ratio and Net Sales covenants, with respect to the Company’s senior secured notes as of September 30, 2019.  Set forth below are additional disclosures that the Company is required to make in connection with the senior secured notes.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
For the Rolling Twelve Month Period Ended September 30, 2019
(in thousands)
(unaudited)

The below reconciliation discloses the calculation of Adjusted EBITDA (as defined in the Company’s senior secured notes) on a rolling twelve month basis to support covenant compliance in connection with our senior secured notes.

 Twelve Months Ended September 30, 2019GAAP net (loss)/income$(48,713)Commercialization agreement revenues (1)28,929 Nucynta and Lazanda revenue reserves (2)(2,176)Expenses for opioid-related litigation, investigations and regulations (3)10,561 Intangible amortization related to product acquisitions101,774 Contingent consideration related to product acquisitions1 Stock-based compensation10,889 Interest and other income(1,139)Interest expense61,881 Depreciation1,148 Income taxes expense (benefit)(5,697)Restructuring and related costs  (4)1,881 Loss on disposal of equipment (5)10,076 Gain on debt extinguishment, net (6)(25,968)Change in fair value of warrants4,900 Adjusted EBITDA$148,347 

(1) The adjustment for the twelve months ended September 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing.

(3) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products.

(4) Restructuring and other costs represents non-recurring costs associated with the Company’s restructuring, reincorporation, headquarters relocation and CEO transition.

(5) Recognition of $10.1 million loss on the September 2019 disposal of equipment residing at a manufacturing supplier that will no longer be used in future production.

(6)  In connection with the August 2019 debt refinancing of the convertible notes the Company recognized a net gain of $26.0 million, comprised of a $26.4 million gain on debt extinguishment offset by approximately $0.4 million of nonrecurring related expenses.

Additional Covenant Disclosures

Long-acting cosyntropin has not yet been launched for commercial sale and therefore no revenue in respect of this product was recognized by the Company as of September 30, 2019.

During the rolling twelve month period ended September 30, 2019, the Company collected $123.4 million in cash receipts, net of cash payments made, in connection with the Company’s Commercialization Agreement with Collegium.