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Ajay Patel

Thanks, Brendan. Today, I'll walk through our financial results for the fourth-quarter and full year 2024. Before I begin, I want to highlight a key -- few key points. My commentary will focus on quarter-over-year comparisons as year-over-year comparisons are less relevant due to the Spectrum acquisition and Indocin's generic competition in late 2023. Rolvedon is now our lead asset and brings with it associated changes in margin, operating cost structure and cash flows as seen in the 2024 results.
Q4 product sales were $29.6 million, up $0.9 million from Q3, driven by strong Rolvedon and Otrexup sales. Rolvedon sales were $15.4 million, up $0.4 million, driven by higher volume, partially offset by changes in pricing. The Q4 step-up in volume was inclusive of new customer stocking, which helps to diversify our base and expand our opportunities. We do expect the stocking pull-through to occur throughout the first quarter.
Indocin sales were $5.5 million, slightly down from $5.7 million in Q3 due to pricing impacts from generic competition. Reported gross margin was 61%, down from 74% in Q3 due to $2.9 million in higher excess inventory write-down primarily for Indocin due to generic competition. Excluding these charges, gross margin was 71% with the decline from Q3 driven by changes in product mix.
Turning to operating expenses. SG&A expense was $21.4 million, up from $16.7 million in Q3. R&D expense was $1.2 million, slightly up from $1 million in Q3. Adjusted operating expenses, which excludes stock compensation, D&A, and changes in fair value and impairments, was $21.6 million in Q4 compared to $16.4 million in Q3. Fourth-quarter adjusted operating expenses reflected in net $5.4 million increase in litigation contingencies, which was partially offset by lower general operating expenses.
GAAP net income for the fourth quarter was a loss of $10.5 million compared to a loss of $2.9 million in the third quarter. Fourth quarter was impacted by an impairment charge on intangible assets of $5.2 million. Adjusted EBITDA for the fourth quarter was a loss of $0.5 million compared to income of $5.3 million in the prior quarter. Fourth-quarter adjusted EBITDA was impacted by the inventory write-downs and litigation contingencies. A detailed reconciliation of adjusted EBITDA is available in our press release.
Turning to full-year results. I wanted to highlight key takeaways in comparison to our 2024 guidance and related commentary previously provided. Total product sales were $120.8 million, at the high end of our sales guidance range. Rolvedon sales exceeded our expectation at $60.1 million. Indocin sales exceeded our expectations at $26.8 million.
Gross margins performed largely as expected based on the change in product mix from Indocin to Rolvedon. However, it was negatively impacted by $4.2 million in write-down for Indocin excess inventory as a result of generic competition, which is now behind us.
Adjusted operating expenses were $73.7 million, which was higher than expectations. This was mainly due to higher litigation-related costs, including about $1 million in net contingency reserves. Full-year adjusted EBITDA was $17.1 million, below the $20 million low-end guidance range mainly due to the $4 million in Indocin inventory write-downs and $1 million in higher litigation contingencies. The business generated $26.4 million in operating cash flows in 2024, allowing us to exceed the high-end cash goal of $100 million.
As a reminder, in 2024, we began to invest cash into short-term investments. Our total cash position includes cash and cash equivalents and short-term investments.
With that, I will turn the call back to Brendan to discuss 2025 priorities and outlook.

Brendan O'Grady

Thanks, Ajay. So now with 2024 behind us, I would like to turn to 2025, our year of transformation. I'd like to begin by explaining clearly what I mean when I say transformation. It really comes down to four strategic priorities in 2025.
Number one is simplifying our structure and processes. This really started late last year with the appointment of Mary Pietryga as Chief Commercial Officer and Paul Schwichtenberg as Chief Transformation Officer. Mary will focus on go-forward commercial strategy and aligning the commercial organization to execute on our growth priorities, while Paul will work directly with me, Ajay and the entire management team to streamline overall structure and processes to enable a successful transformation of our business.
Number two is focusing on growth assets, which today are primarily Rolvedon and Sympazan to which we hope to build upon.
Number three is reducing our legal exposure and associated OpEx. Like many companies that have grown through M&A, we have inherited a significant amount of legal baggage over the years. We have made significant progress in reducing this exposure in 2024 and will continue to do so in 2025. And this will ultimately have a beneficial effect on OpEx and EBITDA going forward.
Number four is deploying our capital in a smart and accretive way to generate long-term value. We are currently in the process of evaluating numerous strategic opportunities to better position Assertio for near-term and sustainable growth. While I want to emphasize that we are engaging in many transformative strategic discussions, I am not able to disclose additional details at this time.
I also want to remind all our stakeholders that while we have strengthened our balance sheet, which will expand our hunting grounds and improve our odds for closing a strategic deal, any deal must be synergistic, complementing our omnichannel commercial approach and must make economic sense.
As I look at 2025, we believe modest growth in Rolvedon is possible this year combined with double-digit Sympazan growth but being largely offset by continued Indocin decline and the rest of the portfolio being flat to slightly declining. While we have made realistic assumptions as it relates to Indocin, the market is uncertain and difficult to predict. In addition, the long-acting G-CSF market is very competitive and continues to be dynamic from quarter to quarter.
That said, I want to be clear that we are focused on growing Rolvedon and continue to add new Rolvedon accounts and customers late in 2024 while expanding payer access early this year to better position us for expansion into the commercial and institutional segments. To enable that growth, as Ajay mentioned, we increased inventory at the end of Q4 to support customer and TAM expansion. As we bring those customers online, it will take time to pull through some of the inventory. Hence, you should not expect to see equal quarters as you saw in 2024, where we were primarily focused on the Part B community oncology clinics segment.
However, to achieve continued growth in Rolvedon, we must expand beyond the community oncology clinics segment. This will also be critical for continued growth in 2026 and beyond. For these reasons, Q1 Rolvedon sales will likely be lower than Q4, but Q2 should see growth from Q1.
In addition, as a result of previously mentioned pilot project, we have increased our promotional efforts on Sympazan, combining our nonpersonal promotion platform with a small field sales team to call on high-decile prescribers in key markets.
Lastly, as I stated, we are currently evaluating numerous strategic options and opportunities that will impact our go-forward strategy should they play out. Given that background and the uncertainty of 2025, I'm giving guidance ranges for net sales between $108 million and $123 million and adjusted EBITDA of $10 million to $19 million. I hope to be in a position to lay out our strategy in more detail during the May earnings call and provide updates to our strategy and guidance ranges as appropriate throughout the year.
And with that, I think we're ready for Q&A. Operator, please go ahead with the instructions.

Question and Answer Session

Operator

(Operator Instructions) Jim Sidoti, Sidoti & Company.

James Sidoti

So it's a pretty broad guidance range. What are the factors that could change that gets you from the $108 million to $123 million?

Brendan O'Grady

Jim, thanks for the question. Yeah, I know it's a pretty high guidance range. There's a lot of puts and takes this year as we look at the business. We're still not quite certain how Indocin will evolve. And of course, Indocin has traditionally had a pretty good margin. So that could have an impact on EBITDA one way or the other.
I mentioned that the long-acting G-CSF market is dynamic from quarter to quarter. We've done very well in the Medicare Part B space. We've grown share, but we really need to expand beyond that into commercial and institutional segments so -- to continue to fuel that growth.
So there's a lot of uncertainty. There's uncertainty to the rest of our portfolio. So as we look at 2025, we felt it appropriate to give a wide guidance range. And as some of the strategic options that aren't included in the guidance, whether they come to fruition or not, we will come back and narrow that guidance as appropriate.

James Sidoti

All right. I know you said to ask one question, but I'll just throw one more in. How likely is it that you do an acquisition in the next 12 months?

Brendan O'Grady

I mean, I think it's -- I think the odds are above 50/50. It's hard to put a number on it. I mean we've certainly strengthened the balance sheet, which puts us really in a different range of assets that we can look at. So there's a broader range of assets that we can look at. So that's all good.
But the important thing here is we're trying to find the right fit for the organization. We certainly don't want to overpay. It's been a little bit of a seller's market. And it has to fit our model. So we've seen some things.
We've had numerous discussions. We have discussions ongoing today. But it's hard to tell when or if they'll pan out. But I'm optimistic that we will do something in this year.

Operator

Thomas Flaten, Lake Street Capital Markets, LLC.

Thomas Flaten

Brendan, maybe I could start. You had an entire kind of pillar for 2025 around legal exposure, and you had the relatively large legal reserve that was taken in the fourth quarter. Can you maybe provide some color around what's exposures are and just how we should think about what that means for you guys going forward?

Brendan O'Grady

Yeah. No. I mean -- and we've talked about it in the past, and thanks for the question, Thomas. But I mean, I think the legal exposure is well known. I mean we've got the ongoing opioid legal exposure that's there.
We've worked through that. We've had, I don't know, 140, 140-some cases dismissed to date, and we're optimistic that we'll continue on a good trajectory there. But it just takes time, right? We don't control the MDL. We don't control what that looks like, but we're making progress in reducing that exposure.
We've had some shareholder losses that we're working through and some other things. So I think, without divulging any confidential information, we made progress last year, as I said, and I think we'll make progress this year. And as we clear some of those issues, our OpEx on legal comes down, and that has a direct impact on EBITDA. So it's a little bit of a journey but things are going in the right direction.

Thomas Flaten

And then switching gears, the April ASP files from yesterday, it looks like you had a little bit of an uptick in the Rolvedon ASP. Can you confirm that and then also talk about what you guys have been doing to manage ASP?

Ajay Patel

Yeah. Thomas, I can take that. Thanks for the question. You are right, yes. If you kind of look at it sequentially over quarters, we did see about a 2% increase in our published ASP that just came out. It's primarily been a function of ensuring we can continue to get the volume gains as we penetrate more in the market and then being really disciplined on the pricing side. So I think a combination of that and execution by our commercial team has really paid dividends in that.

Operator

Naz Rahman, Maxim Group.

Naz Rahman

Congrats on the quarter. Just a few on Rolvedon. So obviously, you have the same-day dosing data come out in December. I guess at this point, two questions. One, are you seeing any physicians prescribe Rolvedon for same-day dosing or have you seen like an uptick in that?
And two, could you kind of walk us through, I guess, now the logistics and time lines for getting that into the NCCN guidelines and when we could really start seeing the benefits of that data?

Brendan O'Grady

Yes. Sure. Naz, thanks for the question. I think that we haven't really seen the impact of same-day dosing or an impact same-day dosing with Rolvedon yet. We just presented the results at the San Antonio Breast Cancer Conference in December.
So that was when the information really became publicly available. We presented the results again, I think at the Miami Breast Cancer Conference just a week or two ago here in March. And the process now is that to put the manuscript in a peer-reviewed journal and then in the back half of the year, approach NCCN for potential inclusion in the guidelines. So it's an evolving strategy throughout the year. I think up until this point, when we were asked by providers or physicians if Rolvedon was safe or if there have been any studies with Rolvedon in same-day, we basically say that we don't have any information.
There's been no data to support that, and that would be the end of the conversation. I think now we're able to direct them into our medical department. And Dr. Howard Franklin, our Head of Medical, is able to have a dialogue with physicians about that study. So I think we're making progress with same-day and getting that information out there. But I don't think we've seen much of a commercial uptick as of yet.

Naz Rahman

So when you say get it into the NCCN guidelines on the back end of the year, are you suggesting that we may see more of an impact from this, I guess, in 2027? Or are you still -- do you still think it will be a 2020 -- like second half 2026 event -- 2025, I'm sorry.

Brendan O'Grady

Yeah. No, I think it's build, right? I don't think you're going to see all of a sudden this big step-up in same-day dosing, whether it's in the guidelines or whether it isn't. I think it's just kind of an awareness that it's -- that there's data to support, we believe, supports that it's safe and effective. And there's no guarantee that it will be included in the NCCN guidelines either.
I mean, as we presented the data twice, we get it into a peer-reviewed journal, we'll certainly approach NCCN and ask for an inclusion in the guidelines. But there's no guarantee there. That's up to NCCN as to what they do there. But I just think, in general, having the trial completed and with positive results as that information is disseminated and becomes more aware in the public domain, then we'll see a gradual uptick in usage there.

Naz Rahman

Thanks for taking my question.

Operator

Raghuram Selvaraju, H.C. Wainwright & Co.

Good afternoon. This is Dan on for Ram. Thanks for taking our question. So regarding Indocin, how many generics are there at this point in time? And how many are you expecting to be at the end of 2025 and 2026? And as a follow-up regarding the Sympazan initial commercial sort of study, have there been any noteworthy changes on uptake there recently? If so, what? And how is that shaping up?

Brendan O'Grady

Sure. Okay. So let me address Indocin first, and then I'll take Sympazan. So I think it was September -- August or September 2023 when Zydus launched the first generic formulation of Indocin. And then we had one generic competitor as well as a compounder in the market for most of -- all of 2024.
In December, Hikma received approval for a generic formulation of Indocin that they launched in January. So where we stand today is we have two generic competitors as well as a compounder. And I would expect one or two other generic competitors throughout the year. So I don't know exact timing and I don't know exact numbers. It could be more than that, it could be less than that. If it's more than that, then that's a headwind. And if it's less than that, then it's probably a tailwind. So we'll see where that ends up.
Ultimately, I don't know how many generic filers there are and how many we'll see. But generally, once you get five in the market, it doesn't -- five or more, it doesn't really matter that the value is pretty much totally gone at that point.
So we're optimizing Indocin the best that we can. I think today, as we sit in the market, we've retained the amount of share that we hope to retain, and our pricing has been somewhat stable the last month or two. So we'll see how long that lasts. In regard to Sympazan, yes -- no, Sympazan showed in our pilot project last year that it was promotionally sensitive. I don't think that's really a big shock.
But we did add, as I mentioned, four field reps back in concentrated, high-decile markets to call on high-decile prescribers. And we have seen one of the highest months of prescriptions for Sympazan since we acquired it in January.
So we believe that they are having an impact, and we'll evaluate as we go through the year what the right FTE equivalent is for field promotion for Sympazan and the best way to achieve that, whether it's adding more of our own reps or augmenting that with a contract sales force or maybe partnering with somebody for secondary details. But we'll explore that as the year goes on, but it does appear that Sympazan is responding to in-person promotion.

Operator

Scott Henry, AGP.

Scott Henry

Starting with a follow-up question on the legal exposure. Was there something new on the opioid legal front that drove that in the quarter, or has that been kind of steady? I'm just trying to get an idea. Is this a transitory event or is this something that may take a little longer to play out? Just any color on why now and why the magnitude there?

Brendan O'Grady

Scott, it's -- thanks for the question. The short answer is there's nothing new there, but I'll let Ajay provide the detail.

Ajay Patel

Yes. Scott, thanks for the question. The contingency was not related to the legal. There's a lot -- not a lot of nuances I can go into the topic due to the ongoing matters. We will have further disclosures on them in our 10-K. I think for the contingency itself, you can look at it as kind of a onetime thing from a transitory perspective.

Scott Henry

Okay. And then just a couple just notes in the release. First, the inventory write-down, not insignificant. Does Indocin have a short shelf life? Why the write-down, you're still selling it? Is it -- I would assume it's the shelf life?

Ajay Patel

Yeah. No, thanks for that question. Good question. Yes. So we had about $4 million, as I noted in my commentary, of Indocin excess inventory write-downs throughout the year.
Really kind of the genesis is, as a virtual pharma company, our production plans start several years in advance. So this would have been inventory we had committed to and purchased based on projections prior to generic competition.
So as the generic competition came through and that baseline level set, we had to adjust our production plans on a go-forward basis. And that kind of results in a bit of inventory between historical production and future production that's going to be left over and that we rolled off throughout this year. But we're hoping most of that is behind us now as '24 kind of worked its way through.

Scott Henry

Okay. And then another clarification. The loss on impairment of Otrexup intangible assets, I'm used to impairment losses being good, gains being bad, but it doesn't seem to be the case here. But what happened with the Otrexup intangible assets?

Ajay Patel

Yes. I'll generalize this as primarily kind of an accounting topic here. Like you've seen in our past, right, last year and throughout this year, we've been -- with where our stock price has been and where our market cap has been, we've been under kind of the accounting rules of evaluating impairment indicators from our book value of our assets versus the fair value of our assets. So as we continue to kind of evaluate that gap, the valuation really kind of necessitated this impairment charge.

Scott Henry

Okay. So it doesn't sound like it was Otrexup-specific. It was more of an allocation issue. You have to put it somewhere, and that's where you guys decided. Is that correct?

Ajay Patel

This one was Otrexup-specific.

Scott Henry

Yeah. But was there anything that happened to the franchise that impaired, anything new that impaired it? Or is it just a general allocation?

Ajay Patel

Yeah. I think it's just generally taking a look at the trend it accomplished during the 2024 period and as we look at it from a future perspective as well.

Scott Henry

Okay. And just one final question. I may be over the two limit. You mentioned cash flow from operations of $11.5 million positive but then adjusted EBITDA of $500,000 negative. Normally, I think of those terms somewhat synonymous. Why the big discrepancy between cash flow from operations and adjusted EBITDA?

Ajay Patel

Yeah. If you're looking at discrete Q4, you're going to see that gap. I would kind of say, I would look at it broader for the whole year because during -- between Q3 and Q4, you also had a working capital impact. If you rewind back to Q3, we had positive EBITDA but negligible operating cash flow. So that's just the working capital kind of turning in Q4 partially impacted it.
But if you look at the full-year impact of our $17 million EBITDA versus the $26 million in operating cash flow, that was primarily driven by kind of the excess inventory write-down, which would have been a noncash event in 2024.

Scott Henry

Okay. So basically, adjustments to working capital are driving that discrete --

Ajay Patel

No, adjustments to working capital and then kind of the excess inventory charges, which are non-cash event in '24 are really driving it.

Scott Henry

Okay. All right, great. Thank you for taking the question.

Operator

I will now turn the call back over to Brendan O'Grady, Chief Executive Officer, for closing remarks. Please go ahead.

Brendan O'Grady

Thank you. And I appreciate everyone who has joined us today. I want to reiterate that we are transforming the company to better position Assertio for sustainable near term growth. We have a proven platform capable of delivering positive long-term financial results. We have an excellent team, a sound strategy and a balance sheet poised to unlock growth.
I hope 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 and opportunities to further grow that platform.
If you'd like to arrange a meeting 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 will be happy to schedule a time. And thank you all once again for joining us today.

Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.