Hello, and welcome to the Sertio Holdings second quarter 2025 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. And if you would like to ask a question at this time, please press star 1 on your telephone keypad. I would now like to turn the conference over to Matt Kress, Investor Relations. You may begin.

Thank you. Good afternoon, and thank you all for joining us today to discuss Sertio's second quarter 2025 financial results and business update. The news release covering our results for this period is now available on the Investor page of our website at investor.sertiotx.com. I would encourage you to review the release and tables in conjunction with today's discussion. With me today are Brendan O'Grady, our Chief Executive Officer, and A.J. Patel, our Chief Financial Officer. Brendan will open the remarks and provide an overview of the business, including an update on a starting long-term business strategy. After Brendan, AJ will cover our financial results and guidance. Brendan will then provide some closing comments before we 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. 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 the Sertios filings with the SEC. These and other risks are more fully described in the risk factor section and other sections for 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. Sertios This typically disclaims any intent or obligation to update these forward-looking statements, except as required by law. With that, I will now turn the call over to Brendan. Please go ahead.

Thank you, Matt, and thank you to everyone who has joined today's call. I'll begin today with a brief overview of our second quarter financial results, which showcase both execution against the transformation phase priorities I have laid out as part of our long-term business strategy and our ability to focus the business in ways that improve operating performance for our investors. We have also updated our full year outlook accordingly, slightly reducing the top end of our revenue range to account for our decision to stop commercialization of Otrexip, but more importantly, raising the lower end of our adjusted EBITDA outlook as this action has a positive impact in increasing profitability. To get a little further into the details, second quarter net product sales came in on plan at $28.8 million. These sales results reflect the highest Rolvidon provider demand volume since launch, benefiting from an expanding provider base and continued growth in Sympazam prescriptions from both existing and an increasing number of new prescribers. This is in response to our decision last year to augment our omni-channel marketing with in-person sales in key markets. Overall, demand for both Rovalon and Simpezan remains strong and is growing. We continue to execute diligently on our plans to drive further growth on each product. Indesyn and our other core, non-core assets performed in line with expectations for net sales and contribution. These results underpin the three-part business strategy I introduced during our year-end call in March and further detailed during the May earnings call. To briefly recap, the three phases are defined as stabilization, transformation, and growth and are intended to create substantial near-term growth and increasing long-term value. Stabilization was successfully completed in 2024 and has adapted our organization to the changing operating environment and reprioritization of assets. That stage included repositioning our portfolio to focus on Wolvidon and Simpozan as core growth drivers, leading to the benefits seen on both of these products year-to-date, with an expectation of more to come. I have characterized 2025 as the transformation phase, focusing on actions intended to catalyze a shift in future growth potential, and that's obviously where we are today. Continued successful execution of our transformation objectives will launch the growth phase of our strategy, expected to start in 2026, during which time we intend to become a leading commercially focused specialty pharma company that creates top-tier value over the long term. Now, I'd like to provide you with a brief update on our transformation progress. In the second quarter, we advanced each of our five core objectives and expect all to be complete or nearly complete by the end of the year. As a reminder, these include, one, reducing our legal exposure, two, simplify our corporate structure and processes, three, prioritize Asertio's investment and growth assets, Four, divest non-core assets where it makes sense. And five, use the strength of our balance sheet to close a strategic transaction. Starting with reducing our legal exposure, we have now settled or closed multiple prior legal matters, helping to remove both ongoing operating costs and future uncertainty from the business. Resolutions to date include the 2017 KITAM lawsuit, the last remaining GUMESA antitrust action, and Spectrum's legacy Luau security class action, pending court approval. We have not admitted to any wrongdoing in any of these cases. Rather, the decision to settle reduces both ongoing legal costs and distraction from our core business. We also obtained a dismissal of the company's Edwards security class action suit. With these matters now closed, we can refocus funds previously allocated to legal costs into building our core business. We also began simplifying our corporate holding structure to reduce cost and complexity in our business. One of the key actions completed in the second quarter was the transfer of all our interests in our subsidiary Asurdios Therapeutics to a third-party ATIH Industries LLC. As of today, Asertio Holdings, nor any of its subsidiaries, are named defendants in any opioid-related litigation. Also, as part of our corporate restructure, we are consolidating products from previously acquired operating subsidiaries to further consolidate our commercial footprint and further reduce operating expense. As part of this process, we have initiated a labeler code change for Rolvidon. This may result in net sales fluctuations over the next three quarters due to certain timing aspects, but we expect 2025 company net sales to be within our guidance range. Further, we expect to fully support Rolvidon demand while maintaining price stability and predictability for our customers during this change. Focusing on our progress prioritizing investments in Wolvedon and Simpazan, we've now finalized our third national agreement for Wolvedon with the GPO of a leading national payer. This milestone reflects continued momentum in our market access strategy. We are currently working with the GPO to engage their national member organizations in discussions to broaden commercial formulary positioning for our product. We believe this agreement represents a meaningful opportunity to broaden access and support long-term growth for one of our two core growth assets. In addition, we're seeing sustained momentum across strategic market segments as organizations explore forward-looking approaches to care delivery. This latest agreement further substantiates a growing trend of engagement, underscoring our conviction in Rolvidon's long-term potential. I look forward to providing further updates at a later date. Regarding divesting non-core assets, as mentioned, we decided to stop commercializing Otrexip and are exploring various options for this product going forward. This is intended to free up additional resources to reallocate to our growth assets, bolster our ability to acquire or in-license new growth assets, and increase our profitability. We are looking at the balance of our portfolio with a similar focus on improving cost efficiency and sales performance. These actions are driven by strategic decisions to thoughtfully address near-term costs and disruptions for the benefit of our long-term business performance. This quarter's progress and our updated outlook demonstrate a sharpened focus to create greater efficiency, redirect resources, and ultimately improve profitability as we move through the transformation into the growth phase. We believe that Aserdio has reached an inflection point and will be most successful by pivoting to a focus on specialty pharma assets with the potential to grow over a sustained period with a commercially focused operating model. And that is where our fifth transformation priority is focused, expanding and diversifying our portfolio with new growth assets, whether acquired, licensed, or via some other form of transaction. We remain active in that area, but also focused on securing the right transaction at the right price, which our balance sheet improvement continues to support with greater flexibility. I'll conclude my remarks today, building on what I said last quarter. Aserdio's underlying business is sound. We have an experienced team that is executing very well, and our balance sheet, fueled by more than $98 million in cash and investments at the end of the second quarter, is solid. I am confident that our long-term business strategy is leading us in the right direction toward our goal of creating sustainable near-term growth and increased long-term value. I look forward to providing you with additional updates on our progress as we head through the second half of this year. I will now hand it over to our CFO, A.J. Patel, who will walk us through the details of our second quarter performance. A.J.?

Thanks, Brendan. Today I'll walk through our financial results for the second quarter 2025. As a reminder, starting last quarter, we have resumed the use of year-over-year comparisons reflecting completion of the stabilization phase that Brendan discussed for 2024. Q2 2025 product sales came in at $28.8 million, compared to $30.7 million in the prior year quarter. Rovadon sales were $16.1 million, up from $15.1 million in the prior year quarter, driven by higher volume and favorability from returns reserve adjustment, partially offset by lower pricing. The returns reserve adjustment was $5.4 million and was previously established in connection with the Spectrum merger for specific channel inventory. Due to continued growth in demand and closure of the returns window, we no longer need to maintain the specific reserve. Sympazan sales were $3.2 million, up from $2.7 million in the prior year period, reflecting higher volume and favorable payer mix. Indicent sales were $3 million, down from $6.9 million in the prior year quarter, due to the expected generic competition on volume and price. The prior year's second quarter was still in the early stages of the generic impact. Turning to operating expenses, reported SG&A expense was $17 million, down from $18.4 million in the prior year quarter, reflecting, among other items, a one-time $2.4 million benefit from the recognition of employee retention tax credits. R&D expense was $0.4 million, down from $0.8 million a year ago, due to the completion of the same-day dosing trial at the end of 2024. Excluding stock compensation, DNA, and one-time items of ERC benefit, legal settlements, and costs related to divestment of acertiotherapeutics and decommercialization of Otrexib, Adjusted operating expenses were $15.4 million in the second quarter versus $19.7 million a year ago, reflecting our efforts to drive operating cost efficiencies as well as timing of certain annual spend. Gap net income for the second quarter was a loss of $16.4 million compared to a loss of $3.7 million in the prior year. The change in net loss reflects one-time charges, including $9.2 million related to the divestiture of Asertio Therapeutics and $3.8 million pertaining to the decision to cease Otrexiv commercialization, which were partially offset by a $2.4 million benefit from the recognition of employee retention tax credits. Adjusted EBITDA for the second quarter was $5.6 million compared to $3.1 million in the prior year quarter. Turning to a balance sheet and cash flow statements. As of June 30, 2025, cash, cash equivalents, and short-term investments totaled $98.2 million, an increase from $87.3 million as of March 31, 2025. The increase was driven by positive operating cash flows as a result of overall performance and favorable working capital, partially offset by investing activity of $8.2 million transferred in connection with the divestment of Asertia Therapeutics. Debt remains unchanged at $40 million, comprised of the company's 6.5% convertible notes, with no maturities until September 2027. As Brendan mentioned, we are narrowing our guidance ranges for net product sales and adjusted EBITDA to reflect first-half performance, the decision to cease commercialization of Latrexib, and improved operational efficiencies. The revised annual guidance range has been updated for net product sales to $108 million to $118 million, and for adjusted EBITDA from $11 million to $19 million. I'll now hand the call back to Brendan.

Thank you, AJ. The Asertio team delivered a second quarter of strong financial performance and remains on track to meet our expectations for 2025. We also demonstrated the potential value of our transformation initiatives in creating both short-term and long-term value for our stockholders. We remain fully focused on executing the Remain Transformation Initiatives plan for this year. I am confident that our ongoing business performance and execution of our business strategy will enable our success. And with that, let's go ahead and open the call for questions from our analysts.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Please ensure that your phone is not on mute when called upon. We ask that you please limit yourself to one question and one follow-up.

Thank you.

Your first question comes from the line of Thomas Flatton with Lake Street. Your line is open.

Hey, good afternoon. I appreciate you guys taking the questions. Just starting off, so I'm trying to understand the kind of quote-unquote true Robidon sales in the quarter. I mean, if I take the number minus the reserve, it's 10.7. Is that how I should be looking at it? I'm trying to – can you help me better understand that?

Yeah, that's the correct number, Thomas.

So if I heard you correctly, Brendan, in the prepared remarks, it was the highest demand from providers. But then, you know, can you give us a sense of volume price shift there so we can kind of understand what's going on, demand versus pricing?

yeah i won't get into too much in pricing that's something we don't really divulge but i will just give you a little bit of a flavor right so there's uh x factory sales that go into the wholesalers and then there's demand that goes from the wholesalers into the clinic so as i mentioned we had a rather high in fact we grew demand by almost 20 percent from q1 to q2 so demand going into the clinics, which is ultimately what patients utilize, is very strong. And we were a little lower on sales into the wholesalers, which sets us up really in a good position for strong execution in the second half of the year. So I wouldn't think about the years taking 13.1 and 10.4 and then doubling it. I think we're in a very good position to achieve what we need to in the second half of the year with Volvodon, kind of balancing wholesaler and clinic demand.

Excellent. I appreciate that color. And then with respect to potential deals, can you give us a sense of, you know, what the market looks like today versus when you started? I mean, is there stuff you've passed on? Are there opportunities you've missed out on? Obviously, getting a deal in the door is one of your five priorities. Just kind of understanding what the market looks like more broadly.

Sure. No, good question. I wouldn't say we've missed out on anything. I mean, there have been things that we've been somewhat interested in, but we look at how they fit into our model, where we think the value is, and we're certainly willing to pay a fair market price. But if it exceeds that and we can't really find a way that it makes financial sense, then we'll pass on it. So we've had a couple opportunities like that, but we have numerous conversations ongoing for a whole wide variety of transactions. And so let's go, you know, I've been said all along I want to be patient because I want to make sure we do the right transaction for the business. And as we are executing on Rolvidon and executing on everything else, we're actually strengthening the balance sheet. So that gives us a little bit wider of a fishing ground to look at. So good conversations ongoing. I said, you know, I'd like to get something done this year. We'll see where that goes.

And then one final one, if I may. When you guys laid out the 108 to 123 guidance, the big swing factor in there was the potential for new generic entrant into the Induson space. But now I guess the top has been reduced because of Valtrexed. But do you, given how far along we are into the year, do you think the swing is still going to be potentially 10 million, primarily Induson? And what else is – what would move that, you know, that number $10 million from bottom to top?

Yeah, well, I will be in a much better position, Thomas, when we get to November to narrow this range considerably. There's other strategic things we're looking at that could impact that. It's not just Indicent, but there's other things that I really don't want to get into that could impact that range. But as I said, as we get through, you know, the third quarter here and I come back in November, I'll be able to narrow that range significantly.

Appreciate it. Thank you very much.

The next question comes from Ram Salvaraju with H.C. Wainwright. Your line is open.

Thanks very much for taking my questions. Firstly, I just wanted to address a housekeeping item. In the wake of the divestiture to Acercio Therapeutics and the ATIH transaction, can you just review for us what remaining outstanding litigation matters there are under Acercio Holdings, or if at this juncture there aren't any?

So at this juncture, Ram, most of it is just some shareholder lawsuits that we're working our way through. Most of everything else has been closed out and we've moved on. So, as I said in my remarks, we hope to have that cleaned up and resolved by the end of this year or early next year, but made significant progress in reducing, you know, kind of our legal spend around defending

different losses. Great. Secondly, I was wondering if you could just characterize some of the principal emergent drivers of Rolvidon pull-through demand and how robust you expect those to be going forward, particularly not only as we go into the second half of 2025, but also looking

ahead to 2026? Well, I think the biggest thing is expanding our customer base. You know, we significantly expanded our customer base during first and second quarter, which is one of the reasons that you saw demand grow by almost 20%, and that isn't even a full quarter. So we expect demand to continue to grow, both in the clinic space where we primarily focus, but also we think that as we go through the second half of this year, and especially into 2026, we'll see more commercial utilization, and we're working on securing that right now.

And then just two more very quick ones. Firstly, on Otrexip, can you remind us about the length of exclusivity that still remains for this product. And then also, if you could just characterize for us, you know, now that Asercio has elected to halt commercialization activities on Atrexip, you know, what does this effectively mean for the SG&A line? You know, what does that translate into in terms of savings? You know, what activities are no longer necessary? And also, So how does that – perhaps you're not in a position to comment on this now, but any helpful color would be appreciated. How does the absence of commercial activity for this product impact your ability to monetize it on a strategic basis going forward, assuming that your priority has now shifted from active commercialization to divestiture?

Yeah, so good questions, Rams. I'll take part of it, and then I'll have AJ take part of it. But if you think about Otrexib, I mean, we have seven assets, or we have seven assets across a variety of therapeutic areas, with Otrexib being primarily rheumatoid arthritis. So that's not really necessarily a core commercial focus on us, for us. We made the decision to focus our commercial efforts around Rolidon and Cipazan, because those are the products that we see the most growth potential in. And we had reached a point with Otrexiv where, although it was driving top line, there was not much there as far as profit. So, you know, instead of spending additional funds to it, we decided to redirect those to where we thought we could actually grow. That doesn't mean that Otrexiv couldn't be profitable in somebody else's hand. It might have a more complementary portfolio that they could add to their rheumatology basket of products. But Otrexib is methotrexate. There's no IP left on methotrexate in and of itself. It's combined in a pen from Halazine. So it would be difficult to maybe duplicate the exact product because of the pen drug delivery combination. But methotrexate itself has no IP. So there's other versions of it out there available in the market. AJ, I'll let you talk about some of the cost savings.

Yeah, Ron. We're expecting a good amount of cost savings from an SG&A perspective on Otrexip next year. It's in the range of $2 to $3 million, which would comprise of any kind of direct spend we had on it from a digital marketing perspective and the annual PDUFA fee. Obviously, this was going to be offset by kind of the top-line degradation. Overall, part of the decision was as we looked at the pricing competitive pressures that were there on top line and the cost pressures that are there from the device combo. It ended up being fairly neutral to EBITDA for this year, for the remainder of the year. And that's why you actually see a benefit in our narrowing of the EBITDA range

upwards on the low end. Okay. Thank you so much. The next question comes from Naz Rahman with Mastem Group. Your line is open.

Hi, everyone. Congrats on the progress, and thanks for taking our questions. Just to have a few, I just want to start on Robidon. I guess at this point, how much of an effect are you seeing from the same-day dosing data, if any? And I guess more towards that point, when do you expect to see larger and greater effects from the same-day dosing data on sales? No, that's great.

Good question. We are starting to get increased levels of interest, and I think we've seen increased levels of interest in same-day dosing since we presented the results end of last year and then first quarter of this year. So it's certainly an interest amongst providers. We know that it's a growing interest. We hope to – we've submitted to a peer-reviewed journal. We hope to have publications sometime this year. And I think once that that happens, that will be another catalyst. And ultimately, you know, the goal would be to get this into the NCCN guidelines. Whether that materializes or not, we obviously don't control and when. But that really today is not built into any of our projections. So that would definitely be an upside. And as we move to publication, we'll take a look and see, you know, what kind of lift we're getting from that. But there's definitely interest in same-day dosing, and the interest is increasing.

So I guess on that point, based on everything you now know in terms of publication and timelines, what are you thinking now in terms of timelines for getting the same-day dosing into NCCN guidelines?

Well, I think the first step is publication. And as I mentioned, we hope to have publications still this calendar year. We've definitely made progress on that. And I would say NCCN probably by the middle of 2026. It's possible it could be earlier, but not probable.

And on Simpazon, now that you're accelerating efforts for promotion, based on what you've seen thus far, I guess what sales levels do you think you could return or get Simpazon to at this point, based on what you're seeing?

A net sales number?

Yeah, a net sales script.

Yeah, I mean, I think net sales could ultimately be between 25 and 30 million in the next several years. So kind of double from where we are today. I think there's definitely growing awareness. And I think that Simpazan is benefiting just from a share of voice out there and providers recognizing that it's there and how to prescribe it and how patients can get it.

All right, and just one last question. Seeing how you're pulling resources and promotional efforts from Attractive, is there a potential to, like, divert some of that resources or, I guess, that time to Rolvidon and Simplazan? Like, why don't you think those – do you think those products could grow faster with the Attractive resources, or do you think there's not much of a difference there, I guess, logistically?

No, I mean, we are redirecting resources from other products to Simplazan and rolled it on. But that's already built really into our projections. I mean, this is – Otrexip is not a decision that we made yesterday. You know, we've been looking at Otrexip for quite some time, and it was built into this year's plan and projections other than the net sales piece, which we adjusted.

Got it. Thank you for taking my questions.

This concludes the question and answer session, and we'll conclude today's conference call. Thank you for joining. You may now disconnect. You