We really focus on acquiring products that have good top-line strength to them in terms of differentiation, IP protection, and then additionally, can be profitable and cash flow growing under our ownership. One of the ways we've really been successful in our profitability and cash flow is through our omni-channel commercial strategy. It's a lean, efficient strategy that allows for prudent growth that can really grow the bottom line. The company is driven by a commercial and a operation team that has strong pharmaceutical experience and business development experience for our acquisitions at both the management and board level. We're showing some of the metrics from our Q1 results. We have a balance sheet that's well-funded. We ended the first quarter with $80.7 million.
We started the year with approximately $70 million. We have a debt profile of $40 million, so net cash, $40 million positive. Our debt consists of a convertible note with 6.5% coupon, and doesn't mature until September 2027. From a financial metrics perspective, we've given our 2024 guidance earlier in the year, which was reaffirmed in Q1. We're expecting product sales to be between $110 million-$125 million. We're expecting adjusted EBITDA to be between $20 million-$30 million, and we're expecting our cash balance to grow by the end of the year. For approximation purposes, we've started the year with $70 million in cash. We're expecting to end the year with approximately $90 million-$100 million cash.
Our primary product portfolio is made up of five products. Rolvedon is our biggest product. It's expected to do approximately $60 million in revenue for the upcoming year. It's a PEG injection that operates in the oncology space. Sympazan is a clobazam. It's a differentiated delivery clobazam through oral film delivery mechanism, which you put on the side of your cheeks. It was a product that we acquired in early 2023 from Aquestive. Otrexup is a methotrexate injection that is differentiated in its injection delivery, which we acquired in 2022. And then Sprix is an NSAID that provides opioid-level pain relief without being an opioid. And it is a product that, along with Indocin, we acquired from Zyla Life Sciences in 2023 through that merger.
Then the final product is indomethacin. It's a suppository form that's used off-label in ERCP procedures. So diving a little bit more into our products, we categorize our products, our primary growth-driving products are Rolvedon and Sympazan. And the reason being, Rolvedon is a newly launched product. It was launched in Q4 of 2022 by Spectrum Pharmaceuticals. We acquired Spectrum Pharmaceuticals in middle of 2023 last year. So we've owned it for approximately, coming up here, our 1-year anniversary at the end of Q2 will be our 1-year anniversary. It's been on market for less than 2 years. It is on a great growth trajectory, and it is a new novel molecule in the PEG space for oncology and within the oncology treatment.
It's primarily its utilization is to help prevent neutropenia for cancer patients that get chemotherapy treatment. Then our second product that we consider our core growth asset that we put investments under is Sympazan. The reason being is because this is a premium differentiated product, as I had described, through its delivery system. With Otrexup and Sprix, what we like about these assets is, although they have nominal growth rates that are steady, they are steady cash flow assets and do deliver a good amount of bottom-line profitability and cash flow based on its promotion being done primarily in the NPP space. And then we do have Indocin and Cambia, our post-exclusivity assets, that we're managing from a long-term profitability and cash flow as they've gone generic.
To give a little more color on Rolvedon, which is our primary product, to the bottom right here is the demand growth chart of what Rolvedon has looked like since launch. This represents demand units at the clinic purchase level. As you can see in Q1 of 2024, sequentially over the prior quarter, it had one of the strongest demand growth outside of the first quarter of the launch from Q4 to Q1 of 2023. We've liked the trajectory of this product, and we've liked the performance that our commercial team executed in Q1.
This is the PEG injection space we estimate at approximately $1 billion plus, and it's split up between two-thirds hospitals and one-third clinic community oncology clinics. Since launch and to date, we focus primarily in that community oncology clinic space. So we do see a market opportunity that we haven't even started to penetrate.
As I'll discuss further later on, some of the additional color we gave on Rolvedon as part of our guidance is, it's $60 million expectation this year, but we do see in the coming years, for this product to reach $100 million. Part of the reason we are able to be a profitable and cash flowing spec pharma company, which is not common in our space and industry, where we have a lot of upside-down companies, is really our low cost and efficient omni-channel commercial platform that we've developed. Coming out of COVID, we had reduced our commercial infrastructure down to zero reps, and really built up this, non-personal promotion platform, which is a holistic approach to, digital promotion as well as virtual sales rep representation.
Additionally, coming out of the Spectrum acquisition, we've increased our sales rep footprint, because of the product being in its launch phase and the promotion required to get the availability of it at the oncology clinic level. We currently have a commercial team that's 30+. 17 of that would represent kinda true sales force effort. The remainder is split out amongst marketing, national accounts, and contracting, which total, combined with NPP, really provides a holistic approach to not only Rolvedon, but all of our portfolio products. In terms of our 2024 priorities, we have a three-prong approach.
We're gonna continue to focus on growth, which is primarily gonna be driven by Rolvedon. We're gonna continue to ensure we can deliver the profitability and cash flows that are part of our guidance in terms of EBITDA, and then we're gonna continue to focus on diversifying our product portfolio. This company, from an operational footprint, has the ability to continue to absorb more products, and that's what we're absolutely focused on. And as I articulated, our growth is really gonna be ensuring that we're identifying assets that can be either synergistic with our current portfolio products, or we can operate them more profitably than the current predecessor. And so to round out from a financial highlights, wanted to give a perspective of what our Q1 results looked like.
We delivered net product sales of $31.9 million. We delivered operating cash flows of $7.5 million, which was all an add-on to our cash balance, because we have very little financing and investing activities. We grew our cash balance to $80.7 million at the end of the first quarter. You can see the outlook, full year guidance that I had discussed earlier on the front page. Then some additional color that I haven't discussed yet is our Indocin, which used to be our previously primary product, but went generic last year. We're expecting it to do approximately $18 million-$25 million this year. With that, Jim, I'll pause and we can take some Q&A.
Great. Thank you. So, you know, let's start with Rolvedon. You know, what was it about the product that attracted you to it that, you know, really what—that you ma... What was the main reason you made the acquisition?
Yeah, I would say, there were various reasons. The primary reason was we were looking to diversify. As I said, our primary product previous to Spectrum was Indocin, which we had done a really great job of growing that product, and was a very profitable product. At the end of the day, the Indocin suppository has been on the market for two decades and had lost its exclusivity a long time ago. So it was a product that, with our concentration in it and having the ability of a generic to launch, we wanted to diversify our portfolio into more patent-protected products, and we had done that over time, as I had said, right? We had acquired Otrexup in 2022. We had acquired Sympazan in 2023.
Both of those have exclusivity or patent exclusivity into the next decade here. So really, the one of the thesis for the acquisition was continued diversification into patent-protected products. And we really like the landscape of where it is, right? As I had said, we estimate the current PEG injection market at $1 billion plus. So although it's in a very competitive landscape with the originator and other biosims, this is a new novel molecule. And one of the benefits that that allows us is, we eliminate some of the pricing pressures the biosims see to the originator.
Because part of the reimbursement model for this is Medicare Part B in the oncology clinics, and that's tied to ASP, and ASP pricing, and the originator and the biosims are tied to each other at the hip based on pricing what each other do. So our competitors are unfortunately do not have pricing control all in their own. What Rolvedon allowed us to do, as its own molecule, has its own J-code from CMS, is our ASP is not tied to the originator or the biosims.
So having a marketplace that has ability to... for growth and market penetration, having a differentiation with the patent life that this unique molecule comes with, the safety and efficacy data that came out versus the originator, was very favorable. So all of those things allowed for us to absorb this product into our omni-channel platform, and ability to grow it in a profitable manner.
You know, how does the reimbursement to the clinic for Rolvedon compare to that for the biosims?
So overall, the mechanism will be the same. I'll talk about it from a Medicare Part B perspective, because that's where we're, as I kind of highlighted, we've currently to date have only focused on the oncology clinics. And furthermore, in the oncology clinics, majority of our buyers are from Medicare Part B. We're taking a very prudent and thoughtful approach to contracting for all of the other payer streams. The way it work is for the clinics themselves, they're gonna get. It's a buy and bill for them. They're gonna get reimbursed for Medicare Part B at ASP for the units themselves, and then ASP 6% of ASP for administration of that.
So for the clinics, from an economics perspective, where a product's ASP is very important, and ensuring that that ASP hasn't eroded their economics away. So what we'd like to say, what our product can allow for these clinics, is the value is stability. We are a company that's focused on ensuring we can be a long-term player in this market, and really be able to ensure there's not a significant erosion to the ASP, and this can be a, we can be a partner to these clinics, from a long-term predictability. And ensuring they don't have to continually, you know, change products on their patients. They can have stability with our products.
But so it sounds like the reimbursement the clinic gets for Rolvedon is higher than what they're getting from the biosims now, though?
Correct. Right.
And I know, I think the first quarter you had the product was the September quarter. There seemed to be a mismatch between end-user demand and your sales. You know, has that situation resolved itself?
Absolutely. Yep, we right out of the gate, when we acquired Spectrum in July, the first quarter out of the gate, we had what I would describe as a business headwind. What we found was the chart I'm showing here is the true demand curve, the pull-through at the clinic level, and you can see it's had a very good, strong demand growth. Every quarter since launch, it has growth, with the last quarter being very strong growth. Early on, Spectrum, prior to our acquisition, had really focused on the sell into the channel.
And what that had resulted in when we acquired the product was the channel inventory levels were too high, and the incentive programs that were utilized to do that were gonna be detrimental in the long run to our ASP management. So we took the immediate concentrated initiative to rightsize that channel inventory and eliminate incentive programs that weren't in line with long-term profitability of this product. And so that's what you saw happen in Q3, the effects of that. And I would say, happy to report, by the end of Q4, the entire channel had been stabilized.
So what you saw in Q4, ex-factory to demand, were in line with what we would like, what we would like, and our focus for 2024 is to ensure we're selling into the channel that's in line with demand.
Your guidance for 2024 is approximately $60 million of revenue from Rolvedon?
That's right, $60 million for Rolvedon.
You think that could be a $100 million product over the next couple of years?
That's right. Absolutely.
Right. You know, one of the issues that... Well, the main issue for Indocin was the loss of exclusivity. A generic had come on the market for that product. Is there any risk of that for Rolvedon? And if not, you know, how long are the patents for that product?
Yeah. So Rolvedon, so Indocin, absolutely, right? As I said, that was a risk that always existed with Rolvedon, with Indocin. Because it was a molecule, or it was a product that'd been out on the market for 2+ decades, never, you know, had, in recent years, any sort of patent protection or exclusivity. That was a risk that existed. With Rolvedon, the molecule itself, the direct molecule, has, or the direct product itself, has, patents in the U.S. through 2039. From a competition, it's still a very competitive landscape, right? The originator has, I think my last count was about seven biosims on it.
So competition, although they can't launch the exact same product as us, from this specific PEG molecule, and compete on our patents, the biosims can obviously launch. And any new molecules that can be developed are available to launch. But we like the patent protection this gives because it really protects that molecule on its own, and really allows us to concentrate our pricing, and gives us a lot more control than some of the biosims and the originator may have because they're tied at the hip from an ASP.
All right. On your earnings call, you mentioned you're in the middle of a trial for same-day dosing for Indocin. Can you, you know, just give us any comment on what you think the potential impact would be if you get that approved?
Yep. It's same-day dosing on our Rolvedon product.
I'm sorry, Rolvedon. I'm sorry.
Yep. So, the way this product works is a PEG injection that's administered to patients getting cancer treatment, but it's administered the next day, so the patient has to come back. As you can appreciate from a practicality, asking a cancer patient on treatment to come back already has friction at the patient level. It also creates friction at the oncology clinic level, right, with an intake and the administration process. So the ability to provide this injection same day, while the patient was getting their treatment, really solves a problem that exists in the marketplace. And what this trial is doing is evaluating the ability to be able to give that injection the same day and still have the same safety and efficacy that the original label was approved for.
This clinic, or this trial, is not for on-label. It's to evaluate, you know, is there an opportunity for us to do that, and then be able to take that for consideration under NCCN guidelines, for doctors to be able to utilize that from a same-day dosing perspective. So I think there's, it's really driving at a practical need that exists in the marketplace.
If the trial results are positive, do you think there could be upside to that $100 million over the next couple of years?
Absolutely. The $60 million and the $100 million figures that we were speaking on do not contemplate any upside from the same-day dosing.
Right. You know, in general, the way you've added products is via acquisition. You don't develop them on your own. Can you talk about the pipeline right now that's out there and, you know, what traits you're looking for products?
Yeah, absolutely. You know, I think we're, we're in a great position, right? With Spectrum Pharma, there's constant evolution of companies that, you know, are either upside down from a profitability or debt perspective, but the underlying assets they have are still strong and can be profitable if just put under a different infrastructure. And we see ourselves through our current portfolio as a strong operator of commercial assets. And really, as we focus on bottom line profitability and cash flow, we look at commercial strategy holistically, not only from direct promotion detailing, but also contracting and looking at where investment dollars can drive the most bottom-line profitability. And chasing top-line growth, that's long-term profitable and not just short-term profitable.
So we're looking at all sorts of assets where we can be a better operator, or distressed companies where assets can be available to us, and fit into our portfolio. Furthermore, we've spread the net wide of assets that can be synergistic to our current portfolio from a promotion standpoint, right? Where we can, as I've said, our infrastructure is available for opportunities to put assets in without growing the infrastructure that much more
So where we can get more synergies out of the dollars we're currently investing in our commercial platform, that would be the ideal source. And then additionally, with Rolvedon being our primary investment dollars right now, if there are opportunities for assets that can be an additional one in the oncology space, that would be a great opportunity. But we're looking at it all across the spectrum. And we're seeing a lot of assets out there. I think it's a bit of just ensuring, you know, we go through our proper diligence, we're evaluating the fair purchase price of the asset itself, and then just looking at it from a long-term modeling perspective.
And one of the factors that helped you, you know, swing the profitability a couple of years ago was the transition to a virtual sales force. And you know, now you know, you mentioned it's more of a hybrid sales force now, with about 15 or 20 direct, you know, people calling on people. But you know, do you think there are assets to be acquired that could be put through those virtual channels?
Absolutely. And, you know, I would say one of the drivers wasn't- it wasn't as simple as just, "Hey, let's get rid of OpEx." It was really when we sat down- when we sat back and we said, "Well, we really wanna focus on bottom line profitability and cash flow, and how are we gonna get there?" And it was a combination of looking at our OpEx profiles and the ROI on that, and then also looking at, you know, holistically within the top-line profile and some of the gross to nets, right? Where are we spending dollars from a contracting and rebate perspective? And taking all of that spend bucket, looking at the rebates, the co-commercial spend, and saying, "Okay, what does that bucket need to be in order for us to be profitable?
Once we have that, where should that be allocated? Certain products, it should be allocated to rebates. Certain products, it should be allocated to promotion. And that's, over time, that's how we've evolved our commercial portfolio, and that's exactly what we're gonna be focused on with the new products that we have.
All right. You know, I look at the balance sheet, you have around $80 million in cash now. I think you said, you know, you expect to end around $90 million. You know, you're a $100 million market cap. I don't think any of the debt is due until 2027. You expect to be cash flow positive and profitable this year, and I assume next year. I mean, with the shares trading, you know, at the dollar level, what do you think investors are missing, and what do you think you need to do to inspire confidence in the markets? Because it just seems like it's a very undervalued equity right now.
Yeah, absolutely. And, you know, I think what we're focused on is just execution, right? If I could predict what the markets were gonna do, Jim, I'd probably be in another job.
Right.
What we're focused on is really showing, you know, the market this is our current base business, and as we continue to execute and pull together quarters that show the results of that and the reality of the guidance we've given, we're hoping there's a natural adoption by the market and realizes the value and growth potential of this company, and just the way the company itself is positioned from a balance sheet perspective, right? And our ability to be, you know, have natural funding coming out of our cash flows and our balance sheet to grow. So we're absolutely focused on execution. You're seeing the results of that most recently, right? Brendan just. We announced our new CEO.
So it's, you know, Q1, we delivered on the results that you know that we promised with our annual guidance. We have our upcoming Q2 results here, and we have a new CEO on board. So as we continue to execute on our strategy, we're hoping the market will adopt to, you know, what the natural value of Assertio should be.
Can you talk a little bit about Brendan's background? Does he have a digital background, you know, experience in the pharmaceutical industry, and do you expect him to change the way you do business?
Yeah, no, absolutely. We're very excited for the new CEO announcement. You know, for his full background, I'll refer you to kind of the press release we put out, which takes you through kind of his entire history. And, you know, our board had feedback in that and commentary as well. I would say from my personal, we're very excited for Brendan to join us. Extremely well, you know, 30+ years of pharmaceutical experience. All sorts of experience, from big companies to small companies. A lot of experience at Teva from a commercial and what he did to grow that U.S. business over there. He actually worked at a company that was an upstart from a digital marketing perspective as well.
So he has great background, and I think one of the things that really appealed to him about Assertio is the business headwinds that came to us in 2023, that are ahead of us, are common business headwinds in pharma that he's experienced before. And he absolutely knows, you know, he can be a value add to this organization. In terms of the strategies we laid out, no, you know, he heard the same pitch I'm giving you guys, right? That we have a three-prong approach for 2024. And he's coming into this to continue to help grow this and help deliver execution on this. So, you know, this is something he's accepting, that he knew what Assertio was gonna be, and where the strengths of the business are.
You know, over the last 12 months, all the news is really focused on, on the, you know, the two, the two bigger products, Indocin and, and Rolvedon. But, I mean, 30%-40% of your revenue does come from, from other products, so, I mean, there is some diversification there. Can you talk about what some of the growth drivers are outside of Rolvedon?
Yeah, yeah, absolutely. And we do like that, right? The other products are not to be ignored, right? Although they don't have the same concentration or growth profile as Rolvedon, we like Sympazan. In the clobazam space, I would say this is the most under-penetrated market or under-penetrated product we have. It's low single digits in terms of market share. Now, clobazam, its molecule itself, has been genericized, right? So this... We look at this as a premium differentiated market that shouldn't compete at a generic pricing point. So it's really getting adoption and awareness of this novel delivery system that exists that can be very beneficial to LGS seizure patients, right?
The ability to, in a seizure patient, to put a strip in and be able to carry that around, versus some of the other products out there, the competitors. But we also wanna ensure that we're able to drive that growth profit. Same thing with Otrexup. It's a great delivery injection system that we wanna be able to grow from a top-line perspective, and get, you know... Right now, I would say it competes against a competitor that has a strong market share, but that's been done from a contracting, and giving away a significant amount of rebates that really erodes profitability. And so, you know, that, that's one of those we're gonna be practical there. How can we get prudent contracting that's a win-win for both sides?
And Sprix, you know, we like this product. It's a, it's an NSAID that can deliver opioid-level pain relief without being an opioid. Obviously, it competes in the pain management space, which is very broad. So it's, you know, getting awareness of this product and premium delivery and efficacy of that product, and where it's right for certain patients. So that, that's what we really like about these, and all of those have patent protection, right? Sympazan, patent protection through 2040, Otrexup through 2031, and Sprix is also patent protected.
Do you think any of those have the potential to be a $100 million product over the next 5-10 years?
I would say that that would be a very aspirational growth, Jim, because a lot of that would come at a unprofitable growth, and we're really focused on profitable growth on these products. So I think it would be a step-by-step approach. There's not a catalyst event that we see, you know, just a quick- step up into the left.
Got it. All right, well, we are out of time, and I wanted to say thank you for the presentation. I know you're very busy over the next two days, so thank you again for the time to do that, and we hope to hear from you soon.
All right. Well, thanks, Jim. I appreciate the opportunity.
Thanks, Ajay.