Assertio Holdings Scores With New Broadly-Covered Asset (NASDAQ:ASRT)

Assertio Holdings, Inc. (NASDAQ:ASRT), is a small ($170 million market cap) specialty pharmaceutical company. Several observations since my previous coverage have come to pass. Share prices have risen 36.8% and, as expected, even breached the August 2024 Senior Notes conversion price of $4.09 multiple times. Third quarter earnings beat both the Street’s revenue and EPS estimates and the 2022 outlook was raised twice, the last guiding to product sales exceeding $152 million. The company is still reliant on INDOCIN and paid $9.0 million upfront to acquire Sympazan from Aquestive Therapeutics (AQST). Based on coverage at the 15-largest health insurance companies in the U.S. overall (Table 1), investors can be assured that Sympazan is an excellent asset and will join INDOCIN in bolstering future revenues.

Combined, the top 15 control 59% market share, with 38 million covered lives as of 2021. The most common plan was specified when possible. If the insurer operated in more than one state Health Marketplace (Obamacare), the most populous state was chosen (California > Texas > Florida). Humana (HUM) doesn’t do Exchanges, so their Medicaid plan is the only one in the survey. How to read Table 1:

Tier # Higher Tiers have higher cost share. Drugs in Tier 4 or higher (in 5+-Tier plans) are non-preferred brands and may also include drugs recently approved by the FDA or specialty drugs and may need special handling.

Sp Specialty drugs are used to treat difficult, long-term conditions and may need to get filled through a specialty pharmacy.

PA Prior authorization is the process of obtaining approval of benefits before certain prescriptions may be filled.

NF A non-formulary drug is not included on a plan’s Drug List. Exception processes such as PA or Step Therapy could be available to request coverage for a NF drug.

Table 1. 2023 Coverage of Assertio Products at 15 Largest Health Insurance Companies in the U.S.

Commercial	Health insurance company	CAMBIA	INDOCIN Suppository	INDOCIN Suspension	Otrexup	OXAYDO	Sympazan	Zipsor
1	Kaiser Permanente [Southern CA Commercial HMO 3-Tier]	x	2	x	x	x	x	x
2	Elevance Health (Anthem) National Drug List 5-Tier	NF	NF	NF	NF PA Sp	NF	NF	NF
3	Health Care Service Corporation (HCSC)
	BCBS Illinois Basic Drug List	x	x	x	x	x	x	x
	BCBS Montana Basic Drug List	x	x	x	x	x	x	x
	BCBS New Mexico Basic Drug List	x	x	x	x	x	x	x
	BCBS Oklahoma Basic Drug List	x	x	x	x	x	x	x
	BCBS Texas Basic Drug List	x	x	x	x	x	x	x
4	UnitedHealth [Traditional 4-Tier]	x	3	3	PA	PA	x	PA
5	Centene [Health Net Essential Rx Drug List]	x	3	2	4 PA	2	x	x
6	CVS Health (Aetna Standard Opt Out)	3	3	3	5	3	3	3
7	GuideWell (Florida Blue) ValueScriptRx	x	x	x	5	x	5	x
8	Blue Cross Blue Shield of Michigan [BCN HMO]	x	4	x	x	x	x	x
10	Blue Cross of North Carolina Enhanced 5 Tier	4	4	4	3	4	4	4
11	Humana Rx5	x	x	x	x	x	x	x
12	Blue Cross and Blue Shield of Alabama Blue Saver Bronze	x	x	x	3	x	x	x
13	Blue Cross Blue Shield of Massachusetts	x	3	3	5 Sp	x	x	x
15	Independence Health Group [Value formulary 5-tier]	NF	4	4	NF	4 PA	4 PA	NF
Marketplace	Health insurance company	CAMBIA	INDOCIN Suppository	INDOCIN Suspension	Otrexup	OXAYDO	Sympazan	Zipsor
1	Kaiser Permanente [CA Marketplace]	x	2	x	x	x	x	x
2	Elevance Health (Anthem) CA Select Drug List	NF	NF	NF	NF Sp	NF	NF	NF
3	Health Care Service Corporation
	BCBSIL 6 Tier HIM Drug List	x	x	x	x	x	x	x
	BCBSMT 6 Tier HIM Drug List	x	x	x	x	x	x	x
	BCBSNM 6 Tier HIE Drug List	x	x	x	x	x	x	x
	BCBSOK 6 Tier HIM Drug List	x	x	x	x	x	x	x
	BCBSTX 6 Tier HIM Drug List	x	x	x	x	x	x	x
4	UnitedHealth Group [TX QHP Standard]	NF	3	NF	NF	NF	NF	NF
5	Centene [Health Net CA Essential Rx Drug List]	x	3	2	4 PA	2	x	x
6	CVS Health (Aetna Health Exchange Plan: CA)	x	x	x	x	x	x	x
7	GuideWell (Florida Blue) ValueScriptRx	x	x	x	5	x	5	x
9	Highmark Healthcare Reform Comprehensive 3-Tier Incentive	3 PA	3	2	3 PA	3 PA	3 PA Sp	3 PA
10	BCBS North Carolina Essential Q	x	x	x	3	x	x	x
11	Humana [FL Medicaid Preferred Drug List]	x	x	x	x	x	PA	x
12	BCBS Alabama Blue Saver Bronze	x	x	x	3	x	x	x
14	Molina Healthcare [CA]	x	x	x	x	x	x	x
Medicare	Health insurance company	CAMBIA	INDOCIN Suppository	INDOCIN Suspension	Otrexup	OXAYDO	Sympazan	Zipsor
1	Kaiser Permanente	x	5	x	x	5	5	x
2	Anthem Blue Cross MedicareRx	x	x	x	x	x	5 PA	x
3	Health Care Service Corporation
	BCBS Illinois Blue Cross MedicareRx Basic	x	x	x	x	x	5 PA	x
	BCBS Montana Medicare Advantage Classic	x	x	x	x	x	5 PA	x
	BCBS New Mexico MedicareRx Basic	x	x	x	x	x	5 PA	x
	BCBS Oklahoma MedicareRx Basic	x	x	x	x	x	5 PA	x
	BCBS Texas MedicareRx Basic	x	x	x	x	x	5 PA	x
4	UnitedHealth [AARP MedicareRx Walgreens]	x	x	x	x	x	5 PA	x
5	Centene [Wellcare Value Script]	x	x	x	x	x	5 PA	x
6	CVS (Aetna) [SilverScript Choice]	x	x	x	x	x	4 PA	x
7	GuideWell (Florida BlueMedicare Premier Rx)	x	x	x	x	x	4 PA	x
8	BCBS of Michigan Prescription Blue PDP Select	x	x	x	x	x	4 PA	x
9	Highmark Performance Formulary	NF	NF	NF	x	x	4 PA	NF
10	BCBS North Carolina Blue Medicare Rx Standard	x	x	x	x	x	5 PA	x
11	Humana Basic Rx Plan PDP	x	x	x	x	x	5 PA	x
12	BCBS Alabama BlueRx Essential		x	x	x	x	4 PA	x
13	Blue Cross Blue Shield of Massachusetts	x	x	x	x	x	5 PA	x
14	Molina Medicare Choice Care (HMO)	x	x	x	x	x	5 PA	x
15	Independence Keystone 65 Basic Rx HMO	NF	NF	5 PA	4 PA	x	5	NF

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INDOCIN has done well with its inclusion at Kaiser Permanente, known for its integration of care and focus on cost-effectiveness, and is on a majority of commercial plans. Cambia and Zipsor lost their spots at Kaiser and HCSC over the years but they are mature products. SPRIX is only available on commercial plans is most similar to Cambia in coverage. Elevance Health (ELV), formerly Anthem, doesn’t include any product in its PDLs, but does allow access to all of them after a Prior Authorization process. Assertio also mostly strikes out with the Health Care Service Corporation, with only Sympazan on the Medicare lists. On the other hand, CVS Health (CVS) and Blue Cross of North Carolina cover all the drugs.

The Street has revised the 2022 revenue estimate (currently $153.15 million) to match the raised guidance. With Q3’s performance (Table 2), $48 million in Q4 product sales is needed to reach those expectations, representing a 66% increase over Q4 2021 (or +44% of total revenues as seen easier in Figure 1). That quarter was buoyed by royalties and milestone payments relating to CAMBIA from partner Miravo Pharmaceuticals in Canada. It remains to be seen if Assertio Holdings, Inc. sales can reflect management’s confidence, which is remarkable since they didn’t need to go out of their way to make such an announcement.

Table 2. Quarterly Revenues (in thousands in US$)

	Q3 ‘22	Q2 ’22	Q1 ’22	Q4 ’21	Q3 ’21	Q2 ’21	Q1 ’21
INDOCIN products	21869	22841	21357	18344	14541	13075	14597
CAMBIA	5808	6183	5473	7344	5038	6128	6462
Otrexup	3004	2616	3078
SPRIX	2455	2216	1766	1765	2272	2942	1697
Other products	884	1358	1644	1316	2147	518	1049
Zipsor	259	216	2228	3383	1999	2581	2222
Total product sales, net	34279	35214	33318	28769	23998	22663	23805
Royalties and milestone revenue	473	451	992	1187	416	542	434
Other revenue	-540	-750		-9	-941	-413	378
Total revenues	34212	35131	36538	33330	25472	25373	26839

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To conclude, Assertio Holdings, Inc. may or may not reach the lofty Q4 revenue goal, but it’s still a great Buy as a defensive healthcare sector stock in a bear market. The company has six straight quarters of positive cash flows. Valuation is still top notch (A+ according to Seeking Alpha’s Quant system) with P/E GAAP (FWD) of 6.1, which is less than half of the 13.17 average for the Zacks Medical – Drugs Industry. Finally, lead product INDOCIN and new asset Sympazan both enjoy broad coverage. The X-factor is Sympazan (branded clobazam), which is on most Medicare PDLs as a reflection of its lesser risk of cognitive impairment than other benzodiazepines (BZDs), but its strength lies in pediatrics. Due to clobazam’s chemical structure, it is less sedating than BZDs that can be used for seizures, and can be used on children 2 years or older. There are few options at that age, and so while indicated only for Lennox‐Gastaut Syndrome, off-label use for refractory epilepsy is likely on the rise.