Endo International PLC (ENDP) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 Endo International plc Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Ms. Laure Park, Head of Industrial (sic) [Investors] Relations and Corporate Affairs. Please go ahead.

Good morning, and thank you for joining us to discuss our third quarter 2020 financial results. Joining me on today's call are Blaise Coleman, President and CEO of Endo; Mark Bradley, Executive Vice President and CFO; and Patrick Barry, President, Global Commercial Operations. We've prepared a slide presentation to accompany today's webcast, and that presentation as well as other materials are posted online in the Investors section at endo.com. I would like to remind you that any forward-looking statements made by management are covered under the U.S. Private Securities Litigation Reform Act of 1995 and the applicable Canadian securities laws and are subject to the changes, risks and uncertainties described in the press release and in our U.S. and Canadian securities filings.

In addition, during the course of this call, we may refer to non-GAAP financial measures that are not prepared in accordance with U.S. accounting principles covered by the United States and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review Endo's current report on Form 8-K furnished with the SEC for Endo's reasons for including those non-GAAP financial measures in our earnings release and presentation. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in our earnings press release issued last night, unless otherwise noted therein.

I'd now like to turn the call over to Blaise. Blaise?

Good morning, everyone, and thank you for joining us for this call. We are pleased by better-than-expected third quarter results, driven by our Branded and Sterile Injectable segments. The results speak to our team's ability to continue to adapt and deliver in this challenging environment. Based on our performance, we are raising our 2020 full year financial guidance.

Now moving to the agenda on Slide 2. I will start with a discussion of the strategic actions we've recently taken in support of our key strategic priorities. I will then review third quarter business performance and provide an update on our pipeline. Mark will then address our third quarter financial results, including the expected impact of our recently announced restructuring program and provide financial expectations for the remainder of the year.

Turning to Slide 3. In August, we introduced our new strategic priorities. Expand and enhance our portfolio represents our focus on investing to build a more differentiated and durable portfolio. Reinvent how we work reflects our focus on embracing the future and evolving our ways of working to better serve our customers, promote innovation and improve productivity. And be a force for good, which expresses our commitment to delivering our priorities in a way that benefits all our stakeholders. These priorities guide every decision we make as we work to create long-term sustainable value for all of our stakeholders.

Moving to Slide 4. In order to accelerate our progress against our strategic priorities, to set up our company for success today and well into the future, we've taken a number of recent strategic actions. Yesterday, we announced a set of business transformation initiatives designed to increase our organizational effectiveness and generate significant cost savings that will be reinvested, among other things, to support our strategic priority to expand and enhance our portfolio, including the planned launch of QWO, fueling the continued growth of XIAFLEX and increasing our funding behind our Sterile Injectables pipeline.

Here are the actions we are taking as part of our business transformation initiative. First, we're optimizing the company's generic business by exiting manufacturing sites in Irvine, California and Chestnut Ridge, New York as well as our API manufacturing and bioequivalent study sites in India. We plan to take a phased approach to exit these sites, which we estimate will extend through the second half of 2022. During this period, the majority of projects from these facilities will be absorbed by our existing network of internal and external capacity. Additionally, we will actively evaluate the sale of these sites.

Second, we will improve operating flexibility and reduce future G&A expense by transferring certain transaction processing activities over the next year to third-party global business process service providers.

Finally, we will increase our organizational effectiveness by fully integrating Endo's commercial, operations and research and development functions, respectively, to support our key strategic priorities.

Unfortunately, these actions will also result in a significant reduction in roles across a number of areas of our company, which means we are parting ways with some of our fellow team members. These actions are in no way a reflection of these team members' talents or the value of their contributions. They are solely a reflection of the necessary changes we must take to evolve as a business for long-term success.

I want to deeply thank each member of our team affected by this change for the positive impact they've made to our company. Each has played an important role in our team, and I'm truly grateful. We are committed to executing a thoughtful transition and to providing support and assistance to our impacted team members through this period.

In addition to this business transformation initiative, we also recently announced an investment in the significant long-term growth potential of XIAFLEX and QWO through the planned acquisition of BioSpecifics. We anticipate the $540 million transaction will close later this quarter. We'll be financed with cash on hand and we'll immediately enhance adjusted EBITDA through increased profitability of XIAFLEX and QWO. We believe these recently announced actions further position Endo to create long-term value.

Moving to Slide 5. This is a snapshot of our segment and consolidated revenues and our adjusted EBITDA for the quarter. Third quarter revenues of $635 million decreased 13% and reported adjusted EBITDA of $287 million declined by 15% compared to the prior year. This was primarily due to significantly lower Generic Pharmaceuticals segment revenues and adjusted gross margins. Third quarter consolidated revenues and adjusted EBITDA exceeded our previously communicated expectations based on the performance of our Branded and Sterile Injectable segments.

Turning to Slide 6. Third quarter Branded segment revenues increased by 3% compared to the same period in 2019. Specialty Products portfolio third quarter revenues increased by 6% compared to the prior year, driven by price and volume. XIAFLEX revenue bounced back within the quarter and continues to show a strong recovery, growing 7% compared to the prior year. Specialty Products portfolio performance exceeded our expectations as the recovery of physician-administered products was stronger than planned. We're also very encouraged by the continued strong demand recovery we've seen to date for both XIAFLEX indications as well as the interest of patients willing to seek treatment. For example, visits to the unbranded Facts on Hand and the branded XIAFLEX websites have increased significantly since we reinitiated our promotional campaigns. Importantly, for both indications, we are also seeing strong consumer activity on our physician locator sites, which is a good early indicator of potential future patient demand.

Our established products portfolio declined by 2% compared to the same period in the prior year, primarily due to ongoing competitive pressures. The Sterile Injectables segment revenues declined by 5% compared to the third quarter of 2019. This decrease was primarily the result of reduced Aplisol revenues, driven by lower volumes, associated with a nonrecurring product restock event that occurred in the third quarter 2019 and ongoing competitive pressures on certain products, including ADRENALIN. This was partially offset by year-over-year growth in VASOSTRICT.

Sterile Injectable segment revenue was better than anticipated mainly due to VASOSTRICT performance. For VASOSTRICT, while we experienced anticipated channel inventory destocking early in the third quarter, this was offset by favorable purchasing patterns and higher underlying demand utilization.

Moving to Slide 7. In line with our expectations, our Generic segment revenues decreased by 38% during the third quarter compared to the third quarter of 2019. The underlying performance in the quarter reflects the impact of competitive events which were anticipated. The decrease in International segment revenues for the third quarter was primarily due to ongoing generic competition in the segment.

Turning to Slide 8 and discussing our ongoing clinical studies and pipeline. Starting with QWO. Our data generation plan and development remains focused on dosing, injection technique and responses in target patient populations as well as rollover studies on durability. Results and analysis from these studies are key to our publication and presentation strategies. We are pleased that there were 4 presentations and 3 posters presented by a number of medical aesthetics key opinion leaders, at the recent Vegas Cosmetic Surgery Conference and the American Society of Dermatologic Surgeries Annual Meeting, 2 of the leading medical aesthetics conferences. These presentations contain a breadth of research topic, reinforcing Endo's commitment to a robust QWO clinical program and real-world data generation. We continue to make progress on the XIAFLEX development programs for the treatment of plantar fibromatosis and adhesive capsulitis. Our adhesive capsulitis program continues to progress, and we expect interim analysis results from the proof-of-concept study for plantar fibromatosis in the first quarter of 2021.

If we turn to Slide 9. As we said before, you can see that our pipeline is increasingly reflective of our Sterile Injectables' growth strategy. We believe our Sterile Injectables opportunities have a higher level of differentiation and a more durable revenue profile. We are pursuing opportunities that we believe can help to meet the evolving needs of our customers and potentially improve patient care.

We also wanted to share pipeline updates from our strategic relationship with Nevakar. At this time, Nevakar has 3 applications filed and accepted, one of which was for ephedrine sulfate ready-to-use vial, which has been approved by the U.S. FDA. We anticipate launching this product in the near term. Year-to-date, we've launched 8 products and plan to launch approximately 10 products in 2022 across our business segments.

During the third quarter, we launched the tablet and powder version of generic KUVAN, which is the first and only generic version currently available.

Now let me turn the call over to Mark to further discuss the company's financial results and provide an update on our financial guidance. Mark?

Thank you, Blaise, and good morning, everyone. First, on Slide 10, you will see a snapshot of our third quarter GAAP and non-GAAP financial results. Blaise covered company and segment revenues earlier, so I will not review that again. On a GAAP basis, reported loss from continuing operations was approximately $69 million or $0.30 per share on a diluted basis in the third quarter of 2020 compared to a loss from continuing operations of approximately $41 million or $0.18 per share on a diluted basis in the third quarter of 2019. The loss in the third quarter of 2020 was primarily related to severance and other restructuring charges associated with the previously discussed strategic actions.

On an adjusted basis, income from continuing operations was $122 million or $0.52 per share on a diluted basis in the third quarter of 2020 compared to income from continuing operations of $153 million or $0.66 per share on a diluted basis in the third quarter of 2019. This decrease was primarily due to a decline in revenues and an unfavorable change in product mix in the generics segment.

Turning to Slide 11. As a result of the strategic actions that Blaise spoke about earlier, we expect to realize annualized pretax cash savings of between $85 million and $95 million by the first half 2023. The savings are primarily related to a net reduction in our global workforce of approximately 560 positions, most of which will be in our generics manufacturing segment. The cash savings from these actions are expected to be reinvested in the business. We do not expect a material impact from product discontinuations as a result of this restructuring. In connection with these actions, we expect to incur total pretax restructuring-related expenses of approximately $163 million to $183 million, which includes approximately $100 million to $110 million of cash charges. In the third quarter, we recorded a pretax charge of approximately $67 million, which included approximately $54 million of cash charges and $13 million of noncash charges. The noncash charges primarily relate to accelerated depreciation and asset impairments. The remaining charges are primarily expected to be incurred in 2021.

Turning to Slide 12. Based on better-than-expected year-to-date 2020 performance in our Branded and Sterile Injectable segments, we are raising our full year financial guidance. While our guidance contemplates a number of different scenarios, we have not assumed a significant impact from resurgence of COVID-19 for the remainder of the year. Also, the strategic actions previously mentioned are not expected to have a material impact on our 2020 adjusted results.

Having said that, we are raising our full year 2020 revenue guidance to be between $2.75 billion and $2.8 billion and our adjusted EBITDA guidance to be between $1.3 billion and $1.32 billion. Additionally, we are raising our full year 2020 adjusted earnings per share from continuing operations guidance to be between $2.50 and $2.55 per share. Our full year 2020 guidance now assumes an adjusted gross margin of approximately 67% and adjusted operating expenses to be approximately 23.5% of revenue. Additionally, we now assume adjusted interest expense will be approximately $525 million, and our 2020 adjusted effective tax rate will be approximately 13.5%.

Switching to Slide 13. This is a summary of full year segment and total enterprise revenue guidance. As you will notice, we have slightly updated the full year growth projections for each of our Branded, Sterile and International segments.

Advancing to Slide 14 and wrapping up the financial discussion. Unrestricted cash flow prior to debt payment was $308 million for the first 9 months of 2020. We ended the third quarter of 2020 with approximately $1.7 billion of unrestricted cash and a net debt to adjusted EBITDA leverage ratio of approximately 4.7x. For full year 2020, we are updating our expectations for unrestricted cash flow prior to debt payments to be between $315 million and $335 million compared to our prior estimate of between $60 million to $100 million. This change reflects the impact of the better-than-expected results of operations as well as the shift in the estimated timing of cash distributions to settle accrued mesh claims from 2020 to 2021. However, for clarity, this updated guidance does not contemplate the impact of the BioSpecifics acquisition, which we expect to close in late 2020.

Let me now turn the call back over to Laure to manage our question-and-answer period. Laure?

Thank you, Mark. (Operator Instructions) Operator, let's take the first question, please.

And your first question comes from the line of Gregg Gilbert with Truist.

I'll ask 2 upfront, one sort of defense, one offense. First is on opioids. We've seen some tangible movement from J&J and the distributors to change their estimates for the amount they will owe. I was hoping you could tell us whether or not you're talking about a global settlement that specifically includes Endo or are you waiting to see what others finalize first? And maybe you could talk about that opioid cash flow line that you have $54 million year-to-date and $80 million estimated for the year and what that specifically includes? And then on QWO, Pat, I was hoping you could address kind of what's going on between this gap and approval and launch and what you're doing behind the scenes to get the injector community educated and excited? And when do you turn on the consumer activation?

Thanks, Gregg, for the questions. Let me start off on the opioids question. So Gregg, there's really nothing new for us to report on the opioid litigation front. As we've previously noted, we continue to remain open to finding a constructive resolution to the matter, and we are actively engaged with counterparties. With that all being said, we also continue to prepare for trials, and we'll be ready to defend ourselves if we're unable to find a resolution.

In terms of your question on the cash flow line, that simply represents our legal expenses associated with the opioid litigation. That's what that line is. Let me turn it over to Patrick to talk about QWO.

Yes. Thanks for the question, Gregg. Couple of things I would point to. First of all, we're right on track relative to beginning to staff up our sales team. So that's been a big focus of us, and will be -- continue to be a big focus in terms of between now and the end of the year. I would say right now, Gregg, as we've been pretty consistent communicating. We're taking advantage of getting our data out. And so we have had a tremendous amount of positive data that was disseminated both at BCS as well as ASDS. And this is the real-world data, which I think will be real impactful, and it's what the market is really craving to understand. For example, Dr. Shridharani released some mechanism of action data as well as some interim analysis on our 305 real-world data, essentially suggesting and elucidating the mechanism of action for QWO, which is really exciting. And so when you look at the MOA, what we're seeing is that there's an Enzymatic Subcision Remodeling, essentially meaning that potentially impacting 3 modalities for cellulite, not only the fibrous septae but also fat remodeling and perhaps some dermal thickening, and that's been really well received from the marketplace. And then we had some real positive patient satisfaction and efficacy data released at ASDS as well. So we're going to continue to get that real-world data out in advance of launch. We're going to continue to recruit. We'll start amping up our consumer activation, probably in the January time line, Gregg, with some condition awareness. And PR is going to continue to start to build as well early in '21. And of course, as we get into launch, we'll really start amping up and converting to branded digital activation and a big splash from a direct-to-consumer activation as we get into the midway of '21, and we're well into launch.

Your next question comes from the line of David Amsellem with Piper Sandler.

So just a couple of quick ones. First, with the acquisition of BioSpecifics. Can you talk about the extent to which you are going to cast a wider net in terms of the exploration of expansion opportunities for XIAFLEX, thinking beyond plantar fibromatosis and adhesive capsulitis now that the -- you don't have any royalty-bearing obligations going forward? And then secondly, given how the business is evolving with going into an anesthetics -- medical aesthetics, a greater presence in Sterile Injectables, are you open to divestitures as a means of potentially accelerating deleveraging? Talk about your strategic thinking there?

Great. Thanks, David. Appreciate the questions. In terms of BioSpecifics acquisition and how we think about XIAFLEX maximization and also how we think about QWO, obviously, we have our 2 indications under development right now for XIAFLEX, which is plantar fibromatosis and adhesive capsulitis. And listen, there are other very interesting potential indications for XIAFLEX as well that we are actively evaluating and we're making decisions on as we move forward. And the same goes for QWO. So this only increases obviously the profitability profile for both of those assets for us. So it is something that we're going to look to do to make sure we're fully maximizing XIAFLEX and also fully maximize QWO as we move forward.

In terms of your question on divestitures and deleveraging, David, our strategy has been pretty clear here, which is, from a capital allocation standpoint, our priority is fully invest into our internal assets and make sure we're getting everything we can out of those assets, be really smart about business development and then also, obviously, be paying attention to paying down debt. But the fundamental principle is that in order for us to deleverage, we have to do it through the portfolio and we have to do it through driving EBITDA. So when we think about divestitures, divestitures make sense when it's aligned with what I just articulated. And that we'd be able to do that in a way that was aligned with our strategy in terms of where we want to be from an overall portfolio standpoint and also, obviously, commands a purchase price, which actually results in deleveraging. So it's as usual, those are things strategically that we're looking at all the time. So it is something that we will consider. But our real focus right now is on continuing to improve our portfolio and ultimately driving to where we can drive EBITDA growth in the future.

Your next question comes from the line of Randall Stanicky with RBC Capital Markets.

I want to ask you about the restructuring. You guys were early to make moves when the sector downturn happened in 2016. Can you talk about Endo's footprint in generics in 2023? Are you still a generic company? Are you still allocating capital to this business? Or is there strategic intent to pivot away from this business? That's the first question. And then secondly, I want to ask on VASOSTRICT. I know this is not a comfortable question, but it's an important one for investors. Last quarter, you talked about being open to settlement. Eagle has recently discussed being open to launching at risk. There's going to be a lot of focus on this over the next several months. Can you just comment on the durability of this franchise and strategic options or opportunities for you to protect this product, given how important it is to Endo?

Great. Thanks for both those questions, Randall. So on the restructuring piece and how it relates to our generics business, we are still absolutely fully committed to the generics business. What you saw announced yesterday is really us further optimizing that business. I mentioned a minute ago around our capital allocation priorities, it is about fully investing into our portfolio. We've been very clear that a big area of focus for us is going to be maximization of XIAFLEX, fully investing behind the launch of QWO and what can come after QWO in terms of us from a medical aesthetics presence standpoint and also what we're doing around Sterile Injectables. So our level of investment will be different for our generics business compared to those priorities I just mentioned. But this plan we're taking is around fully optimizing our generics business, just to continue to improve and enhance its competitiveness as we move forward.

In terms of your question on VASOSTRICT, this is what I can tell you on VASOSTRICT, Randall, and I do appreciate the question and know it's top of mind for our investors. Listen, Paragraph IV challenges are obviously a very common part of our industry, and they naturally create a level of uncertainty, especially when you're dealing with large products like VASOSTRICT. And this P4 litigation is obviously a very important area of focus for us. We are very confident in our position and we're not going to be making predictions or probabilities on different outcomes. But as you can imagine, we are doing everything possible to be ready for trial. We absolutely remain open to trying to find a constructive resolution and settlement, if we can do that outside of trial. And obviously, we're also preparing ourselves commercially for potential outcomes. So we have a plan in place, and we continue to execute against that plan, but that's where we stand on the VASOSTRICT front.

(Operator Instructions) Our next question comes from the line of Gary Nachman with BMO Capital Markets.

First, how much of the strength in XIAFLEX has been from pent-up demand for those procedures from COVID, if at all? Would you expect there to be a reversal if there's a backlog that's being worked through? And are you seeing more growth in Peyronie's or Dupuytren's? It sounds like both are doing well. How much more upside is there in those markets? And then for VASOSTRICT, there's been so much demand during the pandemic, how much of that might stick? And are you able to make enough supply to meet all the increased demand there?

Great. Thank you for those questions. I'll take VASOSTRICT first, and I'm going to turn it over to Patrick to address the XIAFLEX piece. We are absolutely extremely well positioned to meet any market demand on VASOSTRICT. That's something that we've taken significant steps on to fully be prepared to address any demands that are required, and we've been able to meet every single demand in the marketplace through the COVID-19 surge that we saw back in the earlier part of the year and are really proud of how we were able to do that.

In terms of the underlying utilization of VASOSTRICT and what's going to stick, I think what we're seeing now is -- part of the reason we had the better-than-expected performance of VASOSTRICT is that we did see utilization of VASOSTRICT increase in the third quarter versus what we were expecting. And I think you're seeing -- you are seeing some additional use on the COVID-19 front. But also as the shelter-in-place has been removed and we see when we look at mobility data, a significant increase in mobility, that leads to additional events that happened that are outside of COVID-19. So we think as we move into -- out of Q3 and into Q4, we are at a bit more of a normalized now new run rate for VASOSTRICT.

Let me turn it over to Patrick to take the questions on XIAFLEX.

Yes. Thanks for the question on XIAFLEX. I would start by saying we're extremely encouraged by the recovery that we've seen during the quarter. Net sales were up over $50 million versus quarter 2. As you suggest, there was certainly a little bit of a pent-up demand, and it is -- was contingent upon of normalization of physician activity and patient activity. We did roll through some of that pent-up demand. But as we look at ongoing demand, we're very, very encouraged. We saw a tremendous increase in demand for both indications from quarter 2 to quarter 3. For example, on the Peyronie's indication, demand was up by almost 50%. Demand was up by 107% versus quarter 2 for the Dupuytren's contracture indication. And we're looking -- as we look at volumes, we're almost back to where we were prior year. And then when we look to the future, to your question on the sustainability of that, when we look at early indicators like benefit -- investigations and benefit verifications through our patient hub platforms, we see actually in quarter 3 that we were slightly up versus quarter 3 of previous year. And so all those things coming together, there's a lot of data coming at you, but all those things coming together to suggest that we're well on our way to continuing to recover and are certainly approaching those pre-COVID levels. And we're certainly, as Blaise has mentioned multiple times, are very committed to continuing to sustain and grow XIAFLEX.

Your next question comes from the line of Ami Fadia with Leerink.

I wanted to go back to the additional indications on XIAFLEX. Now that you own the full rights to the product, could we expect to see an increase in the pace of development of additional indications? We've seen BioSpecifics sort of pursue different indications over the last couple of years. I'm just curious if there's going to be a pronounced change in the pace at which you explore these others? And then just from a strategic standpoint, should we sort of take this announcement from last night to mean that you're going to invest more on the branded side? And could we see you add more products whether it's aesthetics or other branded products over time?

Ami, thank you very much for your questions. In terms of XIAFLEX, listen, we absolutely are very interested in continuing to pursue additional indications in XIAFLEX. We're doing those evaluations now. To the extent that they make sense for us to do, we'll pursue them. But those will be decisions we'll take going forward. We are actively doing that work and evaluating potential indications on that front. In terms of when we think about investment and what does the restructuring announced yesterday mean in terms of our investment going forward, it doesn't change anything in terms of what our focus is. So our focus is absolutely on what I said earlier, which is making sure we're fully maximizing the assets we have in our portfolio, and that obviously is around XIAFLEX maximization, around QWO and our Sterile Injectables portfolio is going to be our primary area of focus.

From a business development standpoint, we are going to continue. We have been active. We'll continue to be active on evaluating and seeing if there are opportunities out there that makes sense for us to bring on. In terms of medical aesthetics, I think from a business development standpoint, that will be something we would do after we successfully launch QWO and really establish ourselves in the marketplace with that foundational asset. So that's really where our focus is going to be, Ami, as we move forward.

Your next question comes from the line of Annabel Samimy with Stifel.

And again, along the lines of the restructuring, bigger picture, it seems to have crewed up quite a bit of capital. Just want to know if you can give us some flavor on the priorities for aesthetics. I understand launching QWO is a big priority, but it's kind of hard to launch with only one product if you consider it a serious player in these practices. Sometimes it's helpful to launch with multiple products. And then separately, when you think about aesthetics with Sterile Injectables and the generics, these business segments don't exactly fit together naturally. So what are some of your longer-term priorities for the structure of the business and where Endo is going?

Thanks, Annabel. Well, I'm going to let Patrick comment on QWO in terms of medical aesthetics on that question. In terms of the strategy, again, we continue to be hyper-focused on XIAFLEX maximization, QWO launch -- successfully launching and establishing that as a foundational product and continue to invest behind our Sterile Injectables portfolio. That's where the focus is. We'll continue to evaluate all parts of the portfolio going forward. And again, I mentioned earlier, our generics business, the actions we're taking now are really around optimizing that. And as we move forward, we'll evaluate, as we always do, what makes sense for us going forward. But there's no change with the announcement we made yesterday in terms of what our focus is. Maybe, Patrick, just want to comment on the aesthetics and really our view of how QWO can be really successful on a stand-alone basis.

Yes. Let me address your QWO launch question. We certainly believe that we will be successful launching QWO. And certainly, over time, a multiple basket of products does a lot of things, that improves relevance, it certainly expands margins. And those are all good, smart and prudent things, and we'd be looking to do that. But in terms of the requirement of having an additional product to be as successful as QWO, we don't see it that way. The way I would consider it is, this is a brand-new category, it's remarkable innovation. And so this innovation will certainly stand on its own as the first and only injectable to be able to treat a cellulite patient. So we're extremely bullish on that opportunity. I think if you look at the other competitors, there's quite a bit of overlapping of portfolio. And the requirement for they to be successful is they do need the dermal filler, they need a botulinum. And so we're certainly open to adding additional products that make sense to complement QWO. But to suggest that we need it to be successful with QWO, we don't support that premise. And so we will be successful with QWO as this is a really brand-new category. And once we're successful, we will continue to look to complement that with real innovation in the space. And we've made a good splash here as someone who is providing real new innovation, and that's what we would look to do as we look at follow-on opportunities behind QWO.

And your last and final question comes from the line of Dana Flanders with Guggenheim.

Great. Just 2 questions for me. The first one, just on the Novavax fill-finish agreement. Wondering if CMO opportunities could be a bigger part of your strategy going forward? And then curious if you can give any quantification of the potential impact, if that's successful? And then my second question on QWO. I know the label is just for buttocks, but you are running data generation studies in buttocks and thighs. I'm just wondering if that's an important distinction. I know these types of products tend to get used everywhere over time. And just wondering if you think physicians will initially stick to the label or if you could see a bit broader use around the body?

Yes. Thanks, Dana, for those questions. And I'm going to let Patrick take the QWO question in a moment. In terms of Novavax, listen, we were really excited to be able to partner with Novavax and have the -- potentially play a role in helping them to bring to market a really important, obviously, critical need for our country around COVID-19. So really pleased to be partnering with them. Our strategy is not to be a CMO player. This was a bit of a unique situation. And again, something we're very proud of. The terms of the agreement are confidential, so we won't be able to really speak to anything from a financial standpoint around that.

Let me turn it over to QWO, Dana, to answer your question around -- to Patrick, I'm sorry, on the QWO question. Yes, Patrick?

Yes. As you say, obviously, we're quite pleased with the approval of QWO for the treatment of cellulite in buttocks in women. And so we've got very strong data for Phase III that really was a big difference maker in terms of achieving that approval. I can't comment on in terms of -- we'll certainly be launching with the buttock indication. Certainly, physicians, when they have access to the first and only injectable, they will be considering many things. The community has suggested that we need to be able to provide real-world data, and that's essentially what we've done. And so we've continued to provide real-world data around dosing, around injection technique. Thigh data is something that we will continue to be looking to pursue, and we're starting that pursuit with data generation. And so the 305 data is real-world data. And as I suggested, some world-class physicians that have already begun to disseminate data, suggesting that there's very solid data in the improvement of cellulite -- in patients who had that cellulite in thigh. And we're learning more about mechanism of action. So really, it was really about getting the approval and continuing to support the clinical development of QWO through really strong data generation. In fact, we feel like that's going to differentiate us in the marketplace to be able to provide great science to the medical aesthetic community as a part of the strategy. And so happy with the indication around buttocks and pleased with the clinical development plan regarding other treatment modalities for QWO.

And I'm showing no further questions at this time, and I would like to turn the conference back to Laure Park for closing remarks.

Great. Thank you, operator. We appreciate everyone's continued interest and support of Endo, and we look forward to providing you with updates as we move forward. Thank you for joining us this morning.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect.