Good afternoon. My name is Stephanie, and I will be your conference operator today. At this time, I would now like to welcome everyone to the Impax Laboratories First Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to your host, Mr. Mark Donohue, Vice President of Investor Relations and Communications. Thank you, sir. You may begin the conference.

Thanks, Stephanie. Good afternoon, everyone. Welcome to our First Quarter 2013 Financial Results Conference Call. We issued our first quarter 2013 earnings release today after the close of the U.S. financial markets. A copy of the press release and a link to a webcast of this call are available on the company's website at www.impaxlabs.com. Today, Dr. Larry Hsu, our President and Chief Executive Officer will focus his remarks on some of the recent events; and Bryan Reasons, our Chief Financial Officer, will briefly review the financial results and our updated 2013 financial guidance. Also on the call are Dr. Carole Ben-Maimon, President of Global Pharmaceuticals; and Michael Nestor, President of Impax Pharmaceuticals. Following Larry and Bryan's prepared remarks, all will be available to take any questions you may have. Our discussion today may include certain forward-looking statements, and actual results may differ from those presented here. The factors that could cause such a difference are outlined in our SEC filings and on our website. Our discussion today includes certain non-GAAP measures as defined by the SEC. Management uses both GAAP financial measures and a disclosed non-GAAP financial measures internally to evaluate and manage the company's operations and to better understand its business. Further, management believes the inclusion of non-GAAP financial measures provides meaningful supplementary information to and facilitate analysis by investors in evaluating the company's financial performance, results of operations and trends. A reconciliation of GAAP to non-GAAP financial measures is available in our first quarter 2013 earnings release, which can be found in the company's website. And with that, I'll turn the call over to Larry.

Thank you. Thank you for joining us today. We'll continue to focus on improving our quality and our compliance operations, and fulfilling our commitments to the FDA. At the same time, we are taking a number of steps to align our business to better meet our current expectations and ensure that our resources are allocated to meet the future growth plans. With the receipt of the new Form 483 at the end of February, we are now faced with the fact that this will be a challenging year. We believe new product approval from our Hayward facility will continue to be delayed until we can resolve the warning letter. In addition, while our total revenue in the first quarter of 2013 increased by 15% over last year's first quarter, as you are aware, the U.S. patent on the Zomig tablet and the orally disintegrating tablet will expire on May 14 of this year. We expect several generic competitors in addition to our own authorized generic at that time. This will negatively impact a majority of our U.S. Zomig sales. Another near-term event is the FDA's response on the Opana ER citizens petition, which is expected by May 10. After an extensive review of the data, we submitted comment to the FDA in December 2012 and in February of 2013, where we took exception with the CPs interpretation of data on the [indiscernible] rate. We currently have 180 days of exclusivity for being first-to-file on our generic formulation such as oxymorphone ER tablet. This exclusivity expires at the end of June. At which time, we expect additional competition and we intend to vigorously compete against this new competition. The combination of all these events, the warning letter, Zomig and the oxymorphone, requires us to analyze our cost structure to be best…

Thank you, Larry. Hello, everyone. Thanks for joining us. For the first quarter 2013, our total revenues increased by $20 million to $148 million over last year's first quarter. This increase was driven by continued strong sales of Zomig and our launch of generic oxymorphone. Partially offsetting this increase was a significant decline in sales of our authorized generic Adderall, due to additional competition that came in June of last year. We continue to have adequate supply of generic Adderall. As Larry mentioned, our second quarter 2013 Zomig sales will be negatively impacted by the expiration of the U.S. patents on the tablet and the orally disintegrating tablet in mid-May. These 2 dosage forms represent approximately 90% of our quarterly sales of Zomig. We are planning to launch an authorized generic at the same time as other generic competitions do, and we'll continue to promote the Zomig nasal spray. However, these actions won't be enough to offset expected declines in future sales of this product. With the further delay in resolving the warning letter in Hayward and expected near-term decline in Zomig sales, we'll have near-term pressure on total company revenues. We'll continue to monitor and aggressively manage our cost structure in order to be cost efficient in the near term and ensure our business is aligned with our strategic goals longer term. As part of this effort, we decided to discontinue certain mature, low-volume and lower-margin products and record an inventory charge of $6.7 million. As a result of this decision, along with other efficiency initiatives, we expect to realize $10 million of savings in 2013. We're continuing to evaluate other cost-saving opportunities and we'll keep you updated as our plans are finalized. The recent Form 483 also delayed the anticipated approvals of RYTARY and other generic products. As…

[Operator Instructions] And your first question comes from the line of David Amsellem with Piper Jaffray.

A couple of -- maybe I'll start a question specifically for Larry. So given that you've had 3 unsatisfactory inspections over the past 3 years this is sort of a high-level question, but do you, in any way, hold yourself accountable and have you or the board given thought to you possibly stepping aside?

Well, David, I think, obviously, we appreciate you bringing the issue up. However, though, I want to emphasize that the company is in a very critical time at this point. And both the board and the management here believe that the continuity is important, okay. And obviously, if you look at the 3 483 it is not a part of record, anybody can be happy with it. However, though, if you understand the background on that, I think we have initiated this QIP programs about 1.5 years ago and we have a significant change to the management, from this senior management all the way down to our lower management and to -- in order to properly educate this QIP program. It could take time, the QIP program can take 2, 3 years to get into implemented, okay. And therefore, I think at this point, at least we know we're going the right direction, we just need to even more resource into this. We've tried to draft even more internal people into the program, try to finish up the QIP as quickly as possible.

Okay. And given what has transpired at Hayward, what's your view on the possibility of a consent to create, and is that something that you've discussed in anyway with the agency? Well, we have not had a conversation with the FDA at this point. The last check with them, they are still in the process of reviewing the response we sent to them. Not until we finish -- or they finish the review, I don't think we will have any feedback on that. We certainly hope we don't get the consent decree, but on the other hand, the decision is pretty much is in the FDA's hand.

The next question comes from the line of Michael Tong with Wells Fargo Securities.

Two questions. One, have you had a post complete response letter meeting with the FDA, specifically on RYTARY? And then secondly, Larry, you mentioned that you're going to put additional resources into resolving this warning better. I guess my question is, how do you make sure you're actually seeing eye to eye with the FDA as to what they want? Obviously, the most recent 483, it's kind of surprising or unexpected. So how do you make sure that you're not doing one thing and the FDA is looking for some other things?

Well, I guess, the first question is related to the RYTARY. Obviously, we'll continue working with the FDA and try to set up a meeting with the FDA. But it's clearly, until FDA finished the review on our response, the advice were given was not to rush in set up a meeting, because if they have not complete the review, they will not be able to give the feedback on that. So again, the soon as we know they finished the review of our response, we will set up a meeting with them. Now your second question is basically, that's the main reason we want to set up a meeting with FDA more quickly. As soon as they allow us to, we would like to sit down with them and go through the plan we have, and make sure that it's totally aligned in this whole thing. And so that we're not going to the path which can now -- is now satisfying the FDA in the future.

Your next question comes from the line of Chris Schott with JPMorgan. Christopher T. Schott - JP Morgan Chase & Co, Research Division: I just have 2 here. I guess, first, I apologize if you've explained this already. But I'm just trying to understand the gross margin guidance a little bit better. You put up some very high gross margins this quarter, obviously, Zomig's going away, but -- I guess, I was just surprised the margins are coming down that much especially considering some of these discontinuations of the low-margin products. So were the new products really contributing that much this year or just -- just help me understand a little bit more what's happening with the margins for the rest of the year?

Thanks, Chris. So Q1 was obviously high because it had strong Zomig sales, which is higher-margin business for us. But going forward, our original guidance assumed an earlier resolution to the warning letter and had new launches. And we did have -- we had some significant launches on the generic side, some with the very robust gross margins, specifically generic Concerta was going to be -- was a large launch for us planned mid-year with very high gross margins. And so that -- not having those launches is pulling down the gross margin significantly. And the base business, like all generics base business, continues to have that pressure. So it's important to get new product launches.

And there are some new products that could be coming down the pipe, but the timing of that is sort of like Soloray.

It's later in the year and it doesn't have...

It's later in the year and it doesn't have an impact.

Yes. They're not tied to Hayward impact.

Yes. And they're not tied to Hayward.

Those are launches not tied to Hayward. But we did have significant launches coming out of Hayward for this year. Christopher T. Schott - JP Morgan Chase & Co, Research Division: Thanks for that. The second question I had is on SG&A. I know you already pulled down some of the spending targets earlier this year. But I guess I was kind of surprised we didn't see more reductions there. I guess, my question is, what's going to be the focus of this sales force post the Zomig expiration. It seems like we've had a pretty decent window here with just Zomig nasal spray. And then I'm just wondering is the goal to like add another kind of bridge-type of product there. It seems like a lot of spend for a fairly small product right now.

Well, first, relative to our activities to find another product, we're spending a good deal of time from a standpoint of M&A, Chris, looking for other opportunities to be able to utilize the sales force. So we're preserving that aspect of it. I think one of the things, and as Bryan will touch on this is, during the first quarter, we still had a number of, if you will, RYTARY promotional elements that were ongoing that we couldn't really stop, but we've slowed those down. So you'll start to see those reflected as we go forward. And Bryan have something more to say on that.

Yes. So I agree. We had some pre-launch activity early in the year that hit the P&L in Q1, and we've slowed that down to better align it with our expected approval of -- timing of expected approval of RYTARY. And overall, we are looking at the overall company's cost structure infrastructure to better align it, but near-term and for success and our ability to meet our longer-term strategic plans, we're still finalizing that. So I think, like I mentioned, when we do have something finalized, we will disclose that as appropriate. Christopher T. Schott - JP Morgan Chase & Co, Research Division: Okay. And just one final question here, and I don't know if you're going to be able to answer this or not. But just based on your current remediation plan, I know you still need to meet with the FDA and everything, but roughly at this point, when would you expect to have your were completed on Hayward so that you could ask the FDA back in?

Well, I guess, let me try to answer from 2 different angle. If you look at it as just the remediation tied to the Form 483, you need to find another time. And at this point, whatever the time is, let's say it's a finite time, we'll finish work at a certain point. But don't forget there's another important element which we don't -- we initiated QIP 1.5 years ago, which is going to continue. And that's going to be important part of how our quality, activity and action is going to be continuous into the future for that. So again, if you look at only the remediation on the 483 item, we hope we can finish as soon as we get it done.

Your next question comes from the line of Jason Gerberry with Leerink Swann.

Just a follow-up on the gross margin question. Did you indicate whether Opana was in or out of guidance for the remainder of the year? And then second Opana question is just, if you were able to stay on the market, it looks like your kind of around 10% market share now on all strengths. Do you feel like that's a number that you can increase? I know you're kind of in an unusual situation not having a direct substitute ability. But through your commercial efforts, is that a market share you think you can increase?

So I guess, I'll clarify. You're talking about oxymorphone, generic oxymorphone?

Yes, sorry about that.

That's okay. And I'll answer what's in our plan, and then I'll let Carole maybe talk a little more about the business side of things. Yes, it's in our plan for the full year. Obviously, our exclusivity period ends in June.

End of June.

Sorry, end of June. So we expect some competition then and to some price erosion. So yes, it is in our plan for the full year.

And I guess with regard to market share, I think, we are AB rated to the -- after this product on a 7.5 and 15, that is in RLD. And so that product -- those 2 strengths have actually quite done well. And we're actually pretty happy also with how the oxymorphone ER (ph) has done, the other strengths which have no reference listed drug and are not AB rated. So I think a lot is going to depend on the continued market perception. And clearly, it's really just plugging along and continuing to talk to customers and trying to move market share.

Your next question comes from the line of Louise Chen with Guggenheim.

I had a few. So first question I had was on your Taiwan facility. What are the annual sales coming out of this facility, and when do you expect to see a meaningful impact on margin and tax rate from the increasing sales there? And then on your business development, are you seeing a better brand of generic opportunities here and are you in late-stage discussion with any potential candidates? And then lastly, we've gotten questions on the termination of the GSK deal, just wondering if there is any read through on the improvability of the RYTARY NDA without additional clinical trials or if that was just purely GSK allocation resource issue?

Bryan you want to answer the...

I'll start, that's a multipart question. Mind you, we might need reminding, I was writing down as quick as I could. So percentage sales out of Taiwan, if you look at our -- if you look at the company's sales, we -- Hayward actually only accounts for, I would say, probably 20% of the sales. Generally, lower margins other than, obviously, oxymorphone is a nice product for us. And then a lot of our sales are not reliant on Impax-owned facilities at all. But internally, our manufactured products, Taiwan is important and it's becoming more and more important for us. That's a strategy that we've talked about in the past. When will we see the tax rate kick in? One of the important things on our tax planning is the approval of RYTARY and the growth of the brand business. So that's where we'll be producing RYTARY out of Taiwan. That will be a very high-margin product for us. And that's really when we'll really be able to leverage our current tax structure.

Okay, I'll try to start my answer the second question related to the business development, and then have Michael to talk about the GSK, okay. You know that over the last couple of years now, we've been putting a lot of effort on the business development side, and particularly tied to acquired product or company. And the criteria we set is primarily on the -- it has to be strategic fit. And also we like the product of this company, or what product we acquired to be accretive immediately or at least in the very short term on that. So if you look at the opportunity available on the market today, obviously, we feel there are more opportunity which fit into our strategic direction from the brand side, than the generic side. But again, we're not particularly only focused on one or the other. But I'm just speaking from the overall availability point of view, it seems more available on the brand side of the business or as an M&A target product.

And, Louise, to address your question, relative to GSK and the change in the nature of our relationship with them. That relationship changed because of what GSK saw as delays in the approval and subsequent commercial launch in their countries, if you will. I guess their available windows had shrunk or perhaps an allocation of resources, if you will. And so that was the reason that the relationship terminated. In terms of any implications to RYTARY, in terms of additional trials having to be done, we know of no such, and have had no such, discussion with FDA. As you know, we've had a pretty robust clinical trial program built into RYTARY in order to get approval. In fact, with 3 clinical trials that we used to support the approvability -- or used in the submission of the NDA. So the answer to your question is, I wouldn't read anything else into it.

Your next question comes from the line of Randall Stanicky with Canaccord Genuity.

Larry, just maybe a question for you to start off with. Has the Board stepped back and considered the strategic path or is there an opportunity to review that going forward? And I guess the question is, has the Board fully endorsed this path forward and said, okay, this is the direction we're going to take it in and that's where we're headed or is that something that's still being thought about?

Well, I have to say, obviously, the Board is involved in every decision of this magnitude, okay. But I think the focus of both Board and the senior management has been, and will continue for a period of time, is on the -- fix the warning letter and get the QIP as quickly as possible. That's the top priority we have today. And in addition to that, obviously, you heard about what we're saying, continue pushing forward the [indiscernible] government site, okay? The M&A type of activity, as well as you heard Bryan talking about taking a deep dive and looking at our cost structure, and to make sure that we're one very efficient organization. These are most important to the organization. So, at this point, we're not looking at any alternative on that. But, as a public company, we have an obligation to do what we had to do.

Well, I mean, just step back and think about -- the stock has been a little bit of a cap on it since these manufacturing issues begin. And there are several things you can do to create value, looking at the cost structure is certainly one of them, working on the portfolio is another. And your M&A seems to be a big opportunity for you, potentially, and haven't seen a lot of cash being spent. So, I guess, as you think about your M&A priorities, have those changed over the last year, too? And I guess more specifically, would you consider getting more aggressive, looking at a bigger deal or merger of equals or something transformational in nature?

Well, I think, overall direction has not been changed. I think we always emphasize on, as I mentioned earlier, the strategic feat and emphasize on the accretive. I think the only change is we kind of slowed down on the R&D type of pipeline deals because that can suck up a lot of the dollar once you sign the deal. And, at this time, I think we put top priority, basically, on the -- market a product or the company which will give us-- immediate accretive and financially. So otherwise I think, overall, we're still going in same direction.

Okay. Well, my last question -- and this is maybe for Bryan. As you think about the cash on the balance sheet -- you talked about the ability to lever up, you've certainly talked about taking on some significant leverage in the past. With the warning letter existing right now, what's your ability to lever up on the current EBITDA base?

I mean, clearly, on a stand-alone basis, as our EBITDA contracts in the near term, that reduces our stand-alone ability to borrow. I think we still have significant borrowing capacity. And I think, if we are looking into a deal that's immediately accretive and produces EBITDA, you can borrow off their EBITDA as well. So I still think, between our cash and investments that we currently have and the fact that we're really focused on a accretive deal, we still have plenty of capacity to lever up and make the significant deal.

The next question comes from the line of Ken Cacciatore with Cowen and Company.

Larry, I'm a little confused by your answer to Chris's question, about the timing that you think you can have your portion of the remediation plan done. Is it that you guys don't have a date or you just don't want to share it with your shareholders? I'm just confused by that. And if you don't have a date yet, at this point, why would that be? Is it just there's still a lot of work going on? You did file with the FDA. So just confused why you won't share with everyone, your thoughts on when you will complete your portion of the near-term task? That's one question, I'll wait for that and then I'll ask others.

Okay, Ken, I think it's a fair question. And as a matter fact, I will not be able to give you a date. It's not because we don't have internal date, we do. But I think I mentioned earlier that one of the very important goals for us, in the next few weeks, is try to set up a meeting with the FDA. Until we have a meeting with the FDA, I would literally not know that the day we have set is a good day. Because it really depends on what we -- currently, the day we have is based on what we committed the FDA in the response to the 483. After the meeting, the FDA may ask more, may ask less, may have something else. We have to look at it, we have to come back and revise the timeline for that. So, again, we do have internal timeline, but I will not be able to talk about it until we have a meeting with the FDA and get a better picture about that.

Okay, that makes sense. And then on the -- kind of, though, trying to separate RYTARY from the FDA issue. Under what premise can you -- or argument are you going to make and to who do you make this to? Is it the folks that are involved in the manufacturing component or is it the folks that are doing the actual product filing itself? Can you give us any precedence that you're relying on? I'm sure you're getting some advice on how to do this. Can you try to give us, mechanistically, how this is done?

So, I'll try to cover those pieces there, Ken. This is Michael Nestor. So, obviously, that would be the subject of the meeting that we're looking to have with the FDA. We would expect that, as part of that discussion, would be both the review division and the Office of Compliance. We cannot have that meeting until such time as the Office of Compliance has had an opportunity to go through the responses to the complete response letter that we submitted. Once we know that, that has occurred, then what we'll do is we will request a meeting with the agency to ensure that there are no other issues outstanding or, specifically, what steps FDA would like for us to follow. Once we have that clarity, then what we would look to do is then make our NDA resubmission. But that would obviously be updated for the latest information that we have from a safety standpoint, relative to RYTARY. Obviously, getting RYTARY approved is a very, very high priority for us. I think, probably, in terms of an example that we kind of look to, that sits out there, is Genzyme's Lumizyme where, under similar circumstances, they were able to get approval.

Okay, that's very helpful. One last question on the Citizen's Petition you filed on Opana ER. Is there any interaction that you have with the agency on that or are you waiting like the rest of us for the decision on May 10? Is there any back and forth that the FDA asked for more clarification?

So, we don't comment specifically, Ken, our conversations with the agency. But I can tell you, we submitted the Citizens Petition and the agency obviously acted on OxyContin, and that we assume and fully anticipate that we will hear something some time around May 10. And if they don't make the May 10 date, we clearly have to do something before the end of June because when our exclusivity is up, they will either approve Actavis, which had the tentative approval, and/or others or will make a decision that the old Opana formulation was removed for safety reasons.

Your next question comes from the line of David Buck with Buckingham Research Group.

It's Jim Dawson for David Buck. How much pipeline, for oxymorphone, was there in the quarter?

Which pipeline fill?

Yes. If there was any.

We shipped very normal launch quantities in January, and have seen normal pull-through. So, in the pipeline, we're very comfortable with the amounts.

I mean, obviously, we try and keep product at our customers and we've treated this as any other products and routinely. So, I mean, also you see the script date, that obviously represents pull-through.

Okay. And then just a question on Board. Have they been looking at options, potentially separate the Branded business from your Generic business?

Have they options to separate the Generic and Branded?

Oh, oh. No, we have no discussions on that. As a matter of fact, with the warning letter and we have RYTARY waiting for approval, I don't think that this is appropriate time to discuss about a separation anyway.

Great. And just on -- what is the expectation for global sales for the full year, for 2013, after what seems like a very strong first quarter? It looked like $97 million.

We don't give top line guidance, but like I said in my statement, we're obviously going to see some near-term revenue pressure.

Okay. And lastly, it was just -- about the gross margin going considerably down, from the first quarter, to make that mid-40s guidance for the year. Are you going to be making money or breaking even in the second, third and fourth quarters? If you could just add a little more detail on that, it will be appreciated.

Yes, we gave our expense guidance, and clearly we're looking at the overall cost structure and we're going to look at wherever we can save. But we don't give EPS guidance.

Your next question comes from the line of Sumant Kulkarni with Bank of America.

The first one is on the base business. How has competition been so far, on Fenofibrate and how do you expect that to evolve for the rest of the year?

Yes. So, obviously, you can see from the script data, that we've maintained about 80% of our market share on the caps and the tabs really haven't changed very much. We're aggressively defending that business. It's hard to predict, there are no patents on that product. So obviously, at anytime, there could be additional competition. Assuming there's not, we're very comfortable that we can defend the business and maintain our market share.

And on the margin stepping down for the rest of the year, would you say that the biggest single delta was the assumption of a media launch of Concerta or was there something else that would have contributed as much, if not more?

Generic Concerta was the largest single item, yes.

And you mentioned that you had assumed generic Solaray is coming in later in the year, in some of your remarks. Is that a different assumption from when you started the year or was it always the plan?

No, that's always been the plan. Obviously, we're dependent on FCI [ph] and we're estimating the timing on that, but that's always been the plan.

Shifting to the brand side. So, if you look at Zomig tentative approval, there aren't that many. Do you still expect a full generic competitive market there on expiry of the patents?

We do expect to have at least a couple of generic players for Zomig. Carole can probably...

Yes. So there's 1 tentative approval for both the ODT and the tablet, and there's noise in the marketplace of multiple others. So we fully anticipate that there will be multiple players in that market. What we don't know is how many will be in each formulation.

Right. And a final question. On the BD side, have you set yourself any internal deadlines by which you need to do something, given that there is going to be a significant level of spend on the branded side where there might be just 1 product to market?

Well, we definitely understand the urgency about having a -- you can steer it down. But, obviously, you understand we cannot set the deadline. Because, obviously, we don't want to sacrifice the quality for the matter of the speed, at this point. And also, as I mentioned earlier, to make sure the acquisition fits our strategy is very important. So to that point of view, yes, we did step-up the effort. We did make sure everybody know the urgency, but we want to make sure we do a good job.

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

Sorry, I had to hop off the line for a little bit, so apologize if this is a repeat question. Could you remind us about any additional clinical trials that needed to be done for the European approval of RYTARY? And had GSK started on any of that or not? And then I'll follow-up after with a question.

Okay, Ami. So, no additional clinical trial for RYTARY would be required for European approval. And as such, GSK never conducted one.

Got it. So, in terms of your proposal to the FDA, for the remediation work at Hayward. Could you tell us what timeline you've proposed in there and whether that's, at least, in 2013?

The timeline for?

For what we committed to.

Well, some of the item we commit to, the FDA does have a timeline. No question at all. Okay, in other words, we mediate some of the deficiency pointed out in the observation. But many other items which is still open and I think, as I pointed out earlier, the conversation with the FDA will be very important in terms of -- to have a better understanding about expectation, in terms of a couple of things. One is priority, okay? If we cannot finish everything, what has to be finished before the coming year, the next time. And then the second thing is, are they happy with timeline we have. And the important communication we want to have with them.

Got it. In terms of the net income for this year. I know you don't give us the guidance for that, but do you expect to be profitable this year, given the guidance on R&D and SG&A and we know that...

Yes, we're not going to give bottom line guidance. Once again, we're trying to look at cost and reduce cost any way possible, that makes sense.

And a good acquisition can change the picture as well.

Absolutely.

Sorry, could you repeat that, Larry?

A nice accretive acquisition would also really be helpful as well.

Yes, absolutely. So, maybe just a last question, and I think that was the point when I had to drop off the line. And this is just on the RYTARY potential operation of the RYTARY approval, path to approval, from the warning letter situation. If you don't mind, could you just lay out the steps that will lead to sort of decision from the FDA and maybe the timing around that?

Ami, so the steps that have to go with that. We are waiting for the FDA to review our responses to the complete response letter. We will have a meeting with both the review division as well as the Office of Compliance. And that meeting, what we'll be looking to determine is whether or not there are any other issues outstanding and what would be required to satisfy those. Once we have that clarity and we feel we're in a position to have met all of those requirements, then we will resubmit the NDA, updated for the latest safety information since we initially submitted the NDA. And then look for whatever time FDA will require to go through that resubmitted NDA and hopefully give us an approval. I mean clearly, this is an extremely high priority item for us. So, right now, the gaping item here is our ability to meet with both the review division and the Office of Compliance, after the Office of Compliance has had the time to go through our responses.

And, so far, based on FDA's 483 letter, you don't believe that there is any additional work that is required to be done, whether it's respect to validation or anything else?

From our perspective, we believe we have provided responses, appropriate responses, to all the questions that have been raised from our perspective. We need, now, to understand what FDA's perspective is. Now, hopefully, theirs will align with ours. But if not, then we'll need to understand what more we need to do. The thing I can assure you is that if there is anything that FDA requires us to do, we will do it, get it done as quickly as possible.

Your next question comes from the line of Shibani Malhotra with RBC Capital Markets.

So one very quick one. I guess for Carol. in the past you've been quite confident that Opana generic would be allowed in the market, and you were right, and that they will probably left in the market, at least yours would. In light of the Oxycontin decision, has anything changed in terms of your view or do you see these products as different? And then I have a follow-up.

Okay. So, I do think something has changed. And that is that we have a little bit of clarity from the guidance. But I think, more importantly than the guidance, the actions that the agency took, which was that they were willing to give the very focused, very specific labeling changes. Right? They talked about chewing, biting, dissolving being more difficult, and they talked about that resulted in a decrease in injectability and inhalation. So they were very specific. We also know, I think, and this we knew before, that they are going to look at this on a product-by-product basis. So you've seen our Citizen's Petition, we've discussed it. And I think at this point it's really, does the agency have enough information to make a judgment that these products are more difficult to abuse, and if they do, then they may very will rule that the product was removed for safety. But, again, what they've said publicly, in the courts primarily, lead to -- at least know that they weren't sure at that point. And I think the fact that we've been on the market for 4 months, also suggest that, at least at the time they made that decisions, they weren't sure. So I think it's really open at this point, and we'll have to wait until May 10, until we figure out and know exactly what they're going to do.

Are you surprised by the fact that they were willing to accept the incremental abuse potential versus something more meaningful?

I wasn't, actually. They did put out the guidance, which I think suggested that they've been thinking about this for a long time. Also Purdue has been on the market, the new formulation of the Oxycontin has been on the market for quite some time, so they've collected quite a bit of data. And so I think that -- and I think there's a lot of pressure on them to do whatever they can, and obviously, we all want them to do whatever they can, to ensure that patients don't abuse and addicts don't get access to these products. So I wasn’t that surprised.

Okay, and then question for Larry. I know you had a lot of questions on executive changes, et cetera, I was not going to ask anything about that. But one thing I would like to ask, given the setbacks that impact has had, and obviously the stock is coming down a lot. I guess, what would you highlight to investors as being the key reason to own the stock here? And then help us get some comfort in the company execution stability as well, going forward.

Well, I think -- let me put it this way, I think I'll help -- if we look at the specific on the formula and the QIP type of things. And I have to say, in those 2 483, okay? If we do have some deficiency, in my view, which were discovered by the FDA. But I want to emphasize, again, in the very last one, the 483, we received it this year. It's in the middle of a world -- in the company of gradually moving into the IP program. We put a lot of resource on this, and we never thought FDA would pick the [indiscernible], reinitiate ourself and make that as a 483, right among that. So, from my point of view, I think that the new management team actually emphasize that's been moving above or executing -- used to be executed in order to improve the quality of the company on that. And it's really unfortunate that the end up -- we have another 483 in the middle of this implementation of the program. And I do believe, and which even by during the conversation -- at the conversation, during the FDA inspection, the feedback we have is clearly that we're moving in the right direction, we're not there yet. We're moving in the right direction. So, at this point, I'm pretty confident that if we continue, execute it, complete the program, we should be able to have a much, much better chance to the FDA approval.

Your next question comes from the line of Elliot Wilbur with Needham & Company. Elliot Wilbur - Needham & Company, LLC, Research Division: Just real quickly, a couple of financials for Bryan. Specifically with respect to the revised gross margin guidance. Is that a GAAP number including the intermediation cost and the inventory obsolescence charge? And then number two, for you Bryan. With respect to the balance sheet, looking at the accrued expenses and accrued royalty line, $22.5 million. Is that almost exclusively related to Adderall XR at this point or are there other items in that specific line item? And then maybe just going back to some of Carol's commentary around oxymorphone, just to make sure I understand this correctly. Was there anything unique or different about your initial launch strategy or recent shipments to the trade that may sort of reflect uncertainty around the May 10 anticipated FDA decision or have you treated this as a regular launch to date?

So, I'll cover that first 2 financial ones. The gross margin is on a non-GAAP basis, in our guidance. The $22.5 million includes all our royalties. The 3 major ones are Adderall, the Zomig royalty and also some royalties to TOLMAR.

So, with regard to the launch of Opana. I would say that we've traded it pretty much as a standard launch with the exception of the fact that -- with the exception of the 7.5 and 15, the other strands do not have a reference listed drug. But, other than that, it's been treated pretty much as any other routine launch from sampling of inventory levels, and the way we've shipped and all of that. Does that answer the question, Elliott?

Elliott?

[Operator Instructions]

We'll move to the next question, final question.

And your final question comes from the line of Michael Tong with Wells Fargo Securities.

Since we're a month into the second quarter, Bryan, I was wondering if you could give us some indication as to where you think Adderall XR is going to be. Not a specific number, but directionally. Would you expect Q2 to look like Q1 or any type of color will be very helpful. And then, secondly, in the event that Opana ER are was decided to be withdrawn for safety reasons, what happens to the product that's in the trade right now, from you? And what's the accounting treatment for that product if they have to be taken off the market?

We don't give forward top line guidance for Adderall. And then Carol you can add, if you need to. Yes, it's a competitive market but we've seen our market share remain fairly stable over last few months.

Yes, unless there's a new entrant or something shakes up the market, we've been pretty stable. And so I think we're pretty aware where we are, but it is a very competitive market. And we, obviously, are going to be going for some of the bid cycles that going to come up throughout the year. And so I'm cautiously optimistic, but I guess I should also say that we have plenty of supplies, so that hasn't been an issue.

And then the accounting treatment, if it were to be pulled, we clearly have to setup full reserves at the selling price.

Thank you Michael. Thank you, everyone, for joining us. That concludes our call for today.

Thank you.

Thank you, this does concludes our teleconference. At this time, you may now disconnect.