Operator:.

GAAP commercialization agreement revenue of approximately $31 million per quarter through December 2021. This will be somewhat less than the cash we receive which will be $33.75 million per quarter.

The difference is largely due to the frontloading of the GAAP commercialization agreement revenue associated with the value of the inventory we transferred. On a non-GAAP basis we are adjusting for the non-cash portion of the value assigned to the inventory and are reporting $31.3 million of non-GAAP commercialization agreement revenue for Q1 2018.

In future periods we expect to recognize approximately $34.5 million of non-GAAP commercialization agreement revenue per quarter until 2021.

Any royalty amounts we earn above the $33.75 million per quarter minimum royalty amounts due to us will be recorded as additional commercialization agreement revenue above these expected future GAAP and non-GAAP amounts and they will be recorded in the period that they are earned.

In future periods, during the Collegium agreement we do not expect to record any material Nucynta product sales revenues. So with that discussion of Nucynta, I'll move on to the neurology portfolio. Gralise first quarter net sales were $14.8 million down from $17.6 million in Q1 2017.

Cambia had first quarter net sales of $6.4 million down from $7.2 million in Q1 2017, and Zipsor had first quarter net sales of $4.7 million consistent with performance in Q1 2017. I will remind folks on the call that the first quarter is typically our weakest quarter for net sales due to among other things insurance resets.

Comment on just our inventory situation, days on hand at wholesalers at March 31, 2018 for our products were approximately the same as our year-end levels and averaged approximately three weeks. Cost of goods for the neurology portfolio in Q1 2018 was approximately 80% of revenue and this is consistent with prior quarters.

Turning to first quarter expenses, GAAP selling, general and administrative expense was $29 million for the first quarter of 2018 down significantly from $48.5 million in Q1 2017. Non-GAAP SG&A expense that is excluding stock-based compensation and contingent consideration was $28.1 million for the first quarter of 2018.

GAAP and non-GAAP R&D expenses for the first quarter of 2018 were $1.5 million down significantly from $5.1 million and $4.7 million in Q1 2017. Our Q1 2018 expenses reflect certain timing delays in pediatric trials and we expect R&D expenses to increase in future periods in line with the lower end of our expense guidance for 2018.

Restructuring costs were $9 million in the first quarter and reflect costs associated with the reduction of headcount and associated move to Lake Forest, Illinois. EBITDA for the quarter was $32 million up from $25 million in Q1 2017.

Moving on to the balance sheet, as of March 31, 2018 cash, cash equivalents, and marketable securities were $102 million a quarterly decrease of $26 million from year-end.

The reduction in cash during the quarter was primarily due to reductions in short-term liabilities, payment of restructuring charges and the timing of receipts from the Collegium agreement. With respect to cash receipts from the Collegium agreement we were entitled to $30.8 million in minimum royalties for the quarter.

And as you may remember, we have a lockbox and cash sweep arrangement in place to secure those payments. However, in the transition to Collegium and the timing required for them to collect receivables relating to their sales post closing in January we received $13 million during the quarter, a balance of $18 million has been received this month.

At quarter end we had $710 million of debt outstanding consisting of $345 million of convertible debt and $365 million of secured debt. In April we made a scheduled principal repayment of our secured debt of $57.5 million reducing our secured debt to $307.5 million and reducing our total debt to $652.5 million.

That concludes the financial discussion and I'll now turn the call back over to Arthur..

Thanks Auggie. I think it's important that investors and analysts don’t get too distracted by the technical accounting this quarter surrounding our Collegium transaction. Instead, focus on the fact that we are on track to deliver both our financial and strategic goals. We have derisked the portfolio through our agreement with Collegium.

We are stabilizing our neurology business and expect better performance in the second half of the year. We are completing new business agreements that will supplement our growth now as well as support future growth.

We're successfully transitioning to a new headquarters in Illinois and already attracting strong industry talent and we have a revitalized sales force that is ready to help us achieve our sales goals. So with that said, I would now like to turn the call back to John to manage the question-and-answer session..

Thanks Arthur. Angela, we'll open up the call now for Q&A..

[Operator Instructions] Your first question is from Randall Stanicky with RBC Capital Markets..

Hey guys, this is Dan Busby on for Randall..

Hi, how are you?.

Hey, pretty good, thanks.

Based on your release, yes so it's been about seven months since you've restructured and upsized your sales force and script trends are still a bit weak, what gives you confidence that the sales force will become effective in the second half and then if trends remain weak are there any levers that you have left to pull?.

Yes, Dan, I mean again I think it’s very important that people will remember that the first thing you have to do when you have a brand or a franchise is to claim, is stabilize. The neurology franchise clearly was impacted by the withdrawal of promotion last year.

We began with our new sales force in September, so it really is effectively six months and as mentioned in my comments Dan, it takes normally about six months before you start to see a new sales force initiative start to take traction.

And we are very encouraged by the fact that the Gralise performance in the last four weeks has been the strongest since the field force begin. So I think that gives us optimism that not only are we stabilizing the brand, but we can achieve growth in the second half of the year.

As to what we can do if that growth doesn’t materialize as planned, I think first of all as you probably saw in the first quarter we are managing expenses and I think any shortfall in revenue would be compensated by expenses.

But more importantly, we think that there's opportunities both in the way that we are communicating the benefits of Gralise being - the first ones are the gabapentin that truly offers [indiscernible] the control of PHN with a unique mechanism of action.

But also there are opportunities for us to be I think a little more effective in the pull through of the excellent managed care coverage. We have over 80% of commercial lives covered Gralise. So I think both from an operational and from an expense perspective, we do have other levers as we can pull in the second half of the year..

Okay, thank you and then just a follow up on Nucynta, I know it's still early in the agreement, but is there a scenario where you would consider monetizing that royalty stream and how does Collegiums right to terminate the deal affect your thinking around that?.

Let me take the second part of that question first. As I sort of mentioned and I think if any of you had a chance to listen to the Collegium call last evening, there was really the promise just get off to a good start.

We have dealt with the impact of the supply disruption and I think both companies are very confident that this can be a long and successful relationship.

As to whether at some point we would consider monetizing that royalty, that's something that we will consider in the totality of our refinancing that we're looking at in the second half of the year..

Okay, that’s it from me. Thank you..

Yes, thank you.

Angela, next question please?.

Your next question is from Irina Koffler with Mizuho..

Hi, thanks for taking the question.

Can you give us an update on where you are with the Purdue litigation please?.

Irina this is Auggie. The litigation is proceeding. We still do not have a formal trial date set by the judge. Our anticipation continues to be that we will have a trial in the September timeframe..

Okay and can you just clarify what you meant about the pull through in managed care with Gralise, just trying to understand what additional levers you have available to grow the product? Thank you..

Yes, Irina I'm really referring to the fact that we have this excellent coverage of over 80%. In fact we won an exclusive contract with CDS last year for Gralise and I think we've done a slightly better job of making sure that our sales organization is taking advantage of the fact that we have better coverage than our key competitor Horizon..

Okay, thank you..

Okay, thank you.

Angela, next question please?.

[Operator Instructions] Your next question is from Ken Trbovich with Janney..

Thanks, good morning. Good, to talk to you. I Just wanted to get better understanding as to the line extension for Cambia, I guess two points there.

First is when we talk about an easier formulation are we talking about something like a sublingual formulation or a tablet form or what direction are you heading there? And then second part of that is, does the guidance include a stocking order for that product or does that represent upside?.

Ken let me just clarify the second part, this is a product that we will not submit until next year, so we won't see revenues in that until 2020.

But what - if I can remind everybody that currently Cambia is administered in a liquid form it’s a sashay [ph] and one of the challenges is if you over dilute the product, you don't get the rapid efficacy which is really the hallmark and what makes Cambia such an effective treatment for the acute phase of migraine.

This will be a liquid premix that's ready to drink, so it will not only have convenience, but offer more a surety that you're going to get the full effect. And again, I was just at the National Heritage [ph] Foundation Dinner on Saturday evening and was speaking to quite a few neurologists.

They’re really do believe that Cambia has a significant role to play in the acute treatment of migraine and this new presentation will be an added weapon in their armor material..

Terrific and then last question, and I know you've said you probably won’t talk more about Cosyntropin in terms of the timing and details around the indication, but can you give us a sense as to whether or not from a commercial perspective you'll have some sort of feedback regarding that indication and how payers might consider the product relative to the competitive landscape?.

Yes, Ken I think as we discuss what that indication is we'll also start to share a little bit about how we see the commercial opportunity here.

I would say that there have already been some analysts who have done some work in this space and identified that any new entrant even without a tool set or labels could expect to get a reasonably significant share of the ACTH [ph] business..

Terrific, thank you..

Thanks, Ken..

Thanks, Ken.

Angela, any more questions?.

No sir, we have no further questions..

Okay, well we thank you all for joining us today on our conference call. We will have - all the information is posted to our website. If you need any follow up on that please let us know and then finally, Arthur would like to make a few closing comments..

Thanks again, John. As I mentioned we are on plan for Q1 and I would reiterate that the first part of the year has gotten off to a very good start, so thanks for joining today. And I'd also like to take this opportunity to thank all of the employees of Depomed who were made a very positive contribution in the first quarter.

We look forward to updating you as we continue to deliver on our stated milestones and hopefully inform you of some new ones, so thanks again for joining us today..

Thanks everybody. Thank you, Angela for your help..