COLLEGIUM PHARMACEUTICAL, INC Q3 FY2024 earnings call

• Completed the acquisition of Ironshore Therapeutics and its commercial product Jornay PM. - Successfully concluded the CEO search, welcoming Vikram Karnani. - Third quarter financial performance reflected strong operational execution. - Belbuca had record revenue of $53.2 million, up 17% year-over-year. - Xtampza ER achieved an all-time high share of 38.1% in the OxyContin extended-release market. - Jornay PM saw a 31.2% year-over-year increase in prescriptions through the first three quarters of 2024 and accelerated growth during the back-to-school season.

In the third quarter of 2024, Collegium Pharmaceutical achieved record financial performance. Total net product revenues reached $159.3 million, a 17% year-over-year increase. The PAIN portfolio contributed $151.3 million in revenue, up 11% year-over-year. Belbuca's net revenue was $53.2 million, a 17% year-over-year growth. Xtampza ER's net revenue was $49.5 million, a 24% year-over-year increase. Nucynta franchise net revenue was $45.1 million, a 5% year-over-year decrease. Jornay PM is expected to generate over $100 million in net revenue in 2024.

• Reaffirms 2024 net product revenues to be in the range of $620 million to $635 million. - Belbuca's revenue growth is driven by full-year prescription growth. - Xtampza ER's revenue growth is due to gross to net improvement. - 2024 full-year pro forma Jornay PM net revenue is expected to exceed $100 million. - Adjusted operating expenses are projected to be between $150 million and $155 million. - Adjusted EBITDA is expected to be in the range of $395 million to $405 million.

• Risks of not successfully commercializing products. - Litigation risks. - Risks related to realizing synergies and benefits from the Ironshore acquisition. - Risks of unsuccessful integration of Ironshore and uncertainties regarding future opportunities and plans for Ironshore.

Q: Congrats on the impressive CEO selection. And although it might be premature, but given Vikram's strong rare disease background, would you expect any divergence in BD plans into new therapeutic areas? Or do you essentially expect to continue to anchor around the new neuro category? And then maybe for Scott, what are the plans for Belbuca and your investment efforts leading into LOE? And then what is the value proposition of Belbuca against some of the other chronic pain products, specifically those undergoing clinical trials such as [Indiscernible]? And then maybe last, can you talk about the back-to-school season with Jornay, how much of that script growth was tied to the ownership change? And what do you, I guess, envision the peak sales potential or peak market share potential from Jornay across the ADHD market. And then in general, can you highlight how impactful is the back-to-school season seasonality to this product?

A: Michael Heffernan stated that since closing the Ironshore acquisition, they are focused on integrating Jornay and maximizing the PAIN portfolio, and will continue business development efforts to identify assets beyond pain. Scott Dreyer discussed investing in Belbuca, Belbuca's value proposition compared to other chronic pain products, and Jornay's back-to-school growth with minimal disruption due to continuity in the sales force and management team, while noting Jornay's strong growth trajectory but not providing peak sales guidance.

Q: On Jornay PM, can you remind us how you're thinking about the gross to net spread going forward whether you can give us a range or just give us some sense of what the gross to net looks like in relation to other branded agents for ADHD. That would be helpful. That's number one. And then number two, just coming back to business development and M&A. So with Jornay, you've got sort of an interesting and somewhat diverse call audience. I believe there's pediatricians, general practitioners, psychiatrists who are prescribing the product. So given that call audience and the commercial infrastructure you have, how does that inform how you're thinking about future business development M&A?

A: Colleen Tupper mentioned Jornay's gross to net is typical of branded ADHD products, in the 60s range. Scott Dreyer noted that their focus is moving beyond pain, and Jornay's commercial expertise provides flexibility in business development, initially focusing on integrating Jornay and then leveraging new expertise beyond pain as Vikram joins.

Q: Regarding the integration of Jornay PM. Scott, I think you talked about sales force sizing for that products. Just curious what the current size of the sales force is and how you're thinking about the modifications to that? And then secondly, regarding the changes to formulary coverage on both Xtampza and Belbuca. I think there were two pieces. So first, on the -- where you're losing exclusivity. Just curious how many prescriptions are at riskier. And on the new plant, is there an existing Oxy business that's allows you -- that provides a conversion opportunity for that new -- any formulary?

A: Scott Dreyer said currently there are about 150 salespeople in the sales force, assessing modifications to ensure coverage for Jornay. Regarding formulary changes, about 12% of Belbuca prescriptions and 18% of Xtampza ER prescriptions are at risk in the removed formulary plan, and the added plan has new coverage with little existing OxyContin business.

Q: Regarding Victor's appointment as CEO. Can you just talk about what made him a good fit given his experience in global rare disease versus your portfolio of mass market. ADHD and PAIN products. Should we take it to -- should I assume that your existing core management competencies on that front will maybe be elevated, and he will be more focused on broadening your horizons into other areas? Or is he excited and prepared to take on maybe a different sort of book of business? And on Jornay PM, you highlighted the pretty strong execution through back-to-school, but I can't imagine there wasn't some friction or disruption with the corporate change and yet it looks like you're delivering. Look, I think about 25% year-over-year growth right now. Is it fair to say that you're not firing necessarily on all cylinders during the transition, maybe growth could actually inflect upwards again, even on a year-over-year basis with both settling of the organization, rightsizing and some increased resource allocation? And on Jornay in the market, it's obviously a highly genericized overall ADHD space. I know if not I'm mistaken, there's only a couple real unique branded methylphenidate products out there, and you've got [Asteris] (ph) with a prodrug and you guys with this pretty unique dosing. Can you talk about your field reception out there with regards to other branded competition and your differentiation and maybe how it seems to be shaking out in terms of patient or physician preference for these two different value propositions? And just lastly, one housekeeping thing. I haven't run the math yet with gross to net and the low Xtampza ER numbers, so maybe that's lines up perfectly, but were there any material inventory moves on Xtampza or any other product up or down in the quarter?

A: Michael Heffernan noted Vikram's transferable skills from his experience at Horizon and Amgen, applicable to Collegium's growth. Scott Dreyer said there was no disruption in Jornay's growth due to continuity in the sales force and management team, with Jornay's year-over-year growth at 31.2% and accelerated during back-to-school. He also discussed Jornay's positive field reception compared to competitors, with growing prescriber base. Colleen Tupper mentioned PAIN portfolio inventory days on hand are consistent around 15, and Jornay had lower days on hand due to ownership and ordering patterns