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spk02: trained and engaged commercial organization focused on execution. We are well positioned to grow Belbuca and Xtamsa ER prescriptions faster the second half of the year. Xtamsa ER contracts have been renegotiated and we expect to be informed on planned decisions in the fourth quarter. We remain absolutely committed to managing Xtamsa ER gross to net to less than 65% beginning in January 2023. The ELIXIB launch is underway, and we will be synthesizing learnings the remainder of the year. In January 2023, we will begin phase three, accelerate. Our expectation is that we will see an acceleration of top and bottom line growth propelled by improved Xtamsa ER gross to net, prescription growth of Belbuca and Xtamsa ER, and the full year impact of the synergized cost structure. Our singular focus in deploying capital is to create value for our shareholders. Our top priority is business development. We are committed to taking a disciplined approach, but we believe current market conditions are conducive to potentially getting a deal done. We are actively evaluating commercial stage opportunities with peak sales potential of greater than $150 million. Importantly, we are looking for assets that are differentiated and with exclusivity that runs into the 2030s. Our strong financial position allows us to allocate capital in a focused and disciplined manner. We are committed to strategically investing in the growth of our business to create long term value for our shareholders. I will now hand the call over to Colleen for a discussion of the financials.
spk01: Thanks, Joe. Good afternoon, everyone. Q2 was a strong quarter for Collegium. We generated record revenue, completed a seamless operational integration, and we remain on track to exceed targeted run rate synergies of at least $75 million. Collegium is in a strong financial position that will get stronger moving forward. Financial highlights for the second quarter include Total product revenue was a record $123.5 million for the second quarter, an increase of 49% from the second quarter of 2021. Bell Buca net revenue was $42.3 million in the second quarter of 2022. This was the first full quarter Bell Buca was a part of the Collegium portfolio, and it was a record quarterly revenue for the product. Xtansa ER net revenue was $33.2 million. Examsa ER gross to net in Q2 was 70.9%. For the full year, we expect gross to nets around 73% with some lumpiness from quarter to quarter. Nusenta franchise net revenue was 43.6 million in the second quarter of 2022. Operating expenses, which includes stock-based compensation expense, were 41.3 million in the second quarter. compared to 33.8 million in the second quarter of 2021. Adjusted operating expenses, which exclude stock-based compensation and acquisition-related expenses, were 32 million in the second quarter, an increase of 17% from the second quarter of 2021. Net loss for the second quarter was 5.2 million. Income from operations was 11.1 million in the second quarter. Non-GAAP adjusted EBITDA was a record $71.2 million for the second quarter versus $40.1 million in the second quarter of 2021. Please see our press release issued earlier today for a reconciliation of GAAP to non-GAAP results. As of June 30, 2022, our cash balance was $122.7 million. During the quarter, Collegium paid off $25 million in debt We expect to end the year with at least $150 million in cash and estimate that our net leverage will be below three times by the end of this year. In Q2, we posted record revenue and delivered solid operational performance. We are on track to exceed annual synergy targets for the BDSI acquisition, and we expect to grow revenue at greater than two times the rate of adjusted OPEX. Collegium is in a strong financial position that will get even stronger moving forward. Moving to our 2022 financial guidance. For 2022, we continue to expect total product revenues in the range of $450 million to $465 million. Driven by greater than anticipated synergies from the BDSI integration, we are updating adjusted operating expenses and adjusted EBITDA guidance. We now expect our adjusted operating expenses in the range of $125 million to $135 million. We are increasing our adjusted EBITDA guidance and now expect total adjusted EBITDA in the range of $245 million to $255 million. We remain focused on creating value for our shareholders through focused and disciplined business development. BD remains our top priority for capital deployment, and we have significant flexibility to finance additional transactions near term. We will rapidly deleverage the balance sheet, paying down $100 million in debt by March 2023 and fully paying our Pharmacon term loan by March 2026. We also have the option to opportunistically return capital to shareholders with more than $50 million remaining on the $100 million share repurchase program authorized by the board last year. 2022 is a pivotal year for Collegium. Our business is in a solid financial position. We are in a phase of growth and value creation and are focused on finishing 2022 strong. I will now turn it over to Scott.
spk07: Thanks, Colleen. In the first half of the year, we made meaningful progress against our key commercial priorities, and we're now 100% focused on phase two of our action plan, Generate Momentum. Driven by Bobuca and Xtamsa ER prescription growth, and the finalization of our renegotiated Xtamsa ER contracts that will allow us to bring Xtamsa ER gross to net to less than 65% in January of 2023. Collegium remains firmly established as the leader in responsible pain management. Our pain portfolio, comprised of Velbuca, Xtamsa ER, Nucenta ER, and Nucenta IR, spans the continuum of care from acute to chronic pain and includes both Schedule III and II products. All four products are highly differentiated and viewed favorably by health care providers. Each product is distinctly positioned and sources differently. All of our pain products have broad market access coverage. During the first half of the year, we grew volume and market share for both Bobuca and Xtamps ER and maintained market share for Nucenta ER. We grew the market share of our extended release pain portfolio to 49% of the branded ER market. Belbuca and Xtamsa ER are positioned for growth. Both products have large and growing prescriber bases, and Collegium is now the only company with active promotion in this space. During the second quarter, Belbuca's broad prescriber base grew approximately 7% to 9,200 prescribers, and Xtamsa's prescriber base was up 1% to 19,200 prescribers. The Nuscenta franchise was a strong contributor in the second quarter with stable market share and a broad and stable prescriber base of 13,300 healthcare professionals. During the quarter, we successfully completed phase one of our three-phase action agenda, achieving day one commercial readiness. In May, we conducted a national sales meeting, which enabled us to bring the team together to reinforce the strategy and messaging for our differentiated and distinctly positioned product portfolio, to launch new promotional resources for Belbuco and Xtamps ER, and to focus on execution. We're in the early days of the Elixib launch and are now fully operational. We're taking a focused and phased approach and where we choose to play, we'll play to win. We'll be assessing receptivity and uptake throughout 2022. For the remainder of the year, we're focused on growing Bell Buca and Xtamsa ER. We've launched new marketing materials for our sales representatives and new non-personal promotion content and channels. Our paying sales force is fully trained, focused on execution of our plan, and we expect to drive Belbuca and Xtanser ER prescription growth. Our contract renegotiations for Xtanser ER across contracts representing approximately 50% of Xtanser ER prescriptions are complete. We're now awaiting final decisions from plans, which we expect to occur in the fourth quarter. We're absolutely committed to managing gross to net to less than 65% beginning in January of 2023. I'm confident that the actions that we're taking will generate momentum in phase two of our action agenda and position us to accelerate in phase three. I'll now turn the call back to Jeff.
spk02: Thanks, Scott. I will now open the call up for questions.
spk06: Thank you. And at this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press the star key followed by the number two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, to ask a question, press star one on your telephone keypad. We'll pause for a moment to pull for questions. Our first question comes from David Emselem with Piper Sandler. Please state your question.
spk03: Uh, Hey guys, this is Isaac on for David. Uh, thanks so much for taking our questions. Just like couple from us. So I know you guys touched on this briefly with regards to renegotiating contracts for. But any color on this front would be super helpful and appreciated. Um, and then what gives you confidence that you'll be able to get the gross to net down to 65% by next year. And then I've got a few follow-ups.
spk02: Okay. Hey, Isaac, this is Joe. I'm going to pass those two questions off to Scott.
spk07: Thanks, Isaac. Yeah, so I appreciate the question. At this point, not much more color that I can give other than our negotiations are complete. We're confident in those conversations and what we accomplished during those conversations, and the fourth quarter we'll be informed of the choices that the plans make, and we'll be giving some type of an update on the November call. Thanks.
spk03: Okay, great. More on, I mean, BD and M&A. I know you guys touched on this briefly too, but I mean, it's clear that asset prices have come down and you guys are, you know, you could be pretty flexible. I mean, your balance sheet is pretty flexible on this front. So can you walk us through your latest thinking on that and your preference with regards to taking on a commercial stage asset or a development stage asset and the IP runway there? And then the last question we've got is, It's just on Elixib. I mean, it looks like sales are pretty minimal in the second quarter. I know you guys have talked about this being a phased launch, but any metrics you can provide here and does the early performance for the product impact your thinking with regards to M&A and neurology as a means of diversifying the business? Thanks.
spk02: Hey, Isaac, this is Joe. Thanks for the question. I'll start off with a broader perspective on BD, hand it off to Colleen to talk a little bit about how we think of our capacity, and then Scott will follow up on the elixir question. So the first thing that I would emphasize is we think about where we're at. One, we're through essentially all the activities associated with the BDSI integration, which is important. So we're in a position where we're ready if an opportunity presents itself. to take it on. As I said in my comments and as you reiterated in your question, we look at the current market dynamics as conducive to potentially getting a deal done. Certainly much different than what it's been over the past couple of years. From a strategic perspective, we're looking for commercial stage assets with potential, peak sales potential in our view of over $150 million. In terms of runway, we're looking for assets that have runway into the 2030s. Neurology is an adjacency that we like, certainly with the launch of Elixib. We have a small commercial group there that could be leveraged, but we also will be opportunistic given the favorable market dynamics and the bigger focuses on assets that meet the criteria from a peak sales and runway perspective.
spk01: Thanks, Joe. Hey, Isaac, it's Colleen. So I'd say we're in a privileged position to have the ability to continue to hunt for strategic assets but not be forced into a suboptimal deal. Given our commercial focus, deals that we are looking at would bring near term, if not immediate, positive EBITDA. And we have the ability to raise debt and are comfortable with a net debt ratio of about 2x, sorry, 4x or below. And then we have the ability to use our equity if the market dynamics were to be supportive.
spk07: Yeah, and then lastly on the elixir launch, look, we're just getting started and are glad that now we're fully operational in those 25 first phase territories. It's too early to draw any conclusions, but what we're most excited about is we're developing a foothold in neurology. Where we're playing, we're playing to win and are all in, and we'll continue to monitor the uptake through the rest of the year to decide what we do from there in terms of any expansion decisions. Thanks for the question.
spk02: Great. Thanks, guys. You got it. Thank you, Isaac.
spk05: Our next question comes from Tim Lugo with William Blair. Please go ahead.
spk08: Thanks for taking the question. And, you know, regarding GTN and moving up to 65%, could you directionally talk to us about volumes and kind of, you know, how that impacts the revenue and then maybe directionally, obviously, that's going to be more profitable, but give us kind of an idea around the magnitude of that profitability?
spk02: Yeah, so Tim, I'll talk a little bit about the expectation of Xtamsa from a volume perspective. The contracts we're renegotiating account for about 50% of Xtamsa prescriptions. As we commented, we're very encouraged by the discussions we had with the payers. Our objective is first and foremost to bring the gross to net to less than 65% while also maintaining access for Xtamsa. And as we said in the prepared remarks, we expect to see extamsa grow not only in 2022, but also in 2023. And Colleen could talk a little bit about your question on margin.
spk01: Yeah, Tim, thanks for the question. As you know, you know, dropping down to 65% on extamsa growth to NETs will be a significant drop to the bottom line. We ended last year with a full year of 76% growth to net, and this year we're, from a full year perspective, we're tracking on 73%. Okay.
spk08: And just to be clear, when you say Examsom will continue to grow, that is revenue or is that volume?
spk02: That's a statement, Tim, on both volume and revenue. So we expect in 2023 there to be volume growth and then the improved growth to net. will be an additional propellant to revenue.
spk08: Okay, fantastic. And given the market dynamics for BD, you mentioned the availability of debt, but obviously the debt markets might be a little tighter than they were a year ago. Can you just maybe give us some color around what kind of debt you find attractive and just at least talking about the availability of that debt these days?
spk02: Sure. Tim, I'll ask Colleen to answer that question.
spk01: Hi, Tim. Yeah, we're keeping a close eye on the landscape. Debt and cost of capital has increased, but we still do believe there are advantageous ways to finance an acquisition when one presents itself that we'd like to make a move on. You know, you could envision a term loan type arrangement, but we're looking at all options there.
spk08: Okay, fantastic. Thank you for the questions.
spk06: Great. Thanks, Tim. Our next question comes from Serge Bellinger with Needham and Company. Please state your question.
spk09: Hi, good afternoon. A couple for me. I guess the first one for Joe. I think when you gave guidance at the start of the year, one of the main assumptions is there would be no improvements in the market environment in terms of the headwinds that were affecting XTAMSA. I'm just curious if that outlook has changed for the second half of the year. And then just looking on an individual product basis, it looks like the strength of Belbuca in the second quarter kind of offset some weakness in Nuscenta. Just curious if that Belbuca strength is sustainable for the second half. Thanks.
spk02: Yeah. Hey, Sarge, I'll take the first question and hand the second one off to Scott. And I appreciate your question. Look, from a market environment perspective, and we set our guidance for the year, we had said we were trending, not factoring in any improvement to the market dynamic. I would say to this point in the year, that has proven to be a wise choice. The pain market continues to be off of the pre-COVID levels. And when you think of the numbers that we're guiding to, it does not have built into it any improvement to the second half of the year from a market dynamic perspective. But we do expect to see the volume growth of both Belbuca and Xtensa to pick up in the second half of the year. And I'll let Scott address your Belbuca question specifically.
spk07: Yeah, thanks, Serge. So to your comment on the Nusenta and kind of Belbuca trade-off, when we look at Nusenta the second half of the year, It performed in line with our expectations. We're glad that we maintained market share for Nuscenta ER. And yeah, we saw some strength you were referring to for Belbuca from a revenue standpoint. What we're excited about there is there was a lot of transition in the second quarter, cross-training as we came through the integration. And now when you look at the second half, we're well positioned to grow Belbuca. It's got a strong market position, a strong and growing base of prescribers, thought of very highly differentiated by the prescriber base. Coming out of our sales meeting, we're really encouraged by momentum we think we can build in the second half.
spk02: And Serge, hey, this is Joe. The only other thing I would add is when you look historically at the new Cinta franchise, when you get past the first quarter and the reset of deductibles and things like that, you see more stable prescriptions in the second half of the year, which is what we would expect to see.
spk09: Okay. And I guess just... One follow up, it sounds like the renegotiation of the contracts are more or less complete at this point and you're waiting on individual plan decisions. Does that mean plans still have the option to opt out of these renewed contracts or what else could come out of these decisions that you're awaiting?
spk02: Yeah, great question, Serge. So look, where we're at, our bids are submitted, the negotiations are done. You know, the outcome that we're striving for is that we certainly get the rollback from a rebate perspective while maintaining access to Xtamsa ER. But in any event, the Xtamsa ER gross to nets will be less than 65% beginning in January of 2023. So we're very encouraged by the discussions we had during the negotiations. We think that the bids we put forward are very reasonable given the value of Xtamsa ER, and we're looking forward to being able to communicate the decisions when we get on our fourth quarter call. Great. Thanks for the call. You got it. Thanks, Serge.
spk06: Our next question comes from Greg Fraser with Truist. Please state your question.
spk04: Hey, folks, thanks for taking the questions. Just a quick follow-up on the last question about sales. Just curious if there are any one-time items that help sales in the quarter, or should we look at sort of the relationship between sales and prescriptions as a good number to use going forward? Colleen?
spk01: Hey, Greg, it's Colleen. Thanks for the question. I wouldn't say necessarily a one-time event, but we did harmonize some of the co-pay programs across the board. the business, and Bell Buca definitely had a benefit from that with a few changes we made to harmonize that copay program consistent with Collegium. So we're expecting Bell Buca gross to net to stay in the low to mid 50s percent, and you see some of that favorability impacting the second quarter.
spk04: Got it. Very helpful.
spk02: Greg, I'm sorry, Greg. One additional point of color. The benefit that Colleen's referencing is a revenue benefit. We also believe that harmonization probably had a little bit of a pressured effect on prescriptions that we don't expect to see as we move to the second half of the year. Got it.
spk04: Okay. How do we tweak the messaging on Bell Vita relative to what BDSI has been doing?
spk07: Yeah, thanks for the message, Greg. I would say if not a tweak, it's a training on the strong messaging platform that's in place. So as we harmonize the sales force, if you remember, we went through an event in the fourth quarter at Collegium. We then came through integration. It really was a focus in the second quarter of thoroughly training our people on the messaging for the brand. And we were excited we were able to do that live at a national sales meeting. So now we have a position of a product that is clearly differentiated, a Schedule 3 versus Schedule 2, with a broad dosing range that can provide great efficacy for patients. And that's where we're focused going forward in the second half.
spk04: Got it. Okay. On the Belvica prescriber base, you've been growing it clearly. I'm curious if you think that the prescriber base for Belvica could eventually grow to the size of the extamsa prescriber base, which is much larger, or is there a reason that it would not be that, you know, as broad?
spk07: Yeah, I wouldn't hypothesize on getting to the size of extamsa, which is almost 19,000 prescribers, but what's encouraging is As you said, Belbuca is consistently growing 7% in the last quarter at 9,200 total prescribers, and absolutely it's a trend that's not slowing, so I believe we'll be able to continue to grow the prescriber base.
spk02: And, Greg, the only thing I would add there is our organization, we are absolutely passionate and aspire and have a strong belief that Belbuca as a Schedule III product should be being used far more often than it is. in the treatment of pain. So we will make every effort to ensure the Belbuco story is known. And with that, there's certainly a lot of opportunity to expand that prescriber base.
spk04: Understood. Okay. And then just a bigger picture question on the long-acting opioid market. The market's obviously still declining. It has been for many years, but the clients have moderated it. When do you think the market could level off potentially in terms of prescription volume? I'm curious if you have any thoughts on that. Thanks so much.
spk02: Sure. Thanks, Greg. Look, our belief is that the point of which the market is certainly moderating, we expect it to continue to do so as you get to around the prescribing level of the early 2000s. And the relevant point of that is that's when pain was identified as a fifth vital sign, which was one of the drivers. of increased opioid utilization. From a collegium perspective, we believe that opioids should be used only after other options are exhausted and inappropriate patients, and certainly in those scenarios, we believe our products should have a meaningful position.
spk04: How big was the market in terms of total prescriptions back then?
spk02: We're nearing the level. in terms of total opioid prescriptions of the early 2000s. When you get to that level in our modeling, that's where we expect to see it moderate to more of a mid to lower single-digit decline over the next five years. Got it.
spk04: Thanks for taking the questions.
spk02: Sure. You got it, Greg.
spk06: Thank you. There are no additional questions in queue.
spk02: turn the call back over to Joe Schifoni for closing remarks thank you thank you we are building a leading diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions we are laser focused on executing our three-phase action agenda I am proud of our achievement in phase one seamless integration confident that we will generate momentum in phase two and which will position us to accelerate in Phase 3 beginning January 2023. I look forward to updating you on our progress. Have a great evening. Thank you. This concludes today's call. All parties may disconnect. Thank you.
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