Collegium Pharmaceutical, Inc.

Greetings and welcome to the Collegium Pharmaceuticals' fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference call, please press the star and then zero on your telephone keypad. Please note that this conference call is being recorded. I'll now turn the call over to Danielle Jesse, the Director of Investor Relations at Collegium. Thank you, and you may begin.

Welcome to Collegium Pharmaceutical's fourth quarter and full year 2024 earnings conference call. I am joined today by Vikram Karnani, our President and Chief Executive Officer, Colleen Tupper, our Chief Financial Officer, and Scott Dreyer, our Chief Commercial Officer. Before we begin today's call, we want to remind participants that none of the information presented today is intended to be promotional and that any forward-looking statements made today are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risks and uncertainties, including and without limitation, The risks that we may not be able to successfully commercialize our products, that we may incur significant expense in doing so, and that we may not prevail in current or future litigation pertaining to our business. These risks and other risks of the company are detailed in the company's periodic reports filed with the Securities and Exchange Commission. Our future results may differ materially from our current expectations discussed today. Our earnings press release and this call will include discussion of certain non-GAAP information. You can find our earnings press release including relevant non-GAAP reconciliations on our corporate website at collegiumpharma.com. I will now turn the call over to our President and CEO, Vikram Karnani.

Thank you, Danielle. Good afternoon and thank you everyone for joining the call. we will discuss Collegium's financial performance for the fourth quarter and full year 2024 and provide a business update. Let me start by saying how thankful I am for the opportunity to join Collegium at this exciting time in the company's journey. Having spent the last several years leading high growth organizations, I'm energized at the opportunity to spearhead this team through its next phase of growth. Collegium has a successful track record of creating value through strong commercial execution and strategic acquisitions, all while maintaining financial discipline. The organization's commitment to improving the lives of people living with serious medical conditions and its strong culture are what attracted me to this role. The company has built a leading pain portfolio that generates strong cash flows, which enables investment in future growth. And the Iron Shore acquisition demonstrates that Collegium is well-positioned to make further investments that leverage our expertise and will drive a new phase of growth for the company. With Journée poised to be Collegium's lead growth driver, the company is at an inflection in its growth trajectory. We have strong leadership and a deeply committed team of employees, and I am looking forward to collaborating with this accomplished team working together toward our goal of building a leading diversified biopharmaceutical company. At Collegium, we strive to do good as we do well, and our values are highlighted in our 2024 ESG report that was published yesterday. I'd like to recognize the entire team for our commitment to Collegium's mission and for helping make a positive impact on the people and the communities we serve. 2024 was a transformational year for Collegial. We generated significant growth in our pain portfolio through strong operational execution. The robust, durable cash flows generated by our pain business enabled us to acquire Iron Shore Therapeutics and its lead medicine, Journée PM, establishing a new presence in neuropsychiatry. Journée's growth accelerated during our first full quarter of ownership. In the fourth quarter, we grouped descriptions 29% year-over-year and 11% quarter-over-quarter. Journey net revenue on a pro forma basis was $100.7 million in 2024 and is expected to be in excess of $135 million in 2025, representing over 34% growth. Our pain portfolio generated 5% revenue growth in 2024, led by record revenues for both Belbuca and Xsamza ER. We achieved our financial guidance for the year, growing total revenue 11%, while adjusted EBITDA grew 9% year over year. We opportunistically repurchased $60 million worth of shares in 2024. We strengthened the durability of the Nuscenta franchise with several positive developments that extended projected exclusivity for Nuscenta ER to July 2027, reinforcing this franchise as a robust revenue contributor this year and beyond. We appointed Nancy Lurker to our board of directors. Nancy's expertise in driving commercial growth and strategic acquisitions will be of great value to us as we work to advance our mission. We warmly welcome Nancy to the board. And finally, I'm excited to welcome our new head of investor relations, Ian Karp, to the Collegium team. Ian has a long history of leading investor relations for a number of leading biopharmaceutical companies, and we are thrilled that he has joined us for our next chapter of growth. As we look to 2025 and beyond, we will build on the momentum we generated across our commercial portfolio in 2024 and focus on three main priorities. The first is to drive significant growth in Journée to maximize its potential as an important therapy for the ADHD community. Journée is a highly differentiated medicine for the treatment of ADHD and has potential for significant growth with the right investments. We've identified opportunities to raise awareness of Journée with healthcare professionals, patients, and caregivers, and will make targeted investments to unlock its full potential. We expect our investments to support growth in the near term, with majority of the impact coming in 2026 and beyond. Our second priority is to maximize the pain portfolio. These medicines generate significant durable cash flows, and we believe have a longer and more robust revenue stream that remains underappreciated. Our third priority, and frankly, when I'm spending a significant portion of my time, is to strategically deploy capital to create shareholder value. We are focused on expanding and diversifying our portfolio through business development as we did most recently with the IHO acquisition. We will continue to opportunistically leverage the share repurchase program and rapidly pay down debt. Our track record of disciplined capital deployment has put us in a position of financial strength relative to our peers, and we will continue to use these levers to create shareholder value. With that, I will now turn it over to Scott to give a commercial update.

Thanks, Vikram, and good afternoon, everyone. I'm excited to share our fourth quarter commercial results with you, highlighting the momentum we created heading into 2025. I'll begin with Jornay, our lead growth driver. The ADHD market is large and has been growing at 6% on average from 2019 to 2024. Stimulant medications, methylphenidates and amphetamines, make up almost 90% of the market. Within stimulants, 30% of use is methylphenidate products and the use of methylphenidate is skewed towards the pediatric population with 70% of prescriptions for pediatrics and adolescents and 30% for adults. Prescribing is highly concentrated with approximately 20,000 HCPs writing one-third of prescriptions. The majority of the prescribers are neuropsychiatrists or pediatricians. As HCPs choose a medication for their ADHD patients, they're looking for a medication that provides efficacy upon awakening in the morning and a long-lasting duration of effect that can provide symptom control throughout the day. Journée has a profile that has the potential to meet that need. Journée is highly differentiated as the only stimulant ADHD medication with convenient evening dosing. Journée provides symptom control upon awakening in the morning and throughout the day, limiting the need for short-acting stimulant add-ons. It has flexible dose-dependent duration, enabling treatment to be tailored to the patient's needs. This is important for pediatric, adolescent, and adult patients because it eliminates the need to dose throughout the day at school or at work. In market research, HCPs rank Journée as the number one recognized brand, both for achieving all-day symptom control with one dose and for controlling evening symptoms after school or work. Journée is the highest rated brand by targeted healthcare professionals in terms of product favorability. And when patients and caregivers request to try Journée, HCPs honor that request. In addition, Journée has strong market access coverage. Approximately 65% of the business is commercial and 35% is Medicaid, with Journée having 80% coverage across the entire book of business. Since we acquired Journée, we generated momentum and accelerated growth, even before making key targeted investments in the brand. This strong performance speaks to Journée's potential and supports its position as our lead growth driver. During the fourth quarter, our first full quarter owning Journée, prescriptions were up 29% year-over-year and 11% quarter-over-quarter. For the full year 2024, Journée prescriptions grew to 636,200, up 31% compared to 2023. In addition, Journée has a broad and growing prescriber base, with 24,300 prescribers in the fourth quarter, up 26% since the fourth quarter of 2023. And in early 2025, We're encouraged to see this momentum continue, despite the typical first quarter dynamics where deductibles reset and out-of-pocket costs increase for patients. Journée achieved an all-time high for weekly prescriptions in the middle of January and is performing in line with our expectations to start the year. With strong brand fundamentals and clinical differentiation, we see significant opportunity for Journée, and we're committed to investing in the brand to maximize its growth. We've identified two main areas to make targeted investments to impact joint aid growth in 2025 and further accelerate growth in 2026 and beyond. The first is increasing awareness and adoption with healthcare professionals. To do this, we're expanding the sales force to ensure it is optimally sized to reach our target audience. We're expanding the sales force from approximately 125 to 180 sales representatives. We're making great progress with this work, and we expect to have the expanded sales force hired, trained, and calling on HCPs in April. To complement and amplify the efforts of the sales force, we'll also invest in non-personal promotion to increase awareness and the use of Jornet among prescribers. The second area of focus is raising awareness of Jornet's unique and differentiated profile among patients and caregivers. Market research shows that patients and caregivers' requests are a top influencer of HCP trial, and patients and caregivers have limited knowledge of Jornet and its differentiated profile. Therefore, we'll invest in digital marketing and social media strategies and tactics designed to raise awareness among patients and caregivers and to motivate them to ask their healthcare provider about Jornet. While we expect to benefit from these investments toward the end of 2025, The majority of the impact will be in 2026 and beyond. These investments and their expected impact are included in our 2025 financial guidance. Turning to our pain portfolio. At Collegium, we take pride in being the leader in responsible pain management with a unique and differentiated portfolio of medicines for the treatment of pain. Felbuca, Xtamsa ER, and Nucenti ER collectively represent over half of the branded ER market, demonstrating the ongoing strength and reach of our portfolio. Our commercial organization will continue to capitalize on the momentum we generated for our pain portfolio in 2024. Albuquerque delivered another strong quarter with total prescriptions up 5.6% year over year, marking the sixth straight quarter of year over year prescription growth and driving record quarterly revenue. In addition, we saw acceleration in prescriptions at the end of the year with 6.3% year over year growth in the month of December. We're encouraged by this consistent growth trend, which speaks to the impact that our strong commercial execution is having on the brand and Bell Buca's differentiated profile. We expect pressure on prescriptions in the first quarter due to a formulary change that occurred starting on January 1st, as well as the typical first quarter dynamics driven by patient deductible resets. That said, we expect full-year prescription growth, as well as positive net revenue impact from the formulary change. XTAMSA ER prescriptions grew 2.6% in the fourth quarter compared to the third quarter of 2024, and we saw acceleration of average weekly prescriptions in the month of December. We're encouraged that we were able to generate momentum heading into 2025. We achieved full-year gross TINET of 52.7%, which reflects the successful execution of our payer strategy and drove record revenue for XTAMSA in the fourth quarter and for the full year. We expect pressure on prescriptions in the first quarter due to a formulary change that occurred starting on January 1st, as well as the typical first quarter dynamics driven by patients' deductible resets. We're focused on educating physicians on Xtamsa ER's differentiated label and capitalizing on its strong market access position. Our aspiration is to increase utilization for appropriate patients due to Xtamsa ER's superior abuse deterrent properties and labeling. The NuCinta franchise is a key contributor to our pain portfolio with a robust revenue stream. The positive developments for the franchise, including the new patient population exclusivity extension, six-month pediatric exclusivity extension, and recent Grunenthal settlement with Teva, extended exclusivity of NuCinta one and a half years from June of 25 to January of 27, and NuCinta ER two years from June of 25 to July of 27. This, coupled with the authorized generic agreement with HICMA, enables us to continue to maximize and enhance the durability of the new Cinta franchise in 2025 and beyond. In closing, I'm proud of the commercial accomplishments in 2024, which included integrating and accelerating growth for Jornet, delivering strong performance in our pain portfolio, and generating momentum for all of our growth drivers in the fourth quarter. We're now focused on commercial execution, maximizing the potential of the pain portfolio, and accelerating the performance of Jornet in 2025. I'll now hand the call over to Colleen to discuss financial highlights.

Thanks, Scott. Good afternoon, everyone. In 2024, through our dedication to operational excellence, we generated strong financial results and delivered on our 2024 guidance. We grew revenue by 11% and adjusted EBITDA by 9%, generated robust operating cash flows and strategically deployed capital. Successful execution of our 2024 financial and strategic priorities establish a strong foundation for 2025 financial guidance that reflects significant top and bottom line growth. As we head into the year, we plan to further strengthen our financial position and create value through disciplined capital deployment. Financial highlights for the fourth quarter and full year include net product revenues were a record $181.9 million for the fourth quarter, up 22% year over year. 2024 net product revenues were a record $631.4 million, up 11% year over year. Dornier net revenue was $29.3 million in the fourth quarter, which represents our first full quarter of ownership. Pro forma full year net revenue was $100.7 million, inclusive of $37.2 million recognized by Collegium. Belbuca net revenue was a record $55.2 million in the fourth quarter, up 12% year-over-year, and a record $211.3 million in 2024, up 16% year-over-year. Ekstamsa ER net revenue was a record $51.5 million in the quarter, up 6% year-over-year. For 2024, Ekstamsa ER net revenue was a record $191.3 million, up 8% year-over-year. Full year gross to net was 52.7%, coming in better than our expectation of approximately 55%. Nusent to franchise net revenue was $41.8 million in the fourth quarter, down 11% year-over-year, and $176.5 million in 2024, down 7% year-over-year. Gap operating expenses were $60.2 million in the fourth quarter, up 83% year-over-year. For 2024, gap operating expenses were $207.4 million, up 30% year-over-year. Non-gap adjusted operating expenses were $51.1 million in the quarter, up 97% year-over-year. For 2024, adjusted operating expenses were $150.6 million, up 22% year-over-year. As a reminder, adjusted operating expenses increased in 2024 due to the additional operational costs associated with having Jornet in our portfolio. Gap knit income for the fourth quarter was $12.5 million, compared to $31.9 million in the fourth quarter of 2023. For 2024, net income was 69.2 million compared to 48.2 million in 2023. Non-GAAP adjusted EBITDA was a record 107.7 million for the fourth quarter, up 3% year over year, and a record 401.2 million for 2024, up 9% year over year. GAAP earnings per share were 39 cents basic and 36 cents diluted in the fourth quarter. compared to GAAP earnings per share of $0.99 basic and $0.82 diluted in the prior year period. GAAP earnings per share was $2.14 basic and $1.86 diluted in 2024 versus GAAP earnings per share of $1.43 basic and $1.29 diluted in 2023. Non-GAAP adjusted earnings per share was $1.77 in the fourth quarter versus $1.58 in the fourth quarter of 2023. For 2024, non-GAAP adjusted earnings per share was $6.45 versus $5.47 in the prior year. Please see our press release issued earlier today for a reconciliation of GAAP to non-GAAP results. As of December 31st, we had $162.8 million in cash, cash equivalents, and marketable securities. During 2024, $200 million of cash on hand funded our acquisition of Iron Shore Therapeutics, and we deployed $60 million for share repurchases as part of our share repurchase program. We reaffirm our 2025 guidance, which was issued in January. For the year, we expect net product revenues in the range of $735 to $750 million. This growth is forecasted to be primarily driven by journey where we expect net product revenues in excess of $135 million supported by continued durable performance from our paying portfolio. As is typical within our space, we expect a modest quarter-over-quarter decline in revenue in the first quarter due to typical dynamics where deductibles reset and out-of-pocket costs increase for patients. We expect adjusted EBITDA in the range of $435 to $450 million and adjusted operating expenses in the range of $220 to $230 million. As Scott previously mentioned, the increase in adjusted operating expenses reflects targeted investments to support Jornet near-term growth and drive significant momentum in 2026 and beyond. With these investments, we are still expecting over 10% adjusted EBITDA growth this year, with improvement in adjusted EBITDA margin beginning in 2026. This is a testament to our financial strength and the strong foundation that our pain business provides. Our spend is expected to be front-loaded into the first half of the year as we roll out these commercial initiatives in early 2025. We remain committed to strategically deploying capital to create value for our shareholders. We plan to invest in Jornet to drive growth, expand our portfolio through business development, while opportunistically leveraging our share repurchase program and rapidly paying down our debt. In 2024, we repurchased $60 million in shares, including $25 million repurchased in the fourth quarter of 2024 and $35 million through an accelerated share repurchase program in May 2024. We have a $90 million remaining in our share repurchase program, which is authorized by our board through Q2 of 2025. Finally, we remain focused on paying down our debt We ended 2024 with net leverage of less than two times and expect to end 2025 with net leverage of less than one time. I will now turn the call back to Vikram.

Thanks, Colleen. As I mentioned earlier in my remarks, this is an exciting time for our team at Collegium and for the patient communities we serve. The achievement of our financial commitments and the execution of our strategic priorities in 2024 has positioned us for a new phase of growth in 2025 and beyond. Looking ahead, we are focused on accelerating growth for Journée, maximizing our main portfolio, and strategically deploying capital to create value. I feel very fortunate to lead a company that is mission focused, financially strong, and well positioned to deliver top and bottom line growth and create value for our shareholders. Before we open up the call for questions, I wanted to take a moment to thank the entire team at Collegium for their passion and dedication to helping make a difference in the lives of the patients we serve. With that, I will now open the call up for questions. Operator?

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove the question from the queue. For all analysts wanting to ask questions, if you could please limit your questions to only two questions per analyst. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment please while we go for questions. First question comes from Liz Uleski from Tourist Securities. You may proceed with your question, Liz.

Good afternoon. Thank you for taking my questions, and great to have you on the first call, Vikram. Perhaps I'll start there. Could you perhaps lay out any sort of path that you envision for Collegium over the next three to five years, and then perhaps maybe update us on the BD opportunities Would you say you're kind of in the early, mid, or late cycle of a next deal? And then for Colleen, perhaps, could you quantify any synergies that you've had realized from the integration of IronShore? And then lastly for the team, in regards to No Pain Act, are there any dynamic shifts to the pain treatment category that you'd expect or is this the minimus to your portfolio? Thank you.

Yeah, maybe I'll kick it off. Thank you for the question. Look, let me first start out by saying that in the last, call it a little over three and a half months that I've been at Collegium, a lot of what I came in with has been validated. This is a strong team with strong commercial execution, with the pain portfolio performing exceptionally well, as well as journey which is a key part of our portfolio going forward. These performances lay a very strong financial foundation for us to continue to grow from. As we have said previously, our strategy for long-term growth is a function of both organic growth as well as inorganic growth. Organic growth, as we talked about earlier, we have done it with our main portfolio before, and now we're doing it with Journey. In terms of business development and inorganic growth, look, our primary focus is on assets, commercial assets that can add meaningful revenue in the near term. In terms of the therapeutic area that we're looking at, Look, there are logical adjacencies to our newly acquired ADHD asset that are our top priority. If you look at ADHD, neuropsychiatry, or even broader CNS, these are areas that we're quite interested in. Additionally, some of the other areas we're looking at outside of just pure neuro or neuropsych, we're interested in areas that are capital efficient, for example, rare or orphan diseases. And then finally, look, we're not... We're not against looking beyond into other newer therapeutic areas as well, although as you go out further into other areas, the bar is certainly higher. We absolutely would look to make sure that there are strategic as well as financial, from both a strategic and a financial perspective, that we're able to, it has to make sense for us. But I'd say, let me also maybe end with the fact that Given our performance, given where we ended last year at 1.9 times net debt over EBITDA, given the anticipated performance this year where we expect to be less than one times net debt over EBITDA, we're in a pretty strong financial position. And so we're actively looking to expand our portfolio, but at the same time we have to make sure that we will execute both organically with the products we do have as well as look to do the next year. Maybe I'll now turn it over to Colleen.

Thanks, Les, for the question on synergies. Recall, you know, the acquisition of Iron Shore and Genet as a product specifically was really about taking a flag in a new therapeutic area for us. So we achieved the typical synergies you would expect in that situation on senior management, overlap facilities, G&A-type synergies. They were not a meaningful consideration as part of the deal. Really, for us, it was the opportunity to invest strategically behind Jornet and drive that growth.

And I'll take the no-paying act last. This is Scott. So on your question on the no-paying act, yeah, it's had no impact on our portfolio, positively or negatively, and that's because, The primary focus of that act is providing additional reimbursement in the inpatient setting. That's where the focus is, and obviously our products are retail-based chronic pain therapies. So no impact on us at this time.

Great. Thank you, guys, and congrats on the progress. Thank you.

Thank you. The next question comes from David Anselm from Piper Center. Please proceed with your questions, David.

Yeah, thanks. So with the Salesforce expansion, sorry if I missed this, but just remind me, what portion of ADHD prescribers or what portion of volumes does the expanded Salesforce encompass? And then secondly, related to the sales organization, we've seen ADHD-focused Salesforce is even larger, much larger than even the 180 that you're contemplating. I guess the question is over the long term, how are you thinking about the need for further expansion? And then I had a question on long term, are you thinking about the generic entry of Bilbuca and Nuscenta, just given that these are opioids and obviously there's a lot of baggage associated with generic companies and their role in opioids litigation. So how are you planning for loss of exclusivity for both products looking ahead to 27. Thanks.

Yeah, David, thanks for the questions. Look, so maybe I'll kick it off, and then I'm going to invite Scott to give some color on the Salesforce expansion, both in terms of what type of coverage universe we have as well as the size of the Salesforce. And then I'm going to call on Colleen to give us some color on the LOE question related to the pain products. So, look, first of all, we're highly encouraged with our performance to date with Journey PM with the size of the sales force we do have, which was, as a reminder, 125 sales representatives that came over as part of the Iron Shore acquisition. And the performance that we just talked about in Q4 has basically been delivered by that team. and we're really thrilled with the performance and we're really happy with the progress to date. As we look into the future, we've also talked about the fact that we're gonna expand the sales force by an additional 55, and that brings the total sales force to about 180. Maybe I'll ask Scott to give some color on how that changes our coverage universe for HCPs and what that means for the business. Yeah, great.

So, great questions, David. So, first and foremost, These categories, it's interesting, ADHD, there's some analogs to pain, meaning they're large tails, right? If you look at ADHD prescribing in the United States, there's over 300,000 physicians that write a prescription. That said, 20,000 drive a third of overall prescribing. So it's a highly efficient way to go to the market. So when we expand to 180, we will end up covering 60% of the long-acting market, which is what drives the overall market. That puts us at about 23,000 targets. which is exactly where we need to drive forward. You talked about future sizing. Look, every year we will look from a hygiene standpoint at coverage. But what I can tell you is there's no need, if you look at competitive sets with other sales forces out there, we don't anticipate significant growth. But we'll always look to make sure we're deploying to cover the doctors in an efficient way, and that's what we're focused on.

And then, David, I'll take the LOE question. And looking across our entire portfolio, there is no party that has the necessary combination of ingredients, regulatory clearance, legal clearance, and manufacturing capability to launch competitive generics against any product throughout our paying portfolio. Specifically with respect to the new Cinta franchise, there was no party that has the combination of the three necessary ingredients for near-term competitive generic launch, regulatory approval, cleared litigation, contractual hurdles, or access to commercial scale quantities of Topentadol, the API, and the Nucinta formulations. The LOE dates in our Nucinta franchise are now due to some extensions we've been able to accomplish. July 2027 for Nucinta ER and January 2027 for Nucinta IR. The above comments are equally true for Belbuca and Xtamsa ER. So as we proceed into the timeframe where there could be generic entrance, what you'll see us do, particularly on Belbuca and that January 2027 date, is invest through that date, and then we will reassess if, in fact, a player comes in. At that point, there would only be a single player.

This is exactly why we've also reinforced that. We believe we have a longer and more robust revenue stream that remains underappreciated with this business.

That's helpful, Collin. Thanks, everyone. Thanks, David.

Thank you. Ladies and gentlemen, just a reminder, if you'd like to ask a question, please press star and then 1. If you'd like to ask a question, please press star and then 1. We will pause to see if we have any further questions before we close you. There are no further questions, which therefore means that we have reached the end of the question and answer session. And I'd now like to turn the call back to Vikram Krannani for closing remarks. Thank you, sir.

Great. Thank you, everyone, for joining the call. Have a wonderful evening and good night.

Thank you. Ladies and gentlemen, that does conclude the call. You may now disconnect your lines.