Collegium Pharmaceutical, Inc.

Greetings and welcome to the Collegium Pharmaceutical for First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference call, please press star zero on your telephone keypad. Please note that this conference call is being recorded. I will now turn the call over to Ian Karp, Head of Investor Relations at Collegium. Thank you, you may begin.

Thanks, Maria, and welcome to Collegium Pharmaceutical's First Quarter Earnings Conference Call. I'm 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 wanna 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 provisions of the Private Securities Litigation Reform Act of 1995. You're a caution that such forward-looking statements involve risks and uncertainties, including and without limitation, the risk 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 SEC. Our future results may differ materially from our current expectations discussed today. Our earnings press release and this call will include discussions of certain non-GAAP information. You can find our press release, including relevant non-GAAP reconciliations on our corporate website. And with that, I'll now turn the call over to our President and CEO, Vikram Karnani.

Thank you, Ian. Good afternoon, and thank you for joining the call. Today, we will discuss Collegium's first quarter of 2025 financial performance and provide an update on the company's recent progress. As Collegium embarks on a new phase of growth, we remain committed to three very clear strategic priorities. First, to drive significant growth in joint APM. Second, to maximize the value of our pain portfolio. And third, to strategically deploy capital to further enhance shareholder value. I am pleased to report we have made significant progress on each of these three priorities in the first quarter. And importantly, these accomplishments bring us one step closer towards achieving our goal of building a leading, diversified biopharmaceutical company. Collegium was founded with an ambition to become the leader in responsible pain management. And we've spent the past decade building a portfolio of differentiated, responsible pain medicines. Today, we are the leader in responsible pain management and have also expanded our vision further as we strive to improve the lives of people living with serious medical conditions beyond pain. In fact, we have already begun to diversify our business through the acquisition last year of an important medicine, Jornet PM, for the treatment of ADHD. None of our past success would have been possible without the leadership of our founder, Mike Heffernan, who will be retiring as chairman of our board of directors in the coming weeks. I'd like to take this opportunity to formally thank Mike for his dedication to patients, his bold strategic vision, and for positioning the company for continued growth in 2025 and beyond. I'd also like to recognize our employees for the critical role that they play in our growth and success. Collegium's dedication to fostering a collaborative, transparent, and engaged culture was recently celebrated by our recognition in USA Today's Top Workplaces list for the second year in a row, as well as the Boston Business Journal's Best Places to Work. I would like to extend a big thank you to our entire team for their steadfast commitment to our mission and the patients we serve. During the first quarter, we delivered strong performance, including 23% -over-year revenue growth and significant cash flow generation. As expected, we saw the largest growth come from our ADHD medicine journey. In our second full quarter of ownership, prescriptions grew 24% -over-year and generated 28.5 million in net revenue. We continue to expect full year journey net revenue to be in excess of 135 million, representing at least 34% annual growth from 2024. Importantly, our business continues to be highly profitable and our ability to generate significant cash flows allows us to invest for the future. We recently completed the expansion of our journey sales force, adding approximately 55 new sales representatives, bringing the total ADHD sales force to about 180 reps. They are now fully trained, deployed, and focused on accelerating further prescription growth. In our pain portfolio, we generated another quarter of solid revenues with 149.2 million in sales, up 3% -over-year. All three of our pain medicines generated single-digit revenue growth -over-year in line with our expectations. In addition to these achievements, we also made important additions to our leadership team and board of directors' further positioning collegium for continued success. We announced updates to our executive leadership team, welcoming David Deter as executive vice president general counsel, Jane Gonneman as executive vice president strategy and commercial development, and Dean Patras as chief people officer. These proven industry leaders bring a strong crack record of success and will be essential as we continue to grow and diversify our business. We also announced updates to our board of directors, founder and chairman Michael Heffernan and board member Gwen Mellingkopf will retire from collegium's board at the annual general meeting on May 15th, 2025, and Gino Santini, the board's lead independent director, has been nominated to become chairman. Dr. Carlos Paya will be nominated to the board and presented for shareholder approval at the AGM. These updates follow the recently announced appointment of Nancy Lerker to the board in February 2025 and reflect the board's ongoing focus on board refreshment and board succession planning. And finally, we announced today our board has authorized a $25 million accelerated share repurchase program reinforcing our commitment to return value to shareholders. As we continue to grow our business, our strategy will remain focused on driving significant growth for Jornet, maximizing our pain portfolio and strategically deploying capital to create value for our shareholders. Jornet is highly differentiated as the only stimulant ADHD medicine with convenient evening dosing. Jornet provides symptom control upon awakening in the morning and throughout the day, limiting the need for an additional booster. Our targeted investments throughout 2025, including our expanded sales force and marketing efforts, position Jornet for both near-term growth and significant momentum in 2026 and beyond. We also remain dedicated to maximizing and enhancing the durability of our pain portfolio to generate significant operating cash flows. As evidenced by our first quarter performance, including -over-year revenue growth for Bell Buca, extamps ER and the Nacinta franchise, the pain portfolio continues to provide a strong financial foundation for the company. We are confident in the durability of our pain medicines and their ability to continue to drive cash generation. Our third priority is to strategically deploy our capital as we seek to further grow our business and create value for shareholders. We are focused on diversifying and expanding our portfolio of medicines through disciplined business development, rapidly paying down debt and opportunistically repurchasing shares. In the first quarter, we generated 55.4 million in cash from operations, growing our cash position to nearly 200 million, which is up 35 million from year end, while also paying down an additional 16.1 million of debt. In terms of future business development, as we continue to assess potential external opportunities, we do so from a position of financial strength. This is especially important given the broader political and economic pressures occurring right now within the overall healthcare sector. Before I turn the call over to Scott to give a more detailed commercial update, I'd like also to provide a bit of context regarding the potential impact of tariff policies both here in the US and across the globe. We do not expect recently announced tariffs to impact collegiate business in any material way for the foreseeable future. All of our medicines are primarily sourced and manufactured in the US. In addition, the overwhelming majority of our medicines are sold exclusively in the US. 2025 is shaping up to be an exciting year for collegium, and we look forward to providing additional updates as the year progresses. With that, I will now turn it over to Scott.

Thanks, Vikram, and good afternoon,

everyone.

Jorne is off to an extremely strong start to the year, a clear continuation of the positive momentum we generated in 2024. And importantly, recent script growth was accomplished in advance of our field force expansion and any new commercial initiatives we're deploying through the remainder of the year. Underpinning this growth is Jorne's highly differentiated product profile. It's the only stimulant ADHD medicine with once daily evening dosing that provides symptom control upon awakening, through the afternoon, and into the evening, which can limit the need for short-acting stimulant add-ons. 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 fact, in market research, HCPs rank Jorne 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. Jorne is also the highest rated brand in terms of product favorability.

And when patients

and caregivers request to try Jorne, HCPs honor that request. We plan to further leverage this dynamic through targeted marketing efforts for the remainder of the year. The first quarter of 2025, our second full quarter of Jorne ownership, was marked by significant prescription growth. This growth was particularly impressive when you consider the typical first quarter headwinds that can impact branded drugs in the highly genericized ADHD category. As annual patient deductibles reset and -of-pocket costs to patients increase. In fact, prescriptions during the quarter grew 24% year over year. And Jorne's market share of the long-acting branded methylphenidate market increased to 20.3%, up .4% year over year. Importantly, Jorne has broad and growing prescriber base with over 25,000 prescribers in the first quarter, up 22% compared to the first quarter of 2024. This growing base of prescribers is a further testament to the impact of our sales force as they work to educate the healthcare community on Jorne's differentiated profile. We see significant additional opportunities for Jorne and are committed to investing in the brand to maximize its full potential. We've identified two main areas to make targeted investments. First, increasing awareness and adoption within an expanded set of prescribers. Second, raising awareness of Jorne's unique and differentiated profile among patients and caregivers to drive HCP requests. Let's start with the primary action we are taking to raise awareness and adoption among healthcare providers. We recently completed the expansion of our sales force, adding approximately 55 new representatives who are fully trained and deployed as of April. Our expanded sales force, which is now 180 representatives, is targeting approximately 21,000 prescribers up from 17,000 targets prior to our expansion. We expect our expanded sales force to drive increased adoption of Jorne and generate prescription growth in line with our guidance for the year. We expect to realize the full impact of the expanded sales force in 2026 and beyond. In addition to expanding the reach of our sales force, we believe it's important to further educate patients and caregivers on the unique benefits of Jorne. Market research indicates patient and caregiver requests are a top influencer of HCP trial. And today, patients and caregivers still have limited knowledge of Jorne and its differentiated profile. To raise awareness, we're launching new digital marketing and social media initiatives, along with new patient support materials, all designed to motivate patients to speak with their healthcare providers about Jorne. We'll launch these new campaigns in advance of the -to-school season. With Jorne's current prescription and prescriber growth trajectory, strong market access coverage, and targeted investments, Jorne is well on its way to becoming Collegium's lead growth driver in 2025 and beyond. Collegium has a history and reputation of being the leader in responsible pain management with a unique and differentiated portfolio of medicines. Bell Buca, Exstamsa, and Nucinta ER collectively represent over half of the branded ER market, demonstrating the ongoing strength and reach of our portfolio. Our pain portfolio delivered another strong quarter right in line with our expectations. Total revenue growth for the portfolio was 3% year over year, with all three medicines generating low single-digit revenue growth. As expected, total prescriptions across the pain portfolio were pressured by both typical first quarter dynamics, where deductibles reset and -of-pocket costs increase for patients, as well as recent formulary changes impacting individual brands. However, these script declines were in line with our expectations and offset by profitability improvements, which led to overall revenue growth in the quarter. Importantly, the business is performing as expected and continues to show great durability. While the overall pain market continues to decline in line with our expectations, we continue to see that there's ample market opportunity for our portfolio of differentiated medicines. For example, Bell Buca remains the only long-acting opioid that uses buprenorphine buckle film technology. In market research, it was ranked as the number one branded ER opioid in terms of product differentiation and favorability. Similarly, EXTAMSA, the only extended-release oxycodone medicine that uses our proprietary -in-class abuse deterrent technology, DETERX, was ranked as the number one ER oxycodone medicine in terms of product differentiation and favorability. We continue to believe that the revenue and cash flows generated from our differentiated pain portfolio will remain durable in both the near and midterm. Importantly, we believe the life cycle of these medicines may prove to be longer and more robust than is currently appreciated by the market. EXTAMSA, for example, does not lose exclusivity until September of 2033. And the exclusivity for Nucinta ER and Nucinta IR were recently extended to July of 2027 and January of 2027, respectively. Overall, I'm proud of our commercial execution so far this year, which includes generating impressive growth for Jornet, completing the expansion of our ADHD Salesforce and delivering solid performance with our core pain business. We remain well-positioned to deliver on our commercial priorities for 2025 and to support our next phase of growth. I'll now hand the call over to Colleen to discuss financial highlights.

Thanks, Scott. Good afternoon, everyone. In the first quarter of 2025, we delivered strong financial results, including growing revenue 23% year over year, making targeted investments in our lead growth driver, Jornet, and generating strong cash flows from our pain business. Financial highlights for the first quarter of 2025 include net product revenues were 177.8 million up 23% year over year. Jornet net revenue was 28.5 million, which represents our second full quarter of ownership. Belle Buca net revenue was 51.7 million, up 2% year over year. Extamps in net revenue was 47.6 million, up 4% year over year. And Nusinta franchise net revenue was 47.1 million, up 4% year over year. Gap operating expenses were 75.6 million, up 80% year over year. Non-GAP adjusted operating expenses were 62.2 million, up 80% year over year. The increase in operating expenses reflects ongoing costs to commercialize Jornet, as well as the targeted investments we've made to drive growth, including the expansion of our sales force. Gap net income was 2.4 million, compared to net income of 27.7 million in the first quarter of 2024. As a reminder, net income in the first quarter was impacted by expenses associated with the iron to our acquisition, as well as executive transition expenses that do not represent ongoing operations. Non-GAP adjusted EBITDA was 95.2 million, up 3% year over year. Gap earnings per share was 8 cents basic and 7 cents diluted in the first quarter, compared to gap earnings per share of 86 cents basic and 71 cents diluted in the prior year period. Non-GAP adjusted earnings per share was $1.49 in the first quarter versus $1.45 in the first quarter of 2024. Please see our press release issued earlier today for a reconciliation of gap to non-GAP results. In addition, we generated $55.4 million in cash from operations and ended the quarter with $197.8 million in cash, cash equivalents and marketable securities as of March 31st, up 35 million from the end of the year. We are reaffirming our 2025 financial guidance. We expect net product revenues in the range of 735 to 750 million and 18% increase year over year. This increase is primarily driven by Jornet, which we expect to generate net revenue in excess of 135 million supported by continued performance across our pain portfolio. We expect adjusted EBITDA in the range of 435 to 450 million representing 10% growth year over year and adjusted operating expenses in the range of 220 to 230 million. The growth and adjusted operating expenses reflects targeted investments to support Jornet near-term growth and drive significant momentum in 2026 and beyond. We expect quarterly adjusted operating expenses to trend down in the second half of the year. We remain committed to strategically deploying capital to create value for our shareholders as demonstrated by our targeted investments in Jornet to accelerate growth. Continued focus on evaluating opportunities to expand our portfolio through business development and rapid repayment of debt. We also have a strong track record of returning value to our shareholders through share repurchases and our board recently authorized a $25 million accelerated share repurchase as part of our $150 million program. We ended the first quarter with net leverage of 1.5 times, net debt to EBITDA and we expect to end 2025 with net leverage of less than one time. We repaid $16.1 million of our term loan this quarter and expect to repay an additional $48.4 million during the remainder of 2025. I will now turn the call back to Vikram.

Thanks, Colleen. We are proud of our strong performance in the first quarter. We generated stable cash flows from our pain portfolio, growth impressive growth in Jornet, strengthen our balance sheet and made investments to fuel our next phase of growth. We are on track to achieve our 2025 financial guidance and look to the future beyond 2025 from a position of financial strength. We remain focused on creating shareholder value and the strength of our balance sheet gives us the flexibility to maximize and grow our existing portfolio of differentiated medicines while also prioritizing further diversification through discipline business development and returning value to shareholders through share repurchases. With Jornet well on its way to becoming our lead growth driver supported by the long-term durability of our pain portfolio and an industry leading executive team, we are confident as we enter our next phase of growth. Ultimately, our greatest success will be our ability to improve the lives of people living with serious medical conditions. I will now open the call up for questions. Operator.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 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. One moment please while we poll for questions. Our first question comes from Lesk Suliski with Truist Securities. Please proceed with your question.

Good evening. Thank you for taking my questions and congrats on the progress. So I have a couple for Scott and then one for Vikram. Scott, so as we're heading to the tail end of the school year, how would you expect the journey scripts to trend before the new kind of season pick up given the recent investment in the sales force and then also on the, touching on the sales force, is this an increasing touch points or is this more about a geographic expansion? And I have a follow up to that.

Thanks for the question Lesk. So first your question about seasonality. So yeah, so there's an overall seasonality in the marketplace. So essentially what you'll see when you look at weekly scripts is as we get to the end of May, June time period, depending on where you are in the country, there can be a little bit of a slowing of scripts a bit in the overall market because some people will have their child take a little bit of a holiday during the summer from their prescriptions. That then proceeds the acceleration you see in back to school season, which hits usually in the mid August time period and then carries well into the fall last year, carried to the beginning of December. So that's the seasonality you should expect when you look at the overall market in ADHD. When it comes to our expansion, yeah, there's multiple levers that we pulled. So first in terms of touch points, we increased our target universe from about 17,000 healthcare professionals to 21,000. So we're reaching more, but with the expansion of 55 and going from 125 to 180 reps, it wasn't just about an increased reach to those new targets. It was also about increasing our frequency on the current targets. So overall, what we're looking to see is through expanded reach and frequency, greater understanding of Jornet, greater adoption of Jornet. And from a script standpoint, as I've shared before, really seeing the impact start to kick in in about six months is what typically you see in terms of acceleration of scripts. So we have that more fourth quarter and then into 2026 and beyond.

That is helpful. And then, you know, looking beyond methylphenidate, is there an opportunity to utilize the Journey PM delayed release technology and potentially apply to additional compounds, for example, Adderall or Modafinil? Have these conversations occurred internally? And what would be some of the required steps to push this through if this were the case?

Yeah, I'll take that one, Les. Those conversations, I believe, I think occurred even before the acquisition happened. So I am sure had already explored using the technology for other compounds. And I believe the result of all of that work is the fact that we have Jornet, which will really, the technology will pretty well for methylphenidate.

Got it. Okay, and then Vikram, you know, maybe touch on a little bit on the recent color around potential BD plans, given your, you know, you've kind of seeded now at Collegium. What's kind of the appetite for a deal and has the current change in the environment kind of impacted your outlook for potential deals? Thank you.

Yeah, great question. You know, I think as we stated in our prepared remarks, we always look at capital deployment in a very strategic way for the company. And I think we've been consistent in our position that we'll do the right thing to create value for our shareholders. And that's a combination of business development. If it's the right time and the right deal, it's paying down debt, which you have seen us do. And opportunistically, repurchasing shares and returning value to our shareholders, which is exactly what we talked about today. So I would expect that that type of approach, that type of discipline will continue. And as far as your question about this particular market environment, you know, does it increase or change our likelihood of getting a deal done? I don't know that I would make a comment specifically around that. I think whether it's this environment or otherwise, we're, as I've said before, we look to expand our portfolio of medicines, but I think we're gonna do it in a very disciplined way, which is a strong track record that Collegium has had. Go to the next question.

Our next question comes from Serge Belanger with Nidam and Co. Please proceed with your question.

Hi, good afternoon. A couple of joining questions for Scott. I guess the first one, do you remind us what the overall ADHD market growth has been recently? And secondly, also remind us the breakdown in the prescriber base between pediatrician and psychiatrist. And then lastly, you did highlight market share has seen some significant gains over the last year. Just curious where that market share is coming from, is it from other branded products or really other generics in the ADHD market? Thank you.

All right, Serge, you gave me a few of them there. All right, so let's start with market growth. Yeah, the market's growing at about 5% to 6% overall. That's been pretty consistent for the last few years, and that's where we expect the growth to continue going forward. When you look at the prescriber base, it's pretty straightforward. It's roughly 40% is pediatrician. The other 40% is neuropsychiatry. Some of those are P-ed neuropsychiatrists. And the remaining 20 is about half PCP and about half NPs or PAs, mid-levels that ladder up to the specialty. So that's the prescriber base that we're looking at there that drives the market and who we're focused on in our target audience. And then lastly, from a share perspective, yeah, we've seen really strong share growth, right? We're growing at 20% this year, year over year in the long-acted branded methylphenidate market. And basically, the biggest feeder of growth is the movement from generic immediate release products, right? That's the biggest feed to the branded products, and that's what we see. And then we do get some switching from other branded products, but it's mostly the generic immediate release that feeds our business. Great,

thank you.

Our next question comes from David Ancelin with Piper Sandler. Please proceed with your question.

Thanks, just a few on my end. First, how large of a sales organization at steady state are you contemplating for Jordan APM? If I recall, when Vyvanse had exclusivity, Shire's sales force was quite large, a bit larger than what you have now. I'm not saying that you're going to go there, but there obviously is a wide prescriber audience in the ADHD space. So how are you thinking about that? Secondly, can you share your views on what kind of peak sales range you think is realistic for Jordan APM? And then lastly, a BizDev question, how large of a transaction could you contemplate given the current state of the capital structure? Thanks.

Yeah, thanks, David. Scott, why don't you take the first question? I'll take the question on peak sales, and then between Colleen and I, we'll answer the last one.

Yeah, that's great. So yeah, so thanks for the question, David. On the sales force, look, we sized at 180 because that's the right size now. We did a bottom up, we didn't have any constraints. That's reaching a target audience. That's the right target audience to drive the brand with the right level of reach and frequency, having really productive territory. So that's what led to where we are right now. So we evaluate that on a regular basis. Every year as part of our planning process, we will be looking at that, looking at the sales force, seeing if we need to make any adjustments on the edges. But that's what the business demands right now. And to your Vyvanse comment, I think the big difference is that was such a highly branded and competitive marketplace. Now, with you look, where you see such genericization, we really have only a couple of players that we're competing with for share of voice. And so not only are we reaching the right customers, but we also feel like we have a really strong share of voice out there in the branded market.

The second question I think, David, you had was around peak sales for Jornet. We have not talked about peak sales for Jornet PM externally. Part of the reason is we've just gone through an expansion and we have only owned the medicine now for two quarters. What we'd like to do is see the impact of the expansion, as you can imagine, there's a bit of a lag time between folks going into the field and seeing the downstream effect on demand. I think once we have a better sense of the impact of the expansion, it'll give us a sense of the trajectory and we'll be in a much better place to talk about peak sales at that time. And I think that your last question was about what would be the size of a business transaction that we would contemplate at this time. Maybe I'll, I can begin and I'll have Colleen provide some additional color, but, we, I don't know that we have necessarily talked about size of transaction. I think what we have talked about is our ability to take on leverage if we need to. So in terms of capacity, I think we've talked about the fact that last year we ended with our net debt over EBITDA at about 1.8, 1.9. This quarter we're already down to about one and a half and we expect to end the year less than one. So what I can say is that we, given the situation, given the ability to generate significant cash flows from operations, we feel that gives us enough capacity to do a meaningful transaction if the transaction comes along. We're not gonna do a deal just to do one, but it's gotta be the right one. And Colleen, anything else to that?

I think that's right. I think the right deal for the right terms, we've sized it from a debt perspective, we'd be willing to potentially go up to three tons for a commercial asset. What you don't have in that equation is what does the target bring for EBITDA? So we consider that as we're evaluating.

Thank you.

Thank you. There are no further questions at this time and I would now like to turn the floor back over to Victor for closing comments.

Thank you everyone for joining the call today. I wish everybody a great evening.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.