COLL - NASDAQ

Greetings, and welcome to the Collegium Pharmaceuticals Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I'll now turn the conference over to Ian Karp, Head of Investor Relations at Collegium. Thank you. You may now begin your presentation.

Great. Thanks, and welcome to Collegium Pharmaceuticals Second Quarter 2025 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 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 provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risks and uncertainties as 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. And with that, I'll now turn the call over to our President and CEO, Vikram Karnani.

Thank you, Ian. Good morning, everyone, and thank you for joining the call. Today, we will discuss Collegium's second quarter 2025 financial performance and provide an update on our recent progress. At Collegium, we are dedicated to building a leading diversified biopharmaceutical company focused on improving the lives of people living with serious medical conditions. This past quarter, we continued to execute our strategic priorities, which include driving significant growth for Jornay PM, maximizing the durability of our pain portfolio and strategically deploying capital to further enhance shareholder value. We generated both top and bottom line growth in the quarter, including record revenue from Jornay and returned value to our shareholders through our share repurchases. As we look ahead to the second half of the year, we remain committed to the patient communities we serve. The continued strength of our commercial and financial performance provides significant flexibility to further grow and diversify our business. We will continue to evaluate external opportunities to expand our portfolio through business development and generate shareholder value through our capital deployment strategies. We are well positioned for our next phase of growth, and I am confident in our ability to deliver on our financial and strategic commitments. I would like to thank all of our employees for their continued dedication to our mission and to the patients we serve who are at the center of everything we do. In the second quarter of 2025, we delivered strong financial performance, including record quarterly revenue that grew 29% year- over-year and adjusted EBITDA that grew 9% year-over-year. This was driven by performance across our entire portfolio, including from our lead growth driver, Jornay. During our third full quarter of owning Jornay, prescriptions grew 23% year-over-year, and we generated record quarterly revenues of $32.6 million. We also generated another quarter of meaningful growth from our pain portfolio with a record $155.4 million in combined revenues, up 7% year-over-year. All three of our core pain medicines generated year-over- year revenue growth. We returned value to our shareholders through the completion of a $25 million accelerated share repurchase program, and our Board recently approved a new $150 million share repurchase program authorized through December 2026. Following our Annual Meeting of Shareholders in May, I am pleased to report that Gino Santini, our Lead Independent Director, was appointed as Chairman of the Board. Additionally, Dr. Carlos Paya was elected by our shareholders to join the Board following his nomination last quarter. These changes reflect our commitment to our next phase of growth and our ongoing focus on Board refreshment and succession planning. And lastly, based on our strong financial performance to date, we are raising our 2025 financial guidance ranges. We now expect to grow total revenue by approximately 19% year-over-year, driven by our continued confidence in the durability of our pain portfolio and significant growth from Jornay. We now expect Jornay revenue to be in the range of $140 million to $145 million, representing roughly 42% growth from 2024 pro forma revenue. Further, we now expect to grow adjusted EBITDA by approximately 12% year-over-year. These growth expectations are a testament to the dedication and execution across our entire organization. In just a short period of time, we have integrated Jornay into our portfolio of differentiated medicines, expanded the size and scope of the Collegium team and established a new growth platform for our company. Importantly, we accomplished all of this while maintaining our leadership position in responsible pain management. As we generate additional momentum in our next phase of growth, we remain committed to our strategic priorities, driving significant growth for Jornay, maximizing our pain portfolio and strategically deploying capital. We are focused on driving significant growth for Jornay by raising awareness of its highly differentiated profile among health care providers, patients and caregivers through targeted investments. In April, we completed the expansion of our ADHD sales force, and we are making further investments in the brand through new marketing campaigns to raise awareness. These investments position Jornay for both near-term growth and significant momentum in 2026 and beyond. Turning to our pain portfolio. We delivered year-over-year revenue growth with all 3 core pain medicines growing for the second quarter in a row. Our responsible pain medicines have long served as a foundation of our business and provide a strong financial base, which fuels our future growth strategy. Finally, we remain committed to our capital deployment strategy, including diversifying our portfolio through business development, rapidly paying down debt and opportunistically repurchasing shares. In the second quarter, we generated $72.4 million in cash from operations, growing our cash position to $222 million, while paying down $16.1 million of debt and repurchasing $25 million in shares. We are well on our way to building a leading diversified biopharmaceutical company committed to improving the lives of people with serious medical conditions. Our strong financial position, consistent cash flow generation and track record of successful business development uniquely position us for further growth as we continue to assess potential BD opportunities to diversify and expand our business. We remain committed to driving long-term growth and generating value for our shareholders. I will now turn it over to Scott to discuss commercial highlights.

Thanks, Vikram, and good morning, everyone. In the second quarter, we continued to see strong momentum from our lead growth driver, Jornay PM. Jornay is a highly differentiated medicine and the only ADHD stimulant with once-daily evening dosing that provides symptom control upon awakening through the afternoon and into the evening. Many patients and caregivers report challenges starting their day, which is an area of differentiation for Jornay as it begins working when patients wake up in the morning. One of the key insights identified in recent market research was that many adult ADHD patients cite the morning as a challenging time, highlighting the need and importance of morning efficacy for all patient populations, not just children and adolescents. Conversely, many HCPs underestimate the need for morning efficacy among adult patients. This calls attention to a disconnect between patient need and HCP perception and provides us with an additional opportunity to raise awareness among HCPs in the future. In addition to efficacy upon awakening, symptom control throughout the day is important for all patient types, pediatric, adolescent and adult because it can eliminate the need for additional boosters at school or work. HCP perceptions of Jornay are strong. In another body of recently completed market research, health care professionals rated Jornay as the #1 ADHD brand in terms of product differentiation with a score that was more than double that of any other competing brand. In addition, over 60% of HCPs indicated a strong intent to increase prescribing, which was the highest among all other branded ADHD medicines. Since we acquired Jornay, we've also made steady progress in raising awareness and adoption among HCPs. And from market research, we know that if a patient or caregiver specifically asked to try Jornay, physicians typically honor that request. Importantly, there is still significant opportunity to further increase awareness of Jornay's unique and differentiated profile. We believe awareness will be one of the key drivers of prescription growth and our targeted investments, which I'll touch on momentarily, are aimed at maximizing this opportunity. Year-to-date, Jornay is now the fastest-growing stimulant for ADHD, and we're highly encouraged by Jornay's performance in the second quarter. Prescriptions were up 23% compared to the second quarter of 2024, and Jornay's market share of the long-acting branded methylphenidate market grew to 23%, up 7.6 percentage points year-over- year. Jornay has a broad and growing prescriber base, reaching an all-time high of over 26,000 prescribers in the second quarter, up 23% compared to the second quarter of 2024. We're focused on driving additional growth through targeted investments with two key goals: to increase awareness and adoption with an expanded set of prescribers and to raise caregiver and patient awareness to drive requests for Jornay. In April, we completed the expansion of our sales force, adding approximately 55 new representatives, bringing the total ADHD sales force to approximately 180 representatives. Our expanded sales force is fully trained, deployed and focused on targeting approximately 21,000 prescribers, up from 17,000 prior to the expansion. While we expect to realize the full impact of the expanded sales force in 2026 and beyond, we're already starting to see positive indicators. For example, our sales force is already reaching more targets and increasing the frequency of interactions with key health care professionals and over 2,700 of the new targets wrote a prescription for Jornay in the second quarter. We're pleased with the initial progress and expect to see additional benefits as we head into the second half of the year and 2026. We also launched new HCP nonpersonal marketing programs to support the efforts of our expanded sales force and drive awareness of Jornay's differentiated profile. In fact, our expanded sales force and marketing investments are specifically aimed at maximizing the opportunity during the critical back-to-school season, which kicks off in August and lasts into the fall. Turning to our second priority. We're committed to further educating patients, parents and caregivers on the differentiated benefits of Jornay as we know patient requests are a key driver of new prescriptions. We recently launched new digital marketing and social media campaigns as well as new patient support resources in advance of the back-to-school season. With our financial resources and commercial capabilities, Jornay is well positioned for growth throughout the remainder of this year and beyond. Moving to our pain portfolio. Collegium has long been the leader in responsible pain management with a unique and differentiated portfolio of medicines. Belbuca, Xtampza ER and Nucynta ER collectively represent approximately half of the branded ER market. In the second quarter, we reported record quarterly revenue for our pain portfolio, which grew 7% year-over-year. Each of our core pain medicines generated year-over-year revenue growth and continues to provide a strong foundation for our business, in line with our expectations. Our pain portfolio is highly differentiated with strong brand fundamentals. Belbuca remains the only long- acting opioid medicine that uses buprenorphine buccal film technology. In market research, it was ranked as the #1 branded ER opioid in terms of differentiation and favorability. Similarly, Xtampza, the only extended release oxycodone medicine that uses our proprietary best-in-class abuse-deterrent technology, DETERx, was ranked as the #1 ER oxycodone medicine in terms of differentiation and favorability. With exclusivity into 2027 and beyond, our pain portfolio is well positioned to generate durable revenues and cash flows in the near to midterm. Importantly, we believe the life cycle of these medicines may prove to be longer and more robust than is currently appreciated in the market. This has been another quarter of strong commercial execution. In the second half of the year, we remain focused on growing Jornay and delivering consistent performance from our pain business. I'll now hand the call over to Colleen to discuss financial highlights.

Thanks, Scott. Good morning, everyone. We delivered strong financial results in the second quarter, growing revenue 29% and adjusted EBITDA 9% year-over-year, while making targeted investments to drive continued growth in Jornay PM we generated robust operating cash flows of $72.4 million and executed our capital deployment priorities, including returning $25 million of value to shareholders through share repurchases and repaying $16.1 million of debt. Our strong performance enabled us to raise our 2025 financial guidance, which I will detail shortly. Financial highlights for the second quarter of 2025 include net product revenues were $188 million, up 29% year-over-year. Jornay net revenue was $32.6 million. Belbuca net revenue was $52.6 million, up 1% year-over- year. Xtampza net revenue was $52.6 million, up 18% year-over-year. Xtampza revenue for the second quarter did benefit from the timing of rebate settlements in the quarter. Nucynta Franchise net revenue was $46.4 million, up 4% year-over-year. GAAP operating expenses were $73.3 million, up 69% year-over-year. Non-GAAP adjusted operating expenses were $61.9 million, up 104% year-over-year. As a reminder, the increase in operating expenses reflects ongoing costs to commercialize Jornay as well as the targeted investments we've made to drive future growth, including the expansion of our sales force and recently launched marketing campaigns. GAAP net income was $12 million compared to net income of $19.6 million in the second quarter of 2024. Non-GAAP adjusted EBITDA was $105.1 million, up 9% year-over-year. GAAP earnings per share was $0.38 basic, $0.34 diluted compared to GAAP earnings per share of $0.60 basic and $0.52 diluted in the prior year period. Non-GAAP adjusted earnings per share was $1.68 versus $1.62 in the prior year period. Please see our press release issued earlier today for a reconciliation of GAAP to non-GAAP results. In addition, we generated $72.4 million in cash from operations and ended the quarter with $222.2 million in cash, cash equivalents and marketable securities as of June 30. As a result of our strong performance in the first half of the year, we are raising our 2025 financial guidance. We now expect total product revenues in the range of $745 million to $760 million, a $10 million increase compared to our prior guidance range, resulting in a 19% growth year-over-year. This increase is driven by our lead growth driver, Jornay and supported by continued performance from our pain portfolio. Based on strong performance in the first half of the year and our expectations for the back- to-school season, we now expect Jornay revenue to be in the range of $140 million to $145 million in 2025 compared to our prior guidance of at least $135 million. The performance for the remainder of the year will be driven by both demand and gross to net improvement, which are both positively impacted by the typical seasonality. We now expect adjusted EBITDA in the range of $440 million to $455 million, a $5 million increase from the prior guidance range and a 12% increase year-over-year. Adjusted operating expenses are expected in the range of $225 million to $235 million, a $5 million increase from the prior guidance range. This increase in adjusted operating expenses reflects ongoing targeted investments to support Jornay's 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 creating value for our shareholders through execution of our capital deployment strategy, which balances expansion through business development, opportunistic share repurchases and rapid debt repayment. In the second quarter, we returned value to shareholders through the completion of a $25 million accelerated share repurchase program. Additionally, our Board recently authorized a new $150 million share repurchase program, providing flexibility to repurchase shares through December 31, 2026, and reinforcing share repurchases as a key component of our capital deployment strategy. In the second quarter, we repaid $16.1 million of our term loan and ended the quarter with net debt to adjusted EBITDA leverage of approximately 1.4x. We expect to repay an additional $32.3 million during the remainder of 2025 and to end the year with net leverage of less than 1x. I will now turn the call back to Vikram.

Thanks, Colleen. We are pleased with our strong performance and execution of our strategic priorities during the first half of the year. We expanded awareness of Jornay, grew revenues for both Jornay and our pain portfolio, achieved bottom line growth and generated significant cash flows while also returning value to our shareholders. Our increased guidance ranges for revenue and adjusted EBITDA reflect our strong financial position and our continued confidence in the performance of our differentiated medicines. Looking ahead, we expect to benefit from the impact of our targeted investments in Jornay as well as durable performance from our pain portfolio. We remain focused on our capital deployment strategy to further expand and diversify our business while creating value for our shareholders. And importantly, we remain committed to improving the lives of patients suffering from chronic pain and ADHD. I will now open the call up for questions. Operator?

[Operator Instructions] And our first question is from the line of Les Sulewski with Truist Securities.

A couple for me. So what's the target goal for the number of additional prescribers that you expect for Jornay PM by the end of the year? And I guess, what percentage of the targeted prescriber base are already familiar with Jornay PM? And then maybe provide some additional color, if you could, around the progress on tapping into that adult population. And lastly, on Jornay, now that you're comfortable with the path for Jornay PM and the growing base of that product, how that's progressing, have you considered revisiting the $300 million to $400 million peak sales estimate? And then I have a follow-up.

Yes. Les, thank you for the questions. I'm going to let Scott take -- answer most of the questions on Jornay commercial performance. Maybe before I turn it over to Scott, let me just address the 300 to 400 the peak sales number for Jornay. As we've said before, what we'd like to do is see the impact of the performance of the expanded sales team of the targeted investments we're making in new marketing campaigns, then we can determine what the appropriate number would be. So we will revisit it at that time. And with that, I'll turn it over to Scott to address the other Jornay-related questions.

All right. Thanks, Les. So I'm going to try to catch them all here. So first, in terms of prescribers, I wouldn't say that we have a goal for prescribers. What we're focused on is continued breadth of prescribing. So the important thing is 26,000 this quarter, that's up 23% year-over-year. There's no sign of slowing down. We're seeing prescribers added regularly, and we would expect that to continue, frankly, for quite a few years to come. Remember, overall prescribing in this market, it's about 20,000 that drive 1/3 of prescribing, but there's hundreds of thousands of prescribers overall. So we'd expect that to continue to grow given our strong market access. In terms of awareness, we're continually trying to raise awareness. Where Jornay sits right now is it has strong awareness. In the recent ATU that I referred to, unaided awareness was just north of 50%. That only trailed Vyvanse and Concerta. So we're encouraged by that, but that also signals the room we have to go to continue to raise awareness. The adult question, really good question. A couple of things I want you to understand about adult, right, and the adult business. First, it's a large market and it's growing. Second, already Jornay has 20% of its business with adults. We know that methylphenidate overall skews towards use in pediatrics and is about 70-30. Jornay is at 80-20. So we expect it to continue to move in that direction. But there's key insights I mentioned related to the market research. What we're learning is the value proposition of Jornay is just as important to adults as it is to children or adolescents. Efficacy upon awakening throughout the day and into the evening is important for both patient types. And when you look at our 23% growth this quarter, the growth by type is this. We grew 21% in [indiscernible]. We grew 33% in adult. So we're growing across patient segments. We see opportunity within adult, and we'll continue to leverage that profile of Jornay to grow in both populations. So I hope that helps, Les.

Very helpful. And as my follow-up, maybe spend a little time, if you could, about further investments across the pain portfolio.

Yes. Thanks, Les. Again, I'll turn this over to Scott to talk about how we're supporting the growth in the pain franchise, which has turned out to be a very nice durable source of revenue for the company. Go ahead, Scott.

Yes, thanks. So in terms of investment on the pain business, I think what's great about it is it's a very durable business. And the investments we're making now are sound. So we have about 100 salespeople. Every year as part of brand planning, we check in on targets and what we need from an investment standpoint, and that's consistent. And so I don't see anything moving up or down related to those investments. Same with marketing, consistent spend, raising awareness, engaging HCPs. But again, we don't market directly to consumers on the pain opioid side. So those maintain kind of a steady lower spend compared to Jornay.

Next questions are from the line of Serge Belanger with Needham & Company.

This is John on for Serge today. Just wanted to touch on Jornay again here. So you expanded the sales force recently and you're now entering the busy season. Just wanted to gauge what's some of the specific levers are that you're looking to pull throughout the third quarter here that can really deliver and help out the top line. Also on the pain portfolio, you've mentioned improved durability across all 3 of the products. Just curious if anything has developed on the generic competition front, whether any recent ANDAs have been filed or whatnot?

Thanks, John. Appreciate the questions. I'll turn it over to Scott to address both on the Jornay and the pain side. Go ahead, Scott.

All right. So first, starting with the expansion. I'll just reinforce, the expansion is going really great. We're seeing great early indicators. We're reaching more targets at a greater frequency. And I think the key thing is in the second quarter, we saw 2,700 of those new targets wrote a prescription. So on track, heading where we expect it to be. In terms of levers in the third quarter and the back-to-school season, I'll reinforce what I said in my prepared remarks. This is all about two things: continuing to raise awareness among HCPs when it comes to acceptance and adoption of Jornay more broadly across their patient types and about raising awareness among caregivers and patients to drive them into the physician's office to ask about Jornay. What we know is when a physician is asked by a patient to try Jornay, they honor that request. And so we're excited about that. The back-to-school season is here, and we expect to see acceleration over the next few months. In terms of durability, we don't have any new updates in terms of durability of our profile, but I'll turn it over to Colleen if she wants to give any other color on generic entries and the durability.

Sure, John. Maybe I'll just give a reminder across the pain franchise that there is no party that has the necessary combination of all the ingredients needed to launch, and that would be regulatory clearance, legal clearance and manufacturing capability to launch competitive generics against any product in our pain portfolio. Specifically, I'll touch upon sort of the near-term questions, which are Belbuca and Nucynta. For Nucynta, Teva is the earliest potential entrant in January 2027 as they had previously entered in a settlement for that date. However, they do not have tentative approval and have relinquished their first filer exclusivity. Further, based on their own public statements, they may have a strategy that has shifted away from these types of products, lower volume and particularly in the opioid space. Alvogen is currently barred from the market until December 2032. And then the last ANDA filer on Belbuca is Chemo, and they have no approved product, and we have received 5 CRLs to date. So then if I shift gears to Nucynta, there are several ANDA filers across the franchise. However, based on our understanding, all potential entrants lack access to commercial scale quantities of tapentadol. And the only DMF producing at commercial scale is our exclusive supplier. So as a reminder, those potential dates for Nucynta are Nucynta IR at January 2027 and Nucynta ER at July 2027. But the question really becomes, will anyone have access to commercial scale. So we do see a longer and more robust tail possible with the pain franchise. Thanks for the question.

The next question is from the line of David Amsellem with Piper Sandler.

So a couple for me. First, Vikram, in your opening remarks, you described Collegium more expansively, -- in other words, not as a pain-focused company, not as a CNS-focused company. So I guess that sort of leads me to wonder the following, which is, how are you thinking about the kind of assets you're looking for regarding M&A or business development? And does that mean that you're not wed to pain/CNS? So that's number one. Number two is, are you squarely focused on a commercial stage asset or assets? And then as a corollary to that, at what point do you start considering a late-stage asset and ultimately with the idea of building a pipeline?

Thanks, David. I appreciate the question. I think in my prepared remarks, I described us as a leading diversified biopharmaceutical company. And I think that definition has -- we've been consistent with that. And I think we remain consistent with that. With that said, we continue to assess a wide array of potential BD opportunities. But I think we -- as I've said before, we remain very committed to being disciplined in our approach. I think as we have described before, we like the idea of leveraging our existing position within pain as well as within ADHD or psychiatry. As I've said before, with Jornay, we call on psychiatrists as well as pediatricians. So to the extent that we can leverage our investments and our infrastructure that is already in place, that would be our ideal target from a BD perspective. Again, with that said, we've also previously stated that we remain open to other ideas. But if we step outside of those two areas, we need to be extremely financially disciplined so that we're not giving up significant margin profile just for the sake of revenue. So I think no real change from what we have stated before as we look at the type of assets for BD. Your question -- your second question was around looking at noncommercial assets. I think we, again, consistently said that our focus is on commercial assets or, let's just say, commercial-ready assets, right? With the goal of reducing risk as much as possible. I think once we're at a point where we have expanded our commercial portfolio and we've gained a little bit more scale and size, I think down the road, we will -- we can revisit the idea of adding more pipeline or development stage assets. But I don't think we're necessarily at that stage yet.

At this time, there are no additional questions. Vikram, would you like to make some closing remarks?

Yes. I think just in closing, thank you, everyone, for joining the call this morning, and enjoy the rest of your day.