Mike Heffernan - President and Chief Executive Officer Paul Brannelly - Executive Vice President and Chief Financial Officer Barry Duke - Executive Vice President and Chief Commercial Officer.

David Amsellem - Piper Jaffray Tim Lugo - William Blair Serge Belanger - Needham & Company Ed Arce - H.C. Wainwright.

Good day, ladies and gentlemen, and welcome to the Collegium Pharmaceutical, Inc. Fourth Quarter and 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a remainder, this conference call is being recorded. Before we begin today's call, we wish to inform participants that the forward-looking statements made today are 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 to the risks that we will not be able to successfully commercialize or achieve the expected rate and degree of market acceptance for Xtampza.

Furthermore, we are subject to patent infringement litigation and may in the future be subject to additional litigation relating to our product candidates, which may be expensive to defend and delay the commercialization of Xtampza, or our other product candidates.

These risks and other risks of the Company are detailed from time 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. I would now turn the call over to Collegium’s CEO, Mike Heffernan. Sir, please begin..

Thank you. Good afternoon. This is Mike Heffernan, CEO of Collegium. And with me today is Barry Duke, our Chief Commercial Officer, who will provide an update on the commercial progress of Xtampza ER; and Paul Brannelly, our CFO, who will review Collegium’s annual and quarterly financial results. Just a quick recap of 2016.

We began the year with uncertainty as we were subjected to a 30-month stay in conjunction with a patent infringement suit filed by Purdue, which was resolved in February.

We received FDA approval in April and we launched at the end of June with a new hired sales force, calling for the first time on targeted pain specialists, hospitals and long-term care facilities. We had essentially zero pre-stocked pharmacies due to the nature of CQs [ph].

We had no contracted managed care lives and no promotional materials due to lack of FDA feedback until September. Today we’ve made significant progress.

We have over 3,000 pharmacies that have ordered Xtampza ER; over 2,000 physicians who have prescribed the product and over 61 million contracted lives, including an exclusive oxycodone ER contract with UnitedHealthcare.

We have seen excellent growth in the last few months, as we entered December with roughly 500 prescriptions per week, and today we are close to 1,200 prescriptions per week. Wholesale and pharmacy demand is also continued to increase. Barry will provide additional details regarding our commercial progress in a few minutes.

At the end of 2016, we had $153 million in cash, which provides us the resources required to continue to build and drive the commercial success of Xtampza ER. I’d like to make a few comments about the overall opioid market. As many of you know, there is a tremendous focus on opioid abuse from the media, as well as regulatory and governmental bodies.

In addition to the opioid abuse problem, it’s important to recognize that there are also large numbers of chronic pain patients that rely on opioid medication as a treatment of last resort that provides them the only alternative to lead a somewhat normal life.

The good news is that we have seen positive results from the multi-pronged strategy to address opioid abuse and misuse in ADF opioids, abuse-deterrent opioids that played a key role in this strategy, but in some cases the tactics that have been employed have prevented or severely hampered legitimate pain patients from getting medications they rely on.

For example, beginning of 2017, some payors have implemented arbitrary daily dose limits on extend-release opioids, while erroneously citing the CDC guidelines as a definitive reference.

Requiring these limits for a patient who has been adequately controlled on a maintenance dose of extended-release opioid for long period of time is extremely disruptive to the patient, and in a number of cases, leads to a negative unintended consequences, such as patients being converted to products like Xtampza ER or other ER opioids at doses lower than their current therapy to ensure that they are within the new guidelines, but also providing additional prescription for immediate release opioids to provide a bridge to their adequate pain relief.

The problem is that the IR opioids are not abuse-deterrent. They can be injected, snorted or even taken orally or diverted, defeating the purpose of converting patients to ADF opioids in the first place.

On the positive side, we are seeing increased acceptance of ADF opioids as part of the overall opioid abuse strategy, and abuse surveillance data continues to support broad adoption of ADF opioids by clinicians and payors.

Recent data demonstrates that increasing numbers of prescribers are acknowledging that all chronic pain patients should be considered for ADF products not just high-risk patients.

The key objective and challenge for us remains to differentiate the attributes of Xtampza ER versus the market leader, OxyContin, and to make sure that when a patient is prescribed Xtampza, it is available at the pharmacy and reimbursed by the insurance plan. This is an ongoing process.

As we move into 2017, our key objectives for the year are the following. Number one and most important, is to continue to drive market share of Xtampza ER, including pursuing label expansion with our filed sNDA to include head-to-head data versus OxyContin. This data tells a compelling differentiation story.

The PDUFA data for this submission is August 4, 2017. In addition, we continue to explore international opportunities for Xtampza in select high potential markets. Our NDS or New Drug Submission is pending at Health Canada and we should hear feedback by October of this year. We are currently exploring commercial partnerships in a number of markets.

We are also preparing for the launch of our second product, ONSOLIS, which is indicated for the treatment of breakthrough cancer pain. We continue to progress on required CMC related activities and currently anticipate filing a prior approval supplement with the FDA in Q3 of this year. We are targeting launch for the first half of 2018.

Importantly we recently had a new patent issue that covers ONSOLIS that will be Orange Book-listed and extend patent coverage to 2027. This adds significant runway to the product opportunity. The more we learn about this dynamic market for ONSOLIS, the more encouraged we are about the magnitude of the commercial opportunity.

There is a rapidly changing landscape in the TIRF market, especially as it relates to Subsys, the market leader, and we think this could provide an interesting opportunity for new product entrant, especially since ONSOLIS is synergistic with Xtampza ER with significant overlaps and prescribers and patient types.

And finally, we continue to search for and evaluate complementary products that would allow us to continue to leverage and grow our commercial organization. I’ll now turn it over to Paul to provide an update on our financial results..

Thanks Mike. Good afternoon, everyone. In the fourth quarter of 2016, we recorded net revenue of $1.3 million. Our gross-to-net discount was 46.4%, an improvement from 49.9% from the prior quarter. The improvement in our gross-to-net discount was driven by a decrease in our copay assistance program, which was partially offset by higher rebates.

In addition, our average WAC improved, as average daily dosage has increased.

During 2016, we shipped $8.2 million of Xtampza to wholesalers, but since we let the history required to estimate certain items including rebates chargebacks and returns, we currently recognize revenue based on the sell-through method, which is based on patient-level prescription data.

Therefore we’ve recorded $4.9 million of deferred revenue on our balance sheet as of December 31. Deferred revenue represents Xtampza shipments to wholesalers that haven't been recognized as revenue. Wholesalers now have under 25 days of inventory on-hand on average.

For the fourth quarter of 2016, our net loss was $27.6 million compared to $9.5 million for the fourth quarter of 2015, resulting in a net loss per share of $1.02 and $0.46 for the 2016 and ‘15 quarters, respectively. The increase in our net loss is primarily due to costs related to the commercial launch of Xtampza.

As of December 31, our cash balance was $153.2 million. This is an increase of $62.2 million from September 30, as a result of the net proceeds of $86.2 million from our fourth quarter follow-on offering. In the fourth quarter of 2016, cash used by operating and investing activities was approximately $23.6 million.

Based on our current operating plans, we believe that our existing cash resources, together with expected cash inflows from the commercialization of Xtampza are sufficient to fund our operations since 2019. I will now turn the call over to Barry Duke for commercial updates..

Thanks Paul. As Mike indicated earlier, I'll provide some additional details on our commercial progress since our last call. We ended 2016 with 1,600 prescribers, who had prescribed Xtampza ER at least once. Through mid-February, of those 1,600 prescribers, 80% have written for Xtampza more than once and 50% have written five or more prescriptions.

Our average prescriptions per prescriber at the end of 2016 was 5.5 and that number continues to increase. We have observed that once a prescriber writes for Xtampza, he stays with the product. Thus our challenge is to continue to broaden the breadth of prescribers.

To that end, during the first quarter of 2017 through mid-February, we have added over 800 new prescribers to the 1,600. Our average prescriber has now written 6.3 prescriptions.

As we track our prescription progress launched to-date, we have grown Xtampza 148% in the last 13-week over 13-week period or rolling quarter-over-quarter and 26% in the last five-week over five-week period.

While the overall extended release opioid market is down 6% in the past year 2016 versus 2015 and the overall number of prescribers is declining, the market opportunity remains large at over 24 million prescriptions annually.

The 10,400 prescriber targets on whom we are focusing, who represent 60% of the extended release branded market, so steady prescribing levels. That is there is no big decrease in their prescribing levels.

As the branded extended release opioid prescriber base consolidates, we’re confident that we are targeting the right prescribers who represented ever increasing portion of the large extended release opioid market. As we moved into January, the formulary changes at UnitedHealthcare have been an important focus for our commercial team.

As a reminder, effective January 1, Xtampza is now one of three preferred brands that means it requires no step edits through other products and OxyContin is NDC-blocked and not reimbursed at UnitedHealthcare. Our progress there has been steady week-over-week growth. We are tracking ahead of our internal forecast at UnitedHealthcare.

Although that progress has not been without complications, this formulary changes UnitedHealthcare related to extended release opioid dosage limits for all extended release opioids products has created some confusion and challenge for providers in managing the new product authorization requirements, resulting in delays and prescription processing.

We are pleased with our early progress at United and expect our patient volume to continue to build there as providers continue to transition patients to Xtampza and work through these new prior authorization requirements.

Overall our managed care position continues to improve, as our coverage in the commercial portion of the market is now 90% of covered lives. Of course, not all of that coverage is unrestricted and we will continue to work to limit and minimize restrictions.

As a reminder, effective January of 2017, we are now a preferred product at Cigna on its commercial formulary, and in addition to our UHC or United Healthcare focus, are highlighting this opportunity in our commercial activities. Part-D formulary access continues to be limited.

There are more than 50% of prescriptions Xtampza claims for Part-D patients have been paid. We are working diligently to gain access to some Part-D plans in 2017.

Additionally Xtampza has now been purchased in well over 3,000 pharmacies, expanding fulfillment options for providers and patients, which have been a more significant challenge during early months of launch. We continue to believe in the strategic and business potential of our long-term care and hospital businesses.

To that end, we have created a separate business unit for those channels and have put one of our executives, Doug Carlson, our Vice President of Corporate Development in charge. A few notable highlights, first in the long-term care channel.

We continue to see strong uptake driven by long-term care prescribers servicing both regional and national senior care nursing facilities. Just recently we signed an agreement with a national nursing home chain, which owns over 180 facilities. We expect to collaborate with more regional and national chains throughout the year.

Within the hospital channel, we continue to make progress with formulary inclusions and health system contracts. We expect to see significant additional uptake through remainder of the year in both channels. Finally, we are in early stages of our trajectory with Xtampza ER.

As we just began to gain access to and utilize our promotional tools mid-fourth quarter of 2016, we will continue to tweak and add to our commercial approach as we progress through the first half of 2017.

We will continue to look at enhancing and optimizing our coverage model for the 10,400 physicians, whom we target, ensuring that we can execute with the right reach and frequency to drive adoption. Where we have favorable access and target density, we would deploy new headcount as appropriate to ensure we can take advantage of these opportunities.

We have recently added new internal strategic roles in marketing, market access, and national hospital account management to support our growing business. With our continued improvements in managed care coverage, fulfillment and commercial execution, we’re confident in our ability to accelerate Xtampza ER prescription growth throughout 2017.

I’ll turn it back over to Mike..

Thanks, Barry, and thanks, Paul. We’ll now open it up to questions..

Thank you. [Operator Instructions]. And our first question comes from David Amsellem with Piper Jaffray. Your line is now open..

Thanks. Just a couple of questions. So first just regarding the dynamics with United and maybe other payors.

Can you talk to the extent to which patients are having to step through other opioids that are generically available ER opioids, like morphine sulfate and is - or step edits and specifically part of the challenge in terms of uptake? That’s number one.

And then secondly, any latest thoughts on how to think about gross to nets, the spread between growth and net sales as 2017 progresses? I think you had originally said last year, it would be in the 40s. Is that still the case or something different? Thanks..

Yes. Thanks, David. This is Barry. I’ll take the first question on step edits at UnitedHealthcare. So as you recall, Xtampza doesn’t - you don’t have to step through other products other than basic immediate release opioids. So that’s not the issue.

The real issue this causes a lot of the challenge with the new prior authorizations at United is related to the maximum daily dosage limits. So they have anchored to the CDC guidelines of 90-milligram morphine equivalent dose as is maximum daily dose.

And as we estimate that probably 35% to 40% of the patients there on OxyContin were probably above that dose, that daily dose.

So if those patients are being transitioned over to products like Xtampza, it’s creating a lot of confusion as physicians are trying to move those patients over at equivalent dosages and are getting rejections or denials on their prior authorization. So it’s taken some level of education to get the physicians comfortable with that.

We do believe and we’ve heard stories that patients are taking up to three weeks in some cases to get through prior authorization. So we believe there continue to be patients out there that haven't been fully transferred over to an extended release product.

And maybe as Mike indicated in his opening comments, maybe on immediate release opioids or something else trying to manage that while they are working through the prior authorization. So that’s kind of where the real hiccups, I guess, have been. And I think Paul is going to take the GTN question..

Yes, for gross-to-net discount, nothing has changed in our thoughts here. Through the launch, we’re going to be in the mid-to-high 40s for gross-to-net discount. When we get through the launch, we would expect it to be in the mid-to-high 30s..

Okay. Thank you..

Thanks David..

Thank you. And our next question comes from Tim Lugo with William Blair. Your line is now open..

Thanks for the question. So you mentioned the 90 morphine equivalent units was causing some disruption. However I think in your prepared commentary, you also mentioned that you were doing better than internally expected at United.

Can you reconcile those two statements, and for those of us who watch the weekly scrips, can you just tell us what we’ve been seeing over the past several weeks and maybe what we should expect over the next couple weeks? I think most of us were obviously expecting a steeper ramp as of now..

Tim, this is Barry. So yes, as you know we don’t give specific guidance on what our expectations were, but we have forecasted there would be a little bit of a build as we move through. So we have never internally expected that we would get OxyContin patients or what we’re going to get from United early on.

So we’ve had sort of our own forecast build that that’s going to take a little time and effort. So yes, we’re actually - that’s why we’re actually pleased based on some of the challenge we’ve heard that providers and patients are working through that we’ve actually ahead of where we had actually forecasted.

So we continue to think that they are going to be more and more patients that will be able to move to Xtampza again as they work through some of these challenges..

Okay.

And these patients are switching on - is that going to be a benefit in terms of gross net because they are on higher average doses, or will that be more of a drag because of the concessions made to United and Cigna?.

Tim, this is Mike. So it’s push/pull, right. As the doses go up on a per prescription basis, we are seeing that the United prescriptions have a higher dose, and for lot of the reasons that Barry mentioned, is a large number of the OxyContin patients who were treated for a long period of time were on much higher doses than 90 morphine equivalents.

And so they are getting moved over and there - we’re familiar with large numbers of patients who are stuck in, what we call, prior authorization purgatory, as they work through rejections of the PAs and the doctors have to justify medically why they need a higher dose. So we are seeing higher doses in the United patients.

And as you know, we are paying a rebate against those as well. So it really kind of evens itself out..

Okay. And maybe can you give us an update on how you’re doing with stocking of pharmacies? I know that that is always a bit of a struggle early on, especially in this class. I believe the last time I spoke with you guys, you mentioned you had one pharmacy approve ZIP code.

Is that still the case? Is that improving? Is that - or do you feel like you’re at a sufficient level?.

Yes, the challenge of stocking pharmacies is an ongoing challenge that will continue. As Barry mentioned, we have almost 2,400 physicians that are writing prescriptions now or had written a prescription to-date.

And so that requires each time a prescription is written of a pharmacy has not gotten a prescription yet, then we need to stock them and there is a process for that. So that’s going to be a continued ongoing process.

Where we have physicians and we now have a number of physicians on average who write over six prescriptions they’ve written to-date, where they’ve already created a local network with stocked pharmacies and so on, it becomes less of an issue.

But we still spend a fair amount of time of our sales rep time doing calls to non-physicians, working through the PA process with the ancillary staff within the office, as well as talking to the pharmacies to make sure that it’s available. That’s only going to get better as time goes on. It’s better than it was.

Certainly better than it was three months ago, and it gets better every week when we add new pharmacies to the network..

Okay. Maybe one last question.

Can you just update us on the institutional side, maybe some progress you’ve made there or when you believe that will be material portion of the revenue?.

Yes, again, as we’ve mentioned before, we don’t believe it’s a material portion of the revenue for good portion of this year.

It’s really an investment in both our retail business from an opinion leading standpoint, as well as the continuum of care, where we see the patients go from hospital to nursing home to outpatient with many of the same doctors making those particular decisions.

So as Barry mentioned, we just signed our first national chain contract and long-term care. That will be a desire to convert that - those 180 homes to Xtampza, and the sales cycle for this side of the business, both on the institutional and long-term care side, is longer, and there is a process for that.

So we continue to make good progress there and we won't break out the sales for that institutional business, so probably second half of the year where we have more significant business to report..

All right, thanks..

Thank you. And our next question comes from Serge Belanger with Needham and Company. Your line is now open..

Hi, good afternoon. Just a couple of questions.

I guess, first, do you expect to enter into additional formulary agreements in the near future, and what is your target in terms of covered lives for midyear and even the end of this year?.

This is Barry, Serge. So yes, we have a lot of ongoing discussions regarding additional formulary. Again we - as I indicated in my prepared remarks, we’re really focused on Part-D right now as a priority. And so hopefully we’ll have some news as we move forward. We’ll certainly communicate that as we get it.

With 90% coverage, again the goal really is not - we have pretty good coverage now within commercial that the key issue is, as you know, is not all that coverage is unrestricted and our goal is to be an unrestricted tier-three position on most of the formulary.

So we still have some work to do there on the unrestricted side and I think that’s where our focus will be throughout 2017..

Okay. And then in terms of the Xtampza label, it looks like it was revised recently in December.

Also wanted to know what kind of label update do you expect in August with the sNDA?.

Yes, so I can speak to the first question. There was a class-wide change for all ER opioids and Xtampza was subject to that as well. So we made the required class-wide changes, which were additional warnings and safety messages across all opioids. As it relates to our sNDA, we’re not prepared at this point to talk about specific changes to the label.

In general, we would like to have some head-to-head OxyContin date in the label. We’ve published the first study. We did a second replicate study. As we reported, both were very consistent and showed a significant advantage of Xtampza when crushed versus intact versus OxyContin. Again the reason OxyContin has a black box warning and Xtampza doesn’t.

So that’s the type of data that we would like to get in the label and allow us to broadly broadcast that to clinicians..

Okay. One last one.

With Endo’s Opana going in front of an AdCom, I think it’s early next week, anything to gain from that in terms of what they are seeking for label expansion or how the FDA is evaluating their proposal?.

Yes, we’ve watched it closely. We don’t have a public opinion at this point in time in terms of what we think is going to happen but it’s obviously an important conversation. There is over 500,000 prescriptions for Opana ER not counting to generic every year in the United States.

And so there is very large implications if the FDA were to take action on the product. We’ll know, like everybody else, at the end of the day Tuesday, what the AdCom decides and then we’ll go from there..

Thank you..

[Operator Instructions]. Our next question comes from Ed Arce with H.C. Wainwright. Your line is now open. If your phone is on mute, please unmute it. Mr. Ed Arce, if your phone is on mute, please unmute it..

Sorry about that. Hi guys..

Hi, Ed..

Thanks for taking my questions. Apologize if there is any background noise. First question is around the recent launch or re-launch with marketing materials that you had mentioned earlier. It’s only a couple of months in.

Maybe you could talk to us about - although it’s early on - what’s working well so far, what maybe is still in development? What do you see that’s really resonating so far?.

Okay. Hi Ed, this is Barry. I’ll take that one. So as you recall, when we launched the product, we basically launched with a package in back in June of 2016.

So as we got feedback from the FDA, we’ve been able to put together of course more customized sales aids for each channel, and as we’ve been out in the field, we’ve been able to actually even learn further as physicians have reacted, we have done some market research.

So we’ve been able to shape our messages a little bit tighter and better based on what physicians who have responded to the product early adopters and so what attracted them to the product. So we’ve been able to shape our sales aids. Secondly we’ve been able to activate some online presence. We had our Xtampza ER website.

We couldn’t put that up until after we got that feedback from the FDA. So we’ve had that up as well and we’re doing some non-personal digital promotion as well that is beginning to resonate. And then I’d say the third element of our promotion materials is really the ability to speak to our peer to peer programs.

That’s a really important with a newly launched product for physicians to hear from their peers. So we did a lot of programs right at the very end of 2016 that will continue in 2017..

Okay. It’s great. Other question is around the sNDA that’s coming up.

Is there perhaps any expectation that that could come in significantly earlier than the PDUFA date?.

I think the expectation is August 4. If you follow this division closely, they missed more dates than they beat. So I would not expect it to come in early..

All right, great. I’ll get back in the queue. Thanks..

Thank you. I would now like to turn the call back to Mr. Mike Heffernan for any further remarks..

I’d like to thank everyone for joining the Collegium conference call today. We will continue to keep you updated on our progress. Thank you and have a good day..

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day..