Mike Heffernan - CEO Paul Brannelly - CFO Joe Ciaffoni - COO.

David Amsellem - Piper Jaffray Ken Trbovich - Janney Montgomery Scott Serge Belanger - Needham & Company David Steinberg - Jefferies Kevin Kedra - Gabelli & Company Ashiq Mubarack - William Blair.

Welcome to the Collegium Pharmaceutical's Third Quarter 2017 Earnings Conference Call. Before we begin today's call, we wish to inform participants that the forward-looking statements made today are pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

You are cautioned that such forward-looking statements involve risk and uncertainties, including without limitation the risk that we will not be able to successfully commercialize Xtampza.

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

These risks and other risks of the Company are detailed from time to 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. You may begin, sir..

Thank you. Good afternoon, and welcome to the third quarter Collegium earnings call. This is Mike Heffernan, and today I'm joined by Paul Brannelly, our CFO; and Joe Ciaffoni, our Chief Operating Officer. We will provide insight into our recent progress and our third quarter financial results. Overall, we had an excellent quarter.

The Xtampza ER momentum that began at the end of the second quarter has continued, and we finished the quarter with 27,713 prescriptions written by 3,900 healthcare professionals. Prescriptions grew 49% from the prior quarter, which is up from 34% growth from the first to the second quarter.

Through the third quarter, there has been 60,000 prescriptions written for Xtampza ER this year. The continued growth is fueled by improved operational execution. And Joe will provide additional insights in the commercial progress in a few minutes.

After a short one-day delay, we were very pleased to announce yesterday that the FDA approved our sNDA for Xtampza ER.

There are three components to the approved label enhancement, including comparative study data demonstrating that Xtampza's pharmacokinetic profile stays in tact after crushing as opposed to crushing OxyContin, which results in the loss of extended release properties and it becomes bioequivalent to an immediate release oxycodone.

This has potentially important implications for patient safety as well as abuse, misuse, and diversion. In addition, new data from an oral abuse potential study that was completed after the initial approval of Xtampza ER was added to the label.

This data demonstrates that there is little to no increase in drug Liking or the desire to Take Drug Again, the two key study endpoints when Xtampza ER is chewed by recreational drug abusers versus taking the drug as it is intended.

The abuse deterrent summary section now also includes labeling that states that Xtampza ER has the physiochemical properties that are expected to reduce abuse via the oral route. Xtampza ER is the only single-agent oxycodone with this labeling regarding oral abuse in addition to IV and intranasal abuse claims [ph].

During the past few months, we have also strengthened our balance sheet with the addition of $32 million raised utilizing our ATM. This additional capital will serve to strengthen our balance sheet and add flexibility as we move into 2018 and beyond.

I would also like to address the ongoing DO [ph] epidemic in the U.S., with the needs of the chronic pain patients on one side and the prescription opioid on the other.

At Collegium we are intensely focused on advocating for balanced and comprehensive pain management, which means that opioids should only be prescribed for chronic pain patients that have adequate trials of all appropriate non-opioid options. If a patient is prescribed an opioid it should be at the lowest dose for the lowest duration possible.

Should a prescriber and patient decide that an extend release opioid is the appropriate treatment an abuse-deterrent opioid should be used in all patients, not just those perceived to be at high risk for abuse. This ensures the safest possible opioid exposure.

Drug diversion of legitimately prescribed prescription opioids is the precursor to much of the abuse in the U.S., and abuse-deterrent opioids provide the best protection that is currently available to address this issue.

We are proud of the contribution that Xtampza ER has made to addressing this DO epidemic, and are pleased that the uniqueness of the product is being increasingly recognized by payers as evidenced by the recent announcements by Cigna and Florida Blue regarding Xtampza ER replacing OxyContin on their commercial formula as beginning in January of 2018.

FDA Commissioner, Dr. Scott Gottlieb, was recently quoted as saying that the FDA strongly supports the transition from the current market dominated by conventional opioids to one in which the majority of opioids have meaningful abuse-deterrent properties.

We expect that the market will continue to evolve in this direction through regulatory initiatives as well as market forces such as state-based policies, payer formularies and policies, and a growing prescriber recognition that abuse-deterrent opioids are an important component of the overall solution to stem the epidemic of prescription opioid abuse.

A recently completed market research study found that 73% of our target pain physicians agreed that abuse-deterrent opioids should always be used if all things are equal. This is very encouraging evolution of the acknowledgement of the value of abuse-deterrent opioids, and we expect this will continue.

I'll now turn it over to Joe to provide a commercial update..

Thanks, Mike. In Q3, the Collegium team generated momentum with Xtampza ER through improved operational execution. Key drivers included a focus on quality message delivery and resource utilization, better coverage of our target audience of approximately 10,000 predominantly pain management specialists.

As a reminder, our target audience covers approximately 60% of the branded ER opioid market and their prescribing has remained relatively stable throughout 2017.

Pull-through of our broad managed care access inclusive of strong positions at United Healthcarecommercial and Humana D, conversion of appropriate Opana ER patients forced to find a replacement therapy. Noteworthy accomplishments for the quarter included total prescriptions up 49% Q3 versus Q2.

Xtampza ER continues to be the fastest growing established branded ER opioid. Unaided awareness of Xtampza ER improved 27% amongst our target audience. Over 1,200 HCPs prescribed Xtampza ER for the first time in the third quarter. Launch-to-date approximately 5,300 HCPs have prescribed Xtampza ER.

The number of prescriptions per prescriber has continued to increase every quarter since launch. Xtampza ER is now the number one prescribed branded ER opioid at United Healthcarecommercial with a 30% market share, and market share at Humana D grew to 8.8%, up eight percentage points since being added to formulary in June.

On a weekly basis Xtampza ER captured approximately 7% of patients being forced to convert from Opana ER. Progress was made in removing non-clinical barriers as paid rates in commercial and part D improved to 86% and 84% respective, and pharmacy availability continues to improve too.

I want to take a moment to thank and recognize my colleagues at Collegium for the effort that they put forth every day, and for their commitment to making a positive difference in the lives of people living with chronic pain and the communities that we serve.

In Q4, the team will remain focused on generating momentum with Xtampza ER through stronger operational execution. We are encouraged, but not satisfied with the progress that we made Q3. A strong finish to 2017 will fuel a strong start to 2018.

We're making progress in key areas as we strive to set the foundation upon which we will accelerate Xtampza ER in 2018. Specifically, in January, we will launch a new promotional campaign that frames the issues of abuse, misuse, and diversion, focuses on our novel DETERx technology, and differentiates Xtampza ER from the other ER oxycodones.

We will make a significant investment in non-personal promotion to help drive awareness of Xtampza ER, and we will start the year with stronger formulary positions at Cigna, Humana D, and United Healthcarecommercial.

In addition, we have secured new exclusive ER oxycodone formulary wins at Florida Blue, Humana Commercial, Navitus, and UPMC commercial, and Part D. Our payer team remains focused on strengthening existing formulary positions and securing new exclusive ER oxycodone opportunities.

Finally, we're improving key processes and systems to enable stronger execution. Together, the Collegium team is striving every day to get better and to get stronger.

We believe that we can generate momentum with Xtampza ER the remainder of 2017 through stronger operational execution, while simultaneously taking focused actions to be positioned to accelerate in 2018. I will now turn the call over to Paul to discuss our third quarter financial results..

Thanks, Joe. Good afternoon everyone. In the third quarter, we recorded net product revenue of $12 million. In prior quarters, we recognized revenue based on the sell-through method. Beginning in the third quarter, we determined that we had the sufficient experience with Xtampza due to selling method.

Therefore, we now recognize revenue based upon shipments to wholesalers. Net product revenue for the quarter included a one-time pick-up of $4.4 million related to amounts that were previously recorded as deferred revenue as of June 30.

During the third quarter, wholesaler's average days of inventory on hand decreased from approximately 20 days to only 16 days as of September 30. With the change to the selling method, our gross to net discount now includes an additional reserve for estimated product returns.

As a result of the inclusion of the reserve for estimated returns which was not included in prior period gross to net calculations under the sell-through method, our gross to net discounts increased to 54.1% for the third quarter from 52.2% for the second quarter.

With the switch to the selling method for the nine months ended September 30, our gross to net discount was 54.4%.

For the full-year 2017, we estimate that the gross to net discounts will be in the range of 55% as improvements in our gross to net discounts throughout the first-half of 2017 are partially offset by the effects of our change to the selling method.

Under the selling method, our gross to net discount includes the reserve for estimated returns as well as earlier recognition of other gross to net adjustments.

For the third quarter of 2017, our net loss was $13.3 million compared to $26.4 million for the third quarter of 2016, resulting in a net loss per share of $0.45 per share and a $1.13 per share for the 2017 and '16 quarters respectively. The decrease in our net loss is primarily due to an increase in net product revenue for Xtampza.

As of September 30, our cash balance was $107.6 million, down from a $111.2 on June 30. During the third quarter, cash used by operating activities was $12.6 million, compared to $17.5 million in the second quarter, and $23.7 million in the first quarter.

As Mike mentioned in his comments, we used our ATM facility during Q3 and early in the fourth quarter. In total, we raised gross proceeds of $32.2 million, and an average price per share of $10.95. Gross proceeds of $9.8 were received prior to the end of the third quarter.

Based on our current operating plans, we believe that our existing cash resources including ATM proceeds received in October 2017 together with expected cash inflows from the commercialization of Xtampza are sufficient to fund our operations into mid-2019. I will now turn the call back over to Mike..

Thanks, Paul. I'll now open it up to questions..

[Operator Instructions] Our first question comes from David Amsellem of Piper Jaffray..

Thanks. So I just have a couple; first, regarding the Cigna contract that you negotiated, can you talk about how that may have an impact on gross to nets in 2018, given that there is lower pricing at certain higher doses or beyond the certain dosing threshold? Just help us understand the mechanics of that.

And secondly, do you think that that's a potential template for other contracts that you're looking to negotiate? I wanted to get a sense of how influential that might be in terms of contracts going forward. And then the last question is just on the Opana switch.

Can you give us a sense of how much more in the way of patients and volumes you can capture? There still seems to be sizable volumes being written for Opana. So maybe talk about how much more of an impact we could see from that as we move through the end of the year? Thanks..

Great. Thanks, David. This is Paul. I'll take the first part of the question, and then hand it over to Joe or Mike. So as far as gross-to-net, the Cigna contract fits in with our prior guidance with -- in our current guidance on gross-to-net.

So it's an innovative contracting strategy for us, but it doesn't change anything in the overall mix of our gross-to-net..

And David, this is Joe. With regards to your question as to whether or not it is a template that we think about utilizing with customers. The way I would respond to that is, the first thing is that became public that it did is it kind of flipped the table in that it evoked interest.

A lot of payers reached out to us, because, as you know, that's something that all of them are interested in, to have a discussion around a value-based contract. Now, as of right now, the only one that we have in place is with Cigna.

The other thing that I think is important, and this was even in the Cigna press release, and we see this happening in our discussions with the payers, is that people are starting to recognize that Xtampza ER and the potential of the DETERx technology.

And what we're finding is the more that they learn about it, the more that we're able to talk about it. I think the approval of our sNDA only strengthens the message, the more interested they are in Xtampza ER overall.

So as I said in my comments, we continue to work and stay engaged with payers to both strengthen existing formulary positions and also to secure new exclusive oxycodone ER wins. With regards to Opana ER, we see that winding down. Right now, on a weekly basis, I think prescriptions are under 2,000.

And what we've seen consistently on a weekly basis is we're capturing about 7% to 10% of the patients that are converting, which I would say we're encouraged by, but certainly not satisfied from that perspective. We're encouraged because it's about three to five times our overall market share on a weekly basis, so we're punching above our weight.

But certainly as it continues to wind down through operational execution, want to capture a higher percentage. And then the final point I would make on Opana ER that we believe that is really important is it serves as a dramatic example to the marketplace that all abuse-deterrent formulations are not the same.

And the second thing that it does is it creates a positioning opportunity for us because a lot of patients that transition from IR oxycodone in particular that were looking at a product potentially with abuse-deterrent attributes transition to Opana ER.

And we believe for the appropriate patients, that presents a mid to longer term opportunity for Xtampza ER. Thanks for the question..

David, this is Mike. I'll add one other thing to that, and that's there's still 30,000 prescriptions a month for oxymorphone ER generic, which as most people know, have no abuse-deterrent qualities at all.

There's been recent discussion that's been written about from the FDA and others who are going to look at whether that product should come off the market as well. At the FDA Adcom [ph] on Opana ER it was actually admitted by the FDA that there's more abuse with the oxymorphone ER generic than there is Opana ER.

So we could have another opportunity to go after the oxymorphone ER patients, but that's yet to be seen..

Mike, if I may just put in a follow-up on that point. It's a good point you raised about the non-substitutable generic.

Is there anything in your own intel that suggests that there could be another Adcom focus squarely on that product or anything at all that will lead you to believe that we're going to see an outcome similar to what happened to endo [ph]?.

Yes, I mean, I'm not sure about an Adcom, but I think it was just this past week the FDA commented, I believe it was Scott Gottlieb commented on the need to review oxymorphone ER and the abuse potential of that product.

So I think it's on the radar screen of the FDA, but I think it's too early to tell and predict of when and where, and how any action will be taken against it..

Got it. Thanks..

Thanks, David..

Our next question comes from Ken Trbovich with Janney..

Thanks, and congratulations on the good quarter. And I'm trying to better understand in the context of the quarter sort of the difference here between the increase in the gross-to-net discount and the higher revenues.

Can you maybe give us a sense for what those prescriptions are looking like, and how it is that that's translated into the revenues that you reported for the current quarter..

Yes, I think the increase in revenue, basically gross revenue, is driven by the fact that we had a 49% increase in prescriptions quarter-over-quarter. I mean, that's really what drives performance. I mean, we had a one-time effect, as Paul mentioned, a $4.4 million.

But the fact of -- the real key news of the quarter was the increase in prescriptions which drove increase in gross sales, which then even with a slightly higher gross-to-net came in at a net sales number that was significantly higher than the prior quarter..

Yes, and Ken, I'll one thing to that. With the average days on hand that wholesalers being down at 16, that's probably a little bit lower than we'd like as well. So it's definitely not a lot of inventory out in the channel..

Yes, and I guess that's the reason for my question, right, because the reduction in channel inventory would have argued for perhaps a slightly lower number.

And I'm trying to figure out if we're seeing a higher number of pills per prescription or what might account for some of that difference that obviously wasn't negative; it was a positive in the quarter..

Yes, so doses and pill per prescription are relatively flat. It's really driven by increased volume in prescriptions..

Okay.

And then just with regard to the improvement on the United Healthcare plan and being able to be on tier II, is that something that came at a cost, back to that discussion again about how we should be looking at '18, and can you give us a sense as to whether or not you think you might be able to see similar things with other payers next year, maybe mid-year on those cycles?.

Yes, Ken, this is Joe. We obviously don't comment on anything that is competitive associated with our contracts. What we feel good about is we've essentially replaced Opana in that tier II position.

And we believe that that in 2018 will enable us to continue to grow and capture patients that are appropriate, that are transitioning from the IR market over to an extended release opioid..

Yes, Ken, I'll add one thing to that. I mean, one of the things that you see is an evolution of payer relationships, as Joe talked about before. We started our relationship with Cigna by getting added to their list in January of '17. But January of '18 we are moving to exclusive.

With United, we started exclusive in January of '17, and now we're moving to tier II in '18. And in Florida Blue, where we got added in July, we became exclusive in January. So what you're seeing, to Joe's point that he made earlier, is an improvement in our formulary position as payers get more aware of the uniqueness of the product..

Yes, and Ken, one last point on United and tier II. So we have a very generous co-pay card program for patients under commercial plans. So if we're paying for improved access and get to tier II or III there's an offset there with a co-pay card program as well. So it would fit in with whatever guidance we've given in the past..

Okay. And then Joe, just one last quick question for you on the ability to get new healthcare providers to prescribe for the first time, obviously you highlighted that there were 1,200, I guess, on top of the 4,100 you had previously.

Can you give us a sense for the history of the prescribing patterns for the fully [ph] 100, you know, how long after they've written for the first time before they write, and how many of those sort of become true believers and start to exclusively write or at least write on a higher proportion going forward?.

Yes, so Ken, it's a great question. We actually just did a fair amount of work on this. So what we've learned is on average it takes about eight calls to covert somebody to be a prescriber.

And what's interesting, and I'll put it in the context, people should understand, this is still a brand at this point in the launch that has relatively low awareness. So although we've improved the awareness by 27%, our overall unaided awareness with our target audience is 47%.

The reason I make that comment is once somebody prescribes it is important and we can see it in our analysis and segmentation that we continue to maintain a high level of frequency on those prescribers.

So there is a lot of work to do to continue to build brand equity and loyalty with people who have converted, and that's a big focus of ours as we move forward. While at the same time, we need to continue to add new prescribers to Xtampza ER. And I could tell you a couple of things that we know that are really important.

If you look at awareness, unaided awareness overall is 47%. With our prescribers, it's 61%. With physicians who haven't prescribed in our target audience it's 32%. The other thing that is really important for us, and is really a big part of our focus is physicians who have a concern.

All physicians recognize to some degree that abuse, misuse, and diversion are an issue. It's the magnitude of that concern that determines who it is that's likely to write Xtampza ER, or for that matter any abuse-deterrent product.

And then the second thing that really matters which gets to our focus on execution from a message delivery perspective, is those physicians who believe that Xtampza ER and the DETERx technology is comparable or that all ADFs are the same, are less likely to adopt Xtampza ER versus those prescribers that truly understand the DETERx technology and believe in its potential.

They are more likely to prescribe for the first time, and continue to prescribe. So that's our focus from an execution perspective, along with continuing to remove the non-clinical barriers. And it's the combination of those factors that drive people to prescribe the first time, and to keep them on track..

Okay, terrific. I'll just back in the queue. Thank you..

Thanks, Ken..

Our next question comes from Serge Belanger with Needham & Company..

Hi, good afternoon. I have a couple of questions.

First on the 3Q results, can you just talk about maybe the impact of the hurricanes? I know you have a significant business via Florida Blue that may have been impacted?.

Okay. Thanks for the question, Serge. And you're right on both fronts. Florida is a significant driver of our business. What we saw with the hurricanes is basically the week preceding, and for about two weeks after the hurricane as the State of Florida was recovering.

We saw a negative impact on prescriptions, but then it bounced back to where it was, and we're actually continuing to grow and progress our business in Florida. So we're very encouraged by what we're seeing. So we didn't see any sustainable impact. And it snapped back in total probably about a three-week effect..

Okay. And then in terms of formulary wins, obviously you've notched some pretty key wins over the last months and the last weeks.

Can you just give us an overview of where you are in terms of the percentage of lives covered on both commercial and Medicare plans, and what additional work needs to be done there, I guess, in 2018?.

Yes, so to answer your question, Serge, I think right now for us we're very encouraged about the lives that we have covered and the new opportunities that we've added. If you look in terms of the lives of the positions that we've strengthened, it's approximately 30 million lives.

And the additional lives we've added is probably about another 5 million lives overall within this space. So our focus is two-fold. One, we feel good about where we are, and we have plenty of work to do from a pull-through perspective.

The second comment I would make is we believe that the wins that we have also have spillover impact, and they also are driving additional interest into conversations about Xtampza ER on other formularies. So we continue to work it on all fronts..

Okay. One last one and I'll get into queue.

On Onsolis, is that still on track for a mid-'18 launch, and maybe if you can give a little more color on some recent developments in that market?.

Yes, Serge, this Mike. Onsolis is still -- the key challenge for Onsolis is the tech transfer of Onsolis, and we continue to work on that process. The next step will be the filing of a prior approval supplement with the FDA, and that remains on track. Our plans for specific launch plans and so on are still being worked on.

And we are going to be launch ready by mid next year. The product should be launch-ready by mid next year. Clearly the turf market has faced its challenges, but we do think that there is still an interesting opportunity for patients who have breakthrough cancer pain. So we continue to work on the product and as of this point, no change..

Okay. Thanks, and congrats on the recent progress..

Great. Thank you..

Our next question comes from David Steinberg with Jefferies..

Yes, thanks, and good afternoon. I had a couple of questions. The first is with the deferred -- your gross margin was far higher than in previous quarters, I think like mid-90s. I assume it's because the deferred revenue had no costs against it.

If that's the case, what would've been your gross margin? And then secondly, there's been lots of discussion and publicity about the opioid commission and Chris Christie and all the things that are going on in Washington, D.C., I was just curious, does Collegium have a seat at the table? If so, how involved are you given your abuse-deterrent formulation? And do you think there'll be any results coming out of this commission that would be beneficial to the company? Thanks..

Hi, Dave, this is Paul. I'll take the first part about COGS; I don't think Mike wants to answer that one. So for COGS, in the long-run our COG is going to be about 3% or 4% of gross sales. So this switch to the sell-in method did not have a specific affect related to COGS. It's just that COGS is being figured out on a higher base of business.

In the first half of the year, a high percentage of our COGS are fixed costs that are related to things like stability testing and other things that aren't dependant on our volume of how much we sell.

So as we spread those costs over a bigger base of business, COGS will come down significantly to the 3% or 4% that I mentioned a moment ago, so that's the reason you see a big change in COGS this quarter..

And, David, this is Mike. And this is in regards to the Chris Christie commission. I'll make a few comments. We've obviously read the report. We haven't analyzed it completely in terms of all the effects. I'll just give you a few top line thoughts.

Really the focus, when you look at it, is the on the treatment of opioid abuse and the prevention of overdose with naloxone, and the development of new opioids, and figuring out how to educated folks on current opioid therapy.

There was not a lot of focus on how do we evolve the current opioid treatment, which as we all know, there's 100 million chronic pain patients in the United States who remain and need to get treatment.

The commission did not spend a lot of time talking about how chronic pain patients were going to be treated in this world of prescription opioid abuse, which meant that there wasn't a lot of discussion in there around ADF opioids.

In terms of a seat at the table, we belong to the Abuse-Deterrent Coalition; it's a group of companies that work together. And the Abuse-Deterrent Coalition has a voice at the table, sat into the meetings. Now, a voice at the table does not mean a lot. It meant you got a two to three-minute opportunity to tell your story.

So I'm not sure a lot of people individually or any companies have a seat at the table as much as they may think they do. But our perspective is this is really being driven by policy makers and regulators, and not necessarily clinicians and industry..

Sure, that's helpful. One follow-up, so I'm sure you may have seen that yesterday, Nektar Therapeutics reported that, in a surprising move, that they no long -- post an FDA meeting, no longer need to do a Phase III study on their less abusable opioid.

Obviously it had some positive liking scores and strong efficacy in the first Phase III, but they were planning on doing a second Phase III study.

I was just curious what you thought of that? And secondly, how do you see that -- if it get approved as a potential competitor, or do you see it as a competitor to Collegium?.

David, thanks for the question. We're obviously aware of the statements made by Nektar on their earnings call, and we closely track all products that are in development. And we won't comment or make any critical comments on another company's program. What we're really excited about is Xtampza is already approved. It has a strong label.

It's been recognized by the market as an important innovation that effectively treats chronic pain whether you're opioid naive or opioid experience, and it has a comprehensive abuse-deterrent attribute. That's really what we're excited about.

If anything else comes along that we think competes with that at the time it competes, we'll be ready to deal with it then..

Fair enough. Thank you..

Our next question comes from Kevin Kedra with Gabelli..

Hi, thanks for taking the questions. Most of mine have been asked and answered. But I did want to ask if you guys have a sense what percentage of your target prescribing base thinks that all ADF formulations are equal? I would imagine that having that head-to-head date with OxyContin would create an interesting conversation with those prescribers.

And then just a couple of housekeeping questions, one, can you just give us what your share count is outstanding after the ATM that went into Q4. And then wanted to ask you about SG&A expenses, you've kept SG&A pretty consistent since the launch of Xtampza.

Is that something we should expect to continue into 2018, or will se see a bit more expense with some of the additional work that you want to do around that product?.

Okay, Kevin, this is Joe. I'll take the first one. I don't have a specific percentage to give you. But I'll give you a little flavor of what we see in the marketplace and in the research that we do.

Number one, it's a pretty easy hurdle for us to overcome when we're talking to physicians to get them to see the potential of the DETERx technology relative to other abuse-deterrent products.

That being said, it's the magnitude of the belief of if they see it as better, that will result in them dabbling or not prescribing, versus if they see it as significantly better and it's a magic threshold of magnitude that we continue to push on and that is very important for us to ensure that physicians fully understand the story.

When they do fully understand the DETERx technology and platform, and the potential of Xtampza ER they will prescribe the product. And that gets back to my previous comments, of our work is two-fold, driving awareness.

Right now, even with all the progress we've made, overall awareness of Xtampza ER is relatively low, and that's why we're focused as we come down the stretch here through operational execution driving it.

And then we need to make sure, and this is where the discipline within our sales and marketing organization is so important that in every discussion, even though we've been on the market now for over a year, that we're continuing to educate and inform them on the DETERx technology.

And the final comment, that's why we're excited about the sNDA and how it strengthens the label, enables us to continue to have conversations around Xtampza ER and the DETERx platform..

And Kevin, on your other two questions, with the fact that we had the change in to sell-in method as well as the ATM, we did get our 10-Q filed right at the same time as issuing our press release today. So you can get additional details there, but shares outstanding is 30.8 million.

And as far as SG&A, as we've said on prior calls, we're sort of at a run rate now for SG&A, and we even completed our budget process for next year, but I think it's fair to assume that it'll be fairly flat..

Our next question comes from Tim Lugo with William Blair..

Hi, guys. This is Ashiq Mubarack on for Tim. Thanks for taking the questions, and congrats on the progress.

First, are you able to quantify at all what the price reduction might be related to your contract with Cigna if you miss their daily dosing thresholds, any comments on the impact there? Are you also able to comment on how institutional buy-ins might have helped you during the quarter, any thoughts? Thanks..

Yes, Ashiq, this is Joe. With regards to Cigna, as I had said, we won't comment on any of the particulars with regards to the contract other than to say that it is anchored to an average dose of Xtampza, and Cigna would get additional rebates if they were to exceed a certain threshold..

As it relates, this is Mike -- as it relates to institutional buy-ins [ph], we did not have any institutional buy-ins in the quarter. It was just normal course buying, and as Paul mentioned, days outstanding in the wholesaler went down from 20 to 16..

Okay, yes, that's helpful. And then if I may, I think you gave a specific market share percentage, you are taking with regards to the Opana switches.

If the same thing were to happen to Oxymorphone ER, what steps would you be able to take to maybe increase that percentage? And then, with regards to your new label, what's the turnaround to get that into your sales forces' hands and into your marketing materials? Is that more or less immediate? Can we expect to see an impact from that in the fourth quarter? Thanks..

Yes, so -- awesome, with regards to Oxymorphone, I would bring you back to my overall comments. It really comes down to us continuing to get stronger and better at operational execution. The biggest opportunity that we have to continue to drive Xtampza ER is anchored to driving awareness of the product itself and the technology.

So, whether it's Opana ER, whether it would be any other event in the marketplace, the more that physicians are aware, understand the technology and have a concern around abuse/misuse and diversion, Xtampza ER will do better as we move forward.

So, as I said with Opana ER, we are over-clubbing or over-capturing relative to our share, but I believe as does the team that as we continue to get stronger executionally, even coming down the fourth quarter with what's left at Opana ER, we expect to do better than 7% to 10% on a weekly basis..

Any other question?.

The other question -- the other question was about your new label.

What's the turnaround to get that into your sales team's hands and your marketing materials? Is that more or less immediate?.

Awesome. With regards to the turnaround, we're going to take a more disciplined approach in the sense of right now we are working on a new promotional campaign that we'll launch in January.

And we are actually taking the new label now that we have it, it's currently in research to ensure that we understand the most efficient way to create awareness and help physicians understand the impact of that label chain. So that's how we will approach it.

And I think that the real any potential impact associated with the sNDA will be felt more in 2018 than in the immediacy of what's left in 2017..

Okay, thank you. That's very helpful..

Yes..

Our next question is a follow-up question from Ken Trbovich with Janney..

Yes, Mike, I guess I maybe trying to connect the dot to with regard to [indiscernible] comments about morphine -- I'm sorry; about Oxymorphone extended release and the new label. In the past historically the agency has suggested that they would be willing to move to remove a failure product from the market.

Clearly, Opana was removed for safety concerns.

Is there any thought around initiative here with regard to a citizen's petition to connect the dots for the agency, or is that something you consider prepared to do on their own?.

Yes, it's a good question, Ken. And we are not going to comment on that specifically due to the strategic and competitive nature of it. But we will look at all opportunities to differentiate the products. And if that strategy fits into that, we will pursue it..

Okay.

And then just last question on morphine sulfate equivalent dosing limits, can you kind of give us an update on why you think payers are with that, and how this plays into some of those efforts with regard to value-based pricing on the contractor?.

Yes. I mean, the one contract that I'm aware of and others maybe aware of others that had a hard limit on morphine sulfate equivalents was the United Contract in January 2017. We are not aware of any other contract. We've not entered into any contracts that require us specific morphine sulfate equivalent number.

From our perspective, and I think the key opinion leaders had spoke, I think clinicians have spoke, it's very difficult to peg a morphine sulfate equivalent when people have different metabolism. They are different sizes. They required different levels of opioid treatment. Their pain levels are different.

So, I think there is such individualism to how you treat pain that MSC has become very difficult to manage, and I think payers are starting to understand that..

And Ken, this is Joe. The only other thing I would add is I think it -- the thinking around it varies by payer and the one thing that I think it's important to recognize with Xtampza ER that's been consistent since launch and that is that about 70% of our TRXs are at 18 milligrams in lower..

And I guess that's the reason for the questions when we think about Cigna, right, how is that you or they got comfortable with what that limit is?.

Yes. So again, I think as it pertains to Cigna or any of our contracts, we won't get into the details of those discussions. But I would just reinforce that from our perspective, one, it's us taking an innovative approach and communicating in the case of Cigna and through the market that we're willing to partner with the payers.

It reinforces our commitment, and Mike talked about in his opening comments to appropriate and responsible use of opioids, and what we will learn in the real world post January 1 is how it is that it plays out, but I would just come back to the point from our perspective and what we see in prescription data, it has been steady in terms of dose utilization per prescription since launch..

Terrific, thanks so much..

Thanks, Ken..

And I'm not showing any further questions at this time, I would like to turn the call back over to Mike..

Thank you. I would like to thank everybody for joining the call today, and we look forward to continue to keep you updated..

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day..