Good day, ladies and gentlemen, and welcome to the Collegium Pharmaceutical’s First Quarter 2019 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 reminder, this call maybe recorded.

I would now like to introduce your host for today’s conference Ms. Alex Dasalla. Ma’am, you may begin..

Welcome to the Collegium Pharmaceutical’s first quarter 2019 earnings conference call. This is Alex Dasalla, Head of Investor Relations for Collegium. I am joined today by Joe Ciaffoni, our Chief Executive Officer; Paul Brannelly, our Chief Financial Officer; and Scott Dreyer, our Chief Commercial Officer.

Before we begin today’s call, we want to remind participants that none of the information presented today is intended to be promotional and that any forward-looking statements made today are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

You are cautioned that such forward-looking statements involve risks and uncertainties, including, and without limitation, the risks that we may not be able to successfully commercialize Xtampza ER and the Nucynta franchise, and that we will incur significant expense and may not prevail in current or future patent infringement litigation or other litigation pertaining to our products and product candidates.

These risks and other risks of the company are detailed in the company’s periodic reports filed with the Securities and Exchange Commission. Our future results may differ materially from our current expectations discussed today. Our earnings release and this call will include discussion of certain non-GAAP information.

You can find our earnings release, including relevant non-GAAP reconciliations on our corporate website at collegiumpharma.com. I will now turn the call over to Collegium’s CEO, Joe Ciaffoni..

Thanks, Alex. Good afternoon and thank you everyone for joining the call. We believe that 2019 will be a breakthrough year for Collegium Pharmaceutical. We are encouraged by our performance in the first quarter and confident that Collegium is well positioned to become the leader in responsible pain management.

We remain laser focused on our key priorities for 2019, which are to leverage exclusively our oxycodone payer wins, to accelerate Xtampza ER, maximize the value of the Nucynta franchise, strengthen operational execution, leverage not add to our cost structure and execute our mid-term growth strategy.

Financial highlights for the first quarter include net revenue of $74.5 million, up 17% versus Q1 2018, Xtampza ER revenue of $25.1 million, up 59% versus Q1, 2018. Xtampza ER total prescriptions were 105,309, up 71% versus the first quarter of 2018.

Driven by 13 new exclusive ER oxycodone payer wins that took effect on January 1, Xtampza ER continues to be the fastest growing branded ER opioid. As was the case in 2018, we anticipate a faster rate of growth in the first half of the year, followed by sustained growth at a moderated rate in the second half of 2019.

Nucynta franchise revenue was $49.4 million, up 3% versus Q1, 2018. Nucynta franchise prescriptions were down 10% versus Q4, 2018. First quarter seasonality due to high deductible commercial plans is the primary driver of the decline.

We expect to grow Nucynta ER prescription sequentially and to moderate the rate of IR decline over the remainder of 2019. Other accomplishments in the quarter include the appointment of Dr. Richard Malamut to the role of Chief Medical Officer and member of the executive team.

Richard has extensive experience in pain and across all stages of drug development. He will play a key role in the execution of our mid-term growth strategy. In the first quarter, a new patent covering Xtampza ER was added to the FDA orange book with an expiry date in 2036.

With this addition Xtampza ER now has 15 orange book listed patents, enhancing an already strong portfolio. As it pertains to our mid-term growth strategy, we're actively pursuing later stage development assets that we believe are innovative and differentiated.

Our primary focus is on non-opioid pain programs that has the potential to generate revenue as early as 2022. Collegium's focus on the U.S. market credibility with office space pain specialist and development and commercial capabilities are areas of strength and competitive differentiation.

Collegium Pharmaceutical was committed to becoming the leader and responsible pain management. Today our portfolio consists of Xtampza ER, Nucynta ER and Nucynta IR products that pain specialist view favorably and as differentiated. Our portfolio compels us to step into the pain market at a time when others have opted to step out.

We continue to invest in personnel, systems and processes to enable us to achieve our mission. We recognize the importance of earning the trust of key stakeholders every day. We’re encouraged by our performance in the first quarter and focused on accelerating Xtampza ER our and maximizing the value of the Nucynta franchise for the remainder of 2019.

At the same time, we will continue to work hard to position Collegium to utter in a next generation of non-opioid paid solutions in the U.S. market.

On a final note, I would like to take a moment to thank and recognize my colleagues at Collegium for all that they do to make a positive difference in the lives of people suffering from pain and our communities. I'm confident that we have the payment place that will enable Collegium to become the leader in responsible pain management.

I will now hand the call over to Paul..

Thanks, Joe. Good afternoon, everyone. As Joe stated total product revenues in the first quarter of 2019 was $74.5 million with Nucynta contributing $49.4 million. Net product revenue for Xtampza ER was $25.1 million, which is a 59% increase from Q1 2018 and a 36% increase from Q4 2018.

Xtampza revenue growth was driven by improvement in gross to net discount, prescription growth and price. Compared to the average in 2018 the gross to net discount decreased by 3.5% in the first quarter. We believe that the gross to net discount for Xtampza will average in the low 60s for the year.

The decrease in Nucynta net product revenue from fourth quarter is driven by $1.8 million decrease in stocking, as well as lower prescription volume. The decrease was partially offset by a price increase in January. For the first quarter of 2019 our net loss was $9.7 million compared to the net loss of $18.7 million for the prior year quarter.

The first quarter of 2019 includes an increase of $1.5 million for stock-based compensation and a $1.4 million increase in professional fees, primarily due to litigation. Our non-GAAP adjusted loss for the first quarter of 2019 was $1.7 million compared to $11.6 million for the first quarter of 2018 and $3.4 million for the fourth quarter of 2018.

As of March 31, 2018 our cash balance was $134.9 million, which was an $11.7 million decrease from our year-end balance.

The first quarter included a number of items that won’t recur on quarterly basis, including the semi-annual payments of Nucynta royalties to Grunenthal of $15.1 million, payment of annual bonuses and related taxes of $4.6 million as well as CapEx related to the build out of additional manufacturing capacity of $3.3 million.

Cash was also negatively impacted by approximately $8 million by extending payment terms for a major wholesaler. This change negatively impacted cash flows in the first quarter, but will distribution fees that are a component gross to net discount on an ongoing basis.

It’s early in the year but we are encouraged with our progress to-date, we expect quarterly operating expenses to be lumpy throughout the year, but to be lower than the first quarter. I will now turn the call over to Scott for a commercial update..

Thanks, Paul. In the first quarter fueled by 13 new exclusive ER oxycodone payer wins and improved operational execution, we accelerated performance for Xtampza ER. Xtampza ER total prescriptions for the first quarter were 105,309, which is 16% growth over the fourth quarter of 2018 and 71% growth over the first quarter of 2018.

This performance represents a significant milestone as Xtampza ER reached over 100,000 total prescriptions in a quarter for the first time since launch. There were over 12,000 unique writers in the first quarter, an increase of 2,000 from the fourth quarter of 2018.

We saw strong share acceleration for Xtampza ER across the new exclusive oxycodone ER formulary wins that went into effect on January 1. Xtampza ER has already achieved branded ER market leadership within eight of the 13 new wins and continues to see significant share progression across all exclusive positions.

The Nucynta franchise delivered 135,921 total prescriptions in the first quarter, down 10% from the fourth quarter of 2018. The primary driver of this decline is first quarter seasonality due to copay resets and high deductible commercial plans.

We're focused on growing Nucynta ER through the remainder of 2019 and moderating the rate of decline for Nucynta IR. For Xtampza ER, we are excited to announce the following new exclusive ER oxycodone formulary wins.

Effective June 1, the Ohio Bureau of Workers Comp has made Xtampza ER the only extended release oxycodone on formulary and removed OxyContin and a significant regional payer representing 400,000 lives in the Mountain West region will make Xtampza ER the exclusive ER oxycodone effective July 1.

In addition to the progress we made accelerating performance for Xtampza in the first quarter, we are encouraged that our portfolio is viewed favorably, and is highly differentiated by pain specialists. In recent quantitative market research, our sales force is rated number one by HCPs for knowledge, credibility, and overall favorability.

The Collegium team is committed to ensuring that 2019 is a breakthrough year as we work toward our mission of being a leader in responsible pain management. I will now turn it back to Joe..

Thanks, Scott. I will now open it up for questions..

[Operator Instructions] Our first question comes from Tim Lugo with William Blair. Your line is now open..

Thanks for the question and congratulations on the strong results. Just quickly doing some back of a -- or just doing some quick math, the $25.1 million number for Xtampza during the quarter. And looking at the 108,000 scripts, it seems like a price per script is stepping up pretty significantly quarter-over-quarter.

Whereas I thought GTN tends to be weaker in Q1 versus Q4.

Can you just maybe talk about inventory levels or, am I -- is my math off?.

Yes, Tim, so great question. So, inventory levels were actually decreased slightly during the quarter for all the products, but for Xtampza increased roughly about 5 days. So it had a negative impact stocking of about 300,000 or so. So if you think about our Q1 results for Xtampza you can break down the increase in revenue that’s sort of three buckets.

First of all, the most impactful was prescription growth of 16% during the quarter. And if you did the math on that, it's roughly about $3 million of the increase from Q4. And then the second biggest impact on revenue was the improvement in gross to net.

Our gross to net happens to be -- was our worst quarter was Q4 for gross to net discount, and it was higher than any other quarter last year. So the decrease in gross net had the second biggest impact. And then, we took a price increase of 9.9% on January 1, and that had the third biggest impact on the increase in revenue..

Okay, great. And talking -- you mentioned some commentary on gross to net improving throughout the remainder of the year as well.

Is that something we should flow through for Q2 to Q4?.

No, our assumptions for gross to net remain the same that we expected to be in the low 60s for the year. So quarter-to-quarter, there may be some lumpiness, but for the year same as 2018, we expect it to remain in the low-60s for Xtampza..

Okay, great.

And how about inventory levels throughout the year, do you expect them to remain relatively stable or kind of fluctuating a day here or there?.

Yes, so there can be fluctuation, but Xtampza we're trying to manage it close to this level, it is what we said on the year-end call. So some fluctuation there in Q1. But Nucynta, we'll also try to manage what we've seen with Nucynta at year-end wholesalers do really push to stock the product.

And so it goes up -- days on hand go up in Q4, and then down in Q1. And that's what we saw in the results this quarter..

Okay, great. And then one last question on the spending side to talk about SG&A trend through the remainder of the year..

Yeah, sure. So first quarter the largest increase as I said was operating expenses with stock-based compensation which is obviously a non-cash expense. The second largest driver was professional fees driven by litigation. So litigation is inherently lumpy, and it's hard to predict quarter-to-quarter with the amount of activity.

So we do expect Q1 will be on the high end of any quarter this year. And as we saw last year, we do think there is lumpiness, but Q1 shouldn't be on the high-end of that..

All right, well, thanks for all the clarity and congratulations on the quarter..

Great, thanks a lot..

Our next question comes from David Amsellem with Piper Jaffray. Your line is now open..

Thanks. So just a few. So on the Nucynta franchise, I guess what's your level of confident that the culprit truly is seasonality and not just a more challenging environment in terms of being able to grow the footprint of the product? I mean, we've seen these declines at various points.

So help us understand your level of confidence that that business could to be stable? And then secondly, regarding Xtampza on these exclusive plans now you're gaining share, you’re having share acceleration, can you talk about specifics on what you can do to continue to drive share, is it coming primarily of expense of oxy? Or are you taking share from say products like Oxymorphone help us understand where it's coming from and what you think you're doing to gain traction with these plans where you already have exclusivity? Thanks..

Sure. So David, this is Joe. I'll start off on the payer question and then perhaps hand Nucynta over to Scott.

First off, and we're looking from a payer perspective, early in the year when these new wins hit and the disruption of patients being shifted off of OxyContin, we obviously index a bit higher on that ER to ER switch which is not typical in the marketplace when it’s at steady state.

Once we get through the conversion phase, then where Xtampza really drive the bulk of its growth is from IR to ER conversion. And if you think about it, roughly about 80% of the prescriptions of Xtampza ER are driven from IR oxycodone.

From a positioning perspective with Xtampza our focus is squarely on replacing OxyContin in terms of where physicians use extended release oxycodone. That being said, we will source proportionally in terms of the shares of other products in the market from an IR perspective.

And also although there's not a lot of ER to ER switch against steady state, it's about 15%. We will source from some other products besides OxyContin. But it’s to use the IR oxycodone and extended release ER oxycodone when there's a switch. And Scott can talk about the Nucynta..

Yes, thanks for the question, David. So, if we look back over the last three or four years, you see this seasonality dynamic with the Nucynta franchise. And to give a little more color it specifically is to the fact that the number of commercial patients that are in a plan, that is a high deductible plan has risen to over 50% in 2019.

So the copay resets happen, it puts pressure on the brand. We are absolutely confident that we can grow new Nucynta ER from here and slow the rate of decline of Nucynta IR through the rest of the year. And some reasons for that are pretty straightforward. Number one, we have a strong prescriber base.

There's 9,000 prescribers in the quarter from Nucynta ER and 16,000 for Nucynta IR. And in market research, the products are viewed favorably, highly differentiated with over 50% future intent to prescribe. So those are the drivers of our belief that we can meet our goals..

Okay, that's helpful. And if I may just sneak in a follow-up on Xtampza on the exclusivity plans.

Can you specify what regions or what states where you still have much work to do in terms of gaining exclusivity in terms of the state and regional plans?.

Yes, David, this is Joe. When you think about the way I would focus you on that is the significant runway that we have both in commercial and Medicare Part D with Xtampza. So right now we've increased the percent of lives that are in an exclusive position in commercial to 20% of those lives and Medicare Part D were at 38%.

So as we’re now entering into the contracting season, as we’re in a lot of discussions with payers will assess where and when we go after exclusively ER oxycodone positions, and also we have opportunity to strengthen our access positions where we have broad availability and that’s what the teams are working for now.

Obviously, as you can imagine what the track record of success we now we have across 26 different plans of being able to move the market share to Xtampza there are not being physician or patient push back to that and there being high satisfaction around the brand we feel very strong we have a great story to tell as we’re interacting with payers..

All right, thank you..

Thanks, David..

Our next question comes from Gregg Gilbert with SunTrust. Your line is now open..

Good afternoon. I have a few.

My first one is about your ability to gain share where you are on formulary, but not in an exclusive position how is that tended to go in this that’s then enable you to flip to exclusive on different terms?.

Okay. So Gregg, one of the things that we’re really focused on this year that there’s an opportunity for improvement coming out of 2018 is moving market share where we have broad availability.

At the beginning of the year you notice saying all shipped rise with a high tide when we have the conversion taking place within the 13 plans that we added effective January 1 we see an increase in growth across all of the books of business contracted exclusive, contracted non-exclusive and even in the non-contracted books of business.

So we’ll see how that plays out that’s something Scott and his team have focused really hard on even most recently at a national meeting we had in March making sure that we’re able to be more effective in 2019.

And from a big picture perspective the success that we’ve had with these exclusive ER oxycodone wins are credibility building as we’re engaging with payers and we’re talking about exclusively ER oxycodone positions or strengthening positions where we have broad availability..

Great.

Paul, I have a question about the extension in payment terms for the wholesaler that was called out, can you give us some context around that? Is it one-off, is it a trend?.

Yes, so it’s a one-off again a lower -- to pay a lower fee we agreed to give them extra days to pay. So it’s on a go forward basis but as you think about cash flow the impact is only in the first quarter when we implement that, because instead of getting three months of payments we effectively got two months of payments from that wholesale.

But going forward they will equalize. So that has an ongoing impact to gross to net..

Okay.

And is there something you’re planning to do with others or have already done?.

So I wouldn’t want to get into details on that for competitive reasons..

Okay. And one last one, Joe, can you provide some context around the addition of a Chief Medical Officer and what that means for the current portfolio versus what is it mean for BD and future products? Thanks..

Yes, Gregg, I appreciate the question. I’ll start with our mission as we aspired to be the leader in responsible pay management, adding a Chief Medical Officer to the organization is really a statement of our aspiration to lead with the science.

And that starts with the in line portfolio of products we have and ensuring we’re publishing data that will better inform the community on how it is to utilize our products or even just the general treatment of pain. The second thing that really was made Richard a key hire for the organization is our mid-term growth strategy.

As I said in my comments, we are actively pursuing development stage programs and Richard has an extensive track record across all spaces of development and then importantly in building out successful development phase pipelines in pain.

So it’s really a key addition to the organization both in line for what it is we’re aspiring to do in terms of our mid-term strategy and really bolstering our ability to lead with the science..

Thank you..

Our next question comes from David Steinberg with Jefferies. Your line is now open..

Thanks. First on Medicare plans, I know that you thought that in the second half of last year, they would start kicking in and it didn't quite materialize.

What are your thoughts on Part D plans participating this year? And if so, is it more of a second half item versus first half? And then, looking out longer term, putting on our strategic hat at some point investors are going to want to know what's next.

You clearly have a mature product Nucynta and Xtampza still in its early growth phase, but to get a higher multiple longer term you're going to need some other assets. So, are you looking to develop any products internally? Are you looking more for on market assets or in licensing later stage assets? Thanks..

Thank you, David. I'll let, Scott with Medicare and then I'll come back and answer the strategic question..

Yes. Thanks, David. So when you look at the acceleration that we've achieved in the first quarter, market share acceleration within the Part Ds has been a significant contributor to that growth. We're seeing share growth across all Part Ds where we have exclusivity. Some have already achieved branded ER leadership.

And we expect that to continue through the remainder of the year..

And Dave, this is Joe. With regards to our strategy going forward in our mid-term growth strategy. We're viewing the world through two windows. The first one is mid-term, and that's the one we prioritize the highest in that window. We're looking for late stage development programs, things post Phase II.

And that window we're looking at novel mechanisms of action, non-opioid pain solutions and programs that would have the potential to be generating revenue as early as 2022. In the short-term window, we have a very high bar, because of the runway we have in front of us with Xtampza ER in particular.

And our belief that that's a product that will become the number one prescribed branded ER opioid. So in that window, the high bars are anchored to innovation and differentiation. We're also looking for value. We don't feel compelled, nor would we overpay for an asset.

And then the final thing is anything we would do in that short-term window will need to be able to be a creative either the year we did it, or the follow on year..

Okay. Just two follow-up. First, is I know you gave guidance for the first time, the company's history earlier this year. Is there any way to break up your revenue guidance, you only have two products to break those up for us for Nucynta and then Xtampza.

And then also, there's some train of thought among some of the pain experts that at some point the FDA will remove all the non-ADF opioids from the market as the ADFs are a bit safer.

Any thought on when you think it's going to happen or if it's going to happen in the future?.

Okay. So David, Paul will take the guidance question and then I'll comment on the pain expert perspective..

Yes.

David, so for the guidance question, you're asking for breakout on Nucynta products or Xtampza?.

I'm sorry, I couldn't quite hear I guess, you gave total revenue guidance, but can you give guidance by specific product?.

Yes. So we have given guidance by Xtampza and then Nucynta. So as a reminder, what we gave on our year-end call guidance for Xtampza was $95 million to $105 million, and for the Nucynta franchise it was $200 million to $210 million..

Okay.

And you still stand by those two sets of numbers?.

Yes. So on the year -- when we gave guidance on year-end call, we said that we wouldn't update it or reaffirm in a quarterly basis..

Okay..

And then, David, in terms of the question around feedback from pain experts, and that speculation. We're not in a position and I wouldn't speculate on whether or not non-ADF products will be removed from the marketplace.

What I would comment on is one of the things that we feel Collegium is very well positioned in this space is because of our portfolio in the eyes of pain specialist they view it very favorable and they view it as highly differentiated.

So we think as this marketplace continues to try to find the balance of effectively treating patients who are suffering from pain, while also taking a step forward, potentially, with regards to the opioid epidemic. We feel the Collegium portfolio is very well positioned.

And we're obviously going to strive to add to the product portfolio for what we're trying to do in our mid-term growth strategy..

Fair enough. Thank you..

Thanks, David..

Our next question comes from Serge Ballinger with Needham. Your line is open..

Hey, thanks, guys. This is Tian [ph] on for Serge. I just had a question, you guys mentioned the Ohio Bureau, as far as they're taking Xtampza over OxyContin as of June 1. I'm assuming that this is the workman compensation population.

So how meaningful is this market to you as far as the impact on your Xtampza sales? And do you expect any other states to kind of follow in the footsteps? Thanks..

Thanks for the question, Tan. Yes, that is the Ohio Bureau of workers comp in the State of Ohio. It's an important plan in the State of Ohio and that is the number one provider of workers comp insurance in that state. So it's a nice regional win for us.

And I can't comment on what other states will do to follow or other workman's comp plan, I don't have any insight there. But we're happy to have the opportunity with Ohio Bureau..

Got it, thank you..

[Operator Instructions] Our next question comes from Esther Hong with Janney. Your line is now open..

Hi, thanks. So can you provide an update, if any on patent litigation over Xtampza with Purdue, it looks like there's both parallel P-tab in district court proceedings that are ongoing? And then as a follow up, can you provide any details on your newly issued patent? And how it further protects Xtampza? Thanks..

Yes, So Esther, this is Joe, with regard to litigation with Purdue, we have no material updates to provide at this point in time. I would just refer you to the 10-Q on that.

And as it pertains to your second question the patent, with regards to that patent, it's a manufacturing patent it was added to the orange book in the first quarter and it goes out to 2036..

Thank you..

Our next question comes from Kevin Kedra with G. Research. Your line is now open..

Hi, thanks for taking the questions. First, I want to ask about as you're in these discussions with payers, obviously, prices is the big issue.

But is there any place in the discussion for your role as a responsible player in the industry given that the competitor that you're looking to displace has been quite significantly, for lack of a better phrase tarred and feathered across the media lately, given all the lawsuits against them.

Does that have any role in the discussions with payers?.

Yes, Kevin, this is Joe. I appreciate the question. When we talk with payers, what we're excited to talk to them about and what really matters to them most is one their belief in Xtampza ER, with DETERx technology.

And although price and that aspect that is important, we really want to make sure that when payers make that decision, they have a belief in the science around Xtampza, and in a differentiated label.

I think the second thing as we aspire to be a leader in responsible pain management, as Collegium, that's something that resonates because the payers like us are trying to make a difference both for people suffering from pain, and also as it pertains to the opioid epidemic.

So that's certainly something we want to make sure that they understand about Collegium. And then the third thing that is really a key part of that discussion is really being able to talk to them about the success that we've had now with 26 exclusive ER oxycodone opportunity.

So our focus is on Collegium, our science and what it is that we're trying to do..

Okay, that's helpful. And then also on the litigation side, I mean, you guys have you -- kind of on the periphery here, but you still been drawn a little bit into some of this multi-district litigation. I know that really is going to kick into gear into October, where we're going to start seeing the first case is really showing up in May in Oklahoma.

Can you just kind of refresh us is kind of where you see yourself positioned in that. How you see your liability relative to kind the rush in the industry that’s been here in this area for decades you guys have only been here for a couple of years under a very strict FDA regulations.

And is there any potential impact as far as litigation expenses as we start seeing some of these MDL trials pick up..

Yes, Kevin, this is Joe. I’ll take that one and appreciate the question. So as of today and this is new information and I’ll kind of go around the litigation that you referenced first. Number one we were not a part of the litigation in Oklahoma we have been dismissed from litigation in Arkansas.

And as of today as it pertains to be MDL in Ohio we’ve been dismissed from eight out of nine of those cases and we’re not a part of any of the bellwether cases.

We -- as by the nature of the states that we’re in it’s something that we have to deal with and as Paul talked earlier we certainly engage and have some cost associated with what’s going on in the industry.

But that’s what our focused and we’re trying to do as an organization and positioning Collegium as the leader in responsible pain management being our mission and continuing to make investments into the organization as it pertain to our claiming, our compliance and all of the different things that we’ll ensure that we are worthy of what it is we’re striving to achieve in the marketplace..

And maybe one last one on business development you mentioned kind of the mid-term look that you’re looking at new mechanisms in the space outside of opioids, are you also looking at maybe other technologies even on the device side or sort of non-traditional pharmaceutical technologies or substances that could be used in pain..

So Kevin, this is Joe. As part of our strategic review and the mid-term strategy we’re executing against we’re trying to leverage the organizational capabilities and strengths that we believe make us differentiated from other companies.

So for us we’ll be focused to pharmaceutical products that the relevant to the office space pain specialist where we’re able to leverage that expertise from a commercial perspective along with the development capability we have before able to bring in a later stage development program..

Thanks..

And our next question comes from Brandon Folkes with Cantor Fitzgerald. Your line is now open..

Hi, thanks for taking my questions and congratulations on the really good quarter.

Just drilling down a bit more into net price I know we’ve talked about gross to net on the call but give that 1Q it is normally a bolus of four switches which I’d assume there is a bias towards the patients on the higher strength, how should we think about growth cost of strength of Xtampza going forward? Do you expect a lot of growth to be concentrated in the lower dose strength just given that you mentioned a lot of the business still comes from IR to ER switches?.

Yes, so in the first quarter of this year we didn’t see the growth to higher strengths like we did last year, but it’s on a bigger base of business.

So even with the switches, I don’t think that’s as impactful with the bigger prescription base that we already have which while it’s a good thing because then we don’t see the sort of reversible of that that we did last year where those higher doses then later in the year as we continue to grow that the average prescription strength started to decrease in the second and third quarter.

So this year we stayed flat relatively flat so that’s encouraging for me from a gross to net and net revenue perspective makes it more predictable..

Okay, thank you very much.

And maybe just one more from me, I know you had talked in the past that there is a potential to benefits in 1Q 2019 from the 2018 party exceptions I think in the Humana and Optum, could you help us just characterize net benefits that you saw in this quarter from the 2018 party exceptions and maybe just help us also think about the magnitude of the exceptions granted in 1Q 2019? Thank you..

Yes, thanks for that Brandon, this is Scott. So what we saw was in the acceleration in the first quarter a contributor of that acceleration was absolutely the Part D plans.

And those we referenced that you just mentioned, we saw share acceleration across all of those and expect to see continued growth through the rest of the year in all the big Part Ds..

Okay, thank you very much..

Thanks, Brandon..

At this time, I'm showing no further questions. I'd like to turn the call back over to Joe Ciaffoni for any closing remarks..

Thanks. Once again, thank you for joining us this afternoon. We are encouraged by our performance in the first quarter and committed to making 2019 a breakthrough year. We believe that Collegium Pharmaceutical is well positioned to become the leader and responsible pain management. We look forward to updating you on our progress. Have a great evening..

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day..