Good morning. My name is Serge Belanger. I'm one of the healthcare analysts at Needham & Company. I want to welcome you to day two of our 24th Annual Healthcare Conference. For our next fireside chat session, we have the Collegium Pharmaceutical team with us this morning. From Collegium, we have President and CEO Vikram Karnani and the company's CFO, Colleen Tupper. I'll hand it over to the Collegium team to give us a quick overview of the company for those who aren't familiar with Collegium. Then we'll move on to some Q&A in the fireside chat format. Vikram or Colleen.
Great. Thanks, Serge. Thanks for having us on. Good morning, everyone. Introducing Collegium Pharmaceutical. We're a leading, highly profitable biopharmaceutical company focused on commercializing differentiated medicines for serious medical conditions. We have five marketed products with a current focus in chronic pain and ADHD in the neuropsychiatry space. We had 2024 sales in excess of $630 million, and we're expected in 2025 to be in the $735-$750 million range, which represents 18% growth at the midpoint in 2025. We have a strong track record of using our cash to fuel strategic and highly successful business development activities. Importantly, we began diversifying our business in 2024 with the acquisition of Ironshore Therapeutics, which added Jornay PM, the highly differentiated ADHD medicine, into our portfolio, which provided entry into neuropsychiatry.
Our commitment is to increase shareholder value by increasing revenues, Adjusted EBITDA, and the strategic deployment of capital in 2025 and beyond. Maybe I'll pause there and turn it back over to you, Serge.
Great. Thanks for the overview. Maybe we start jumping to specific questions about Collegium. One of the topics du jour these days is tariffs. I know pharmaceutical products have been exempted, but I think there is an expectation that that's only temporary. Just curious if you can give us an overview of where the Collegium products are manufactured and what would be your exposure to potential tariffs if they were to come on board here.
Yeah, great question. It is the issue du jour. I think one thing to understand about the Collegium product portfolio is that given that we are governed by the DEA regulations, we are required to have our products fully manufactured in the United States. As far as our sales go, our vast majority, if not all of it, is in the United States. As it relates to tariffs or some of the other federal spending freezes or what have you that have been talked about recently, what I'd like to say is that our portfolio is uniquely positioned to, frankly, be quite sheltered from a lot of that volatility that is being experienced by the marketplace right now because of the nature of our products and because of our supply chain being primarily in the U.S. or, frankly, almost all of it in the U.S.
Thank you for the question because I think it is an important point of differentiation for our Collegium product portfolio.
Great. There have been a number of recent changes at the company in terms of the management team as well as some recent board changes. How should we think of all these changes and what it means to the overall corporate strategy of the company?
Yeah, great question. Look, as we have embarked on our next phase of growth, any changes that we've announced on the management team or on the board are reflective of that vision. The vision remains the same. We want to build a company, and we've been on that journey for a while to build a company with a diversified portfolio of medicines that address real and immediate need for patients. We offer attractive returns for our shareholders. I've talked about the fact that the key revenue growth driver this year is Jornay PM. That was as a result of diversification via acquisition last year. We have a very strong portfolio of our pain medicines, which continues to deliver significant cash.
In totality, we continue to leverage our strong position both in terms of top-line growth and cash generation to continue to add new products and diversify the company. I would say that the changes that you see on the management team or the board are reflective of our continuation on that journey rather than there's no major strategic pivot or anything of that sort at this time.
Okay. I think you mentioned BD would remain a focus for the company. Just curious if your criteria for BD targets has changed. I know in the past, the company had a list of various criteria they wanted to meet when they were looking at their BD targets. Just curious if there's been an update on those.
Yeah. Look, BD remains one of our absolute key priorities. We prefer commercial or near-commercial products right now that we expect to leverage. We'd like to leverage our existing infrastructure that we've already invested in. That would be the most ideal place to find BD targets. We'd look for areas of unmet need and real product differentiation. That's important to us. We look for medicines that have significant runway in terms of IP longevity. At this point, we're not necessarily tied to a specific therapeutic area. As you know, we are a leader in responsible pain management. We have taken our first step of diversification into neuropsychiatry with ADHD. As it relates to newer areas, we're open to it. The bar is higher, though.
We need to make sure that if we enter into a new area, that we are being capital efficient rather than something that requires a huge amount of investment or build-up. We have a history of being highly strong on the cash generation front and returning cash to our shareholders. We would like to continue to have a profile that not only drives top line, but also significant bottom line growth over the years.
Okay. Again, I'm going back to the past since I've followed the company for a long time, but typically, there was a period of two to three years between acquisitions as they integrated the new product or the company they had acquired. Is that still kind of the timeline to get more involved in BD activities, or it's something you would be in a position to pull the trigger on as soon as this year despite acquiring Jornay last year?
Look, great question. I don't know that we have a specific timeline that we want to or try to stick to. I think the way I would answer the question is we are focused on building out our profile and our portfolio so that we can continue to deliver significant top and bottom line growth. As part of that, we do have the ability to pull the trigger at the right time. As an example, we ended last year at 1.8-1.9 times net debt over EBITDA. By the end of 2025, based on our guidance, we would expect to be below one times net debt over EBITDA, which basically implies that we do have the ability to take on a new acquisition or a new product if it makes sense and if it meets our criteria.
I think we've talked about previously that given our cash generation and given our financial profile, we are comfortable going up to 3x net debt over EBITDA if we find the right product. Of course, subsequent to that, rapidly paying that down and regaining our strong capital structure, which is something we're pretty proud of.
Okay. The company has not historically been involved in, at least not recently, in R&D. Should we expect that to change? I know you kind of mentioned you preferred a commercial asset, but is there appetite to go into late-stage development or even with a phase two asset?
Look, right now, our BD is primarily focused on commercial stage assets. We do need more scale and our expertise and current infrastructure is in the commercial space. I think in the longer term, a pipeline could make sense in order to create longer-term value and longer-term longevity, just create longevity. I don't know that we currently, as things stand today, are in a position to take on any significant capital to take on binary risk from a large clinical program. I think we look at those opportunities very carefully. At the end of the day, this is about making sure we're not taking untoward risk. If we can find a way to create a pipeline or build a pipeline while minimizing risk, we'll explore that.
I would say at the heart of it all, our focus is on, for BD, is on commercial stage assets to continue to grow and build out that portfolio.
Okay. I think at the near-opening comments, you talked a little bit about the 2025 guidance. Maybe if you can just outline what you see as the key growth drivers for 2025. Maybe afterwards, I'll ask Colleen to just talk about the, I guess, the seasonality or the variability within quarters that we should expect for this year.
Sure. I'll jump in on this question in totality, Serge. Our revenue guide for the year is $735-$750 million, which at the midpoint will deliver 18% growth over 2024. Much of this growth is coming from Jornay PM, which we expect to grow to at least in excess of $135 million, so delivering at least 35% year-over-year growth for that asset. Jornay PM growth will come from a combination of both new prescribers as well as current prescribers expanding usage. In shifting on to the pain business, we expect that to remain robust and resilient and with revenues growing in the low single digits this year across the portfolio of three products. The pain growth will largely come from better economics rather than prescription growth. As you recall from the third quarter earnings call and then reiterated at year-end, we did exit some health plans in 2025.
When we exited those plans, we expected TRX to come under a bit of pressure, but be offset by improved profitability. As you think about the year and the seasonality in the space that we operate, particularly in highly genericized spaces, revenue has a bit of a disruption in the first quarter, as you see with patients having deductible resets that can both have an impact on your demand as well as have a gross to net impact. We flagged in our fourth quarter call, a year-end call, that Q1 dynamics would be as such and that we would expect a little bit of pressure in Q1 and then rebound throughout the year. We are feeling fairly good about the year as we set out and reiterate our guidance.
Okay. Fourth quarter, typically the highest revenue number versus the two and two.
Yeah. Broadly, it can vary across the products. More consistently, Q1 is the lowest.
Got it. Okay.
Certainly with Jornay, I'll add on the seasonality there because as an ADHD medicine, you have the back-to-school dynamics. That's where sort of middle of the year, Q3, as kids are going back to school, has a bit of a demand push. You see a bit of different seasonality.
Okay. Wanted to dig in a little more on Jornay PM. It's the newest asset, and I think people are still in the process of learning about it. It is an ADHD product, so maybe just highlight how it differentiates itself in a market that's, I think, become crowded over time, but there's still some interesting branded products within it.
Yep. First of all, thanks for the question about Jornay. Jornay is a highly differentiated medicine. It is the only delayed and extended-release methylphenidate medicine that provides all-day ADHD symptom control from awakening in the morning all the way into the evening. It does this with once-daily dosing before bedtime. That was a mouthful. The important thing to remember here in this particular marketplace for these patients is symptom control upon awakening and symptom control lasting throughout the day. Because of the unique delayed and extended-release formulation with Jornay, we're able to provide both of those benefits to patients in one medicine. It is the number one recognized branded ADHD medication for achieving all-day symptom control with one dose. This is directly from research.
It is the number one recognized branded ADHD medication for controlling after-school or after-work and evening symptoms. Just to give you a little bit of background on Jornay PM, it was launched by a private company called Ironshore in the second half of 2019, so right around the start of the COVID pandemic. The company restructured in 2021, did a nice job with limited resources, but really could not fully maximize the commercial potential of this medicine. What we see is a significant opportunity for Jornay PM, and we are committed to investing in maximizing its growth. We have identified two main areas to make very targeted investments to impact Jornay PM growth in 2025 and, frankly, further accelerate growth in 2026 and beyond. First is increasing the awareness and adoption with healthcare professionals.
To do this, we recently expanded our sales force from approximately 125 to 180 reps to ensure that we have the optimal size to optimize both reach and frequency to our targeted HCPs. Secondly is raising awareness of Jornay PM's unique and differentiated profile among patients and caregivers. Our market research has clearly shown that both patients and caregivers, their requests are the top influencer of HCP's choice of medicines. Patients and caregivers have very limited knowledge of Jornay PM and its differentiated profile today. Our plan is to invest in targeted digital marketing and social media strategies designed to raise awareness among both patients and caregivers and to motivate them to ask their HCP about Jornay PM.
Okay. I believe the product grew, at least on volumes, about 30% year-over-year in 2024.
That's right.
You're expecting something similar for 2025?
What we have talked about, Serge, is that in our guide, we discussed that we expect Jornay PM to grow net revenue to grow in excess of 35% year-over-year in 2025 over 2024.
Okay. Where is this growth coming from? Is it an expansion of the ADHD market, or you're capturing market share from generics or other branded products?
Yeah. I mean, the simple answer is both. I think it's important to understand that the ADHD market itself has been growing pretty at a healthy clip over the last several years. There are about 22 million patients in the United States living with ADHD. About 6.5 million are kids and adolescents, and about 15.5 million are adults. This total market has been growing at about 6% CAGR over the last five years. This treatment landscape is very genericized. It's highly genericized. There are a few branded medicines, but the majority of the prescriptions are generic prescriptions. About 100 million prescriptions written in this space in the last 12 months, or at least in 2024, which is about 2 million prescriptions a week. Okay? 90% of those are stimulants, and about 30% of those stimulants are methylphenidate products. Within the methylphenidate category, you have long-acting and short-acting.
That long-acting methylphenidate category is exactly where Jornay PM sits. The majority of those prescriptions or those medicines are generic. There are some branded, but Jornay PM is the only one with that unique differentiated profile that I talked about earlier, which allows us to, or allows physicians to prescribe the medicine for once-daily nighttime dosing and provides that dual benefit of the medicine working upon awakening as well as providing symptom control throughout the day. Our prescriber base is largely pediatricians and psychiatrists. We targeted about 17,000 prescribers last year with 125 representatives. With the expansion to 180, we expect to target in excess of 21,000 prescribers. As a reference, more than 20,000 prescribers are responsible for about a third of all prescriptions in this space.
Hence the optimization so that we can get to the optimal reach and frequency to those high-decile prescribers in excess of 21,000.
Got it. With the increase in sales force and the expansion of targeting additional physicians here, are you leaning more towards the pediatricians or the psychiatrists for the next leg of growth here?
I mean, look, I think it's both, right? Jornay PM is prescribed by both pediatricians as well as psychiatrists. We broadly look at that as the overall neuropsychiatry landscape, if you will. We were looking at that space as our optimal target for business development. If we can find other assets that fall into that neuropsychiatry bucket, we believe we're really well-positioned to take advantage of it, take advantage of our existing infrastructure, leverage it, and drive significant growth.
Okay. And maybe just to wrap up our conversation on Jornay, maybe just highlight the coverage makeup between commercial and Medicaid coverage.
Yeah. About approximately 65% of our business is commercial and about 35% is Medicaid. And Jornay PM has really good coverage, about 80% coverage across the entire book of business from a formulary coverage standpoint.
Okay. Not much more improvement to do on the coverage front for this product at this point.
We continue to work on expanding incremental coverage on an ongoing basis. Our market access team is pretty active doing that. I mean, with 80% coverage across the entire book of business, formulary coverage is not a barrier to growth.
Yeah. Okay. I guess we're not yet in a position to talk about peak sales for this product. I guess once you have a better view of what the expanded sales force can achieve, I'm sure it's a question that'll come back.
Yeah. I think that's fair. Look, we haven't provided a peak sales estimate at this point in time. Once we have a few more quarters of Jornay under our ownership, and particularly once we see the expansion of or the impact of the sales force expansion become a bit more evident, I think we may be in a better position to comment on peak sales. What I will say, though, is we're very pleased to see the momentum year to date. That was pre-expansion already, right? Now that we have the full expanded team out there executing as we speak, we look forward to providing performance updates as we progress throughout the course of the year.
Okay. I wanted to jump to the pain portfolio. Maybe we'll start with the Xtampza. Colleen, you mentioned that most of the growth will be more economics than volume-driven this year. Just how should we think about the growth prospects for Xtampza going forward? Is it driven by additional formulary coverage, or do the overall oxycodone trends remain kind of a driver or will really influence where the product ends up?
I got it. I would say I think the overall market, while it will moderate, will continue to decline, and we expect that. That is tracked in line with our expectations. On the overall pain portfolio, as I noted this year, we expect low single-digit growth to come largely from profitability improvement. Serge, I would say going forward for Xtampza, in the absence of payer changes, we would expect to be able to grow modestly on prescription growth this year. In the past, as you've seen us execute on our payer strategy to influence gross- to- nets or improve gross- to- nets, rather, we've had an impact on prescriptions. Absent those changes, we do still believe there is room for Xtampza to grow given their significant share that it is able to continue to take. Beyond that, I think I mentioned the opioid market.
Yeah, I guess the last thing I'd say there is the ample market opportunity, I think, exists for both Xtampza and both you guys. Those are really taking share from others and not really impacted by the overall size of the market.
Yeah. Like others, we track IQVIA scripts. I think for the first quarter, they were down about double digits, which I think was expected given that one of the new plans does not report to IQVIA. Do you have any color on what the actual trend really is if we were to include that player?
I would say in the first quarter, what we've seen for prescription data thus far is in line with our expectations. What you're speaking to is in the payer update on the third quarter call. We mentioned, as I said previously, a loss of a Part D plan for both Xtampza and Belbuca, but we also had the gain of an integrated health system for both Xtampza and Belbuca, and that health system acquires product directly and does not report prescriptions to IQVIA. Bottom line is in line with our expectations thus far.
Are there any updates on the LOE for Xtampza, if anything has changed or what we should be watching for?
Yeah. No change. Let me start with an overarching comment covering our entire pain franchise, so Nucynta, Belbuca, and Xtampza, is that there is no party across all of those products that has the necessary combination of ingredients to launch a product. There were three things required: regulatory clearance, legal clearance, and the ability to supply or have manufacturing capability. Across our entire pain portfolio, there is not one entity that has checked all those boxes for a product. That said, as you recall, for Xtampza, it is pretty long-lived. We have one ANDA filer to date that was Teva, and we have settled for September of 2033. It still remains unclear to us whether launching a generic opioid fits within Teva's current strategy, but for Xtampza, September 3, 2033.
Okay. One of the questions we get from investors related to Xtampza is the potential for a generic OxyContin product. Just curious if there's been any developments or what are your expectations for the potential of such a generic?
We have not seen anything in the marketplace that suggests one is imminent. As you know, with it being a private entity, none of us have full visibility. To date, there has been no FDA approval of abuse deterrent long-acting. Perhaps that's the barrier, but we have not seen anything in the marketplace.
Okay. On Belbuca, I think that's a product where you are expecting a little more volume growth from. It has shown some growth in the last couple of years. Maybe just highlight how the market opportunity differs from Xtampza and how they target what Belbuca targets versus Xtampza and why there's growth potential.
That's right. With Belbuca, it's the only long-acting opioid medicine that uses the buprenorphine buccal film technology. We have seen, and as you saw in 2024, with 5.6% prescription growth and an acceleration in the fourth quarter, and specifically in December, that that product does still have growth potential in it. We believe it should be the first-line therapy when a physician is making the choice to use a long-acting opioid as a Schedule III product. We believe it's a great first choice. As you've heard, with low-digit revenue growth expected this year, that will be predominantly profitability due to the payer change noted. Belbuca does have the ability to stabilize and come out of that growth at a more accelerated pace.
Okay. On the formulary coverage there, I think Medicare Part D was one area where the Collegium team was focused on continuing to grow. Should we expect additional expansion of the coverage on that front going forward?
Perhaps. We continue to look to expand coverage when appropriate at the right metrics, at the right economics. What I will say is our team, even with limited Part D coverage, our team has been very successful at pushing through and gaining access in that space without contracting.
Okay. Gross- to- nets should remain stable here for Belbuca.
They're about stable. That's right.
Okay. Lastly, the Nucynta, kind of the more mature product of the pain portfolio, but I think you've done great work on the LOE front here. Just, I guess, just an overview of where that product is and what we should be looking for.
That's right. That is a mature product. Really, since it's been in our hands when we outright acquired it in 2020, our goal had been stable revenues, which has been comprised to date of declining volumes and improved profitability. That is about what we expect continuing forward. It's been a highly profitable product in our portfolio and, in fact, has had LOE extension that has put about two additional years. The Nucynta LOE has recently been extended to July 2027, and the IR LOE was extended to January 2027. With that said, this is another one where it's unclear to us if Teva will actually launch a generic Nucynta.
Broadly, across the Nucynta franchise, there was a handful, low to mid-single-digit number of parties that could launch at various times between 2027 and 2028, none of which have access to tapentadol in the U.S. as far as we can see in the supply chain.
Okay. Maybe can you just talk a little bit more about what would be the process to access tapentadol and if there's anything to look out for to see if somebody would be ready to launch on the Nucynta?
What's unique here is tapentadol is only used in the Nucynta products. In the United States, there are four DMFs that have been approved. Only one is approved at commercial scale, and that is our exclusive supplier. The other three remain at clinical/pilot scale, and it certainly could be ramped up. We estimate that to be a two-plus years process as well as investment just north of $10 million. To our understanding, as we're always looking to secure supply and have dual source, there's no facility that has begun that work for commercial scale.
Maybe just to wrap up our conversation on the pain portfolio, where does the size of the sales force stand for that is behind the pain portfolio at this point, and should we expect it to remain stable?
Ninety-five territories. We think that's the right size for the portfolio as it stands today. Given the uncertainty around LOEs, particularly on Teva or, I'm sorry, on Belbuca, I would expect that that remains the same until we see something play out there.
Okay. On the financial side, we've talked a little bit where the debt level is and where you expect it to be by the end of this year. Just curious about the capital allocation priorities of the company. I know you've been active in returning capital to shareholders over time. Would BD still be a focus? How does that change those capital allocation priorities going forward?
Yeah. So it's a great question. I think our priority for capital allocation remains the same. It's to expand our portfolio through disciplined business development. We look to rapidly pay down our debt and opportunistically repurchasing shares. As you know, this is a balancing act, and we regularly review all of our options with the board and act accordingly. You should expect that we will continue to make the best choice when it comes to capital allocation based on the choices that I just described.
Okay. Maybe if you can just highlight if I think you've been at the company for about six months now or getting close to that.
Almost. Getting close.
Getting close to that number? Maybe if you can highlight, based on your conversations with investors and as you get more familiar with the story, what do you think is either poorly understood or underappreciated by investors about the portfolio and the company?
I think, first of all, I'm thrilled to have joined the company. It's a mission-focused, mission-centric company, great group of employees, and really committed to the cause. Our pain business remains very important to us. We do view Collegium as evolving to a company that is more than the leader in responsible pain management. Those are our roots, and we will continue to make sure that we serve that business and those patients well. As you saw, we took our first step of diversification with the Ironshore acquisition last year. The addition of Jornay PM into the portfolio has been a terrific one. As we just talked about the expectations from that business, we're well on our way to becoming a diversified, growing biopharmaceutical company. I think that I would ask current and future investors to keep an eye on us.
We are a growth-driven, diversifying biopharmaceutical company that is generating significant earnings and cash. Our capital allocation priorities will be targeted at making sure we continue to drive both top-line growth and bottom-line growth through discipline capital allocation.
Okay. All right. I think that's a good place to end here. I want to thank you both for spending time with us and telling us more about Collegium Pharmaceutical. Appreciate your participation.
Thanks for having us.
Thank you, Serge.
Thank you.