Okay, let's get started. Good afternoon everyone. This is David Amsellem from the Piper Sandler Biopharma team. Our next company fireside chat is Collegium. We have CEO Vikram Karnani with us. We also have CFO Colleen Tupper. Thanks so much for joining us. Let's just dive right into questions. I think that what's sort of top of mind is, at least for me, Jornay PM.
Mm-hmm.
which is really the growth driver right now of the overall business. So maybe I'll just start with a high-level question on Jornay PM. Just how are you thinking about the growth runway here and the peak opportunity? And, you know, the way I think about it, I'd love to hear your thoughts is, you know, that's in the context of a pretty vast ADHD space from a volume perspective, but you've got a pretty unique profile in a, you know, pretty crowded market, but nonetheless unique profile. So with all that in mind, how do you think about the opportunity here?
Yep. First of all, thanks for having us. Jornay PM is the only, it's a unique differentiated medicine. It's, first of all, it's in the crowded space of ADHD medicines. It is the only medicine that is taken at night. And what it does is, because of its unique differentiated profile, which is delayed release and extended release, it can offer patients benefits upon awakening in the morning, as well as lasting efficacy throughout the day, in the afternoon and throughout the evening, which is really important for patients. Because of that, and a lot of our promotional efforts over the last year or so, what we've observed is tremendous growth with the product. We, in Q3, Jornay grew 20% in prescriptions year over year, 22% in new writers, year over year. So there's a lot of headroom still left in Jornay PM.
This performance, and throughout the year, our performance has caused us to raise guidance. At our Q3 earnings call, we raised guidance for Jornay for the full year to be in the range of $145 million-$150 million in net sales, which is about a 46% growth year over year. So while we haven't necessarily talked about peak sales as an opportunity, I think it's important to know that we're very pleased with the performance.
Mm-hmm.
and we think there's a long runway of growth ahead for Jornay in a crowded ADHD market.
Yeah. Crowded but very large in terms of volumes.
Crowded, very large in terms of volumes. You know, the overall market's 100 million prescriptions.
Yeah.
And still growing at, you know, pick your favorite number, 6%-8%. So this is a market that is continuing to see growth. And with our differentiated profile, we feel really good about the value proposition that Jornay brings for patients as well as for physicians.
Okay. So I wanted to ask you about the commercial infrastructure supporting the product. Just remind us how many reps you have, how many physicians you're targeting. And I know that this is, you know, this is sort of a multidisciplinary space. There's psychiatrists, there's pediatricians. So talk about how you're tackling those two pieces of the market.
Yeah. When we acquired Ironshore Therapeutics, which brought us Jornay , there were 125 representatives, sales representatives at the time. We expanded the team. We added 55 new reps in April of this year, which brought the total to about 180 territories. Okay? And we did that because we believed that was the right size that was needed to support this medicine. We're now able to call on more than 21,000 physician targets with the right level of frequency. So it wasn't just about increasing breadth. It was also about increasing frequency to the right number that was needed in order to be effective. In terms of the prescriber base, it is about 40% psychiatrists, about 40% pediatricians.
Mm-hmm.
And the balance 20% is a mix of mid-levels, you know, some high decile primary care, you know, those type of other specialties, which.
Yeah.
At the end, ladder up to psychiatrists and pediatricians.
So, you know, when I think back to when Shire had exclusivity for Vyvanse, I mean, their sales force was quite large. I'm not saying that you're going to get there, but certainly there's room to further expand the sales force if you wanted to. So I guess my question here is, what's your appetite for, how do you assess the need for further sales force expansion? It's a promotion-sensitive space. There's obviously a lot of peds out there. There's a lot of psychiatrists. It's a, these are big audiences. So how do you think about that going forward?
Yeah. David, right now we believe that the 180-sized team is the appropriate size for calling on those top targets, the 21,000+ targets, with the right level of frequency.
Mm-hmm.
The expansion just took place in April.
Yep.
You know, typically it takes about six-to-nine months before you can start to see real signs of impact from a sales force expansion. We're right in the middle of that period right now.
Sure.
So I think what we'd like to do is let this expansion fully take effect, observe the growth and drive growth into next year. And down the road, we'll always keep assessing whether there is a need to expand. And, you know, we'll revisit the question at the right time.
Can you remind us of the split between adults and pediatric ADHD patients currently? Where are you seeing the most growth come from?
Yeah. We so in the ADHD space.
Mm-hmm.
You have, you have stimulants, non-stimulants, and you've got methylphenidates and amphetamines under the stimulant category. Jornay PM is a methylphenidate with a DELEXIS technology. So we tend to move and skew more with the methylphenidate as a category. Methylphenidate as a category skews more 70% peds and adolescents, 30% adults. Jornay PM right now is about 80% peds and adolescents, 20% adults. And over time, we believe that we will, we will migrate towards that 70/30 split for the overall category. In our most recent earnings call, we also talked about this, our growth, the 20% prescription year over year growth when you split that into adults and peds and adolescents.
Mm-hmm.
Adults were 29%.
Yep.
Now, peds being the large majority was about 18%. But what we are seeing is, you know, reasonably good uptake even in the adult segment. So we're pretty excited about that.
Although, to be clear though, I don't know if this is still the case, the adult segment has tended to be the faster growing of the two segments in the overall market. Is that still the case?
Yeah. I believe so. From the overall market space, that does seem to be the case. Just to give you a sense of overall split.
Sure.
About 22.5 million to 23 million patients.
Mm-hmm.
Diagnosed patients. About 15 and a half to 16 million are adults.
Mm-hmm.
The remainder are peds and adolescents.
Got it. Okay. That's helpful. So what does access look like? Let's start with commercial access for Jornay PM. And I'd like to get a better understanding of the nature of authorizations and step edits that are in place given that, you know, there's generics out there for Concerta and other forms of methylphenidate. So how should we think about that?
So, first of all, our access from an overall payer standpoint is quite good. We have our split of business is about two-thirds commercial, about a third Medicaid. And in terms of, you know, as we think about step edits and whatnot, in this type of heavily genericized category, it's normal to expect that patients would have to try and fail one or step through one or two generics before they go to a branded medicine like Jornay PM. That's what we see. But those prior authorizations that are required are not, you know, overly onerous prior authorization.
Sure.
Typically, they are attestations, from a physician that the patient has tried and failed. They don't have to re-go through another whole cycle.
Got it. Okay. And just remind us what the gross to net is on Jornay PM, and how that compares to other branded ADHD products such as Supernus's Qelbree.
Colleen, you wanna take that?
So in the third quarter, gross to nets for Jornay PM improved as we expected with the seasonality throughout the year.
Mm-hmm.
From a full year perspective, we now expect gross to net to be about 65% in the mid-60%.
Okay.
That is an improvement over last year, about 71% for the full year. That improvement is down from, or better than our original expectation of the high 60%. That was helped by improved returns and some other factors around copay programs. As you compare it to other brands in the category, particularly the non-stimulants, because it's a smaller universe of competitors and fewer generics.
Yeah.
Our gross-to-net tends to be higher. If you look within the amphetamine methylphenidate category, we're about where you would expect to be. And so looking forward, I think it's been normalized in that mid-60%.
Mid-60%. Okay. That's, that's helpful. I wanted to step back and get your thoughts on just where you're pulling Jornay PM patients from. So are these generally patients who, you know, have had exposure to other methylphenidate products? Are these patients who are not tolerating amphetamine products well? Are you getting treatment-naive patients? And I know that's kind of a mouthful, but, you know, help us better understand, you know, where you're getting these patients from.
Yeah. I'd say, certainly from switchers, right? Majority of the patients are switching from.
Yep.
Another medicine onto Jornay PM, as you would naturally expect, a significant number of these patients are coming from having tried another methylphenidate or another stimulant, so we do get some from patients that are switching from amphetamines.
Mm-hmm.
Mostly from other forms of methylphenidate. We do, we are starting to see some treatment-naive patients as well now, where Jornay PM becomes their first treatment of choice. This is usually after a physician has turned into a bit of a loyalist, right? They've got good experience with the medicine. They've seen a substantial number of their own patients, you know, realize the benefit of Jornay PM. That's where we're starting to see. But that's a small number.
Yep. Okay. Well, let's turn to the rest of the business, so the legacy pain business here. Just refresh us on the exclusivity runways, or what you think of the exclusivity runways, for both Belbuca and same question for Nucynta. Let's start with Belbuca.
Sure. So I'm gonna start with a global comment across the full pain portfolio.
Yeah.
Inclusive of Xtampza, Belbuca.
Fair enough.
Nucynta, which is that we don't see any single party that has met all three criteria required to launch a generic competitor.
Yep.
The right criteria being regulatory approval, tentative approval, legal clearance, as well as access to manufacturing and the API. And so, there's different flavors of that for each of our brands and then the different varieties within those brands. So with Belbuca, the first potential generic entrant would be Teva in January of 2027. That date arises from a settlement agreement between BDSI and Teva.
Mm-hmm.
to date, they do not have tentative approval.
Mm-hmm.
They have relinquished their first filer exclusivity. There's strategic questions around Teva, you know, that we can't answer for them on whether or not they would launch another opioid, whether or not this fits with their strategy focused on branded and complex generics. And frankly, the opportunity is limited. So we look to watch that space, but that's the first to watch for Belbuca. Then there are Alvogen.
Yep.
Who is currently barred from the market till December 2032, and Chemo, who is pursuing non-infringement, but to date have received five CRLs, so we feel confident, one, you know, it seems to be technically challenging.
Mm-hmm.
But if they are able to sort of crack the code, we feel very strongly in our IP case.
Yep. Before we move to Nucynta, I had some follow-up questions about Belbuca. So let's suppose that Teva does not enter the market. And you can make an argument that they want no part of anything opioid or opioid-related. I don't think that's a big leap. But let's just suppose that they don't enter the market. I mean, you've got in Belbuca, kind of a unique profile. It's a Schedule III, not a Schedule II. So it's a, you know, as I look at the opioid space, a more benign opioid, if you will. Do you invest behind the brand if you get, say, another several years of exclusivity?
I think we would take it under careful consideration, but we would look at the pain portfolio today as really right-sized and the right amount of investment in it.
Mm-hmm.
What I would say specifically because of that uncertainty around that January 2027 event is that we are not going to harvest or pull back on any Belbuca investment in advance of that date. We're gonna invest right through and not take any action until something was to happen.
Yep.
And so we'll continue to assess to see if there is any additional investment required. But sitting here today, I wouldn't expect. That said, I think Belbuca, in the absence of a negative, you know, payer action, has absolutely the ability to grow volumes.
Yeah. So let's talk about the payer landscape for Belbuca 'cause I think in the past, you've talked about Part D access in particular. So I wanted to get your thoughts here on not just Part D access but also commercial access. How are you thinking about contracting in general? And if your exclusivity runway is indeed going to be longer than 27, you know, how do you think about contracting?
Yeah. I think we look to balance profitability and volume growth.
Yep.
As we have been doing for the past few years. You know, with a longer runway, if that were to be the situation we find ourselves in early 2027, we would assess contracting not very different than we do today. We're really looking to get profitable access to Belbuca because it really should be the first line before you move into a schedule two therapy, and we do believe it has broader use.
What reminds us what the gross-to-net is on Belbuca these days?
It's in the mid-50%.
Okay.
That's fairly stable.
Got it. Okay. So let's move to Nucynta and talk about IR and ER and how you're thinking about exclusivity runway for both forms of Nucynta.
Yeah. So there are several ANDA filers across the franchise.
Yep.
A few more on IR than there are on ER. However, based on our understanding, we don't believe any of those parties have access to Tapentadol in commercial scale quantities. In the U.S., where it must be sourced from, there were four approved DMFs, only one of which is producing at commercial scale, and that is our exclusive supplier.
Mm-hmm.
The other three, to date, we are unaware of anyone taking the action or making the investment to scale up.
Sure.
So that is what we think is a fairly significant barrier on the Nucynta side. In addition, we announced last year that we've strategically partnered with Hikma.
Yep.
For an authorized generic arrangement that provides Collegium with favorable profit share terms. I would just say overall, it's difficult to know for sure when and if somebody will launch and to what scale they are able to launch. But we do believe that the franchise has a longer and more robust scale than you'd otherwise expect. And the Hikma arrangement delivers value in the near and long term.
So a follow-up question to that. With the AG with Hikma, how should we think about, you know, investment behind that brand or, you know, pulling back of investment behind that brand? I mean, that to me strikes me as a product that you essentially manage for cash flow.
Our investment you're referring to?
Yes.
Yeah. Yes. And, in fact, that's really how we have been managing that brand since acquisition in 2020. If you recall, our goal at that time was to maintain revenue at about a stable base, which was at that time $180 million. And we've been able to achieve that through the profitability improvements and pruning unprofitable contracts. And so the volume that was declining for the Nucynta franchise before we acquired it, but we've been able to stabilize and even grow revenue.
Yep.
And so it has third position for the sales team, and it would remain that way.
Okay. So switching gears now to Xtampza. Let's talk about how you're thinking about the exclusivity runway there. That, that's, you know, always been the one that I've thought of as having the highest, barriers, for potential generics just given the nature of the formulation. But help us understand how to think about that.
Yeah. So to date, there's been one ANDA filer.
Yep.
that was Teva. We settled to.
Yep.
allow them to enter September 2033. I thought that was a really positive outcome.
Mm-hmm.
To date, as you would expect, it's a ways away. They do not have tentative approval, but I think also importantly, as a significant distributor of the OxyContin IR generic, they have already stopped distribution there. And so it really does call into question to come back in the base molecule, come back into opioids in 2033.
Yeah. That's a fair point. And, as you think about that product, just help us understand your investment in that brand. I mean, is that more akin to a Nucynta where you're kind of managing it for cash flow?
You know, we have a 95-person sales team.
Yeah.
Supporting pain overall.
Yeah.
I would say Xtampza and Belbuca were really sort of in shared position one.
Okay.
It depends on the office.
Sure.
And the prescribing habits within that office, which might get more airtime. I would anticipate that continues. There is absolutely continued life in that product, and we would continue to invest behind it with that runway.
Okay. And just remind us how we should think about the gross-to-net for Xtampza.
Xtampza gross to net, it's settling around in that mid-50% range as well. It's been a little bit better this year, for a variety of reasons. We've said, a few years back when we embarked on the exercise to really improve gross to nets from a high of 72-ish%.
Mm-hmm.
that we would never get above 65%. Well, we'll always be well below that based on the success we had with renegotiating contracts. That said, we've gone through that entire cycle, and so we don't expect to have significant moves in the gross to nets going forward.
That's helpful. So I wanna spend the next few minutes that we have remaining just getting your thoughts on just your overall vision for the company. You're generating a lot of cash flow. You have clearly stated that business development and M&A is a priority. So, and you've done this before. So, I guess my question here is, just help us understand how you're thinking about capital deployment more broadly, and ultimately where you wanna take the business. You have the legacy pain business. You've, from my inference, that gave you an entry into psychiatry and also pediatrics. But I kind of look at, you know, what you have here is a lot of white space in terms of the capital you can deploy. So how are you thinking about that?
Yeah. Look, let me take a step back. When, at the beginning of the year, we laid out three priorities for the company, three strategic priorities that we need to accelerate the growth of Jornay. We've talked about Jornay quite a bit.
Mm-hmm.
We need to make sure that we're maximizing the durability of the pain franchise. And you heard from Colleen about all the factors that play into that. And we think that we've got a good runway there as well. The third was we always talked about a very smart disciplined capital deployment strategy, which has three parts to it, right? One is continue to look for additional BD assets through business development that become part of the portfolio. Number two is, you know, we generate a lot of cash.
Yeah.
As part of generating cash, since 2021, we have returned $222 million in share repurchases back to our shareholders. So returning value to our shareholders through share repurchases is part two.
Mm-hmm.
And part three is strengthening our balance sheet and continuing to strengthen our balance sheet by paying down debt, right? So at any given point in time, we're always looking at all three areas of what's the best way to deploy capital, specifically talking about business development. So, Jornay has given us an entry into a very exciting space. You break down ADHD, as I said earlier, our sales force really spends a lot of time with pediatricians.
Mm-hmm.
As well as psychiatrists. So, you know, a very natural play for us would be to acquire an asset that fits in the bailiwick of the sales force that is calling on those two specialties.
Sure.
It's highly synergistic. It can drive value for the company. The assets we're looking at are commercial or very near commercial, and by very near commercial, it's something that at least has phase three top line data so that we can assess, does the medicine work?
Mm-hmm.
Is it approvable? So that we can remove some of those types of risks, okay, or minimize them anyway. We look for assets that are peak sales of, you know, in excess of $300 million, peak net sales, longer duration. You've heard from Colleen and from me about our IP estate. We'd like to bring in medicines that continue to deliver value into the mid-2030s and beyond.
Mm-hmm.
We're primarily a U.S.-based company. And obviously, we would wanna make sure that we have medicines that we can, you know, commercialize in the U.S. Outside of those areas of, you know, pediatricians and psychiatry, we are open to other areas, and adding a third leg of the stool, if you will. But we'd like to be very capital efficient about it. We look at areas that are both specialty as well as rare diseases. And, you know, especially in rare disease, when those criteria that I laid out, a lot of the medicines tend to fit that type of a size.
Mm-hmm.
So that's how we're looking at growing the company: assets that are commercial or very near commercial that can be put in the hands of our existing sales force. Or if we go into a new area, it's in an area where we can scale from, add more products, and scale the company.
I think given your background in rare diseases, and you get this question all the time.
I do.
Is it fair to say that you'd be comfortable layering in or absorbing a small specialty sales force supporting a rare disease asset where you can, you know, put together an access/reimbursement hub? And that's something that you can leverage over time as you layer in other assets. I mean, is that something that?
That's, that's exactly right.
Too?
That's exactly right. So.
Yeah.
What you can do is exactly right, right? You can potentially bring in an asset that is a smaller size.
Sure.
But you can then add other rare disease assets that tend, that they don't, they can be a bit more TA agnostic. But where you find synergy is then in how you support patients, your patient services, your reimbursement hub, all of the things we just talked about. So that's another way to potentially build scale for the company.
Then real quick, at what point do you consider taking on a development stage asset?
Yeah. At this point in time, I think we don't believe we're at the size or frankly the expertise within the company to take on a development stage asset today. It's something that we've thought about, but I think we'd like to get a little bit more commercial scale before we think about taking on development stage assets down the road.
All right. I'll leave it at that. Thanks, Vikram. Thanks, Colleen. Thanks, everyone in the audience.
Thanks, David.