Greetings, and welcome to the Collegium Pharmaceutical Investor Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference call, please press star zero on your telephone keypad. Please note that this conference call is being recorded. I will now turn the call over to Ian Karp, Head of Investor Relations at Collegium. Thank you. You may begin.
Great. Thanks so much, and welcome to Collegium Pharmaceutical Investor Call to discuss the acquisition of AZSTARYS and all relevant corporate subsidiaries from Corium Therapeutics, which significantly expands our position in ADHD. I'm joined today by Vikram Karnani, our President and Chief Executive Officer, Scott Dreyer, our Chief Commercial Officer, and Pauline Tupper, our Chief Financial Officer, who will be available for the Q&A portion of today's call. Before we begin, 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 as detailed in the company's periodic reports filed with the SEC.
Our future results may differ materially from our current expectations discussed today. Our press release and this call will include discussion of certain non-GAAP information, and you can find the press release on our corporate website. With that, I'll now turn the call over to our President and CEO, Vikram Karnani.
Thank you, Ian, and thank you everyone for joining today's conference call. Over 10 years ago, Collegium began its journey in building a leading diversified biopharmaceutical company committed to improving the lives of people with serious medical conditions. Our strong financial position, consistent cash flow generation, and steadfast commitment to patients allowed us to first build a leadership position in responsible pain management and then in 2024 expand our portfolio by acquiring Jornay PM, a highly differentiated medicine for ADHD. Today marks another important milestone in our company's evolution. It follows a very thoughtful and disciplined business development approach, where we have been focusing our evaluation efforts on areas where we can leverage our existing commercial infrastructure and meaningfully enhance our growth profile. We have been particularly interested in adding differentiated commercial medicines that have exclusivity into the 2030s and beyond.
This announcement represents an exciting strategic addition to our portfolio, one that accelerates our growth trajectory while reinforcing our long-standing commitment to improving patient care and delivering shareholder value. I'm pleased to provide additional context and outline the strategic rationale behind our acquisition of AZSTARYS, a differentiated ADHD treatment for people six years and older. Notably, adding a second commercial medicine to our ADHD portfolio will allow us to better support our most important stakeholder, the patient communities we serve each and every day, who guide everything we do here at Collegium. The addition of AZSTARYS will significantly complement our existing ADHD medicine, Jornay, and upon close, will immediately contribute to Collegium's financial profile. Business development has long been a core component of Collegium's overall capital deployment strategy, and the addition of AZSTARYS represents a compelling strategic fit.
It is a focused and important step forward in Collegium's mission to building a leading diversified biopharmaceutical company. This acquisition immediately expands our position in ADHD with two highly differentiated and complementary medicines for the ADHD community. The addition of AZSTARYS will also allow us to leverage our existing ADHD commercial infrastructure, supporting operating leverage and future margin expansion, while also increasing our impact on the ADHD community and our target healthcare professionals. It also further diversifies Collegium's revenue base beyond pain. While our pain medicines will continue to be an integral part of our overall business, we believe it is important for Collegium to further diversify its therapeutic focus. In addition to therapeutic diversification beyond pain, AZSTARYS is also expected to extend our future ADHD revenues into 2037, 5 years beyond Jornay PM's expected loss of exclusivity date.
This acquisition aligns extremely well with our previously communicated capital allocation strategy, one which balances portfolio expansion and diversification through business development, debt repayment, and opportunistic share repurchases, all while remaining fiscally responsible stewards of our shareholders' capital. In addition to the compelling strategic rationale for acquiring AZSTARYS, this transaction also provides important financial benefits to Collegium. We plan to acquire AZSTARYS and all relevant corporate subsidiaries from Corium for $650 million in cash. In addition, shareholders of Corium Therapeutics will be eligible for up to an additional $135 million in potential contingent payments should certain sales and/or regulatory milestones be achieved. We plan to fund this acquisition with a combination of cash on hand and $300 million from our delayed draw term loan, which was part of the syndicated financing facility announced in December 2025.
The significant portion coming from cash on hand is a testament to the strength of our underlying business and our robust cash generation. As a reminder, in 2025 alone, Collegium generated over $329 million in cash from operations, and we expect strong cash generation again in 2026 and beyond. The credit facility provides for favorable interest rate terms in a range of SOFR plus 275 to 375 basis points based on first lien net leverage. Our interest rate upon closing will be SOFR plus 325 basis points. We estimate that our net debt to adjusted EBITDA will be approximately 2x following the close of the transaction and our future cash flows from operations will support continued rapid delevering. The addition of AZSTARYS into our portfolio of marketed medicines will provide attractive commercial and financial benefits to Collegium.
Importantly, the deal will be immediately accretive to our adjusted EBITDA. AZSTARYS generated over 760,000 prescriptions in 2025 and is viewed favorably by healthcare providers. Supported by our commercial ADHD infrastructure, we believe we can accelerate AZSTARYS' growth profile, expanding top-line revenues. Scott will talk more about this shortly, but there are shared key ADHD stakeholders, including HCPs, which will allow us to leverage operational efficiencies to accelerate future growth. We believe our existing ADHD commercial infrastructure will allow us to achieve significant cost synergies, which we estimate could translate into more than $50 million of cost improvements within 12 months following deal close as compared to the expected standalone costs to commercialize AZSTARYS. The addition of AZSTARYS is also expected to meaningfully extend our ADHD revenues based on its 6 Orange Book patent listings, most of which expire in December 2037.
Overall, we estimate that AZSTARYS will generate over $50 million in pro forma net revenues in the second half of 2026. We expect our expanded ADHD portfolio, including both Jornay PM and AZSTARYS, to serve as our leading growth drivers going forward. We plan to update our overall financial guidance for 2026, including expectations for total revenues and adjusted EBITDA once the transaction has closed, which we expect will be in the second quarter. With that as an introduction, I'll now hand the call over to our Chief Commercial Officer, Scott Dreyer, to provide some additional insights into our future expanded ADHD portfolio. Scott.
Thanks, Vikram, and good morning, everyone. ADHD is a large and growing market, which Collegium first entered in 2024 following our acquisition of Jornay PM. There are roughly 22 million patients in the U.S. across pediatrics, adolescents, and adults, with about 111 million prescriptions written in 2025. Prescriptions for ADHD have been growing at about 8% annually over the past 5 years, and we expect the market to continue to grow well into the future. The vast majority of prescriptions, nearly 90%, are for stimulant medications, which have long been used to treat ADHD based on their compelling and well-understood efficacy and safety profile. The stimulant class of medicines includes amphetamines and methylphenidates. Both Jornay PM and AZSTARYS are in the methylphenidate category. The most commonly prescribed medicines are generics, but both Jornay PM and AZSTARYS represent differentiated, important options for patients.
In fact, each brand generated over 760,000 prescriptions in 2025, and we believe there is significant opportunity to increase their share of the market. Despite a number of different treatment options available today, many patients continue to struggle to find the right individual treatment solution. Market research indicates that on average, ADHD patients try about three different ADHD medicines before finding the right treatment option. One benefit of adding AZSTARYS to our ADHD portfolio is that it's complementary to Jornay PM, and it meets the needs of a different patient type. For patients who need efficacy upon awakening in the morning and throughout the day without the need for a booster medicine in the afternoon, Jornay PM is a unique treatment option. It's the only ADHD stimulant that's taken at night and provides efficacy upon awakening and throughout the day.
AZSTARYS is the first and only ADHD treatment with both fast and long-acting medicines in one capsule, providing patients with rapid efficacy that lasts later into the evening. Each drug has a different profile and it can address the needs of different patient types. Jornay PM and AZSTARYS, first introduced in 2019 and 2021 respectively, are differentiated ADHD treatments that have established themselves as important options for patients. HCP perceptions of Jornay PM and AZSTARYS are high. In recent market research from the first quarter of 2026, healthcare professionals rated Jornay PM and AZSTARYS very high in terms of product differentiation, and they have very favorable perceptions of both brands. In addition, 70% of HCPs indicated a strong intent to increase prescribing of Jornay PM, which was the highest among all branded ADHD medicines. 53% indicated an intent to increase prescribing of AZSTARYS.
We also know that if a patient or caregiver specifically asks to try Jornay or AZSTARYS, 70% or more of HCPs will typically honor that request. Jornay and AZSTARYS are highly complementary to one another. Importantly, their combination into a single commercial organization will help Collegium better serve the growing ADHD patient community and increases our standing among healthcare professionals. While both medicines come from the same category of medicine, they are meaningfully differentiated from one another. Jornay has been developed with a dual delayed and extended release technology. It's the only ADHD treatment taken at night and then released in the colon approximately 10 hours later so that it's working upon awakening by the patient. The extended release technology then provides a smooth and prolonged efficacy profile throughout the following day and into the evening. AZSTARYS works differently.
It's the first and only ADHD treatment with both fast and long, long-acting medicines in one capsule. Its immediate release medicine allows for rapid efficacy, followed by a different extended release profile driven by the inclusion of a prodrug, which is converted to its active form over time. Because of these different delivery profiles, physicians tell us that they most commonly prescribe Jornay to patients who need efficacy upon awakening. While the primary patient type for AZSTARYS is for those requiring a rapid onset of action upon taking the medicine and a duration of efficacy that lasts throughout the day. As a result, the types of patients most frequently treated with these medicines differ. For example, roughly 80% of Jornay use is in children and adolescents, with 20% coming from adults.
The distribution for AZSTARYS is a bit more weighted towards adults, with about 1/3 of prescriptions in adults and roughly 2/3 in children and adolescents. Importantly, the patient communities and prescribers are nearly identical for both medicines, which will allow for significant operational synergies. Both medicines have strong market access positions and comprehensive co-pay assistance programs, which are critically important to ensure as many patients as possible have access to these two treatment options. I couldn't be more excited for our commercial team to add AZSTARYS into our ADHD portfolio, and I look forward to keeping the investment community informed of our progress after we close the transaction and take ownership of this differentiated medicine. With that, I'll pass things back to Vikram to provide a quick recap and some closing remarks before we open it up to questions. Vikram.
Thanks, Scott. As you have heard this morning, the acquisition of AZSTARYS represents an important strategic step forward for Collegium. It also closely aligns with the key business development objectives that we established for our organization. It adds a differentiated commercial stage asset to our portfolio, which further diversifies our revenue base and expands our position in ADHD, with the ultimate goal of having a greater impact on the patient communities we serve. It provides significant immediate revenues, increasing both our top and bottom line and accelerating the growth trajectory of our business. It extends revenues out to at least 2037. It reflects both our commitment to investing in innovation as well as remaining financially disciplined, which is further reflected in our expectation that this acquisition will be immediately accretive to adjusted EBITDA, with increased financial accretion expected beginning in 2027.
Our roadmap to create durable long-term shareholder value is clear and as evidenced by this morning's announcement, is also actionable. We continue to execute against three strategic priorities. Driving significant growth for Jornay, maximizing the durability of our pain portfolio, and deploying capital with discipline and intent. Business development has long been central to that capital allocation strategy. The acquisition of AZSTARYS represents another decisive step forward in our evolution toward becoming a leading diversified biopharmaceutical company. This transaction grows our revenue base, enhances our earnings power, strengthens our cash flow generation, and further diversifies our portfolio, positioning us to deliver sustainable value to shareholders today and well into the future. Most importantly, it brings a complementary medicine to our ADHD portfolio, allowing us to expand our impact on the ADHD community. Thank you for your continued interest in Collegium.
We remain focused on executing our strategy, creating long-term value for shareholders, and delivering for patients. We look forward to updating you on our progress in the quarters ahead. With that, we are happy to open up the call to your questions. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for your questions. Our first questions come from the line of Dennis Ding with Jefferies. Please proceed with your questions.
Hi. Good morning. Thanks for taking our questions. We have two. Number one, can you please disclose how much revenue AZSTARYS did in 2025? And I guess what are the inherent assumptions with your quote-unquote in excess of $50 million in second half revenue? Question number two is just around scripts. When you look at scripts, they have seemed generally flat over the last one and a half years or two years. Curious why you think that is and why do you think AZSTARYS is in better hands with you than with Corium? Thank you.
Dennis, thanks for your questions. I want to repeat the question just because your voice was a little bit muffled. Was your first question about what was AZSTARYS doing in terms of revenue under Corium?
Yeah, that's right. In 2025.
Okay. I'll start and maybe I'll invite Pauline to join as well. You know, Corium Therapeutics is a privately held company, and as such, they do not or have not disclosed net revenue. As you know, net revenue has significant variables that play into it, including gross-to-net and WAC and script builds and all of that. What we have talked about and what we've you know done in our diligence essentially has resulted in us making our statement that we expect to do greater than $50 million in the second half of 2026, assuming that the close is in Q2. Historically, Corium has not disclosed net revenue.
Your second question was around script growth. Is that right? Okay. Your question was, it was flat in terms of script growth and where you expect us to, you know, maybe start driving growth. Maybe, Scott, I'm gonna. Can I invite you to answer the question?
Yeah. That's great.
Yeah.
No, thanks for the question. Look, first and foremost, I think what's most critical is the differentiation of the asset when you think about growth. When you look at the flattening of scripts, I'd say Corium did a good job launching this product, right? As a private company, they did it with limited resources. What we have the ability to do is leverage our resources, our commercial expertise, what we've done with Jornay. As an example, they most recently have 100 representatives, and we have 180 representatives. So when you combine our experience, our ability to invest and to leverage our scaled sales force, and then the most important fact, the fact that what I shared in my comments, that AZSTARYS is viewed differentiated favorably and over 50% of physicians intend to increase prescribing.
With that kind of package, that's what gives us confidence that we can grow from here.
Perfect. Thank you.
Thank you.
Thank you. Our next question has come from the line of Les Sulewski with Truist. Please proceed with your questions.
Good morning. Thank you and congrats on the transaction. So as you're thinking about growing out the AZSTARYS side, is there any potential to cannibalize some of the Jornay progress? And then second, with the expansion of Jornay's sales force that you recently announced and you noted that there's 100 reps on the Corium side, how do you think about the synergistic headcount to cover both of the assets? Thank you.
Yeah. Maybe I'll take the second question first and then, Scott, you can take the first one. As far as the cost synergies, we're working to evaluate all of the appropriate resources were gonna be needed to support the future growth and optimize the market opportunity. We'll look forward to providing some more details and including updated guidance upon closing. Maybe, Scott, take the first one.
Yeah. To your question on cannibalization, Les, the answer very straightforward is no, right? When you look at the business, I'll reinforce there's 100 million stimulants written in 2025. Jornay PM and AZSTARYS both had 760,000. There's meaningful opportunity for them to grow. They are different profiles, right? Just to reinforce, Jornay PM is the product that when efficacy is needed upon awakening in the morning, given the night before, provides efficacy upon awaken and provides duration of effect. When you look at AZSTARYS' profile, AZSTARYS is about a product that can give you rapid efficacy within 30 minutes upon taking the product and then a duration of therapy. Very different. Not in a position to cannibalize each other.
When you talk to physicians, that's the primary way they think of the use of two of these products. We're excited to have them both under our leadership to be able to maximize the potential of both assets.
Thank you.
Thank you. Our next question has come from the line of Brandon Folkes with H.C. Wainwright. Please proceed with your questions.
Hi. Thanks for taking my questions and congratulations on the acquisition. Two from me. Maybe just on the contracting side, do you anticipate doing anything differently, going forward now that you have two ADHD products in the bag? You know, how do we think about your lead ADHD product going forward? You know, granted hearing the differentiation and the non-cannibalization you talk about, but, you know, in front of a prescriber, you know, what is your number one drug you detail to them? You know, does that change to different prescribers? Thank you.
Yes. Scott, go ahead.
Yeah. First, when it comes to contracting, look, I'm not gonna get into contracting details right now, but what I would say is we're committed to broad access for both products, which they have right now. The other thing is they both have co-pay programs right now that really help make sure that when a physician makes a choice to prescribe the product, it's written. We feel good about the market access situation. In terms of the deployment, I think the way I view that is, look, these are both assets meaningfully differentiated that we will put the muscle behind to promote. I don't actually think of it as a which is first or which is second.
I think of it as we have a portfolio now of products that can meet the needs of different types of patients that are highly complementary, and so we'll put the promotional muscle behind both of them to reach their maximal potential.
Great. Thanks so much. Maybe just one follow-up. Are you in a position to further elaborate on the regulatory milestones at this stage?
Brandon, could you repeat the question?
I think in your prepared remarks, you mentioned there are sales but also regulatory milestones attached to the deal. Any color on those regulatory milestones?
I think we can provide more color upon closing, Brandon, but I would just couch it as it's more related to the manufacturing side of things.
Great. Very helpful. Thank you.
Thank you. Our next question has come from the line of David Amsellem with Piper Sandler. Please proceed with your questions.
Thanks. I hate to be the one to ask about other potential acquisitions when you literally just announced one, but I can't help but wonder, you know, just broadly how you're thinking about the business and strategy. Now you have a strong beachhead in the ADHD space, and you're calling on psychiatrists. Is the goal to continue to further leverage that infrastructure in psychiatry, casting a wider net in psychiatry? Or is it a pivot to other therapeutic verticals, perhaps rare disease? Or maybe is it a bit of both, and you're just going to take an opportunistic approach? Just wanted to get a sense of philosophically where your heads are at collectively, given the announcement this morning. Thank you.
Thanks, David. Yep, I think, you know, it's a great question. Our strategy, go forward strategy, when we think about business development, it still remains intact. You know, even historically, over the last several quarters, we have, I think, said that our strategy is focused on acquiring commercial or commercial-ready assets in our existing therapeutic areas where we can have significant, you know, synergies. So drive growth, but also be able to drive operating leverage. But at the same time, we have also been open to other areas, potential areas, especially ones that are capital efficient, like rare disease. On a go-forward basis, that strategy does not change. You know, if anything, this acquisition further reinforces our strategy of driving meaningful growth through business development in the areas where we have already made significant investment.
We still remain open to other areas down the road, and they could be outside of psychiatry, could be outside of pain, but would need to be capital efficient. At a high level, I would say that our go-forward strategy remains consistent with what we have stated before and what we have executed against today.
Okay, that's helpful. Just a quick follow-up on sales force. You know, looking back historically at ADHD, namely Shire, I mean, their sales force supporting Vyvanse, of course, was quite large. I don't know the exact number, but it was certainly a good bit higher than what you have. I guess my question here is just given the nature of promotion sensitivity and promotion intensity in the market, and then given that you've got, you know, good exclusivity runway here for AZSTARYS, how do you think about periodic sales force expansions and will you be taking, I guess, a stepwise approach to further headcount expansions over the next few years?
Yeah. Thanks for the question, David. You're exactly right. We will always take a thoughtful approach on what is the most appropriate footprint to optimize our market opportunity. You know, with the addition of AZSTARYS, that obviously gives us a significant, potentially significant opportunity to expand our offering for the ADHD community. Even prior to this announcement, as we have said before, even with just Jornay PM, if we find that at some point in time we needed to expand our footprint, we would do so. Our sizing of 180 representatives was driven by analytics and by the fact that we expected to call on more than 21,000 prescribers.
On a go-forward basis, we're now doing the work to assess exactly what that looks like, to ensure that we can maximize the opportunity with both medicines in our portfolio. You know, upon closing, we will keep you updated on where that shakes out. I think that at the heart of it, the main message here is we have invested in supporting the ADHD community with Jornay PM. We now have an opportunity to do that with the addition of AZSTARYS, and we will absolutely optimize our footprint to make sure we serve the needs of those patients appropriately.
Okay. Thanks, Vikram.
Thank you. Our next question has come from the line of Serge Belanger with Needham. Please proceed with your questions.
Hi, good morning. Thanks for taking my questions. First one, can you just compare the margin and gross-to-net of AZSTARYS and how they compare to Jornay PM? Secondly, regarding the valuation framework for this acquisition, you know, when we compare it to Jornay PM, which you acquired in 2024, this seems to be a little bit higher. Jornay PM was a high-growth asset, at least based on prescription. AZSTARYS seems to be flattish. So maybe just give us a little more thoughts on the framework for the valuation. Maybe it's just an inflationary environment. Thank you.
Thanks for the question, Serge. I'll take both of those. On the gross to net front, today, I cannot comment on AZSTARYS' gross to net profile, but what I will say is, as we noted, we expect in the second half of 2026, AZSTARYS to do $50 million or more in net sales. As a private company, you don't have visibility to their historical financial statements, and I don't have anything to provide you there. But what I can tell you is at close, we will provide you with updated guidance, and then following close, we will have obligations, and we will prepare pro forma financial statements that will be retrospective. More information to come. We look forward to updating you, upon close and thereafter, on the first question.
On valuation, what I would say is, while we're not going to disclose details of the valuation process, we do believe the deal is a fair value for AZSTARYS and positions Collegium to drive substantial returns. I would note, importantly, that AZSTARYS has the expected exclusivity to December 2037, is meaningfully longer than the Jornay LOE expected in March of 2032. In addition, our upfront consideration includes a reimbursement for a buyout of the future royalty obligations on that asset, so it is unencumbered from a royalty perspective.
Got it. Thank you.
Thanks for the question.
Thank you. We have reached the end of our question and answer session. I would now like to hand the call back over to Vikram Karnani for closing remarks.
Thank you. As you have heard this morning, the acquisition of AZSTARYS represents a very important strategic step forward for Collegium. It also closely aligns with our key business development objectives that we established for our organization. We look forward to keeping you updated as we move towards closing in Q2 of 2026. Have a great rest of the day, everyone. Thank you.
Thank you, ladies and gentlemen. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.