Collegium Pharmaceutical, Inc. (COLL) Earnings Call Transcript & Summary

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.

And let's just dive in into questions. And I think that what's sort of top of mind is, at least for me, is Jornay PM, 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 the way I think about it, I'd love to hear your thoughts is 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 pretty crowded market, but nonetheless, unique profile. So with all that in mind, how do you think about the opportunity here?

Yes. First of all, thanks for having us. Jornay PM is the only -- it's a unique differentiated medicine. First of all, 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 raised guidance. At our Q3 earnings call, we raised guidance for Jornay for the full year to be in the range of $145 million to $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. And we think there's a long runway of growth we get for Jornay in a crowded ADHD market.

Yes, crowded, but very large in terms of volume.

Crowded, very large in terms of volumes. The overall market is 100 million prescriptions and still growing at pick your favorite number, 6% to 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 Journey brings for patients as well as for physicians.

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 sort of a multidisciplinary space. There's psychiatrists, there's pediatricians. So talk about the -- how you're tackling those two pieces of the market.

Yes. When we acquired Ironshore Therapeutics, which brought us Jornay, there were 125 representative -- 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 believe 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. And the balance 20% is a mix of mid-levels, some high decile primary care, those type of other specialties, which at the end, ladder up to psychiatrists and pediatricians.

So 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. These are big audiences. So how do you think about that going forward?

Yes. David, right now, we believe that the 180 sized team is the appropriate size for calling on those top targets, the 21,000-plus targets with the right level of frequency. The expansion just took place in April. So typically, it takes about 6 to 9 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. So I think what we'd like to do is have 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 we'll revisit the question at the right time.

So can you remind us of the split between adults and pediatric ADHD patients currently? And where are you seeing the most growth come from?

Yes. We -- so in the ADHD space, you have stimulant, nonstimulants and you got methylphenidates and amphetamines under the stimulant category. Jornay PM is a methylphenidates with the Delexis technology. So we tend to move and skew more with the methylphenidates 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 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, adults were 29%. Now peds being the large majority was about 18%. But what we are seeing is reasonably good uptake even in the adult segment. So we're pretty excited about that.

To be clear, that will be -- and 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 over market. Is that still the case?

Yes, I believe so. From the overall market space, that does seem to be the case. Just to give you a sense of overall split, about 22.5 million, 23 million patients -- diagnosed patients, about 15.5 million to 16 million are adults and 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 there's generics out there for Concerta and other forms of methylphenidate. So how should we think about that?

So our -- first of all, our access from an overall payer standpoint is quite good. We have -- our split of business is about 2/3 commercial, about 1/3 Medicaid. And in terms of -- 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 your onerous prior authorization. Typically, they are attestations from a physician that the patient has tried and failed. They don't have to rego through another whole cycle.

Got it. Okay. And just remind us what the gross to net is on Jornay PM. How that compares to other brand ADHD products such as Supernus' Qelbree?

So in the third quarter, gross to net for Jornay PM improved as we expected with the seasonality throughout the year. From a full year perspective, we now expect gross to net to be about 65% in the mid-60s. That is an improvement over last year at about 71% for the full year. That improvement is down -- or better than our original expectation of the high 60s. That was helped by improved returns and some other factors around co-pay program. As you compare it to other brands in the category, particularly the nonstimulants, because it's a smaller universe of competitors and fewer generics, 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 going to normalize in that mid.

Okay. 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 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 help us better understand where you're getting these patients from?

Yes. I'd say, certainly from switchers, right? Majority of the patients are switching from another medicine on to 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, 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 realize the benefit of Jornay PM. That's where we're starting to see, but that's a small number.

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 the same question for Nucynta. Let's start with Belbuca.

Sure. So I'm going to start with a global comment across the full pain portfolio, inclusive of Xtampza, Belbuca and Nucynta, which is that we don't see any single party that has met all three criteria required to launch a generic competitor. That criteria being regulatory approval, tentative approval, legal clearance, as well as access to manufacturing in the API. And so there's different flavors of that for each of our brands and then the different parties 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. To date, they do not have tentative approval, and they have relinquished their first filer exclusivity. There's strategic questions around Teva 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, for Belbuca. Then there are Alvogen, who is currently barged from the market until December 2032 and Chemo who is pursuing non-infringement, but to date, have received five CRLs. So we feel confident, one, it seems to be technically challenging. But if they are able to sort of crack the code, we feel very strongly in our IP case.

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. It's -- so it's a -- 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. It's really rightsized and the right amount of investment. 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 going to invest right through and not take any action until -- when and until something was to happen. 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 payer action has absolutely the ability to grow volume.