Collegium Pharmaceutical, Inc. ($COLL)

Good morning, everyone, and thank you for joining us at the Barclays Miami conference. My name is Jenna Davidner. I'm one of the analysts here on the specialty pharmaceuticals team, and I have the pleasure of hosting Collegium Pharmaceuticals. Representing the company is the CEO, Vikram Karnani; on his -- on my left in the middle is the CFO, Colleen Tupper; and down on the end is the company's Chief Commercial Officer, Scott Dreyer. So maybe to level set the conversation, Vikram it's been a big year. You are a more recent addition, new CEO. You guys made an acquisition towards the end of 2024, bringing in a new growth asset, diversifying the top line. Maybe you can just, first of all, give us a brief overview of the company and walk us through 2025, maybe how you performed better or worse than you expected. There's a couple of guidance raises throughout the year.

Yes. Thanks, Jenna. Great to be here. Thanks for having us. 2025 was a tremendous year for us. It was a record-breaking year. We had record net revenues, record adjusted EBITDA, a solid year of growth, but also hitting on all of our strategic priorities. At the beginning of last year, we had laid out 3 of our top priorities, and one of them was accelerating the growth of Jornay which we did very successfully. Jornay PM grew 48.9% year-over-year, marking a significant period of growth for the brand, especially in its sixth year on the market. The second priority was to continue to maximize the durability of our pain franchise. And that franchise also delivered 6% growth year-over-year. Again, these are products that have been on the market for some time. And the company found -- has continued to find a way to drive growth and actually generate a significant amount of cash from that business. And number three was we committed to disciplined capital deployment. At the end of last year, we strengthened our balance sheet. We had a new credit facility that was signed that Colleen can go into some more detail later here. And as you said, we raised guidance twice last year and most recently in November. So throughout the year, we set expectations, we beat them, we raised expectations, we beat them again, and it was thanks to the tremendous performance by the team.

Awesome. And let's talk about the individual products for a few minutes, and then we'll wrap it up with how this ties into guidance. So starting with Jornay. And as you mentioned, I think at the start of the year, you had guided to 30% -- 35% pro forma. You finished much closer to 50%. Can you break that performance down between the volume growth and maybe any pricing impacts that you saw throughout the year that benefited the top line.

Yes. So Jornay beat the growth -- on Jornay PM, as you rightly suggested, we have -- we grew both volume as well as net price. Volume growth was substantial. It was in 20% year-over-year. We -- over the course of the year, we continued to put in place commercial initiatives, and Scott can go into those details in a bit. But everything from sales force expansion to new marketing programs to -- that were timed for the back-to-school season, which is really important time of the year for Jornay and for the ADHD market in general. That volume growth was complemented by some benefits on the gross to net side of things as well, which put together gave us a really strong start to Jornay PM within the control and ownership of Collegium.

And just before we move to 2026, can you also give investors an overview of what attracted you to this asset?

Yes. I mean I can -- maybe I'll kick that off, but I would love for Scott and Colleen to jump also into it. If you take a step back and think about -- we've talked about what type of assets are within our strike zone, if you will, from a business development standpoint. Jornay PM hit every single one of them, right? It's a commercial asset. It's in a market that still has unmet need. It's a differentiated asset that brings something meaningful to patients, i.e., there is demand for it. It's primarily in the U.S. where we have a strong footprint. It allowed us to diversify into a new area beyond pain. And frankly, it was a brand that needed some more commercial firepower behind it. And that is something that we could do something about given our commercial execution over the years. So maybe, Scott, if you want to jump in and talk a little bit about a lot of that initial diligence was done prior to my joining the company.

Yes. I think a double click on the differentiation is key. So large market, ADHD is a growing market, right, a lot of products, a lot of options. And so Jornay in that sea of options is the only single medication that's dosed once at night in the evening. That was [indiscernible] that meets a real unmet need, which is efficacy upon awaken in the morning. Many children and many adults have the need for that, and it gave us the only product that you could dose works upon awakening, which was a huge opportunity that we thought we could leverage because there was room for investment. So our 2 focal points were raising awareness among physicians and among patients and caregivers. And so we made significant investments. We've seen awareness among physicians go up based on the expansion of our sales force and more digital marketing. And then for patients and caregivers, they had no idea that Jornay was available. And so the programs you've seen us put out there are to raise that awareness and the response has been really strong.

And while I have you, Scott, when you brought Jornay into the fold, can you remind us what the sales infrastructure you acquired, how you've expanded that, where those reps are in productivity? And then I'll have a couple of follow-ups.

Yes. So we acquired the brand with 125 sales representatives. We moved to 180. With that, we were able to expand the target universe from 17,000 to 21,000. So we got both greater breadth of customers and more frequency against those customers, all designed to raise awareness and adoption. And we're really happy with what we're seeing. I think a couple of anchor points of that are, number one, if you look at those 4,000 physician targets we added, almost all of them have written a prescription now. Most of them an increase in depth as well. And so greater reach and frequency, seeing a good response in terms of prescribing and now our focus is [ deprescribing ].

And you also announced a partnership with Paris Hilton, which is pretty interesting. And I've seen some stuff about that in the media. Just would love to get your take on the strategy and when you expect that could maybe have more of a top line impact?

I think that's a great initiative that's complementary to our overall goal of raising awareness, right? So Paris Hilton was never diagnosed as a child, misdiagnosed, then was diagnosed, struggled to find the right ADHD medicine and actually ended up on Jornay PM. Ironically, she's been an advocate for the ADHD community long before that. And so we saw it as a great opportunity to take someone who's been a vocal advocate for the needs of patients with ADHD, had a great experience with Jornay and has over 27 million followers who listen to what she has to say. And so all designed to raise awareness. That one leans a little bit more toward the adult community on the impact that Jornay can have for someone with ADHD.

Awesome. And I'll have Colleen tie this together with the outlook. So 2025, the first year -- first full year of the product, better than expected. The commercial investments are going great. And you gave your 2026 guidance that came in ahead of even what people were thinking with very strong 30%-plus growth at the midpoint. So just given this conversation, can you layer in what -- how the commercial side, pricing volume impact, like what gives you the confidence? And what are the key pieces to that 30% growth?

Yes. For Jornay PM, our guide this year, as you know, is $190 million to $200 million, 31% up at the midpoint. That is really going to be driven by demand. It's really prescriptions that are driving that growth this year, and that's the pull-through of all those investments and the increased awareness. In 2025, while the performance was a mix of gross to net improvement and demand growth in '26, it will really be on the demand side. We ended full year 2025 with about 64% gross to net, and we expect going forward, there will be stability in the mid-60% range.

Awesome. So now let's shift gears into the pain portfolio, and I'll start with Xtampza and Belbuca. So in 2025, both of these products grew year-over-year. There is maybe some different volume dynamics between the 2 pricing dynamics. So maybe, Colleen, if you wanted to just give us the overview of how those products trended last year, and then we'll focus on 2026 after.

Absolutely. So for the pain portfolio across all 3 brands, Nucynta, Xtampza and Belbuca, we had low to mid-single-digit growth on all the brands. That was a combination of, I would say, stable to regrowth on the demand side and -- but predominantly pricing. We have set out the past few years with a really firm payer strategy, whereby depending on which brand is in its life cycle that we were looking to improve profitability. And so that helped fuel the growth we had last year. For Xtampza and Belbuca specifically, what you saw on the volume side at the start of the year, which was a bit of a pullback, and that was a result of one formulary losing that formulary position for both of those brands. So as you saw in the beginning of the year, while it was a positive revenue impact, you had a volume decline and then you saw those brands stabilize and then start to return to slight growth at the end of the year.

And I think a good theme with the pain portfolio is durability, just given there's -- and we'll focus on some of the LOE, and we're going to ask some more Nucynta specific questions as it relates to 2026. But it's -- given all the moving pieces, it feels like a durable, stable, strong cash flow generating portfolio. And so just talk about 2026, if you pull out the Jornay PM guidance, it kind of implies core pain is down in the low single-digit range. And there's going to be some implications on Nucynta, which we'll get to next. But compared to the overall low single digit, what are you thinking for the trajectory of Belbuca and Xtampza this year in relation to that?

You're going to see for Xtampza and Belbuca stability to a low grower and really that overall pullback in the pain portfolio guide when you back out Jornay relates to the dynamics for Nucynta for the remainder of the brand in that portfolio. You see a stability to slow grower. It will still be a combination of demand as well as price.

Awesome. And then for Nucynta, there's generic competition coming in -- well, now it is the first quarter, but I think it would be helpful to just lay out because there's a few different time lines, there are different players involved. Can you just update us on the Hikma relationship and maybe if the trajectory is potentially more stable just given the AG partnership and the economics you get?

Yes. Well, first off, for a variety of reasons across the entirety of the pain portfolio, I think we're going to see even upon generic entry that we have a longer and more robust tail. The exact dynamics of that and what the impact is will vary. Specifically for Nucynta, if you recall in 2024, we announced an authorized generic agreement with Hikma. We chose them as our partner there so that we could give more certainty to the market as well as to our own planning on what would the dynamics be when a generic was to enter the market. We have very favorable economics in that agreement with the tiered profit share that starts in very high. And what has recently transpired or is about to transpire is for Nucynta ER, Hikma imminently will launch this quarter, their authorized generic version of Nucynta ER. The next potential player to come in, in that space, we expect is Teva, if they so choose to in July of 2027 and then Alkem in 2028 because they did not adopt the skinny label. So with ER, you're going to see an authorized generic branded market for some time. On the Nucynta IR front, we recently announced that Hikma launched the authorized generic version of the immediate release as well as a small player has announced that they have final approval for their generic version of Nucynta. In the IR product specifically, there were a few other players, the ones that I mentioned and a few others that could launch to date, none of them have final approval beyond the single entity that I mentioned. And we believe, based on our canvassing of the intelligence out there and our scoring on the manufacturing situation that all of them are somewhat limited in their ability to have commercial scale. And so while they may choose to come in, we believe their ability to compete will be limited.

And I know you mentioned Teva, and I want to focus on them a little bit because they're somewhat involved on each of these products related to settlements and so forth. So you mentioned Teva has a settlement for July. You talked about some of the manufacturing and the planning and what activity you're seeing. And so I was just curious if for Teva specifically, what you're seeing out of them in terms of their motivation on generic Nucynta?

Certainly, and maybe I'll speak across the entirety of the pain portfolio because I think the answer is the same across our portfolio. I can't speak for exactly what Teva will choose to do. For Xtampza, there is a settlement for September of 2033, for Nucynta July of 2027 and Belbuca in '27 as well in January. What we have seen over the past few years, obviously, is a shift in strategy that does not seem to align with launching additional opioids that are and/or any branded products that are not in the top 1/3 of the marketplace already. So there, I think, is a strategic decision to be made. There has been no activity on either Nucynta or Belbuca, i.e., getting tentative approval. And for Belbuca specifically, we know that they have relinquished first filer exclusivity. Another data point we watch and the market could watch as well is IQVIA. They have all but pulled away from distribution of oxycodone IR. And so there are a number of market signals that seem to question whether or not they'll choose to enter.

And the reason that we're focusing on this is with Belbuca in their 2020 settlement and thinking about Teva's motivation or lack thereof, what is the next Belbuca generic settlement beyond what Teva has?

Yes, that's a great question. There are no other settlements. But at the time that the agreement between the predecessor company, BDSI and Teva was entered into January 2027 was a 6-month advance of the then latest expiring patent. Since that time, patents have been registered for December of 2032. So beyond Teva, there's been 2 other ANDA filers. Alvogen and Chemo have been fully litigated on invalidity and BDSI, the predecessor company prevailed. And so there is a bar in the market until December 2032 currently for that. Chemo is pursuing noninfringement on their own. But to date, they have not been successful in producing an equivalent product. They've had 5 CRLs. If they do succeed in the future, we feel pretty strongly about our IP case. The litigation process would we start.

And maybe this one is for Scott. So in terms of how you're investing in these core pain products, specifically Belbuca, like what's your strategy for investing in this product as it relates to some of these different LOE time lines?

I think for the pain portfolio, the biggest investment we have is our field force, right? And it's a very efficient investment. So as the pain market has shrunk, targeted physicians are about 11,000 pain specialists that we call on. And so we do that with a field force of 95 people. So you take that sales force combined with some awareness marketing and mostly patient support resources when someone gets on the product, whether Belbuca, Xtampza or Nucynta, and that's the package that we have in place that we think efficiently commercializes the products the right way.

Awesome. So we've talked about Jornay, we talked about pain. Let's tie this together with the full year 2026 outlook. And it's worth just commenting again on, obviously, Jornay is a new growth driver, diversifying the business, but it's not lost on us how durable this pain -- more mature pain business is, the cash flow generation, your EBITDA margin profile and how that's enabled you to keep your leverage low despite doing an acquisition. So all these pieces together, can you just remind us what the outlook for 2026 is, what gives you confidence in the top line and maybe some of the investments and spending on Jornay and pain, how that will flow through into your EBITDA margin profile?

Great. So as a reminder, for overall total revenue, we're guiding $805 million to $825 million this year, which is up 4%, predominantly driven by that Jornay growth. The guide is $190 million to $200 million, up 31% year-over-year. Falling to the bottom line, we are guiding $455 million to $475 million. So this is a business, especially with the pain portfolio and how much efficiency and leverage we're able to get there that generates significant cash flow. We had a full year free cash flow of over $325 million last year, and that continues to grow. And as noted previously, on the top line, it's really driven by demand growth for Jornay, stability across pain with a bit of compression on Nucynta due to the market events this year. And our bottom line is stable year-over-year, which accounts for the investments we started to make in Jornay last year and then a full year impact.

Awesome. And then on capital allocation, which will probably be split between Vikram and Colleen, can you guys just refresh us on your overall capital allocation priorities? There's been a nice combination of share repurchase over the years. You've done deals. I know you've talked about different parameters and things that you would look at in a potential asset. You did a refinancing. So whoever wants to start, maybe we can talk about those pieces.

Yes. Happy to start. And if you take a step back and think about our capital allocation priorities, we look at it in 3 different ways. Number one is looking to continue to diversify our portfolio, add new products via business development, as you rightfully said, opportunistically repurchasing shares and returning value to our shareholders. And number three is paying down debt and strengthening the balance sheet. In terms of the first one in business development, I think our strategy there has not changed dramatically. We still look for -- we're looking for commercial or commercial ready assets that are primarily marketed in the U.S. given our footprint. We look for assets in the $300 million to $500 million peak net sales potential and LOEs into the 2030s and beyond so that we have longevity of revenues. As far as therapeutic areas is concerned, we look for assets that have synergistic value with our existing footprint. So pain specialists and within ADHD, psychiatrists and pediatricians. We've made a significant investment in those areas, and we look for -- primarily look for assets that can be synergistically deployed in one of those or multiple specialties. Probably the only exception where if we step outside of those names would be those areas where we can be highly capital efficient. What I mean by that is where the cost to commercialize is not prohibitive, right? So for -- an example of that would be rare disease, where your cost of commercialization is low, and it also fits those criteria that I laid out previously. And I think the last thing on business development would be the size of the transaction. We previously said that we're comfortable levering up to 3x net debt over EBITDA. We finished last year just under 1x. So that -- if you look at our EBITDA, if you look at 2 additional turns, it gives you a sense of what type of transaction we're looking at up to $1 billion with -- just given the strength of our balance sheet. And maybe, Colleen, if you can touch on the refinancing that we did at the end of last year, please?

Sure. So we moved our term loan facility out of private lending into a syndicated bank group. We were able to achieve much significant cost of capital reduction. Our interest rate is SOFR plus 2.75% right now. So we were able to shave more than 200 basis points off. We also have more flexibility with a delayed draw in a revolver as well as the ability to prepay all or some at any point in time.

Awesome. And just to give you guys the last word and close out, it's very clear you have a new attractive growth asset. It diversifies the top line. You have a very durable pain business with some potential upside on some of these LOEs. And it's just taking these things together. And maybe you can also comment on some of the macro situations in the Middle East and anything like that. But just overall, the stock trades in a more distressed type of LOE situation. So I'm just curious to hear your thoughts and tie all this together on what maybe people are not appreciating enough about how Collegium has transitioned and diversified while also maintaining a very durable pain portfolio?

It's a great question. Look, I think we've -- as you said, we've got a very strong portfolio of products. We have a growth driver in Jornay, which we have demonstrated significant growth beyond expectations already in the first year. We have a durable pain franchise for all of the reasons that Colleen went through. And I think as time progresses, that will probably become a bit more apparent to investors and shareholders alike. So there's more upside to be had there. And finally, I think we continue to look for ways to expand our portfolio, diversify further on the strength of a very strong balance sheet. And as far as the dynamics in the Middle East are concerned, I think the only point I'd make there is, given the nature of our business, given that our supply chain is largely contained within the U.S., our customer base is fully within the U.S. We are largely immune and relatively unaffected by things that are happening at the macro scale.

Awesome. Thank you so much.

Thank you.

Thank you.