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

Thank you. Thank you. Great. Good afternoon. My name is Bob Klingenberger. I'm an Executive Director at Morgan Stanley. I'm really pleased to be joined by the Collegium team here this afternoon. Vikram Karnani, President and Chief Executive Officer, and Colleen Tupper, Executive Vice President and Chief Financial Officer. And just before we get started for any questions, research disclaimers, please just visit MorganStanley.com/researchdisclosure. And if any questions, please reach out to your Morgan Stanley representative. And like I said, thrilled to be joined here by the Collegium team. And I think, you know, Vikram and Colleen, just maybe to kind of kick things off, historically, you know, I think the company has been viewed as a, you know, really a pain management company. I think fair to say that the story today is increasingly diversified and, you know, just reshaped. Maybe to kick us off would be great if you could kind of describe the transformation and how you guys, especially Vikram since you've been in the seat, have really kind of transformed the profile the last couple of years.

Yes, first of all, thank you. Thanks for having us. To give you a little bit of background on Collegium Pharmaceutical, Inc., we describe ourselves as a dynamic, growing biopharmaceutical company, focusing on improving the lives of people living with serious and often misunderstood conditions. There are three main components to how we do what we do. We identify differentiated commercial assets or medicines that address meaningful unmet needs for patients. We apply focused commercial execution strategies and efforts to accelerate growth. And then finally, we create value through strategic acquisition and business development. We've gotten really good at acquiring companies or products, integrating them, and quickly putting them on a path to growth. To date, as you rightly identified, we've built the industry's leading organization when it comes to supporting patients with severe pain, and more recently, over the last couple of years, have started the diversification part of our journey, and have really expanded into ADHD. While the pain portfolio remains a significant portion of our business, in the last couple of years, the ADHD portfolio has grown to almost 30% of our annual revenues now. Our first ADHD medicine, which we acquired in 2020, JORNAY PM, grew 48% in 2025, and we expect approximately 31% growth this year, and that's at the midpoint of our annual guidance. And that represents revenues of about $190 million to $200 million in 2026. In May, we acquired our second ADHD medicine, AZSTARYS, which is a highly complementary offering to JORNAY PM. And we expect that to deliver $65 million to $75 million in revenues in a partial year, because the deal closed in May. So, when you take a step back and look at our total diversified portfolio of medicines, both between pain as well as ADHD, it represents about $825 million to $855 million in revenue this year. That's our updated guidance. Represents 8% annual year-over-year growth. And it puts us on a path to achieving $1 billion plus in revenue in the future. Most importantly, this growing business is also continues to be highly profitable. And so our EBITDA margins are in excess of 50%, well above the typical margins that you see in our industry, especially for mid-sized pharma companies, or even commercial biotech companies. And I think looking ahead, we remain focused on our efforts to drive growth in ADHD, maintain the durability of our pain portfolio. And then frankly, deploy capital in a highly disciplined manner through business development and expanding the portfolio, debt reduction, strengthen the balance sheet, and then continue to be opportunistic when it comes to buying back shares. In a nutshell, that's the company.

Yes. No, look, I think you covered a lot of that we'll get into in a little bit more detail, but I think a really helpful overview. I think the first piece that you sort of touched on there was, you know, ADHD becoming an increasingly important part of the business, especially with the recent acquisition. And how do you think about, you know, sort of, you mentioned the products being highly complementary, JORNAY PM and AZSTARYS. How do you think about the complementary nature and how you're positioned in that space?

Look, I think it's important to understand, like, take a step back and just let's talk about the ADHD market as a whole. In 2025 alone, there were 111 million prescriptions written in this market. So it's a very large market. It's also a growing market, enjoying about 8% CAGR between 2020 to 2025. So 111 million prescriptions growing at a fairly high growth rate, which signals high patient unmet need. Patients on average will try and cycle between two to three different ADHD medicines before they finally arrive on the one that actually works for them. Of the 111 million prescriptions, almost 90% of those prescriptions were written for stimulants, and the balance is for non-stimulants. So the vast majority are stimulants. And of that 90%, which represents close to 100 million prescriptions, about 26 million prescriptions were for the methylphenidate category. So just to give you a sense of size. What this implies is there is a significant amount of opportunity for both JORNAY PM as well as AZSTARYS to grow within the methylphenidate stimulant category. As a reference point, both JORNAY PM and AZSTARYS in 2025 did about 760,000 prescriptions each. So 26 million prescriptions written annually. Each of these brands had 760,000. So a significant opportunity. Talking about the differentiation and the complementary nature of the two medicines. JORNAY PM is the only stimulant ADHD medicine that is taken at night, and it provides morning efficacy upon awakening, which is a significant stated unmet need for ADHD patients. It's one of the most frequently prescribed medicine to patients that have a, that have some structure to their schedule and can predictably, they need to wake up at a certain time. Think of school going kids, for example. On the other hand, AZSTARYS is the first and only ADHD medicine that has both fast and long acting medicines in one capsule. So rapid onset of action, uh of the reaction lasting several hours up to 13 hours. AZSTARYS is most often prescribed to those patients who would say that the morning is manageable, but are really in need for rapid onset of action and need flexibility in their schedule. And then of course have continuous therapeutic coverage as a need for the rest of the day. Together, these two medicines provide very nice complementary set of options for physicians. And that's, you know, pre-acquisition, that's what we heard back from physicians, and post-acquisition, as now we've been out there for a few months promoting both medicines, those, I guess, practices have been validated.

And, you know, just I think helpful to lay out, right, the landscape. And I think one of the, you know, one of the proof points, at least as you all have, you done with JORNAY PM, which you've had in your portfolio for a couple years now, is really kind of changed the trajectory of that product. So could you talk about, right, you talked about sort of the differentiation from a, it's the only therapy that you can take at night and wake up. you know, with the fact, you know, what else has been kind of a factor as you've really expanded that product and it's continued to see growth as you've talked about with the guidance for this year?

As a reminder, we talked about the fact that JORNAY PM grew 48% year over year in 2025, and is expected to grow 31% this year. So very healthy growth rates for this medicine. This growth is driven by a few factors. Number one, the product profile of JORNAY PM is viewed highly favorably by physicians. When we've done research, as a reminder, it's the only ADHD medicine that you take at night, gives you efficacy upon awakening in the morning. Physicians ranked JORNAY PM in market research, ranked JORNAY PM as the number one branded ADHD medicine in the category in terms of product differentiation. With a score that is far higher than even the second ranked medicine in the in the same category. In addition, in the same research, more than 70% of physicians indicated a strong intent to increase prescribing, right, which was also the highest among all branded medicines in this category. Secondly, we know ADHD is a highly promotionally sensitive market. So based on growing opportunities within this space, we have increased the size of our sales force that is calling on physicians and increased the size of the called-on HCP universe for these medicines. The current sales force is about 190 representatives promoting both JORNAY PM as well as AZSTARYS. And our early insights are suggesting that physicians are very receptive to a single sales force that brings both JORNAY PM and AZSTARYS, both complementary medicines to the table. Physicians, it improves our commercial efficiency and it also expands our reach at the same time. I think in today's day and age, what has proven particularly effective is marketing through digital and social media channels. We've successfully raised awareness of JORNAY PM over the last couple of years, both with physicians as well as with patients and caregivers. So I think in terms of future growth, I would say that we continue to see growth in new prescribers. I mean, in our last earnings call, we talked about the fact that JORNAY PM now is prescribed by more than 30,000 physicians, which represented more than 17% growth year over year. So, we continue to expand the universe of physicians that are prescribing JORNAY PM, and within the practices that are prescribing JORNAY PM, we're starting to see increased depth or increased prescribing within the practice. So, both increased depth as well as breadth of prescribing will drive JORNAY PM growth.

Yes, and I think when you first acquired the product, right? You had a, you know, kind of a peak opportunity in the couple hundred million category, obviously with the growth you've seen. I mean, you talked about kind of the areas that you feel like you can continue to expand the product, but I guess how should, how should we be thinking about kind of the long-term trajectory?

We never actually provided a specific peak sales estimate for JORNAY PM or for AZSTARYS for that matter. I think the range, if you look at sell-side estimates, they're probably in the $300 million to $500 million range. But we definitely have not provided any peak sales estimates. In addition, we're yet to see the potential impact of having AZSTARYS now in the portfolio as well. And like I said, we're one of the only teams that is out there that is promoting a portfolio of branded medicines, both that are considered highly differentiated, highly complementary, and bringing value to patients. What I can tell you is that based on our experience thus far, based on the KPIs that we follow and based on the momentum that we see, we will continue to increase the number of prescribers that will prescribe JORNAY PM and AZSTARYS. We will continue to see increased depth of prescribing for both JORNAY PM as well as AZSTARYS within the prescriber universe. And solid profitability for the brand. You know, both JORNAY PM and AZSTARYS enjoy very good payer coverage. The access is very good, our patients support programs, our co-pay assistance programs are viewed very favorably by patients as well as physicians. So, you know, strong execution in the future will continue to drive momentum for both these medicines.

Yeah. And you touched on this, I know, when you acquired AZSTARYS, but maybe just kind of remind us a little bit. You've talked about the 190 reps that you have, you know, in terms of, you know, needing with both products, you know, are any plans in terms of expansion and, you know, just how do you take some of the success you've, you know, the playbook you've run for success with JORNAY PM?

And kind of apply it to AZSTARYS as well? Yes, look, when we, so as a reminder, pre-acquisition, about 180 representatives were promoting JORNAY PM alone. And that was based on our analytics at the time, that was the right size. We were, our target universe that we were going to call on was about 21,000 positions. Post acquisition, when we redid all the analysis, we increased our target universe to now 27,000 physicians. So we're able to do that with a very modest increase in the sales force size. So we've now gone from 180 representatives to 190 representatives, right? So just adding 10 more geographies allows us to very efficiently and effectively call on that entire universe of physicians of about 27,000 targets. I think in addition to the efforts of our sales force, something that we saw deliver impact in 2025 in the in the in the tail end of the year was the increase in our marketing efforts. We put out new marketing campaigns, both in digital channels as well as social media. We had a social media influencer campaign that was launched last year. And throughout the course of the back-to-school season last year and into 2026, we continued to monitor the impact of all of these programs. Post acquisition, of AZSTARYS, we also increased the size of the MSL team to continue to help educate physicians on the benefits of both medicines. And I think what we saw was, as I've already said, what we saw was a dramatic increase in growth in JORNAY PM. And what we have seen with AZSTARYS is an opportunity to do much of the same, especially when it comes to highly efficient, targeted, cost effective social media and digital marketing. So what you should expect to see is some of those programs now play out in the back-to-school season this year, we'll monitor the impact and you know, we'll continue to refine our programs as we enter next year and beyond.

Yes. No, I mean, exciting to have both of those in the ADHD franchise. You know, maybe just, we talked a little bit about the pain portfolio you mentioned in the introductory remarks. I mean, I know it remains an important source of sort of revenue and cash flow. Just maybe talk about a little bit the different initiatives you have and some of the points of, you know, I think durability, longevity for that franchise that I know you've discussed on recent earnings calls as well. Yep.