Q3 2020 Collegium Pharmaceutical Inc Earnings Call
Greetings and welcome to the clean <unk> Pharmaceutical Inc. Third quarter 2020 conference call. At this time all participants are in listen only mode. A question and answer session will follow the formal presentation if.
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As a reminder, this conference is being recorded it is now.
My pleasure to introduce your host with Alex Hello, Hello.
Investor Relations for coming Thank you. Please go ahead.
Welcome to the clean Air Medical third quarter 2020 earnings Conference call. This is Alan that's all I had.
After relation for fleet you I'm joined today by John <unk>, Our Chief Executive Officer, Paul Reilly, Our Chief Financial Officer, and Scott Schrier, Our Chief commercial officer.
I guess they call we want to remind participants that none of the information presented today is intended to be promotional and 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, including and without limitation the impact of the cold 19 pandemic threats that we may not successfully commercialize xtampza yard and the New center franchise and that we may incur significant expense and may not prevail encouraged her future opioid industry, let it go.
<unk> and investigation patent infringement litigation or other litigation pertaining to our products. These risks and other risks that the company are detailed in the company's periodic reports filed with the Securities and Exchange Commission.
Our future results may differ materially from our current expectations discussed today.
Our earnings press release, and this call will include discussion of certain non-GAAP information you can find our earnings press release, including relevant non-GAAP reconciliations on our corporate website athlete in pharma Dot com.
I'll now turn the call over to clean <unk> CEO, Joe sure Tony.
Good afternoon. Thank you everyone for joining.
On the call.
Sure.
There is strong or been stable for six consecutive court.
Opex for the quarter was down compared to the third quarter of 2019.
Well actually.
We remain committed to let project not growing collegians cost structure in 2020 and beyond.
We were profitable on a GAAP basis for the third consecutive quarter meaningfully increase cash on hand and pay down debt.
And we settle the test exams to ER.
Litigation.
Settlement contemplating the generic launched no earlier than September 2030.
September 2033.
We believe that the settlement confirms the strength of the Extensity our patents state.
Looking forward to 2021, we believe that we have set the foundation upon which Samson normal accelerate begin in January.
Which sequential annual revenue stability will be achieved with the new centre franchise.
Our market access team has done a great job executing our portfolio payer strategy.
As for banks to Samson ER Collegium market Actos team has secured additional exclusive ER oxycodone formulary wins.
Approximately 7 million commercial and Medicare part B loss.
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RP PGP preferred business, which is a high control plan and then the second largest plan in terms of ER Oxycodone prescription.
Company submitted to being the leader responsible pain management, we will continue to work with payers whenever possible to remove nonclinical barriers to our pain portfolio, which health care providers, you favorably and is highly differentiated.
The Collegium team is encouraged by it but not satisfied with the progress that we've made thus far in 2020.
Every person in our organization is focused on finishing 2020 strong while simultaneously preparing for a fast start to 2021.
Confident that we have the people in the portfolio to make it happen.
I'll now hand, the call over to Paul for discussion of the financials.
Thanks, Joe Good afternoon, everyone.
In the face of COVID-19, we ended the third quarter and a strong financial position in the two quarters. Since we've closed the new center transaction, we generated $78 million in cash from operations and repaid $25 million of our term loan.
Our September Thirtyth cash balance was $165.4 million compared to our June thirtyth cash balance of 145.7 million.
Total product revenue was $79.2 million for the third quarter of 2020.
Xtampza EOL revenue was $32.1 million, which is an increase of 21% from the third quarter of 2019, and a decrease of 4% from the second quarter of 2020.
The gross to net discount for extended CR was 60.9% for the third quarter compared to 59% in the second quarter.
The increase in our gross to net discount was driven by Medicare coverage gap.
We continue to expect gross to net discount may be lumpy throughout the year and to be in the low 60% range for 2020.
New Center revenue was $47.1 million for the third quarter of 2020, which is a 1% increase from the third quarter of 2019, and a 6% increase from the second quarter of this year.
Operating expenses were $28.6 million for the third quarter of 2020, which is a 10% decrease from the second quarter of this year.
Our GAAP net income was $11.3 million for the third quarter of 2020 compared to a GAAP net loss of $6.1 million for the prior year quarter.
Our non-GAAP adjusted income was $36.1 million for the third quarter of 2020 compared to $1.7 million for the prior year quarter.
Similar to the last two years, we expect to issue 2021 financial guidance in January.
We anticipate providing guidance for adjusted EBITDA instead of non-GAAP adjusted income like we did this year.
We believe that adjusted EBITDA is a more helpful metric for investors and analysts please.
Please see our earnings release and 10-Q for additional information about adjusted EBITDA.
In the third quarter, we had a record had record net income generated significant cash flow from operations and we continue to maintain financial discipline. We are on track to May 2020 year financially transformative year for the organization and we've built a strong foundation upon which we can continue to grow.
So in 2021 and beyond.
I will now hand, the call over to Scott for commercial update.
Thanks, Paul.
As COVID-19 cases increase across the country. It continues to adversely impact in office patient visits and in person calls by our sales professionals. It's estimated that weekly in office patient visits are down about 20% versus pre coven levels, which manifest in a corresponding decrease in the new to brand market. Our field force is it.
Opting and continues to make progress that being said in Pursing calls are still down about 40%. As we've described previously we believe the growth rate of Xtampza is adversely impacted by these dynamics and Conversely, the new Synta franchise benefits from continuity of care.
In the face of these dynamics extensive grew modestly in the third quarter, achieving new highs in total prescriptions market share and total prescribers total prescriptions for Xtampza yard grew to 142686 up 1% versus the second quarter of 2020 Xtampza ER.
Or extended release Oxycodone market share grew to 24% and there were 14700 unique prescribers the noose into franchise stabilized in the third quarter and for the first time in over three years. The prescriber base is for both new Cindy E. R end IR group.
You said DDR has now had stable or growing market share for six straight quarters.
I appreciate the efforts of the commercial team and I'm encouraged by the progress that we're making.
Although we don't anticipate a return to normal in 2020.
I believe that we can and will do better the remainder of the year.
We're focused on improving execution and impact of both remote and in person interactions pulling through our strong market access positions and leveraging our new capabilities to generate momentum in the fourth quarter.
Turning to 2021, our market access team has done a great job executing our portfolio payer strategy.
We've put a foundation in place to accelerate Xtampza ER beginning in January and to achieve annual net revenue stability for the us into franchise.
I'm pleased to announce that the market access team has strengthened formulary position of Xtampza ER, securing new exclusive and parity wins across 12 million lives. These wins will fortify the foundation for accelerated growth in 2021.
In 2021, the commercial team will be focused on the three buckets of growth.
The first bucket is the new exclusive VR oxycodone wins, taking effect on January onest. The most significant new when is the United Healthcare Medicare part D and ERP PDP preferred business.
This is a high control plan and the second largest individual plan as measured by Oxycontin prescriptions.
Xtampza ER is now the exclusive yard Oxycodone for all of Unitedhealthcares 10 million Medicare part D. Lives. We have also secured several new exclusive wins with regional commercial plans, representing approximately 3 million lives.
The second bucket is the 2020 exclusive IAR oxycodone wins, which represent significant opportunity for continued growth in 2021.
In both commercial and part D. Our team is focused on capturing the market share that we anticipated getting in 2020.
In addition, many plans are making operational adjustments to drive a better formulary adherence.
The third bucket is the Optum national commercial formulary win we're Xtampza Aer was moved into a parity preferred position in 2020.
As a reminder, this when went into effect in July and is the first priority position for Xtampza IAR covering approximately 17 million lives Optum commercial will serve as a bellwether and impact our contracting strategy for 2022 that.
The team also achieved several parity wins with smaller regional plans that take effect in January and cover approximately 5 million lives.
For the New center franchise, the team was able to improve rebates at several plants. We also opted not to renew several contracts that were underperforming.
Those these decisions will pressure new Synta franchise prescription volume. They will result in increased revenue.
As a company committed to being a leader in responsible pain management, we continue to engage payers to remove nonclinical barriers that complicate access to our pain portfolio, which healthcare providers, you favorably and as highly differentiated the.
Uhm X stanza and I'm, particularly interested in what you're close to that to be on the necessity furniture is either needed discontinuation uncertain contracts, how we should think about those dynamics for 2021. Thanks.
Sure.
Yeah.
Paul.
Gross.
Thanks, David So so yes to answer your question first about the PDP when we do expect acceleration right out of the gate in the first quarter like we see every time, we have an exclusive when to give some perspective, the pvp business right now has about a 5% market share it as a high control plan, we know that will accelerate it will be.
More protracted as a pvp right, so compared to commercial it'll be a little more protracted throughout the year, but will absolutely accelerated aggressively in the first quarter.
Great and Hi, David.
So for.
Extending gross to net as we've said we believe we can continue to manage it stems in the low 60% range.
On a go forward basis.
But we will give guidance and we expect to give guidance in January so we could give more detail at that point when we're done modeling out what we pick uptake will be next year on the new for the New centre franchise, it's been fairly stable in the low 50% range now and and so that could certainly.
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We could see some benefits and gross to net as we change. These payer contracts. So that is something that will will also be included in our.
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Work done for coming out with 2021 guidance and our communications with that.
Okay, and then if I may just uhm asking a follow up. This is this is for you know you know you you talk about this done in the past and I wanted to get your latest thoughts and.
Talk about the addition of of an accident and have some line of sight into commercialization download obviously looking at keeping an eye on the the last about this evening the center in here so.
With all that in mind, you know what are you lying to Scott.
What are you prioritize these days.
Yes, Thank you and I. Appreciate the question. There's always wanted to get that question on my waist size the confidence that we have in the wrong way of the core business and how it is that we anticipate perform.
Our focus our focus remains the same our highest priority is looking at late stage development non opioids pain solutions.
They were focus we know what it is that we probably work costs.
And we're active from that perspective, and then I guess the final point that I think is always important for us emphasizes because of the strength of the overall business.
I also really lost into value and making sure that not just in terms of value of the asset in terms of being a meaningful solution, but also being able to action around it in a way that we think makes sense for the organization and the utilization of our capital.
Alright, that's good thanks.
Thank you. Our next question is coming from him.
Blair. Please go ahead.
He got the smock one on the 10th Thanks for taking the question. So I was just interested can you give me a sense of.
What your penetration <unk> current plan is and do you think about.
Yeah, some future growth, so 2021 and beyond how that's going to be driven by increasing penetration verses you continued expansion of coverage formulary.
Your lives on the formulary.
Yeah. Thanks for the question Laughlin, so yes, so with the winters, we just announced in commercial about 45% of lives will be an exclusive physician and about 42% of part D lives. So.
Strong penetration, but obviously, if we need to pull that lever more if there's still more room to grow from a standpoint of exclusivity. The parity wins are big that's 22 million addition lives will be in parity with opt in in some of these regional plans.
Okay, great. Thanks.
Is that.
Oh, okay.
Thank you. Our next question is coming from Greg Frasier a true.
<unk>. Please go ahead.
Thanks, that's great grades run for Greg Gilbert on the recent part the the United part D plan can you give us a sense of the volume of that plan in terms of Oxy prescriptions, you mentioned five per cent market share I wasn't sure if that referred to the volume or the size of that plan.
Yeah, So the breakfast show on United part B.
I would say right now we're really confirming the final numbers as we work through our forecast for 2021 and as you know there's ins and outs of lives what I can tell you with confidence is it's the second biggest individual player.
Extended release Oxycodone Oxy cotton, obviously in this case is what is most important as soft reference and speak to the level of control as United PDP. We currently have a 5% market share, which is why we expect to see significant growth right out of the gate.
In 2021.
And that's the second largest pay your for part Dear overall oxy, that's the second largest individual payer boxy cough.
Got it okay.
And then just curious what you see is the potential implications on the C E R market or potential opportunities for you due to the new ownership structure Purdue in what that company is going through.
Yeah, So I'll take that one and as you might imagine.
I don't want to speculate or get into the potential outcomes or impact of what it is one of our competitors is going through what I would say is from a collegium perspective.
Feel really good that are paid portfolio was viewed as highly differentiated and favorable by paying specialist. We are really excited about the foundation that we continue to put into place to celebrate say answer.
To continue to be able to stabilize from a annual revenue basis to suit. The franchise. So we're focused on collegium executing around our strategy feel there's a long runway of growth and we're committed that we believe wrong track for Sam supposed to be the number one branded ER products.
By 2023.
Got it thanks for taking the questions.
Thank you. Our next question is coming from search calendar I've made him a company. Please go ahead.
Okay. That's good.
Question for me.
First I need to.
The.
Current business.
Both extremes center.
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Uh-huh.
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Our than most people thought largely attributed to the fact that you're just spend a lot of less in person visits to the doctor in order to to get the <unk>.
The handover from [noise].
Oxycontin to Xtampza scrip wise and I was just curious in that in the third quarter has there been any improvement in.
Very direct meetings between patient and physician in order to facilitate that or is it still.
Pretty sluggish given the pen down there.
And then and then secondly, you touched on business development I'm just curious.
We're getting different messages from different companies some companies say, they they paused business development, because they can't have face to face meetings during the pandemic.
Or the valuations have gotten too expensive just curious.
Or you still active or has your activity declined a bit because of the pandemic and their related issues, there Ah and launched.
I'm, saying in terms of valuations of companies you're interested thanks, okay.
Okay. Thanks to strong pass the first.
Question off the start and then I'll come back and profit.
And as we look to 2021 I think one we're excited about the new plans that will be taking effect on January onest and look at those as a source of acceleration in with a trajectory kind of.
In line to what we have seen.
And that the.
You need less penetration on parity planned given favorable pricing, but can you give us any sort of color around.
Where that would have to come out to to kind of.
Be on par with the economics, she will get with exclusive plan.
Before 2021, you're going to give adjusted EBITDA as opposed to net income outlook.
I'm, just wondering kind of the rationale behind that is.
Does it in any way function kind of volatility you might see in tax rate as you utilize and a wells and kind of how should we think about.
And oil utilization in 2021.
Yes, it's a great question, Kevin So so for us to the main reason to do it is to.
Suddenly or pathway there with the F D. A to eventually put some bill world abuse data on the label or are we kind of past that point.
Yeah.
Sure I would say yeah, what's the date that we continue to see more encouraged five we certainly share and make sure. The agency is aware of it and along those lines. We also have some close marketing regulatory requirements that we need to fulfill.
And I'll leave it.
Okay. Thanks.
Thanks.
Thank you at the time I would like to turn the floor back over to Mister Saponify closing comments.
Thank you.
Thank you everyone for participating in our call. This afternoon.
<unk> Dream pharmaceutical was on track to make 2020, a transformative year and we look forward to updating you on our progress.
You may be well.