Q4 2020 Collegium Pharmaceutical Inc Earnings Call
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Greetings and welcome to the Collegium pharmaceutical fourth quarter 2020 earnings call.
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A brief question answer session will follow the formal presentation.
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It is now my pleasure to introduce your host Alex <unk> head of Investor Relations for Collegium.
Thank you Mr. Sullivan you may begin.
Welcome to Collegium Pharmaceuticals fourth quarter 2020 earnings Conference call. This is Alex to sell our head of Investor Relations for Collegium I'm joined today by Joseph <unk>, Our Chief Executive Officer, Paul Bradley, Our Chief Financial Officer, and Scott Dreyer, Our Chief Commercial Officer Bill.
Before we begin today's call 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, including without limitation. The risks that we may not be able to successfully commercialize extends the E. R and the NUCYNTA franchise and that we may incur significant expense and may not prevail in current or future opioid industry litigation and investigations patent infringer.
Net litigation or other litigation pertaining to our products. These risks and other risks of the company are detailed on 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 at Collegium pharma Dot Com I will now turn the call over to Collegium CEO Joseph O'dea. Thank you Alex Good afternoon, and thank you everyone for <unk>.
Joining the call I'm pleased to be here today to discuss our Q4 and year end 2020 performance as well as our 2021 outlook.
As you know Collegium is committed to our mission of being the leader in responsible pain management and is highly dedicated to people living with pain and the communities we serve.
We are focused on executing our strategy with dual aims of delivering on our mission and creating value for our shareholders. We do this through maximizing the value of our differentiated pain portfolio, achieving our near term operational and financial goals and strategically investing in our long term growth.
Including investments on our people processes and programs that strengthen our most important brand Collegium pharmaceutical Inc.
On an extraordinary time 2020 was a transformative year for Collegium.
Our highest priority was the health of our people on their loved ones customers business partners and communities. We were able to successfully maintain operations throughout 2020 enhance our commercial capabilities to fit a new virtual world and broadly achieve our priorities.
Key accomplishments in 2020 include achieving Collegium first full year of profitability and growing revenue in the face of COVID-19.
Accelerating extensor ER growth, notably strengthening formulary positions and securing the path to market leadership in 2023.
Executing the NUCYNTA franchise transaction.
Completing construction and validation of the dedicated facility for <unk> ER, making it commercially operational.
Settling the Teva expands the ER and the litigation, which contemplates a generic launch no earlier than September 2033, and confirms the strength of the extensor ER patent estate and.
And importantly, supporting our communities and committing as an organization to acting in a socially responsible manner. This includes our partnership with life Science cares an organization that is working to address poverty education and sustainability in the Boston area.
Putting all of it together these achievements allowed us to reinforce our commitment to leadership in responsible pain management deliver on our profitability objectives and generate significant cash.
We are entering 2021 from a position of financial strength and I want to recognize my colleagues at Collegium on their many accomplishments in 2020 and thank them for their commitment to people living with pain and communities we serve.
Looking ahead to 2021, we are encouraged by the early trends our business is strong and our people are healthy I'd also like to note that Collegium was recently recognized as a 2021 top workplaces USA company.
Testament to our mission core values and culture.
We are entering a phase of growth and value creation, and we will continue to look for opportunities to maximize the value of our differentiated pain portfolio and strategically invest in the long term growth of our company.
I am confident that we have the right plan and more importantly people in place to make it happen I look forward to updating you on our progress throughout 2021, I will now hand, the call over to Paul for a discussion of the financials.
Thanks, Joe Good afternoon, everyone.
In 2020, we were able to achieve a financially transformative year for the organization.
With the acquisition of the NUCYNTA franchise, and <unk> ER revenue growth, we delivered on our total revenue targets achieved our first full year of profitability.
<unk> generated meaningful cash flows from operations and paid down debt.
Total revenue was $310 million in 2020, an increase of four 5% from 2019.
This was at the midpoint of the guidance range, we communicated in early May.
A slight Masonic STAM, so was offset by the NUCYNTA franchise exceeding our expectations.
Overall, we view this as strong revenue performance for 2020 as robust underlying demand for our differentiated pain products offset a more challenging and protracted negative impact from COVID-19 than we had anticipated.
<unk> net revenue was $128 million in 2020, which was an increase of 22% from 2019.
The gross to net discount for <unk> ER was 61, 5% in 2020 compared to 58, 5% in 2019.
As a result of the new exclusive ER Oxycodone on formulary wins, we expect gross to net discount to be in the 62% to 64% range in 2021.
So it will be lumpy from quarter to quarter.
NUCYNTA net revenue was $182 million in 2020, a 5% decrease compared to 2019.
The gross to net discount from the NUCYNTA franchise was 53, 1% in 2020.
With the payer actions that we took to improve the profitability of the NUCYNTA franchise, we expect to see pressures pressure on prescriptions in 2021, but achieve relative revenue stability.
Operating expenses, which include stock based compensation were $123 6 million for 2020.
In line with our prior guidance and representing a 3% improvement versus 2019.
Compared to $8 3 million for the full year 2019, and $5 5 million in the fourth quarter of 2019.
The notable improvement in our non-GAAP adjusted EBITDA was driven by <unk> ER revenue growth and the NUCYNTA franchise acquisition.
Please see our press release for a reconciliation of GAAP to non-GAAP results.
As of December 31, 2020, our net cash balance was $174 1 million, which is an increase of $8 7 million from our September 32020 balance and a $4 1 million increase from December 31 2019.
Our year end cash balance was lower than expected due to timing of payments from wholesalers at year end.
In addition to increasing our cash balance in 2020, we also repaid $37 $5 million of our term loan.
Today, we are reconfirming, our prior guidance, which was initially provided on January six.
It is important to note that our annual guidance assumes there is not a return to normal until the second half of 2021.
For 2021, we expect <unk> ER revenues in the range of $155 million to $165 million.
The center franchise revenues in the range of $175 million to $185 million.
Adjusted EBITDA, which excludes stock based compensation in the range of $160 million to $170 million.
And finally total operating expenses, which include stock based compensation in the range of $125 million to $135 million, which is lower than our original 2020, opex guidance and demonstrates our continued commitment to leveraging our cost structure.
Although it is early in the year, we are encouraged by what we've seen so far in 2021, we are focused on profitability continuing to generate cash leveraging our cost structure looking for ways to strategically invest in the long term growth of our organization and taking a disciplined approach.
Roche to capital allocation.
I'll now turn it over to Scott.
Thanks, Paul.
As both Joe and Paul mentioned 2020 was a transformative year for Collegium and I wanted to take a moment to recognize the efforts of our commercial organization, who demonstrated great agility and resilience in the face of the COVID-19, pandemic and worked tirelessly to fulfill our commitment to being the leader in responsible pain management.
In the fourth quarter, we took specific actions to generate momentum and extends to ER achieved all time highs for total prescriptions market share and total prescribers in the quarter total.
Total prescriptions grew to 144897 up 17% versus the fourth quarter of 2019 ex stamps. The ER exited 2020 with a 25, 1% share of the ER Oxycodone market up six two percentage points from December 2019, and there were 14000.
800 unique prescribers of <unk> ER, an increase of 11% versus the fourth quarter of 2019.
Ex stamps the ER saw significant market share growth within every new exclusive accounts in 2020 and ended the year with an ER oxycodone market share of 54% across all exclusive accounts.
For the NUCYNTA franchise, both total prescriptions and market share remained stable in the fourth quarter.
As a result of payer actions, we took in 2020 to improve the profitability of the NUCYNTA franchise, we expect volume to be pressured in 2021, but net revenue to be stable.
Looking to 2021, the Covid pandemic remains a challenging dynamic within the marketplace. Although in contrast to 2020, we're actively leveraging key learnings benefiting from adjustments on our commercial model and have better visibility overall on potential impacts as anticipated Covid continues to impact in office patient visits.
Which remained down about 20% versus pre COVID-19 levels. This has a corresponding impact on the new to brand market. The.
The productivity of our sales force overall is at pre Covid levels. Although the number of in office visits are down due to COVID-19, our sales team continues to adapt to make progress and leverage digital capabilities to engage healthcare providers remotely.
We took specific actions at the end of last year to ensure a fast start and position the portfolio for success in 2021.
These actions included launching new selling resources and digital engagement tools for our sales representatives, increasing our investment in non personal promotion and launching new content.
Executing comprehensive action plans to pull through the broad market access coverage for our entire portfolio.
Working very closely with health plans to develop and execute specific action plans to pull through the new and existing exclusive positions for <unk> ER.
As a result of these actions through the first six weeks of 2021, we've seen immediate acceleration in <unk> volume and market share performance for <unk> ER.
Q1, 'twenty one quarter to date total prescription volume is up 13% over the fourth quarter of 2020.
For the most recent data week, ending February 5th New to brand ER Oxycodone market share for extensive ER was 46% up from 29% for last week of December in 2020.
We're encouraged by these trends, but recognize that it's early but.
The commercial team is focused on accelerating performance for <unk>, ER and ensuring stable contributions from the NUCYNTA franchise on.
I'm confident we have taken the actions necessary to accomplish these objectives and I look forward to updating you as the year progresses with that I'll turn it back to Jeff. Thanks, Scott I will now open the call up for questions.
Okay.
Yes.
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One moment, please where we now poll for questions.
Our first question comes from David <unk> with Piper Jaffray. Please proceed with your question.
Thanks, just had a couple.
So.
So first on.
On NUCYNTA this is kind of day.
Long term question, but.
With the.
With the changes in contracting.
We're basically getting out of sub optimal.
Im contracts.
Can you just talk about the cadence of volumes this year.
Just in terms of.
What we'll see in terms of volume degradation.
And how better economics makes up for that as.
As the year progresses. So that's number one and then secondly can you talk through your.
Your latest thinking on Biz Dev on M&A.
I know Joe uses.
<unk> talked about trying to bring in.
And on other assets, particularly with the NUCYNTA.
NUCYNTA low.
At the end of 2025, maybe talk through philosophically, what youre looking at.
How are you thinking about it these days thanks.
Great. Thanks, David I'm going to ask Scott and Paul to split the question on NUCYNTA, Scott can speak to the cadence of volume and Paul perhaps can talk a bit about price and revenue.
Yeah. Thanks, David So when we look at volume for the year, what we really see is pretty steady volume decline through the first half of the year, maybe a little bit greater in the first half to the second half because of when the actual changes took place and I'll, let Paul speak to the revenue.
Yes.
<unk> side, we should see.
<unk>.
On the effect the benefit of canceling and renegotiating contracts in the first quarter of the year.
And then it should be steady through throughout the year.
So the impact is really in Q1 that will see see difference from the economics of the franchise.
And David the one thing I would add on NUCYNTA. We also will get a benefit of a price increase that we took at the beginning of the year.
To your question on business development.
As we think about it and what I would emphasize there is one.
We're really encouraged that the business is on a strong position. We believe it's poised for growth and we have a long runway.
Certainly committed because of that to being disciplined in our approach. So we don't feel we need to do a deal just to get a deal done we're really focused on doing a really good deal.
To that end, we're active we're focused and we're engaged so we know and have priorities of what it is that we like we're engaged in.
That process.
On business development for US we continue to be focused on in our highest priority being non opioid pain solutions with the potential later stage development with the potential of being able to generate revenue in that 2024 to 2026 timeframe.
Okay. Thank you.
Great. Thanks, Dave.
Thank you.
Our next question comes from Tim Lugo with William Blair. Please proceed with your question.
Hey, this is lachlan on for Tim Thanks for taking the questions.
I guess first of all just a quick clarifying question. Scott I think you said you had 46% new to brand share.
On the most recent week was that within exclusives.
Plans or was that of the overall market and then a second question.
Obviously, it's early but.
Have you can you just speak to the dynamics you see in the.
On the plans what you have parity physician how is that looking on the first two months of the year and how does it compare reputations.
Great Yeah. Thanks for the questions Lachlan So first the new to brand share I shared a 46% that's in the overall business across all business through week ending February 5th not just exclusives and then second regarding the parity positions. So yes, what we've seen there is right that position went into place at Optum in July we've seen a little less debt.
A share point of growth every month.
Our first large parity. So we know it's going to behave different than our exclusives and what we expect is continued steady growth there with a chance for may be greater growth as we get to the second half of the year. So that's what we're seeing and what we anticipate.
And Lachlan. This is Joe I would also from a managed care perspective on the size, we're seeing market share gains broadly across all of the books of our business at this point in the year. It skews to the exclusive in particular, Medicare part D and as Scott said as the year goes on and what's <unk>.
Particularly important where were in parity positions is when we get to that new normal when people are returning to regular in office patient visits. So that's where we would expect to see a little bit of lift to the back half of the year.
Thank you.
Got it.
Thank you.
Our next question comes from Serge Belanger with Needham <unk> Company. Please proceed with your question.
Hey, good afternoon.
Few questions from me.
Let's go back to <unk>.
Extends us a bit of a drop from third quarter, Despite an increase in prescriptions.
Was that just due to a change in gross to nets.
And then in terms of the overall business environment I think last quarter, you mentioned that.
Patient physician visits were down 20%.
That number improve that all over fourth quarter or.
The first quarter.
Then last question for Paul.
The price increase of about 10% on boats extends on NUCYNTA in the past you've realized about half of that.
When do you expect that to.
To take effect.
Will you realized.
Still realize half of it.
Now that you have parity plans and not just exclusive.
Okay.
Okay search so Paul will take your first and third question and then Scott will take the second great High surge. So first question about the.
The decline of <unk> revenue in the fourth quarter compared to the third quarter that is driven by gross to net gross to net discount as we've said.
Is lumpy through the year and the fourth quarter and increased two three points.
From the third quarter, so 69% in the third quarter, and then went up to 63, 2% in the fourth quarter. So that's that's the slight decline in <unk> revenue in.
In the fourth quarter, and then I'll jump over to your third question, which was about the price increase we will realize about five or six points of the price increase.
Because of price protection built into contracts and we will see the benefit of that right. In January. So there is no lag and to start seeing the benefit of that and I'll hand, it over to Scott for your second question. Yes. Thanks, So regarding patient visits that where we sit right now patient visits are still down approximate.
20% and what we anticipate is sometime during the second half of the year is where we might see some of the bounce back of those visits.
Thank you.
Okay.
Thank you.
Our next question comes from Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.
Alright, thanks for taking my questions.
Maybe just firstly following on from <unk> question.
Joe how do you think about that moving earlier in terms of R&D.
Profile in terms of business development and as you build the company.
And then.
Echo your comments about a very good start to 2021, how should we think about the trajectory obviously last year was very difficult with COVID-19.
It seems like we're going to have tailwind in the second half of the year with sort of hopefully.
So just maybe.
As you can what are you thinking this year in terms of the growth trajectory on ex stands for the second half of the year, maybe on a normalized environment as well as with.
And then lastly, what's your updated thinking any update I guess on the oxy caution generic thank you.
Okay. Thanks, Brandon So look first with the business development question and from an R&D perspective, as we've said we believe we have capabilities that we can leverage.
As it pertains to later stage development assets. So we're looking for programs that are either in phase two or phase II ready and we think that aligns to the capabilities.
Collegium when you think of the year is.
As it pertains to extend the ER, we believe that what we expect to see is the immediate acceleration that we've seen with strong overall growth for the year skewed to the first half of the year, but to your point.
If in fact, we're fortunate enough that there is a return to normal in particularly driven by the 23 million lives that we have in a parity position. We think although growth will continue to be moderated in the second half of the year, perhaps we can do a bit better than what we've done in the past couple of years and I'll, let Paul take the third.
Question.
Thanks, Thanks, Joe Yeah. So for Purdue, we don't have complete line of sight.
As to potential generics there, but what we know is that they have 19 Orange book listed patents.
Which includes 10 that expire have expiration dates between 2027 and 2030. So so that's what we know as far as their IP situation.
Alright, Thank you very much.
Alright, thanks for thanks Brendan.
Thank you.
As a reminder to our audience. If you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from Kevin Kendra with G. Research. Please proceed with your question.
Hi, Thanks for taking the questions.
First wanted to ask about.
How are you thinking about what the trajectory could look like for the business coming on the Covid I talked about obviously benefit for <unk>, but thinking more about NUCYNTA ER.
Some stickiness there seems to be.
<unk> of the lack of visits that were seeing in switching that tends to happen. So can you maintain that stability that you anticipate for NUCYNTA.
As we come out of Covid whenever that might be.
Yes, so Kevin this is Joe I'll take that one big picture when you look at the year for NUCYNTA, we expect there to be pressure on volume as a result of the execution of our contract strategy offset by favorability in terms of from a price and gross to net.
Perspective, which we believe will lead to sequentially stable revenue in 2021.
Okay.
Great.
Thank you.
There are no further questions at this time I'd like to turn the floor back over to management for any closing remarks.
Alright, Thank you and thank you all for your attention 2000, 22020 was a truly remarkable on transformative year for Collegium and we head into 2021 with encouraging momentum and a strong financial position. We are entering a phase of growth and value creation for the organization, we will continue to focus.
Our efforts on maximizing the value of our differentiated portfolio of pain products, achieving our near term operational and financial goals strategically investing in our long term growth and delivering on our mission of being the leader in responsible pain management I look forward to updating you on our progress and have a great evening.
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