Q2 2023 Collegium Pharmaceutical Inc Earnings Call
Greetings.
Welcome to the Collegium Pharmaceuticals.
Second quarter 2023 earnings call.
I apologize greetings and welcome to the Collegium pharmaceutical second quarter 'twenty earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference call. Please press star zero on your telephone keypad. Please note that this conference call is being recorded.
Now I'll turn the call over to Christopher James Vice President of Investor Relations at Collegium.
Thank you you may begin.
Welcome to Collegium Pharmaceuticals second quarter 2023 earnings Conference call I'm joined today by Joseph <unk>, Our Chief Executive Officer, Colin Tucker, Our Chief Financial Officer, and Scott Dreyer, Our Chief commercial officer.
Let me 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 and without limitation. The risks that we may not be able to successfully commercialize our products.
May incur significant expense and that we may not prevail in current or future litigation pertaining to our business. These risks and all the rest of 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 at Collegium pharma Dot Com I will now turn the call over to our CEO jokes your pone.
Thank you Chris Good afternoon, and thank you everyone for joining the call.
Today, we will discuss our progress towards achieving a banner year in 2023, our financial performance in the first half and expectations for the remainder of the year at.
At Collegium, we are focused on building, a leading diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions are.
Our commitment includes the supporting the communities, where we live and work during the second quarter, we launched a new partnership with the Boston Red Sox and science from scientists a nonprofit organization, leading stem education initiatives for kids from low income households. This partnership furthers Collegium is commitment to driving <unk>.
Access to educational resources that support the next generation of stem leaders I'd like to recognize my colleagues for their hard work and dedication to our organization and thank them for their commitment to people living with serious medical conditions and the communities that we serve.
I am pleased to report that we are on track to make 2020 free a banner year for Collegium pharmaceutical.
At the beginning of this year, we committed to strong top and bottom line growth that would be achieved by maximizing the potential of our differentiated pain portfolio and leveraging our cost structure. We also said that we would generate strong operating cash flows that would enable us to rapidly pay down debt and position us to achieve our other cat.
<unk> deployment priorities that is exactly what we have accomplished in the first half of this year and what we will be focused on for the remainder of 2023.
I am confident that we are on track to deliver on our strategic and financial commitments.
Accomplishments in the first half of 'twenty 'twenty free include we delivered record revenue and adjusted EBITDA in the first half of the year, we grew revenue, 35% and adjusted EBITDA of 51% compared to the first half of 2022.
We generated strong performance in our pain portfolio.
BELBUCA is trending to achieve prescription growth on a full year basis total prescriptions were up three 5% in the second quarter compared to the first quarter. We continue to be encouraged by the trends that we're seeing the week ending July 21st BELBUCA generated 9376 total.
Scripts in the highest the highest level achieved since we acquired BDSI in March of 2022.
We grew expands our revenue in the first half of the year by 38% year over year driven by improvement in gross to net due to the successful completion of contract renegotiations last year.
We delivered on our commitment that NUCYNTA franchise revenue would be relatively stable year on year in the first half of the year NUCYNTA franchise revenue grew 4%.
We achieved an important step in the pursuit of a six month pediatric extension for the NUCYNTA franchise with FDA approval of both NUCYNTA IR NUCYNTA oral solution for use in children under under age of six and all in children ages six and older.
We increased our cash and marketing marketable securities balance to over $300 million, leaving us well positioned to execute on our capital deployment strategy.
And our board has authorized us to enter into a $50 million accelerated share repurchase program. We believe that our stock continues to be significantly undervalued and we are committed to leveraging our $100 million share repurchase program to opportunistically return cash to our shareholders.
We are laser focused on our two pronged strategy of maximizing the potential of our differentiated pain portfolio and strategically deploying capital to create value for our shareholders.
We believe that strong commercial execution is key to maximizing the potential of our pain portfolio extensive E. Our revenue is benefiting from gross to net improvement BELBUCA prescriptions are expected to grow on a full year basis and the NUCYNTA franchise is exceeding expectations.
Our capital deployment strategy is focused on creating long term value for our shareholders and business development is our top priority.
We are actively pursuing differentiated commercial stage assets that we believe have peak sales potential of more than $150 million and exclusivity into the 'twenty thirties, although business development as our top capital deployment priority, we are absolutely committed to being disciplined in our approach.
Our strong financial position allows us to do so.
For perspective in our base case long range plan net of paying off our Pharmacon loan, we will have greater than $1 billion of cash on hand at the end of 2027.
We are committed to leveraging our strong financial position to create value for our shareholders.
2023 is on track to be a banner year for Collegium pharmaceutical we delivered a strong performance in the first half of the year and we expect to see revenue increase and expenses decrease for the remainder of the year.
We are reaffirming our full year 2023 financial guidance, which includes growing adjusted EBITDA by approximately one five times the rate of revenue growth in two and a half times the rate of adjusted operating expenses growth.
We believe that there is a meaningful disconnect between our share price and the intrinsic value of the company and we will be utilizing the board authorized accelerated share repurchase program to buy back $50 million of our stock to deliver value to our shareholders.
Our priorities for the remainder of the year are clear and we are well positioned to achieve them I will now hand, the call over to Colleen to discuss the financials.
Thanks, Joe Good afternoon, everyone.
We remain on track to achieve our financial objectives in 2023 in the second quarter, we generated year over year double digit revenue growth and grew adjusted EBITDA at twice that rate, we manage operating expenses and generated positive operating cash flows while paying down debt.
Financial highlights for the second quarter included net product revenues were $135 5 million for the second quarter compared to $123 5 million for the second quarter of 2022 an.
An increase of 10%.
As expected revenue in the second quarter tends to be lighter than the first quarter due to the higher coverage GAAP expense also known as the donut hole in Medicare coverage, we expect quarterly revenue to increase in the remaining quarters of 2023.
BELBUCA net revenue was $43 1 million in the second quarter, an increase of 2% over the second quarter of 2022.
It seems that he our net revenue was $41 2 million in the second quarter, an increase of 24% over the second quarter 2022, and extensive E. Our gross to net was 63, 5% in the second quarter, we expect full year extensive E. Our gross to net to be between 61% to 63% in 2023.
NUCYNTA franchise net revenue was $47 3 million in the second quarter, an increase of 8% over the second quarter of 2022.
GAAP operating expenses were $38 2 million in the second quarter, which decreased 7% compared to $41 3 million in the second quarter of 2022.
Adjusted operating expenses were $31 1 million in the second quarter, which decreased 3% compared to 32 million in the same quarter of 2022.
Net income for the second quarter was 13 million compared to a net loss of $5 2 million in the second quarter of 2022.
non-GAAP adjusted EBITDA was $85 8 million for the second quarter compared to $71 2 million in the second quarter 2022, an increase of 21%.
GAAP earnings per share was 38 cents basic and <unk> 34 cents diluted in the second quarter compared to GAAP loss per share of <unk> 15, basic and diluted in the second quarter of 2022.
non-GAAP adjusted earnings per share was $1 26 in the second quarter compared to $1 seven in the second quarter 2022, an increase of 18%.
Please see our press release issued earlier today for a reconciliation of GAAP to non-GAAP results.
As of June 30th our cash cash equivalents in marketable securities increased to $325 $5 million during the second quarter, we paid down $45 $8 million in debt related to our term notes. We ended the second quarter at one two times net debt to adjusted EBITDA and expect to end the year at approximately one.
On time.
We are reaffirming our financial guidance for 2023, we.
We expect net product revenues in the range of $565 million to $580 million adjusted operating expenses in the range of $135 million to $145 million and adjusted EBITDA in the range of $355 million to $370 million.
As part of this financial guidance, we expect net product revenues in the second half of the year to exceed the first half of the year and adjusted operating expenses in the second half to be lower than the first half.
Collegium is a financially strong organization well positioned to deliver on our capital deployment priorities.
We remain focused on creating long term value for our shareholders through our capital deployment strategy business development is our top priority and we rank and we remain committed to a disciplined approach.
We are locked into rapidly deleveraging the balance sheet paying down $162 $5 million of debt in 2023, which would put us at approximately one times net debt to adjusted EBITDA at year's end.
Our ability to Delever quickly is a testament to our strong cash generation.
We are also returning capital to shareholders through share repurchases our share repurchase program announced in January enables us to purchase up to $100 million worth of our shares. This year. We believe in the long term success of our company and that our stock at the current valuation represents a very attractive investment with a favor.
<unk> return profile for our investors.
As such we announced today that as part of our repurchase program. Our board has authorized us to enter into a $50 million accelerated share repurchase program. We.
Reinforcing our commitment to deliver to our shareholders through effective capital deployment.
We see the share repurchase program as a high return use of our capital for the benefit of our shareholders I will now turn it over to Scott.
Thanks Colleen.
We take pride in Collegium being viewed by pain specialists as the leader in responsible pain management, It's a testament to our highly differentiated and distinctly positioned pain portfolio and our talented and committed commercial organization.
In the first half of this year, we've grown our portfolio share to 50% of the branded market.
Our field forces at 100% capacity and focused on growing our differentiated pain portfolio.
In the second quarter, we were encouraged to see an uptick in the BELBUCA total prescription trend BELBUCA.
BELBUCA total prescriptions grew three 5% versus the first quarter of 2023 and over the past several months weekly prescriptions have been steadily increasing.
The trends that we're seeing along with a favorable comparator in the back half of 2020 to reinforce our expectation that BELBUCA prescriptions will grow on a full year basis.
In addition to growing total prescriptions are focused in the second half of the year will be on improving BELBUCA position within Medicare part D for 2024.
We are encouraged by the clinical and financial discussions that we're having with payers and are confident in our ability to grow BELBUCA in 2023 and moving forward.
<unk> revenues grew significantly year over year as a result of gross to net improvements from the successful contract renegotiations, we completed in 2022.
Prescription trends in the second quarter stabilize from the first quarter, but we did not see prescription growth in the first half of the year.
This is due to pressure from the plans that represented about 10% of prescriptions within the contracts that we renegotiated last year, where <unk> was removed from formulary and candidly the need for stronger commercial execution, where we maintained our position.
To be clear, we're making progress within the plans, where we maintained extensive E. R. S formulary position, but not to the level that we anticipated.
We're focused on building momentum for <unk> ER through the remainder of the year.
In terms of managed care, we're focused on renegotiating contracts that expire this year, which represent an additional 30% of prescriptions and winning new plans for extensive E. R. R.
Our payer strategy will serve as a catalyst for growth in 2024, and we're forever committed to keeping gross to net below 65%.
In November we expect to provide an update on the status of our contract renegotiations as well as any new wins, we've secured for BELBUCA next steps up for 2024.
Importantly, we're excited by the performance of the NUCYNTA franchise. The NUCYNTA franchise continues to deliver stable revenue and contribution which was our commitment when we acquired it from a <unk> in 2020.
Our commercial organization and our market access team in particular has done an excellent job.
The NUCYNTA franchise serves an important role in pain management.
Our differentiated pain portfolio as strong with BELBUCA ex stamps and NUCYNTA ER holding a combined 50% share of the branded ER market.
We have a stable commercial organization committed to making a positive difference in the lives of people living with pain and the communities that we serve.
In September we look forward to participating as a leading sponsor in pain week, the largest pain conference in the United States.
We will have a large presence and our medical team expects to present 10 posters supporting our pain franchise.
We're focused on building momentum in the second half of the year and executing our market access strategy to position the pain portfolio for growth in 2024, I will now turn the call back to Joe.
Thanks, Scott we had a strong performance in the first half of 2023 and are on track to achieve our strategic and financial commitments. We are focused on growing our core business and creating long term value for our shareholders through our capital deployment strategy 2023 will be a banner year for Collegium.
I will now open the call up for questions operator.
Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Information tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Finally, please while we poll for questions.
Our first question comes from the line of David <unk> with Piper Sandler.
Do you foresee with your question.
Hey, Thanks, so to save a few.
So on BELBUCA, you talked about looking to improve Medicare.
Part D access.
Can you help us understand on a on a broad level.
What your goals are in terms of.
Percent covered lives over time, what youre looking for in terms of our gross to net range.
Just how should we think about what that improve part D access for the product.
Could look like so that's number one and then number two on capital deployment.
Can you talk about how you're balancing buybacks versus a BD activity.
I know, it's not an either or.
But I guess the question is do.
Do you expect to do even more buybacks down the road.
And then lastly, just remind us how you're thinking about different.
Therapeutic categories that you may or may not be interested in.
Regarding business development.
Okay. David Thanks for the question I'm going to ask Scott to take the BELBUCA Med D, calling capital deployment and I'll come back on the third question. Yeah. Thanks, David So first in BELBUCA and Medicare part D look when you look at the profile of the access very strong in commercial only one real large plant in part D. We're looking to.
Prove it I'm not going to get into guidance around gross to net and where we're heading other than saying, we will always be looking to effectively manage gross to net and profitability, but the bottom line is with the profile of BELBUCA and where it stands we feel more patients in part D should have access we're encouraged by the clinical discussions we've had we've submitted our bids and now we're waiting to hear back from them.
Plans and we'll give you an update in November .
Thanks, David for the question about capital allocation priority. So thank you Paul we've always been clear that our first priority is business development and then secondly rapidly paying down debt and then also third continuing to Opportunistically return capital to our shareholders via the share buyback program. So as you can see from our track record in.
In the past in years with or without BD 2022 in mind, we have.
<unk> done share repurchases. So you know, we'll we'll in a typical year, where BD is light accelerate our buying of shares but we're pleased to right now have in place for the full year, what we announced in January was $100 million share repurchase program and then today as part of that 100 million, we've announced that the board has authorized.
It's us to enter into a $50 million accelerated share repurchase program.
And then David with regards to BD.
Which is our top priority from a capital deployment perspective, because of the current market conditions. We think it's important to be agile. So we're very open minded in terms of therapeutic area. The next acquisition, we do will be a pivot to a new footprint of new infrastructure to the organization.
So it will be a lower synergy deal than what it is that we've done historically, so what we're really anchored to are the fundamentals of a differentiated commercial stage asset with peak sales of greater than 150 million in our opinion with exclusivity into the 20 <unk> more so.
So then any one particular therapeutic area.
If I may just sneak in.
Follow up.
What is the.
The market look like in terms of.
Asset prices.
And you've talked a number of times about being disciplined here are asset prices.
At a place that you find more attractive.
Or do.
Do we still have a bit of a ways to go to a point, where you feel more comfortable.
No David I. Appreciate the question I think it's a great question, what I would say is the noticeable difference this year, whether it's private or public companies is the level of engagement, which is different than what it had been in previous years when access to capital.
It was easier for people now look as we go forward because we don't have to do a deal because of the financial strength of the company and the durability of our growth drivers, we're going to be disciplined we're going to do the right deal for Collegium and what I would say is in some instances I suspect where we've been engaged maybe come.
<unk> need to see a couple more quarters or additional time before we can get to what we would see as a rational position or one that's the strike zone to getting a deal done. So what we're really focused on is executing against our core business continuing to strengthen the company financially and what I am <unk>.
And then is that we will find the right deal for Collegium pharmaceutical that will create value for our shareholders.
Okay. That's helpful. Thank you.
Thank you David.
Our next question comes from the line of Tim Lugo with William Blair. Please proceed with your.
Hi, Tim This is John on for Tim. Thanks, So much for taking our questions maybe just two from us.
On the BD front can you talk a little bit more about maybe the potential overlap on the Dallas first.
Might be and how you might manage that as you continue to focus on the growth that their existing franchises.
And then maybe on BELBUCA I know in the past is that that's a little bit more of a complicated product requiring some additional education.
Can you speak a little bit on how the ramp up of that education, that's progressing and how you expect those efforts to affect the trajectory of BELBUCA, both in the near and the long term.
Sure. John This is Joe I appreciate the questions I'll take the BD, one and Scott will comment on BELBUCA. So look from a BD perspective, and when you think about the organization. One we take a lot of pride and I think we're able to say that we are the leader in responsible pain management and we have a portfolio.
So with runway in front of it so one of the key things when we think about BD is not doing anything that would be disruptive to that and the good news is with what we're focused on will be setting a new strategic beachhead, which we're confident will enable us to not disrupt the focus and what we're setting out to do with.
The pain business, while also shifting the narrative of the company with an asset that we have a beliefs has that potential of $150 million plus peak sales and then that becomes an infrastructure that will then be focused on leveraging with additional assets over time and that's that's the.
Roche that were taken and Scott on BELBUCA, Yeah, Yeah. Thanks, John So look yeah. So we have talked about the complexity of the sale before and we've put a lot of effort. When we talk about execution into training our sales professionals upon acquisition of the product practicing rolling out new tools and resources and by all means I think thats a contributor to <unk>.
Some of the momentum that we're starting to see build in and clearly that gives us confidence in our ability to continue to grow through the rest of the year.
Thanks, so much.
Thank you.
Our next question comes from the line of.
Searchable anger with Needham <unk> Company. Please proceed with your question.
Hey, good afternoon, just a couple of pictures from US I guess.
First one on gross to net can you just tell us.
What kind of movement you saw in gross to net for the three major products.
Over the second quarter.
And what do you expect those gross those growths in Essen move into in.
In the second half of the year.
And then secondly, now that you've got the pediatric extension for NUCYNTA.
Maybe just the updated outlook on.
For that product post 2025.
Okay. Thanks search so calling on gross to net hi, Serge Thanks for the question.
Great topic of interest here, so as expected the second quarter gross to nets were higher due to the impact of the higher Medicaid coverage GAAP expense. That's really the same theme across all of our products to varying degrees depending on how much of the business is Medicare part D, but gross to nets generally more favorable in the first quarter of each year due to the lower coverage gap.
Also known as the Donut hole and then through the back half of the year as patients are coming out of that there is improvement in third and then fourth quarter, but not quite as good as the first so we are right now in the height of Medicare coverage gap expense as we would've expected and we'll see improvement through the back half of the year.
And then search with the NUCYNTA franchise, we would expect.
To know, whether we're going to achieve the pediatric extension in the first quarter of 2024, if if we do that would take us from a July 2025 to the full year 'twenty 'twenty five in terms of exclusivity.
Our next question comes from the line of Glenn.
And together with Jefferies. Please proceed with your question.
Thanks for taking my question.
Hey, Colin I just wanted to follow up on a couple of comments that you made first did I hear in your prepared remarks, how do you. You said you expect to retire 100 million worth of debt.
In 2023 and finished the year with a leverage of one does that is that the goal.
That's right we have per our debt payment reschedule paying over $160 million this year and that will put it at the end of the year about one times net debt to adjusted EBITDA.
Okay.
Right now.
Yeah and.
And I apologize I, probably should know this but you had the $100 million authorization out there now there's another $50 million accelerated share repurchase authorization. So it was at $1 50 in total now.
No. The 50 accelerated share repurchase is part of the 100 for the full year.
Okay, Alright, and so I mean, just looking at your level of cash flow would you expect that the $100 million in debt and $50 million of accelerated repo would probably be.
The the aggregate of what should you would return to shareholders. This year.
So we have the authorization throughout the entire year could you up to $100 million in share repurchases of weight of today's announcement is that we have the additional tool within that 100 million to do an accelerated share repurchase of which we'll issue a press release as soon as that contract has been executed.
Yeah, Okay, and then Joe maybe if I could just follow up on some of your comments to a previous question about you know what you're seeing in the M&A market right. Now you said the level of engagement is different than in previous years.
Sort of implying that there's a higher level of engagement or a lower level of engagement and I guess, what we're all trying to assess is.
The the market now are you seeing you know.
A reasonable valuations or not and you know would you be disappointed if we exited the year without a deal.
Yeah. So great question, Greg Glenn So what I'm focused on and that comment is that we are actively in pursuit of commercial stage assets and there is a difference in terms of receptivity of companies that perhaps we reached out engaged in the past.
That weren't in our mindset because of a different market.
Dynamic to engage that now are in terms of a deal I'm not going to make any commitment from a timing perspective.
To your question from valuation if we were able to agree on valuation than we would have a deal done.
And of course, as you know thats the unpredictable part of you need two parties to come to a rational or a reasonable position to get that deal done. So we work with urgency while maintaining discipline and were afforded the luxury to do so because of the financial strength of the organization and the durability.
<unk> of the assets that we have.
So we're fine.
Yeah, Thanks for the comments.
You got it thank you thanks.
Our next question comes from the line of Lauren This is Matt with H C. Wainwright. Please proceed with your question.
Thanks, I have a few challenged me just because I forgot about your full year guidance and where products are I know you've.
Previously committed to both BELBUCA and <unk> growing year over year total and it looks like there'll be booking trends have improved nicely that staffs are still lagging yet you reiterated your full year guidance. So I just wanted to understand should we assume that maybe NUCYNTA franchise outperformance is the.
The difference there and helping you get to your full year or are there other positive revenue offsets that I guess can make up for maybe lower volumes than you would've hoped six months ago.
No.
Okay. So on the way the way I would think about and as you know we don't give product specific guidance. As you said, we do expect to see BELBUCA prescriptions to grow on a full year basis.
We've seen that acceleration in revenue of X stamps are right out of the gate. This year and we expect to see that revenue will continue to grow we do not need prescription growth with expansion to achieve.
The guidance that we reaffirmed today, so what we've seen with X stamps as stabilization, which is an important step we will be focused for the remainder of the year and trying to build.
From there, but we don't believe at this point that we could say with confidence that we will see full year Rx growth with stamps and as I said in my prepared remarks, and I'll emphasize here, we're really encouraged.
NUCYNTA is exceeding the expectation of relative stability that we had set at the beginning of the year. So the pain portfolio is performing in a manner, where we're confident reaffirming the full year guidance.
Okay and.
Just to get the gross to nets.
I guess cadence through the year, maybe a little bit different I guess, it's for Colleen.
Then in the past it looks like at least some extent maybe to Q gross to nets why isn't Joe grew a little faster from Q1 than I had expected, but you guys are guiding to second half revenue growth. So.
Besides Q4, which should improve or are we thinking maybe we got through the donut hole or getting to dental hold little faster this year than perhaps.
You'll actually see an improvement in gross to nets, even in Q3 for ex stepson or am I misunderstanding.
Understanding and.
And then I guess just.
Big picture when you think about gross to nets.
I know you keep promising to stand or 65%.
Is it which is great I'm, just wondering though with all of that volume that's still out there.
<unk> extended release Oxycodone.
And less safe.
Products right now.
How do you think about maximizing revenue or is that 65% arbitrary or is there any reason why you Wouldnt next.
Next year, saying, Hey, you know, what let's give a little bit more away then we then 65%.
But there's a huge headroom that we can go into volume either they'll more than make up for it.
Okay. So thanks for the question.
When you go through some of the mechanics and gross to net and then we'll come back to the question around.
ER Oxycodone market and how we think about the approach here.
Thanks, Lauren for the question on gross nets, so as we expected Q2, the gross to net sort of <unk>.
Increases quite dramatically due to the Medicare coverage gap that's most.
Acute with extensor as you noted for the full year, we are still anticipating extends to E. R will be within the range of 61% to 63%. So as you see generally across the board on the products Q3 improved slightly and then a bit in Q4, but again not quite as good as the first quarter.
Okay.
Alright, and then they can make sure other question, yes, Okay and then.
The other question.
Well right now were extensive that its lifecycle, we have a really strong access position a product from a real world data perspectives performing within the marketplace, we're committed to managing gross to nets to less than 65%.
What you need to be mindful on how we'll approach the market as we go forward with what we accomplished last year and the renegotiations along with another 30% up for renegotiation. This year, we now have the headroom to add new wins if.
If we're able to achieve them at a rebate level that we're comfortable with so look at the end of the day. The mission of Collegium is anchored to putting together a differentiated portfolio that we believe can be a positive contributor and making a difference to the opioid epidemic. We believe our products are.
Are relevant and that we're going to do everything we can to get access and then we're going to educate around it to get the highest shares that we possibly can because at the end of the day, we believe that BELBUCA and schedule III should be used before schedule two and schedule three more broadly and certainly we believe.
Is that the case can be made that extends to ER should eliminate oxy cotton utilization and that's what we're aspirational you're trying to do.
Alright, Thank you I appreciate it.
Thank you.
Yeah.
And our next question comes from the line of less so risky with <unk> Securities. Please proceed with your question.
Good afternoon, guys. Thanks for taking my questions can you explain what happened with non stop cutting off of formularies on 10.
10% of the contracts and what have been some of the headwinds to get this back online and second I have I guess I believe you took a price increase in January which has been historically a bit lower.
There is there a pricing events scheduled for the back half of the year and I have a follow up thanks.
Okay, Scott will take the first and then Collin you will talk about price yeah. Thanks, a lot. So first with the 10% that were extensive was removed from formulary.
<unk> those are still more profitable scripts right now so we've seen script erosion, but the script, we have contributed to the profitability and net revenue increases we're seeing what we were counting on is that growth, where we maintained our formulary access would be greater than what we've seen so we're seeing progress in growing and our other exclusive and parity positions.
<unk>, but not to the extent that we thought we would and that's what's the headwind against the growth year to date, that's what we're focused on pushing through in the second half.
And last one price increases, particularly for extensive E. R. As your question was on January 1st we took a 5% price increase.
Forex stance of which we recognize and realize about 80% of that historically, we've taken about nine 9%.
Annually on January 1st the reason why it was lower this year was really taking into consideration the impact of the inflation reduction act and optimizing where price should be.
Got it that's helpful and just to go back to the BD question.
What gives you confidence you can execute within a new vertical and you mentioned that you'd be Chad outside of pain.
And then in terms of quality of assets out there or even like gravitating toward perhaps underperforming assets that you can can you kind of like a carve out from an a player that perhaps had wounds is being given a full marketing effort or are you willing more to take up something that's high performing and pay up a bit.
You know great questions. So the first thing I would say is what matters to us.
Is that we have a belief that the asset has peak sales potential of at least $150 million and then it has exclusivity into the 20, <unk> and I think dependent upon the situation and what we always ask ourselves is why are we a better owner of that asset and I think it depends so that's on an ASP.
At the outset basis, whether it's the company who has it is not able to make appropriate investments whether it's the market access capabilities that we have which I think we.
We're demonstrating over the past several years the level of capability that we have there or whatever it may be that's the question, we always seek to answer and I think as important whenever we do get that deal done that we're able to articulate a.
To everybody that is interested in or currently shareholders of Collegium of why that transaction makes sense.
Very helpful. Thank you.
Great. Thank you Les.
And we have reached the end of the question and answer session and I will turn the call back to Joe <unk> for closing remarks.
Thank you and thank you everyone for joining the call today, we look forward to updating you on our progress and I hope that everybody has a great evening.
Yeah.
And this concludes today's conference and you may disconnect your lines at this time.
You for your participation.
Thank you.
Yeah.
Okay.
Okay.
Yes.
Yeah.
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Uh huh.
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Yeah.
Okay.
Yes.
[music].
Yes.
[music].
Yes.
No.
Yeah.
[music].
Yeah.
[music].
Yeah.
[music].
Yes.
Sure.
[music].
Okay.
Great.
[music].
Okay.
[music].
Okay.
Uh huh.