Let's get started. Good afternoon everyone, and welcome again to the 35th Annual Piper Sandler Healthcare Conference. I'm David Amsellem from the pharma team, and our next company discussion is Collegium. And with us is Joe Ciaffoni, CEO, and Colleen Tupper, CFO. Why am I mangling my words? It's been a long day. Thanks for joining us. So, I'll start off, you know, at a high level and wanted to get your latest thoughts on capital deployment. And I guess I'll frame it this way: how do you plan to balance buybacks versus business development M&A? Yeah. So first off, thanks for the opportunity to be at the conference. I'm gonna take a quick step back, and as we think about 2024, for Collegium, our focus will be on operational execution. Mm-hmm. With that, there's two dimensions. One, the achievement of our financial objectives. We'll be giving guidance at the beginning of the year, and then the second is capital deployment. Sure. From that perspective, what I would highlight is what we know, and we know that we're locked in to the aggressive paydown of our debt, and we know we'll continue to opportunistically leverage our share repurchase program. From a BD perspective, we continue to be active and engaged. When the opportunity is there for us to strike, we're well positioned to do so- Mm-hmm. We'll see how it is that that plays out. I want to follow up on the BD M&A question, because you've in the past had a lot of detailed thoughts on- Mm-hmm you know, the kind of, in broad strokes Mm-hmm the kind of assets you're looking at, kind of peak sales potential Yeah Looking at, even exclusivity runways, things like that. So have your thoughts at all changed in terms of the different boxes you want checked in terms of doing a deal? They haven't. So we remain focused on commercial stage only. Okay. Peak sales potential of greater than $150 million. Okay. We want differentiated assets. We think that's critical to get reimbursement, which is critical to commercial success and exclusivity into the 2030s. Okay. Now, that most likely entails looking outside of pain. Mm-hmm. I guess the question here is, as you look at different therapeutic verticals, are you more focused on therapeutic adjacencies, something or something in CNS more broadly? Mm-hmm. Are you open to something well outside of the CNS space? Mm-hmm. Maybe if you can, provide some color on what verticals might be interesting to you. Yeah. So right now, because of what we think are favorable market conditions- Mm-hmm We wanna be agile. Mm-hmm As it pertains to therapeutic areas. In fact, the only person who has ever gotten me to call out an adjacency that we would be interested in is you, and that was- Yeah —a year ago, where we said that, "Look, neurology is an adjacency— Mm-hmm -that certainly makes sense and that we like. Because the next acquisition will be a new strategic beachhead from a commercial perspective, it's those other fundamentals that are most important to us. And I would add, anything we're looking at, we also map out what other assets are out there- Mm-hmm so that we could then replicate what we did in pain, which is achieve leverage Mm-hmm on that new commercial infrastructure. Yep. Yeah, and I, I guess with a new commercial infrastructure, whether you're adding new reps or whether you're reallocating existing reps- Mm-hmm Does that entail potential... And again, this is all hypothetical, right? Mm-hmm. Does that entail potential for year one or year two dilution- Yeah in the event- Mm -of a commercial stage acquisition that's, well outside of your therapeutic wheelhouse? Yeah. So maybe, Colleen, you want to comment on that? Yeah. I'd say we are looking for accretive acquisitions- We are. -if not in year one, absolutely in the second year. Okay. That's helpful. All right. So let's move on to... This is a little bit of a, you know, squishy question, but I think it's still good to ask. What are asset prices looking like? You know, I think we've seen a lot of companies over time not have that come to Jesus moment about- Mm-hmm -what they're actually worth. But more and more companies- Mm -probably are. Yeah. So what are you seeing? Yeah. Yeah. So I think what we're seeing, or what we saw this year, is a higher level of engagement, a lot of receptivity to discussion. And candidly, I think people are getting their heads around- Mm-hmm Their reality and haven't yet, in many instances, taken the step to confront their reality. Part of the challenge that we have, and it's something we really tried to emphasize on our last call, our outlook continues to get bolstered beyond 2024. Mm-hmm. So with the Nucynta new patient population exclusivity, we have a much better outlook for 2025 and 2026 than we had previous. The reason we emphasize that point is we are a financially strong company. We are committed to being disciplined- Mm-hmm in our approach to M&A... and we'll wait for those boards and management teams to be in the position to confront- Mm-hmm. that reality, and when they do, we'll be ready to do a deal. Okay, fair enough. All right, so let's talk about the business now. Yes. The assets you do have, not the ones you want. So let's start with Xtampza, and it would be helpful to get a refresher on your last update on the renegotiation of payer contracts and what that means for formulary positioning as we move into 2024. Sure. So in 2023, we renegotiated contracts that represent about 30% of all Xtampza ER prescriptions. It was very successful in that we were able to maintain our formulary position in 57% of those plans and improve the rebate. We did come off, or will come off of 43% of the formularies. Mm-hmm. In every situation where we're coming off, we will be at parity with OxyContin. And I think what has been an exceptional performance of the team, and you have to put this in the context of the past two years in the generics, the highly genericized space we're in. We've renegotiated contracts that represent 84% of all Xtampza ER prescriptions. We have maintained our access position and materially improved the rebate in 77% of those opportunities, and we've come off formulary in 23%. One thing that we saw earlier this year is, you did see a little bit of degradation of- Mm-hmm -Xtampza volumes as a result of, moving off a formulary- Mm-hmm In cases where you didn't think the economics made sense to stay on. That's right. And I believe there are two plans, if I'm not mistaken, where that's gonna happen in early 2024. So can you talk to what we might see regarding the trajectory of Xtampza, as we move into early 2024? Sure -regarding volumes? Yeah. Yeah. So that's a great question. First off, when you think of Xtampza from now through 2033, and I call that date out because that's where we have a settlement with Teva. Mm-hmm. That's a potential LOE event. Mm-hmm. We are confident that we'll be able to consistently grow revenue. In 2024, because of where it is that we're coming off formulary, we expect to see revenue progression, and we'll be working to mitigate pressure on prescriptions, but I think it's reasonable to expect some pressure on scripts. Mm-hmm. I think the important thing people have to get their head around when they think about Xtampza ER as we go forward, how it is we progress that revenue will be a year-to-year scenario because we now have significant headroom to go out and contract for more payer wins. So our- Sure ... our commitment was to forever manage the brand at a gross to net of less than 65%. This year, on our last call, we said we expect it to come in between 60%-62%. Mm-hmm. There will be improvement in 2024. From the 60-62? Yes. Okay. And so 2024, there aren't a lot of renegotiation opportunities. We'll be setting our sights on trying to achieve new wins. Mm-hmm. If we do, that would result in a more favorable prescription perspective, but we expect Xtampza revenue growth- Mm-hmm in 2024. Okay. And a lot of that is gonna be driven by the improved economics as opposed to volumes? That's right. Okay. Exactly. Okay. That's, that's helpful. So one thing I, I wanted to drill down on is just the, the commercial dynamics for, for Xtampza, not the payer dynamics. Where are you getting new starts? Mm-hmm From? Is it patients transitioning from immediate-release opioids, OxyContin, other ER opioids? Mm-hmm. Help us better understand that. Yeah. If you think about the market, we get about 80%-85% of all Xtampza patient starts from- Mm ... IR to ER transition. Yep. Then the remainder is ER to ER switching. There's almost no patients that start right out of the gate- Sure on a Schedule II opiate. Yeah. So looking at the pie, if I'm looking at the ER oxycodone market, I mean, this has been a shrinking pie. Mm-hmm For some time. Doesn't appear to be going away. Sure. I guess the question here is: Do you think about managing this business for better economics primarily, or do you think there is a point where we can start to see meaningful volume growth again? Yeah. So that, that was my point. I think you have to think of it year to year. Year-to-year. Yep. So if we, in a year, are able to achieve payer wins- Mm-hmm ... and we may also, in a year, also have economic improvement, then revenue growth the following year will be driven by prescriptions and perhaps margin improvement. Mm-hmm. In the absence of new wins, then the driver would be our pricing and margin improvement. But the thing we're confident in is the ability to continue to grow and progress revenue. How that happens will really come down to: What's the state of a given year- Sure from a market access perspective? But it doesn't. In other words, you've got a couple of levers here. Mm-hmm. One is optimizing economics. The other is if there are opportunities for better payer, better access. There's that, too. That's right. Okay. So help me understand what kind of payer wins we'd be thinking about longer term. I mean, I realize this is more of a 25 and 26 kind of question, but what... Is it commercial? Is it Part D? Is it a mix of both? It's both. Okay. But, for example, the single bit... We like to say it this way when we talk with them, and I'm not gonna say who. Mm-hmm. The single biggest enabler of OxyContin utilization in the United States is one Medicare Part D plan. If we were to win that plan or find a pathway to be put on that formulary, that would be tremendous volume growth. It would put some pressure to the gross-to-ne t if we weren't coming off of any plans. And that's why, from a year-to-year perspective, there's opportunities commercially, there's opportunity in Medicare Part D, and we just have to see how it plays out. But we're very confident in the ability to continue to grow Xtampza revenue. Okay, that's helpful. So let's switch gears and talk about Nucynta. And before I get to the term extensions, because I know that's important, I wanted to get your thoughts on the volume trajectory, what you expect to see over the next year or so. Is it gonna be more like what we have been seeing in terms of this steady erosion of the volume footprint? And also talk through the economics on Nucynta. Yeah. So look, when you look at Nucynta, you have to be mindful. We have walked away from many bad contracts over the past couple of years, which has really pressured volume, but we've been able to actually grow revenue because of the improved economics. When you go into 2024, there's less of that dynamic. There's not gonna be much change- Mm-hmm. to the payer landscape. So I would expect to see pressure on prescriptions, but different than what you've seen in previous years, of which we'll be able to offset from a pricing perspective. Okay. And remind us what the Gross to Net has been on Nucynta and what you think it will be next year? Mm-hmm. Gross to Net for Nucynta has been pretty stable- Yeah. -in the low 40s. Okay. For sure, there's some quarterly volatility, but from a full year perspective, it's in the low 40s. Okay, so that should be pretty stable. All right, so now let's get to the exclusivity runway. I know there's a few moving parts here. So I guess, maybe I'll ask a question like this: What is the very best case now in terms of your exclusivity runway for both ER and IR Nucynta? Yeah. So I'll give base case before I give- Yeah the flip best case. Okay. Fair enough. Our base case with Nucynta IR is we got a new patient population exclusivity, which takes it to July of 2026. Mm-hmm. We also factor into our base case and expect to achieve in the back half of next year, pediatric exclusivity that would take it to January 2027. If you look at Nucynta ER, Nucynta ER is July 2025- Mm-hmm. but we also expect to get the pediatric extension that will take it to January of 2026. Okay. Now, the question you ask, I'll answer on the best case, I'll answer it different. Sure. If you look at Nucynta ER, there's an important learning that we're going to have- Mm-hmm ... that really applies to perhaps how you may think about the entire portfolio. So when we bought Nucynta ER from Depomed or Assertio, there were settlements in place for the Nucynta franchise. With Nucynta ER, there are three, two of which would have the ability to launch in July of 2025 or January, if we get the pediatric extension. The other is held out until 2028. One of those is Teva. Mm-hmm. The significance of that is Teva is also where there's a settlement when we acquired Belbuca from BDSI. Mm-hmm. It's also the only settlement that we have for XTAMPZA ER. The question will be: Will Teva launch another opioid or not? Right. And we don't know the answer to that, but we're gonna get a first opportunity to see that with Nucynta ER. And then with Nucynta IR, there are five settlements. Yeah in place. So we'll see how it plays out, but the best case would be that there aren't generic entrants for the Nucynta franchise. I would emphasize that the tapentadol supply- Mm-hmm is not abundantly available the way that ER oxycodone is. Okay. So just to recap that, your best case is Teva doesn't come in, which... And, I do wanna talk about that regarding- Mm-hmm Belbuca. I think that's an interesting point. But your best case is that Teva does not come in, but others- Well, the best case is nobody comes in. Why would no one come in? Well, we'll see. I mean, if you look at it- Yeah -and the different players, at this point, when you look at the franchise, so say- Yeah Nucynta collectively is $190-ish million. Yeah. ER's about 45% of that. Mm-hmm. Is that worth it in the face of all of the opioid settlements? Sure for people to enter the market? And also, the tapentadol, unlike oxycodone- Mm-hmm you're dealing with quotas and things like that, and it isn't- Yep as abundantly or readily available, so there's work to be done. Yep To be able to do that. So that's a response to the best case, the important learning. Mm-hmm. And so the base case, if you assume that there are generics at the time frames we discussed, the important learning will be to see what Teva does. Yep. That is fair. So let's move to Belbuca. Mm-hmm. Whereas to your point, that is the only settlement there. Mm-hmm. In your case with Alvogen, you won. My understanding is Alvogen is blocked till 2032, if I'm understanding? That's right. Okay, so you only have those two, as far as we know. Mm-hmm. Um- There's one more. One more, that's right. Yeah. I- That's KemPharm. The significance- Yeah, that's right. We can't take credit- Yeah for Alvogen. BDSI did a great job.... And the trigger for us to acquire BDSI was the Alvogen decision. Mm-hmm. Because what was unique with Alvogen, they're the only one of the three ANDA filers that had a tentative approval. And with that formulation, they're barred until 2032. Kempharm, who is the third ANDA filer, attached themselves to the Alvogen litigation from an invalidity perspective, and then they also are pursuing non-infringement. We believe it is very hard, in our assessment, when we made the decision to acquire BDSI, that it is very hard to achieve all the doses of Belbuca without infringing upon the IP. And Kempharm got their third CRL in April of this year. Mm-hmm. Yeah. That's the landscape there. Yeah. So I guess, and it's hard to prognosticate in terms of what Teva may or may not do, but, maybe I'll sort of ask it this way. They're an evolving company. Mm-hmm. This is a loaded question, which I tend to... I could see you're heading in that direction. So it's an evolving company. They have opioid liabilities they're gonna be paying out for a long time. Belbuca is not a particularly high volume product, and it's not particularly easy to make. Mm-hmm. Are all of those forces going to conspire to keep Teva from the market, and is there anything I'm missing? I don't think there's anything you're missing. Mm-hmm. I don't know what Teva will or won't do. What I can tell you is what we will do- Mm-hmm ... is we will in no way pull back on the investment of Belbuca- Okay through that period. Okay. So in other words, if Teva's in the market in 2027, you're not necessarily flipping to an authorized generic and not gonna promote it and, or- Well, no, if... We have the ability to launch an authorized generic. You do. My comment is to say, typically, you would start to pull back a year and a half in advance of loss of exclusivity. Okay, so that's not happening. From a payer perspective and how it is you manage the asset, we will be investing through that period, and then we'll see whether they do or don't come to the market. Okay. So let's talk about Belbuca more near term. So, you have talked about Medicare- Mm-hmm Part D contracting and trying to improve access there. So can you just give us a lay of the land in terms of where you are now- Yeah -on Medicare Part D for Belbuca? Yeah. I'm gonna get to that, but there's one thing I want to say about Belbuca. Yeah, yeah, sure. We have a stable field force that is finally at a point of being able to confidently sell a far more complicated product, and that's a driver of the growth we've seen in the third quarter that continues into the fourth quarter on a prescription basis. So we expect Belbuca is a much different situation- Mm-hmm —than the other products in our portfolio. Our expectation moving forward is that we're able to continue to grow Belbuca prescription growth. The opportunity in Medicare Part D is, right now, it only has coverage for 17% of the lives, which is really an unfortunate situation for anybody who's serious about the opioid epidemic, to believe a product as differentiated and unique as Belbuca, Schedule III, that doesn't have the dose limitations of Butrans, to not be available in the vast majority of Medicare plans, is really, in my view, shameful. Mm-hmm. So we'll continue to work to try to improve that by really educating the Part D players on the clinical value of Belbuca, and we'll continue to try to generate real-world evidence to be supportive of that ad. Mm-hmm. And that's what we'll try to do. For 2024, what should not get lost in the communication is, with the one major Part D plan, which represents 12% of all prescriptions, we were able to meaningfully roll back the rebate and maintain the exact access position. So not only do we expect prescription growth, we will also get the benefit of that renegotiation. And unfortunately, we were only able to add one additional Medicare Part D plan of about a million lives. But we're gonna keep chipping away at that because it's the right thing to do, and that's a product that Medicare should cover. What's the gross to net expectation for Belbuca in 2024 versus where it is now? It's gonna be a bit improved- Yeah because of that plan that we were able to renegotiate. So it will improve. Okay, are you in a position to say, by how much? No. We don't call the ball on Belbuca gross to net necessarily. Okay But you'll see that flow through in our guidance that we give in early January. Okay, that's fair. So I guess philosophically, where would you be willing to take Medicare Part D access on Belbuca, in terms of percentage of covered lives. So you're gonna get more volume, access to more volume- Mm-hmm -but potentially, it could mean some Gross to Net degradation. Mm-hmm. So is that a trade you would make, and how should we think about that? Yeah. So I want to be careful here because we would not manage Belbuca gross to net the way we did Xtampza- Right Where we were trying to be aggressive early on to displace OxyContin. Right. So when you think of Belbuca, yeah, we're comfortable with gross to net erosion- Mm-hmm but maintaining reasonable, reasonably profitable prescriptions. Mm-hmm. That you have the net impact of the value to the top line of that improved access. But is it fair? Yeah, is it? I guess where I'm going with this, is it fair to say that being at 17% now, you could take that up quite significantly, access a lot more volumes, and be perfectly willing to accept some widening of the gross-to-net? Absolutely. Okay. Absolutely. Okay. In the starting point for 2023, we're in about the low 50s for Belbuca. So again, it's not the Xtampza situation, where it was in the low 70s. Is there a gross to net level where you'd have to hold the line on Belbuca? In other words, you gave a target for Xtampza, 65% or below. As you look at Belbuca, how do you think about that? Belbuca would be meaningfully less than Xtampza. Okay, that's helpful. I see a flashing red sign, that means we're out of time. Okay. Thanks, Colleen. Thanks, Joe. Thanks to everyone in the audience. Great. Thank you. Thanks, David. Appreciate it.