Thank you and welcome to the Collegium Pharmaceutical, Inc Earnings Conference Call. I would now like to hand the conference to Ms. Alex Dasalla. You may begin.

Welcome to Collegium Pharmaceuticals First Quarter 2020 Earnings Conference Call. This is Alex Dasalla, Head of Investor Relations for Collegium. I am joined today by Joe Ciaffoni, our Chief Executive Officer; Paul Brannelly, our Chief Financial Officer; and Scott Dreyer, our Chief Commercial Officer.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 and without limitation, the impact of the COVID-19 pandemic, the risks that we may not be able to successfully commercialize Xtampza ER and the Nucynta franchise, and that we may incur significant expense and may not prevail in current or future opioid industry litigation and investigation, patent infringement litigation or other litigation pertaining to our products. These risks and other risks 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 collegiumpharma.com. I will now turn the call over to Collegium's CEO, Joe Ciaffoni.

Thank you, Alex. Good afternoon and thank you everyone for joining us. I want to start by acknowledging the challenging situation the COVID-19 pandemic has created for so many people. Our thoughts and hearts go out to everyone who has been impacted.In April, Collegium Pharmaceutical made a $240,000 donation to the Life Science Cares COVID-19 Response Fund, including $40,000, which was raised through our employer match program. Life Science Cares is a non-profit organization focused on eliminating the impact of poverty in our neighborhoods in the Greater Boston area. We are committed to acting in a socially responsible manner.Turning to the impacts the pandemic has had on our organization, I am pleased to report that our people and their families are healthy and have been working remotely since March 16. I have been amazed by how fast our team has been able to adapt and inspired by their resolve. Our home office team transitioned in a seamless manner and is advancing all essential business activities.Collegium's field-based teams are finding ways to increase the quantity of customer interactions each week and importantly, are leveraging technology to improve the quality of those interactions too. Due to the efforts of our supply chain team and manufacturing partners, we do not anticipate any disruption or issues in our ability to supply the market. We are on track to achieve our broad priorities and remain confident that 2020 will be a transformative year for Collegium Pharmaceutical.In the first quarter, we made significant progress versus each of our broad priorities. Specifically, Xtampza ER total prescriptions due to brand and total prescription market share immediately accelerated in January, driven by new exclusive ER oxycodone formulary wins, representing 35 million lives that took effect on January 1.In the first quarter, Xtampza ER was the fastest growing extended release…

Thanks, Joe. Good afternoon, everyone. Driven by Xtampza ER growth, the acquisition of the U.S. rights to the Nucynta franchise and continued financial discipline, we are confident that 2020 will be a financially transformative year for Collegium. We expect to significantly increase our profitability and operating cash flow.Total product revenue was $76.5 million for the first quarter of 2020. Xtampza ER revenue was $31.5 million, which is an increase of 25% from the first quarter of 2019 and an increase of 15% from the fourth quarter of 2019. Days on hand for Xtampza ER remains stable from year-end levels. The gross to net discount for Xtampza ER was 63% for the quarter. As discussed on prior calls, the gross to net discount may be lumpy throughout the year and is expected to be in the low-60% range for 2020.Nucynta revenue was $45 million for the first quarter of 2020, which is a decrease of 9% from the first quarter of 2019 and a decrease of 4% from the fourth quarter of 2019. The decrease in Nucynta revenue was partially driven by a reduction in wholesaler inventory of approximately 1.5 days. With the acquisition of the Nucynta franchise during the first quarter of 2020, we have updated our income statement presentation. The updated presentation includes sub totals for gross profit and operating expenses.Additionally, amortization of the Nucynta intangible asset is disclosed separately from other COGS. We believe this updated income statement presentation will provide better usability in consideration of the financial guidance that we provide. Even though the Nucynta franchise purchase agreement eliminated royalties owed to Assertio for Nucynta sales in 2020, accounting rules require us to include an adjustment of $14.2 million in COGS for royalties that would have been paid according to the previous Commercialization Agreement. Non-GAAP adjusted income…

Thanks, Paul. Fueled by 20 new exclusive ER oxycodone formulary wins, Xtampza ER immediately accelerated in January. In late February, we began to see the impact of COVID-19 on the growth trajectory. Despite this impact, Xtampza ER achieved all-time highs for total prescriptions, total and new-to-brand market share, total prescribers and total prescriptions per prescriber. In the first quarter, total prescriptions grew to 136,736, up 30% versus the first quarter of 2019 and 10.2% versus the fourth quarter of 2019.Xtampza ER total prescription OER market share was 21.8% in the first quarter, up 3.3% from the end of 2019. New-to-brand OER market share accelerated to 32.7% in the first quarter, up from 24.3%. There were 14,600 unique prescribers of Xtampza in the first quarter, an increase of 18% versus the first quarter of 2019. Importantly, the productivity of the prescriber base continued to improve and the average total prescriptions per prescriber increased to a new high of 9.4.We saw strong market share performance across all 49 commercial and Part D exclusive accounts and share acceleration within every one of the 20 new exclusive that went into effect on January 1. Aggregate ER oxycodone market share across all 49 exclusive accounts grew to 51% in March, up from a baseline of 40% in December. We expect continued market share growth within exclusive accounts. As a reference point, Xtampza ER exited 2019 with a 63% OER market share within accounts that were exclusive prior to January 1.Based on quantitative market research conducted in the first quarter of this year, 53% of our targeted healthcare providers intend to prescribe more Xtampza ER over the next 12 months compared to 62% who intend to prescribe less OxyContin. Nucynta franchise total prescriptions were 120,576 in the first quarter, representing a sequential decline of 6.1%, a…

Thanks, Scott. I will now open the call up for questions.

[Operator Instructions] We have a question from David Amsellem. Your line is open.

Thanks and I apologize if I missed this color since I joined late, but I wanted to get your thoughts on how forced switching away from OxyContin has been progressing or maybe better term is delayed due to the pandemic. And are you seeing patients that normally would have been forced off, be allowed to stay on Oxy for an extended period, if you will, because of all the dislocation? So that's number one.And the number two is on Nucynta. Joe, I think in the past, you've alluded to reworking contracts or ridding yourself of contracts that had poor economics. So can you talk about the progress you've made there and what that implies for the profitability of Nucynta going forward either for this year or beyond 2020? Thanks.

Sure. Thanks, David. I'm going to pass the first question off to Scott to talk about the forced switches and then I'll come back and address the Nucynta market access question.

Yeah, thanks David. So, yeah, when we look at what's happening in the market and the impact of COVID-19, kind of, late in February, yes, we see a delay in some of the switching. And the primary driver of that is that patients aren't going to doctor's offices. So physicians really want to consult the patient when they're switching a patient and so that decrease in overall visits is really having the most significant effect on timing of switching in the market.

And, David, you had also asked for plans with regards to the first question, in some instances, being a little bit more flexible, even if they have certain formulary positions where Xtampza is advantaged and we do believe some of that's happening, but the primary driver that we think impacted -- is impacting the ramp is the in-person visits as Scott had said.With regards to Nucynta, as you know, our goal, and we believe on a going forward basis, we'll be able to achieve relative revenue stability and also do some positive things from an operating contribution perspective. On the payer side, our strategy will be, one, we'll be looking to add new contracts at discount rates that we think makes sense for the franchise.The second thing, and directly to the question you had asked, one of the things we liked about doing the Nucynta transaction when we did, is over the next couple of years, contracts that we inherited will begin to expire. And our approach there is going to be two-fold. One, if we can, we're going to try to keep the contract and renegotiate it at a better rate but in some instances where we can't do that, we will let the contract expire and we would expect to see the impact of that more so in 2021 and 2022. But some of those decisions will obviously be made in 2020.From a operating contribution perspective, we also believe, as we move forward over the next three years, we'll be able to improve the COGS associated, not just with the Nucynta franchise, but because there will now be overlap across a lot of the value chain as we do, for example, a tech transfer of Nucynta ER from a facility in -- a J&J facility in Puerto Rico to Thermo Fisher in Cincinnati where we also manufacture Xtampza ER. And that's how we think we can achieve relative revenue stability and also hold up operating contribution on a going forward basis.

Okay, great, that's helpful color. Thanks, Joe.

You got it.

Thanks, David.

Our next question comes from the line of Kevin Kedra. Your line is open.

Hi, thanks for taking the questions. First, I just wanted a clarification on a comment on business development. So you mentioned that you view the COVID impact as kind of being neutral to favorable for business development. So maybe if you could just expand upon that.And then secondly I wanted to ask about Nucynta IR, it’s a product we don't talk about as much as the ER product, but I'm wondering what you're seeing there and kind of what the patient base is for that, given that with the lack of elective surgery procedures, I would imagine that the IR opioid market is seeing the negative impact from some of that declining volume. Thanks.

Yeah, hey, Kevin. This is Joe. So from a BD perspective, the commentary that I made of our view is the COVID-19 impact will be neutral to positive. Obviously, a lot of different companies are going to experience COVID-19 in different ways. Some are being impacted from a valuation of the company, some will experience a P&L challenge, some will have delays from a clinical trial perspective. That could create pressure.So from our perspective, we're focused in, we've identified eight non-opioid pain solutions, all of which are either in Phase II or are ready to enter Phase II development. As you know, we're targeting that 2024 to 2026 window and my comment was to say, based on that high level assessment, we're certainly not in a net worse position in terms of our view of the likelihood of being able to get the transaction done. And, Scott can speak about Nucynta IR.

Yeah. So...

Patient type.

Yeah. Thanks a lot, Kevin. So, yes, when we look at IR, it actually travels along with ER. So this quarter versus first quarter '19, there was a decline, but it was significantly less than the first quarter of '19. And it's a product that's 70% of the time used for chronic pain patient treatment. And so it behaves a little differently than the traditional IR products.

Okay.

Operator, next question.

Our next question comes from the line of Serge Belanger. Your line is open.

Hey, good afternoon. Just a couple of questions for me. The first one, Joe, is on the guidance. We saw a lot of companies withdraw guidance entirely just because of the uncertainty around COVID. What gives you confidence or what are the assumptions behind your new guidance here?

Yeah, Serge, so I appreciate the question. I'll give a little perspective and then maybe Paul can give additional texture to the guidance. Look, the first thing is, we feel, when you look at the Nucynta transaction, it's financially transformative to the organization. And what we believe is happening in the market is continuity of care is benefiting the established products. So we feel comfortable with the guidance of Nucynta, which as you know, drives a lot of the cash flow and EBIT for the organization.The second thing, from an expense perspective, by the nature of our people working remotely, there's T&E related expenses, meetings, conferences and things like that, we otherwise, would have gone to, that we think will result in favorability from an expense perspective. And when you look at Xtampza, our basic assumption that we're making and the primary driver of what we think is putting pressure on the ramp of Xtampza is patients not being able to visit their physicians in person at the same rate.So the assumption of our guidance is that we don't anticipate a return to normal prior to the end of the year, meaning across the country, patients at the same rate they were, are visiting their physicians in the office and we also don't anticipate if we're fortunate enough to be able to bring our field force back to in-person customer interactions, that it will be at the same level across the country as it was prior to the event. And I don't know if, Paul, you want to add any additional comment.

Yeah, thanks, Joe, and thanks Serge for the question. The only other thing I'd just expand on what Joe said is how financially transformative the Nucynta deal is for Collegium. So we were profitable in the first quarter despite the Nucynta royalty adjustment of $14.2 million, but we'll be profitable for the remainder of the year and generating meaningful cash flow throughout the year, which is why we gave the cash guidance as well.So we'll end the year with over $180 million, while paying down $37.5 million of the term note. So we still expect to have a very strong year despite having to bring down the Xtampza revenue cuts.

Okay and then just a follow-up on Nucynta. Can you maybe talk about the market dynamics of that product and which would explain your success in growing market share over the last couple of quarters?

Okay. Scott, you can take.

Yeah. Thanks for the question, Serge. So, look, when we look at Nucynta ER, we believe that the stabilization is driven by the value proposition of the product and our commercial effectiveness being able to stabilize that product. As I've shared before and I'll share it again, when you talk to physicians, they have a strong intend to prescribe the product and they see it as highly favorable and differentiated. So I think those things have come together to allow us for four quarters to stabilize and are growing share.

Thank you.

Our next question comes from the line of David Steinberg. Your line is open.

Sorry about that. And I apologize, with three calls going on at one side, I might have missed it, but -- and the question may have been asked. But in the past, the last four or five months, you talked about the possibility of some off-cycle wins, any update there? I know that the next time you have your call, it would be close to when you would announce the regular cycle wins.So would there be -- what's the chance of something between now and then? And then, given -- I know that in order to adjudicate the script with the forced conversion, you physically have to be -- I just want a clarification, you physically have to be in the doctor's office with them. Can that not be achieved via Zoom or some such method or you literally have to be at their office with the doctor? I just wanted to make sure I've got this.

Great. Thanks, David. I'm going to let Scott start with the question around prescriptions and then I'll talk about the off-cycle payor wins.

Perfect. Yeah, thanks, David. Yeah, so first, no, from a legislative standpoint, changes were made that a new patient can't actually be started via telemedicine and video conferencing. So that -- the challenge is in the abilities. The challenge is the physicians want to make those changes in live patient visits and visits to physicians' offices by patients are down significantly since COVID-19 kicked in at the end of February.So they can mechanically do that, but it's impacted by the fact that patients aren't going to the office, and that's why they want to see the physician and make a change.

And, David, one other thing to that question, pain specialists relative to other physician groups were low users of telemedicine prior. And so, although, that's increasing, that's not been a common part of their practice, which is why we think the disruption to the patient flow was important and is having impact to the shifting of patients from oxycodone in these exclusive plans over to Xtampza.With regards to off-cycle payor wins, we continue to be actively engaged. I would say that we are encouraged and our commitment will be, if we achieve any that are material, we would communicate them. And I would also emphasize, we're looking to do three things now from an Xtampza perspective in terms of our payor strategy. One, in instances, we're looking to get additional exclusive. In certain situations, we are trying to do a parity so they get on equal status.As you know, every payor position we have that is not exclusive, Xtampza ER has actually disadvantaged oxycodone. So if we can achieve parity off-cycle, that would lead to a run-in to exclusive. That's part of our strategy and then in certain instances, we will also try to achieve a parity position because we think with our commercial scale, our overall breadth payor position, in terms of exclusive, that we can meaningfully move market share for put on equal footing with oxycodone. So anything material, we will communicate and encourage both for the potential of out-of-cycle, but also as we look to 2021 based on the discussions we're having.

There are no questions at this time. Please continue.

Okay, great. Thank you, operator. In the face of unprecedented challenges, Collegium Pharmaceuticals is uniquely positioned and on track to make 2020 a transformative year. I'm confident that we have the product portfolio, financial strength and, most important, people to make it happen. I look forward to updating you on our progress. Have a good evening. Stay healthy and be well.

This concludes today's conference call. You may now disconnect.