Collegium Pharmaceutical, Inc. (COLL) Q3 2022 Earnings Report, Transcript and Summary

Greetings, and welcome to the Collegium Pharmaceutical Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, that this conference is being recorded. I will now turn the call over to Dawn Schottlandt, at Argot Partners. Thank you. You may begin.

Welcome to Collegium Pharmaceutical's Third Quarter 2022 Earnings Conference Call. I am joined today by Joe Ciaffoni Collegium's, Chief Executive Officer; Colleen Tupper, Chief Financial Officer and Scott Dreyer, Chief Commercial Officer. Before we begin today's call, I 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 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 derive the expected benefits of the acquisition of BioDelivery Sciences International on the proposed schedule or at all, [Technical Difficulty] also reducing fully commercialize [ph] our products and that we may incur significant expenses and may not prevail in the current or future litigation pertaining to our business. 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, Dawn. Good afternoon, and thank you, everyone, for joining the call. Today, we will discuss our performance during the third quarter and through the first nine months of the year and provide perspective on our outlook for the remainder of 2024 and what we expect 2023 to be advanced [Technical Difficulty]. 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. During the third quarter, Collegium continued to support the communities where we live and work, highlighted by our charitable donation two and additional sponsorship of the MassBioEd Foundation's 2022 Life Science Workforce Conference. [Technical Difficulty] education, recruitment, inclusion and retention of a more diversified talent pool for our growing industry. MassBioEd is a non-profit which provides Life Science's educational programs to teachers and students of all backgrounds. We are also proud to have helped our second Annual Day of service in which are employees nationwide volunteered in service of organizations that are important to them. At our corporate headquarters on the day of service, we partnered with science from scientists packing over 400 STEM lesson kits, for underserved students in the Brockton, Massachusetts School System. We remain focused on growing our business and creating value for our shareholders. We do this by maximizing the potential of our differentiated portfolio, focusing on achieving our near-term operational and financial goals and strategically investing in our long-term growth. I want to thank the Collegium team for their hard work, dedication and commitment to our mission. 2022 has been a pivotal year for Collegium. Throughout the first nine months of 2022, we executed on our strategic priorities and delivered on the goals we communicated at the beginning of the year. We closed the financially transformative BDSI deal, establishing Collegium as the leader in responsible pain management. We completed the seamless integration of BDSI and expect to achieve run-rate synergies of approximately $85 million, up from the $75 million target we shared when we announced the transaction. We delivered record net revenue and adjusted EBITDA, driven by the acquisition of BDSI. We completed the renegotiation of Xtampza ER contracts that represent 54% of all prescriptions. Based on the planned decisions we have received, we are pleased to share that we achieved the goal of materially rolling back the discount rates and maintaining broad access. Starting in January 2023, Xtampza ER gross to net will be less than 65%, which we expect will immediately accelerate top-line growth. We advanced our position as the leader in responsible pain management, growing the market share of our branded extended-release pain portfolio. We participated in Pain Week this past September with 11 poster presentations highlighting and raising awareness of clinical and real-world data on our differentiated and distinctly positioned product portfolio. And in March, we executed a Master Settlement Agreement resolving all 27 pending opioid industry-related lawsuits, brought against the company by cities, counties and other subdivisions in the United States. Each of those lawsuits has now been dismissed. We made significant progress against our key objectives in these first nine months of 2022. We are on track to achieve all of our 2022 strategic and financial goals. And because of our strong execution, we are updating our 2022 full-year guidance. We are confident that our recent achievements position us for a banner year in 2023. We remain laser-focused on executing our 3-phase action agenda. In the second quarter we successfully completed Phase 1, the seamless integration of BDSI and our efforts are yielding results. We are on track to exceed our original run-rate synergies target of $75 million and now expect to achieve approximately $85 million in run-rate synergies within the first 12 months of closing the BDSI transaction. At the start of the second quarter, we transitioned to Phase 2, generate momentum and have made significant progress versus most of our operational objectives. Of note, we successfully completed Xtampza ER contract renegotiation which ensures a gross to net of less than 65%, beginning on January 1st 2023. We expect BELBUCA and Xtampza ER to grow volume and market share moving forward. Both products are highly differentiated, distinctly positioned and fundamentally well-positioned to grow. Our commercial organization is fully trained, engaged in building on their learnings to generate prescription momentum in 2022, in growth in 2023. Our execution in 2022 positions Collegium for a banner year in 2023. We will transition to Phase 3 of our action agenda Accelerate in January. We expect to see an immediate acceleration of top and bottom-line growth in 2023 propelled by Xtampza ER gross to net of less than 65%, prescription growth of BELBUCA and Xtampza ER and the full-year impact of the synergized cost structure. Our singular focus in deploying capital is to create value for our shareholders and our top priority as business development. We are committed to taking a disciplined approach and we believe current market conditions are conducive to delivering on our business development objectives. We are focused on commercial stage opportunities with peak sales potential of over $150 million. Importantly, we are looking for assets that are differentiated with exclusivity that runs into the 2030s. Our strong financial position including robust cash generation and rapid pay down of debt leaves us well-positioned to allocate capital in a focused and thoughtful manner. We are committed to strategically investing in the growth of our business to create long-term value as well as leveraging our share repurchase program to opportunistically return value to shareholders. Our third-quarter results reinforce the conviction we have in our business strategy. We are making meaningful progress on our goals and are strongly positioned for top and bottom-line growth in 2023. I will now hand the call over to Colleen for a discussion of the financials.

Thanks Joe. Good afternoon everyone. Q3 was another strong quarter for Collegium. We generated record revenue record adjusted EBITDA and leveraged our strong cash flows to pay down debt while returning cash to shareholders through the share repurchases. As a reflection of our execution, we increased our targeted run rate synergies for the BDSI acquisition to approximately $85 million. Collegium strengthened its financial position throughout 2022 and we expect to capitalize on this momentum in 2023. Financial highlights for the third quarter include total product revenue was a record $127 million for the third quarter an increase of 61% from the third quarter of 2021 and BELBUCA net revenue was $38.8 million in the third quarter of 2022. BELBUCA sales were impacted by a transient destocking of the channel at the end of the quarter. Xtampza ER net revenue was $38.8 million and Xtampza ER gross to net in the third quarter was 66%. The lower gross to net was primarily driven by a one-time benefit to returns which I will speak about shortly. For the full year 2022, we now expect gross to net to be less than 73% and starting in January 2023 as a result of the successful contract renegotiations, gross to net will be less than 65%. Nucynta franchise net revenue was $44.4 million in the third quarter. Operating expenses, which includes stock-based compensation expense, were $38.4 million in the third quarter compared to $32 million in the third quarter of 2021. Adjusted operating expenses, which excludes stock-based compensation and acquisition-related expenses, were $32.5 million in the third quarter an increase of 25% from the third quarter of 2021. Net income for the third quarter was $0.5 million. Income from operations was $20.5 million in the third quarter. Non-GAAP adjusted EBITDA was a record $74.9 million for the third quarter versus $37.3 million -- sorry $37.3 million in the third quarter of 2021. The GAAP EPS was $0.01 in the third quarter of 2022 versus $0.23 GAAP earnings per share basic and $0.22 GAAP earnings per share diluted in the third quarter of 2021. Non-GAAP adjusted EPS was $1.10 in the third quarter versus $0.65 in the third quarter of 2021. In addition, related to the returns matter that we disclosed in February of this year I am pleased to share that we have reached comprehensive resolutions of our returns-related disputes with all three wholesalers. Overall, the returns adjustment resulted in a one-time positive impact to revenue in the quarter of $4.7 million. Please see our press release issued earlier today for a reconciliation of GAAP to non-GAAP results. As of September 30th, our cash balance increased to $134.1 million. During the quarter, we paid off $25 million in debt. We expect that our net leverage will be below three times net debt to EBITDA by the end of this year. Our strong operational performance in the third quarter demonstrates the strength of our business model. We are on track to achieve all of our 2022 financial goals notably growing revenue at greater than two times the rate of adjusted OpEx. We are pleased with our performance and are poised to continue strengthening our financial position. Moving to our 2022 financial guidance. As we've successfully executed on our financial priorities, we are updating the guidance ranges for product revenue adjusted operating expenses and adjusted EBITDA. For 2022, we now expect total product revenues in the range of $455 million to $465 million. We expect our adjusted operating expenses in the range of $125 million to $130 million and total adjusted EBITDA in the range of $250 million to $255 million. We look forward to providing 2023 financial guidance in early January, which will reflect an acceleration in top and bottom-line growth. We are focused on creating value for our shareholders through thoughtful and disciplined business development. BD remains our top priority for capital deployment. And given our strong financial position we have the ability to support additional transactions near-term. We are rapidly deleveraging the balance sheet with net leverage expected to be below three times net debt to EBITDA by the end of this year and to be at less than two times by the end of 2023. We expect to pay down $100 million in debt by March 2023 and fully repay our Pharmakon term loan by March 2026. Our ability to delever quickly is a testament to our strong cash generation. Our financial strength enables us to pursue acquisitions, pay down debt, and opportunistically return value to our shareholders through our Board authorized $100 million share repurchase program. During the third quarter and in October 2022, we returned $10 million in capital to shareholders through repurchases under the $100 million share repurchase program authorized by our Board. We have approximately $42 million remaining under this program. Overall, we are pleased with our performance this quarter and our solid financial position reflects our ability to execute on our strategic priorities. We are in a phase of growth and value creation and are focused on finishing 2022 strong and entering 2023 even stronger. I will now turn it over to Scott.

Thanks Colleen. I'm excited to report that we've successfully completed the contract renegotiations with plans that account for 54% of all Xtampza ER prescriptions. This is the top commercial priority in 2022 and it will fuel the acceleration of Xtampza ER revenue in 2023. I can now confirm with certainty that Xtampza ER gross to net will be less than 65% beginning in January. Importantly, in addition to materially rolling back rebates, we were able to maintain our exclusive and parity access positions for the vast majority of the renegotiation opportunity. Let me take a moment to highlight the results of the Xtampza ER contract renegotiations. In plans that represent approximately 90% of the current prescription base that was subject to renegotiation, Xtampza ER will maintain its exclusive ER oxycodone position or parity position with OxyContin. The plans where Xtampza ER maintained its exclusive position are both the largest plans and the plans that have demonstrated an ability to control and drive market share over the past several years. We expect volume growth from these plans in 2023. In plans that represent approximately 10% of the current prescription base that was subject to renegotiation. Xtampza ER will move to a non-formulary position. It's important to note that this change puts Xtampza ER in a parity position with OxyContin at these accounts. As a group, these plans are smaller and have demonstrated less control. We expect that the benefit of no longer paying discounts will offset any potential pressure on prescriptions. Overall, we expect to grow Xtampza ER volume and market share in 2023 in the accounts in which Xtampza ER maintained its access position at a level that offsets any potential pressure where Xtampza ER was moved to non-formulary. Lastly I want to emphasize that we have ample room to opportunistically secure new wins moving forward, which will serve as a catalyst for prescription growth while maintaining Xtampza ER gross to net below 65%. From now until the end of the year, we're focused on taking actions to ensure we grow Xtampza ER within the accounts where Xtampza continues to have exclusive access. These actions include building joint action plans with the payers to tighten formulary control and utilization management to move patients who remain on OxyContin to Xtampza ER, to communicate to HCPs and patients the preferred formulary position of Xtampza ER versus OxyContin and the associated lower co-pays for patients and to launch new personal and non-personal promotional tools to pull through the exclusive access position of Xtampza ER and accelerate growth. Collegium Pharmaceutical is the leader in responsible pain management. Our organization and our pain portfolio are viewed favorably by HCPs. BELBUCA Xtampza ER and Nucynta ER, have a combined 50% share of the branded ER market. The fundamentals of our growth drivers, BELBUCA and Xtampza are strong. Specifically, both products are seen as highly differentiated by HCPs have broad prescriber bases, strong market access positions and are the only products growing market share in the branded ER market in 2022. Both products are well-positioned to grow volume and share in 2023. That being said, thus far in 2022, prescription volume is flat with both brands versus 2021. We plan to address this through improved commercial execution. The pain market isn't competitive but it's complex. To succeed requires exquisite execution in terms of education on our products and the navigation of the payer landscape. Beyond commercial execution, there are internal and external factors that contributed to BELBUCA and Xtampza ER volume trends in 2022. Externally, in-person patient office visits have still not returned to pre-COVID levels, adversely impacting the new-to-brand market. Pain practices continue to experience significant turnover in mid-level prescribers and administrative staff. These people understand how to navigate the complex payer landscape. From a Collegium perspective, our commercial organization experienced a fair amount of disruption in the first half of 2022, due to our fourth quarter 2021 restructuring and the first quarter 2022 acquisition of BDSI. This resulted in changes to our field forces territory alignments customers and portfolio. For most of our field force, BELBUCA was a new product that's far more complicated than Xtampza ER. I believe that our commercial team is just beginning to hit its full stride with BELBUCA. From now until the end of the year, our commercial organization is focused on taking action to fuel the growth of Xtampza and BELBUCA in 2023. These actions include executing training to strengthen the knowledge and impact of our sales professionals, launching new educational resources for our sales team to use during their interactions with HCPs and pharmacists; introducing new non-personal promotional content and channels, which reinforce the clinical differentiation of Xtampza ER and BELBUCA; launching new personal and non-personal promotional tools to pull through the strong access positions of Xtampza ER and BELBUCA and supporting payers as they ensure that the value of Xtampza ER is clearly understood enabling stronger formulary controls where Xtampza ER is exclusive. In closing, I'm proud of the many accomplishments that the commercial organization has achieved this year, especially the successful renegotiation of contracts for Xtampza ER, which will drive gross to net for Xtampza below 65% starting on January 1, and fuel the acceleration of Xtampza ER revenue in 2023. I'm confident that the actions we're taking now, will elevate our level of commercial execution, generate momentum for the remainder of the year and drive acceleration in 2023. I'll now turn the call back to Joe.

Thanks Scott. We are making significant strides forward as we build a leading diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions. 2022 has been a pivotal year for Collegium and we remain focused on executing our three-phase action agenda. I am encouraged by our progress in 2022 and confident that 2023 will be a banner year. I will now open the call up for questions.

At this time we will be conducting a question-and-answer session. [Operator Instructions] And our first question comes from the line of David Amsellem with Piper Sandler. Please proceed with your question.

Hey, thanks. So I just had a few. So I just wanted to clarify. So you said, I think it was 54% of all Xtampza ER prescriptions represented by the contracts renegotiated. So I'm just sort of wondering the remaining Rxes, what are those? And is it just safe to say that you're at a place where it's status quo for next year? I just want to clarify there. So that's number one. Number two is you talked about Xtampza ER returning to volume growth next year. It's not just better economics. And the comments about better commercial execution certainly are not lost on me. But in the context of the shrinking oxycodone ER pie, what do you think just beyond commercial execution? In other words external factors do you think can get the product back to a more aggressive growth trajectory next year from a volume perspective? And then the same question is for BELBUCA again is growth of BELBUCA beyond commercial execution just predicated on more in-person office visits? What else do you think are factors that could get that product growing in a more aggressive direction? Thank you.

Great. Thanks, David. This is Joe. I'll take the first question and then hand the Xtampza and BELBUCA questions off to Scott. So when you think about the payer landscape as we move forward with regards to Xtampza ER. This year we had the opportunity to renegotiate with plans that represented 54% of prescriptions. Next year we'll have an opportunity to renegotiate with plans that account for another 30% of all prescriptions. And I think it's important that we also emphasize with what it is we accomplished we also have more than enough headroom to opportunistically go out and try to secure additional wins, which will also serve if we're successful in doing so as a catalyst for prescription growth with Xtampza ER. And then Scott, can take the other two questions.

Yes. Thanks David. And to your other two about the growth of Xtampza and BELBUCA, look first and foremost, again, we need to execute better. As I mentioned in my prepared remarks, these internal and external factors were a real thing in 2022. And so the way I look at it is there's the controllables and the non-controllables. From an external standpoint, those are non-controllables in terms of patient office visits and new to brand. But the fact of the matter is I believe that over time we'll see some bounce back there. The other thing is if you look at growth opportunity and I look at the market there's plenty of room for both brands to grow in the market. Xtampza is sitting with a 35% share in OER. So there's plenty of room for us to grow from there. And you look at BELBUCA same thing about a mid-30 share of the buprenorphine market plenty of opportunities to grow. So I don't see any issue with the markets in terms of us being able to grow. The last thing is on those internal factors look those are controllables and that's where all our focus is right now 100% of our focus is on those controllables and taking actions to grow next year. Lastly, the fundamentals of these brands are really strong. Still in market research the brands are viewed as highly differentiated really broad and growing prescriber bases and strong market access position. So all of that put together is what makes me feel confident that as we move into next year we'll be able to reinvigorate growth.

That's helpful. Thanks, guys.

Okay. Thanks,David.

Our next question comes from the line of Tim Lugo with William Blair.

Thanks for the excellent breakdown and congrats on the progress during the quarter. You answered a lot of my questions during David's question, but maybe if you weigh share buyback potential investing in the current franchise and additional development. Can you just talk to us about -- can you give us a sense of where these areas rank internally for capital deployment?

Sure, David. I'll -- or sorry Tim, I'll hand that one off to Colleen.

Hi, Tim. Thanks for the question. So as far as capital allocation priorities, they remain consistent with past discussions, which we will prioritize business development, seeking out commercial stage assets as our first priority. Our returns of our Pharmakon that we will be paying those down pretty rapidly with $100 million paid off in the first year, so paying down our debt, and then also opportunistically continuing to return capital to shareholders via the share buyback program. We have about $42 million remaining through the end of the year.

And Tim the only other thing, I would say, we're working through our planning process. If they're -- if we believe that there would be value in making additional investment in support of the current portfolio, obviously, we have the wherewithal to do that. When you look from a size structure, the big part of the cost structure we believe we're sized correctly, and there's not a need to make additional investment in the current in-line portfolio at least from the big parts of the cost structure.

Okay. Understood. And maybe digging back into BD a little bit more. Can you just give us a refresher on areas you're looking at? Obviously, I like to -- was something that came in BELBUCA and Hysingla [ph] previously. Can you just refresh us on opportunities and give us a sense of the opportunities that you come across?

Sure. Great question Tim. Look I think when we look at the current market environment, which we think is really conducive to getting a deal done, we're not thinking of it so much through the lens of a therapeutic priority, but are really anchored to, one, we're looking for assets that are meaningfully differentiated, which we think is critical for a multitude of reasons in particular reimbursement. The peak sales potential of over $150 million is the threshold that matters to us. And then, of course, we're looking for exclusivity into the 2030s. From a -- look if there was something in the pain space directly that leverages the infrastructure we have in place that certainly would be a preference. I've spoken in the past about neurology being an adjacency that we think makes sense, but when you -- when we assess the current market conditions, we want to be a little bit more flexible and opportunistic.

Understood. Thank you.

You bet. Thank you.

Our next question comes from the line of Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.

Hi. Thanks for taking my questions and congratulations on the progress. Maybe just one for me following on from the earlier line of questioning. Do you have to compromise any gross-to-net in any of the other products in the portfolio, obviously, a much broader portfolio to achieve that expanse gross-to-net, or should we think of the other products remaining relatively stable across the portfolio in 2023 and expand a gross to nets improving to that less than 65%?

Sure. Thanks for the question, Brandon. I'll hand that one off to Colleen.

Thanks, Brandon. No, for the Xtampza renegotiation, there was no compromises or linked to any other products within our portfolio and broadly for the remaining products we do expect stability.

Thanks. And just one follow-up, sorry. This may have been asked in the first question. I missed the answer. Earlier in the year, I think we talked about 50% of contracts being renegotiated this year. I think you've talked about 54% on the call, and then maybe 30% next year. Is there -- is that how we should still think about it? Are there 30% of the Xtampza contracts up for renegotiation next year?

Yes, Brandon, this is Joe. There is an additional 30% of Xtampza contracts up for renegotiation in 2023. That's correct. And is your focus on those 30% now that you've achieved success on such a large majority of the contracts this year still going to be gross to net driven, or could we see something else where maybe that could be volume driven? How should we just think about if you have any change in your approach and the negotiation on those 30%?

Yes. So, great question. I think with existing contracts with Xtampza, the approach will be similar to what it is that we did from a renegotiation in 2022, which from our view really speaks to the value and the performance of Xtampza ER over time, and plans recognizing the clinical differentiation and the positive impact that Xtampza ER can make. The other point that is important to continue to emphasize is, we now have significant headroom, which enables us to opportunistically look to secure new payer wins when the opportunity presents itself. And if we're successful in doing so, that certainly would serve as a potential catalyst for prescription growth and market share gains.

Great. Thanks very much and congratulations again.

Great. Thanks, Brandon.

Our next question comes from the line of Serge Belanger with Needham & Company. Please proceed with your question.

Hi, good afternoon. Thanks for taking my questions. I guess the first one a follow-up on the first question. With 54% of contracts that's been renegotiated and the other 30% coming up next year, should we expect a continued gross to net improvement on an annual basis going forward? And then, a similar renegotiation opportunities available for BELBUCA?

Yes. So Serge, great question. The way I would think about it, and I don't want to get ahead of ourselves, our commitment is managing Xtampza ER gross to net to less than 65%, on a forever basis. Now with the renegotiation opportunity, that would certainly have a margin benefit. But we also with the headroom we have, we'll be looking to secure opportunistically at new additional payer wins, which we think would serve as a catalyst of growth. And most important, as a company committed as the leader in responsible pain management, we always want to try to improve the access to Xtampza ER for physicians, their staff and most of all to the patients. And I'll let Scott, comment on BELBUCA.

Yes. Thanks, Serge. So, yes, when we look at BELBUCA and the rest of the portfolio the fact of the matter is, first, to reiterate what you said, our goal is always to have as broad of access as we can for our full portfolio. We want patients to have access to our products. Right now, when we look at where we are in this negotiating season, the gross tenet for BELBUCA are very reasonable similar to Nucynta. And so we always are looking at things come up, to do what we call pruning whether that may be reducing a discount rate while maintaining access or in situations where it's a bad contract will walk away. And any additional things, I have nothing to report on right now, but that will all be contemplated and reflected in the guidance that we gave in January.

Great. And then, just one last one. Any update on the ELYXYB launch in migraine. It's been a couple of quarters now. It's a first foray into CNS. Just, if you can give us color on how that's going.

Yes. So, Serge, great question. The first thing I would emphasize is, when we did the BDSI acquisition we were clear that the driver of the acquisition was one, the associated synergies because of the direct overlap of the two core businesses. Number two, the opportunity, to add a differentiated growth driver in BELBUCA to the portfolio. And then the ELYXYB launch was underway and we've said, we're going to synthesize learnings through the course of the year and make a decision, on how it is we'll handle the asset moving forward. So we're synthesizing those learnings and expect to be making some decisions very soon on how it is that we're going to handle it. But when you think about Collegium, on a going-forward basis it's really maximizing the potential of our pain portfolio and building the company through acquisition of commercial stage assets, with all of the parameters that we've outlined.

Thank you.

Our next question comes from the line of Greg Fraser with Truist Securities. Please proceed with your question.

Great. Thanks for taking the questions and congrats on the progress. I'm curious, if you have a sense for where the gross net could reach in 2023, I understand mix will play an important role it might be hard to predict. But I'm curious, if you can talk about anything beyond the target of less than 65.

Sure. Greg, appreciate the question. For now what I would say is, we can confirm it will be less than 65%. We'll be issuing our guidance in early January, which will certainly frame the acceleration and Xtampza ER revenue. And at that time, we'll also give some perspective on how to think about Xtampza ER gross to net.

Got it. That's helpful. On BELBUCA and the things that you can control, when do you think those start to yield results? Are we weeks away from reinvigorated share growth quarters away? I'm curious, how you're thinking about that.

Sure. So great question. I'm going to start on that because I think Scott, gave a very good answer to the overall question. The one thing that I would emphasize, that I think is really important to understand was a learning for us. And in particular, the people in our commercial organization is just how different BELBUCA is in terms of, one physicians' awareness of the product; two, the complexity associated with education around BELBUCA and the navigation both at the pharmacy and payer level in terms of, to get the prescription adjudicated and filled. So that's a long way of saying, I believe we're on the verge of hitting our stride. And when we do I believe we'll be in a position, where we will see growth in volume and market share. And that's been a process of learning, reeducation focusing in on education and it's a little bit of a different dynamic than Xtampza because as you know, the buprenorphine market is in fact growing, which really should benefit BELBUCA because it's so differentiated for a multitude of reasons one of which is, the dosing range relative to Butrans patch. So we think there's really good opportunity to get BELBUCA, growing from a volume and share perspective moving forward. That one, more so than Xtampza, is about execution along with just hitting our stride in being as good as we can be, in the promotion of the product.

Got it. And then I just wanted to follow up on your comments on assets, that could be of interest. I'm curious on areas beyond pain and neurology. What other areas might make sense? Thank you.

Yes. Great, question. I'm not going to get into calling out therapeutic areas, but rather reinforce what it is that we're looking to accomplish. So, one, we're looking for commercial stage assets that are meaningfully differentiated. So we don't want commoditized or me-too assets. We think that's aligned to the mission of the company and critical from a reimbursement perspective. We're looking for assets that have peak sales potential of over $150 million and we want exclusivity into the 2030s, and when we assess the current market conditions, contrasting our financially strong position to the current marketplace, we think it's conducive to getting a transaction done and we want to remain opportunistic and flexible.

Great. Thanks for taking the question.

Great. Thanks Greg.

And our last final question comes from the line of Oren Livnat with H.C. Wainwright. Please proceed with your question.

Hi, thanks. I have a few. Clearly you're not going to give us any more color on what less than 65% means, I guess until you give some guidance. So that will be highly anticipated. I guess, just as we think about how you even look at and approach that guidance in terms of conservatism. Since -- I guess you won't really know the mix of product until you get into the year and then even later get the, I guess, the rebates coming back your way. How do you approach that guidance? Do you have just a volume bogey you have in mind? And then just say hey to start let's go at 65% or 64.9% so to speak, and then we'll work through the year and see how it goes. Or is there some other approach? And I have a couple of follow-ups. Thanks.

Sure. Thanks for the question Oren. I'll hand that one off to Colleen.

Hi, Oren, thanks for the question. I think [indiscernible] how we'll approach guidance we'll be -- we'll have robust thoughtful guidance that we set out through the year. As far as the forecasting in and out dynamics for Xtampza as you would in any given year, we have our forecasting model. And for payer shifts there are all sorts of analogs that will leverage to come up with what will be real estimates for the year and that will be incorporated into our planning and guidance.

Okay. And one thing you mentioned that was pretty interesting I don't think anyone asked about is this notion of growing market share within I guess established exclusive contracts. I think you worded it as improving control or increasing control on those formularies. How much share do you already have in mature exclusive contracts now? And what is going on with those straggler OxyContin patients? So what could change going forward that hasn't already changed to date?

Okay. Thanks Oren. I'll pass that one off to Scott.

Yeah. Thanks Oren. So when you think about it as we through the years talked about the exclusives in the ramp, we feel good that we can achieve market shares above 65%. So what's behind my commentary is with all of the plans, they have step-wise approaches as the years go on. So with the exclusives that had been in place for a year or two, now we turn the year there's an opportunity to work with to literally just control right where they identify OxyContin patients and they move them over to Xtampza. So that's what we're referring to when we talk about that. And in general, we can see getting to market shares in above 65%.

Okay. And can you talk about the weighted average of your total share now across the exclusive contracts?

Yeah. Oren so this is Joe. I'll take that one. So there is a range of share within exclusive contracts that we're not going to get into the specifics. What I would say to you is there is a significant opportunity in every one of the exclusive plans to grow volume and market share, the size of which is also dependent upon their season and the in and out and movement of patients to the various plans. So what we feel really good about is we've maintained the exclusive positions on the biggest Medicare Part D plans that have the highest controls in which there's a significant opportunity to continue to grow, which we believe will offset any potential pressure where we were moved to a non-formulary parity position with OxyContin in that 10%, which is lower control.

Okay. And just on the gross to net, I wasn't sure if you quantified the impact from that one-time revenue gain. What would have gross to nets been on Xtampza ER without that positive adjustment in this quarter, or I guess another way to look at it is what is the gross to net on that -- recognized on that piece that was added?

Great question Oren, and I didn't specifically state this yet. So the gross to net for Xtampza ER for the quarter absent the returns adjustment would have been 73%.

Thank you. And just -- sorry, one last thing. My connection was fuzzy when you gave the individual product sales results for this quarter. Do you mind just running through those three or four numbers real quickly? I apologize.

Sure. So for the third quarter of 2022, so total is $127 million and $38.8 million for Belbuca, $38.8 million for Xtampza, Nucynta franchise $44.4 million, SYMPROIC $3.6 million, Elixa [ph] and other $1.4 million total.

Thank you so much. And I look forward to your guidance.

Right. Thank you Oren.

Thanks Oren.

And we have reached the end of the question-and-answer session. I'll now turn the call back over to Joe for closing remarks.

Great. Thank you and thank you everyone for joining the call today. I look forward to updating you on our progress. Have a great evening.

And this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.