Greetings, and welcome to the Collegium Pharmaceuticals Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded. I will now turn the call over to Ian Karp, Head of Investor Relations at Collegium. Thank you. You may begin.

Great. Thanks. Welcome to Collegium Pharmaceuticals Third Quarter 2025 Earnings Conference Call. I'm joined today by Vikram Karnani, our President and Chief Executive Officer; Colleen Tupper, 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 as 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. And with that, I'll now turn the call over to our President and CEO, Vikram Karnani.

Thank you, Ian. Good morning, everyone, and thank you for joining the call. I am pleased to report that we delivered another quarter of both top and bottom line growth, driven by a strong start to the back-to-school season for Jornay PM and robust revenues from our pain portfolio. As our financial results reflect, we continue to make considerable progress on our 3 strategic priorities, which include driving significant growth for Jornay, maximizing the durability of our pain portfolio and strategically deploying capital to further enhance shareholder value. Jornay prescription growth accelerated in the quarter during the critical back-to-school season and early signals indicate that our incremental commercial efforts are being well received by health care providers, caregivers and patients. We also generated another quarter of meaningful revenue growth across our pain portfolio. The continued growth across our portfolio is a testament to the outstanding focus and execution driven by the entire Collegium team. As I reflect on my first full year at Collegium, I am incredibly proud of what our team has accomplished. We successfully expanded into a new therapeutic area, rapidly integrated Jornay into our portfolio and made strategic investments to drive future growth. We also continue to generate robust performance from our pain portfolio and are increasingly confident that these revenues will prove to be more durable than many have previously expected. We have also strategically deployed our capital through share repurchases and rapid debt prepayment and have remained active in our pursuit of additional differentiated medicines to add to our growing portfolio via business development. Of course, none of this success is possible without a strong commitment to the patient communities we serve. We recently celebrated and supported initiatives for both paid awareness month in September and ADHD awareness month in October, serving as an opportunity…

Thanks, Vikram, and good morning, everyone. In the third quarter, we continued to generate positive momentum for our lead growth driver, Jornay PM, driven by strong brand fundamentals and our ongoing commercial efforts. We delivered growth in Jornay prescriptions, market share and prescribers, which I'll discuss in detail in a moment. Jornay is a highly differentiated medicine and the only ADHD stimulant with once-daily evening dosing that provides symptom control upon awakening, throughout the afternoon and into the evening. Many patients, including pediatrics, adolescents and adults, report challenges starting their day, which is a key area of differentiation for Jornay as it begins working when patients wake up in the morning. In addition to efficacy upon awakening, symptom control throughout the day is important for most patients because it can eliminate the need for an additional booster at school or work, and Jornay delivers efficacy that lasts throughout the day. HCP perceptions of Jornay are highly positive. In market research, health care professionals rated Jornay as the #1 ADHD brand in terms of product differentiation with a score that was more than double that of any other competing brand. In addition, over 60% of HCPs indicated a strong intent to increase prescribing, which was the highest among all other branded ADHD medicines. We also know that if a patient or caregiver specifically asked to try Jornay, physicians typically honor that request. While we're pleased with our progress to date, there's still significant opportunity to increase awareness of Jornay's unique and differentiated profile to further drive utilization. Year-to-date, Jornay PM is the fastest-growing stimulant for ADHD. In the third quarter, Jornay delivered strong prescription growth, up 20% year-over-year. Our expanded sales force and new marketing campaigns were in place to maximize the opportunity during the back-to-school season. And as expected, we're…

Thanks, Scott. Good morning, everyone. Q3 was another strong quarter. We delivered record total revenues of $209.4 million, up 31% year-over-year. Adjusted EBITDA of $133 million, up 27% year-over-year and are on track to achieve our updated full year 2025 guidance. We also generated robust operating cash flows of $78.4 million, repaid $16.1 million of debt and ended the quarter with $285.9 million in cash, cash equivalents and marketable securities, demonstrating the strength of our balance sheet. Our strong performance enabled us to raise our 2025 financial guidance, which I will detail shortly. Financial highlights for the third quarter of 2025 include net product revenues were $209.4 million, up 31% year-over-year. Jornay PM net revenue was $41.8 million. Belbuca net revenue was $58.3 million, up 10% year-over-year. Xtampza ER net revenue was $50.5 million, up 2% year-over-year. Nucynta franchise net revenue was $54.8 million, up 21% year-over-year. Nucynta revenues increased year-over-year, primarily due to profitability improvements from gross to net, consistent with our payer strategy as well as certain rebate settlements benefiting the quarter. GAAP operating expenses were $67.1 million, up 8% year-over-year. Non-GAAP adjusted operating expenses were $55.7 million, up 60% year-over-year. As a reminder, the increase in operating expenses reflects ongoing costs to commercialize Jornay as well as the targeted investments we've made to drive future growth, including the expansion of our sales force and new marketing campaigns. GAAP net income was $31.5 million, up 238% year-over-year. Non-GAAP adjusted EBITDA was $133 million, up 27% year-over-year. GAAP earnings per share was $1 basic and $0.84 diluted compared to GAAP earnings per share of $0.29 basic and $0.27 diluted in the prior year period. Non-GAAP adjusted earnings per share was $2.25 compared to $1.61 in the prior year period. Please see our press release issued earlier today for a…

Thanks, Colleen. In summary, we delivered another strong quarter, which has prompted us to raise our full year financial guidance. We are determined to carry this momentum through the remainder of the year and into 2026. As we look ahead, we remain focused on our capital deployment strategy to further expand and diversify our business, while creating value for our shareholders. And importantly, we are committed to improving the lives of patients living with serious medical conditions who are at the forefront of everything we do. I will now open the call up for questions. Operator?

[Operator Instructions] First question comes from Dennis Ding from Jefferies.

This is [Anthea] on for Dennis. Congrats on the great quarter. First question, for Q3 script growth was clearly very strong, but curious how return reserves and inventory also played into that in addition to gross to net improvements? And then secondly, on the expanded sales force, do you see that having a major impact on Q3 already? Or should we actually expect more of an acceleration in Q4 in 2026?

I'll take that first question, and then I'll hand it off to Scott for the second half. So for Jornay gross to net, as expected, gross to net has improved in the third quarter as compared to the first half of the year. As a point of comparison, Q1 gross to nets was 70%, Q2, 67% and 62% in the third quarter, as just mentioned. And we now expect gross to nets to be in the mid-60% range relative to our previous expectation of upper 60s. What's really driving that improvement on the gross to net front is the -- through the year improvement is seasonality. And then broadly, it's also improving returns rates and favorable contracting.

All right. And to your question on the sales force, so no, there was not significant impact in the third quarter as it relates to the expansion of the sales force. What I'd say is we're beginning to see, as I said in my prepared remarks, some early signals of impact, right? We're reaching more customers. I'd say the biggest numerical thing is we expanded our sales force from 17 -- I mean, our target universe from 17,000 to 21,000 targets and 3,800 of those wrote a prescription. So that's a good signal, but not significant impact in the third quarter, and we really expect most impact as we get into 2026 and beyond.

Next question, Brandon Folkes with H.C. Wainwright.

I do want to just follow on from the prior question. Can you help us just think through -- so on Jornay, the net revenue, I think if we look at prescriptions 3Q over 2Q, it looks like it grew 3.2%. Gross net obviously improved from 67% to 62%. Revenue quarter-over-quarter is up 28%. Can you just sort of answer the question about inventory movements? It does seem to be flowing through to 4Q, if I look at the new guidance. So can you just help us understand the net price tailwinds in the back half of this year? And is that dynamic expected to be similar in 2026?

Thanks a lot for the question, Brandon. So in our space, all of our products, given that they're controlled substance, inventory is on average around 15 days on hand. We don't see much fluctuation from that up or down a few days. Jornay for the third quarter, I believe, was 17 days on hand. And as far as the gross to net, so what has improved this year, so I'll separate. In each year, you would expect higher gross to nets in the first half, particularly in the first quarter due to deductible resets and those typical seasonal patterns. In addition to that, what we have seen that has been better than our expectations is improved returns rates and improved contracting. And so looking forward to 2026, what I would say is the seasonality associated with the first half versus second half dynamic will exist due to those Q1 resets. And we would expect full year gross to net to be stable now in about this mid-60s range.

Next question, Les Sulewski with Truist Securities.

This is Jeevan on for Les. And congrats on the progress. So now that we're in November, how has the adherence rate for Jornay been trending since beginning of back-to-school season? And then also in terms of M&A, when you look across your BD funnel, have you gotten to the due diligence stages on anything? And if so, what are some factors that might dissuade you from closing on a effective deal?

Yes. Thanks for the questions. I'll have Scott answer the question on Jornay. And then I'll take the BD question. Go ahead.

Yes. Thanks. Related to adherence, there's no surprises when it comes to the adherence rate for Jornay PM. It's in line with all ADHD medications where we see a typical adherence curve of 9 to 10 months per TRx.

Yes. On the BD question, I mean, I think we wouldn't comment on any specific opportunities that we're in process on. But what I would say is I would reiterate what I said in my prepared remarks. We remain active in our business development efforts as we have been in the past. And at a point when there is something to be discussed, obviously, we will make folks aware. But as a reminder, I want to reiterate what I said about our overall capital deployment strategy. It's a balance of business development and expanding our portfolio, opportunistically repurchasing our shares and continuing to strengthen our balance sheet by repaying debt. And what you should expect is that balance to continue.

Next question, Serge Belanger with Needham & Company.

This is John on for Serge today. Congrats on the quarter. So sticking with GTNs, Nucynta had a really solid quarter. And I believe in the past, you've highlighted GTNs for 2025 for this product to be in the range of roughly 40%. Just curious to see where they were in the third quarter? And if you can provide any additional color on the rebate settlements and how much of an impact that had, that would be great.

John, just to clarify, which product was that question on? You cut out a bit.

Nucynta.

Okay. Great. I wanted to make sure. Thanks for the question. For the overall Nucynta franchise, obviously, Nucynta IR and Nucynta ER travel a little bit different. The rebate settlement benefit in the third quarter was just under $3 million at $2.8 million. That was really a timing difference. It was a benefit in the third quarter that was really attributable to first half activities. For gross to net rate in the third quarter, Nucynta IR was at -- because of that benefit, 28.5% and Nucynta ER was 31.8%.

David Amsellem with Piper Sandler.

This is Alex on for David. Maybe just to circle back to business development. How large a transaction would you contemplate given the current capital structure? And when would you be willing to take on R&D risk? Also related to BD and M&A, are you led to pain or CNS? Or are you thinking more broadly?

Yes. Thank you for the question. As far as the size of business development transaction, I think what we've previously said is we are willing to take on -- lever up to about 3x net debt over EBITDA. And as Colleen mentioned, we ended this quarter in Q3 at about 1.2, and then we expect to end the year less than 1x. In terms of the area of -- the therapeutic area, look, our priority is going to be those areas where we can create some operational leverage from the investments that we have made, right? So if you think about pain, where we have 100-person sales force, now with Jornay, we have a 180-person sales force that calls on roughly half and half about equally split between pediatricians and psychiatrists. So when we think about call point synergies, those would be the target areas that we would look at. But we're -- as I've said before, we are willing to look beyond that. However, the bar is higher. And in order for us to look beyond that and create a third stool of the leg or third leg of the stool, sorry, it would need to be a capital-efficient area, right? So we've discussed those in the past as well. So at the end of the day, what we'd like to do is continue to think about additional BD opportunities that are in -- that are commercial assets or very near commercial assets, thinking just from a risk standpoint. And your question more around BD -- pipeline and development stage, I don't think that's something that we can take on today. Down the road, once we have scaled the company and built another commercial leg, so to speak, to the company, we can contemplate that. But at this point in time, we are focused on commercial or very near commercial assets.

I would like to turn the floor over to Vikram for closing remarks.

Okay. Well, thank you, everyone, for joining the call this morning. Enjoy the rest of your day.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.