Collegium Pharmaceutical, Inc. (Nasdaq: COLL), a specialty
pharmaceutical company committed to being the leader in responsible
pain management, today announced that it has entered into a
definitive agreement to acquire the U.S. rights to the Nucynta
Franchise from Assertio Therapeutics, Inc. (“Assertio”) for $375.0
million in cash.
“Acquiring the full U.S. rights to the Nucynta Franchise is
financially transformative for Collegium,” said Joe Ciaffoni,
President and Chief Executive Officer of Collegium. “We expect the
acquisition to improve annual EBITDA and operating cash flows by
more than $100 million. The transaction is supported by a financing
structure that allows for rapid de-leveraging and enables us to
pursue future business development transactions.”
Transaction Details
- Collegium will make a cash payment to Assertio of $375.0
million, less royalties paid to Assertio in 2020, and subject to
certain other adjustments. Collegium will assume the U.S. license
for the Nucynta Franchise, and will no longer be required to pay
royalties to Assertio.
- Collegium has secured debt financing commitments of $325.0
million that, together with cash on hand, will be used to fund the
purchase price payable to Assertio.
- Collegium will continue to pay Grunenthal GmbH a flat 14%
royalty on net sales of the Nucynta Franchise, but will no longer
be required to pay a supplemental royalty on sales greater than
$180.0 million.
- The transaction is expected to be immediately accretive and to
significantly increase Collegium’s profitability and operating cash
flows.
- The deal is expected to close on February 14, 2020, subject to
satisfaction of customary closing conditions.
The Nucynta Franchise
- The Nucynta Franchise, which includes both an extended-release
and an immediate release formulation of tapentadol, is supported by
patents with expiries in mid-June 2025, with the potential for a
six-month pediatric extension.
- Importantly, Collegium assumes no liability, including
litigation-related liability, related to the manufacture, sale or
promotion of the Nucynta Franchise prior to Collegium’s licensing
of the U.S. commercialization rights on January 9, 2018.
Financial Guidance for 2020
Collegium reiterates its full-year 2020 financial guidance,
initially provided on January 7, 2020:
- Xtampza ER revenues are expected in the range of $150.0 million
to $160.0 million.
- Nucynta Franchise revenues are expected in the range of $170.0
million to $180.0 million.
- Total operating expenses are expected in the range of $130.0
million to $140.0 million.
Advisors
Jefferies LLC acted as financial advisor to Collegium on the
transaction, and Pepper Hamilton LLP served as legal counsel.
About Collegium Pharmaceutical, Inc.
Collegium is a specialty pharmaceutical company committed to
being the leader in responsible pain management. Collegium’s
headquarters are located in Stoughton, Massachusetts. For more
information, please visit the company’s website at
www.collegiumpharma.com.
About Xtampza ER
Xtampza® ER is Collegium’s first product utilizing the DETERx
technology platform. Xtampza ER is an abuse-deterrent,
extended-release, oral formulation of oxycodone approved by the FDA
for the management of pain severe enough to require daily,
around-the-clock, long-term opioid treatment and for which
alternative treatment options are inadequate.
About Nucynta ER
Nucynta® ER is an extended-release formulation of tapentadol.
Tapentadol is a centrally acting synthetic analgesic. Nucynta ER is
approved by the FDA for the management of pain severe enough to
require daily, around-the-clock, long-term opioid treatment and for
which alternative treatment options are inadequate. Nucynta
ER is also approved by the FDA for neuropathic pain associated with
diabetic peripheral neuropathy severe enough to require daily,
around-the-clock, long-term opioid treatment and for which
alternative treatment options are inadequate.
About Nucynta
Nucynta® is an immediate release formulation of tapentadol
indicated for the management of acute pain severe enough to require
an opioid analgesic. Tapentadol is a centrally acting synthetic
analgesic.
Non-GAAP Financial Measures
To supplement our financial results presented on a GAAP basis,
we have included information about EBITDA. We internally use this
non-GAAP financial measure to understand, manage and evaluate the
Company as we believe it represents the performance of our core
business. Because this non-GAAP financial measure is an important
internal measure for the Company, we believe that the presentation
of the non-GAAP financial measure provides analysts, investors and
lenders insight into management’s view and assessment of the
Company’s ongoing operating performance. In addition, we believe
that the presentation of this non-GAAP financial measure, when
viewed with our results under GAAP, provides supplementary
information that may be useful to analysts, investors, lenders, and
other third parties in assessing the Company’s performance and
results from period to period. We report this non-GAAP financial
measure in order to portray the results of our major operations –
commercializing innovative, differentiated products for people
suffering from pain – prior to considering certain income statement
elements. This non-GAAP financial measure should be considered in
addition to, and not a substitute for, or superior to, net income
or other financial measures calculated in accordance with GAAP. The
Non-GAAP financial measure is not based on any standardized
methodology prescribed by GAAP and represents GAAP net income
(loss) before interest expense, interest income, income tax
expense, depreciation expense and amortization expense. Any
non-GAAP financial measures used by us may be calculated
differently from, and therefore may not be comparable to, a
non-GAAP measure used by other companies.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of The Private Securities Litigation Reform Act of
1995. We may, in some cases, use terms such as "predicts,"
"forecasts," "believes," "potential," "proposed," "continue,"
"estimates," "anticipates," "expects," "plans," "intends," "may,"
"could," "might," "should" or other words that convey uncertainty
of future events or outcomes to identify these forward-looking
statements. Examples of forward-looking statements contained in
this press release include, among others, statements regarding
financial guidance for Xtampza ER and Nucynta Franchise revenues,
total operating expenses, current and future market opportunities
for our products and our assumptions related thereto. Such
statements are subject to numerous important factors, risks and
uncertainties that may cause actual events or results, performance,
or achievements to differ materially from the company's
current expectations. Management's expectations and, therefore, any
forward-looking statements in this press release could also be
affected by risks and uncertainties relating to a number of other
factors, including our expectations related to the consummation of
the acquisition of the Nucynta assets and the potential impact on
our future operating results; our ability to commercialize and grow
sales of our products; our ability to manage our relationships with
licensors; the success of competing products that are or become
available; our ability to obtain and maintain regulatory approval
of our products and any product candidates, and any related
restrictions, limitations, and/or warnings in the label of an
approved product; the size of the markets for our products and
product candidates, and our ability to service those markets; our
ability to obtain reimbursement and third-party payor contracts for
our products; the rate and degree of market acceptance of our
products and product candidates; the costs of commercialization
activities, including marketing, sales and distribution; changing
market conditions for our products; the outcome of any patent
infringement, opioid-related or other litigation that may be
brought by or against us, including litigation with Purdue Pharma,
L.P. and Teva Pharmaceuticals USA, Inc.; the outcome of any
governmental investigation related to the manufacture, marketing
and sale of opioid medications; our ability to secure adequate
supplies of active pharmaceutical ingredient for each of our
products and manufacture adequate supplies of commercially saleable
inventory; our ability to obtain funding for our operations and
business development; regulatory developments in the U.S.; our
expectations regarding our ability to obtain and maintain
sufficient intellectual property protection for our products; our
ability to comply with stringent U.S. and foreign government
regulation in the manufacture of pharmaceutical products, including
U.S. Drug Enforcement Agency, or DEA, compliance; our customer
concentration; and the accuracy of our estimates regarding
expenses, revenue, capital requirements and need for additional
financing. These and other risks are described under the heading
"Risk Factors" in our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2019, and in other reports which we file with
the SEC. Any forward-looking statements that we make in this press
release speak only as of the date of this press release. We assume
no obligation to update our forward-looking statements whether as a
result of new information, future events or otherwise, after the
date of this press release.
Contact: Alex Dasallaadasalla@collegiumpharma.com
|
|
Reconciliation of GAAP to Non-GAAP Financial
Information |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
Illustrative Pro Forma |
|
|
|
Annualized (1) |
|
Nine Months Ended |
|
Twelve Months Ended |
|
September 30, |
|
December 31, |
|
2019 |
|
2019 |
|
|
|
|
|
|
GAAP net loss |
$ |
(20,521 |
) |
|
$ |
(27,361 |
) |
|
|
|
|
|
|
EBITDA adjustments: |
|
|
|
|
|
Interest expense |
|
698 |
|
|
|
931 |
|
Interest income |
|
(1,552 |
) |
|
|
(2,069 |
) |
Depreciation expense |
|
535 |
|
|
|
713 |
|
Amortization expense |
|
11,064 |
|
|
|
14,752 |
|
Total EBITDA adjustments |
$ |
10,745 |
|
|
$ |
14,327 |
|
|
|
|
|
|
|
EBITDA |
$ |
(9,776 |
) |
|
$ |
(13,034 |
) |
|
|
|
|
Illustrative Pro Forma Adjustments |
|
|
|
|
|
Nucynta royalties due to Assertio (2) |
|
94,163 |
|
|
|
118,842 |
|
Nucynta royalties due to Grunenthal (3) |
|
– |
|
|
|
6,958 |
|
Total Illustrative Pro Forma Adjustments |
$ |
94,163 |
|
|
$ |
125,800 |
|
|
|
|
|
Illustrative Pro Forma EBITDA |
$ |
84,387 |
|
|
$ |
112,766 |
|
|
|
|
|
|
|
Change in EBITDA |
$ |
94,163 |
|
|
$ |
125,800 |
|
|
|
|
|
|
|
|
|
(1) Represents illustrative pro forma annualized GAAP net
loss, interest expense, interest income, depreciation expense, and
amortization expense based on annualizing the amounts disclosed for
the nine months ended September 30, 2019 in the Condensed
Consolidated Financial Statements as filed on Form 10-Q for the
period ending September 30, 2019. |
|
(2) Represents calculated royalties due to Assertio under the
Third Amendment to the Nucynta Commercialization Agreement, which
are no longer required under the agreement to acquire the Nucynta
Franchise. For the nine months ended September 30, 2019, the
Company recognized product revenues, net from the Nucynta Products
of $144,866, which results in $94,163 of calculated royalties due
to Assertio (65% of net product revenues from the Nucynta
Products). The Company’s illustrative pro forma annualized
product revenues, net from the Nucynta Products is $193,155, which
results in $118,842 of calculated royalties due to Assertio (65% of
net product revenues up to $180,000, or $117,000, plus 14% of net
product revenues from $180,000 to $193,155, or $1,842, for total
calculated royalties due of $118,842). |
|
(3) Represents the
change in calculated royalties due to Grunenthal under the
agreement to acquire the Nucynta Franchise compared to the Third
Amendment to the Nucynta Commercialization Agreement. The
Company was previously required to pay a guaranteed $34,000 royalty
to Grunenthal if net product revenues from the Nucynta Products
exceeded $180,000. Under the agreement to acquire the Nucynta
Franchise, such guarantee has been eliminated and is replaced with
a flat royalty of 14% of net product revenues from the Nucynta
Products. As such, the difference between 14% of illustrative
pro forma annualized net product revenues of $193,155, or $27,042,
and $34,000 is $6,958. |
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