|Shares Out. (in M):||29||P/E||0||0|
|Market Cap (in $M):||480||P/FCF||0||0|
|Net Debt (in $M):||5||EBIT||0||0|
|TEV (in $M):||319||TEV/EBIT||0||0|
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In its briefing document to the FDA Advisory Committee (Adcom), the Company conducted two PK studies to compare the drug to its direct competitor Oxycontin ER (as mentioned above, Oxycontin dominates the ADO market with over 95% market share). Below charts shows the results of the two studies. The first chart compares Oxycontin (intact and crushed) with Crushed IR Oxycodone – Crushed Oxycontin and Crushed Oxycodone behave exactly the same implying limited abuse deterrent properties. Study 2 compared Intact and Crushed XTAMPZA with Crushed IR Oxycodone. The test showed that PK profile of the crushed XTAMPZA was similar to intact XTAMPZA. While FDA included the results from study 2 (XTAMPZA vs. Oxycodone), they did not include the results from study 1 (Oxycontin vs. Oxycodone) on the label and asked the Company to conduct more confirmatory studies. In May 2016, the Company reported results from the second head-to-head study that again showed similar results.
Drug marketing is a highly regulated space and all marketing labels have to be approved by the FDA. Currently, FDA has not provide Collegium the approval to use the data of the two studies for commercialization purposes. Having these studies been available on its label would give XTAMPZA a boost in commercializing the drug. The Company recently submitted a sNDA to the FDA to have the results made available for promotional materials and is expected to hear back from the FDA in April 2017.
Developments since launching the product in June 2016:
The Company has made significant progress since launching the product. On the last earnings call, the Company mentioned that the following developments with respect to commercializing the drug (by improving broadened payer coverage, pharmacy availability, customer contracting, and increasing physician prescriber base of the product) in Q3:
- After much delay, the Company recently (Oct 2016) received approval from the FDA on its promotional materials. The company was not able to promote the drug due to the lack of marketing materials approved until a few weeks ago to market the drug. The marketing materials still do not have the results of the Study 1 and Study 2 (mentioned above)which would be critical in convincing the customer
- At the end of Q3, XTAMPZA had 17mm contracted lives covered from 0 lives at the end of Q2. Company will have 60mm contracted lives in Q1 2017 from contracts already signed so far. Keys wins in Q3 include:
o United Health: Effective Nov 1, United Health (15.6mm commercial lives) mentioned that XTAMPZA is their preferred ER drug; Oxycontin will remain in the drugs available until Jan 2017.
o Cigna (6.4mm commercial lives): Approved Oct 1st but after Jan 1, 2017, will become one of three preferred products.
o Approved by one large PBM with 10.5mm commercial lives and currently in negotiations with top PBM for contracting the drug.
o Available at approx. 1,500 pharmacies from 40 at end of Q2.
- Collegium is the only approved drug that can be sprinkled over soft-food or be delivered through feeding tube making the drug an attractive option for hospitals and long-term care facilities. The Company is currently making significant progress with hospitals. Approx. 12,000 hospitals purchase about $300mm ER opioids and top 500 hospitals purchase about 60% of the opioids. Reaching out to hospitals provide synergies, since the portion of the patients leave the hospitals to stay at long-term care centers were they are likely to continue to be on opioid pain management treatment.
- Strong sales force in action. Company currently has a sales force of 142 reps; 118 focused on approx. 11k outpatient prescribers that account for 55% of the retail prescription for branded ER opoids; remaining 14 reps are focused on hospitals and long-term care facilities.
Sell side analyst consensus estimate (6 analyst) for 2019 (3years from launch) is for approx. $155mm ($109 - $207mm range). Peak annual sales expectation is around $350 – 500mm. Peers with similar launched products trade around 5-6x sales and around 1.5x peak sales numbers. Company currently has about $170mm of cash on hand ($5.75 cash per share) and so is well capitalized to market the drug without additional dilution. Based on these multiples, Collegium should easily trade over $25.00. Additionally, the company is an attractive acquisition target for a larger company with a pain portfolio. Acquisition will have high synergies ($50mm+ per year) since the Company’s biggest expense currently is its sales reps and the acquirer can use its existing sales force to a major extent to market the product. Additionally, the Company has over $100mm of NOLs which the acquirer could potentially utilize.
positive quarterly sales numbers; approval of marketing materials with ability to market Study 1 and 2 results
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