Collegium Pharmaceutical(COLL) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, and cash flows, with detailed notes on business, accounting policies, and financial components Condensed Consolidated Balance Sheets Summarizes the company's financial position, detailing assets, liabilities, and shareholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Assets | | | | Total current assets | $549,211 | $482,257 | | Total assets | $1,592,631 | $1,663,591 | | Liabilities and Shareholders' Equity | | | | Total current liabilities | $464,609 | $509,510 | | Total liabilities | $1,360,425 | $1,434,749 | | Total shareholders' equity | $232,206 | $228,842 | | Total liabilities and shareholders' equity | $1,592,631 | $1,663,591 | - Total assets decreased by approximately $70.96 million from December 31, 2024, to June 30, 2025, primarily driven by a decrease in intangible assets and goodwill[15] - Total liabilities decreased by approximately $74.32 million, mainly due to a reduction in accrued rebates, returns, and discounts, and term notes payable[15] Condensed Consolidated Statements of Operations Details the company's revenues, expenses, and net income over specific periods, including earnings per share Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenues, net | $188,000 | $145,276 | $365,757 | $290,199 | | Total cost of product revenues | $79,616 | $54,470 | $160,049 | $107,937 | | Gross profit | $108,384 | $90,806 | $205,708 | $182,262 | | Income from operations | $35,105 | $47,471 | $56,792 | $96,945 | | Net income | $11,983 | $19,606 | $14,400 | $47,319 | | Earnings per share — basic | $0.38 | $0.60 | $0.45 | $1.46 | | Earnings per share — diluted | $0.34 | $0.52 | $0.44 | $1.24 | - Net product revenues increased by $42.7 million (29.4%) for the three months ended June 30, 2025, and by $75.6 million (26.0%) for the six months ended June 30, 2025, compared to the same periods in 2024, primarily driven by the acquisition of Jornay PM[17][190][203] - Net income decreased significantly for both the three-month and six-month periods ended June 30, 2025, compared to 2024, largely due to increased operating expenses (selling, general and administrative, and intangible asset amortization) and higher interest expense[17][195][196][197][208][209][211] Condensed Consolidated Statements of Comprehensive Income (Loss) Presents net income and other comprehensive income components, reflecting total comprehensive income for the periods Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $11,983 | $19,606 | $14,400 | $47,319 | | Other comprehensive income (loss) | $96 | $(58) | $282 | $(196) | | Comprehensive income | $12,079 | $19,548 | $14,682 | $47,123 | - Comprehensive income decreased for both periods in 2025 compared to 2024, mirroring the trend in net income, despite a positive shift in unrealized gains on marketable securities[21] Condensed Consolidated Statements of Cash Flows Outlines cash flows from operating, investing, and financing activities, showing changes in cash and equivalents Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $127,837 | $129,335 | | Net cash used in investing activities | $(12,595) | $(27,034) | | Net cash used in financing activities | $(73,606) | $(168,354) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $41,636 | $(66,053) | | Cash, cash equivalents and restricted cash at end of period | $138,248 | $173,941 | - Net cash provided by operating activities remained stable year-over-year, at $127.8 million in 2025 compared to $129.3 million in 2024[24][221] - Net cash used in investing activities decreased by $14.4 million, primarily due to lower purchases of marketable securities[24][222] - Net cash used in financing activities significantly decreased by $94.8 million, mainly due to lower repayments of term notes, the redemption of 2026 Convertible Notes in the prior period, and reduced common stock repurchases[24][223][224] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Nature of Business Describes the company's core business as a biopharmaceutical entity and its product portfolio - Collegium Pharmaceutical, Inc. is a biopharmaceutical company focused on improving the lives of people with serious medical conditions, with a product portfolio including Jornay PM, Belbuca, Xtampza ER, Nucynta Products, and Symproic[25] - The company acquired Ironshore Therapeutics Inc. on September 3, 2024, adding Jornay PM to its product offerings[26] Note 2. Summary of Significant Accounting Policies Outlines the key accounting principles and estimates used in preparing the financial statements - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP for interim financial reporting and Regulation S-X, Rule 10-01, and include all necessary adjustments for fair presentation[28][29] - The company's estimates and assumptions, such as revenue recognition, fair value of acquired assets, inventory valuation, and intangible asset useful lives, are evaluated on an ongoing basis[30][31] - In July 2025, the Board authorized a new $150 million share repurchase program through December 31, 2026, and the One Big Beautiful Bill Act (OBBBA) was enacted, with the company evaluating its impact on the 2025 effective tax rate[33][128][174] Note 3. Revenue from Contracts with Customers Explains the company's revenue recognition policies, including product sales and variable consideration - Revenue is primarily derived from product sales to wholesalers, recognized when customers obtain control of products, typically upon delivery[39][43] - Transaction price includes variable consideration for sales deductions like rebates, returns, and trade allowances, estimated using historical data and market trends[44][45] Net Product Revenues by Product (in thousands) | Product | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Belbuca | $52,600 | $52,198 | $104,258 | $102,861 | | Xtampza ER | $52,605 | $44,571 | $100,247 | $90,384 | | Jornay PM | $32,626 | $0 | $61,165 | $0 | | Nucynta IR | $26,501 | $25,203 | $53,918 | $51,163 | | Nucynta ER | $19,946 | $19,272 | $39,632 | $38,458 | | Symproic | $3,722 | $4,032 | $6,537 | $7,333 | | Total | $188,000 | $145,276 | $365,757 | $290,199 | - Jornay PM, acquired in September 2024, contributed $32.6 million and $61.2 million in net product revenues for the three and six months ended June 30, 2025, respectively[57][59][191][204] Note 4. Acquisition Details the Ironshore Acquisition, including its strategic rationale, consideration, and preliminary purchase price allocation - The company completed the Ironshore Acquisition on September 3, 2024, to expand into neuropsychiatry with Jornay PM, an ADHD treatment[26][62] - The total fair value of the acquisition consideration was approximately $306.1 million, including an initial cash consideration of $276.9 million and contingent consideration of $4.1 million[64] Preliminary Purchase Price Allocation (in thousands) | Assets Acquired | Acquisition Date Fair Value | | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $9,350 | | Accounts receivable | $44,593 | | Inventory | $17,155 | | Intangible assets | $635,000 | | Deferred tax assets | $35,441 | | Total assets | $751,551 | | Liabilities Assumed | | | Accounts payable | $6,656 | | Accrued liabilities | $73,436 | | Accrued rebates, returns and discounts | $91,279 | | Senior secured notes payable | $151,500 | | Deferred royalty obligation | $116,900 | | Deferred revenue | $10,000 | | Total liabilities | $459,525 | | Total identifiable net assets acquired | $292,026 | | Goodwill | $14,078 | | Total consideration transferred | $306,104 | - Acquisition-related expenses for the six months ended June 30, 2025, totaled $2.224 million, primarily for integration consulting and employee-related expenses[68][69] Note 5. Earnings Per Share Calculates basic and diluted earnings per share, considering the impact of potentially dilutive securities Earnings Per Share (in thousands, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $11,983 | $19,606 | $14,400 | $47,319 | | Earnings per share — basic | $0.38 | $0.60 | $0.45 | $1.46 | | Weighted-average shares — basic | 31,810,612 | 32,433,025 | 31,802,222 | 32,379,807 | | Earnings per share — diluted | $0.34 | $0.52 | $0.44 | $1.24 | | Weighted-average shares — diluted | 39,075,703 | 40,383,694 | 39,283,297 | 40,510,943 | - Diluted EPS decreased from $0.52 to $0.34 for the three months ended June 30, 2025, and from $1.24 to $0.44 for the six months ended June 30, 2025, primarily due to lower net income[71] - Certain dilutive securities, including stock options, restricted stock units, and performance share units, were excluded from diluted EPS calculations if their inclusion would have been antidilutive or if vesting conditions were not met[71][72][73] Note 6. Fair Value of Financial Instruments Categorizes financial instruments by fair value hierarchy and discloses their fair values - The company categorizes fair value measurements into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[74] Fair Value of Financial Instruments (in thousands) | Category | June 30, 2025 Total | Level 1 | Level 2 | Level 3 | | :-------------------------- | :------------------ | :------ | :------ | :------ | | Assets | | | | | | Cash equivalents | $40,678 | $40,678 | $0 | $0 | | Marketable securities | $104,805 | $0 | $104,805 | $0 | | Total assets measured at fair value | $145,483 | $40,678 | $104,805 | $0 | | Liabilities | | | | | | Contingent consideration | $38 | $0 | $0 | $38 | | Total liabilities measured at fair value | $38 | $0 | $0 | $38 | - The contingent consideration liability, related to the Ironshore Acquisition, decreased from $1.182 million at December 31, 2024, to $38 thousand at June 30, 2025, due to a gain on fair value remeasurement[78][80] - The fair value of the 2029 Convertible Senior Notes was $260.820 million (carrying value $237.688 million) and the deferred royalty obligation was approximately $132.305 million (carrying value $122.627 million) as of June 30, 2025, both classified as Level 2 and Level 3 liabilities, respectively[81][83] Note 7. Marketable Securities Details the composition and fair value of available-for-sale marketable securities Available-for-Sale Securities (in thousands) | Category | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :-------------------------- | :----------------------- | :----------------------- | | Corporate debt securities | $96,303 | $82,679 | | Government-sponsored securities | $8,502 | $6,560 | | Commercial paper | $0 | $4,952 | | Total | $104,805 | $94,191 | - Marketable securities increased from $94.191 million at December 31, 2024, to $104.805 million at June 30, 2025, with corporate debt securities forming the largest component[86] - The company did not record any allowances for credit losses or other-than-temporary impairment on available-for-sale debt securities during the six months ended June 30, 2025[87] Note 8. Inventory Provides a breakdown of inventory components and changes over the reporting periods Inventory Composition (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Raw materials | $9,521 | $12,531 | | Work in process | $12,058 | $13,163 | | Finished goods | $20,150 | $17,812 | | Total inventory | $41,729 | $43,506 | - Total inventory decreased from $43.506 million at December 31, 2024, to $41.729 million at June 30, 2025, primarily due to a reduction in raw materials and work in process[88] - Long-term inventory of $3.581 million as of June 30, 2025, is included in other noncurrent assets[90][91] Note 9. Goodwill and Intangible Assets Details changes in goodwill and intangible assets, including amortization expense - Goodwill decreased from $162.333 million at December 31, 2024, to $147.936 million at June 30, 2025, due to measurement period adjustments related to the Ironshore Acquisition[65][92] Intangible Assets, Net (in thousands) | Intangible Asset | June 30, 2025 Carrying Amount | December 31, 2024 Carrying Amount | | :----------------- | :------------------------------ | :-------------------------------- | | Jornay PM | $565,844 | $607,758 | | Belbuca | $113,087 | $150,786 | | Nucynta Products | $55,384 | $83,076 | | Symproic | $46,141 | $49,782 | | Total | $780,456 | $891,402 | - Total intangible assets, net, decreased by $110.946 million from December 31, 2024, to June 30, 2025, primarily due to amortization expense[93] Amortization Expense (in thousands) | Period | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Three Months Ended June 30, | $55,473 | $34,515 | | Six Months Ended June 30, | $110,946 | $69,032 | Note 10. Accrued Liabilities Provides a detailed breakdown of accrued liabilities and their changes Accrued Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------------------- | :------------ | :---------------- | | Accrued royalties | $14,014 | $13,120 | | Accrued product taxes and fees | $8,944 | $6,660 | | Accrued interest | $7,123 | $6,146 | | Accrued payroll and related benefits | $6,121 | $4,589 | | Accrued incentive compensation | $4,299 | $4,054 | | Accrued sales and marketing | $4,283 | $4,398 | | Accrued bonuses | $3,283 | $8,399 | | Accrued inventory | $2,729 | $6,073 | | Liability for cash-settled share-based awards from Ironshore Acquisition | $2,435 | $3,044 | | Accrued audit and legal | $1,576 | $1,848 | | Accrued income taxes | $328 | $8,525 | | Accrued severance expense related to Ironshore Acquisition | $0 | $510 | | Accrued other operating costs | $4,301 | $4,758 | | Total accrued liabilities | $59,436 | $72,124 | - Total accrued liabilities decreased by $12.688 million from December 31, 2024, to June 30, 2025, primarily due to decreases in accrued bonuses, inventory, and income taxes[94] Note 11. Term Notes Payable Describes the 2024 Term Loan, its terms, and associated interest expense - The company entered into a $645.833 million 2024 Term Loan on July 28, 2024, refinancing the 2022 Term Loan and funding a portion of the Ironshore Acquisition[97] - The 2024 Term Loan matures on July 28, 2029 (or November 18, 2028, if 2029 Convertible Notes exceed $50 million), bears an annual interest rate of term SOFR + 0.13% (subject to a 4.00% floor) + 4.50%, and requires quarterly principal payments of $16.146 million[99] Term Loan Interest Expense (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contractual interest expense | $13,847 | $12,104 | $27,922 | $25,755 | | Amortization of debt discounts and issuance costs | $1,096 | $1,318 | $2,207 | $2,798 | | Total interest expense | $14,943 | $13,422 | $30,129 | $28,553 | - The effective interest rate on the 2024 Term Loan was 9.90% as of June 30, 2025[102] Note 12. Convertible Senior Notes Details the redemption of 2026 Convertible Notes and the terms of the 2029 Convertible Senior Notes - The remaining 2026 Convertible Notes were fully redeemed on June 18, 2024, with all conversions settled in cash[105] - The company issued $241.5 million in 2.875% 2029 Convertible Senior Notes on February 10, 2023, maturing on February 15, 2029[106][107] - As of June 30, 2025, the 2029 Convertible Notes could not be converted, and the outstanding balance was $237.688 million (net of unamortized issuance costs)[109][114] Convertible Notes Interest Expense (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contractual interest expense | $1,736 | $1,879 | $3,472 | $3,787 | | Amortization of debt issuance costs | $259 | $286 | $515 | $586 | | Total interest expense | $1,995 | $2,165 | $3,987 | $4,373 | Note 13. Deferred Royalty Obligation Explains the deferred royalty obligation from the Ironshore Acquisition, including royalty rates and carrying amount - The deferred royalty obligation, assumed from the Ironshore Acquisition, relates to royalty payments on net sales of Jornay PM, with a rate of 7.4% prior to July 1, 2025, and 9.7% thereafter through March 2032[117] - The net carrying amount of the deferred royalty obligation was $122.627 million as of June 30, 2025, with an effective interest rate of approximately 11.83%[118][119] - Total interest expense recognized for the deferred royalty obligation was $7.137 million for the six months ended June 30, 2025[119] Note 14. Equity Summarizes changes in shareholders' equity and details share repurchase programs - Total shareholders' equity increased from $228.842 million at December 31, 2024, to $232.206 million at June 30, 2025[15] - The 2024-2025 Repurchase Program expired on June 30, 2025, with $80.025 million used to repurchase 2,574,983 shares at a weighted-average price of $31.08 per share[126][127] - In July 2025, the Board authorized a new $150 million share repurchase program (2025-2026 Repurchase Program) through December 31, 2026[128] Note 15. Stock-based Compensation Reports stock-based compensation expense and unrecognized compensation related to unvested awards - Stock-based compensation expense was $10.818 million for the three months and $22.342 million for the six months ended June 30, 2025, an increase from $10.012 million and $17.487 million in the prior year periods, respectively[134] Stock-based Compensation Expense (in thousands) | Period | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Three Months Ended June 30, | $10,818 | $10,012 | | Six Months Ended June 30, | $22,342 | $17,487 | - As of June 30, 2025, unrecognized compensation expense related to unvested awards was approximately $76.713 million, expected to be recognized over a weighted-average period of 2.2 years[135] Note 16. Commitments and Contingencies Details ongoing legal proceedings, including patent infringement lawsuits and other claims - The company is involved in ongoing legal proceedings, including patent infringement lawsuits related to Xtampza ER (against Purdue) and Nucynta (against Purdue), and challenges to Belbuca patents (against Alvogen and Chemo Research, S.L.)[137][148][160][165] - The PTAB found asserted claims of the '961 patent (related to Xtampza ER) invalid, a decision affirmed by the Federal Circuit, exhausting Purdue's appeal rights[143] - New lawsuits include an arbitration request from David Lickrish against Ironshore Pharmaceuticals & Development, Inc. for over $500 million in compensatory damages, and a lawsuit from Walgreen Co. alleging over $14 million in credits owed for product returns[171][172] - The company continues to cooperate with state attorneys general regarding opioid sales and marketing practices, having settled with the Massachusetts Attorney General in December 2021[151][152] Note 17. Income Taxes Reports the provision for income taxes, effective tax rate, and impact of new tax legislation Provision for Income Taxes (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $5,042 | $9,491 | $5,747 | $18,400 | | Effective tax rate | 29.6% | 32.6% | 28.5% | 28.0% | - The provision for income taxes decreased by $4.5 million for the three months and $12.7 million for the six months ended June 30, 2025, primarily due to lower earnings before taxes[173][200][214] - The company maintains a valuation allowance for deferred tax assets not likely to be realized and is evaluating the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its 2025 effective tax rate[173][174] Note 18. Segment Information Identifies the company's single operating segment and details segment expenses - The company operates as a single operating and reportable segment, with the Chief Executive Officer serving as the chief operating decision maker (CODM) who reviews consolidated results and budget-to-actual variances[175] Segment Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Commercial expenses | $44,115 | $17,186 | $84,908 | $37,411 | | Corporate expenses | $9,801 | $7,810 | $23,090 | $16,433 | | Medical expenses | $7,832 | $4,807 | $15,865 | $10,021 | | Technical operations expenses | $136 | $469 | $234 | $914 | | Stock-based compensation expense | $10,818 | $10,012 | $22,342 | $17,487 | | Other segment items | $577 | $3,051 | $2,477 | $3,051 | - Commercial expenses significantly increased for both periods in 2025, primarily due to the ongoing commercialization of Jornay PM following the Ironshore Acquisition[177][201][209] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes financial condition, results of operations, and liquidity, comparing performance for the three and six months ended June 30, 2025 and 2024, including non-GAAP measures Overview Introduces Collegium as a biopharmaceutical company with a focus on pain and ADHD products - Collegium is a biopharmaceutical company focused on differentiated products for moderate to severe pain and ADHD, including Jornay PM, Belbuca, Xtampza ER, Nucynta Products, and Symproic[181] - Jornay PM, an evening-dosed stimulant for ADHD, was acquired in September 2024, expanding the company's presence in neuropsychiatry[182] - Nucynta IR received New Patient Population exclusivity in pediatrics in August 2023, extending its U.S. exclusivity to July 3, 2026, with further pediatric exclusivity granted in June 2024 for the Nucynta Products[185] Critical Accounting Policies and Significant Judgments and Estimates Highlights key accounting policies requiring significant management judgment and estimation - The company's critical accounting policies involve significant judgments and estimates, particularly in revenue recognition, fair value of acquired assets, inventory valuation, and intangible asset useful lives[188] Results of Operations Analyzes the company's financial performance, comparing revenues, costs, and expenses across periods Comparison of the three months ended June 30, 2025 and June 30, 2024 Compares key financial metrics and performance drivers for the three-month periods ended June 30, 2025 and 2024 Key Financial Highlights (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------------- | :----- | :----- | :--------- | :--------- | | Product revenues, net | $188,000 | $145,276 | $42,724 | 29.4% | | Total cost of product revenues | $79,616 | $54,470 | $25,146 | 46.2% | | Gross profit | $108,384 | $90,806 | $17,578 | 19.4% | | Selling, general and administrative | $73,637 | $43,335 | $30,302 | 69.9% | | Income from operations | $35,105 | $47,471 | $(12,366) | -26.1% | | Interest expense | $(20,463) | $(15,587) | $(4,876) | 31.3% | | Net income | $11,983 | $19,606 | $(7,623) | -38.9% | - Product revenues, net, increased by $42.7 million, primarily driven by $32.6 million from Jornay PM (acquired in September 2024) and $8.0 million from Xtampza ER due to lower gross-to-net adjustments[190][191] - Total cost of product revenues increased by $25.1 million, with intangible asset amortization rising by $21.0 million due to the Ironshore Acquisition[194][195] - Selling, general and administrative expenses increased by $30.3 million, mainly due to higher sales and marketing expenses ($14.6 million) and salaries, wages, and benefits ($12.7 million) related to the Ironshore Acquisition[196][201] Comparison of the six months ended June 30, 2025 and June 30, 2024 Compares key financial metrics and performance drivers for the six-month periods ended June 30, 2025 and 2024 Key Financial Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------------- | :----- | :----- | :--------- | :--------- | | Product revenues, net | $365,757 | $290,199 | $75,558 | 26.0% | | Total cost of product revenues | $160,049 | $107,937 | $52,112 | 48.3% | | Gross profit | $205,708 | $182,262 | $23,446 | 12.9% | | Selling, general and administrative | $150,060 | $85,317 | $64,743 | 75.9% | | Income from operations | $56,792 | $96,945 | $(40,153) | -41.4% | | Interest expense | $(41,253) | $(32,926) | $(8,327) | 25.3% | | Net income | $14,400 | $47,319 | $(32,919) | -69.6% | - Product revenues, net, increased by $75.6 million, primarily due to $61.2 million from Jornay PM and $9.9 million from Xtampza ER[203][204] - Selling, general and administrative expenses increased by $64.8 million, driven by $29.1 million in salaries, wages, and benefits (including Ironshore headcount and executive transitions) and $26.5 million in sales and marketing for Jornay PM[209] - Interest expense increased by $8.4 million, mainly due to $7.1 million from the deferred royalty obligation assumed in the Ironshore Acquisition[211] Liquidity and Capital Resources Discusses the company's sources of liquidity, cash position, debt obligations, and future capital requirements - The company's primary liquidity sources are product sales (Jornay PM, Belbuca, Xtampza ER, Nucynta Products), private/public offerings, and term loan debt[215] - As of June 30, 2025, the company had $222.2 million in cash, cash equivalents, and marketable securities, which are expected to fund operations, debt service, and capital expenditures for the foreseeable future[218] - The 2024 Term Loan has an outstanding principal balance of $613.5 million, and the 2029 Convertible Notes have an outstanding principal balance of $241.5 million, both due in 2029[216][217] - Future capital requirements include operating expenses, debt repayment, royalties, lease obligations, minimum purchase obligations, income taxes, deferred royalty obligation, and contingent payments related to Jornay PM[225] Additional Information Presents non-GAAP financial measures like Adjusted EBITDA and Adjusted Earnings Per Share to supplement GAAP results - The company uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Operating Expenses, Adjusted Net Income, and Adjusted Earnings Per Share to provide insights into operational activities and performance[226][236][239] Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP net income | $11,983 | $19,606 | $14,400 | $47,319 | | Total adjustments | $93,079 | $76,395 | $185,814 | $141,065 | | Adjusted EBITDA | $105,062 | $96,001 | $200,214 | $188,384 | - Adjusted EBITDA increased by $9.1 million for the three months and $11.8 million for the six months ended June 30, 2025, driven by higher product revenues partially offset by increased adjusted operating expenses[233][234] Adjusted Earnings Per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP adjusted net income | $64,289 | $63,964 | $121,710 | $122,796 | | Adjusted earnings per share | $1.68 | $1.62 | $3.16 | $3.09 | Contractual Obligations Confirms no material changes to the company's contractual obligations since the last annual report - There have been no material changes to the company's contractual obligations and commitments since the most recently filed Annual Report[241] Item 3. Quantitative and Qualitative Disclosures About Market Risk Assesses market risk exposure, focusing on interest rate sensitivity for the investment portfolio and the variable-rate 2024 Term Loan - The company's investment portfolio, totaling $145.5 million as of June 30, 2025 (including cash equivalents and marketable securities), is managed to minimize credit risk and ensure liquidity, with immaterial exposure to interest rate risk[246] - The 2024 Term Loan, with an outstanding principal of $597.4 million as of June 30, 2025, bears a variable interest rate (adjusted term SOFR + 4.50%), making it sensitive to interest rate changes; a hypothetical 1% change would impact interest expense by approximately $6.0 million[247] Item 4. Controls and Procedures Confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[248] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[249] PART II—OTHER INFORMATION Item 1. Legal Proceedings Refers to Note 16 for legal proceedings details, confirming no other material changes from the annual report - Legal proceedings are detailed in Note 16, Commitments and Contingencies, with no other material changes from the prior annual report[252] Item 1A. Risk Factors Outlines various risks impacting business, financial condition, and stock price, including commercialization, indebtedness, regulatory, intellectual property, and macroeconomic factors Risk Factors Summary Summarizes key risks such as product commercialization, indebtedness, regulatory changes, and intellectual property litigation - Key risks include dependence on successful product commercialization, substantial outstanding indebtedness, adverse financial services industry developments, regulatory changes affecting product labeling and marketing, unfavorable intellectual property litigation outcomes, and challenges in maintaining intellectual property rights[253][254] - Additional risks involve the impact of opioid/stimulant abuse concerns, reliance on sole/limited third-party manufacturers and distributors, post-marketing requirements, integration challenges from acquisitions, macroeconomic conditions, cybersecurity threats, and intense competition[256] Risks Related to Our Financial Position and Capital Needs Addresses risks concerning profitability, substantial indebtedness, access to funding, and debt covenant limitations - The company's profitability depends on successful commercialization of its products, requiring viable pricing, efficient manufacturing, effective sales/marketing, adequate reimbursement, and compliance with regulations[255][257] - Substantial outstanding indebtedness ($597.4 million 2024 Term Loan and $241.5 million 2029 Convertible Notes) could limit cash flow, restrict additional financing, and increase vulnerability to economic downturns[261][262] - Adverse developments in the financial services industry could impair access to funding, while covenants in debt agreements limit the company's operational flexibility[264][267] Risks Related to our Products Covers risks related to product commercialization, regulatory changes, controlled substances, pricing, and market demand - Continued successful commercialization of products like Jornay PM, Belbuca, and Xtampza ER depends on factors such as manufacturing capacity, sales strategies, physician and patient education, and intellectual property defense[268][269] - FDA may require changes to product labeling, including abuse-deterrent claims for Xtampza ER, which could adversely affect marketability; for example, the FDA announced safety labeling changes for all opioid pain medications in July 2025[271] - Opioid products are subject to mandatory REMS programs, and any modifications could increase costs or reduce prescription willingness[272][275] - Failure to comply with governmental regulations for marketing, especially regarding abuse-deterrent labeling, could lead to enforcement actions, fines, and harm commercial success[276][278] - Some products contain controlled substances (Schedule II and III), subjecting the company to stringent DEA and state regulations on manufacture, use, and distribution, which could limit commercialization[296][299] - Current and future legislation, such as opioid taxes, drug pricing transparency laws, and the overturning of regulatory deference, may increase commercialization costs and reduce product prices[301][302][305] - Unfavorable pricing regulations or third-party coverage and reimbursement policies, including increased pressure for discounts and rebates, could materially adversely affect the business[308][311][313] - Social issues and law enforcement efforts against opioid and stimulant abuse could decrease market demand for products and negatively impact investor perceptions[320][322] - Approval of generic abuse-deterrent products or authorized generics could lead to significant sales declines, and ongoing ANDA-related litigation is costly and distracting[323][325][326] Risks Related to Intellectual Property Examines risks associated with intellectual property litigation, maintenance, enforcement, and trade secret protection - Unfavorable outcomes in intellectual property litigation could be costly, limit commercialization, and result in monetary damages or injunctions[280][281] - Failure to obtain or maintain intellectual property rights for technologies and products could lead to loss of valuable assets or inability to compete effectively[284][285] - Litigation to enforce or defend intellectual property rights is expensive, time-consuming, and risks invalidation or narrowing of patents[286][287] - Inability to protect trade secrets could harm the business and competitive position[288] - Non-compliance with procedural, document submission, and fee payment requirements by governmental patent agencies could reduce or eliminate patent protection[290] Risks Related to the Commercialization of Our Products Addresses challenges in sales and marketing capabilities, strategic alliances, and market acceptance of products - Inability to successfully utilize or grow internal sales and marketing capabilities, especially for newly acquired products like Jornay PM, or to maintain strategic alliances, could hinder product revenue generation[291] - Lack of acceptance and use of products by the medical community, patients, and healthcare payors, influenced by factors like safety, efficacy, pricing, and competitive products, could prevent sufficient revenue generation[292][293][295] Risks Related to Our Dependence on Third Parties Highlights risks from reliance on third-party manufacturers, suppliers, and distributors, and consortia for post-marketing requirements - Reliance on third-party manufacturers, particularly a single manufacturer for Xtampza ER and Nucynta ER, exposes the company to risks of production difficulties, quality issues, supply shortages, and regulatory non-compliance[329][331][334] - Dependence on sole or limited suppliers for active pharmaceutical ingredients (APIs) creates vulnerability to production problems, supply chain disruptions, and DEA quota limitations, potentially impacting commercial supply[333][336][338] - Significant reliance on a few wholesale pharmaceutical distributors for retail distribution poses risks if any accounts are lost or their networks are disrupted, potentially affecting financial condition and results of operations[342][343] - Fulfilling post-marketing requirements (PMRs) for opioid products often relies on participation in consortia like the Opioid PMR Consortium (OPC), where the company has limited control, risking non-satisfaction of PMRs and potential FDA restrictions[344][346] Risks Related to Our Business and Strategy Covers risks from acquisitions, macroeconomic conditions, cybersecurity, litigation, competition, product liability, and regulatory compliance - Failure to realize anticipated benefits from future acquisitions or successfully integrate acquired businesses could adversely affect operating results, diverting management attention and financial resources[347][348] - Macroeconomic conditions (recession, inflation) and geopolitical turmoil (conflicts, political instability) could reduce demand for products and negatively impact sales, operations, and liquidity[349] - Security breaches and disruptions to information technology systems, or those of vendors, could compromise data, expose the company to liability, and harm financial condition and reputation[352][353] - Ongoing litigation and regulatory actions regarding opioid medications could lead to injunctive relief or substantial monetary penalties, negatively affecting reputation, business, and cash flows[354][356] - The pharmaceutical industry is highly competitive, with major companies possessing greater resources, potentially leading to competitors developing safer, more effective, or less costly products[357][358] - Commercial sales expose the company to expensive product liability claims, and maintaining adequate insurance coverage may be challenging[359] - Relationships with customers and payors are subject to anti-kickback, fraud and abuse, and other healthcare laws, risking criminal sanctions, civil penalties, and exclusion from government programs[360][361] - Natural disasters, health epidemics, or inadequate funding/disruptions at government agencies (FDA, DEA, SEC) could severely disrupt operations, delay product approvals, and negatively impact the business[362][364][367] Risks Related to Our Common Stock Discusses factors affecting common stock price volatility, anti-takeover provisions, internal control, and share repurchase programs - The market price of the common stock is highly volatile and subject to wide fluctuations due to various factors, including industry trends and the realization of other risks[370][371] - Anti-takeover provisions in corporate documents and Virginia law could delay or prevent an acquisition, even if beneficial to shareholders[372] - Failure to maintain effective internal control over financial reporting could adversely affect investor confidence and the stock value, potentially leading to sanctions[373] - Sales of common stock by the company or existing shareholders, or the perception of such sales, could cause a decline in market price and dilute ownership interests[374] - There is no assurance that the company will repurchase additional shares of common stock at favorable prices under its new $150 million 2025-2026 Repurchase Program[378][379] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered equity sales and details common stock repurchases under the 2024-2025 Repurchase Program - No unregistered sales of equity securities occurred during the reporting period[380] Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total shares purchased | Average price paid per share | | :-------------------------------- | :--------------------- | :--------------------------- | | April 1, 2025 through April 30, 2025 | 3,756 | $24.67 | | May 1, 2025 through May 31, 2025 | 699,427 | $28.90 | | June 1, 2025 through June 30, 2025 | 4,047 | $30.37 | | Total | 707,230 | $28.89 | - The 2024-2025 Repurchase Program expired on June 30, 2025, with approximately $65.0 million available for repurchase at expiration[381] Item 3. Defaults Upon Senior Securities Confirms no defaults occurred upon senior securities during the reporting period - There were no defaults upon senior securities[383] Item 4. Mine Safety Disclosures States that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the company[384] Item 5. Other Information Provides details on Rule 10b5-1 trading plans adopted, amended, or terminated by directors and officers Rule 10b5-1 Trading Arrangements (Three Months Ended June 30, 2025) | Name | Title | Action Date | Rule 10b5-1 | Non-Rule 10b5-1 | Scheduled Expiration Date of Trading Plan | Maximum Shares Subject to Trading Plan | | :------------- | :------------------------------------ | :---------- | :---------- | :-------------- | :---------------------------------------- | :------------------------------------- | | Colleen Tupper | Executive Vice President and Chief Finance Officer | May 30, 2025 | X | | April 30, 2026 | 30,679 | Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including equity incentive plans, award agreements, and certifications - Exhibits include the 2025 Equity Incentive Plan, forms of Restricted Stock Unit, Incentive Stock Option, Performance-Based Restricted Stock Unit, and Non-Qualified Stock Option Award Agreements[387] - Certifications from the Chief Executive Officer and Chief Financial Officer, pursuant to Sarbanes-Oxley Act Sections 302 and 906, are also filed[387] Signatures Contains authorized signatures of the CEO and CFO, certifying the report filing for Collegium Pharmaceutical, Inc - The report is signed by Vikram Karnani, Chief Executive Officer, and Colleen Tupper, Chief Financial Officer, on August 7, 2025[393]