Mike Heffernan - President and CEO Joseph Ciaffoni - EVP and COO Paul Brannelly - EVP and CFO

David Amsellem - Piper Jaffray Tim Lugo - William Blair Ken Trbovich - Janney Serge Belanger - Needham & Company Kevin Kedra - Gabelli

Thank you. Good afternoon and welcome to the second quarter Collegium's earnings call.

This is Mike Heffernan and I am joined today by Paul Brannelly, our CFO; and Joe Ciaffoni, our recently appointed Chief Operating Officer. We intend to provide additional insight into our recent progress in our second quarter financial results.

Today with our earnings release we announced the addition of Gwen Melincoff to our Board of Directors. Gwen is an experienced pharmaceutical executive with expertise in both commercial and corporate development function.

She will be an excellent source as we strive to build Collegium into a leading specialty pharmaceutical company focused in providing safer pain management options. Also we announced in May that we had hired Joe Ciaffoni in a newly created role of Chief Operating Officer.

Joe comes to Collegium with significant commercial and operational experience including recently heading the Global Specialty Medicines Group at Biogen. He spent his first two months at Collegium focused on the commercial organization and he will provide additional insights in a few minutes.

Overall we are encouraged by our continued growth of Xtampza ER in the second quarter. After a short period early in the quarter week-over-week prescriptions we are pleased by the recent accelerating growth over the last half of the year.

This is fueled by a number of executional adjustments and recent managed care wins that are starting to produce the desired results. We finished the quarter with 18,600 prescriptions versus 13,800 in the first quarter and have now generated close to 40,000 prescriptions written by over 4,000 prescribers since the Xtampza launch.

In addition to our commercial progress, which Joe will outline in more detail shortly. There are number of other milestones in the quarter.

Since the beginning of the year we have received notice of allowance or been issued three additional patents that are all orange book listable and will stand out the patent exclusivity period of Xtampza to 2036 and will bring to the number of 12 the total number of patients listed in the orange book for Xtampza. On the product development side, we have made additional progress on our second extended release opioid candidate incorporating the DETERx technology and have recently completed manufacturing of clinical trial material for DETERx hydrocodone candidate.

In the third quarter, we will be initiating the final - the next step of the clinical development program of this candidate. We will also completing manufacturing of registration batches of ONSOLIS at the new manufacturing facility and have progressed commercial planning activities.

Our goal is the end of the year FDA filing of a prior approval supplement and a planned product launch for mid-2018. We have also continued to invest in the clinical differentiation of Xtampza ER versus its competitors by completing studies and publishing data that demonstrate reinforce that all of these deterrent products are not the same and further highlight advantages of the DETERx technology.

A recently completed study that was accepted for peer reviewed publication tested the invitro release after crushing Xtampza ER versus eight commonly prescribed extended released opioid formulations including OxyCotin. The study results demonstrated that Xtampza ER significantly more resistant to crushing than all other formulations that were tested and further supports the fact that XtampzaER is the only ER opioid that doesn't have a box warning regarding the potential dangers of not taking the product intact.

We will continue to invest in both clinical and non-clinical studies to highlight the advantage of Xtampza ER with the goal of continuing to distinguish it as the best in class of abuse deterrent opioid. We will also be increasing our efforts to influence policymakers and payers on the need to include abuse deterrent opioids as part of the comprehensive solution for addressing opioid abuse misuse and diversion as well as encouraging payers to eliminate sale first policies which required patients to sale a non-abuse deterrent opioid prior to getting approval for an opioid with abuse deterrent features.

Selling a non-abuse deterrent opioid has the potential for severe consequences that can be readily avoided by providing a treatment option that has the best abuse deterrent properties. I'll now turn over the discussion over to Joe Ciaffoni to provide additional detail on the commercial performance.

Thanks, Mike. I'm excited to be at Collegium an organization created and striving every day to make a positive difference in the lives of people living with chronic pain and in the communities that it serves.

In my brief couple of months with the organization, I've been impressed by the team's experience, confidence and accomplishments Collegium's belief in the DETERx technology and passion for the important role that Xtampza ER can play in the patient with chronic pain has been energizing. The organization's commitment starting from the top to keep the patient first, while operating with integrity has been well established.

Over the past several weeks I've also have the opportunity to interact with the significant number of customers including physicians, pharmacists and payers. All stakeholders recognize the need for efficacious and potentially safer treatment options.

I was encouraged by the receptivity to Xtampza ER's value proposition and the recognition that abuse deterrent formulations are not all the same. The experience of physicians that have prescribed Xtampza ER, pharmacies that have it on their shelves and payer (Inaudible) has been positive.

In the second quarter progress was made in a multitude of areas. Noteworthy accomplishments include total prescriptions up 34% Q2 versus Q1, Xtampza ER is now the fastest growing and established branded ER opioid.

The number of new prescribers increased 22% versus Q1 with the additional of over 1,100 new prescribers the number of prescription per prescriber increased too. New Part D formulary wins that took effect in Q2 had a positive impact on performance.

The teams' efforts in removing non-clinical barriers had impact as paid rates in commercial plans improved to 83% and in Part D to 77%, reflecting Xtampza ER's overall broad availability. Lastly the team executed a retail field force expansion, growing from 118 to 131 territories.

Upon joining Collegium, I conducted a merchant sessions with the commercial function. Sales, marketing, managed care and operations along with medical affairs.

During these sessions we review the opioid market and Collegium's strategies, tactics, people and processes. The key outputs are an aligned view on the organizations strengths, opportunities for improvement and the path forward.

For the remainder of 2017, the Collegium team will be laser focused on generating momentum for operational execution. The field force is our biggest investment, thus field force execution is our highest priority.

Although significant progress has been made launch to-date unaided awareness of Xtampza ER remains relatively low and represents an opportunity for improvement. Call quality and effective delivery of the Xtampza ER core messages is key to success.

Coverage of our target audience of approximately 10,000 predominantly pain management specialist is critical to maximizing the potential of Xtampza ER. In spite of headwinds impacting the overall ER opioid market, primary care physicians in particular the ER opioid prescribing of our target audience remains relatively flat.

Maximizing our broad managed care access and recent wins at Aetna D, Humana D, and Blue Cross, Blue Shield of Florida is a top priority. Xtampza ER is now covered on the two largest PBMs too.

The decision to withdraw Opana ER from the market reinforces that abuse deterrent formulations are not the same, which creates a positioning opportunity for Xtampza ER and a conversion opportunity as chronic pain patients and their physicians are forced to seek a replacement medication. The Collegium team has mobilized in a focused and responsible manner to ensure that Xtampza ER is considered for appropriate patients.

Concurrently the organization is taking actions to ensure that we are prepared to accelerate Xtampza ER in 2018. Key acceleration actions include, developing a new promotional campaign and stronger messaging to establish Xtampza ER as the oxycodone ER of choice.

Securing new formulary wins and strengthening existing formulary positions where possible. Leveraging learnings to-date to determine the optimal marketing mix and improving key processes and systems to enable stronger execution.

I am confident that a strong focus on operational execution will enable us to generate momentum through the remainder of 2017, while taking the necessary actions to ensure that we are positioned to accelerate Xtampza ER in 2018. I look forward to working with the team to make this happen.

I will now turn the call over to Paul to discuss our second quarter financial results.

Thanks Joe, good afternoon, everyone. For the second quarter of 2017 our net loss was $21.1 million compared to $24.5 million for the second quarter of 2016.

Resulting in a net loss per share was $0.72 and $1.05 for 2017 and 2016 quarters respectively. The decrease in our net loss is primarily due to the net product revenue for Xtampza.

In the second quarter we recorded net product revenue of $3.6 million. As discussed on previous calls we currently recognize revenue based on the sell-through model.

During the quarter we shipped $10.8 million of Xtampza to wholesalers and now have $10.4 million of deferred revenue on our balance sheet. Deferred revenue represents gross shipments to wholesalers that haven't been recognized as revenue.

On average, wholesalers now have under 20 days of inventory on hand. During the second quarter, our gross-to-net discount was 52.2% an improvement from 58.7% during the first quarter of 2017.

For the full year 2017, we estimate that our gross-to-net discount will be in the range of 50% as the impact of our co-pay card programs decrease and prescriptions increase with non-contracted and lower rebated payers. As of June 30th our capital balance was $111.2 million.

During the second quarter cash used by operating activities was $17.5 million, which decreased by $6.2 million from the first quarter of 2017. Based on current operating plans, we believe that our existing cash resources together with expected cash inflows from the commercialization of Xtampza are sufficient to fund our operations into 2019.

I will now turn the call back over to Michael Heffernan.

Thanks, Bob. I will now open it to up to questions.

Thanks. I had just a couple, first in terms of the volume growth can you talk about how much of grows that you saw in the back part of the - your back half of the quarter was driven by all of the hoopla [ph] around Opana ER was that you think a meaningful boost?

And then secondly regarding the payer landscape, can you talk about big Part D contracts that are still out there that you think could be added and could impact the business either back half of this year or next year? Thanks.

Okay. David this is Joe, thank you for the question.

First off with regards to the second quarter trends and the uptick that we saw, I don't think that I would accredit or ascribe that to Opana ER and that communication. I would really put in on the shoulders of stronger execution the team continuing to get experience stability within the field force focusing in on the key messages and really improved execution.

That being said we are starting to see that we are capturing a market share greater than what we currently have with regards to Opana ER. So, as that event gets closer and continues to evolve, our expectation is that we will see that contribute more to the momentum that we are seeing.

But in the second quarter I think it was more about execution. To your second question with regards to managed care wins, where it is we're negotiating and trying to get additional access that's not something that we are going to comment on, on the call.

Thanks for the question.

Thank you.

Thanks for taking my question, a few. What's the current status of the United Health I guess just state of affairs I know that there was some disruptions in Q1.

And also for your final 505(b)2 hydrocodone product, which product will you reference against?

So, this is Joseph, I will take the UHC question. UHC we're very encouraged by what it is we are seeing to give you a frame of reference, at the end of 2016 at UHC we had low single-digit market share.

At the end of the first quarter in UHC we were around 20%. Now we believe we are in the mid-20s and we're approaching market leadership within the ER branded opioid bucket.

So we feel, we have the right focus. It's a good example and a good demonstration of what it is that we can do from a pull through perspective.

And as we move forward to the back half of the year with the strong position we have we also think we'll have additional opportunity as Opana ER comes off the marketplace.

This is Mike, Tim. I'll take the second question regarding our DETERx hydrocodone candidates.

Our products intended to be a twice a day product, that's our target. We have not decided and or disclosed what the actual reference will be when it comes to our 505(b)2 position.

As I am sure you are aware each one has a regulatory and a legal consideration. And so from a strategic standpoint we will likely not disclose that.

Okay. And quickly for hydrocodone, you mentioned the next steps for the program, is the next step going to be a pivot trail or a dose ranging trial?

The next step, the intent of the next step is to finalized our selection of formulation to understand its abuse deterrent qualities, understand it's bio availability versus the different reference choices we have. To see what our options are as we continue to develop.

Understood, thanks for all the questions.

Thanks, Tim.

Thanks. Mike, I just wondering if you might be able to give us an update just with regard to the industry outlook in terms of trying to get parity with payers in terms of state legislation or even proposed federal legislation.

Because it certainly seems that payers are the major obstacle here and nobody seems to talk about that the delay [ph] press when it comes to the issue of abuse deterrent and trying to resolve some of those problems?

Yes, I mean there continues to be state-by-state discussion and legislation that's both filed and approved around ADF opioids and make sure that there is equal playing field. As you are I'm sure aware in Massachusetts for example there is a law that went into effect where once it's finally implemented will require that ADF opioids are substituted or actually substitute products that don't have ADF qualities and there is a formulary being developed around it.

That's probably one of the more aggressive plans, but in other states there is additional conversation. The thing that we're focused on is making sure that ADF opioids are offered not after fail first policy.

And so, we spent a lot of time on the policy side talking about that. We are very encouraged by some of the recent comments by Dr.

Gottlieb our new FDA Commissioner, he recently have said, that he want to make sure that ADF opioids will have a growing role in clinical practice since we believe they are safer for individual patients. They also went on to say that they look forward to a market where ADF opioids are the predominant product.

So, we think that all things are moving in the right direction, but it's going to be a while we think until there is a mandate, there is a lot of push back. And all have seen the ICER report for example and some of the other headwinds.

There is push back against cost, but the interesting thing to us is that when we really look at the data including the ICER report I think there is a clear reorganization that ADF opioids decrease abuse and misusing diversion. And it's an important piece of the overall solution to opioid the opioid crisis.

Thanks for that. And I guess just as a quick follow-up, can you give us a sense as to sort of the relative importance now of the sNDA and the label change that you are seeking knowing that you are able or have at least started the promotional efforts using the literature that's been published.

Can you kind of walk us through the importance of that as we look forward to that PDUFA date later this year?

Yes. So, as you know we've talked about the PDUFA date is in the beginning of November and that sNDA will include data, direct head-to-head data versus OxyContin, it also includes data on our recently concluded Human Abuse Potential study for all abuse.

Both of those pieces have information would enhance our label and I think it just really it solidify the fact that this product is different than other products on the market including OxyContin. So it is important to us, but as noted we are able to talk about the characteristic difference between Xtampza and OxyContin.

At this point in time, this would just accelerate and strengthen that conversation.

Okay. And then one last question for Paul, just trying to better understand the sort of anticipated pattern now for shipments.

I know you mentioned that there is less than 20 days inventory on hand after shipping almost $11 million in the quarter. Is there some level that you think they reach where the deferred revenue starts to get worked down or do you anticipate that they're going to continue to build inventory as the volumes increase.

So I think that's about is as low as they should go for inventory on hand. But our revenue recognition right now is based on sell-through method so it's on script.

So we continue to evaluate when is the appropriate time to reevaluate that revenue recognition policy and potentially start recognizing revenue like most companies do on selling method.

Got it. But we're not there yet.

I take it from your commentary it's not - doesn't sound like a 2017 event?

So it could be. We're evaluating that and a year into the launch we start to accumulate the data necessary to make some estimates that prevent you from doing the sell in method at launch.

Got it. And do you anticipate that we would have some sort of heads up on that or is that just something that you guys will do and then will see the deferred sort of changed at that point in time.

Yes, so there is a disclosure on our 10-Q that was filed in the last half hour as well that we're actively evaluating once the right time to switch to sell in.

Okay. Terrific, thank you.

Hi, good afternoon. Couple of questions from me, first one for Joe you kind of talked about this in your prepared remarks about dichotomy and opioid [ph] prescribing between primary care physicians and the pain specialist.

And I think one of your competitors this week hinted at that and decided to kind of pull their call efforts toward the primary care segment. So just wanted your thoughts on what you're seeing with Xtampza and what actions you're taking to address that?

Okay. Serge thanks for the question.

Our call audience as I said in my comments is 10,000 roughly physicians that are pain management specialists predominantly. And we're very confident that that's the right place to be focused because when you look at the prescription dynamic where you see significant decline in the primary care segment because of things like CDC guidelines and the other factors the cohort of physicians we're focused on they're prescribing in the ER branded opioid space is stable.

So we're very confident in the physician group that we're focused on and our efforts are about really honing in on execution. I referenced that one of the opportunities we have is there is relatively low awareness of Xtampza ER right now in the marketplace.

And a key differentiator between the group who prescribe the product and those who don't one driver is awareness, second thing that is really important is their understanding and the better they understand it the more they believe in the differentiation of the DETERx technology. That gives them the wherewithal to either push the product through the payer landscape if necessary or to put the patient on the product and that's the formula that we see leading to the growth that we're seeing and will put us on the path of continued and accelerated growth.

Thanks for the question.

And then you mentioned a couple of steps you planned on undertaking in 2018 to further drive Xtampza growth. Are you comfortable at this point with the amount of sales reps?

And I guess you mentioned better formulary positioning of Xtampza? What are the barriers to that?

Is it just pricing or better awareness of the product?

Yes, so to your first question Serge, I'm confident in the size of our field force, I think we're sized correctly. I also being relatively new to the organization was pleased to see how we're resourced, I think we're resourced to accomplish our objective with Xtampza ER.

And I think it's important for the remainder of this year that we're really sharply focused on operational execution inclusive of managed care pull through. We are also in a fair amount of negotiations and I'm confident as we come down the stretch of this year and as we move into 2018 we will both secure new formulary wins and we will strengthen our position within existing formularies where we've already won.

I think the dynamics that's most important in the discussions we're having with the payers is when they believe and understand DETERx technology and the impact that it can have on patients with chronic pain that's where we start every discussion we have whether it's with physicians, payers, pharmacist. Because that's really the thing that then drives them to want to get into the other discussions.

And I think you have seen in our track record when we do that we can secure formulary positions and importantly we are now able to bring to them examples like United Healthcare that when you do put us on formulary, the market will respond and we can move share. So, thanks for the question.

Thanks for the additional details.

Hi, thanks for taking the questions. First I know Xtampza abuse deterrent formulation but there are other elements of the formulation that kind differentiate it from some of the products you mentioned.

This is the only one that doesn't have that black box warning about crushing. So, just wondering if those other features of the product have allowed you to get any traction with Xtampza?

And then secondly, we have seen significant reprising of the value of assets within the pain space and particularly the opioid space, how are you thinking about potential business development opportunities and possibly adding in couple or adding additional assets to your sales force?

Okay. So Kevin I will take the first question with regards to the things that drive utilization of Xtampza ER and when you look at the data.

One, the DETERx technology when it's well understood is very compelling, I think it's not a primary driver of utilization, but the alternative ways of which Xtampza can be administer and certain settings is important. There is two things in the market research and when we are sitting with prescribers, that are really important to them being motivated to utilize Xtampza ER.

One and it's the magnitude of their belief and concern around the abuse, misuse and diversion. So, positions that are really concerned, aware of and on top of that topic have a higher likelihood of writing Xtampza than those who are aware of it, but don't have same magnitude of concerned.

The second thing is the threshold of efficacy, which is an easy one for us to get over because where oxycodone and they are comfortable with the base molecule and then it gets to a fundamental belief of the magnitude of belief of the differentiation of the DETERx technology. And when they believe and have a concern around abuse, misuse and diversion and they see this technology as a significant step forward, those are the physicians that are then motivated to right a lot of Xtampza ER.

And that's where our focus on increasing awareness of the product with the strong share of voice we have. And then really been sharp on our messaging to differentiate is so important and that's where our focus is.

Kevin, this is Michael, I will take the second question on our BD strategy. Our focus in business development is really to expand the footprint of Xtampza internationally.

And number two deleverage our current integrated commercial infrastructure. As you know we have a retail sales organization, we have a long-term care sales organization, we have a hospital sales organization.

Our goal is to be a leader in pain management and provide solutions across the whole continuum of pain and we are doing that with Xtampza and then the launch of ONSOLIS mid next year which is for a break to cancer pain. So, we are actively evaluating assets and opportunities to bring safer pain management solutions to that continuum.

We are interest in the hospital marketplace and things such as post up pain and so on. So, we are very active in our evaluation process right now and the main goal is to deleverage the current commercial infrastructure.

Okay, Thanks.

Thanks. Joe I was wondering if you could address may be the uptake in long-term care in hospital market.

I now we spend a lot of time talking about retail scripts, but somewhat difficult to track for us how it's going in that side from what little we can see obviously it looks like there is uptake there, but I was hoping you might be able to give us some greater clarity on how things are progressing.

Yes, sure Ken. I appreciate the question.

So, on hospital and LTC for the quarter like we've seen with retail we see continued progression, which is encouraging. As you know those different and longer sales cycles in particular in the institutions.

So, we have been encourage with some of the formulary wins that we have been able to achieve along with some contracting at an IDN level, which gives us an opportunity to pull through. So, we are seeing progress it's a longer sales cycle and the total picture today it's a small contributor to our overall sales, but it's two channels where we believe it's important for us to be in for some of the reasons Mike referenced and we thank over time and as we work through the sale cycle it will continue to pick up and contribute to the overall success of Xtampza.

Is the leading message there difference though in the sense that back to the point about black box and the only one that you don't have to worry about crushing, simply from a safety standpoint is the message lead different there than it is in that physician setting in a doctor's office or pain specialist doctor.

I think the message is similar, but when you get to the alternative administration in those settings it dials up more than it does to an office space pain specialist. But the notion to whether it's the institution, whether it's an LPC the more the people making those decisions are concerned about abuse, misuse, diversion beyond the patient and others who can touch the product.

And the more they understand and believe that the DETERx technology is differentiated that gives them the core receptivity to make a decision to add it to the formulary or to use it in any of the settings of which we are trying to drive utilization.

Got it, thank you.

Thanks, Ken.

Thank you everyone for joining the call today and I would like to thank the Collegium team for their continued dedication. We look forward to providing additional update as the year continues to progress.

Thank you very much.