COLL

Business Context and Reporting Period

Company: Collegium Pharmaceutical, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: May 11, 2016
Event: Entry into a Material Definitive Agreement with BioDelivery Sciences International, Inc. (BDSI).

Key Financial Metrics and Agreement Terms

This filing details a License and Development Agreement rather than periodic financial results. Key financial terms include:

• Upfront License Fee: $2.5 million (non-refundable, payable within 30 days of the Effective Date).
• Milestone Payments: Up to $21.0 million in aggregate, contingent on commercialization, intellectual property, and net sales milestones. This includes a $4 million payment upon the first commercial sale in the U.S.
• Royalties: Upper teens percentage based on annual net sales of the Product in the U.S.
• Manufacturing Expenses: Collegium must reimburse BDSI for manufacturing transfer expenses up to a pre-determined amount.

Material Changes and Strategic Developments

The primary material change is the acquisition of an exclusive license to make, use, sell, and commercialize BDSI's fentanyl buccal soluble film, ONSOLIS, in the United States. Key operational requirements include:

• BDSI must use commercially reasonable efforts to submit a Prior Approval Supplement to the FDA by December 31, 2016, regarding the transfer of manufacturing.
• Both parties are restricted from developing or selling competing fentanyl-only oral mucosal products in the U.S. during the term.

Outlook, Risks, and Contingencies

Termination Rights:

• Collegium: May terminate at any time with 90 days' written notice.
• BDSI: May terminate for non-payment of the License Fee, loss of narcotics license, or failure to make the first commercial sale within 12 months of the NDA assignment.
• Both Parties: May terminate upon permanent cessation of operations, bankruptcy, or material breach.

Risks: The agreement is contingent on regulatory approvals (FDA submission) and the successful transfer of manufacturing. Failure to meet the 12-month commercial sale deadline exposes the agreement to termination by BDSI.

Investor Verification Checklist

• Verify the exact pre-determined cap on reimbursable manufacturing transfer expenses.
• Confirm the specific definition of "upper teens" royalty percentages in the full agreement.
• Monitor the status of the Prior Approval Supplement submission to the FDA by the December 31, 2016 deadline.
• Review the full License Agreement (expected as an exhibit to the Q2 2016 Form 10-Q) for detailed milestone definitions.