Collegium Pharmaceutical, Inc. — Q2 2015 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2015; filed August 12, 2015. Collegium was a development-stage specialty pharmaceutical company focused on abuse-deterrent medicines using its DETERx platform. Its lead candidate, Xtampza ER, was under FDA review. The company had no approved products and had generated no product revenue since 2011.
Financial results and liquidity
| Metric | Q2 2015 | Q2 2014 | Six months 2015 | Six months 2014 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development | $1.64 million | $3.57 million | $3.09 million | $6.83 million |
| General and administrative | $2.93 million | $0.52 million | $5.12 million | $1.00 million |
| Total operating expenses | $4.58 million | $4.09 million | $8.21 million | $7.83 million |
| Net loss | $4.67 million | $4.12 million | $8.37 million | $7.89 million |
| Net loss per share, basic and diluted | $0.45 | $5.33 | $0.18 | $10.36 |
Amounts are losses per share. The six-month 2015 per-share result was affected by preferred-stock accounting, including a $31.8 million extinguishment gain and preferred-stock accretion and dividends; it is not directly comparable to the underlying net loss.
- Cash and cash equivalents: $112.4 million at June 30, 2015, versus $1.6 million at December 31, 2014. Total assets were $114.2 million.
- Cash flow, six months: $6.1 million used in operations and $23,000 used in investing; $116.9 million provided by financing. Ending cash increased by $110.8 million.
- Debt: Term loan payable totaled $7.73 million ($2.25 million current and $5.48 million long-term). The $5.0 million related-party bridge notes converted into Series D preferred stock in March; preferred stock converted to common stock at the May IPO.
- Margins: Not meaningful because the company had no product revenue.
Changes versus comparable periods
For the first half, R&D expense fell $3.7 million, mainly because Xtampza clinical trials were completed in 2014; manufacturing costs rose with validation batches. G&A expense increased $4.1 million, reflecting higher staffing and stock compensation, professional fees, commercialization planning, litigation costs, and public-company insurance. Q2 showed the same pattern: lower R&D but higher G&A, resulting in a larger quarterly net loss.
The company raised approximately $72.0 million net in its May IPO and $44.8 million net from the March Series D financing. The IPO also triggered conversion of all outstanding preferred shares to common stock, materially increasing the share count and affecting per-share comparisons.
Outlook, risks, and contingencies
- Management expected existing cash and IPO proceeds to fund operations into mid-2017, including potential Xtampza commercialization and development of other candidates. This estimate depended on assumptions and could prove inaccurate. The company expected continuing losses and rising operating cash use.
- The FDA’s target date for completing review of the Xtampza NDA was October 12, 2015. An FDA advisory committee meeting was scheduled for September 11, 2015 to consider, among other matters, food-effect safety and efficacy and whether the product’s abuse-deterrent data supported a meaningful public-health benefit. Approval, timing, and commercial prospects were uncertain.
- Purdue Pharma’s patent litigation remained a significant contingency. After the Delaware court dismissed Purdue’s case on jurisdictional grounds on August 6, 2015, Purdue filed a new Massachusetts case asserting the same claims; Purdue also sought reconsideration of the Delaware dismissal. Collegium filed an action in New York seeking patent certainty. The filing said the financial impact could not be meaningfully quantified. Litigation could delay FDA approval or commercialization.
- Additional funding may be needed; financing may be unavailable or dilutive or carry restrictive terms. Other key risks include regulatory delays or rejection, clinical and manufacturing execution, intellectual-property disputes, competition, and the ability to build commercial capabilities.
Key facts for investors to verify
- FDA review outcome, advisory committee conclusions, and any change to the October 12, 2015 target date.
- Status and potential timing effects of Purdue litigation, including any resulting FDA approval stay.
- Actual cash burn and whether the projected mid-2017 runway remains adequate as commercialization and development spending rise.
- Xtampza’s manufacturing readiness, commercial launch costs, and ability to secure market acceptance if approved.