10-Q 1 coll-20240630x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

(Mark One)

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☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the quarterly period ended June 30, 2024

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OR

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☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the transition period from              to

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Commission file number: 001-37372

Graphic

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Collegium Pharmaceutical, Inc.

(Exact name of registrant as specified in its charter)

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Virginia
(State or other jurisdiction of
incorporation or organization)

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03-0416362
(I.R.S. Employer
Identification Number)

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100 Technology Center Drive
Stoughton, MA
(Address of principal executive offices)

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02072
(Zip Code)

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(781) 713-3699

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

COLL

The NASDAQ Global Select Market

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧  No ◻

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧  No ◻

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer ☒

  

Accelerated filer ◻

  

Non-accelerated filer ◻
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Smaller reporting company ☐

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Emerging growth company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻ 

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ⌧

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As of July 31, 2024, there were 32,213,751 shares of Common Stock, $0.001 par value per share, outstanding.

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Forward-Looking Statements

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Statements made in this quarterly report on Form 10-Q (“Quarterly Report”) that are not statements of historical or current facts, such as those under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “may,” “could,” “would,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning.

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Forward-looking statements are inherently subject to risks, uncertainties and assumptions; they are not guarantees of performance. You should not place undue reliance on these statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct.

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You should understand that the following important factors could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

●our ability to commercialize and grow sales of our products;
●our ability to maintain regulatory approval of our products, and any related restrictions, limitations, and/or warnings in the label of an approved product;
●the size of the markets for our products, and our ability to service those markets;
●the success of competing products that are or become available;
●our ability to obtain and maintain reimbursement and third-party payor contracts with favorable terms for our products;
●the costs of commercialization activities, including marketing, sales and distribution;
●the rate and degree of market acceptance of our products;
●changing market conditions for our products;
●the announcement and pendency of our acquisition of Ironshore Therapeutics Inc. (“Ironshore”);
●our ability to complete our announced acquisition of Ironshore, successfully integrate Ironshore’s operations into our organization following closing, and realize the anticipated benefits associated with the acquisition;
●the outcome of any patent infringement, opioid-related or other litigation that may be brought by or against us;
●the outcome of any governmental investigation related to the manufacture, marketing and sale of opioid medications;
●the performance of our third-party suppliers and manufacturers;
●our ability to secure adequate supplies of active pharmaceutical ingredients for each of our products, manufacture adequate quantities of commercially salable inventory and maintain our supply chain;
●our ability to effectively manage our relationships with licensors and to commercialize products that we in-license from third parties;
●our ability to attract collaborators with development, regulatory and commercialization expertise;
●our ability to obtain funding for our business development;
●our ability to comply with the terms of our outstanding indebtedness;
●regulatory and legislative developments in the United States, including the adoption of opioid stewardship and similar taxes that may impact our business;
●our ability to obtain and maintain sufficient intellectual property protection for our products;
●our ability to comply with stringent government regulations relating to the manufacturing and marketing of pharmaceutical products, including U.S. Drug Enforcement Agency (“DEA”) compliance;
●our customer concentration, which may adversely affect our financial condition and results of operations;
●the accuracy of our estimates regarding expenses, revenue, capital requirements and need for additional financing; and
●the other risks, uncertainties and factors discussed under the heading “Risk Factors” in this Quarterly Report on Form 10-Q.

​

In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this Quarterly Report on Form 10-Q (including the exhibits hereto) might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, even if experience or future developments make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.

​

These and other risks are described under the heading “Risk Factors” in this Quarterly Report on Form 10-Q. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.

​

​

3

​

​

PART I—FINANCIAL INFORMATION

​

Item 1. Condensed Consolidated Financial Statements (Unaudited).

​

Collegium Pharmaceutical, Inc.

​

CONDENSED CONSOLIDATED BALANCE SHEETS

​

(in thousands, except share and per share amounts)

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

​

2024

​

2023

Assets

 

​

    

 

​

    

Current assets

​

​

​

​

​

​

Cash and cash equivalents

​

$

172,894

​

$

238,947

Marketable securities

​

​

98,737

​

​

71,601

Accounts receivable, net

​

​

183,855

​

​

179,525

Inventory

​

​

27,862

​

​

32,332

Prepaid expenses and other current assets

​

 

26,850

​

 

15,195

Total current assets

​

 

510,198

​

 

537,600

Property and equipment, net

​

 

14,976

​

 

15,983

Operating lease assets

​

​

5,592

​

​

6,029

Intangible assets, net

​

​

352,676

​

​

421,708

Restricted cash

​

​

1,047

​

​

1,047

Deferred tax assets

​

​

34,184

​

​

26,259

Other noncurrent assets

​

​

858

​

​

825

Goodwill

​

​

133,857

​

​

133,857

Total assets

​

$

1,053,388

​

$

1,143,308

Liabilities and shareholders' equity

​

​

​

​

​

​

Current liabilities

​

​

​

​

​

​

Accounts payable

​

$

2,412

​

$

8,692

Accrued liabilities

​

 

38,726

​

 

37,571

Accrued rebates, returns and discounts

​

​

236,208

​

​

227,331

Current portion of term notes payable

​

​

183,333

​

​

183,333

Current portion of operating lease liabilities

​

​

1,038

​

​

988

Total current liabilities

​

 

461,717

​

 

457,915

Term notes payable, net of current portion

​

​

132,845

​

​

221,713

Convertible senior notes

​

​

236,650

​

​

262,125

Operating lease liabilities, net of current portion

​

 

5,593

​

 

6,124

Total liabilities

​

 

836,805

​

 

947,877

Commitments and contingencies (refer to Note 14)

​

​

​

​

​

​

Shareholders’ equity:

​

​

​

​

​

​

Preferred stock, $0.001 par value; authorized shares - 5,000,000

​

​

—

​

​

—

Common stock, $0.001 par value; authorized shares - 100,000,000; 39,532,358 issued and 32,319,577 outstanding shares as of June 30, 2024 and 38,192,441 issued and 31,868,549 outstanding shares as of December 31, 2023

​

 

40

​

 

38

Additional paid-in capital

​

 

567,976

​

 

565,949

Treasury stock, at cost; 7,212,781 shares as of June 30, 2024 and 6,323,892 shares as of December 31, 2023

​

​

(165,381)

​

​

(137,381)

Accumulated other comprehensive (loss) income

​

​

(182)

​

​

14

Accumulated deficit

​

 

(185,870)

​

 

(233,189)

Total shareholders’ equity

​

 

216,583

​

 

195,431

Total liabilities and shareholders’ equity

​

$

1,053,388

​

$

1,143,308

​

See accompanying notes to the Condensed Consolidated Financial Statements.

​

4

Collegium Pharmaceutical, Inc.

​

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

​

(in thousands, except share and per share amounts)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

2024

​

2023

​

2024

​

2023

Product revenues, net

$

145,276

​

$

135,546

​

$

290,199

​

$

280,313

Cost of product revenues

​

​

​

​

​

​

​

​

​

​

​

Cost of product revenues (excluding intangible asset amortization)

​

19,955

​

​

24,257

​

​

38,905

​

​

54,156

Intangible asset amortization

​

34,515

​

​

37,463

​

​

69,032

​

​

74,929

Total cost of product revenues

 

54,470

​

 

61,720

​

 

107,937

​

 

129,085

Gross profit

​

90,806

​

​

73,826

​

​

182,262

​

​

151,228

Operating expenses

​

​

​

​

​

​

​

​

​

​

​

Selling, general and administrative

 

43,335

​

 

38,193

​

 

85,317

​

 

90,968

Total operating expenses

 

43,335

​

 

38,193

​

 

85,317

​

 

90,968

Income from operations

 

47,471

​

 

35,633

​

 

96,945

​

 

60,260

Interest expense

 

(15,587)

​

 

(21,863)

​

 

(32,926)

​

 

(43,290)

Interest income

​

4,397

​

​

4,027

​

​

8,884

​

​

6,774

Loss on extinguishment of debt

​

(7,184)

​

​

—

​

​

(7,184)

​

​

(23,504)

Income before income taxes

​

29,097

​

​

17,797

​

​

65,719

​

​

240

Provision for income taxes

​

9,491

​

​

4,790

​

​

18,400

​

​

4,659

Net income (loss)

$

19,606

​

$

13,007

​

$

47,319

​

$

(4,419)

​

​

​

​

​

​

​

​

​

​

​

​

Earnings (loss) per share — basic

$

0.60

​

$

0.38

​

$

1.46

​

$

(0.13)

Weighted-average shares — basic

​

32,433,025

​

​

34,622,284

​

​

32,379,807

​

​

34,471,624

​

​

​

​

​

​

​

​

​

​

​

​

Earnings (loss) per share — diluted

$

0.52

​

$

0.34

​

$

1.24

​

$

(0.13)

Weighted-average shares — diluted

​

40,383,694

​

​

42,849,952

​

​

40,510,943

​

​

34,471,624

​

See accompanying notes to the Condensed Consolidated Financial Statements.

​

​

5

Collegium Pharmaceutical, Inc.

​

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

​

(in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

2024

​

2023

​

2024

​

2023

Net income (loss)

$

19,606

​

$

13,007

​

$

47,319

​

$

(4,419)

Other comprehensive loss:

​

​

​

​

​

​

​

​

​

​

​

Unrealized losses on marketable securities, net of tax

​

(58)

​

​

(38)

​

​

(196)

​

​

(38)

Total other comprehensive loss

​

(58)

​

​

(38)

​

​

(196)

​

​

(38)

Comprehensive income (loss)

$

19,548

​

$

12,969

​

$

47,123

​

$

(4,457)

​

See accompanying notes to the Condensed Consolidated Financial Statements.

​

​

6

Collegium Pharmaceutical, Inc.

​

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

​

(in thousands)

​

​

​

​

​

​

​

​

Six Months Ended June 30,

​

​

2024

    

​

2023

Operating activities

​

​

​

​

​

Net income (loss)

$

47,319

​

$

(4,419)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

​

​

​

​

​

Amortization expense

​

69,032

​

​

74,929

Depreciation expense

​

1,869

​

​

1,712

Deferred income taxes

​

(7,925)

​

​

(682)

Stock-based compensation expense

 

17,487

​

 

13,107

Non-cash lease benefit

​

(44)

​

​

(213)

Non-cash interest expense for amortization of debt discount and issuance costs

 

3,384

​

 

4,548

Loss on extinguishment of debt

​

7,184

​

​

23,504

Net amortization of premiums and discounts on investments

​

(1,138)

​

​

(98)

Changes in operating assets and liabilities:

​

​

​

​

​

Accounts receivable

​

(4,330)

​

​

15,640

Inventory

​

4,470

​

​

20,475

Prepaid expenses and other assets

 

(11,688)

​

 

(1,749)

Accounts payable

 

(6,144)

​

 

(1,075)

Accrued liabilities

 

982

​

 

(884)

Accrued rebates, returns and discounts

​

8,877

​

​

(17,402)

Net cash provided by operating activities

 

129,335

​

 

127,393

Investing activities

​

​

​

​

​

Purchases of property and equipment

​

(838)

​

 

(232)

Purchases of marketable securities

​

(73,403)

​

​

(41,661)

Maturities of marketable securities

​

47,207

​

​

—

Net cash used in investing activities

 

(27,034)

​

 

(41,893)

Financing activities

​

​

​

​

​

Proceeds from issuances of common stock from employee stock purchase plan

​

356

​

​

169

Proceeds from the exercise of stock options

 

9,924

​

 

5,099

Payments made for employee stock tax withholdings

​

(18,749)

​

​

(7,956)

Repurchases of common stock, including the ASR agreement

​

(35,000)

​

​

—

Repayment of term notes

​

(91,667)

​

​

(70,833)

Proceeds from issuances of 2029 Convertible Notes, net of issuance costs of $6,280

​

—

​

​

235,220

Repurchase of 2026 Convertible Notes, including premium

​

—

​

​

(138,638)

Redemption of 2026 Convertible Notes, including premium and redemption costs

​

(33,218)

​

​

—

Net cash (used in) provided by financing activities

 

(168,354)

​

 

23,061

​

​

​

​

​

​

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(66,053)

​

 

108,561

Cash, cash equivalents and restricted cash at beginning of period

 

239,994

​

 

176,235

Cash, cash equivalents and restricted cash at end of period

$

173,941

​

$

284,796

​

​

​

​

​

​

Reconciliation of cash, cash equivalents and restricted cash to the Condensed Consolidated Balance Sheets:

​

​

​

​

​

Cash and cash equivalents

$

172,894

​

$

283,749

Restricted cash

​

1,047

​

​

1,047

Total cash, cash equivalents and restricted cash

$

173,941

​

$

284,796

​

​

​

​

​

​

Supplemental disclosure of cash flow information

​

​

​

​

​

Cash paid for interest

$

29,542

​

$

37,187

Cash paid for income taxes

$

35,881

​

$

10,011

​

​

​

​

​

​

​

​

​

​

​

​

Supplemental disclosure of non-cash activities

​

​

​

​

​

Acquisition of property and equipment in accounts payable and accrued liabilities

$

200

​

$

—

Miscellaneous costs of redemption of 2026 Convertible Notes

$

27

​

$

—

​

See accompanying notes to the Condensed Consolidated Financial Statements.

7

Collegium Pharmaceutical, Inc.

​

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

​

(unaudited, in thousands, except share and per share amounts)

​

1. Nature of Business

​

Collegium Pharmaceutical, Inc. (the “Company” or “Collegium”) was incorporated in Delaware in April 2002 and then reincorporated in Virginia in July 2014. The Company has its principal operations in Stoughton, Massachusetts. The Company’s mission is to build a leading, diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions. The Company’s portfolio includes Belbuca, Xtampza ER, Nucynta IR and Nucynta ER (collectively the “Nucynta Products”), and Symproic.

​

The Company’s operations are subject to certain risks and uncertainties. The principal risks include the Company’s ability to continue successfully commercializing products, changing market conditions for products and development of competing products, changing regulatory environment and reimbursement landscape, product-related litigation, manufacture of adequate commercial inventory, inability to secure adequate supplies of active pharmaceutical ingredients, key personnel retention, protection of intellectual property, and patent infringement litigation.

​

2. Summary of Significant Accounting Policies

​

Basis of Presentation

​

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Collegium Pharmaceutical, Inc. (a Virginia corporation) and its subsidiaries. The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements.

​

In the opinion of the Company’s management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to fairly present the financial position of the Company as of June 30, 2024, the results of operations for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year.

​

The preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, costs and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. Estimates in the Company’s consolidated financial statements include revenue recognition, including the estimates of product returns, discounts and allowances related to commercial sales of products, estimates related to the fair value of assets acquired and liabilities assumed, including acquired intangible assets and the fair value of inventory acquired, estimates utilized in the ongoing valuation of inventory related to potential unsaleable product, estimates of useful lives with respect to intangible assets, accounting for stock-based compensation, contingencies, impairment of intangible assets and deferred tax valuation allowances. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions. The consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s most recently filed annual report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”).

​

There were no significant changes in the Company’s significant accounting policies from those described in the Company’s Annual Report.

​

8

Recently Adopted Accounting Pronouncements

​

New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as required by the specified effective dates.

The Company has not been required to adopt any accounting standards that had a significant impact on its Condensed Consolidated Financial Statements during the six months ended June 30, 2024.

​

Recently Issued Accounting Pronouncements Not Yet Adopted

​

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023 for the Company’s annual report, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

​

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). The amendments in this update expand income tax disclosure requirements, including additional information pertaining to the rate reconciliation, income taxes paid, and other disclosures. This update is effective for annual periods beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

​

Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the consolidated financial statements upon future adoption.

​

3. Revenue from Contracts with Customers

​

The Company’s revenue to date is from sales of the Company’s products, which are primarily sold to wholesalers (“customers”), which in turn sell the product to pharmacies or other outlets for the treatment of patients.

​

Revenue Recognition

​

The Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements with a customer, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

​

The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the assets is one year or less.

​

Performance Obligations

​

The Company determined that performance obligations are satisfied, and revenue is recognized, when a customer takes control of the Company’s product, which occurs at a point in time. This generally occurs upon delivery of the products to customers, at which point the Company recognizes revenue and records accounts receivable. Payment is typically received 30 to 90 days after satisfaction of the Company’s performance obligations.

​

9

Transaction Price and Variable Consideration

​

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). The transaction price for product sales includes variable consideration related to sales deductions, including: (i) rebates and incentives, including managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances; (ii) product returns, including return estimates; and, (iii) trade allowances and chargebacks, including fees for distribution services, prompt pay discounts, and chargebacks. The Company will estimate the amount of variable consideration that should be included in the transaction price under the expected value method for all sales deductions other than trade allowances, which are estimated under the most likely amount method. These provisions reflect the expected amount of consideration to which the Company is entitled based on the terms of the contract. In addition, the Company made a policy election to exclude from the measurement of the transaction price all taxes that are assessed by a governmental authority that are imposed on revenue-producing transactions.

​

The Company bases its estimates of variable consideration, which could include estimates of future rebates, returns, and other adjustments, on historical data and other information. Estimates include: (i) timing of the rebates and returns incurred; (ii) pricing adjustments related to rebates and returns; and (iii) the quantity of product that will be rebated or returned in the future. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period.

​

Rebates and Incentives

​

Provisions for rebates and incentives are based on the estimated amount of rebates and incentives to be claimed on the related sales. As the Company’s rebates and incentives are based on products dispensed to patients, the Company is required to estimate the expected value of claims at the time of product delivery to wholesalers. Given that wholesalers sell the product to pharmacies, which in turn dispense the product to patients, claims can be submitted significantly after the related sales are recognized. The Company’s estimates of these claims are based on the historical experience of existing or similar programs, including current contractual and statutory requirements, specific known market events and trends, industry data, and estimated distribution channel inventory levels. Accruals and related reserves required for rebates and incentives are adjusted as new information becomes available, including actual claims. If actual results vary, the Company may need to adjust future estimates, which could have an effect on earnings in the period of the adjustment.

​

Product Returns

​

Provisions for product returns, including returns for Belbuca, Xtampza, the Nucynta Products, and Symproic, are based on product-level returns rates, including processed as well as unprocessed return claims, in addition to relevant market events and other factors. Estimates of future product returns are made at the time of revenue recognition to determine the amount of consideration to which the Company expects to be entitled (that is, excluding the products expected to be returned). At the end of each reporting period, the Company analyzes trends in returns rates and updates its assessment of variable consideration. To the extent the Company receives amounts in excess of what it expects to be entitled to receive due to a product return, the Company does not recognize revenue when it transfers products to customers but instead recognizes those excess amounts received as a refund liability. The Company updates the measurement of the refund liability at the end of each reporting period for changes in expectations about the amount of refunds with the corresponding adjustments recognized as revenue (or reductions of revenue).

​

The Company provides the right of return to its customers for an 18-month window beginning six months prior to expiration and up until twelve months after expiration. The Company’s customers short-pay an existing invoice upon notice of a product return claim. Adjustments to the preliminary short-paid claims are processed when the return claim is validated and finalized. The Company’s return policy requires that product is returned and that the return is claimed within the 18-month window.

​

​

10

Trade Allowances and Chargebacks

​

Provisions for trade allowances and chargebacks are primarily based on customer-level contractual terms. Accruals and related reserves are adjusted as new information becomes available, which generally consists of actual trade allowances and chargebacks processed relating to sales recognized.

​

At the end of each reporting period, the Company updates the estimated transaction price (including updating its assessment of whether an estimate of variable consideration is constrained). Variable consideration, including the risk of customer concessions, is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is subsequently resolved.

​

Significant Judgments

​

Significant judgment is required to determine the variable consideration included in the transaction price as described above. Adjustments to the estimated variable consideration included in the transaction price occur when new information indicates that the estimate should be revised. If the value of accepted and processed claims is different than the amount estimated and included in variable consideration, then adjustments would impact product revenues, net and earnings in the period such revisions become known. The amount of variable consideration ultimately received and included in the transaction price may materially differ from the Company’s estimates, resulting in additional adjustments recorded to increase or decrease product revenues, net.

​

Provision and Allowance Activity

​

The following tables summarize activity in each of the Company’s product revenue provision and allowance categories for the six months ended June 30, 2024 and 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Trade

​

​

Rebates and

​

Product

​

Allowances and

​

​

Incentives (1)

​

Returns (2)

​

Chargebacks (3)

Balance as of December 31, 2023

​

$

149,826

​

$

77,505

​

$

20,917

Provision related to current period sales

​

​

197,088

​

​

19,937

​

​

79,615

Changes in estimate related to prior period sales

​

​

325

​

​

2,406

​

​

(79)

Credits/payments made

​

​

(192,073)

​

​

(18,806)

​

​

(78,578)

Balance as of June 30, 2024

​

$

155,166

​

$

81,042

​

$

21,875

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

​

    

Trade

​

​

Rebates and

​

Product

​

Allowances and

​

​

Incentives (1)

​

Returns (2)

​

Chargebacks (3)

Balance as of December 31, 2022

​

$

156,937

​

$

73,554

​

$

22,058

Provision related to current period sales

​

​

211,709

​

​

20,958

​

​

73,382

Changes in estimate related to prior period sales

​

​

(1,623)

​

​

1,230

​

​

593

Credits/payments made

​

​

(227,167)

​

​

(22,509)

​

​

(73,076)

Balance as of June 30, 2023

​

$

139,856

​

$

73,233

​

$

22,957

​

(1)Provisions for rebates and incentives include managed care rebates, government rebates and co-pay program incentives. Provisions for rebates and incentives are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Condensed Consolidated Balance Sheets.
(2)Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Condensed Consolidated Balance Sheets.
(3)Provisions for trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s Condensed Consolidated Balance Sheets.

​

11

As of June 30, 2024, the Company did not have any transaction price allocated to remaining performance obligations and any costs to obtain contracts with customers, including pre-contract costs and set up costs, were immaterial.

​

Disaggregation of Revenue

​

The Company discloses disaggregated revenue from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. When selecting the type of category to use to disaggregate revenue, the Company considers how information about the Company’s revenue has been presented for other purposes as well as what information is regularly reviewed and used for evaluating financial performance. As such, the Company disaggregates its product revenues, net from contracts with customers by product, as disclosed in the table below.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

2024

​

2023

​

2024

​

2023

Belbuca

$

52,198

​

$

43,136

​

$

102,861

​

$

87,348

Xtampza ER

​

44,571

    

​

41,245

​

​

90,384

​

​

89,114

Nucynta IR

​

25,203

​

​

28,158

​

​

51,163

​

​

56,057

Nucynta ER

​

19,272

​

​

19,171

​

​

38,458

​

​

40,307

Symproic

​

4,032

​

​

3,836

​

​

7,333

​

​

7,487

Total product revenues, net

$

145,276

​

$

135,546

​

$

290,199

​

$

280,313

​

​

4. Earnings Per Share

​

Basic earnings per share is calculated by dividing the net income or loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted earnings per share is computed by dividing the net income or loss by the weighted-average number of shares of common stock, plus potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock, if-converted, or contingently issuable accounting methods, depending on the nature of the security. For purposes of the diluted earnings per share calculation, stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), and shares potentially issuable in connection with the Company’s employee stock purchase plan and convertible senior notes are considered potentially dilutive securities and included to the extent that their addition is not antidilutive.

​

The following table presents the computations of basic and dilutive earnings per common share:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

2024

​

2023

    

2024

​

2023

Numerator:

​

​

​

​

​

​

​

​

​

​

​

Net income (loss)

$

19,606

​

$

13,007

​

$

47,319

​

$

(4,419)

Adjustment for interest expense recognized on convertible senior notes

​

1,477

​

​

1,677

​

​

2,942

​

​

—

Net income (loss) - diluted

$

21,083

​

$

14,684

​

$

50,261

​

$

(4,419)

Denominator:

​

​

​

​

​

​

​

​

​

​

​

Weighted-average shares outstanding — basic

​

32,433,025

    

​

34,622,284

​

​

32,379,807

    

​

34,471,624

Effect of dilutive securities:

​

​

​

​

​

​

​

​

​

​

​

Stock options

​

393,128

​

​

236,426

​

​

430,273

​

​

—

Restricted stock units

​

949,383

​

​

481,478

​

​

1,093,741

​

​

—

Performance share units

​

—

​

​

—

​

​

—

​

​

—

Employee stock purchase plan

​

1,853

​

​

660

​

​

817

​

​

—

Convertible senior notes

​

6,606,305

​

​

7,509,104

​

​

6,606,305

​

​

—

Weighted average shares outstanding — diluted

​

40,383,694

​

​

42,849,952

​

​

40,510,943

​

​

34,471,624

​

​

​

​

​

​

​

​

​

​

​

​

Earnings (loss) per share — basic

$

0.60

​

$

0.38

​

$

1.46

​

$

(0.13)

Earnings (loss) per share — diluted

$

0.52

​

$

0.34

​

$

1.24

​

$

(0.13)

​

12

The Company has the option to settle the conversion obligation for its convertible senior notes due in 2029 in cash, shares or a combination of the two. On April 11, 2024, the Company provided notice of redemption for the remaining $26,350 aggregate principal amount of its 2.625% convertible senior notes due in 2026 (the “2026 Convertible Notes”). The 2026 Convertible Notes were fully redeemed on June 18, 2024. The Company settled the redemption of the 2026 Convertible Notes in cash. The 2026 Convertible Notes represented 902,799 shares which were excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2024 as their inclusion would have had an antidilutive effect. The Company uses the if-converted method for the convertible senior notes.

​

The following table presents dilutive securities excluded from the calculation of diluted earnings per share:

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

2024

 

2023

 

2024

 

2023

Stock options

—

​

751,930

​

—

​

1,368,968

Restricted stock units

5,150

​

1,073,613

​

6,200

​

2,522,025

Performance share units

223,680

​

503,880

​

223,680

​

503,880

Convertible senior notes

—

​

—

​

—

​

7,509,104

​

For PSUs, these securities were excluded from the calculation of diluted earnings per share as the market-based vesting conditions were not met as of the end of the reporting period. All other securities presented in the table above were excluded from the calculation of diluted earnings per share as their inclusion would have had an antidilutive effect.

​

​

5. Fair Value of Financial Instruments

​

Fair value measurements and disclosures describe the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:

​

​

​

Level 1 inputs:

Quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market is defined as a market where transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs:

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3 inputs:

Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

​

The Company invests in instruments within defined credit parameters to minimize credit risk while ensuring liquidity.

​

There were no transfers between Levels 1, 2, and 3 during the six months ended June 30, 2024 and 2023.

​

13

The following table presents the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument as of June 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Significant

​

​

​

​

​

​

​

​

​

Quoted Prices

​

​

other

​

​

Significant

​

​

​

​

​

​

in active

​

​

observable

​

​

unobservable

​

​

​

​

​

​

markets

​

​

inputs

​

​

inputs

​

    

​

Total

    

​

(Level 1)

    

​

(Level 2)

    

​

(Level 3)

June 30, 2024

​

​

​

​

​

​

​

​

​

​

​

​

Cash equivalents:

​

​

​

​

​

​

​

​

​

​

​

​

Money market funds

​

$

21,208

​

$

21,208

​

$

—

​

$

—

Commercial paper

​

​

997

​

​

—

​

​

997

​

​

—

Marketable securities:

​

​

​

​

​

​

​

​

​

​

​

​

Corporate debt securities

​

​

62,428

​

​

—

​

​

62,428

​

​

—

U.S. Treasury securities

​

​

22,935

​

​

—

​

​

22,935

​

​

—

Government-sponsored securities

​

​

7,491

​

​

—

​

​

7,491

​

​

—

Commercial paper

​

​

5,883

​

​

—

​

​

5,883

​

​

—

Total assets measured at fair value

​

$

120,942

​

$

21,208

​

$

99,734

​

$

—

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

​

​

​

​

​

​

​

​

​

​

​

Cash equivalents:

​

​

​

​

​

​

​

​

​

​

​

​

Money market funds

​

$

77,299

​

$

77,299

​

$

—

​

$

—

U.S. Treasury securities

​

​

4,729

​

​

—

​

​

4,729

​

​

—

Marketable securities:

​

​

​

​

​

​

​

​

​

​

​

​

Corporate debt securities

​

​

41,612

​

​

—

​

​

41,612

​

​

—

U.S. Treasury securities

​

​

25,468

​

​

—

​

​

25,468

​

​

—

Government-sponsored securities

​

​

4,521

​

​

—

​

​

4,521

​

​

—

Total assets measured at fair value

​

$

153,629

​

$

77,299

​

$

76,330

​

$

—

​

The Company’s cash equivalents, which consist of money market funds, are measured at fair value on a recurring basis using quoted market prices. Accordingly, these securities are categorized as Level 1.

​

Assets and Liabilities Not Carried at Fair Value

​

The Company’s convertible senior notes fall into the Level 2 category within the fair value level hierarchy. The fair value was determined based on data points other than quoted prices that are observable, either directly or indirectly, such as broker quotes in a non-active market. As of June 30, 2024, the fair value of the Company's 2.875% convertible senior notes due in 2029 was $269,652 and the net carrying value was $236,650.

​

The Company’s term notes fall into the Level 2 category within the fair value level hierarchy and the fair value was determined using quoted prices for similar liabilities in active markets, as well as inputs that are observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals. As of June 30, 2024, the carrying amount of the term notes reasonably approximated the estimated fair value.

​

As of June 30, 2024, and December 31, 2023, the carrying amounts of cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, accrued liabilities, and accrued rebates, returns and discounts reasonably approximated their estimated fair values.

​

6. Marketable Securities

​

Available-for-sale debt securities were classified on the Condensed Consolidated Balance Sheets at fair value as follows:

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2024

​

2023

Cash and cash equivalents

​

$

997

​

$

4,729

Marketable securities

​

​

98,737

​

​

71,601

Total

​

$

99,734

​

$

76,330

14

​

The following table summarizes the available-for-sale securities held as of June 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30, 2024

​

Amortized Cost

    

Gross Unrealized Gains

    

Gross Unrealized Losses

​

Fair Value

Corporate debt securities

​

$

62,603

​

$

6

​

$

(181)

​

$

62,428

U.S. Treasury securities

​

​

22,938

​

​

—

​

​

(3)

​

​

22,935

Government-sponsored securities

​

​

7,492

​

​

3

​

​

(4)

​

​

7,491

Commercial paper

​

​

6,883

​

​

—

​

​

(3)

​

​

6,880

Total

​

$

99,916

​

$

9

​

$

(191)

​

$

99,734

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

​

​

​

​

​

​

​

​

​

​

​

Corporate debt securities

​

$

41,610

​

$

47

​

$

(45)

​

$

41,612

U.S. Treasury securities

​

​

30,189

​

​

8

​

​

—

​

​

30,197

Government-sponsored securities

​

​

4,517

​

​

4

​

​

—

​

​

4,521

Total

​

$

76,316

​

$

59

​

$

(45)

​

$

76,330

​

The following table summarizes the contractual maturities of available-for-sale securities other than investments in money market funds as of June 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2024

​

2023

Matures within one year

​

$

62,076

​

$

61,672

Matures after one year through five years

​

​

37,658

​

​

14,658

Total

​

$

99,734

​

$

76,330

​

The unrealized losses on the Company’s available-for-sale securities were immaterial as of June 30, 2024 and December 31, 2023. In addition, there were no sales of marketable securities during the three and six months ended June 30, 2024. Net unrealized holding gains or losses for the period that have been included in accumulated other comprehensive loss were not material to the Company’s Condensed Consolidated Statements of Operations.

​

The Company did not record any allowances for credit losses to adjust the fair value of available-for-sale debt securities during the three and six months ended June 30, 2024. The Company reviews its investments for other-than-temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. The Company generally does not intend to sell any investments prior to recovery of their amortized cost basis for any investment in an unrealized loss position. As such, the Company did not hold any securities with other-than-temporary impairment as of June 30, 2024 and December 31, 2023.

​

7. Inventory

​

Inventory as of June 30, 2024 and December 31, 2023 consisted of the following:

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

​

2024

​

2023

Raw materials

​

$

7,152

​

$

10,384

Work in process

​

​

5,926

​

​

6,740

Finished goods

​

​

14,784

​

​

15,208

Total inventory

​

$

27,862

​

$

32,332

​

The aggregate charges related to excess and obsolete inventory for the three and six months ended June 30, 2024 were $60 and $433, respectively. The aggregate charges related to excess and obsolete inventory for the three and six months ended June 30, 2023 were $155 and $1,061, respectively. These expenses were recorded as a component of cost of product revenues.

15

8. Goodwill and Intangible Assets

​

As of June 30, 2024 and December 31, 2023, the Company’s goodwill balance was $133,857. The Company’s goodwill resulted from the acquisition of BioDelivery Sciences International, Inc. (“BDSI”) on March 22, 2022 (the “BDSI Acquisition”).

​

The following table sets forth the cost, accumulated amortization, and carrying amount of intangible assets as of June 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30, 2024

​

December 31, 2023

​

​

​

Cost

​

​

Accumulated Amortization

​

​

Carrying Amount

​

​

Cost

​

​

Accumulated Amortization

​

​

Carrying Amount

Belbuca

​

$

360,000

​

$

(171,517)

​

$

188,483

​

$

360,000

​

$

(133,821)

​

$

226,179

Nucynta Products

​

​

521,170

​

​

(410,400)

​

​

110,770

​

​

521,170

​

​

(382,710)

​

​

138,460

Symproic

​

​

70,000

​

​

(16,577)

​

​

53,423

​

​

70,000

​

​

(12,931)

​

​

57,069

Total intangible assets

​

$

951,170

​

$

(598,494)

​

$

352,676

​

$

951,170

​

$

(