Collegium Announces $35 Million Accelerated Share Repurchase Program

Rhea-AI Summary

Collegium Pharmaceutical, Inc. announced a $35 million Accelerated Share Repurchase (ASR) program with Jefferies to buy back common stock as part of a $150 million repurchase program. The company aims to enhance shareholder value by leveraging its capital deployment strategy. The ASR agreement will result in Collegium receiving 888,889 shares initially, with the final number based on stock prices during the term.

Positive

• Collegium's ASR program demonstrates commitment to enhancing shareholder value through capital deployment strategies.

Negative

• None.

Insights

Financial Analyst

Collegium Pharmaceutical's initiation of a $35 million Accelerated Share Repurchase (ASR) program is a notable event in terms of capital allocation. ASRs are typically initiated by companies that believe their stock is undervalued and are seeking to opportunistically return capital to shareholders. Given that the ASR is part of a larger $150 million share repurchase authorization, it suggests a confident stance by management on the company's financial health and their commitment to shareholder value.

The immediate effect of the ASR will be a reduction in the number of shares outstanding, which could lead to an increase in Earnings Per Share (EPS) due to a smaller share count, even if net income remains unchanged. For current shareholders, this could be seen as a positive signal, as it often indicates the company's belief that its shares are trading at a discount to their intrinsic value. Moreover, it is important to observe that repurchasing shares at prices below or near intrinsic value is accretive to shareholders.

For long-term investors, the key considerations would be whether this use of cash reflects the best investment opportunity available to the company and if the repurchase is supported by a strong balance sheet and cash flow. In Collegium's statement, reference to robust cash generation and positive momentum in key product sales bodes well for their operational performance. The company's strategic outlook, as hinted by the CFO, suggests a positive trajectory.

However, one should also consider the opportunity cost of the share repurchase program. The capital deployed in share repurchases is not being used for other potential growth initiatives, such as R&D or acquisitions. Therefore, investors must weigh the immediate EPS boost against the potential for future growth opportunities that might be forgone.

Pharmaceutical Industry Analyst

In the context of the pharmaceutical industry, Collegium's focus on Belbuca® prescriptions, Xtampza® ER gross-to-net and the Nucynta Franchise reveals tactical areas that contribute to the company's financial robustness. The company's operational success in these areas is indicative of a solid market position and effective sales strategies, which can be appealing to investors seeking industry-specific growth.

For investors unfamiliar with pharmaceutical terms, 'gross-to-net' refers to the gross revenue expected from product sales minus deductions such as discounts, rebates and returns. A favorable gross-to-net ratio can be indicative of efficient pricing strategies and market access success. The mention of an 'authorized generic agreement' for the Nucynta Franchise could imply a strategic play to extend the lifecycle of the product and retain market share against generic competition.

An investor must consider how well Collegium's product portfolio aligns with market trends, such as the ongoing demand for effective pain management treatments. The improvement in prescription numbers and strategic agreements suggest Collegium is navigating the market adeptly. Still, investors should remain vigilant to changes in market dynamics, such as shifts in regulatory environment, which could affect drug pricing and profitability.

STOUGHTON, Mass., May 13, 2024 (GLOBE NEWSWIRE) -- Collegium Pharmaceutical, Inc. (Nasdaq: COLL), a leading, diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions, today announced that it has entered into an Accelerated Share Repurchase ("ASR") agreement with Jefferies LLC to repurchase $35 million of the Company’s common stock. Collegium will execute the ASR as part of the $150 million share repurchase program authorized by its Board of Directors in January 2024. Upon completion of this ASR, Collegium will have $115 million remaining under the program.

“Our financial and strategic execution bolster the strength of our business today and in the future. Collegium’s strong start to 2024 was supported by robust cash generation, momentum in Belbuca^® prescriptions, improved Xtampza^® ER gross-to-net and the Nucynta Franchise authorized generic agreement, all of which put us on track to meet our 2024 financial guidance and improve our outlook in 2025 and beyond,” said Colleen Tupper, Chief Financial Officer of Collegium. “This $35 million ASR program reinforces our belief that the value of Collegium is underappreciated. We remain committed to leveraging our $150 million share repurchase program, which is authorized through the second quarter of 2025, to create value for our shareholders through our capital deployment strategy.”

Under terms of the agreement, Collegium will pay $35 million to Jefferies LLC and will receive an initial delivery of 888,889 shares, based on the $31.50 closing stock price of Collegium’s common stock on May 10, 2024, representing approximately 80% of the total shares the Company expects to repurchase under the ASR agreement. The final number of shares repurchased will be based on the volume-weighted average prices of Collegium’s common stock during the term of the ASR and subject to adjustments related to the terms and conditions of the ASR agreement. The final settlement of the ASR is expected to be completed in the third quarter of 2024. As of March 31, 2024, Collegium had approximately 32.7 million shares outstanding.

About Collegium Pharmaceutical, Inc.

Collegium is a leading, diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions. Collegium’s headquarters are located in Stoughton, Massachusetts. For more information, please visit the Company’s website at www.collegiumpharma.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. We may, in some cases, use terms such as "predicts," "forecasts," "believes," "potential," "proposed," "continue," "estimates," "anticipates," "expects," "plans," "intends," "may," "could," "might," "should" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Examples of forward-looking statements contained in this press release include, among others, statements related to current and future market opportunities for our products and our assumptions related thereto, expectations (financial or otherwise) and intentions, and other statements that are not historical facts. Such statements are subject to numerous important factors, risks and uncertainties that may cause actual events or results, performance, or achievements to differ materially from the company's current expectations, including risks relating to, among others: unknown liabilities; risks related to future opportunities and plans for our products, including uncertainty of the expected financial performance of such products; our ability to commercialize and grow sales of our products; our ability to manage our relationships with licensors; the success of competing products that are or become available; our ability to maintain regulatory approval of our products, and any related restrictions, limitations, and/or warnings in the label of our products; the size of the markets for our products, and our ability to service those markets; our ability to obtain reimbursement and third-party payor contracts for our products; the rate and degree of market acceptance of our products; the costs of commercialization activities, including marketing, sales and distribution; changing market conditions for our products; the outcome of any patent infringement or other litigation that may be brought by or against us; the outcome of any governmental investigation related to our business; our ability to secure adequate supplies of active pharmaceutical ingredient for each of our products and manufacture adequate supplies of commercially saleable inventory; our ability to obtain funding for our operations and business development; regulatory developments in the U.S.; our expectations regarding our ability to obtain and maintain sufficient intellectual property protection for our products; our ability to comply with stringent U.S. and foreign government regulation in the manufacture of pharmaceutical products, including U.S. Drug Enforcement Agency, or DEA, compliance; our customer concentration; and the accuracy of our estimates regarding expenses, revenue, capital requirements and need for additional financing. These and other risks are described under the heading "Risk Factors" in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the SEC. Any forward-looking statements that we make in this press release speak only as of the date of this press release. We assume no obligation to update our forward-looking statements whether as a result of new information, future events or otherwise, after the date of this press release.

Investor Contact:
Christopher James, M.D.
Vice President, Investor Relations
ir@collegiumpharma.com

Media Contact:
Marissa Samuels
Vice President, Corporate Communications
communications@collegiumpharma.com

FAQ

What is the purpose of Collegium's $35 million ASR program?

Collegium's ASR program aims to repurchase common stock as part of a larger $150 million share repurchase program to enhance shareholder value.

Who is Collegium's ASR agreement partner?

Jefferies is Collegium's partner in the ASR agreement to repurchase $35 million of the company's common stock.

When is the final settlement of Collegium's ASR program expected?

The final settlement of Collegium's ASR program is anticipated to be completed in the third quarter of 2024.

How many shares will Collegium initially receive in the ASR agreement?

Collegium will receive 888,889 shares initially as part of the ASR agreement.