Collegium Pharmaceutical Inc (COLL) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Collegium Pharmaceutical, Inc. third-quarter 2016 earnings conference call. (Operator Instructions) As a reminder, this call is being recorded.

Before we begin today's call, we wish to inform participants that the forward-looking statements made today are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risks and uncertainties, including and without limitation, the risk that we will not be able to successfully commercialize Xtampza ER and achieve the rate and degree of market acceptance for Xtampza ER.

Furthermore, we are subject to patent infringement litigation and may in the future be subject to additional litigation which may be expensive to defend and delay the commercialization of our product candidates. These risks and other risks of the Company are detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. Our future results may differ materially from our current expectations discussed today.

I would now like to turn the call over to Collegium CEO Mike Heffernan. You may begin.

Thank you. Good afternoon, everyone. This is Mike Heffernan, CEO of Collegium, and with me today is Barry Duke, our Chief Commercial Officer, who will provide an update on the commercial launch of Xtampza ER, and Paul Brannelly, our CFO, who will review Collegium's quarterly financial results.

Let me start by saying that we are very pleased with the overall progress we made during the third quarter, particularly the progress we have made on significantly enhancing the commercial profile and overall visibility of Xtampza ER. Barry will provide the commercial details in a few minutes. I will highlight additional recently-achieved milestones.

A few summary comments on the Xtampza commercial launch. We finally received FDA feedback on our promotion materials in September and fully launched our sales and marketing campaign, which has been on hold since June, in October a few weeks ago.

The feedback from the field to date has been very encouraging. In the quarter, we have made significant advancements in overall payer coverage, pharmacy stocking, customer contracting, and the number of physicians prescribing Xtampza ER. We have also had very encouraging feedback from both hospital and long-term care portions of our business for some significant early wins and many ongoing and productive discussions with large integrated delivery networks.

In addition to the commercial gains, we have recently announced the filing of an Xtampza NDA supplement that includes data from two head-to-head Xtampza ER versus OxyContin pharmacokinetic studies. The data from both studies clearly and consistently demonstrate that upon crushing Xtampza it retains the same PK profile and the extended-release properties, while after crushing OxyContin there is a complete loss of extended-release properties and it's bioequivalent to an immediate-release control product.

The goal of the sNDA is to gain FDA approval to include this data in Section 9.2 of the product label, which is the drug abuse section. This would allow us to use this data as part of our promotional message. We expect feedback from the FDA as early as April of 2017.

It is important that we continue to expand the Xtampza scientific literature with publications in peer-reviewed medical journals, as well as present new data at major pain-related conferences. This quarter we had three articles that were published including publications on Xtampza's oral abuse deterrence clinical data, scientific data supporting the flexible dosing options of Xtampza, and an independent product review in the medical letter. We also presented multiple posters at Pain Week conference held in September.

It is our goal to continue to support clinical investigations of Xtampza and to aggressively publish the resulting data. This serves to enhance the clinical profile and product differentiation of the product.

We also announced the filing of our drug application, or NDS, in Canada. This is our first filing outside the US and we are in the process of analyzing our commercial options, including evaluating partnership opportunities for Canada. In addition, we continue to explore additional international opportunities as one of our corporate priorities is to expand the geographic footprint of Xtampza outside the US into select high-potential markets.

A key part of our corporate mission is to support and educate clinicians on the appropriate and responsible prescribing of opioids with a focus on the problem of unintentional misuse as well as prescription opioid abuse. In close collaboration with four opinion leaders in the pain field, we developed an online educational program focusing on these key issues.

The program is called OpioidIQ. It can be accessed at OpioidIQ.com. This is an important educational tool that is consistent with our mission.

Our product pipeline continues to advance with ONSOLIS. Tech transfer of the commercial manufacturing is proceeding as planned with the goal of product availability in late 2017. ONSOLIS is a fentanyl transmucosal product for the treatment of breakthrough cancer pain.

In addition, we are in the process of manufacturing clinical supplies for DETERx hydrocodone, our second product using the DETERx technology, and we will initiate the next clinical trial in 2017 -- in early 2017. Proof-of-concept studies to date have shown that DETERx hydrocodone has very similar clinical benefits as those seen in Xtampza ER.

Finally, a few weeks ago an equity financing, raising $75 million to enable us to fully fund our commercial initiatives and development programs through the end of 2018 and into 2019.

I will now turn it over to Barry to provide additional detail on our commercial progress over the last three months.

Thanks, Mike. I will provide a commercial overview, as Mike mentioned, and also wanted to reiterate, as he noted, that we are most encouraged with our progress during the quarter.

First, some comments on overall prescriptions and prescribers. To date, we have 3,616 Xtampza prescriptions and 804 prescribers. We've reached 72% of our original 11,500 targets, including 88% of our A, or most valuable, targets.

Our average call frequency for A targets is 6.8 calls to date and they are responsible for 79% of our prescriptions. Less than 1% of our prescriptions are from outside of our representative called-on universe, reflecting Xtampza's low awareness during the early launch period because of our limited ability to utilize our full complement of marketing tools and tactics as we awaited a response from the OPDP division of the FDA.

Most encouraging is our early-adopter analysis. Of the first 102 physicians who used Xtampza within the first five weeks of launch, 79% are prescribing the product in the most recent month and their weekly prescriptions have increased from 1.5 per week to over 2 per week. We are encouraged by their continued use of the product after initial product trial.

Broadly speaking, feedback on Xtampza ER's product attributes continues to be positive, both from an anecdotal and market research perspective, with the only consistent barrier cited as payer coverage and prior authorization issues and pharmacy fulfillment challenges. In essence, hassle factors for the prescribers and patients. We will discuss both in just a minute.

As we move forward from here, we are encouraged by the foundation that we have built. Additionally, we are encouraged by the improvement in our managed care position and our recent ability to ramp up our promotional activity. I want to turn our attention to these two topics. Let's look at managed care.

We will focus on claims data versus covered lives information, as it may be more relevant to understanding the payer dynamics. While our percentage paid claims rate for commercial patients has improved from a low of 24% of claims paid during June to 69% in September, 30%-plus rejection rates can still be discouraging for physicians as they consider prescribing a new product.

Of note, contracted commitments for Xtampza with commercial payers continue to grow. At the end of Q2 2016 when we launched, we had no contracted commitments. At the end of Q3, we had 17 million commercial lives contracted and we will move into the first quarter of 2017 with over 60 million commercial lives under contracted commitments with expected enhancements to those numbers as we continue to gain momentum with payers.

I want to highlight two key formulary wins as previously noted by both United and CIGNA in their recent communications regarding their 2017 formularies. Effective November 1, the NDC block for Xtampza was removed at UnitedHealthcare, which is 15.6 million commercial lives.

Xtampza ER is now a preferred Tier 3 formulary product with no step edits. OxyContin remains on formulary at United through year-end, but is behind a triple step. This triple step includes trying three of five products first, one of which is now Xtampza ER.

OxyContin will be removed and NDC blocked from United's formulary beginning on January 1. UnitedHealthcare has begun its communications, effective last week, to notify providers and patients of this change. Of course, we are most encouraged by this opportunity and have a robust communication plan to highlight these changes and increase awareness more broadly with our targeted prescribers.

Regarding Cigna, which is 6.4 million commercial lives, while we were approved for commercial coverage on October 1 of this year, we had been not covered prior to this date. We are currently behind a double-step edit there. Effective January 1, 2017, we will become one of three preferred products and no longer subject to the step edit. Like our plans with United, we will optimize this positive change in coverage with targeted communications and marketing plans with prescribers.

In addition to United and Cigna, Prime Therapeutics, 10.5 million commercial lives, the PBM for several large Blues plans, has announced Xtampza ER as part of its formulary as a Tier 3 unrestricted product, effective October 1 of this year, of 2016. With one of the largest national PBMs, we are also in final stages of signing an agreement and Xtampza ER should be a Tier 3 unrestricted addition in its formulary effective January 1, 2017. These contracted changes should provide clarity and confidence for physicians to prescribe as we transition in the new year.

To date, Part D access has been limited, although that is generally true for branded ER opioids. To add some perspective, even the most established brands only have 40% to 50% coverage of Part D lives, though rejection rates in Part D tend to be low.

We have recently gained contracted coverage with MedImpact, 750,000 Part D lives; are now in the process of submitting Part D bids broadly for 2018. As a new brand if a plan accepts our bid for 2018, there is an opportunity for inclusion in 2017. We will provide quarterly updates on notable managed-care changes in the future.

Product accessibility is another potential barrier for new product adoption, especially with a C2, or Controlled 2, to like Xtampza. In general, pharmacies do not autoship C2 products. It is an on-demand market for stocking. If a pharmacy gets a prescription, then they are likely to order and dispense it.

At the end of June we had only 40 pharmacies stocking the product. Due to the diligent work of our sales team, we now have approximately 1,500 stores that have purchased Xtampza and that number grows daily as demand grows. We are also developing a national and regional network of specialty pharmacies to support fulfillment as more and more pain specialists and patients prefer that enhanced level of support and service.

We have educated our distribution partners about the recent favorable managed-care changes and we will continue to work to expand our product availability with pharmacies. We will also continue to expand our patient support services to make it easier for patients to locate convenient fulfillment options. Our goal is to continue to elevate our efforts so that product fulfillment is minimized as a potential barrier.

Now let's turn our attention to our promotional activities.

We received feedback from OPDP in September regarding our promotional material that we had submitted during the first week of May just after our final FDA approval. Based on FDA advice, we updated our materials, included sales age for each of our three different sales teams, and retrained them during the weeks of October 10 and 17. During the same period, we updated our promotional speaker decks and trained 130 speakers.

By October 21, we began utilizing our new tools on sales calls as well as conducting speaker programs. We have conducted 100 peer-to-peer programs which are particularly important during our new product's introduction over the past three weeks and have hundreds more scheduled for the remainder of 2016. We are in the process of rolling out a full multichannel marketing campaign utilizing direct mail, email marketing, digital, journal ads, supplements, and tele-detailing. As mentioned earlier, the favorable managed-care changes will also be highlighted in many of our communications.

We will be updating our XtampzaER.com website with full promotional content in December. We are excited to finally be able to supplement our sales team's efforts with this more complete arsenal of promotional tools.

An important part of our strategy is an integrated commercial model. Not only are we providing salesforce coverage for outpatient pain specialists, as we had discussed, we were also covering the hospital and long-term care channels. The product attributes of Xtampza ER are an appealing and natural fit for these facilities with institution concern about diversion and abuse and the need for more flexible dosing and administration options for patients with swallowing difficulties and/or patients with feeding tubes.

In the hospital channel, we continue to make significant progress. At launch, we overlaid our hospital sales representatives to mirror the territory alignments of our outpatient sales team. As a reminder, approximately 12,000 institutions purchased over $600 million in opioids annually, of which $300 million is contributed from extended-release opioids.

We are currently targeting about approximately 500 hospitals that represent approximately 60% of the total extended-release market. The primary strategy in deploying a dedicated hospital team is to realize synergies from patients discharged from the hospital that will ultimately be treated in the outpatient clinic, nursing home, or rehab facility. Hospital system formulary decisions are often influential with local medical communities and can influence product adoption.

Even though the sales cycle in the hospital setting can be long, we have already seen notable third-quarter achievements in this channel. Recently, we gained formulary access in one of the largest cancer treatment and research institutions in the Northeast. We also recently gained formulary access to a top-five nationally recognized hospital system, which operates 30 acute-care hospitals, long-term care centers, outpatient surgery centers, and an array of other services including family clinics, homecare and hospice centers, and outpatient pharmacies.

We also recently contracted with one of the largest cancer treatment and research providers in the Southwest with over 40 oncology outpatient pharmacies, approximately 100 practices, and a total of over 400 healthcare providers. We also continue to make progress with multiple national and regional hospital systems.

We have also made progress in the long-term care channel. A significant number of patients in nursing facilities, both rehab and long-term care, are discharged from the local hospital. Thus, establishing a strong connection between our hospital and long-term care sales teams that is central to our strategy.

As a reminder, there are over 600,000 OxyContin prescriptions per year and 1.5 million subscriptions of fentanyl patches per year to skilled nursing facilities. We are targeted in 11 states that represent approximately 50% of that value. Xtampza is available through the three major GPOs in this channel -- MHA, Innovatix, and GeriMed -- an important first step for facility purchase and prescribing.

We have begun to see signs of early demand despite their longer sales cycle and minimal Part D coverage. We have added a director of strategic accounts for the long-term care channel, who will be working with the large national long-term care pharmacy providers, the GPOs, and large nursing home chains to drive national opportunities. We have already experienced success with regional facilities in Ohio and Florida, as an example, who have committed to converting patients in their facilities from OxyContin to Xtampza ER. More to come as we move into 2017.

In conclusion, with significant improvements in managed care access, growing pharmacy options for fulfillment, and access now to a broad toolbox of promotional materials and programs, we are looking forward to accelerating Xtampza's adoption as we close 2016 and move into 2017.

Let me turn it over to Paul Brannelly for a financial update.

Thanks, Barry. Good afternoon, everyone. As of September 30, our cash balance was $91 million. This amount doesn't include the net proceeds of approximately $74.8 million from our October 2016 follow-on offering.

In the third quarter of 2016, cash used by operating and investing activities was approximately $19.5 million, which is a decrease from $23.4 million used in the second quarter of 2016. Based on our current operating plans, we believe that our existing cash, together with the expected cash inflows from the commercialization of Xtampza, along with the net proceeds from our recent follow-on offering, are sufficient to fund our operations into 2019.

For the third quarter of 2016, our net loss was $26.4 million compared to $9.4 million for the third quarter of 2015, resulting in a net loss per share of $1.13 and $0.46 per share for 2016 and 2015 quarters, respectively. The net loss includes stock-based compensation of $1.6 million and $503,000 for the third quarter of 2016 and 2015, respectively. The large increase in our net loss is primarily due to costs related to the commercial launch of Xtampza.

During the quarter, we recorded net sales of $408,000 with a gross-to-net discount of approximately 49.9%. During the quarter, the majority of our gross-to-net discount was driven by our co-pay assistance program. We expect the impact of the co-pay assistance program on gross-to-net discounts to decrease over time as payer coverage improves.

As of September 30, we have recorded $3.9 million of deferred revenue on our balance sheet for products shipped to wholesalers. As previously discussed, we expect to recognize revenue based on the sell-through method, which recognizes revenue based on patient-level prescription data since we lack the history required to estimate certain items including rebates, chargebacks, and returns.

I will now turn the call back over to Mike.

Thanks, Barry and Paul. We will now open it up to questions.

(Operator Instructions) David Amsellem, Piper Jaffray.

Thanks. So on the gross to nets, can you just walk us through how you are thinking about gross to nets early in 2017 as the impact of the OxyContin exclusion happens; and presumably there will be a lot of forced switching. Then, as you go further into 2017, how do you expect steady-state gross to net to shake out?

And also, just any changes in your thinking about that compared to your past comments? That's number one.

Then number two. In terms of the long-term care market, you talked about the traction you're getting. Maybe give us a lay of the land or how much of the mix you think that's going to be for you steady-state? And what is it as a portion of the OxyContin mix as of now? Thanks.

Great, David. This is Paul. I'll take the first question about gross to net.

Nothing has changed in our thinking related to gross to net. In the early part of the launch, our gross to net discount is going to be in the mid to high of 40s and as we get better payer coverage a co-pay assistance program will be -- have less and less of an impact and it will improve, as well as we get better coverage in more plans.

I think early in the launch more of our business will be driven from plans where there might be a bigger impact on gross to net as well. And as we get more and more coverage, that will have less of an impact.

Barry or Mike, you want to take the long-term care question?

Thanks, David. It's Mike. On the long-term care question, as Barry said, we have had some opportunistic early success in the long-term care market; earlier success than we expected. The first step in getting into the long-term care market is getting our GPO contracts all in place and starting to create demand at the home level.

The market is large; there is 600,000 prescriptions for OxyContin in the long-term care channel. It's too early for us right now to predict how much of that we're going to get because of the longer sales cycle. And it is a key strategy for us to, over time, start to get the opportunistic accounts, but really bring in a national sales director who will go out and start to call on the large chains. And that has really just begun.

We expect that the 2017 impact, at least early on, will be small. But we are hoping, as we get into -- later in 2017, we will be able to give more specific guidance around the opportunity in LTC.

Okay, that's helpful. Thanks.

Tim Lugo, William Blair.

Thanks for taking the question. I guess can you maybe quantify the oxy opportunity in United a little bit more? I think you mentioned it might be small, but I know when the triple-step edit was put in place a lot of patients switched from the brand. Will those patients come back to oxycodone or have they been just kind of loss to other products in the class?

Tim, this is Barry. We look at sort of the Cigna and United opportunities. We kind of look at a $30 million to $50 million type of opportunity with OxyContin in both of those plans. Obviously at United, with the block OxyContin, that is certainly a place where we should accelerate our adoption much faster.

So in regards to your question about patients who previously were treated with OxyContin within United and they got triple-stepped about a year and half ago, the product got triple-stepped, you have to think there are some patients in there and physicians within United that would like to use an extended-release oxycodone. And certainly we certainly want to make a lot of noise about our availability.

To tell you exactly what we will get of that, what we will bring back of that is very hard to pinpoint.

This is Mike. The other thing I would add to that is early on a big portion of our business came -- comes from the immediate-release opioids, but a portion of our business, in the 30% range, comes from extended-release opioids. Only 40% of that comes from OxyContin; the other 60% comes from other extended-release opioids.

So we would fully expect that as doctors get more experience with Xtampza ER that it wouldn't just be OxyContin patients that we are looking for in United. It would be patients on any extended-release opioid who need a switch.

Okay, understood. Maybe for the pharmacy stocking, can you give us an update on your progress there? How many pharmacies are stocking the product now? How many do you hope to reach maybe within a year? And where is that trend going to be; maybe how many of the pharmacies that stock oxy also are stocking Xtampza now?

Tim, I will take that as well; this is Barry. So we have about 1,500 pharmacies now that stock the product. Stock means they've purchased it at some point. It's hard to know if they exactly have it on their shelf at any given moment. But about 1,500; it's a big uptick from where we started.

We also -- in terms of kind of where we'd like to go, obviously we need more stocking out there. What the magic number is -- we know where our targets are located, physician targets, so we'd probably like to ideally sort of double that number if at all possible.

We're also getting some traction with specialty pharmacies. That has become an important offering in the marketplace. A lot of pain specialists are comfortable and have begun working with specialty pharmacies to meet their fulfillment demand. So we are creating a national and regional network of specialty pharmacies to sort of help and as well meet the needs of the physicians and patients.

Okay, thanks for that. Also maybe one more. Out of the 804 physicians writing scripts, I have heard of these kind of super-writers out there. How are you broadening that, the number of super-writers, or are you just hoping to get that 1.5 to 2 to maybe 4 over the next couple of quarters? What's your plan there?

It's certainly a good question; we've looked at it. As you can imagine at this stage of our adoption, most of our writers are in the sort of one prescription category. I think from the numbers -- and I'm going off the top of my head a little bit -- about 40% of them are around -- have just have written one prescription. I think we have another bucket of 30% of our prescribers who have written two to four.

And then you have about 20 to 25% of our subscribers who have written more than five prescriptions. We do have a handful of the prescribers who've written more than 50 prescriptions to date. So we are still very early in the adoption process in terms of getting our physicians to get more experience with the product.

Okay, thanks for all the questions.

Serge Belanger, Needham & Company.

Good afternoon. I guess my first question is if you can talk a little bit about the negotiating process around some of the key recent formulary wins with United and Cigna. More specifically, how much did the Xtampza label attributes come into play versus the rebates and discounts that were offered?

And maybe how the OxyContin block also happened; whether that is a blueprint that you can use in future negotiations.

Serge, this is Mike. From a negotiation standpoint, we lead with the clinical differentiation. When we meet with any payer group we give them our full scientific data and walk them through the advantages of product.

In a lot of cases, we wouldn't get into the next conversation unless that was positive and the clinical group within the plan endorses the product. Once we get over to the contracting group, it's rebate discussion and in those cases we have obviously got to be competitive.

But when you look at United, for example, and you look at what United presented in their slides for 2017 formulary, they spent a lot of time talking about how they're going to manage the opioid category, how they are going to put the CDC guidelines in place and Xtampza was part of that overall strategy. So we think there's an important clinical component associated with that.

Okay. I think in prior quarters you've given us an idea of how many Xtampza ER scripts consisted of patients that were switching from IR to ER. I don't know if you can give us that update as well as Xtampza ER patients that are dysphasia patients.

So we don't have any focus on the dysphasia patients, although maybe when I tell you about the IR/ER data it will be something that will be indicative. Right now, when we look at our data through -- most recent data through September, for example, as I mentioned before about 25% of our prescriptions come from somebody who is on another ER opioid and 75% of our prescription come from somebody who is on an immediate-release opioid. That was exactly what we expected from our market research.

And if you really think about it, you think about a doctor who's going to try Xtampza ER for the first time, it's unlikely they are going to take somebody off another extended-release opioid when they may be doing well. But when it's time for somebody to take somebody from an IR opioid to long-term chronic treatment and move them to an ER opioid, Xtampza, for their first patient, could be a good place for them to try. And that's really where this has played out.

Okay, one last one from me. In terms of the IMS and Symphony RX data that we are tracking, I guess how accurate is it and what is missing from the numbers at this point?

It's really too early for us to tell. We track both IMS and Symphony and they are relatively close. Ones is a little bit higher one week; one is a little bit higher the next. The real question is how much are we missing from IMS and Symphony, especially since -- as we have an institutional business base.

We don't know the answer to that yet. Our intent is, as we get more experience with that data and our business grows in institutions and long-term care and specialty pharmacy, which may or may not report, once we start to better understand that trend we will give guidance on it.

Thanks for the detailed update.

David Steinberg, Jefferies.

Thanks very much. With regard to your launch, I know you launched in the summer, but it's only recently that the sales reps got their full marketing materials; you can start your KOLs dinners and you just got some managed care wins.

I know everyone wants instant results, but realistically what do you think is a proper timeframe in which to get a really good measure of the launch? Would it be Q1, Q2? Could you give us your thoughts on that?

Thanks, David, for the question. You're absolutely right; our promotional materials launched two weeks ago. Our dinners launched two weeks ago and we've got hundreds of them set up between now and the end of the year. And the managed care wins really started in October and don't really kick in November through January.

We've got lots of things planned and lots of additional things to talk about over the next three months and the following three months in terms of things that are in negotiation. So our expectation is that it wouldn't be until the first quarter as we really start ramping up in United and into the second quarter that you'd see a major acceleration of the growth of Xtampza.

Now, we would expect to continue to see growth through that period, but we think that we really start to optimize when we get into the end of the first, into the second quarter.

Thanks, Mike. Now that your reps have had a number of calls to the key prescribers, what is the principle pushback, if there is any? Then secondly, what are you seeing in the field as far as counter detailing efforts from Purdue, if there are any?

David, this is there Barry; I'll take that. As far as pushback, it's really sort of what I mentioned earlier in my prepared remarks. It's just physicians love the product; they really like the product attributes. What they sort of respond to is being a new product, being a C2, they have a lot of perceptions around access challenges, both access from as payer coverage and from a pharmacy fulfillment.

That's the biggest pushback we get. With some of the early rejections that we were getting at the pharmacy level or lack of stocking, it was making it harder for some of the patients to get it; a few physicians got discouraged early. But, again, with all the things we have going on now, with the growing pharmacy stocking, with the managed care wins that we talked about, we expect to see that diminish greatly over the coming weeks and months.

As far as counter detailing, we have seen very little, quite frankly, from Purdue or anyone else as far as counter detailing with Xtampza. I think they maybe focus on other products and priorities. So we have not seen a lot of counter detailing at all.

Okay, just my final question is more theoretical and long-term in nature, but there is a body of thought that once a number of products, ADFs like yourselves get out in the market and you can show the FDA that you can fully supply the market, that at some point the FDA might remove all the non-abuse deterrent products, which would create a massive market; for one reason, higher price points. What are your current thoughts on that?

It's a good question and it's a question that a lot of people are thinking and talking about. Last week there was a hearing at the FDA, a public hearing on abuse-deterrent opioids and the generic guidance. We participated and I attended and so there was discussion about what the appropriate time point for that.

The FDA clearly reiterated that its goal is to ultimately convert the whole market. The question is when and how. There is clear sensitivity about the need for lower-cost abuse-deterrent products and that's the need for the generic guidance.

So I think it is the collective belief of the brand companies that until there is a generic guidance that is finalized and a pathway for generic ADFs that the FDA would have a hard time removing all of the generic products from the market and not provide a pathway for approval.

Now, again that assumes two things: one that all the Orange Book patents for each of these products have been validated, and number two, that there is a pathway and people can actually meet the abuse-deterrent equivalents that's going to be required in the guidance. But again I think it is an important first step to have a guidance available so that it gives the opportunity for lower-cost ADF products over time.

Ken Trbovich, Janney.

Thanks. Barry, I was wondering if you could go back. I think when you were going through the managed care contracts I might've missed one. You mentioned Prime Therapeutics. Did you mention a fourth one after that?

I did kind of go through that pretty fast, Ken. Thanks. I didn't mention the specific name. We are inches close to finalizing an agreement with one of the biggest PBMs in the nation, so stay tuned. But it's not finalized yet so that's why we didn't give the name.

Okay. Then specifically when it comes to the comment, Mike, around the sNDA, you mentioned the possibility that you could hear back from the FDA as early as April. Is that simply a commentary on the application or is that the earliest date at which you would expect an actual action?

That's actually the date that the FDA mentioned to us in their letter of acceptance of our sNDA that our PDUFA date would be in April.

Okay. Then, if in fact you got the type of label or the label that you are hoping for with the comparative data, are there any plans that you would be able to reach out to in order to perhaps get a midyear inclusion on plans that you are not currently able or have not had success thus far in penetrating?

Yes, it's a really good question and if you think about what we have been able to accomplish so far this year, we came into the market in June. We have been able since June till here we are in the beginning of November to penetrate up to 60 million lives that we will have contracted in the beginning of next year.

In a lot of cases, those were situations where people were not reviewing the extended-release opioid class. We came in with our clinical package, we explained to them why this is an important add, and we were able to get them to take the product seriously.

We will continue to do that; that's our strategy. There are certain plans that we have been excluded and OxyContin is the oxycodone extended-release that is exclusive to that plan. We are working hard to convince those individuals, plans to reconsider Xtampza and we will continue to do that.

Obviously, if we can get this information on the label, it is an important discussion on the payer side, but is an even more important discussion on the provider side, on the physician side. Because obviously OxyContin has abuse-deterrent claims, but our sales reps at this point in time, because it's not in our label, can't go out and show comparative data head-to-head versus OxyContin. When we -- in market research when we look at that data, we know that physicians find that very interesting and so it is our goal to get that included and make that part of our promotional message.

With regard to including it in the promotional message, would there be a delay in the timing between the PDUFA date and your ability to rollout? Would we see several months delay as we did here at launch? Or is this something that now that you have heard initial feedback from the Agency, you feel as though you'd get faster feedback on the second round?

I'm not sure we would get faster feedback. I think what's encouraging to us is that it's important to recognize that the data in our current label in the category two material on the label in the pharmacokinetic section, Section 9.2, is data from the same study that OxyContin was included in. All of the arms of that study are included except OxyContin. They took that arm out until we could replicate the data.

We replicated the data and now we have submitted to add that arm back in to data that is already included in the label. And so, for us to add this to our promotional material, it's really adding it to [existing grass] and it is not something that we are going to have to spend a lot of time doing. We will be prepared ASAP after the April time frame to launch the message into the field.

Got it. But it doesn't require re-review by FDA then to add that once it's in the label?

No, no. So we have no requirement to submit our materials and get a preapproval for any materials. It would be purely a voluntary submission if we decide to do that.

Voluntary, yes. Okay, terrific. Thank you.

Serge Belanger, Needham & Company.

Thanks for taking a couple additional questions. Just on the pipeline, can you remind us again what the pivotal study is for the hydrocodone product and what is the timeline for potential filings for that product?

Serge, we haven't disclosed the full clinical development plan yet because there are some unknowns. Some of the unknowns are around what our ultimate bioequivalence profile is versus the reference product we decide to use, which, as you can imagine, is a strategic question and something that we are spending a lot of time thinking about. That's going to dictate the specific studies that we have to do and how many studies. So we will be prepared in first quarter of next year to come out and lay out the full clinical development plan for the product.

Okay. Then on ONSOLIS, the only thing that is required there is a tech transfer?

We have to do the tech transfer to a commercial manufacturer. We have to file a prior approval supplement for the tech transfer with the FDA and get an approval of that prior approval supplement, so that's all built into our timeline.

Got it, thank you.

There are no further questions. I'd like to turn the call back over to Mike Heffernan for any closing remarks.

I'd like to thank everyone for joining our third-quarter conference call. We will continue to keep you updated on our progress. Thank you and have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.