Collegium Pharma Also Gets A "Pass"
Oct 9, 2024
Collegium Pharmaceutical (COLL) develops and markets medicines for pain management, focused largely on extended release formulations of addictive opioid-based drugs. Currently, the firm sells 3 drugs, each contributing about 30% of revenue. Xtampza ER is an extended release version of oxycodone. Nucynta ER is a similar formulation of tapentadol, another powerful opioid. Belbuca is a form of buprenorphine, a synthetic opioid that can also be highly addictive. I have a few concerns with investing in this one. First, after the recent purchase of Ironshore to add ADHD drug Journay ER, Collegium will have a substantial amount of debt and only about a 2x interest coverage ratio (that's risky). Second, there is board room drama, with former CEO Joe Ciaffoni forced out in May by founder Michael Heffernan. And finally, about 1/3rd of current sales are at risk in the next few years as Nucynta goes off-patent. Just too many issues with this one. I'm passing on adding it to the Watch List.
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