HCW starts Collegium at buy

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H.C. Wainwright initiated coverage of Collegium Pharmaceuticals (NASDAQ:COLL) with a “buy” rating and $21 price target. The stock closed at $10.21 on Sept. 8.

Collegium is a leading player in the abuse-deterrent formulation (ADF) segment of the pain space, with lead drug, Xtampza ER, an oral, extended-release ADF of oxycodone, utilizing the company's proprietary DETERx technology platform. It was approved in April 2016.

Analyst Ed Arce writes that in a recent in vitro study accepted for peer-reviewed publication, drug release by Xtampza ER was more resistant to crushing than eight commonly prescribed ER opioids, including OxyContin. In addition, Xtampza ER is the only ER opioid without a black box warning on the risks of not swallowing the pill intact.

After some recent adjustments on the commercial front, prescriptions in the second quarter of 2017 grew 34% sequentially over the first quarter, with the number of new prescribers up 22%, and prescriptions per subscriber also higher.

“Despite the headwinds (flat to slightly lower overall opioid prescribing by targeted physicians) and challenges (unaided awareness of Xtampza ER remains relatively low), we believe the value proposition of Xtampza ER as the best-in-class ADF opioid is beginning to resonate with high-prescribing physicians (over 4,000 have written a script) and that further momentum will grow as Collegium increasingly becomes a major beneficiary of the widespread public effort to address the opioid crisis in the U.S.,” Mr. Arce said.

“Given its uniquely strong position within the pain space, and management's singular focus on operational execution, we project profitability in the second half of 2019,” he added.