Collegium Pharmaceutical, Inc. (NASDAQ: COLL) has updated its projections for 2022 following the acquisition of BioDelivery Sciences International Inc. last month. For the acquisition, Collegium paid $5.60 for every share of BioDelivery Sciences. This transaction was originally announced in February.
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The revised projections seem to have lifted investors’ sentiments, evident from a 4.4% increase in the share price that closed at $20.08 on Tuesday.
The $670-million specialty pharmaceutical company has expertise in making pain-management medicines. The company is headquartered in Stoughton, MA.
Inside the Headlines
It is worth mentioning here that the addition of BioDelivery Sciences to Collegium’s portfolio is expected to diversify the latter’s product portfolio, boost its revenues and earnings, improve cash flows, and generate annual run-rate synergies of at least $75 million.
Collegium’s CFO, Colleen Tupper, said, “We anticipate significant product revenue growth in 2022, driven by Xtampza ER and the addition of the BDSI product portfolio.” He added that the synergies expected from the buyout are likely to be over the initial target.
In figures, Collegium now anticipates product revenues to be within the $450-$465 million range in 2022. This projection suggests a 65% increase (at the midpoint) in product revenues from the year-ago figure of $276.9 million.
Also, the company expects total operating expenses (excluding stock-based compensation expenses) to range from $130 million to $140 million in the year. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) are predicted within the $235-$250 million range, up from $118.3 million in 2021.
In February, Collegium had projected total revenues in the range of $315-$330 million. This guidance excluded the impact of the BioDelivery Sciences buyout.
Stock Rating
On March 5, Needham analyst Serge Belanger reiterated a Buy rating on Collegium with a price target of $36 (79.28% upside potential).
Another analyst, Tim Lugo of William Blair, maintained a Buy rating on this pain-killer specialist. Lugo is optimistic about Collegium’s growth prospects backed by a strong base business and “an impressive financial profile.”
He considers Collegium’s buyout of BioDelivery Sciences “a highly strategic move, doubling the number of commercial assets in the portfolio while offering the opportunity for significant synergies, and providing a foothold for future expansion into neurology with Elyxyb.”
On TipRanks, Collegium has a Moderate Buy consensus rating based on six Buys and one Sell. The sentiments for the stock, both Bloggers and News, are Bullish.
Further, Collegium’s average price target of $28 suggests 39.44% upside potential from current levels. Over the past six months, shares of Collegium have declined 14.9%.
Hedge Fund Activity
The Hedge Fund Trading Activity tool on TipRanks shows that confidence is Very Positive for Collegium, as the Hedge Fund holdings in COLL have increased by 167.6 thousand shares in the last quarter.
Conclusion
“Near-term, we are laser-focused on seamless integration of BDSI, maximizing the potential of the portfolio, renegotiation of Xtampza ER contracts to ensure <65% gross-to-nets by January 2023, and allocating capital to create long term shareholder value,” said, Joe Ciaffoni, the President and CEO of Collegium.
With such potential in the near term, investors interested in gaining exposure to pharmaceuticals companies may find Collegium a good stock to bet on.
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