Collegium Pharmaceutical (NASDAQ:COLL) Q1 2019 Earnings Call

0:00 Ladies and gentlemen, and welcome to the Collegium Pharmaceutical's first quarter 2019 earnings conference call. At this time, all participants are on a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. If anyone should require operator assistance during the call, please press start and the zero on your touch-tone telephone. As a reminder, this call may be recorded. I would now like to introduce yours for today's conference, Ms. Alex DeSalem. May we begin? Thank you. Welcome to the Collegium Pharmaceutical First Quarter 2019 Earnings Conference Call. This is Alex Basala, Head of Investor Relations for Collegium. I am joined today by Joe Schifoni, our Chief Executive Officer, Paul Branley, our Chief Financial Officer, and Scott Dreyer, our Chief Commercial Officer.

0:49 Before we begin today's call, we want to remind participants that none of the information presented today is intended to be promotional. and that any forward-looking statements made today are made pursuant to the safe harbor provision 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 risks that we may not be able to successfully commercialize Xtamsa ER and the Nusenta franchise and that we will incur significant expense and may not prevail in current or future patent infringement litigation or other litigation pertaining to our products and product candidates. These risks and other risks of the company are detailed in the company's periodic reports filed with the Securities and Exchange Commission.

1:37 Our future results may differ materially from our current expectations discussed today. Our earnings release and this call will include discussion of certain non-GAAP information. You can find our earnings release, including relevant non-GAAP reconciliations, on our corporate website at collegiumpharma.com. I will now turn the call over to Collegium CEO, Joe Schifoni. Thanks, Alex. Good afternoon, and thank you everyone for joining the call. We believe that 2019 will be a breakthrough year for Collegium Pharmaceutical. We are encouraged by our performance in the first quarter and confident that Collegium is well positioned to become the leader in responsible pain management. We remain laser focused on our key priorities for 2019, which are to leverage exclusive ER oxycodone payer wins to accelerate extensa ER, maximize the value of the Nuscenta franchise, strengthen operational execution, leverage, not add to our cost structure, and execute our midterm growth strategy.

2:41 Financial highlights for the first quarter include net revenue of $74.5 million, up 17% versus Q1 2018. Xtamsa ER revenue of $25.1 million, up 59% versus Q1 2018. Xtamsa ER total prescriptions were 105,309, up 71% versus the first quarter of 2018. Driven by 13 new exclusive ER oxycodone pair ones that took effect on January 1st, Xtamsa ER continues to be the fastest growing branded ER opioid. As was the case in 2018, we anticipate a faster rate of growth in the first half of the year, followed by sustained growth at a moderated rate in the second half of 2019. Nuscenta franchise revenue was $49.4 million, up 3% versus Q1 2018.

3:41 Nuscenta franchise prescriptions were down 10% versus Q4 2018. First quarter seasonality due to high deductible commercial plans is the primary driver of the decline. We expect to grow Nucenta ER prescriptions sequentially and to moderate the rate of IR decline over the remainder of 2019. Other accomplishments in the quarter include the appointment of Dr. Richard Malamut to the role of Chief Medical Officer and member of the Executive Team. Richard has extensive experience in pain and across all stages of drug development. He will play a key role in the execution of our midterm growth strategy. In the first quarter, a new patent covering Xtansa ER was added to the FDA Orange Book with an expiry date in 2036. With this addition, Xtansa ER now has 15 Orange Book listed patents, enhancing an already strong portfolio.

4:41 As it pertains to our midterm growth strategy, we're actively pursuing later stage development assets that we believe are innovative and differentiated. Our primary focus is on non-opioid pain programs that have the potential to generate revenue as early as 2022. Collegium's focus on the U.S. market, credibility with office-based pain specialists, and development in commercial capabilities are areas of strength and competitive differentiation. Collegium Pharmaceutical is committed to becoming the leader in responsible pain management. Today our portfolio consists of Xtamsa ER, Nucenta ER, and Nucenta IR, products that pain specialists view favorably and as differentiated.

5:29 Our portfolio compels us to step into the pain market at a time when others have opted to step out. We continue to invest in personnel, systems, and processes to enable us to achieve our mission. We recognize the importance of earning the trust of key stakeholders every day. were encouraged by our performance in the first quarter and focused on accelerating extantia ER and maximizing the value of the Nucenta franchise for the remainder of 2019. At the same time, we will continue to work hard to position Collegium to usher in a next generation of non-opioid pain solutions in the U.S. market. On a final note, I would like to take a moment to thank and recognize my colleagues at Collegium for all that they do to make a positive difference in the lives of people suffering from pain in our communities. I'm confident that we have the team in place that will enable Collegium to become the leader in responsible pain management.

6:28 I will now hand the call over to Paul. Thanks, Joe. Good afternoon, everyone. As Joe stated, total product revenue for the first quarter of 2019 was $74.5 million. We've since been contributing $49.4 million. Net product revenue for Expansive ER was $25.1 million, which is a 59% increase from Q1 2018 and a 36% increase from Q4 2018. Expansive revenue growth was driven by improvement in gross to net discount, prescription growth, and price. Compared to the average in 2018, the gross to net discount decreased by 3.5%.

7:15 in the first quarter. We believe that the gross net discount for Expanse will average in the low 60s for the year. The decrease in recent net product revenue from the fourth quarter was driven by a $1.8 million decrease in stocking as well as lower prescription volume. The decrease was partially offset by a price increase in January. For the first quarter of 2019, Our net loss is $9.7 million compared to a net loss of $18.7 million for the prior year quarter. The first quarter of 2019 includes an increase of $1.5 million for stock-based compensation and a $1.4 million increase in professional fees, primarily due to litigation.

8:05 Our non-GAAP adjusted loss for the first quarter of 2019 was $1.7 million, compared to $11.6 million for the first quarter of 2018 and $3.4 million for the fourth quarter of 2018. As of March 31, 2019, our cash balance was $134.9 million, which is an $11.7 million decrease from our year-end balance. The first quarter included a number of items that won't occur on a quarterly basis, including the semi-annual payment of new center royalties to Grimthal of $15.1 million, payment of annual bonuses and related taxes of $4.6 million, as well as capex related to the build-out of additional manufacturing capacity of $3.3 million.

9:00 Cash was also negatively impacted by approximately $8 million by expending payment terms for a major wholesaler. This change negatively impacted cash flows in the first quarter but will reduce distribution fees that are a component of gross limit discounts on an ongoing basis. It's early in the year, but we are encouraged with our progress today. I will now turn the call over to Scott for a commercial update. Thanks, Paul. In the first quarter, fueled by 13 new exclusive ER oxycodone payer wins and improved operational execution, we accelerated performance for Xtamsa ER. Xtamsa ER total prescriptions for the first quarter were 105,309, which is 16% growth over the fourth quarter of 2018, and 71% growth over the first quarter of 2018.

10:03 This performance represents a significant milestone as Xtamsa ER reached over 100,000 total prescriptions in a quarter for the first time since launch. There were over 12,000 unique writers in the first quarter, an increase of 2,000 from the fourth quarter of 2018. We saw strong share acceleration for Xtamsa ER across the new exclusive oxycodone ER formulary wins that went into effect on January 1st. Xtamsta ER has already achieved branded ER market leadership within eight of the 13 new wins and continues to see significant share progression across all exclusive positions. The Nuscenta franchise delivered 135,921 total prescriptions in the first quarter, down 10% from the fourth quarter of 2018.

10:54 The primary driver of this decline is first quarter seasonality due to copay resets and high deductible commercial plans. We're focused on growing NuCinta ER through the remainder of 2019 and moderating the rate of decline for NuCinta IR. For Xtamsa ER, we are excited to announce the following new exclusive ER oxycodone formulary wins. Effective June 1st, the Ohio Bureau of Workers' Comp has made Xtamsa ER the only extended release oxycodone on formulary and removed OxyContin. And a significant regional payer representing 400,000 lives in the Mountain West region will make Xtamsa ER the exclusive ER oxycodone effective July 1st. In addition to the progress we made accelerating performance for Xtamsa in the first quarter, we are encouraged that our portfolio is viewed favorably and is highly differentiated by pain specialists. In recent quantitative market research, our sales force is rated number one by HCPs for knowledge, credibility, and overall favorability. The Collegium team is committed to ensuring that 2019 is a breakthrough year as we work toward our mission of being a leader in responsible pain management.

12:08 I will now turn it back to Joe. Thanks, Scott. I will now open it up for questions. Thanks for the question and congratulations on the strong results. Quickly doing some back of the, well, just doing some quick math. The $25.1 million number for Xtamsa during the quarter and looking at the 108,000 scripts, it seems like a price per script is stepping up pretty significantly quarter over quarter, whereas I thought GTN tends to be weaker in Q1 versus Q4.

13:03 Can you just maybe talk about Inventory levels or, you know, am I, is my math off? Yes, Tim, it's a great question. So inventory levels were actually decreased slightly during the quarter for all the products, but for expense it decreased roughly by a day. So it had a negative impact stocking of about 300,000 or so. So if you think about our Q1 results for Expanza, you can break down the increase in revenue to sort of three buckets. First of all, the most impactful was prescription growth of 16% during the quarter. And if you did the math on that, it's roughly about $3 million of the increase from Q4. And then the second biggest impact on revenue was the improvement in gross to net. Our gross to net happens to be our worst quarter was Q4 for gross to net discount, and it was higher than any other quarter last year.

14:10 So the decrease in gross to net had the second biggest impact, and then we took a price increase of 9.9% on January 1st, and that had the third biggest impact on the increase in revenue. Okay, great. And you mentioned some commentary on gross to net improving throughout the remainder of the year as well. Is that something we should flow through for Q2 to Q4? No, our assumptions for growth to net remain the same, that we expect it to be in the low 60s for the year. So quarter to quarter, there may be some lumpiness, but for the year, same as 2018, we expect it to remain in the low 60s for extensa.

15:00 Okay, great. And how about inventory levels throughout the year? Do you expect them to remain relatively stable or kind of fluctuating a day or year? Yes, so there can be fluctuation, but EXPANSA, we're trying to manage it close to this level, which is what we said on the year-end call. So some fluctuation there in Q1. But USENTA, we'll also try to manage, but what we've seen with USENTA is at year-end, wholesalers do really push to stock the product, and so it goes up, days on hand go up in Q4. and then down in Q1. That's what we saw in the results this quarter. Okay, great. And one last question on the spending side.

15:47 Can you talk about kind of the SG&A trend through the remainder of the year? Yeah, sure. So for the first quarter, the largest increase, as I said, was operating expenses with stock-based compensation, which is obviously not cash expenses. The second largest driver was professional fees driven by litigation. So litigation is inherently lumpy and it's hard to predict quarter to quarter with the amount of activity. So we do expect Q1 will be on the high end of any quarter this year. And as we saw last year, we do think there's lumpiness, but Q1 should be on the high end of that.

16:33 All right. Well, thanks for all the clarity, and congratulations on the quarter. Great. Thanks a lot. Our next question comes from David Amsellem with Piper Jaffrey. Your line is now open. Thanks. So just a few. So on the new center franchise, I guess, what's your level of confidence that the culprit truly is seasonality and not just – Thank you for joining us. Share. Is it coming primarily at the expense of Oxy, or are you taking Share from, say, products like Oxymorphone? Help us understand where it's coming from and what you think you're doing to gain traction with these plans where you already have exclusivity.

17:43 Thanks. Sure. So, David, this is Joe. I'll start off on the payer question and then perhaps hand Nusenta over to Scott. First off, when we're looking from a payer perspective, early in the year when these new wins hit and the disruption of patients being shifted off of OxyContin, we obviously index a bit higher on that ER-to-ER switch, which is not typical in the marketplace when it's at steady state. Once we get through the conversion phase, then where Stamps really drives the bulk of its growth is from IR-to-ER conversion. and if you think about it, roughly about 80% of the prescriptions of Xtansa ER are driven from IR oxycodone.

18:31 From a positioning perspective with Xtansa, our focus is squarely on replacing OxyContin in terms of where physicians use extended release oxycodone. That being said, we will source proportionally in terms of the shares of other products in the market from an IR perspective. And also, although there's not a lot of ER to ER switching at steady state, it's about 15%, we will source from some other products besides OxyContin, but it skews to IR Oxycodone and extended release ER Oxycodone when there's a switch. And Scott can talk about Lucinta. Thanks for the question, David. If we look back over the last three or four years, you see this seasonality dynamic with the new Sinta franchise.

19:18 To give a little more color, it specifically is to the fact that the number of commercial patients that are in a plan that is a high deductible plan has risen to over 50% in 2019. So the co-pay recess happened, it puts pressure on the brands. We are absolutely confident that we can grow Nuscenta ER from here and slow the rate of decline of Nucenta IR through the rest of the year. And some reasons for that are pretty straightforward. Number one, we have a strong prescriber base. There's 9,000 prescribers in the quarter for Nucenta ER and 16,000 for Nucenta IR. And in market research, the products are viewed favorably, highly differentiated, with over 50% future intent to prescribe. So those are the drivers of our belief that we can meet our goals.

20:08 Okay, that's helpful. And if I may just sneak in a follow-up on XTAMSA and the exclusivity plans. Can you specify what regions or what states where you still have much work to do in terms of gaining exclusivity in terms of these state and regional plans? Yeah, David, this is Joe. When you think about it, the way I would focus you on that is the significant runway that we have both in commercial and Medicare Part D with Xtensa. So right now we've increased the percent of lives that are in exclusive position in commercial to 20% of those lives in Medicare Part D were at 38%. So as we're now entering into the contracting season, as we're in a lot of discussions with payers, we'll assess where and when We go after exclusively our oxycodone positions and also we have opportunity to strengthen our access positions where we have broad availability.

21:11 And that's what the teams are working through now. Obviously, as you can imagine, with the track record of success we now have across 26 different plans of being able to move the market share to its stamps, they're not being physician or patient pushback to that, and they're being high satisfaction around the brand. We feel very strong. We have a great story to tell. as we're interacting with payers. All right. Thank you. Thank you. Our next question comes from Greg Gilbert with SunTrust. Your line is now open. Good afternoon. I have a few. My first one is about your ability to gain share where you're on formulary but not in an exclusive position.

21:58 How has that tended to go? And does that then enable you to flip to exclusive on different terms? Okay, so Greg, one of the things that we're really focused on this year that is an opportunity for improvement coming out of 2018 is moving market share where we have broad availability. At the beginning of the year, you know the saying, all ships rise with a high tide. When we have the conversion taking place within the 13 plans that we added effective January 1st, we see an increase and many more. that were able to be more effective in 2019.

22:57 And from a big picture perspective, the success that we've had with these exclusive ER oxycodone ones are credibility building as we're engaging with payers, whether we're talking about exclusive ER oxycodone positions or strengthening positions where we have broad availability. Great. Paul, I have a question about the The extension and payment terms for the wholesaler that was called out. Can you give us some context around that? Is it a one-off? Is it a trend? Yeah, so it's a one-off. To pay a lower fee, we agreed to give them extra days to pay. So it's on a go-forward basis, but if you think about cash flow, the impact is only in the first quarter when you implement that.

23:49 because instead of getting three months of payments, we effectively got two months of payments from that wholesaler. But going forward, it will equalize. So that has an ongoing impact to gross net. Okay. And is this something you're planning to do with others or have already done? So I wouldn't want to get into details on that for competitive reasons. Okay, and one last one. Joe, can you provide some context around the addition of a chief medical officer and what that means for the current portfolio versus what does it mean for BD and future products? Thanks. Yeah, Greg, I appreciate the question. I'll start with our mission. As we aspire to be the leader in responsible pain management, adding a chief medical officer to the organization is really a statement of our aspiration to lead with the science. And that starts with the in-line portfolio of products we have and ensuring we're publishing data that will better inform the community on how it is to utilize our products or even just the general treatment of pain.

25:00 The second thing that really made Richard a key hire for the organization is our mid-term growth strategy. As I said in my comments, we are actively pursuing development stage programs, and Richard has an extensive track record across all phases of development and importantly in building out successful development phase pipelines in pain. So it's really a key addition to the organization both in line for what it is we're aspiring to do in terms of our midterm strategy and really bolstering our ability to lead with the science. Our next question comes from David Steinberg with Jefferies.

25:47 Your line's now open. Thanks. First on Medicare plans, I know that you had thought that in the second half of last year they would start kicking in and it didn't quite materialize. What are your thoughts on Part D plans participating this year and if so, is it more of a second half item versus first half? And then Looking at longer term, putting on our strategic hat, at some point, investors are going to want to know what's next. You clearly have a mature product with Nusenta, and Xtams is still in its early growth phase, but to get a higher multiple longer term, you're going to need some other assets.

26:32 Are you looking to develop any products internally? Are you looking more... for on-market assets or in licensing later stage assets. Thanks. Thank you, David. I'll let Scott start with Medicare, and then I'll come back and answer the strategic question. Yeah, thanks, David. So when you look at the acceleration that we've achieved in the first quarter, market share acceleration within the Part Ds has been a significant contributor to that growth. We're seeing share growth across all Part Ds where we have exclusivity. Some have already achieved branded ER leadership and we expect that to continue through the remainder of the year. And David, this is Joe. With regards to our strategy going forward, and our midterm growth strategy. We're viewing the world through two windows.

27:22 The first one is midterm, and that's the one we prioritize the highest. In that window, we're looking for late-stage development programs, things post-Phase II. In that window, we're looking at novel mechanisms of action, non-opioid pain solutions, and programs that would have the potential to be generating revenue as early as 2022. In the short-term window, we have a very high bar because of the runway we have in front of us with Xtamsa ER in particular and our belief that that's a product that will become the number one prescribed branded ER opioid. So in that window, the high bars are anchored to innovation and differentiation. We're also looking for value. We don't feel compelled, nor would we overpay.

28:11 for an asset. And then the final thing is anything we would do in that short-term window would need to be able to be accretive either the year we did it or the following year. Okay, just two follow-ups. First is I know you gave guidance for the first time in the company's history earlier this year. Is there any way to break up your revenue guidance? You only have two products to break those up for us and for Nusenta and then Xtamsa. And then also, you know, there's some train of thought among some of the pain experts that at some point the FDA will remove all the non-ADF opioids from the market as the ADFs are, you know, a bit safer.

28:58 Any thought on when you think it's going to happen or if it's going to happen in the future? Okay, so David, Paul will take the guidance question and then I'll comment on The Pain Expert Perspective. Yeah, and David, sorry, for the guidance question, you're asking for a breakout of new sent-up products or exams? I'm sorry, I couldn't quite hear. I guess, you know, you gave total revenue guidance, but can you give guidance by specific product? Yeah, so we have given guidance by exams and the new sent-up products. Okay. As a reminder of what we gave on our year-end call, guidance for Expanza was $95 to $105 million, and for the new sense of franchise, it was $200 to $210.

29:51 Okay, and you still stand by those two sets of numbers? Yes, so when we gave guidance on year-end call, we said that we wouldn't update it or reaffirm it on a quarterly basis. Okay. And then, David, in terms of the question around feedback from pain experts and that speculation, we're not in a position, and I wouldn't speculate on whether or not non-ADF products will be removed from the marketplace. What I would comment on is one of the things that we feel Collegium is very well positioned in this space is because of our portfolio, and the eyes of pain specialists, they view it very favorable and they view it as highly differentiated.

30:40 So we think that this marketplace continues to try to find the balance of effectively treating patients who are suffering from pain while also taking a step forward potentially with regards to the opioid epidemic. We feel the Collegium portfolio is very well positioned, and we're obviously going to strive to add to the product portfolio for what we're trying to do in our midterm growth strategy. Fair enough. Thank you. Thanks, Dave. Our next question comes from Serge Belanger with Nino. Your line is now open. Hey, thanks, guys. This is Tian for Serge. I just had a question. You guys mentioned the Ohio Bureau as far as, you know, they're taking Xtensa over Acticon as of June 1st.

31:31 I'm assuming that this is the workman compensation population. So how meaningful is this market to you as far as impact on, you know, your Xtensa sales and do you expect any other states to kind of follow in this footsteps? Thanks. Thanks for the question, Cam. So yes, that is the Ohio Bureau of Workers' Comp in the state of Ohio. It's an important plan in the state of Ohio and is the number one provider of workers' comp insurance in that state. So it's a nice regional win for us. And I can't comment on what other states will do to follow or other workmen's comp plan. I don't have any insight there. But we're happy to have the opportunity with Ohio Bureau. Got it. Thank you.

32:17 Again, if you have a question, please press star and then one. Our next question comes from Esther Hong with GAMI. Your line is now open. Hi, thanks. So can you provide an update, if any, on patent litigation over extensa with Purdue? It looks like there's both parallel PTAB and district court proceedings that are ongoing. And then as a follow-up, can you provide any details on your newly issued patent and how it further protects exam set. Thanks. Yeah, so Esther, this is Joe. With regards to litigation with Purdue, we have no material updates to provide at this point in time. I would just refer you to the 10Q on that.

33:04 And as it pertains to your second question, the patent, With regards to that patent, it's a manufacturing patent. It was added to the Orange Book in the first quarter, and it goes out to 2036. Thank you. Our next question comes from Kevin Kedra with G-Research. Your line is now open. Hi. Thanks for taking the questions. First, I wanted to ask about... As you're in these discussions with payers, obviously prices is the big issue, but is there any place in the discussion for your role as a responsible player in the industry, given that the competitor that you're looking to displace has been quite significantly, for lack of a better phrase, tarred and feathered across the media lately, given all the lawsuits against them? Does that have any role in the discussions with payers?

34:06 Yeah, Kevin, this is Joe. I appreciate the question. When we talk with payers, what we're excited to talk to them about and what really matters to them most is, one, their belief in Xtensa ER, the deterX technology. And although price and that aspect of it is important, we really want to make sure that when payers make that decision, they have a belief in the science around Xtensa and in the differentiated label. I think the second thing as we aspire to be a leader in responsible pain management as collegium, that's something that resonates because the payers like us are trying to make a difference both for people suffering from pain and also as it pertains to the opioid epidemic.

34:53 So that's certainly something we want to make sure that they understand about Collegium. And then the third thing that is really a key part of that discussion is really being able to talk to them about the success that we've had now with 26 exclusive ER oxycodone opportunities. So our focus is on Collegium. are science and what it is that we're trying to do. Great, that's helpful. And then also on the litigation side, I mean, you guys have, you're kind of on the periphery here, but you've still been drawn a little bit into some of this multi-district litigation. I know that really isn't going to kick into gear until October, but we're going to start seeing the first cases really showing up in May in Oklahoma. Can you just kind of refresh us as kind of where you see yourselves positioned in that situation?

35:43 How you see your liability relative to kind of the rest of the industry that's been here in this area for decades? You guys have only been here for a couple years under very strict FDA regulations. And is there any potential impact as far as litigation expenses as we start seeing some of these MDL trials pick up? Yeah, Kevin, this is Joe. I'll take that one, and I appreciate the question. So as of today, and this is new information and I'll kind of go around the litigation that you referenced first. Number one, we were not a part of the litigation in Oklahoma. We have been dismissed from litigation in Arkansas.

36:29 And as of today, as it pertains to the MDL in Ohio, we've been dismissed from eight out of nine of those cases and we're not a part of any of the bellwether cases. By the nature of the space that we're in, it's something that we have to deal with and as Paul talked earlier, we certainly engage and have some costs associated with what's going on in the industry. But that's where our focus and what we're trying to do as an organization and positioning Collegium as the leader in responsible pain management being our mission and continuing to make investments and all of the different things that will ensure that we're worthy of what it is we're striving to achieve in the marketplace.

37:27 Last one on business development. You mentioned kind of in the midterm look that you're looking at new mechanisms in the space outside of opioids. Are you also looking at maybe other technologies, either on the device side or sort of nontraditional pharmaceutical technologies or substances that could be used in pain? Yeah. So, Kevin, this is Joe. As part of our strategic review and the midterm strategy we're executing against, we're trying to leverage the organizational capabilities and strengths of that we believe make us differentiated from other companies. So for us, we'll be focused to pharmaceutical products that are relevant to the office-based pain specialists where we're able to leverage that expertise from a commercial perspective along with the development capability we have if we're able to bring in a later stage development program.

38:30 And our next question comes from Brandon Phelps with Cantor Fitzgerald. Your line is now open. Hi, thanks for taking my questions, and congratulations on the really good quarter. Just drilling down a bit more into net price, I know we've talked about gross to net on the call, but given that one cue, you know, there's normally a bolus of forced switches, which I would assume are, you know, there's a bias towards patients on the highest strength. How should we think about growth and many more. Thank you. and the prescription base that we already have, which in a lot of ways is a good thing because then we don't see the sort of reversal of that that we did last year where those higher doses then later in the year as we continue to grow that the average prescription strength just started to decrease in the second and third quarter.

39:50 So this year we stayed flat, relatively flat, So that's encouraging for me from a growth to net and net revenue perspective. It makes it more predictable. Okay. Thank you very much. And maybe just one more from me. I know you had talked in the past that there was a potential to benefit in 1Q 2019 from the 2018 Part D exceptions, I think, in the Humana and Optum. Could you help us just characterize the benefit that you saw in this quarter from the 2018 Part D exceptions and maybe just help us also think about the magnitude of exceptions granted in 1Q19? Thank you.

40:36 Yeah, thanks for that, Brandon. This is Scott. So what we saw was in the acceleration in the first quarter, a contributor to that acceleration was absolutely the Part D plans. And those we referenced that you just mentioned, we saw share acceleration across all of those and expect to see continued growth through the rest of the year in all the big Part Ds. Okay. Thank you very much. Thanks, Brandon. At this time, I'm showing no further questions. I'd like to turn the call back over to Joe Schiavone for any closing remarks. Thanks, Skylar. Once again, thank you for joining us this afternoon. We are encouraged by our performance in the first quarter and committed to making 2019 a breakthrough year.

41:23 We believe that Collegium Pharmaceutical is well positioned to become the leader in responsible pain management. We look forward to updating you on our progress. Have a great evening. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.