Collegium to Acquire BioDelivery Sciences Broadening Pain Portfolio

Collegium Pharmaceutical, Inc. and BioDelivery Sciences International, Inc. recently announced a definitive agreement pursuant to which Collegium will acquire BDSI for $5.60 per share in cash.

BDSI has a portfolio of pain and neurology products that address serious and debilitating conditions. BDSI’s commercial growth driver, BELBUCA, is a meaningfully differentiated schedule III opioid product and is highly complementary to Collegium’s portfolio of pain products. Additional products in the BDSI portfolio include Symproic, a contributor, and ELYXYB, a neurology product in its early launch phase.

“We are excited to announce this acquisition, which represents a major step forward in our mission to build a leading, diversified specialty pharmaceutical company committed to improving the lives of people suffering from serious medical conditions,” said Joe Ciaffoni, President and Chief Executive Officer of Collegium. “The BDSI portfolio expands and enhances Collegium’s differentiated pain offerings and establishes a foothold in neurology, a strategic market adjacency. Importantly, we expect this acquisition will be immediately and highly accretive by expanding our revenue scale and generating significant synergies.”

“We are pleased to announce the transaction with Collegium, which we view as a testament to the attractiveness of our portfolio and long-term value of our brands,” said Jeff Bailey, Chief Executive Officer of BDSI. “Our team has worked diligently to grow our differentiated products. We believe that this transaction will deliver benefits to patients and prescribers and create significant value for our shareholders.”

Transaction Rationale

• Strategically aligned with Collegium’s mission to build a leading, diversified specialty pharmaceutical company committed to improving the lives of people suffering from serious medical conditions
• Diversifies and expands Collegium’s revenues by adding BELBUCA as a second and highly complementary growth driver to Collegium’s highly differentiated pain portfolio, in addition to a contributor with Symproic, and a new product launch opportunity with ELYXYB
• Further strengthens Collegium’s financial position through increased revenue scale, immediate and significant earnings accretion, and accelerated cash flow generation, driven by identified annual run rate synergies of at least $75 million expected to be achieved within twelve months post-closing
• ELYXYB provides entry into the neurology market, a strategic market adjacency previously identified by Collegium

Additional Transaction Details

• Under the terms of the definitive agreement, Collegium will promptly commence a tender offer to acquire all the outstanding shares of BDSI at the price of $5.60 per share
• The offer price of $5.60 represents a 54% premium to BDSI closing share price of $3.64 as of Friday, February 11, 2022, and implies a fully diluted equity value of approximately $604 million using the treasury stock method

• The all-cash consideration will be funded by a combination of Collegium existing cash on hand and a $650 million secured financing from funds managed by Pharmakon Advisors, LP (“Pharmakon”), with a four-year term, which will bear an interest rate of Libor+750bps and will be amortized over four years
• As part of the transaction, Collegium will repay the existing Collegium term loan from Pharmakon and the existing BDSI term loan from Pharmakon
• Post-closing, we expect Collegium net leverage to be below 3.0x based on estimated fiscal year 2021 pro forma combined EBITDA including run rate synergies
• Collegium expects to achieve annual run rate synergies of at least $75 million, based off of BDSI estimated 2021 operating expenses, within twelve months post-closing
• Collegium expects this transaction to be highly accretive to earnings in 2022 and 2023

The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close late in the first quarter 2022, subject to customary closing conditions, including receipt of required regulatory approvals and the tender of a majority of outstanding shares of BDSI’s common stock. Following the successful closing of the tender offer, Collegium will acquire any shares of BDSI that are not tendered in the tender offer through a second-step merger at the same consideration as paid in the tender offer.

Jefferies LLC is acting as the exclusive financial advisor to Collegium. Moelis & Company LLC is acting as the exclusive financial advisor to BDSI. Troutman Pepper Hamilton Sanders LLP is serving as legal counsel to Collegium. Goodwin Procter LLP is serving as legal counsel to BDSI.

Collegium Pharmaceutical is building a leading, diversified specialty pharmaceutical company committed to improving the lives of people suffering from serious medical conditions. Collegium’s headquarters are located in Stoughton, Massachusetts. For more information, visit www.collegiumpharma.com.

BioDelivery Sciences International, Inc. is a commercial-stage specialty pharmaceutical company dedicated to patients living with chronic conditions. BDSI has built a portfolio of differentiated pain and neurology products and leverages its experienced sales and marketing organization to educate prescribers on their unique features. BDSI’s products address serious and debilitating conditions, including chronic pain, acute migraine and opioid-induced constipation.