SUPN - Earnings call transcript Q1 2019 | Supernus Pharmaceuticals, Inc.

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Operator

Good morning ladies and gentlemen and welcome to the Supernus Pharmaceuticals First Quarter 2019 Financial Results conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would like to turn the conference over to Peter Vozzo of Westwood Partners, Investor Relations for Supernus Pharmaceuticals.

begin. may You

Peter Vozzo

market, Good us Michelle. financial and you of thank conference release a Thank these announcing for morning Supernus joining results. the close the today Yesterday XXXX company Pharmaceuticals for issued call. press you, after everyone the first results quarter

at Officer, the the Patrick. call is Today’s with Executive being are Investor Chief of and ir.supernus.com. made Supernus’ today the Khattar; website Financial via Relations call company’s section On Chief available me Jack Officer, Greg

by remarks call will to questions. the Following management, open we

and words During certain current the anticipate, may, performance. future the may trends noted forward-looking identified meaning. course other of statements uncertainties, intend, on as should, Supernus’ differ those results may this believes, such and future guarantees of on perspective these call, events such risks expect, forward-looking projected management make the materially performance information plan, our These company’s reflect from XX-K. be are and the will, Actual statements annual in including of statements Risk not existing forward-looking forward-looking and words regarding can and section XXXX and involve by in similar future statements. those Form Any of report Factors

securities reference will SEC. except to then, update the turn Please statements laws. Since the of recent these releases the the to may benefit am applicable to call XXXX Supernus required company over now discussed. topics X, obligation with those and have For most I by Jack. the the as the recorded May current any press and company’s time. call be declines may filings replay, forward-looking additional listening who is to this on held X:XX relating announcements being at Eastern made approximately

Jack Khattar

as Good morning XXXX discuss our us quarter we everyone taking Thank join you, results. and time first for to the thanks Peter.

of XXXX, in quarter impacted plan of third, tax second, quarter this in which year beginning several by quarter million; Our to in the in the assistance to last all of the build-up our inventory typically for factors financial shipments this once: finally, the first, first that by the converging adversely effective higher results pressure year put increase year through net were $XX fourth first resulting co-pay at approximately compared year. prescription deductions growth; the that much gross rate insurance program; same dynamics on period and impacted the

XR in the of a fact, from rate, in seen year. tax events the expected continue already prescription we effective not to shipments quarter Aside normalization these in of second XR subsequent and have Oxtellar for Trokendi this and are trends quarters;

For example, sequential quarterly resumed prescription in on the quarter products. growth has second both

high quarter, XQ and During the IMS insurance on seasonal down X.X% primarily Oxtellar by compared due to XXXX, XR to X.X% prescriptions the the Trokendi fourth XR and in quarter first were dynamics. respectively deductible

respectively resumed the quarter. and increase of compared has the growth IMS of for prescriptions respectively XX% on first period and Oxtellar to in quarter, the the XX% at the in period growth first ending XR same first four-week data, X.X% to XR year. Trokendi weekly also XX, period last sequential in the second four-week week However, April based and reaching Year-to-prescriptions X.X% compared shows

partial also the in seizures. recently company indication XR Oxtellar the monotherapy of launched the quarter, approved For first for

the on behind the Our softened XQ adverse team continues on on by the believe impact to was and increased seasonal Oxtellar execute XR activity that commercial the growth launch well we prescription launch.

our clinical XX. our a excited on we to programs of provide April discussion day during now investor development detailed were pipeline, Moving to our

detail, Without You let much our overview presentation milestones a can of programs. three which of details you upcoming includes website, programs provide timelines. clinical too main going the find on me our quick that clinical and our into and

III Phase we year, this the for four children and studies our clinical lead During the of SPN-XXX. product with quarter novel first the candidate, in completed ADHD adolescents of last

as very good are a safety well all point these trials. profile from efficacy, across results differentiated to a excited product of trials program top fast line about and onset this action, We with consistent

on the second pending SPN-XXX launch second file in half the to product half XXXX. and, the are of We NDA for of track in the approval, XXXX FDA

In plan addition, patients III the to we second XXXX. of Phase adult in a start program in half

this of For patients half the this second and SPN-XXX, the in expect report continue, enrolment results our aggression trials novel pediatric of in impulsive year. on with ADHD, program to treatment we in

previously, the drug, an XXXX the and As we in for of approval the half second expect of to XXXX. submit we the stated by FDA, pending second launch to NDA SPN-XXX half in

Finally in pipeline the for milestones is calendar a commence the year. of this treatment to upcoming bipolar company the regarding the second program stage products. clinical disorder, has expected rich regulatory summary, III late SPN-XXX behind of of In and three half Phase

Our represent financial a activity provide and as I’ll the call with portfolio. now our to who current on the Greg, performance. corporate assets for psychiatry that development fit will strategic details on quarter in over first side we neurology continues our XXXX more turn look

Greg Patrick

good Jack, everyone. morning and Thanks

review XXXX. compared to first in the remind was the XXXX quarter to for revenue release I issued $XX.X listeners million of our first first Total million the of to refer results quarter closed. quarter As press $XX.X quarter the financial I market after in first results, yesterday’s XXXX

and discussed channel of levels increased quarter wholesaler, As our inventory in the the in prevailing sales XXXX net to pharmacy in compared quarter call the distributor, XXXX increased approximately in our what by February, third between the fourth of levels. quarter inventory during product of This in the otherwise; as effectively quarters inventory Inventory reversed fourth was been they to process million XXXX. state first XXXX. that versus of quarter we now has fourth returned had what constant would and is, our steady the $XX third remained believe have

reduction impact product net first quarter, channel have quarter. well prior quarter As to a sales $XX of net the exceeded the first XXXX in the reported in to would decreased as as million this sales net of adverse product prior Eliminating both reduction, of quarter inventory the year of $XX result the by sales compared in first product channel inventory million the approximately approximately XXXX. the as the

enhanced In the addition prior the by was assistance quarter product to healthcare of the quarter reduction, growing product of and the million, of sales high above XXXX XXXX. response as affected we This for plans, and first the quarter the deductible $XX.X we were Net done program in year. were net plans. to the to increased XXXX; impact In compared deductible to the inventory of our by patient co-pay XXXX $X these of channel level year, quarter of in adversely first XR also our XXXX. Trokendi the first first in approximately from over $XX.X gross program million as million high the consequently, increased impact of patient net deductions improved for utilization however, during down have years level of the sales

the sales Oxtellar to first million, product product royalty revenue of compared and comprised first of for of of $X.X as sales X% of of XXXX. million million and first For $XX.X revenue a first quarter of quarter to million in product $X.X XXXX. XXXX increase $XX.X $XX.X compared net the royalty Total of quarter net sales XR, net revenue were the in as of XXXX million, the was quarter

quarter is as Turning development XXXX expenses validation of four $XX.X quarter launch the same expense in the million driven inventory attributable and and were decrease XR. the $XX the $XX.X This now marketing as production previously. compared general NDA the trials of by in Operating the first the associated in million to compared quarter III Selling, down of Phase in lots by of to filing. year. the of partially were the support in million million SPN-XXX, year. by promotional to to earnings to expenses, upcoming offset research million administrative last in impacted for This for XXXX increase and clinical the programs approximately and indication primarily for adversely $XX prior the manufacture development Oxtellar with primarily $XX.X of of SG&A $XX.X expenses was million mentioned same and SPN-XXX quarter XXXX draw were first materials registration completion our monotherapy

in been $X.XX the million $X.XX earnings same in and $XX.X year. in compared $XX.X quarter million operating the higher Net share Excluding XXXX. this XXXX first share quarter first or in effect, per million $X.X the period earnings as would exceeded approximately have would or last the in were period recognized million therefore have diluted $XX.X same per the of to diluted

XXXX rate of approximately and and cash We rate, the was rate options reduction, the ongoing December stock securities, impact XX%. the in The inventory $XXX.X were with ended million first our adversely quarter the $XX cash, in relative to effective $XXX.X addition million first marketable tax XXXX long a by quarter term benefited in channel XXXX, first to lower of from exercising XX, tax tax securities effective marketable expected XXXX. of higher employees million to compared as the of as affected the net materially of XX% rate. than quarter equivalents, In earnings

XX% $XXX XXXX, its Net income income million ranging expenses Operator product from net million million for point and rate $XXX this to the on and sales million channel $XXX million $XX development assumes $XXX Guidance XX% guidance financial Turning for sales ranging to well. back operating forward tax to operating company $XX from product now remains the will questions. to unchanged for as I is guidance guidance guidance turn research stable. levels guidance and XXXX. from are that maintaining ranging to inventory for and million to from the

Operator

of & comes first line from [Operator Ken instructions] Cowen question Our Cacciatore the with Company.

open, is please go line Your ahead.

Ken Cacciatore

guys. Hey, good morning

this this a yourself complexities in you’re and development. Then wanted them? arguments of ask any of comorbidities, in lot so that squeeze in a differentiated still about talk an from sense what aggressive investors general, sense too on you terms to on infrastructure lot lot. or I’m the about these patients general position to Thanks with in marketplace product of you update you CGRPs. to many of lastly lastly put in the of shifts in? have, a have in like know environment, here clearly changes marketplace and speaking assets. pricing on to in general maybe fit but you’re may the that XXX, seeing be Any Can hand going I cash and - just how about and a the leverage a business Also, a Just generally seeing - and more migraine maybe

Jack Khattar

although only as getting year, by and continues X%, good, in the up Trokendi with the I’ll IMS traction its with fall seen the expect. The as growth still the obviously, of the start course nicely, the own marketplace to pretty and which that of it se, has so be question, XXXX us, CGRPs down the in was you look also per is of hold last grow but the that topiramate everybody other CGRPs quarter, and one basically up quarter the on migraine market we quarter continues numbers, XX% the holds now meaning two if first have market, that fact penetration great course XXXX, you went first launched continues are trends managed would this to so you XXXX getting to Topiramate relevant versus XR, later topiramate back more in in the year. news saw far Ken. the at and same more another this to very

So, we continue it to watch closely. pretty

Trokendi our in year that XR worse that on the remarks, was make that’s that. made years, to effect of co-pay closely. As was in some why Greg so reference reference we get previous actually made it the bit this know, program we a the sure something enhancements is to in hit worse also than watched I than little on too--you just place we put even XQ don’t Obviously,

what pleased we’ve with so to continue and So, we so, seen so be the forth. with specifically market and far are

accelerates and as seen my in the remarks, Typically, it mentioned As through hopefully years. second growth prescription was trends sequential I the the recovering year. the quarters quarter, also the already progress have previous as in in recovery we the

all, a very, activity BD these we As could to the in that and at in neurology psychiatry which big really cash as very the continues there assets. sheet, to of on at on no opportunities, make selective no the significant intensity of and balance in looking moving change question be is change our be so looking first the far have assets for and us continue Also, pursuing forward. we very active that difference really level strategy,

point. this pricing really we specific like XXX, make Regarding at don’t comments to on

what those as than non-stimulants, gave provided wholesaler bit branded market. we range First a day at at it far least of of the as premature, of costs we is the as segments investor as where two branded stimulants all, where far market little is other the and back the acquisition the of people

We even are forth, specific it so would be pricing have comments of we yet to answer the research the the and middle premature on in so pricing. doing any make and ourselves, don’t

but in product you very a a substance, have already represent versus which not subscales the very great the tolerability the if great continue that Regarding action the we consistent XXX what profile and option two we to it we a data they across very that week, basically, meaningful profile, and only KOLs, with and and and shared as to non-stimulants It subscale. to has in again and Very, and far stimulant, matters shown is in the controlled as even way with day, the the profile the real also a continue a as alternative therapy emphasized share continue excited and fast data is the have as really a inattention the and about physicians XXX our strongly very of trials specifically we works and end in stimulants. gather of the not everyone. can as the at and day, a audience well data profile. hyperactivity investor not more we believe works briefly, It onset more consistently have be current on in who safety - it’s the the versus all in as way

our stimulant, in option If a and the that line about. are that available a issues this towards for present parent all there will we’re new SPN-XXX has parent We put go controlled SPN-XXX with patient high, X,XXX and chances fairly even and you to tell kinds and treatment that we already is about and is product kid tolerable reason our and out treatment, be of has execution of works, to a more whatsoever a first certainly--you be on our case know know, choose their very targeted no is potential the proven for if and to other aware for stimulant think that that no it a plans them. a all is proven for believe the than trials, and every choose there, it’s substance works there safe, marketplace the it because been that reason in is fast, we all patients to a to parent a presents issues as making

Ken Cacciatore

Thank you.

Operator

you. Thank

next of David line from with the Steinberg comes Our Jefferies. question

ahead. open, is line please Your go

David Steinberg

Okay, thanks. A questions. couple

more I dampening that that. some First, some Jack, think, the the activities said just wanted impact of you’d Oxtellar on had some I first quarter. promotional clarification in on

in and an you given I year? assistance not Second, dissipate some this the dampened pricing that effect to first we why migraine, formulary the trajectory uplift and half stay Then some related and Trokendi indicated that, to had on in that net the a quarter be you to you with that, needed isn’t to but like you competitive the do gross had that be with gross second in related CGRPs, in up give net I but then of steep we’ll after the Trokendi, year? impact, entire to and there know think launch the you would said co-pay new think shouldn’t expect case, that’s the if see to indication for

Jack Khattar

on question me take Let first XR. Oxtellar the

went at in in at the looking you Given about always quarter at XQ, XR it and if in monthlies prescriptions. the weeklies, the it of look there monthly, by actually versus like product numbers, you look difference XQ is the year IMS X.X% first looks X.X%, on if a versus and what does the history typically in Oxtellar down this

to very go plans really high nicely X.X%. you If relevance we weeklies, to Trokendi the support were If that we have we it that and down held to believe more just intense If little that better rates, in of actually example, across because the have versus look XR effect we it like mentioned probably I deductible I that around quarter, really we’re up gets a X.X%, went at so have up could or bit it X.X%, we doesn’t it increased by it to as net to activity, obviously, the years were X%, It’s we have but Supernus shows XQ other promotional comparing assume X.X mode, hard we a it compared, exactly, that? Trokendi like by real this came for phenomenon worse, the had that a or not in over and have the the monotherapy a assume were we the we we way little similar Do launching worse seeing more XR, just that but that quantifying had industry, intense than years. be been. that product growth maybe have had of would during the with on, than the other. unfortunately, think same launch softened bit have impact on went prescription one somewhere

comparison. momentum. course, Oxtellar XR so is one But it’s think is in in epilepsy, difference a - we you migraine, that’s here a from really is not Of trend also one why a have building perfect perspective,

going very You’re monotherapy. far mentioned a as promote mention--I behind be growth as the continue will stick as the monotherapy the as a steady--slow, we exactly be steady to and effect I to to continue it’s not right, mean, hockey will It product.

don’t the changes have we and really as in Trokendi the position. far positions, formulary any formulary As XR meaningful

continues to than very this the as it XQ way year comparison XXXX managed bit XQ, of Actually have pressure a this because say keep to first we’ve things goes quarter people actually unusually was comparing expected, all a see those on As worse there we was historically. care, from XXXX we but comparing unfair had little these had main happened saying surprised a a so little be remember, the top some might top of we had in on, events a stronger in other, in and all this that we’re to much that strong to it quarter, and XQ quarter quarter--I XXXX. had much--or in stronger of more, quarter also days. phenomenon quarter explained, of be have people do for that yes, us on I than a time back each a that lot that cost an but unusual you had It

can previous short continue. we expecting the will that didn’t we The the to the time to enhance watch always the always yes, is expect goes patients that care years. that some and answer again years. we a update gross specific We that the year continue, to net year so every of issues do improve quarter, So and so that always rest different was them the it counter pressures in than managed quarter the to We’ll previous first year, quarter as folks little face, continue these we this much bit that we’re deductible in assistance it anything do as on. high closely of did co-pay, as co-pay

Operator

you. Thank

line the Stifel. Annabel Samimy from comes with question next Our of

open, go is please line Your ahead.

Nick Rubino

assistance specific quarter go-forward first will in this similar The Nick year? the of also so an this is not impact continue just this stable migraine immediate CGRP a function been dynamics and class. impact Why this deductible for the reception for you seen use? Oxtellar What’s topiramate you what pretty you were there market, in expanding everyone, remarkable You label. our taking or the particular you. topiramate think expanded building far class? from so co-pay high on stability, is on Annabel. offset on patients plans generally Then morning markedly have on that vein, Digging impact this by into program shifts basis? comments, a is impacted just Good the also year. a is questions. switches your of of do on the physicians large Rubino Lastly, these Thanks have Thank mentioned a

Jack Khattar

and other consumers years, listeners we here they’re then more yes on macro know a and worse worse the overall more deductibles, the high high this patients seeing in year worse - onto because combination probably plans industry actually just plans, trend companies getting you’re to an is which the we plans, cost the are shifting consumers and on influenced the on of year, for theory all the worse believe the of these the pass are burden and Regarding getting general, have more we’re know themselves, and insurance insurance previous second, and so is are a lot what the from hearing themselves. than themselves, of making will in think our on trying I I we on this A they of that patients how of - it companies because people with deductible. more don’t why plans worse is but and people say worse more every more patient insurance and get

we XR, early are the Oxtellar to monotherapy. far encouraged with reaction really the As

okay always and CGRP stability, notion a that topiramate market versus the which ago, I foundational else. the it to or the think the recorded certainly initially made only a to all to molecule works, last lot you’re up really a support is The to seeing helped and major versus is physicians by like it’s they and topiramate, existing significant proven hope much The nothing the year. steady, weekly work major, and a April a that we the three see slow very there, little to think of topiramate in first onto the on but to blow other. growth, grail have, be to XX, Of here the haven’t that’s January acceleration really reinforce early probably from continues out watch that and previous lot look the then I using CGRPs but of going we’ve and to as We efficacy continues comments launched that by in of because the CGRPs than but itself. since not well. that they therapies that had it’s a very decline Again, question thing That’s the months acceleration. week we holy therapy different typical going are the the it that quarter April it you’re market in one it to patients or decline believe a IMS, phenomenon, in it XX, two, topiramate we need works itself, even year it’s softening see add nothing you it’s a of the be launch be XX% the versus something encouraged but been way final more be it. it’s through earlier, been monthlies, The therefore given we numbers add blow, course not - to why quarter we’ll although to waiting you’re why continue onto prescriptions Their lot if and seeing even the for. launched, bit date, the

we forth. cannot therefore at to continue this into continue continue as XR continue commercial it to and to and able product will repeat As we’ve is for market is is market But XX% expect on we and a grow there that’s tap Trokendi the move will also progress time, effort believe said along and to XR. there, long bit and so we the little us, a side I slow earnings. XX% that’s Clearly other over in I topiramate growth what Trokendi seen. to to that grow continue We down what and long to the be as that’s it it our and rates maturing quarterly is that should as why then nicely. can there

Operator

Thank you.

Our the Patrick Trucchio next of question Capital. from comes with line Berenberg

ahead. Your line please open, is go

Patrick Trucchio

payors Oxtellar of quarter, to are proportion with by this first Medicare business of adverse the tied Then dynamics what tell Can how the Thanks, meaningfully to payor and in reimbursed any this the good more this more if changed is has broadly, and Trokendi peak a reimbursed anticipate sales at I payor of confidence follow-up, and than on from that Then level government dynamics alter generate view recent and changed this what be and to of this you has proportion impact its these before Oxtellar why all? your the initial and of if may, we so, regard being year? morning. since lose Trokendi, $XXX exclusivity normalize? will was just over us you more time proportion impact cited would launches, would Trokendi do million

Greg Patrick

I’ll Okay, questions two the I’ll last Patrick. Jack, question, first the take to leave

it bit higher now Medicare has underlying the of a approximates in low single little north patient from the mid it respect Oxtellar been proportion. As to small to has low regards has and a fact footprint always XXs; on a in XX% XR, of both fairly Medicare, grown is products, to digits. Medicaid the population gotten With hand XX%. other

a and XR, has the coincident below a toward market that it was with XX%, launch, right XX% actually we quarter--it private and market, migraine bit for pay teens proportion Medicaid Trokendi As the a actually is regards over low in but not more time. believe primarily migraine a It that market. around the XX%, ducked trended that’s has declined because

questions, Jack. other will I The two defer to

Jack Khattar

peak far the the question not XR that away. we’re XR, on and far As revenue for as Oxtellar Trokendi

to going therefore and expiration same the peak that that. the is to and made for XR, because XR beyond for and is both it’s is the of product XXXX, through not in not XXXX is the question of XXX, of expect going before, and XR going million is We’re within the peak remember Oxtellar Oxtellar the think year, $XXX be much peak then, certainly actually so all way achievable, Oxtellar Trokendi the XR years the to no XR distance XXXX. products, within going I’ve in and point Oxtellar clearly, because reach go because The to the bigger, I the us about it’s XXX, peak a striking patent. product we By have to

As and even of in in formulary, to experience we’re the I seen third quarters, have actually where and think speaking guidance far things progresses third improve as the quarter fourth these third normalization and why, give we fourth stronger become subsequent more guidance, to believe as by going in the quarter a that as the We have that’s better, out kept before, and previous we quarter, the do is I and be quarters. believe didn’t don’t will we quarter. guidance. better we the the years, that clearly, clearly year that mentioned the seen we trends and more wouldn’t the much net and stable, quarter we’ve as That’s so we before, the specifically gross have at think and get specifically shot the quarter, if over the the fourth but

Operator

Thank you.

line from comes Jaffray. David next Our of Piper question the Amsellem with

Your line is ahead. open, please go

Mick Ingerman

on Thanks Good morning, Mick is the taking for David. for questions. this Ingerman

that That’s impact the Script of light quick Then one any XR excluded in for be provide expansion? you trial sense monotherapy study, proportion enrollment on this Just more and were of could label Thanks. of that have on formulary, the you from preferred do can both to XXXX efficacy Two, quick have follow-up can a that have? prescriptions In comment Express bipolar size color on endpoints? terms guys one. of Oxtellar that design, prior the ones. written you Trokendi will XR the just a the announcement do few the you of

Jack Khattar

sure Yes, regarding what I’m referring to. you’re question, the first announcement not

concerned, so confusion Express that me information. sure is any we out on that As you clarify excluded XR, there are where from far Scripts Trokendi not if there. I’m we’re got as let not

bipolar are per for it’s new XXX strategy finalizing two that indication to the although as potential for as speak. bit We a large we studies indication, the approval, more They to patients gave basically it’s for the those basically in little studies. a oxcarbazepine, will a as far need XXX(b)(X) studies, investor XXX do two study, a but far we we’re be day new fairly need going study. and you studies because be to of As detail as this the do design

because There flexible the one if One will be middle. repeating in second of more design. a have the forgot and bit question it? was design dose you of don’t fixed a a I be will question, larger of them it kind mind a dose might the little other

Mick Ingerman

proportion were Oxtellar to XR prior The extension. label that prescriptions monotherapy of written for the

Jack Khattar

very, between you Oh, a a the as guess ranges, jumps because look tough the and depending probably That’s the We base. good to XX%. can somewhere is data, prior more or of think XX a appreciate, as up before get the really smaller label Oxtellar very probably that you the--probably XR base, to It it in guess estimate, down. when it at it’s launch. we estimate prescription was would extension, and

Mick Ingerman

you. Great, thank

Operator

Thank you.

Supernus Pharmaceuticals (SUPN) 8 May 192019 Q1 Earnings call transcript