Supernus Pharmaceuticals, Inc. (SUPN) Earnings Call Transcript & Summary

Good morning, good afternoon and good evening depending on where you are. My name is [ Sreenivasan ], and I'm a member of the JPMorgan Investment Banking team. It is my pleasure to introduce to you Jack Khattar, CEO of Supernus. Jack, I'll turn it over to you.

Thank you, and thanks for having us today. Good morning, everyone, and thanks for joining us. Before I start, I would like to start on Slide 2, just to remind everyone that I will be making forward-looking statements through the presentation as well as the Q&A session, so please refer to our SEC filings for all the risk factors associated with our business. Turning to Slide 3. It shows you the execution in CNS and the experience in CNS that Supernus has had over so many years, 20-plus years of CNS expertise. Developing actually 4 products in ADHD, and that is very relevant to us today as we speak a little bit more in details about SPN-812, which is our lead pipeline asset. We operated for many years as a division of Shire Pharmaceuticals and developed a product like Adderall XR, which was a major stimulant program; Intuniv as a non-stimulant; Mydayis, another stimulant product; and of course, SPN-812. We also have 5 products in the market today, which we introduced after we spun out from Shire at the end of 2005. If you look at our track record on Slide 4, showing the sales performance of the products since we launched our first products in 2013, those were Oxtellar XR and Trokendi XR at that time. Reaching in 2020, and that's the latest guidance we gave, which was in November of last year, surpassing the $0.5 billion mark. And also a very nice profitability over the years, building up, again, to the guidance that we gave back in November of last year, which was $155 million to $170 million in operating income. The products that we have currently on the market are in 4 different areas. In epilepsy, we have Trokendi XR and Oxtellar XR. Trokendi XR also is indicated for the prevention of migraine. In the Parkinson's area, we have 2 products that we acquired last year as part of the US WorldMeds acquisition or transaction, APOKYN injection, apomorphine injection, XADAGO, which is an adjunctive therapy, and Parkinson's to Levodopa and Carbidopa. And then MYOBLOC indicated for cervical dystonia, which is a toxin B and sialorrhea. As far as our future, we have a very robust pipeline to deliver strong future growth in the company. Starting with SPN-812, the NDA is under review, and I will talk a little bit more later about the CRL that we received in November. SPN-830, which was a Parkinson's apomorphine pump, that NDA was submitted in September 2020. Again, I will address the issues that were cited in the RTF letter. And then as recent as December, we issued positive Phase III data on the adult patient population for SPN-812, so that represents another major expansion in the ADHD space and should the pediatric and NDA be approved. We expect to file the NDA in the second half of this year. I will also touch today on SPN-820, a very, very exciting product, novel product for depression. We are targeting to start Phase II before year-end. Slide 7, 8 and 9, I'm going to go through very quickly. Most of you are very familiar with Trokendi XR and Oxtellar XR by now. The main points of differentiation of the products, which is really the tolerability and the safety, as you see on these slides compared to the immediate release products that are on the marketplace to permeate specifically, which is the active ingredient in Trokendi XR. You'll see on Slide 7, the improvement in the AEs. And this is data I should point out, is not a head-to-head trial. This is data from retrospective medical chart reviews, showing actual clinical experience and what patients are reporting as far as their experience with the immediate release product as well as Trokendi XR. Also the efficacy of Trokendi XR, you'll see that on Slide 8. The responder profile is very, very strong profile. About 24% of patients reporting 100% reduction in migraine, basically migraine free. And more than 50% of patients getting more than 50% reduction. So really a very strong efficacy profile. Similarly, on Slide 9, you'll see the profile of Oxtellar XR as far as its tolerability and how it compares, again, to the immediate release Trileptal, which is the oxcarbazepine, anti-convulsion. This is data from our Phase III program compared to the Phase III program of Trileptal. Again, it's not a head-to-head clinical trial. However, the both sets of data in our label on Oxtellar XR are showing the difference between the 2 products, leading to much lower discontinuation at the end of the day on the 2,400 milligram per day therapy. You'll see the difference in Oxtellar XR at almost half the discontinuation rate of Trileptal. Moving on to Slide 10, talking about the Parkinson's portfolio. As far as the market, a very quick overview. It is actually the second most common progressive neurodegenerative disorder, affecting about 1% to 2% of individuals 65 years and older. About 1 million patients on an annual basis in the U.S. and growing approximately 2.5% a year. The most common issue with Parkinson's and the thing that we really try to help patients with is the off periods that they experience. And as the disease advances and progresses, unfortunately, they tend to experience more and more of these off periods and also the extent of the off period and the severity of these off periods could also be impacted as the disease progress. So you'll notice on Slide 11, you have the map here, basically showing the disease progressing from stage 1 to stage 5, and you'll see the alternative treatments that patients have available to them. All the way at the beginning with stage 1, most of the therapy is monotherapy, oral Levodopa, Carbidopa type of products. And then as the disease progresses, you started adding adjunctive therapy, such as the product we have, which is XADAGO, which is indicated as an adjunctive therapy to Levodopa-Carbidopa, its an oral product, again, design to address off episodes. Then moving on to later stages, APOKYN pen become a mainstay in the on-demand therapy. That's when patients are starting to experience even more of episodes, so this is for acute treatment of these off episodes. And then later on, as the latest stage, more advanced stage of the disease, that's where we believe the SPN-830, our apomorphine continuous pump, will be very suitable for many of these patients who currently have very, very limited options. So starting with APOKYN pen on Slide 12, you'll see the data behind this product. It's very robust data. Actually, looking at the chart on the right side of the slide, that's the UPDRS score and notice the reduction in the UPDRS motor score, which means clinical improvement in the symptoms. With the off episodes, you'll see the red line, which indicates the apomorphine, the APOKYN pen, very significant reduction in UPDRS. First of all, it's very quick. It works within minutes. So it's a rapid response that our patients get from using the APOKYN pen, but the robustness of the efficacy is also remarkable, reducing the UPDRS by 24 points, even when you adjust for placebo, about 16.8 points. That's a very significant reduction in the UPDRS score, enabling these patients to really function very well and address their off episodes. And also, the reliability of the product about -- is really significant where successfully the product treats 95% of the off episodes within minutes. So a very exciting profile for APOKYN pen. It is rapid. It gives robust efficacy, but also is very reliable as well. Moving on to the pump, which is the new product that we expect to launch, hopefully, in the next year or so. We're looking at a non-invasive, again, apomorphine therapy for continuous treatment on/off episodes. The current options that are available in the marketplace are basically 2 options there, the gastrointestinal surgically implanted infusion of levodopa-carbidopa and deep brain stimulation. The SPN-830 product that could be eligible also for the orphan drug designation has a 7-year exclusivity. As I mentioned earlier, we submitted the NDA in September of 2020, and we received an RTF citing several issues that the FDA is looking for us to address as far as supplementing data and document's and information that they're looking for. So we are targeting at this point to meet with the FDA in this quarter, depending -- very highly dependent on the meeting itself and the outcome, we will be able to later on come back to you with a little bit more specificity regarding the timing of the resubmission. It really all depends on the extent of the work that we have to do for the resubmission. A lot of it from what we can garner, at least, initially. A lot of the data they're asking for is already in the NDA. We just have to clarify what exactly they're looking for, but there could be some additional testing they might be requiring on the device and so forth. So until we have that meeting with them, we won't have 100% certainty or clarity, but we will definitely update everyone later on as we get more clarity on the pathway forward. However, very exciting program, very exciting product, the efficacy of the product, and you'll see that on Slide 14, is really impressive as far as helping these patients. Again, remember, these are folks who are well advanced in the disease. And this data here on Slide 14, if you look at the primary endpoints that were prespecified in this Phase III program, which is a reduction of off time. Reducing off time by about 2.5 hours is very meaningful, very important for these patients to allow them to do even some of the simple daily functions that we all take for granted. So this is really a very important product, will be a very important product for these patients, if approved and launched. And also, similarly to that, the on-time also increased by about 2 hours without troublesome dyskinesia. So we're really looking forward to resolve the issues on the RTF, resubmit the NDA and hopefully get the product approved and launched as soon as we can. Moving on to SPN-812, which is another exciting late-stage product for us, which is the novel non-stimulant ADHD product candidate. It's viloxazine hydrochloride. This is a new chemical entity in the U.S. market. Previously was successfully marketed outside the U.S. as an antidepressant for many, many years. We are building and have built strong IP portfolio with most of the patents expiring in the 2029 to 2033 range. The clinical profile of the product, and we continue to reinforce this clinical profile, even with the most recent data we got from the adult patient population, has really emerged in a very nice way. First of all, we studied 100- to 400-milligram in pediatric patients, 200-milligram to 600-milligram in adults. So a very wide range of different dosage have been studied in the patient populations, showing the unique mechanism of action of this product. But more importantly, the consistency and reliability of the efficacy that has been shown across all these Phase III side is fairly impressive. The efficacy is also on both subscales, hyperactivity, impulsivity and inattention. And remarkably, the product performed extremely well as far as the onset of action as early as week 1, showing statistical significance in its performance. And in addition to all that, a good safety and tolerability profile, and I'll show you -- I'll share with you the data momentarily. Regarding the NDA, as I mentioned, we got a CRL letter, and we have a meeting in January this month with the FDA. We hope to really -- and that's what we are targeting at this point to give you an update as soon as we understand the timing specifically. The key issue here and the only issue, actually, a major issue mentioned in the CRL is the fact that we moved our laboratories that does some of the quality control testing around the product. And the move was completed in February of last year, and the FDA did not have the opportunity to inspect our laboratories. However, we do have in the NDA, a second site and a second laboratory that is mentioned. That is qualified to do the same testing. It is at our supplier. So in the worst case, basically, we will move the laboratory, our laboratory out of the NDA, take it out of the NDA and keep the suppliers laboratory as the major lab that will be conducting the testing. So we hope that the resubmission will be a fairly short period of time between now and resubmitting the NDA. And we expect that we don't know for sure until the FDA confirms that to us. We expect that to be about a 60-day type of review for the NDA. If approved for pediatrics, we plan on submitting the sNDA for adult patients in the second half of this year. So on to the data and the Phase III studies, as I mentioned earlier, we studied in all the patient populations, pediatric, adolescent and adults. So what you see on Slide 16 are all the 5 Phase III programs that we have conducted. The design of these studies, especially 301, 302, 303 and 304 are very, very similar with the same primary end point, which is the ADHD-RS-5 total score on ADHD. The one for adults uses, of course, a different rating scale, which is more appropriate for adult patients. And that is the ADHD Investigator Symptom Rating Scale. The other difference in the design is that the adult study had a flexible dose design, starting with 200-milligram all the way up to 600-milligram. Next slide, Slide 17, talks about the primary endpoint. It shows you the collective data that we have now from all these 5 Phase III studies. It is truly remarkable how consistent the performance of the product has been across broad statistical significance. The only caveat I would mention here on the slide is that the 600-milligram on the adolescent study, P304, missed the 0.05 p-value. Other than that, very, very consistent data across all the studies. And as I mentioned recently, we announced the positive data, which you see on the bottom of the slide in the P306 study in adults with a flexible dose of 200, all the way up to 600-milligram with a p-value of 0.004. In addition to that on the next slide, as I mentioned earlier, significant reduction, not just on the total score of ADHD, but even when you look at the subscales of hyperactivity and inattention. Extremely important fact here, extremely important data because what we hear in the marketplace that the non-stimulants currently, some of them don't work as well in certain subscales versus the others. So it's very, very reassuring to see that our product seems to work well in both subscales, which could be another differentiating factor and feature of the product. Slide 19 talks about the onset of action, which is very important in the non-stimulant segment. Many folks over the years have asked me how come the ADHD market is 90% stimulant and only 10% non-stimulant. And it really drives to the efficacy of the current products in the marketplace, but also the answer of action. As a parent, and for many parents, for a product to work after 3, 4, 5 or even 6 weeks. So that is like eternity when you have kids in schools getting suspended or getting bad grades or socially, they're not being accepted in school and so forth. It is important for a product to show early onset and give the parent and the patient as well as the physician, the reassurance that this product is going to work and work well. So we are very encouraged and excited about the data that we've been able to generate through 5 Phase III studies across all patient population. And that's what you really see on this, Slide 19. And on the left of the slide, you'll see the pool data of Phase 301, 02, 03 and 04 collectively, because the common doses in all these studies were the 200 and the 400-milligram. You'll notice the efficacy starting with week 1, week 2, week 3, week 4, all the way to the end of the study, which is week 6, extremely consistent and very strong p-values. And then on the P301 study, which is the only study that studied 100-milligram, again, the 100-milligram performing exactly in the same pattern. And finally, on the adult side, you'll notice the efficacy also week 1, week 2, 3, 4 and 5, separating from placebo in week 2 and that obviously, because you're starting with 200 milligrams, that could be low for a lot of the adults, 200-milligram is probably more suitable for the pediatric. But given the design of the study, 200 up to 600-milligram, that's why you probably see that it separated as early as week 2 instead of week 1 because everybody started on the 200-milligram. So extremely consistent data across all 3 patient populations and data generated from 5 Phase III programs. On the secondary endpoint, which was in the pediatric or the adolescent children studies, the global improvement score. And in the adults, it was the Global Severity Score. Again, the same patterns that you've seen before as far as the efficacy of the product and the statistical significance across all the studies. Finally, and very importantly, is the safety and the tolerability of the product. Slide 21, shows and summarizes the treatment-related AEs in the safety population. On the top portion of the slide, you'll see the 301, 02, 03 and 04 studies in children and adolescents with Somnolence being the highest, and note, the discontinuation due to AEs is only 3.5% and placebo was 1.3%. So a nice clean profile, especially for a CNS product. And similarly, for adults, discontinuation of 9% when placebo had 4.9%. So placebo-adjusted is only about 5% with insomnia being the highest as far as the AEs. So that clearly gives also physicians a tremendous flexibility with the titration, the way they use the product all the way from 100-milligram to 600-milligram across all patient populations. And finally, on SPN-812, Slide 22 really shows you the market potential here and the size of the market. At peak, we expect the ADHD market to be somewhere between 89 million, 100 million prescriptions on an annual basis. And given the research that we have done and if we assume a peak market share of 5% to 10% penetration of that market, that will quickly come up to something that is extremely meaningful as far as the huge opportunity of Supernus, somewhere between 4.5 million to 10 million annual prescriptions for SPN-812. So it's a very exciting, very important product for us. Of course, a sizable opportunity for us to drive our future growth. Moving on now to an earlier stage product in the pipeline, which is SPN-820. This is a product that we're extremely excited about. That's a partnership we entered into last year with Navitor Pharmaceuticals. It's a joint development and option -- license option agreement. It is a first-in-class molecule that activates the mTORC1 inhibitor. And it actually binds to and modulates the sestrin, which is a very important amino acid sensor. And it has been shown in Phase I studies to really hit on the HAMD-6 scale in treatment-resistant depression patients with a rapid onset of action. A signal around 2 hours, which was really meaningful in these patients and meaningful, also, effect sizes. So we're very excited about the data that has been generated so far. Since we entered into this partnership, the program has been progressing very, very nicely. And we're targeting to start our Phase II program before year-end this year. Clearly, this is a significant market opportunity here, the prevalence of major depression is enormous about 15 million in the U.S., approximately 5% to 8% of the adult population. And specifically, when it comes to the treatment-resistant depression, approximately 30% of MDD patients are treatment resistant. Overall, it equates to about 5 million plus prescriptions per year. So a huge opportunity for Supernus and novel mechanism of action, first-in-class molecule, very exciting Phase I, early data, and we look forward to starting the Phase II program before year-end. Finally, to sum it up, we are well positioned for long-term growth. Clearly, we have this next couple of years, where we are trying to make sure that we can transition after the Trokendi XR expiration of its exclusivity in 2023, so we're trying to position the company for future growth. And we believe we have the right number of assets and the right assets for us to deliver and go back into a future growth in the future long term, especially with SPN-812, which I mentioned, very market opportunity and how big that is. SPN-830, an exciting, exciting program that we believe will strengthen and anchor us even more into the Parkinson's space. And then, of course, we have MYOBLOC, which we didn't touch on today, have Phase IV programs going on in expanding its use across other neurological disorders. And finally, SPN-820 and 817 that are a little bit earlier stage. We really look forward in the next few years to progress these both assets into the mid-stage and final stage of development. With that, I thank you for your attention, and I can turn it over now for the Q&A session.

Thank you, Jack. Clearly, some very consistent data here. We've received a few questions and we can go straight to them. The first one is about the 812 data released in December. And how it will affect the regulatory time line and the discussions that you're having with the FDA?

Yes. As I mentioned, and as we mentioned in our press release, the meeting is in January, which is this month. And the key issue is the move of our laboratories. We had used our original laboratories in generating some of the data. We in the process, have moved the labs to our new location. But we also have in the NDA knowing what we knew at that time, of course, that the NDA is likely to be reviewed at a time when we have that move going on. We try to be proactive and, of course, mention in the NDA, a second lab that can perform the same testing. So what we expect, hopefully, moving forward is probably as simple as just deleting or eliminating the reference to our own laboratory, that the FDA has not had a chance to inspect or look into the move and the documentation. And just rely on our suppliers' laboratory to release the product. So that should be a fairly -- again, this is all relative terms I'm using here, fairly simpler resubmission, and we hope the review can be completed actually in 60 days post that resubmission. So from a timing point of view, assume we can resubmit in few weeks from now. Again, give or take, then we should be able to add another 60 days to that. So you're probably looking at some time in the May, June, maybe as far as launching the product. We are ready. We have been ready to launch our products. So we'll be ready from a commercial point of view, manufacturing point of view and so forth to really get this product going into the marketplace. So that's pretty much my best guess at this point. Clearly, as I mentioned earlier, in February as we announce our year-end results and guidance for the year, we will have a much more concrete time line that we can share with our investors.

And how should we be thinking about the adoption and launch for 812, if everything goes through as planned?

I mean, we all have seen all the recent product launches across different categories. And SPN-812 is probably not going to be any different as far as the trajectory, the adoption of the product and so forth. From a consumer perspective, patient perspective, parent perspective, even physician perspective and all the KOLs and everybody we have talked to and the research we have done, the data is really amazing as to what people are looking for. This is a noncontrolled substance. It's a nonstimulant that works really well across so many doses, so easy to use as far as you may not even need titration for a child at 100-milligram work -- as I shared, some of the data works extremely well, and it is an uncontrolled substance. So I, as a parent, why would I try something else? Why would I put my kid on a controlled substance or on a stimulant if I have that other choice of the non-stimulant that have really good efficacy. And I can tell as early as week 1 or 2, whether the product will be working or not, so I don't have to really wait so many weeks into the school year to really know whether the product is going to work for my child or not. And then, of course, it is much easier for physicians to prescribe because it's an uncontrolled substance, you don't have the issue with the refills and so forth. And then you add to all that, the safety and the tolerability. I mean remarkable data as far as discontinuation because of AEs, 3.5%, it's really a nice, good and clean safety and tolerability profile. So as a parent, what is the downside for me to start my child on a product like this instead of starting them quickly on the stimulant right from the beginning. I can always add a stimulant, if and should I need it later on, but I would make that choice every day all the time. So we think from a consumer perspective, patient perspective and even the physician perspective, the demand will be there. No question about it. It's an issue of dealing and managing the payer landscape, and we've been discussing with the payers all along, as you would imagine, especially as the data kept coming along, especially now also with the adult data and so forth. Educating the payers about the uniqueness of this product. This is a disease area where in the last decade or more, actually, nothing new has been introduced other than formulations of 2 existing stimulants. Methylphenidate and amphetamine. They've been around for so many years, nothing really novel or innovation that has come into this place. And we think SPN-812 represents that innovation and new treatment option that a lot of people have been looking for. So it's not like we're asking payers to reimburse us for antidepression #15 or 16 or what have you. Actually, it's remarkably, when you look at the ADHD market, there are actually only 4 molecules that people really use. 2 stimulants and 2 non-stimulants that really are the products that, typically. For a market that has 75 million prescriptions a year, that is remarkable. So we're really bringing here a treatment option that is really needed and the patients need. And we sure hope that payers will come on board and really understand the unmet need in the space and be a partner with us and really bringing this medication and give us the access that it really requires.

That's helpful. And on 830, how should we be thinking about the time line?

Yes. As I mentioned, we're targeting to meet with the FDA this quarter. Once we sit down with them and that meeting is extremely important for us because there is some ambiguity and confusion as to exactly what they're looking for. So we want to go through the list of the items that they have mentioned in the RTF. Also, we're working very closely with the supplier of the device because there could be, we're not sure 100%, there could be some device testing that needs to be done. How quickly can we do that? Or is that something that can be done a little bit later instead of at the submission? So there're a lot of questions that we need to clarify. The good news, obviously, in the RTF, there is no requirement or a question to conduct a clinical study or anything like this. So the Phase III program that I mentioned to you, we feel very good about the efficacy data that I shared, and that has been published about the product and the value of the product, but we have to work through these issues with the FDA. So once we have the meeting, we clearly will be able to come back to investors and shareholders and communicate the exact time line. I don't see this a matter of weeks for resubmission. It could be a few months for us to do the resubmission. Again, highly dependent on the meeting that we are really hoping, and we should be able to get in this quarter. And then we will come back with communications. So clearly, as far as the launch of the product, this is going to be a launch next year in 2022 sometime.

Great. That's very helpful. Thanks a lot, Jack, and thanks a lot, everybody, for joining us today. Have a good day.