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

Thanks, everyone, for joining us. Thanks for Jack for being here and Stacy and Georgi with me today virtually, looking forward to seeing everyone next year live in Boston. But been a good substitute to be able to get everyone at least on the screens together. Jack thanks, it's been a long time that we've known each other, been working with each other and seeing the evolution of the company from no commercial assets to really done a fantastic job with the original assets that you have. And now you added WorldMeds and real exciting to talk about today 812. I thought it would be helpful to folks, clearly, I know your background, but maybe some that don't -- as it relates to the genesis of Supernus vis-à-vis some of the background you have in ADHD. I always find it helpful to rehear it, maybe it would be good for other folks to understand a little bit of the background before we set up a discussion on 812. So with that kind of open-ended comment, I'll throw it to you to just talk about that.

Yes, sure. Thank you, and good afternoon, everyone, and thanks for having me. Before I get started, I just want to remind everyone about the forward-looking statements I might be making in the session, so please check the risk factors in the SEC filings. But back to Ken's question. As far as our background, we actually been around for more than 25 years or so. We've operated for many, many years as a division of Shire Pharmaceuticals. So -- and we're probably the only company in the world, in the industry who have developed 4 different ADHD medications. There is really nobody else who's had that kind of experience, depth of experience, starting with Adderall XR, Intuniv as a nonstimulant, Mydayis as a stimulant and now, of course, SPN-812. All basically came from our own laboratories using our own technologies, our own expertise. A lot of our commercial folks also have extensive experience in ADHD as well. So as an organization, we're very excited to be at the cusp of hopefully launching the next novel nonstimulant product in the market, which have been starved for really new option treatments that have been lacking for so many years. I mean we've seen a lot of product launches in the last decade, but a lot of them are the same molecule that people have been used to just in a different format, formulation and so forth. So we're excited to be the company who potentially can launch the next big, big ADHD medication here because we know for sure, and we've been working for a couple of years now in educating patients, educating KOLs, physicians about ADHD. And the demand for something like this, we think, is ready to go, and we're ready to go as well as an organization.

All right. Why don't we talk just mechanistically the differentiation? So we can talk about your approach with 812 and maybe vis-à-vis, obviously, the stimulants and then maybe the nonstimulants, just really the niche and the niche mechanism you're doing.

Yes, the molecule, which is viloxazine historically has been known to be an NRI, norepinephrine reuptake inhibitor. What we have done, since we took it over and we started working in that space, we've done a lot of work on the preclinical side, the receptor activity side, structural activity side and so forth. And we've shown that the molecule actually is not just a norepinephrine reuptake inhibitor. It actually hits on the serotonin in a meaningful way as well. And it's more a modulator rather than an inhibitor, so to speak. So -- and we've published a lot of that data. So this is already now in the public domain and try to educate people about the science behind the molecule. And it is really very much differentiated from other products in this space, specifically, atomoxetine, which everybody asked us about it because atomoxetine actually was studied as an antidepressant, and it failed. On the other hand, viloxazine not only was studied as an antidepressant, was on the market as a successful antidepressant in Europe for many years. So we know that the molecules are different. They behave differently. The Phase III data that we were able to generate behind SPN-812 speaks for itself as far as the different differentiation aspects of the product consistently, across 3 different patient populations, not just pediatric, but also adolescent and the recent data we published in the adult patient population. So the molecule has been remarkably consistent in the kind of clinical profile it's generated. And we're very excited about all that as far as the predictability of its efficacy, the extent of the efficacy, the ease of use. I mean, in a lot of kids, you may not even need titration. You just do the 100-milligram, and you'll see the data from the 100-milligram for a lot of children is a perfect good dose for them. So not just the ease of use, the efficacy and hyperactivity and an attention on both subscales. So that's really why we have such a great level of excitement behind the product, given how well rounded the product is, its consistent profile. Early answer of action, at least from what we've seen in the Phase III data. I mean, as early as week 1 or week 2, fairly consistent across board. Also, on top of all that, you have a tremendous flexibility from a dosing perspective. With 100-milligram all the way to 400 and then all the way to 600, which -- the data we just issued on the adults. And yet, even as you go up in dose, we've seen that the safety and tolerability of the product held up really nicely. So that gives physicians also tremendous flexibility from a dosing perspective as well.

That is obviously a market that's, to a certain extent, well-defined and clearly, historically, the products that have been there for a while. So can you just talk about as we think about the market, we could think about it as all-comers or maybe even unsatisfied niches within it. But can you talk about maybe patients that are not really attaining the level of benefit they would want on stimulants or for you as you think of it, is it just more the de novo patients that come in, the caregivers who are being presented for the first time with a child to they have to consider medicating? And I know even internally at our organization, clearly, I'm a liberal arts major not a doctor, but been dealing with these ADHD products for a long time. You really hear from colleagues when they're confronted with potentially having to medicate their child, a real anguish of moving to stimulants and the whole processes is usually filled with anguish on whether they're doing the right thing for their child or not. Can you talk about how you see it slotted in? Is it more -- why not try a nonstimulant first? Or is there an unsatisfied market? Maybe how you feel you're going to approach it.

Yes, sure. This is actually probably the most important point in anyone looking at this opportunity and why does this product make a lot of sense. And I always try to direct people to the actual user, consumer or patient at the end of the day. I mean, that's really what drives success of products or not. And when you look at the patient or the caretaker and you think about the parent and it's exactly what you're referring to. And I went through it personally. I mean, as a parent, you always have that internal struggle. I want something that works so quickly that can take care of these symptoms very quickly, so I'm not getting these suspension letters. I'm not getting my kids having bad grades, all that. And I want it immediately. I don't want to deal with this all the time through the school year. On the other hand, I don't want to give my kid a controlled substance that could be abused, that causes dependence or abuse and so forth and all the side effect issues that some of these stimulants have. So I'm torn as a parent. And so far, I've been having that internal battle because I don't have a good choice that I can offer. And most of the choices are the stimulants that can be harsh. They can also be great medications for many patients as well, but they can also be harsh. I mean, I could easily argue that not every child who is taking a stimulant needs a stimulant, very simple. No one can ever convince me that the market is only 10% nonstimulant and 90% stimulant because that's the only way people like these medications. The reason it's like this is not because people don't like nonstimulants, it's because there is no good nonstimulant. That's really how we look at it from a market perspective. So if you offer the parent a choice that they can see for themselves within a week, 2 weeks, 3 weeks, whether it works or not. And the safety and tolerability of the product is fairly benign. And the downside, there is really no downside for them to really try and give their child the chance to take a nonstimulant, noncontrolled substance, why wouldn't you do it? You can always go to a stimulant. I mean that's always available to you as a parent to go to that last resort if you have to take a stimulant and give it to your child, but why not try something new that has been proven through the one clinical study after another and see whether your child can benefit from. I mean, again, back to the efficacy that we've seen in the clinical study, it's remarkable. It's very consistent across board. So we think if you give the parent that choice and that chance to try something like SPN-812, we think we can win the day here for a lot of these children that don't have to take the stimulants. And there is always room for a stimulant and nonstimulant. I mean this is a huge market, 85 million prescriptions a year or 80 million prescriptions a year. I mean, that's a huge market, obviously. And there is -- and there has been a need for a product finally like 812.

And it's my understanding that, obviously, as you say, a massive market, a lot of prescriptions that -- and this maybe gets a little dangerous, but I can bring it up. That there are clearly children that have behavioral issues that as you think about the spectrum of behavioral issues, there's classic ADD, there's classic ADHD. But then there's clearly a whole subset and range of issues that children may be experiencing, whether it be anxiety or depression or other cognitive issues throughout the spectrum. It's our understanding that to a certain degree, oftentimes, clinicians are trying or looking to try multiple different solutions, which oftentimes leads them to having to go to atypicals at lower doses and other kind of really nasty medications. Can you just talk about maybe that need for more in the marketplace as opposed to just classic symptoms of ADD?

Well, I mean, from a disease point of view, there's no question. I mean, ADHD tend to be comorbid with a lot of other behavioral issues, whether it's an anxiety, depression or position of defined. I mean, impulsive aggression. I mean, we were in that space also, if you remember, with 810. And to your point, of course, a lot of psychiatrists end up resorting to other -- to augment therapy with other medications or agents, even like the atypical antipsychotics and so forth. So there is no question this is a disease that is complex. It's not just a very small plain vanilla ADHD. Unfortunately, for a lot of these kids, they have other behavioral issues that they have to be dealing with. Now of course, as far as viloxazine, it will only be approved to treat ADHD. So I just want to make sure that that's clear and straight. And we don't have the final label, but that's what the product has been submitted for. Its history, as a molecule, it is what is. Yes, as I mentioned, it was as an antidepressant, but that is not something we can talk about or should be talking about as far as its use, its use should only be for ADHD.

Okay. Fair enough. In talking about the regulatory review, you got the faster review cycle here. And so I just wanted to know, and it can be very brief. Do you feel good about the regulatory process? And then I'll ask you a question that maybe is a little bit longer answered, which is, obviously, if we get approval on time, there still are plans that have automatic locks. So as we think of the back-to-school season. Can you talk about how managed care could evolve to put you in a position to be able to capitalize on the first back-to-school season? And I guess -- and I'll remind you on all 3 of these, as we think about pricing as well as we approach managed care.

Yes. I mean this has become an issue for all launches and we all have been witnessing for the last 2, 3 years, the issue of payer and access and so forth. No question about it. I've been cognizant about this thing, and we've been working closely with the payers actually, since the beginning, for the last couple of years, when we started getting the Phase III data, educating them about the product, its uniqueness, the profile. The fact that this category, in general, you only have 4 molecules that treat ADHD. I mean it's really mind-boggling. When you look at all CNS conditions. I mean I don't even know how many antidepressants we have. How many antischizophrenic products we have. How many epilepsy. I mean I know we have 30-plus anticonvulsants. You look at ADHD, 4 molecules. I mean this is it, 2 stimulants and 2 nonstimulants. I think there is another nonstimulant, but the 2 main nonstimulants -- and patients don't have options. And in CNS, you need options. Not all patients respond to every medication, not all patients respond the same way to all medications. The disease is multi symptom and it's more complex. So it's not like we're going to the payer and saying, look, you need to reimburse us for the 15th antidepressant or antischizophrenia medication here. And this product looks like every other 14th product out there and every other option treatment. This is a very well differentiated product. There is really a huge need something like this. We haven't seen any real innovation for the last decade or so in this whole market. And really, they need to work with us, and they need to make this accessible to patients, and we're working very closely with them. And we're going to sample the product. This is a product we can sample. It's another controlled substance. We're going to let parents for themselves, and patients and physicians see for themselves that this is a product that can actually work and work well for them. And we're going to build the demand that way as well and make sure the utilization is there because we believe that this product has a huge place in this marketplace. So does that mean we're going to get access immediately? Of course, not. I mean we're working very hard to make it as close as possible. So the time period from launch to full coverage is as short as possible. And that will be yet to be seen, of course, to see how successful we are in getting everybody on board as quickly as possible. But we're not going to abandon these patients. We're going to give them the chance to try it. We're going to stay with them until they get the coverage and until the product really takes off.

And I would just imagine, it's a defined pricing in this marketplace to a certain extent. Is there anything we should be thinking about that would be materially better or worse as you approach the pricing?

Yes. I mean I can't comment specifically, but I think most people know what the brand -- the range of branded products is pretty much in this category. So it's somewhere in the 350 to 600 give or take, as far as the WAC for 30-day prescription. But I mean, we're going to look at it to give people access and affordability as well and also a price that is commensurate with the innovation that's being introduced here and the uniqueness of this product also.

Now you come into this launch uniquely different than the earlier 2 in terms of the balance sheet is uniquely different. Organizationally, there's a lot of infrastructure that's already here and in place from both -- I'm sure internal managed care folks, obviously, given the infrastructure that you built around Trokendi and Oxtellar XR. But can you talk about the balance of resources as those programs or products kind of at the later stage here versus really investing in what could be the future part of the future? How you're going to work that balance? And to what degree I would think you could support this early launch uniquely differently than the previous 2?

Yes. I mean. No question -- and God, I remember the first day we launched Oxtellar XR in February 2013, with 75 new reps, most of whom didn't even know how to spell pharmaceuticals because we tend to hire from outside the industry and how far we've come, of course, since then. And the amount of resources at that time, we weren't even breakeven as a company. So to your point, no question, today, we're in a much different position than we were when we launched Oxtellar XR, Trokendi XR. And that's also reflected in our guidance. I mean, I know some people were surprised with the guidance we gave, but we've been telling people for the last 2 years, we're going to invest behind this launch. We're going to do it right, we're going to support it. We're going to really put money behind this product that is really proportionate to what we believe the opportunity is. And therefore, to your question, naturally, we'll -- in the middle of reallocating resources as well because Trokendi XR is not our future. It's SPN-812. This is the apomorphine pump. It's Oxtellar XR as it continues, hopefully through 2027, and it's the pipeline that we are building. So our future, obviously, 812 is a big player and a big role -- plays a big role in our future, and that's how we're going to give it the right level of resources that it deserves because we believe this could be a huge product for us.

Okay. Let's pivot now to the rest of the portfolio, so we don't undersell it. Obviously, a real interesting acquisition brought you a Parkinson's portfolio to a certain extent. Just wanted to get commentary on APOKYN and your view of where that can go. I think, and unfortunately millions of earnings call, I didn't hear some of the nuance along the lines of other competitors. But can you talk about APOKYN, its potential growth and what you all are doing with that franchise?

Yes. I mean APOKYN really is our second biggest product right now, clearly. So it's very important for us, and that's why we made the acquisition. We believe in the franchise and the need for apomorphine in that space. The segment we are operating in is really what we call on-demand therapy, which is really APOKYN, the recent sublingual tablet and also the inhaled levodopa, carbidopa. So these are really the 3 products in that segment. The profiles of the products are very different. We can -- people can look at the labels and compare. So we believe the patient segment within that market sector or segment is very different the patient profile for each of these products. So APOKYN tends to be more in the moderate type of -- on the spectrum of the disease, patients with moderate symptoms. They tend to get more than just one-off episode. And these episodes are -- they're really looking for quick response, very reliable response, but also very robust response from a product. And that's where APOKYN really comes into play here. So it's a really good product and can work very extremely well. Of course, in the short term, we have a competitor that just launched the product. So naturally, some people are going to gravitate to try the new products. But I think in the end, the way things are going to shake out, as I mentioned, these 3 products in the marketplace pretty much are more useful for a different patient profile overall. We are investing in the franchise. This year, we're putting more resources behind APOKYN. And we're getting it ready as a franchise to really preparing for the pump because we view APOKYN and the pump as a very nice franchise for us that will contribute to future growth, no question about that.

Now do you feel that the portfolio is being maximized before we move to the pump? Do you feel that there's something that Supernus can bring that's unique or different to try to further maximize APOKYN? Or do you just feel like it was -- it's kind of a steady state, and this is what our expectations should be?

It has been more of a steady state kind of story, and the company before us did really an amazing job in getting it to where it is. It's an older product. It's a more mature type of product, but that doesn't mean we won't be exploring ways how we can rejuvenate it, instill in it much higher growth. Unfortunately, the COVID environment doesn't help in these kind of situations because this is a product that requires intervention. It is an injection. We have a huge nurse support and network on a national basis that supports the use of the product, which requires patient visits, requires face-to-face training with the patients, how to inject themselves, how to titrate the product, how to stay compliant with it. So there is a lot of intervention and patient support that is required. It has been a little bit impacted by the pandemic and new patient initiations has been impacted as well, unfortunately. So we're hoping that this year will be a little bit more of a normal year than last year, and that will go away, and we can really go back into focusing on APOKYN and growing it very nicely. But for now, we like people to have the expectations. It's steady product. That's where it is until things really change, then we can promise, hopefully, something different.

Okay. No, it makes sense. Why don't we talk about the pump? We were part of the team that took NeuroDerm public and eventually was sold, which was continuous use levodopa, which is different than obviously, continuous use apomorphine. But completely understand the need here, these severe patients before they move forward with even much more invasive products. So can you talk about what you need to do to rehabilitate that filing or things that you need to accomplish on your end? And then maybe talk about the opportunity?

Yes. Definitely, we need to have the meeting with the FDA. As we mentioned, this month, we're having the meeting with the FDA. So that's going to be very crucial for us to get and gain clarity on what exactly they want us to do to finish any of the things that they think are deficiencies or were deficiencies in the initial filing. And then hopefully, after that meeting, we should be able to come back to everybody with more clarity on the timing. Is it an issue of months? Is it an issue of weeks? Today, if you force me and say, can you guess, Jack? I'll tell you, probably, it's not an issue of weeks. I think it's more of months. But is it 3 months? Is it 6 months that is going to be required to resubmit? I really don't know until we have that meeting with the FDA because there's a lot of things they're asking us for, but they're already in the NDA. So we're not sure why they're asking for it. And there are other things that are not in the NDA, but we have it, and it's a matter of reformatting it or resubmit. So it's a function of so many different matters that need to be really clarified. And hopefully, we can get back to the speed and much more clarity sooner than later. Trust me, it's a huge opportunity. We think this can be a great product. Initially, when we did the acquisition, I mean, we gave an idea that we think this could be somewhere in the $125 million to $175 million product at peak. It could prove -- if things work well, actually, this could prove to be conservative, but I really don't know at this point. But that's about the range we looked at, at that time.

Okay. So now we have portfolios expanding. Obviously, we have the original legacy products. Now we have kind of a pediatric CNS and also now we have the Parkinson's. So as we pivot and the balance sheet is in healthy shape and the currency is -- we want it healthier, but it's relatively healthy. Can you talk about business development? It does seem as if in the Parkinson's market is pretty fragmented and maybe a lot of opportunities to further leverage. But can you walk us through as we kind of wrap up this conversation, the vision you have as we go forward, trying to balance an 812 launch with BD and really trying to leverage the commercial infrastructure?

Yes. I mean, we -- despite the fact, we executed a couple of transactions last year. I mean we haven't taken our foot off the gas pedal, so to speak, on BD. I mean we're still very active, intensely involved looking at so many different opportunities. Priority wise, we would like to get more revenue, if we can, to further diversify our revenue base. So we can take care of this transition at the end of 2022 when Trokendi XR -- or beginning of 2023, when Trokendi XR goes away, so to speak. So we're trying to address that potential gap and make the transition as smooth as possible. Of course, we have not only BD, but we have SPN-812, the pump all that working towards addressing that specific issue. In general, beyond that, I mean, we're really agnostic to neurology or psychiatry because we're going to be in both, and we're establishing the foundation right now with SPN-812 to be a major player in psychiatry. We also have a very exciting -- another time, we can talk more about it as SPN-820, which is an novel antidepressant. So we're going to be in psychiatry. We're going to be very deep into that space. As well as, of course, to your point, now we're in epilepsy, migraine and Parkinson's. So we are very well-established in neurology. So we're looking at both areas equally. With top priority. I mean a lot of times in BD is an issue of availability, quality and price and willing sellers. So a lot of it is defined by that as well, right?

Yes. Yes. Okay. I think that was a really full discussion, and we really appreciate you taking the time, and I know you have a busy afternoon as well. So I think we'll leave it here. Thanks, Jack, so much. We appreciate it.

Thank you. Appreciate your time as well. Bye-bye.

Okay. We'll talk again soon.