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

Good afternoon, everyone. So continuing our specialty pharmaceuticals track for the day. We have with us Jack Khattar, the CEO of Supernus Pharmaceuticals. Jack, it's a pleasure having you here, and thank you for joining us at the Barclays Healthcare Conference.

Thank you for having me.

Great. So Jack, maybe you recently reported your Q4 results and provided some '25 outlook, too. So maybe just to kick out the proceedings. Would you like to start with some opening comments around that, and then we could dig into some questions.

Yes, sure. Good afternoon, and thank you for joining us. Before I get started, just to make sure I remind everyone, be making forward-looking statements, so please check the risk factors in our SEC filings. . Supernus, for those of you who may not be familiar with us, we are a CNS biopharmaceutical company. We had revenues last year around $660 million. We are profitable. We've been going through a couple of years of transition here with our legacy products losing exclusivity and transitioning into new products. Our new products, primarily Qelbree, which is a novel non-stimulant ADHD medication, had a great year last year with very strong momentum, strong back-to-school season and that carried through the fourth quarter. And we had a great start in 2025 with some updates on the label for the product as well as additional data. So we're very excited about the continued future of Qelbree, which is a fairly new product at this point early in its life cycle. Also beginning of this year, we had the approval of the infusion Parkinson device. It's an apomorphine continuous infusion device, and we're looking for launch that product in the second quarter of this year. And we have also several pipeline assets primarily 817 in the epilepsy space that we just started Phase IIb data on. We did have a negative study on our depression program, and we also have a positive study. So we are in the midst of analyzing further the data to see what the next steps would be, and that would be the SPN-820 program.

Thank you, Jack. So also, as we think about your -- moving from your 2024 strong performance into 2025, why don't you revisit your 2025 guidance and some of the key pushes and pulls to this guidance as you look at what will drive you towards the higher end of the range versus the lower end of the range?

Yes. I mean the key things, the key catalyst for us in 2025 is really Qelbree. Qelbree is a primary driver here, has been for a few years now helping us through this transition that I mentioned about. So continued growth with Qelbree, which we're obviously expecting. The market has been very healthy market. The ADHD market grew by 9% and prescriptions last year. We grew by 25% in prescriptions. And we are yet to scratch the surface as far as our penetration of the marketplace. So we did about $241 million in Calgary last year in net sales, and we're looking forward for much further growth. We have a lot to penetrate as far as pediatric and adult populations. We have both indications, and we've been pushing forward on both ends as far as the growth. Adult tend to be as the biggest segment in the marketplace. The market splits up 68% adults and 32% pediatric. Our business, on the other hand, is exactly the opposite. 32% of our business is in adult and 68% is pediatric. And that's because of the fact that we are in non-stimulant while the market overall is a majority of it, 90% of it is stimulants. So we'll probably never mirror exactly what the split is for the market, but we'll be somewhere probably in the 40% to 50%. We'll see how far we can go with the stimulants. And then the second key driver for 2025 is, of course, our launch in the second quarter of this year. We're very excited about the Infusion Device in Parkinson. That is a product that pretty much along with our competitor. We're pretty much creating a whole new segment in the market in Parkinson's, infusion devices. Although, have been available in Europe for many years, they were never developed in the U.S. They are very important alternative options for folks who get very progressed in the disease become very advanced with a lot of off episodes. And therefore, instead of resorting to deep brain stimulation or invasive surgery, they can use the pump for continuous delivery for all day control. And we're pretty excited about the opportunity. Again, as I mentioned, the product has been in Europe for 30-some years and does extremely well. So a lot growth momentum in the Parkinson's space. And actually, that will be product number four [indiscernible] in Parkinson's. So we have a major presence in the Parkinson's space with 4 products.

Got it. Maybe continuing on that last point, as we think about now that with approval through with the label specifically for severe patients, do you have a better sense of what the market opportunity is? And what might be the first low-hanging fruits for you to target in terms of this pump versus Levodopa pump?

Yes. I mean as far as the market opportunity, initially, both of these products, our product and the other product approved for advanced Parkinson. I mean that's what the label basically speaks about. However, when you talk to physicians, the word advanced in their mind could mean different things. For some physicians, advanced is a patient who's been diagnosed probably for 10 years now, and they're really struggling big time, and therefore, that would be a perfect candidate for these type of products. In some other physicians' mind or perspective is advanced as maybe a patient has been diagnosed only 3 years ago or 4 years ago. And they're starting to get into a position where they have to add so many oral adjunctive medications. And in that situation, they might opt actually to use the earlier in the disease. So I tell folks all the time. I mean, the size of this opportunity is going to be completely and directly correlating to the fact is to what is the patient profile who ends up being the best candidate for these products and where would the practice lead us as time goes on. If we take Europe as a good example because it's been in Europe for many years, we see a lot of physicians using the pump earlier in the disease instead of waiting all the end when the patient is desperate and they have to go to deep brain stimulation, then they use the pump. So will be an interesting progression to watch over time.

Understood. So with that in mind, how does that influence your launch plans and especially as you prepare to roll out the product in 2Q, how would the messaging be around the product?

I mean clearly, our message is we stick to the label, advanced Parkinson's disease. Clearly, that's the message. That's the positioning, and that's how we will promote the product. Eventually, a lot of it will be driven by the experience physicians are having with the product. And as I mentioned, the way they approach the disease. . Now the 2 products are very different, ours versus our competitors. The molecule is very different. We have apomorphine as our drug on our pump. Apomorphine is a great actually dopamine agonist. There's nothing like it from a dopamine agonist perspective activity. It doesn't need to be converted in the synapse to dopamine. It just gets all the way directly and directly on the receptors. So it's a potent drug, very efficacious. It's the same drug we have currently actually with APOKYN, which is an injection pen for acute treatment for just 1 single acute injection for acute episodes.

Got it. And so as we see the initial stages of launch and as analysts tend to model it for full disclosure, I do not cover the stock, but how should we think about the ramp-up of this product? And what could be the contribution in initial stages?

I mean for this year in our guidance, we told folks probably somewhere in the single high digit, it's a partial year. We don't know exactly that's going to be launched in April and May. So I mean it all makes a difference. But as far as the projections overall moving forward, we did speak about $200 million to $300 million as far as potential peak for a product like this. That may prove to be conservative at some point, if the medical practice does end up mimicking what happens in Europe, but that remains to be seen clearly. Our competitor talks about more like $1 billion, but that's [ more ] on a worldwide basis. We only have potential for the product in the U.S. So we only talk about U.S. opportunity. But certainly, this can be a very sizable opportunity for us. I know firsthand, a lot of patients have been waiting for it. We had a few hiccups from a regulatory perspective to get it approved but I know the demand is there, certainly, no question about that.

Got it. And in your opening remarks, you mentioned about that this is your fourth product in Parkinson's. So can you remind us how all of your various Parkinson's products now fit together with this approval? And...

Yes, sure. Yes. We have first a small product, which is an oral adjunctive therapy to Levodopa that's XADAGO. It's MAOI inhibitor. So it has a very different mechanism. So that's typically used earlier in the disease or earlier stages of the diseases. Then we have GOCOVRI, which is one of our growth drivers in the portfolio. Actually, it's a very unique product. It's the only product in Parkinson's that is approved to treat off episodes and at the same time, treat dyskinesia. As we all know, as patients progress through the disease, as you continue to increase the Levodopa Carbidopa doses to treat off episodes that worsen over time. You end up bumping against dyskinesia. And a lot of times, these dyskinesia symptoms are very troublesome and burdensome to a lot of patients. With GOCOVRI, actually, you don't have to have a trade-off between lowering the Levodopa dose to get rid of the dyskinesia. You can keep that dose at the same level, but add GOCOVRI. And GOCOVRI will help you actually further with the off episodes as well as treat dyskinesia. So it has a very unique position. In addition to GOCOVRI, we have APOKYN. APOKYN is our apomorphine pen injection that I referred to earlier. Actually, the product works fast. It works within minutes. So typically used either early in the morning when a lot of the patients have stiffness, [indiscernible] when they first wake up because their medication hasn't kicked in yet. Typically, you have to take your oral medication in the morning, and it takes quite a bit of time for it to kick in. And therefore, a lot of times, some patients would use an APOKYN injection. And within a few minutes, you can actually be mobile, you can get up, get ready in the morning, also can be used as a rescue type of medication as needed during the day. If you see like you're getting an off episode, you can use APOKYN. So that's the third product. And then the fourth product is on ONAPGO, which will be the same active ingredient, apomorphine as APOKYN. However, that will be more for an all-day control, continuous infusion. So each one of these products have a very single unique positioning on its own different use and a different patient profile.

Understood. So with that kind of a profile though, APOKYN they have the same de-agonist properties, we should not really be concerned about or worried about cannibalization of APOKYN and with ONAPGO?

Ideally, there shouldn't, but we do have some patients who take APOKYN actually up to 4 times a day. So they use it because it helps folks pretty quickly with the off episodes. Now in those situations, and if you're a patient who is getting 3 or 4 injections a day, you might opt to put the pump instead. So I mean there is some potential for some overlap. Historically, we've talked about somewhere probably in the 15% potential cannibalization of the APOKYN business. remains to be seen, but we'll -- I mean that is -- could happen for a patient that is taking it around 4x a day.

Got it. Maybe shifting to Calgary. I mean, clearly, your flagship product. And can you also maybe comment on the variables which drive the strong pricing that we are seeing and the progression of the adult launch?

Yes. The Initially, when we launched Calgary, we launched it in May 2021 in pediatrics and about a year exactly later in May 2022, we launched the adult because we got the adult indication. And given that Calgary is a nonimmune clearly, in the pediatric population, you have several factors that play out that favor nonstimulants. One of them is the fact that a lot of parents don't like to give their kids controlled substances. And what's happened historically over the years is as a parent, you prefer a non-stimulant, but the options we had for many years have been very limited, primarily Strattera, which is the main nonstimulant out there used to take sometimes up to 8 weeks after initiation of therapy for it or for the parent to even find out whether it will work or it will not work. And that to a lot of parents, and I went through it, I know it could be like eternity when you have a child that is really struggling in school with bad reports from a grade perspective or suspension letters or socially having a lot of issues. And therefore, as a parent, you just give up on a lot of times and you say, "You know what, I'll put them on a stimulant because I know stimulants work. They work fast. But is that really my top choice? No. However, today, it's a very different story. Today, you do have a choice because Calgary is a non-stimulant, but also Calgary within a week or 2 at the most, will work. And you will find out whether it works for your child or not. So your downside is fairly limited. We even give people samples for 2 weeks because we are a nonstimulant. We can sample. And therefore, you can try it and why put your child on a controlled substance that potentially could be abusable, stimulant-like side effects. If you have a choice with a product like Calgary that is very well tolerant and could be very effective. So that's been the main value proposition in the pediatric segment. On the adult side, it's interesting, different dynamic. Adults love their stimulants, especially the immediate-release stimulants, and they do give them like a high, a buzz, whatever every person likes it for a different reason. But a lot of also adults supplement their day. Although they might be taking extended release stimulants, they supplement their day with an immediate release later on late afternoon because the extended release has worn off, and it's not giving you the efficacy that you're looking for. With Calgary, you don't need to do any of this. Because Calgary truly covers you for 24 hours, so it gives you a full 24-hour coverage. So what we're seeing happening in the market right now is a lot of physicians don't want to upset their patients and take them off suddenly or abruptly from the stimulant. Instead, what they do is they add Calgary. They titrate very slowly over time. They add and increase the dose of Calgary, while at the same time tapering off the stimulant use, with the goal eventually, of course, to take the stimulant out of the equation and end up with only Calgary. And we estimate about 40% of Calgary's usage or prescriptions in adults are actually combination use with the stimulant. So a lot of physicians are starting their way with adults to get them on Calgary. And actually, a lot of adults when we get the feedback from consumers. I mean they're really excited about the fact that at the end of the day, they can only use 1 product instead of having using 2 products that really gives them the full coverage for a full 24 hours. And clinically, medically the product works extremely well in both, whether pediatric or adult. The feedback has been the same as far as the efficacy of the product and so forth. About now 32% of Calgary's usage as first-line treatment, completely naive patients. So it's really refreshing to see that Calgary is starting to be seen as a true first line choice instead of going all this to the stimulant.

Got it. And Jack, what does all of these rolled up into -- rolled up together, what does it mean for the longer-term outlook for Calgary and in terms of peak sales potential between adult and pediatric combine?

You mean the long-term potential, in general? .

Yes.

I mean the market last year was about 100 million prescriptions, the ADHD market. That's in polo, pediatric and adult. And we can do quick sensitivity. I mean even if we get 3%, 4%, 5%, up to 10% market share, I mean, that's very quick math. And then our net price last year for 2024 was around $310. So very quickly, you can get to a multi-hundred million dollar opportunity. As I said, last year, with the $240 million. So we think this product can be huge. And we're only in the initial innings, so to speak, at this point. We have about 10.8% market share of the non-stimulant segment and about 0.8% or close to 1% market share of the total market. So even we don't need too much to really make this product a very big product for us.

Got it. Shifting very quickly on to GOCOVRI, maybe some quick comments around the opportunity that you see for future growth potential with GOCOVRI. And what is the market and key dynamics look like?

Yes, with GOCOVRI, as I mentioned earlier, it has a very unique positioning in the Parkinson's space, It's the only product that is indicated for both off episodes and the dyskinesia. So the opportunity there for us is really to continue to highlight the dyskinesia issue. . That's an issue that doesn't discuss unfortunately, all the time between the patient and the physician. A lot of patients think that dyskinesia is just part of the disease. The shaking, all that is really a part of the disease. They don't realize that a lot of it is because of the medications that they are giving. So they don't talk about it, they don't bring it up. And typically, patients when they go and visit their patients, their physicians, they're normally at their best time, they want to present themselves at their best time as far as mobility, as far as so forth. Now the movement in this order specialist dig deeper typically in that conversation with the patient. They do talk about dyskinesia. So what we've been doing really is trying to do a little bit more market education among your general neurologists, so to speak, to bring up this issue, encourage physicians to discuss the issue with patients. And sure enough, when they do, yes, patients do talk about it, and it is something that is troublesome for a lot of them, and it could cause falls, it could cause all kind of issues for them. And therefore, when it is brought up, GOCOVRI then come -- could come in and could be part of that conversation. So it will continue to grow clearly. Now this year, we will be clearly emphasizing heavily the ONAPGO launch, the Infusion Device launch because it's the same infrastructure that we're using for the launch of ONAPGO that currently promotes GOCOVRI and APOKYN So the emphasis in the sales force is going to be ONAPGO with the launch in the second quarter and GOCOVRI more like a second position and APOKYN more like a third position.

Got it. We have a few minutes left. I do want to hit upon the pipeline, for sure, so both. SPN-820 and 817. Starting with 820, I mean, you had the top line data from Phase IIb, and walk through the key highlights of this data. And what are the next steps that we need to look out for them?

Yes, on SPN-820, which is for depression, we have 2 studies that read out. The first one was an open-label study that we read out last year, which was an MDD. On that study, we had a 2,400 milligram that we gave once every 3 days. So it was an intermittent dosing that we went with based on some early studies that were done on that molecule. And they believe that there is a potential here that the molecule actually could work because one single dose in a Phase Ib study actually had a very nice effect size that lasted for 72 hours. So that was the basis of that design with the open label. So we did that study, and the data was fairly phenomenal, despite the fact that, of course, open label, there was no placebo. But the magnitude of reduction in MADRS was pretty profound. Starting with about 16-point reduction on day 1, and going all the way down to 24 or 23.9 points reduction by day 10. In parallel, we had a Phase IIb study that was going on, which was a placebo-controlled that studied 1,600 milligram daily. So it was a very different dosing regimen, and that did not separate from placebo. Placebo response was around a 12-point reduction. So it wasn't outrageous, it wasn't too low either, somewhere in the middle. A lot of the things we looked at in the study were very normal. We had a lot of all the sites. We didn't have like a lot of outliers. I mean so the study was very well executed, very well managed. And the only difference we can see is really the dosing regimen between the 2 studies. So it's still an open question in our mind. Is this a biologic system, which is the mTORC1 activation, a system that perhaps needs to be a reset and doesn't need to be activated every single day with a single dose, which was exactly or would mimic the design we did in the open label. The question now in our mind, and that's what we're investigating and looking at it before we decide on what the next step is. Should we look at a 2,400 milligram once every 3 days? And is that something we should pursue any further? Because we have an answer now that the 1,600 milligram daily is not going to work. So we know that. Will the 2,400 milligram and scientifically, biologically, is this a system that maybe that's the way to activate it? And that's the way you get the response that we did in the open label. So we're going to take a few more weeks discussing this. We'll let people know whether it will be another step because we don't want to chase it just for the sake of chasing it. Clearly, the science has to be solid before we make another investment behind it. The thing is, it's really hard to walk away from this because if this drug works and works like it did in the open label, that is a huge game changer in depression. It's phenomenally highly differentiating profile for an oral drug that works within 2 hours, at least that's what we saw in the open label, and has a very significant impact, even reduces suicides by 80%. So it's a very unique, highly differentiated potential profile. And therefore, before we just walk away from it, we want to make sure we do our homework well and look at every potential question here.

Understood. Good luck with that, Jack, and we look forward to updates from it. We're out of time, and I want to thank you, again, for joining us at the conference, and I wish you a very productive conference, Jack. Thank you.

Thank you very much. .

Thank you.