Supernus Pharmaceuticals, Inc. ($SUPN)

Okay. Thank you very much. Well, good afternoon, everyone. Thank you for joining us this afternoon. We're obviously excited for our next presentation. We're happy to present Supernus Pharmaceuticals here. For those of you who don't know me, I'll introduce myself, I'm Glen Santangelo, I'm the analyst at Barclays responsible for the specialty pharmaceutical sector. Amongst other things here joining us from Supernus today is the President and CEO, Jack Khattar, who -- we're very happy to have you here. So thank you very much. Obviously, a lot to talk about in 2025, as you reposition yourself for 2026. So maybe that's a good thing for us to start and sort of dig in. You can talk about some of the accomplishments in 2025, in particular, the Sage Therapeutics acquisition. In July, you had an FDA approval, new product launches. So let me let you start there and talk about how things have sort of evolved in 2025 and that set the stage for 2026.

Yes. Sure. And thank you for having me. And just a quick reminder for everybody that I'll be making forward-looking statements. So please refer to our SEC filings for the risk factors. Yes, I mean 2025 was a remarkable year for us, not only we pretty much completed the transition that we've been going through with the legacy products losing exclusivity, but also having a record year from a revenue perspective and numerous accomplishments, as you mentioned, starting with, of course, the Sage acquisitions and the addition of ZURZUVAE to our product portfolio, it's been a tremendous addition to the portfolio. It's a major and will continue to be a major growth driver for the company. We're just getting started in that space. The product is only a couple of years old. And then, of course, the approval and the launch of ONAPGO and that launch and the performance of the launch pretty much surprised a lot of folks on the -- in a very positive way. So we're very happy to add that product to our portfolio as well. And clearly, the continued growth with Qelbree and GOCOVRI. So if you look at our product portfolio, 2025 pretty much marked a very important milestone for us. It's a complete makeover of our product portfolio with 4 growth drivers.

Right. When you think about those 4 growth drivers, right, Qelbree, GOCOVRI, ZURZUVAE and ONAPGO. I mean they drove over 20% growth in the fourth quarter, not that we want to focus on the fourth quarter, but it felt like you were exiting the year with a fair amount of momentum sort of setting the stage for 2026. Is there anything that you saw in the second half of 2025 that maybe surprised you positively? Or maybe anything that was -- maybe could have went a little bit better according to your expectations?

I mean one of the big surprises in 2025 has been on ONAPGO and the incredible performance of the product since we launched it back in April to the point it actually contributed to a hiccup that we had on the supply side. So ONAPGO has been very exciting. It's a growth potential. The demand has been incredible. And what also surprised us is despite the supply constraint that we had, which we talked about in November, actually physicians, which is a great measure for demand, continued to submit forms -- enrollment forms for patients despite the fact we had the hiccup and the forms grew from 1,300 forms to about 1,800 forms just in that period when we had these constraints. So the demand continues to be strong. We continue to be in front of these physicians, educating them about ONAPGO because we knew we're going to come back at some point. And now we're very excited that we have a good feel around that issue, a good plan in place for it. as we talked about it in February.

Well, I mean I think what you said that's important is, despite the supply issue, the demand part of the equation was always there, and I think the market kind of recognize that, right? And with the, sort of, reconfiguration of your portfolio in the second half of last year, the stock was up 80%, I think in a 6-month span. So clearly starting to get a lot of credit for that. So congrats on those accomplishments, so why do we dig into the 4 major products, the main products? And we'll start with Qelbree. Obviously, your biggest asset by a wide margin is ADHD product for those that are less aware. The scripts were up big again in the fourth quarter, 18%. I think highlighting that demand. Maybe can you elaborate a little bit here on what you think is driving the demand for that product, the competitive landscape around that product and some of your commercialization efforts that may be driving that strong execution?

I mean, right from the beginning, Qelbree has been fundamentally a very different product than what the market has been used to historically, and we've been in the ADHD market for 25 or 30-plus years. We've created 4 different ADHD products historically, starting with Adderall, Intuniv, Mydayis and now Qelbree. So we know the space very well. And for a long time, we've been looking for a nonstimulant that actually works. That simple, a nonstimulant that really works. And specifically, with the speed of onset, because the existing nonstimulants, specifically Strattera, for example, would take weeks and weeks for it to really kick in and for mom or the parents to really find out whether it's going to work for their child or not. So if you can imagine, a child school is struggling, whether it's grades, socially, suspension letters, all kind of difficulties throughout, I mean, 5, 6, 7, 8 weeks into the school year is like Eternity. So what typically parents will resort to is go back to a stimulant because stimulants work quick, work fast, but they all have their issues, they are controlled substances and not every parent want to put their kids on a controlled substance. Today, we have an option, which we didn't have that. And that is Qelbree, because Qelbree works as early as week 1, specifically for children. And it may need -- you might need as an adult to titrate up for another week. So within 2 weeks for adults, you can tell whether it works or not. So why on earth would you put your child on a controlled substance, if you have another option that within a week, you can know whether it's going to work for them or not. You can always resort a stimulant, right? So that has been a great value proposition for a lot of patients out there, whether on the pediatric side or even on the adult side. And that's why we've seen great success with the product over the past 5 years. And as you rightfully pointed out, and even this past quarter, we grew by 18% for the year by 21% in 2025, and that's already year 5, and we're into year 6. And...

Yes. So you're growing 18%, 5 years in?

Yes.

And can you talk about the physician education efforts and you think it's -- your commercialization efforts, do you feel like help us assess sort of the durability of that trend just sort of given your market share and your position in the market?

Yes. I mean, market share in 2025, we did about 931,000 prescriptions. The market itself is 111 million prescriptions. So we haven't even scratched the surface as far as the potential out there. And clearly, from an effort perspective -- marketing effort perspective, I mean, the product is very well differentiated in the marketplace, and it's a very promotion-sensitive area. So we continue to push through our sales force. And the key recipe for success in this category in any category is very good targeting and frequency that you can get in front of these physicians to change habits because physicians are creatures of habit like we all are. And it takes time and frequency for us to convince them to start with an nonstimulant instead of always start with a stimulant because typically, that's the first line of treatment, it's stimulant before they even consider anything else. So we're trying to really reverse a lot of practices that have been established for years and years with a completely new paradigm here.

Okay. Can we maybe shift gears and go to GOCOVRI? Your second biggest drug for extended release for Parkinson's double-digit script demand as well here. Can you talk about the differentiation of this product? And sort of your commercialization efforts here and sort of where you think we are in sort of that growth curve?

Yes. I mean, GOCOVRI actually is the only product in the Parkinson's space that is approved for the treatment of OFF episodes and dyskinesia. Most of the products in Parkinson's treat off episodes and that's it, nothing really treats dyskinesia. So GOCOVRI is the only product approved for that. So it has a very unique positioning. And most people get dyskinesia at some point in the progress during the progress of the disease as they get more and more off episodes over time. They take different medications, dyskinesia is caused by a lot of the medications that these patients are taking. And therefore, there is a great place for a product like GOCOVRI. GOCOVRI is now about 9 years into the market actually was launched back in 2017, and we were really excited to see last year growing at double digits, 14% in prescriptions, 12% in net sales. So we're very excited about the product and its continued potential. There's a lot of patients out there who could really use that type of product.

And when you think about the -- all right, let's shift gears. Let's go to ZURZUVAE. This is the asset you acquired from the Sage deal. Back us up and what attracted you to this asset in the first place?

Yes. I mean, again, as you see from our portfolio, we're always looking for very unique products. So ZURZUVAE is the only product approved for postpartum depression at this point. And it was the first and only oral treatment for postpartum depression. Until now and recently, most physicians, if they do actually diagnose and treat postpartum depression, they would use SSRIs. And SSRIs haven't been really studied the right way of designed and developed for postpartum depression. And a lot of -- most of the times, they actually require the patients to wait for weeks for them to kick in. They're not effective from day one. If you look at the ZURZUVAE profile, by day 3, you can start seeing impact on the disease. And you will be done by day 14. It's only a 14-day therapy, and you're done. -- and you rarely need any refills or there is no really -- it doesn't come back as far as the condition itself. So it's a very unique product. It's an asset that has longevity. It's a new chemical entity. It's really a great innovation in the space. And we are in CNS and have been focused on CNS for years. So that's why it was a very important asset for us.

Any LOE concerns across the portfolio?

I mean LOE is the most upcoming potential here will be GOCOVRI, which is like mid-2029. That will be the earliest one in the rest of the portfolio.

And what about Qelbree?

Qelbree is 2035 as the last to expire patent.

All right. And I think in your opening remarks, you sort of talked about maybe ONAPGO as being maybe one of the positive surprises to you in 2025. How strong of the launch you have? Maybe you can just sort of talk about that first half of 2025 launch and sort of what you did in the second half that maybe sort of drove those strong results in that, maybe faster uptake than maybe you expected it?

I mean one of the key assumptions we had assumed initially, because our label says advanced Parkinson's for the treatment of advanced Parkinson's. We assume that probably initially, at least initially for the first maybe couple of years, we're going to get mainly severe patients who have progressed significantly in the disease. And the only option for them at that time is either deep brain stimulation or another invasive surgery, and therefore, an infusion device would make a lot of sense for these patients. And those would be probably the most suited initially for the product. Now the product itself has been in Europe for many years and the clinical practice has shifted over the years to start treating actually more moderate more earlier-stage type of patients, but that happened over time. It didn't have it overnight. And that's why when we launched the product and we saw the demand, we're like, whoa, I mean, this is really much obviously, stronger than we expected. And we were starting to get a point where we truly understand the patient profile and who is getting ONAPGO and who is on ONAPGO and then, of course, we have the supply disruption. So before we know it, we will have a much better handle on that patient profile. And most likely, maybe we are getting patients who are more on the moderate side of it, and that really opens up the whole opportunity.

Can you give us just a little bit of background on the supply disruptions that you disclosed in the fourth quarter. What drove those? What's the status of that? And sort of how we position relative to that for 2026?

Yes. Currently, the product is produced by a third party, and it's not a production line that is dedicated to ONAPGO. There are other clients on that production line. And basically, what we face is that because of our overwhelming demand, and at the same time, the other clients have also additional demands from a capacity perspective, we couldn't get enough capacity and production from the third party. So through a lot of work and effort and so forth, we were able to finally fight for enough capacity for 2026, which we felt very comfortable with that gives us...

With that supplier?

With that supplier that will support our guidance that we gave in 2026, which is the $45 million to $70 million in sales on ONAPGO. In parallel, we're working with a second source of supply, and that is our own partner startup in Europe who actually makes the same exact product for the European market. So we will be tapping into that facility. But that facility, we have to make a submission. We have to get it registered by the FDA and approved for providing product into the U.S. market. So we anticipate that second source of supply to come online in 2027. So that's where we are, and that's why we felt comfortable that we can go back and start initiating patients.

Before we talk about the pipeline, let's just sort of wrap all that together when we talk about the guidance, revenue is $840 million to $870 million, that's 32% to 37% growth. That's big numbers across the portfolio driven by those 4 products. I mean, anything sort of worth calling out within that top line number that maybe people be interested or surprised to hear or will it be balance across the portfolio?

No. I mean, you're going to have balanced contributions from all these 4 products. I mean that's the expectation that we have. I mean, Qelbree is going to -- it is our biggest product, but it's going to continue to contribute very significantly. ONAPGO, of course, I mean, and we communicated what that is $45 million to $70 million on ONAPGO. ZURZUVAE is going to continue to grow significantly as well. It's only 2 years old as far as the product. I mean we have treated only 20,000 patients every year, we have 500,000 women who suffer from postpartum depression. So there is a huge opportunity for us there. So the contributions are going to come from all the different pieces...

Despite that revenue growth, the operating earnings of $140 million to $170 million, roughly flat year-over-year. Can you put that in context for given the revenue growth?

I mean given that ONAPGO and ZURZUVAE are 2 years or less. I mean, they're still new. We're still investing behind them. Clearly, a lot of the marketing investments, I mean we did communicate that on ZURZUVAE,for example, we have a all new program that didn't exist in '25, which is DTC campaign to provide more education to women and mothers and expectant mothers and so forth because the knowledge and the awareness of postpartum depression is pretty low among consumers. And they don't really come forward and discuss these conditions with their doctor. And a lot of the symptoms of postpartum depression are typically confused, unfortunately, with fatigue, lack of sleep, additional stress because when a newborn comes to the family, so to speak, everything has disrupted schedules, fatigue, sleep, all that. So people don't realize that actually it could be postpartum depression. It's not necessarily just these kind of symptoms. And it takes a lot of education to get to women to realize that and mothers and to take the courage and take that first step and discuss that with their OBGYN because there is always also a lot of feelings of shame, guilt attached to that. There is nothing to be ashamed of. These are normal things that could happen and it's not your fault as a patient. That is due to the hormonal changes from pregnancy to delivery. So this is something that does happen and there is treatment for that.

Okay. And what about the uptick in our R&D spending as well. Let's move over to the pipeline because you have two candidates in Phase II and one candidate Phase I. And so I want to give you a couple of minutes to sort of talk about that pipeline and those 3 assets and kind of when we should expect the readouts on those 2 sort of Phase II trials as those could be important catalyst one way or another for the stock.

The 2 key programs, SPN-817, which is for epilepsy, we expect that product to be fairly differentiated from a potency efficacy perspective as well, it has the potential to perhaps help with cognition because it's an acetylcholinesterase inhibitor, which is a very well-known class of drugs for memory, Alzheimer's and so forth. So we expect that to be a differentiation for that product. And it is currently, as you mentioned, enrolling Phase IIb. Now epilepsy trials tends to be notorious for being slow recruitment wise. So we're not expecting data until '27. And then we just initiated recently the Phase IIb on our SPN-820, which is a first-in-class new chemical entity in depression, and that's an MDD. Now MDD will probably recruit much faster clearly than the epilepsy program. So again, it will be in 2027. And we'll be a little bit more specific as to when in 2027 as we get at least a quarter or 2 recruitment so we can have a better trajectory on the completion of these studies.

Okay. And then you do have one product in Phase I, which is a stimulant use to treat ADHD. Could you talk about 443? And obviously, we're in the earlier stages, but anything you want to share related to this molecule or...

Yes. I mean it's still early. As we said, this year, we're looking at starting the SAD and MAD study for this year. Last year, we did the first in human, which gave us good tolerability in the safety profile of the molecule. But we look towards this molecule to be a differentiated stimulant with the potency and efficacy of a stimulant, yet potentially not classified as a narcotic as a C2 kind of classification. So it will be interesting to see the profile as we develop the product and what kind of a package we can come up with it. But it's a fairly differentiated molecule. And that's actually a molecule that came completely out of our own discovery program in R&D.

So elevated spending in 2026 sort of keeps that operating profit roughly flat. I mean I'm not asking you for sort of longer-term guidance, but how should we think about the outlook for profitability sort of longer term? And that pathway to sort of more operating leverage as some of your 4 commercial assets mature and we drive greater revenues and a lot of the physician education were to begins to flatline or gets done or relative to the R&D spending. Help paint us a multiyear picture of that operating profit sort of leverage, if you will.

There's no doubt. I mean, as time goes on, we will gain more operating leverage. That's a given -- we will get to even levels where we used to be at before loss of exclusivities and so forth. As we pass through some of these heavy investment years. And I'll give you a very small example on Qelbree, for example, we don't spend the same marketing budget we used to spend when we first launched the product for second line. So I mean you kind of taper off some of these investments as time goes on. And we will expect to do the same thing and rationalize the spending and reallocate resources accordingly to the products and their growth profile. So certainly, we will be able to leverage more the infrastructure that we have.

So we're almost coming up on time. So I just have one last question. When you think about, sort of, the transformation or evolution in 2025 in the portfolio and the developments that you made, the stock obviously benefited significantly in the second half of last year. Is there anything that you think may be still underappreciated, misunderstood with the investment community. Any consistent questions you're getting anything sort of worth calling out that you think could be a dislocation relative to what people think versus reality?

I mean, on the commercial side, I think people finally are getting there to where we thought we would be as far as the potential of our portfolio, the growth assets and so forth, I think most people have a good appreciation for that. The pipeline certainly is still not appreciated, and I understand that because we need to generate more data on both 817, 820. I mean, should the science actually work and our thesis works on 820. That will be another big transformation for Supernus. I mean that product is a huge, huge product as far as differentiation in the depression market. I mean that potentially could be an oral product, it is an oral product that could work within hours and has a ketamine-like effect without the hallucinations we have, without any clinical supervision, without any of this baggage that you have with some of the other products being developing in that space. So 820 has a very huge potential for really, again, another transformation for Supernus moving forward.

Well, listen, Jack, we're out of time, what I want to do is I want to flip it back to you to sort of give you the last word. I mean, we talked about a lot of the transformation here and a lot of the positives. But is there anything else that we didn't talk about that you want to share with the investor community? Anything else that you think is important related to questions you're getting. I want to give you the last word. Anything else you want to leave or share with today.

Thank you for all your time. I mean, the only thing I would say is we're just starting. It's only the beginning, and we have a clean balance sheet. M&A will continue to be also a key growth strategy for us. We are believers in both M&A as well as R&D because science doesn't always work the way you like it to be. In M&A, you don't always find what you like to find. So you have to employ both strategies for continued future growth.

Okay. Jack Khattar, President and CEO of Supernus Pharmaceuticals. Thank you very much. Great to have you here.