Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) Q1 2024 Earnings Call Transcript

Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) Q1 2024 Earnings Call Transcript May 8, 2024

Supernus Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, and welcome to the Supernus Pharmaceuticals First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Peter Vozzo of ICR Westwicke, Investor Relations representative, Supernus Pharmaceutical. You may now begin.

Peter Vozzo: Thank you, Mark. Good afternoon, everyone, and thank you for joining us today for Supernus Pharmaceuticals’ first quarter 2024 financial results conference call. Today, after the close of the market, the company issued a press release announcing these results. On the call with me today are Supernus’ Chief Executive Officer, Jack Khattar; and Chief Financial Officer, Tim Dec. Today’s call is being made available via the Investor Relations section of the company’s website at ir.supernus.com. During the course of this call, the management may make certain forward-looking statements regarding future events and the company’s future performance. These forward-looking statements reflect Supernus’ current perspective on existing trends and information.

Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of the company’s latest SEC filings. Actual results may differ materially from those projected in these forward-looking statements. For the benefit of those of you who may be listening to the replay, this call is being held and recorded on May 8, 2024. Since then, the company may have made additional announcements related to the topics discussed. Please reference the company’s most recent press releases and current filings with the SEC. Supernus declines any obligation to update these forward-looking statements, except as required by applicable securities laws. I’ll now turn the call over to Jack.

Jack Khattar: Thank you, Peter. Good afternoon, everyone and thanks for taking the time to join us on today’s call. Following a productive year in 2023, in which we successfully minimized the impact of the Trokendi XR loss of exclusivity and positioned the company to mitigate the potential impact from the first generic Oxtellar XR, we have continued to execute on our long-term growth strategy and have delivered another quarter with double-digit growth in total revenues excluding Trokendi XR and Oxtellar XR. Driving this growth is Qelbree’s strong performance with 31% growth in prescriptions as reported by IQVIA and 75% growth in net sales. Prescriptions reached an all-time quarterly high of 176,503 and net sales were at $45 million.

Growth in net sales in the first quarter of 2024 benefited from both prescription growth and gross-to-net improvement compared to the same period last year. Gross-to-net during the first quarter of this year was well within our targeted range of 50% to 55%, which is encouraging for the first quarter considering the typical beginning of year pressure from high deductibles and insurance resets that are seen across the pharmaceutical industry. For the remainder of 2024, we expect the gross-to-net for Qelbree to remain in the range of 50% to 55% with fluctuations that you would typically expect on a quarterly basis. During the first quarter, Qelbree further expanded its base of prescribers ending the quarter with approximately 27,138, up from 25,938 from the fourth quarter of 2023.

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Q&A Session

Prescriptions from adult patients now account for approximately 32% of Qelbree’s total prescriptions. Switching now to our Parkinson’s franchise, we saw increased pressure on our brands in the first quarter with higher Medicare rebates, patient out-of-pocket costs and the closing of the patient assistant funds to new and existing patients. These dynamics contributed to increased gross-to-net deductions for our brands, leading for example to lower growth of 2% on net sales of Qelbree compared to the same period in 2023. During the quarter, we also saw a significant 42% increase in sample distribution by physicians to patients. This increased in sample usage as many patients to stay on Qelbree while waiting to hit their maximum out of pocket costs.

We have already seen a bounce back in the Qelbree business in the second quarter as we believe patients started transitioning from their samples to refilling their prescriptions. Switching to our legacy products, Oxtellar XR net sales for first quarter 2024 were $26.9 compared to $28.9 million in the first quarter of last year. We expect the introduction of the first genetic of Oxtellar XR in September 2024. For Trokendi XR first quarter net sales were 16 million down by 54% from the same quarter last year. We expected further erosion in Trokendi XR and the entry of an Oxtellar XR genetic later this year. We continue to anticipate combined net sales of Trokendi XR and Oxtellar XR in 2024 to be in the range of 125 million to 135 million. Regarding SPN-830 as we disclosed in April, the FDA issued a complete response letter in response to the company’s NDA indicating that the review cycle for the application is complete but that the application is not ready for approval in its present form.

The company will announce the timing for its resubmission after meeting with the FDA later this month. We are committed to Parkinson’s patients who need this potential new treatment option and to bringing SBN 830 to the marketplace. Moving on to our emerging CNS pipeline of novel product candidates, we have exciting catalysts coming up in the next 12 months. Regarding SPN 820, the company expects to provide data from its Phase 2b study in adults with treatment-resistant depression in the first half of 2025. The Phase 2b study recently achieved more than 50% enrollment of the total 268 targeted number of patients. The Phase 2 of the labeled study is currently enrolling and targeting a total of about 50 patients with major depressive disorder.

Regarding the Phase 2a study of SPN 817 for treatment-resistant seizures, the company now expects to report interim data from approximately 40 patients, greater than the one-half of total randomized patients originally targeted. As such, we plan to hold a conference call on May 23rd to report these interim data. This study is examining the safety, tolerability, and efficacy of SPN 817 as a junket therapy in adult patients with treatment-resistant seizures. Top-line results for the full study are expected in the second half of 2024. In addition, we plan to initiate a Phase 1 single-dose study of SPN 443 in healthy adults following submission of an investigational new drug application. SPN 443 is our new stimulant-like product candidate for ADHD and other CNS disorders.

Finally, we remain active in corporate development looking for strategic opportunities to further strengthen our future growth and leadership position in CNS. With that, I will now turn the call over to Tim.

Tim Dec: Thank you, Jack. Good afternoon, everyone. As I review our first quarter 2024 results, please refer to today’s press release and 10-Q that was filed earlier today. Total revenue for the first quarter of 2024 was $143.6 million compared to $153.8 million in the prior year quarter. Total revenue in the first quarter of 2024 was comprised of net product sales of $138.4 million and royalty and licensing revenues of $5.2 million. The $2.2 million decrease in net product sales was primarily due to a $20.8 million decline in net product sales of Trokendi XR and Oxtellar XR, partially offset by a $19.3 million increase in net product sales of Qelbree. Excluding net product sales of Trokendi XR and Oxtellar XR in both periods, total revenues for the first quarter of 2024 increased 12% compared to the prior year quarter.

For the first quarter of 2024, combined R&D and SG&A expenses were $111.4 million as compared to $106.8 million for the prior year quarter. The increase was primarily due to R&D spend associated with the clinical programs for SPN-817 and SPN-820 as we continue to progress our pipeline. Operating loss on a gap basis for the first quarter of 2024 was $3.2 million as compared to an operating earnings of $5.2 million for the prior year period. Income tax expense in the first quarter of 2024 was $119,000 as compared to an income tax benefit of $7.9 million for the same period in 2023. GAAP net earnings was $124,000 for the first quarter of 2024 or earnings per diluted share of $0 compared to GAAP net earnings of $16.9 million or earnings per diluted share of $0.29 in the prior year quarter.

On a non-GAAP basis, which excludes amortization of intangibles, share-based compensation, and contingent consideration, and depreciation, adjusted operating earnings for the first quarter of 2024 was $22.3 million compared to $30.5 million in the same quarter of the prior year. As of March 31st, 2024, the company had approximately $309.4 million in cash, cash equivalents, and marketable securities compared to $271.5 million as of December 31st, 2023. The increase was primarily due to cash generated from operations. The company continues to have a strong balance sheet with significant financial flexibility for potential M&A or other value-creating opportunities. Now, turning to guidance. For full year 2024, the company reiterates its financial guidance for total revenue combined R&D, and SG&A expenses and non-GAAP operating earnings.

As such we expect total revenues to range from $580 million to $620 million comprised of net product sales royalties and licensing revenues. For the full year 2024, we expect combined R&D and SG&A expenses to range from $430 million to $460 million, reflecting increased level of R&D spend as our pipeline progresses. Overall, we expect full year 2024 GAAP operating loss in the range of $30 million to breakeven and non-GAAP operating earnings to range from $80 million to $110 million. Please refer to the earnings press release issued prior to this call that identifies the various ranges of reconciling items between GAAP and non-GAAP. With that I will now turn the call back to the operator for Q&A.