Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Supernus First Quarter 2013 Financial Results Conference Call. Please note this event is being recorded. Before we get started, I'd like to remind you that the matters discussed on this call contain forward-looking statements that involve risks and uncertainties, including those relating to commercial efforts related to Oxtellar XR and Trokendi XR. Actual results may differ materially from the results predicted and recorded results should not be considered an indication of future performance. These and other risk factors are fully discussed in our Annual Report on Form 10-K that was filed with the SEC on March 15, 2013, and updated in a quarterly report of Form 10-Q that we expect to file with the SEC by May 15, 2013. And they will be most particularly dealt with under the caption of Risk Factors. Supernus disclaims any obligation to update or revise any forward-looking statements made on this call as a result of new information or future development. As a reminder, Supernus' policy is to provide, update, reconfirmation -- reconfirm financial guidance and guidance on corporate goals only by issuing a press release or filing updated guidance with the SEC in a publicly accessible document. Reference to current cash, cash equivalent and investment based upon balances as of March 31, 2013, all of the guidance including guidance related to the company's expected expenses, year-end cash and corporate goals is as of today, May 13, 2013. With that, I'll hand the call over to Jack Khattar, President and CEO of Supernus.

Good afternoon, and welcome to our first quarter 2013 Financial Results Conference Call. With me today on the call is Greg Patrick, Vice President and Chief Financial Officer of Supernus. The first quarter of this year marked a major event for us, that of launching our first product in the specialty neurology market. We launched Oxtellar XR for adjunct effect in partial seizures in adults and children 6 to 17 years old. I'll start with an update on the launch and then Greg will walk you through the financial results. We continue to execute well on the launch of Oxtellar XR. We're starting to see positive trends in the number of target physicians prescribing the product and the conversion market share or the percent of the addressable immediate release of oxcarbazepine prescriptions that have been converted to Oxtellar XR. Over 450 target physicians have prescribed Oxtellar XR since launch with approximately 15 new prescribers being added each week in the most recent weeks. In addition, the number of repeat prescribers has been increasing, recently reaching more than 60% of weekly prescribers. Feedback from the field supported by interim results from an ongoing qualitative market research confirms that prescribers of Oxtellar XR have been very pleased with what their patients are reporting regarding the efficacy and tolerability profile of Oxtellar XR. The top reasons physicians report for choosing Oxtellar XR are reduction in adverse events, once-a-day dosing for compliance and the ability to get patients on a higher dose of oxcarbazepine. Prescriptions as reported by Symphony/Wolters Kluwer for Oxtellar XR in the first 2 months of its launch totaled 579 prescriptions. We started the second quarter with a healthy momentum increasing prescriptions to 682 for the 4 weeks ending April 26, 2013, representing a 58% increase over prescriptions for March. Based…

Thanks, Jack, and good afternoon, everyone. I'd now like to summarize the financial results for the quarter ending March 31, 2013. Cash, cash equivalents and marketable securities declined during the quarter by $18.6 million from $88.5 million at December 31, 2012, to $69.9 million as of March 31, 2013. Research and development expense for the first quarter declined from $5.4 million in 2012 to $4.5 million in 2013, primarily because our Phase IIb study for SPN 810 was completed in 2012. Selling, general and administrative expense for the first quarter increased from $2.7 million in 2012 to $13.5 million in 2013, reflecting the costs associated with hiring our 75 rep sales force during the first quarter of 2013, launching Oxtellar XR in February of this year and the prelaunch activities for Trokendi XR. Net deferred product revenue as of March 31, 2013, was $3.6 million. This amount represents shipments to wholesalers during the first quarter of 2013, net of expected wholesaler fees, discounts and product costs of approximately $0.5 million. I would now like to provide some context to our deferred product revenue balance of $3.6 million. As of March 31, we have received payment from wholesalers for approximately 60% of these shipments or $2.4 million. The remainder, or approximately $1.7 million, is recorded in our balance sheet under accounts receivable. The sum of these 2 amounts, $4.1 million, less deferred cost of $0.5 million, nets to our deferred product revenue balance of $3.6 million. In terms of physical units, net deferred product revenue represents approximately 11,000 prescriptions. This level of inventory is in line with our expectations regarding filling the product distribution pipeline, the objective of which is to ensure that Oxtellar XR is available to patients in a reasonable time frame, thereby avoiding lost sales. Going forward, we…

We continue to be excited about 2013 and the commercialization of Oxtellar XR and Trokendi XR. We are pleased with the specific launch metrics that we have shared with you today about the Oxtellar XR launch and look forward to sharing with you more progress as the year unfolds. And now we would like to open the call for questions.

[Operator Instructions] And our first question will come from the line of Corey Davis with Jefferies.

[indiscernible] may help you maximize Trokendi launch or are you off to any kind of different or better start than we've seen with Oxtellar?

I'm sorry, Corey, we got the first portion of your question cut off. We didn't hear the full question. Do you mind repeating it?

Basically, just what have you learned from Oxtellar launch so far that will help you maximize Trokendi?

Yes. I mean certainly, everything we've been going through right now continues to reinforce our initial plans and belief and understanding of the marketplace. Clearly, the strong correlation, that's not surprising between the call frequency and the level of market penetration we've been able to achieve in certain physician groups, that's certainly is not necessarily a new thing but it's good to see that it's really reinforcing the fact that we always always talk about that this is the category that is very responsive to promotion. You have to relaunch these products and you have to support them. And if you support them at the right way, the right frequency, you will be able to achieve results, so it's really very -- it's been very refreshing to us to confirm all that obviously as early as Oxtellar is, continue to see that kind of confirmation because that certainly will be a lot of great learning for us obviously moving forward Trokendi XR.

And for those stocks that haven't used it, are you finding that they are titrating patients down after presumably Trileptal dose and then back up on Oxtellar? Or can they do a one-for-one conversion without any kind of titration?

Yes. The qualitative research that I mentioned today is still ongoing but the data we've seen so far is about 2/3 completed actually. They're using it into some [indiscernible] milligrams, 4 milligrams so far. And it's mainly being used monotherapy, so that's of the feedback we've been getting so far from current prescribers.

[Operator Instructions] Our next question will come from the line of Annabel Samimy with Stifel.

I just want to clarify on the cash burn guidance that you gave, that does contemplate the doubling of the sales force with the Trokendi launch and presumably, you're still doing that, given that you're seeing good responses from the call frequency?

Annabel, this is Greg. Yes, that does, in fact, compound our sales force expansion plans. As we've mentioned as of late, we're titrating those plans a little bit and in terms of the timing and sequence and layering in those sales reps, we'll be expanding the sales force in a series of steps later on this year and probably, the final step early next year. But yes, we eventually plan to expand the sales force somewhere in the range of 120 to 140 reps.

Okay. And then can you tell us whether the SG&A contemplated or SG&A from this quarter should be the correct run rate for the next quarter? Or is this quarter kind of still ramp up?

Well, this -- the next quarter will probably be a bit higher than the current quarter simply because our next step in bumping up the sales force is going to happen either very end of this quarter or early the following quarter. So we are going to be incurring both marketing expenses to launch Trokendi, as well as additional expenses to field some additional recruit and then field those sales reps. So I would say G&A expense is going to go up quarter-to-quarter.

Okay. And then quickly on deferred revenue, thank you for the detail on that. I just want to make sure we understand. You said you're going to be recording revenues for the June quarter. Is that going to be the $3.6 million that we saw from -- in deferred revenues from the first quarter? Or is it shipments for wholesalers that you're going to be recording on the income statement? Can you just...

No, that's going to be more the pull-through data that have probably correspond fairly closely to the number of prescriptions filled for the first quarter. So for the first couple of quarters, we'll be recording revenue on a pull-through basis once we understand what the rebates and allowances look like. So in the quarter that we report, as of June 30 in another words, we actually released the data in mid-August. That would reflect the prescriptions were actually filled in the first quarter. We'll continue to record deferred revenue and post-deferred revenue, everything that we'll ship to wholesalers at that point in time.

Okay. Great. And then one question if I may. In terms of the coverage you said you had 135 million lives, 8 million of those were Medicaid coverage. Is that something that you're expecting to expand or is that pretty much the coverage that you're expecting from here on?

No. I mean, we keep building on the coverage. You might recall from our -- in March, we have actually a total of 127 million, so we're up to now 135 million. And on Medicaid, we were about 7 million, we're up to 8 million. So certainly we'll continue to build on that.

Then how much of the market is Medicaid?

Medicaid is -- About 26% to 27% of prescriptions are Medicaid, but certainly an important piece. And as we mentioned earlier, I mean, we keep adding the states, it's a state by state basis as they go through their own processes. But we expect that numbers to go higher as far as coverage.

And our next question will come from Ken Cacciatore with Cowen and Company.

I just wanted to ask about Trokendi. Can you give a little bit more detail? Are we actually starting to share label thoughts back and forth? Or is that still premature? And then I had a follow-up question on the Oxtellar XR launch.

Yes. I mean I would reserve comment on that, Ken, as far as talking about labels or anything specific with the FDA because, as we all know, it's a very tricky business for trying to predict when is the FDA going to act. All we can say is at this point, we've responded to everything that asked us for and they confirmed that with us. But as far as labeling or anything like that, I won't be able to say anything at this point.

Okay. And then just on -- clearly on Oxtellar XR seems like a good product and your feedback from your initial survey sounds very good. So can you help -- where are you seeing any pushback? Is it just because of the lack of coverage? Or are you hearing, is it the lack of times just haven't have enough time to address the clinicians with frequency? Is there any reason why you're hearing from your sales force why sometimes you're getting pushback and what you're doing to address that there isn't just a matter of time as we continue to kind of the bodies to work here, update should continue?

Yes. It's a combination of several things you mentioned. One is, for example, physicians tend to generalize and say, "I had a patient on Medicaid. He is in state XY and Z." And because as we just mentioned, and we have 8 million lives covered on Medicaid so we're not even halfway through covering the whole U.S. as far as Medicaid is concerned. If the physician happens to have a patient on Medicaid, they don't have the covers right away from the beginning. They need some prior authorization or whatever the case might be. They tend to generalize that, that's so the whole experience are going to walk through as far as every other patient that goes with our practice. And therefore, they tend to be a little bit slower in finally, getting over that a hump to really understand that they can put maybe a different patient who really have the commercial coverage on the products. So we recently, we've been emphasizing the PA program, the prior authorization program assistance program that we have in place. We found out that physicians really didn't recall that, as well as we would like them to recall that we have that full assistant to help them put patients on the drug. So that's the main reason. The second reason is the fact that as the natural, slow uptake that we always talk about is that these patients walk into their physician probably once every quarter, let's say. Unless, for example, they have a major compliance issue or a major side effect issue that forces them to go into their physician's office and check in with them. And therefore, it's a natural cycle that sometimes although we may have call on the physician 2, 3, 5, or 4, or 5 times, they may…

Our next question will come from the line of David Amsellem with Piper Jaffray.

This is Trevor Davis on for David Amsellem. Just a couple. So just first on SPN 810, I know you provided a brief update in the press release. But can you speak a little bit more to what you think will be sort of the key focuses and things that you want to discuss with the FDA meeting later this year? And when do you reasonably expect that Phase III trial initiation could begin, assuming you do meet the FDA later this year?

Yes. The core pieces of discussion with the of the will be focused mainly on the development path forward: How can we get this put product a later stage clinical studies with our goal being obviously Phase III. So what we want to discuss with the agency obviously of the results from the Phase IIb study. We've got to discuss the protocols, the designers of the future studies with forward, what this data mean, and so forth. So these are really the key discussion points of that we need to hash out with the agency before obviously we jump into a Phase III. As far as the timing of the meeting, as we said, we expect it to be a year end, we should have that meeting done and hopefully, a good feel and agreements on how to move forward with this product. And therefore, we've said before that we don't expect a Phase III program to start before the second half of 2014. When exactly is going to be hard for us to give a today specific timing event that we haven't had that meeting with the FDA yet so obviously a lot to write all that around and design a Phase III or whatever it is that we need to do as the next step.

Our final question will come from Bill Tanner with Lazard Capital.

A couple of them for you, Jack. You did mention that, I think with physicians that have been called on 6 times, curious there's about 2% conversion. I'm curious if you could help us understand how many of how many times they would need to be called on presumably over a fairly short period of time? And then how frequently they would be called on subsequent to that? And then is there no care -- it didn't sound like -- it sounds like you're learning a lot that's preparing you for the Trokendi launch. But would there be no, I guess, translation of the message, given the formulation -- the similarities necessarily but extended release that Oxtellar help lay the groundwork or maybe the Trokendi take a little bit deeper?

Yes. So let me take the first part of the question. As far as physicians who -- I mean, some of them we called on even as much as 11 times or 12 times If you really think about it, we've been in the launch now, this is the 12 times week or 13th week. So you're looking at a pretty high frequency. But even at the 6, 7 times or 8 times frequency, which is about once every 2 weeks since we launched the product, that's the kind of frequency we're really targeting. And specifically we are targeting the top 50 doctors per territory. So obviously those high-frequency calls are going to the highest potential doctors, highest prescribers. And that's where we believe that high frequency is going to generate for us the highest market share among those doctors, who are the most important as far as the percent of the business they generate or percent of the prescriptions that they generate. Certainly, this experience that we're going through with Oxtellar XR and some of our folks, management team and the company have had also through the Carbatrol experience and so forth, certainly is going to help us tremendously with the Trokendi product. Now clearly, Trokendi product will have a different profile from a data point of view. We are given that it was approved based on bioequivalence and therefore, we didn't have a Phase III. But nevertheless, you are talking about a very similar domain here, which is providing physicians with an alternative, which is a once-a-day product in a very important therapeutic area which is epilepsy and the neurology space. And certainly, physicians from the feedback we're getting are also from the previous products we've seen in this marketplace they do appreciate the importance of compliance and the importance of potentially a lower side effect profile. We won't have that data initially from Trokendi XR. What we do have is obviously some of the data we generated from the switch study, where we switched patients in real life clinical setting where we switched them from twice a day, but clearly Topamax to once a day Trokendi XR. And we asked them at the end of the study their preference. And clearly we had an overwhelming preference of 90% or more patients preferring Trokendi XR. So we have a different kind of data that we can talk about. But clearly both products are synergistic both product reinforce each other obviously.

Yes. I mean I guess that was my question, not so much. I'm sure your company is learning things that I was more from the standpoint with physicians be able to grasp the concept of Trokendi quicker having been exposed to Oxtellar.

Yes, absolutely. And there is a good overlap as far as physicians who prescribe both medications.

This does conclude our time for questions. I'd like to turn the program but to Jack Khattar for any additional or closing remarks.

Thank you so much for joining us this afternoon. And we look forward to sharing with the results in the next quarter. Thank you.

Thank you again, sir. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. Attendees, you may now disconnect.