Good afternoon, and welcome to the Supernus Third 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 the 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 more fully discussed in our annual report on Form 10-K that we filed with the SEC on March 15, 2013, and they'll be most particularly dealt with under the caption, Risk Factors. Supernus disclaims any obligation to update or revise any forward-looking statement made on this call as a result of new information or future developments. As a reminder, Supernus' policy is to provide, update or reconfirm its 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. References to current cash, cash equivalents and investments are based upon balances as of September 30, 2013. All other guidance, including guidance relating to the company's expected expenses, year-end cash and corporate goals is, as of today, November 12, 2013. With that, I'll hand it over to Jack Khattar, President and CEO of Supernus.

Good afternoon, and welcome to our third quarter 2013 financial results conference call. With me today on the call is Greg Patrick, Vice President and Chief Financial Officer of Supernus. The third quarter of this year marked another historic event for us, that of launching our second product in the epilepsy market. As we expected, we received approval by the FDA for Trokendi XR in the third quarter and were able to launch it 1 week after approval. There are very few specialty pharma companies that can report 2 product approvals and launches in less than 12 months. This has been a remarkable achievement by our commercial team and sales force. I'm also pleased to report that our business is experiencing strong growth in product shipments to wholesalers and in prescriptions. Product shipments to wholesalers reached $13.8 million by the end of third quarter and $17.9 million by the end of last week. That translates to $4.1 million in product shipments in the last 6 weeks. Regarding prescriptions, Oxtellar XR continues to show significant growth, with IMS prescriptions growing by 108% in the third quarter to 7,596, up from 3,648 prescriptions in the second quarter. In addition, Trokendi XR is off to a strong start, with 4,711 prescriptions reported by IMS for the week ending November 1, 2013, of which 1,434 prescriptions were in the first 5 weeks of launch in the third quarter. This growth in prescriptions on both products resulted in a significant increase in market share penetration. Based on IMS data for the week ending November 1, 2013, Oxtellar XR achieved a conversion share of the addressable oxcarbazepine market of approximately 1.8%, representing a significant increase over the 1.3% share we reported during our second quarter update and a continued trend that is consistent with Carbatrol's historical…

Thanks, Jack, and good afternoon, everyone. Starting with our third quarter 2013 financial results, we recorded net product revenue of $1.1 million for the 3 months ended September 30, 2013. This represents 3,648 Oxtellar XR prescriptions filled at the pharmacy level during the second quarter of 2013. Product gross margin on net product revenue was 97%. Research and development expense declined from $8.3 million in 2012 to $3.8 million in 2013, primarily because our Phase IIb study for SPN-810 was completed in 2012. Selling, general and administrative expense for the third quarter increased from $4.1 million in 2012 to $14.6 million in 2013, primarily due to increased sales and marketing costs associated with the commercial launches of Oxtellar XR and Trokendi XR. We recognized a noncash charge of $4.1 million associated with the interest make-whole derivative liability provision of our 7.5% convertible notes during the third quarter of 2013. Net loss applicable to common shareholders for the third quarter was $24.1 million or $0.78 per common share, based on 30.9 million weighted average shares outstanding. This compares to a net loss of $13.5 million or $0.55 per common share based on 24.5 million weighted average shares outstanding in the third quarter of 2012. Moving on to the 9-month period ended September 30, 2013, we recorded net product revenue of $1.3 million. This is comprised of 4,177 Oxtellar XR prescriptions filled at the pharmacy level during the first and second quarters of the year. Gross -- product gross margin on net product revenue was 97%. R&D expense for the first 9 months of 2013 was $11.8 million, down from $18.4 million in 2012. The decrease was primarily attributable to the completion of our Phase IIb study for SPN-810 in 2012. SG&A expense for the first 9 months of 2013 was $40.4…

In summary, we are confident that we will have successful product launches for Oxtellar XR and Trokendi XR. We have a strong cash position that is allowing us to expand our sales force and to invest in the commercialization of both products. Our market share trends to date indicate that we should be able to achieve or potentially exceed the 4% market share target required to reach cash flow breakeven by end of 2014. As we mentioned earlier, on Oxtellar XR, we are already at a 1.8% share and Trokendi XR is exceeding the Oxtellar XR trend with 0.5% after only 10 weeks into the launch. We look forward to our fourth quarter and to concluding what has been a remarkable year for Supernus. We will take now any questions.

[Operator Instructions] Our first question comes from Ken Cacciatore of Cowen and Company.

Just wanted to get a little bit more kind of nuance feedback you're getting from the clinicians on the Trokendi calls, maybe some of the negative and positives. And then maybe a little bit of discussion on Oxtellar refill rates. And on both products, maybe just discussion about prior authorization. Are we encountering that? And how is that going?

Yes, I'll take that, Ken. Regarding Trokendi XR, the feedback from the field actually has been very, very consistent with the feedback we have been getting and continue to get on Oxtellar XR. Again back to the original premise behind these 2 products, the need for once-a-day, the need for compliance and the potential improvement that physicians or patients may experience with the use of these products from a side effect point of view continues to resonate and continues to be the primary reasons why these physicians and patients like these products and appreciate them. So, so far, everything we've been hearing on Trokendi XR has been very, very consistent with what we've heard and continue to hear on Oxtellar XR: Positive feedback. Even some physicians telling us, "Why did you guys wait so long, for what? Waiting for all this. We've been waiting for this kind of product once-a-day and so forth." As far as Oxtellar XR and refills and so forth, some of you may have noticed that in the last couple of weeks, it had a kind of, in general, the emphasis on Oxtellar XR flattened and the refills or the prescriptions flattened a little bit. That is normal. We did expect that. That was part of our plan because we wanted to launch Trokendi XR, and the emphasis was on the launch of Trokendi XR. So we wouldn't read too much into these weekly aberrations as far as ups and downs on Oxtellar XR. We expect the product to continue its momentum. And once we put a big push behind Trokendi XR, there will be a rebalancing as far as the emphasis that the sales force is putting into these physicians' offices.

Okay. Jack, maybe one last question, if I could. Any thoughts on the upcoming potential Upsher launch, kind of how you're going to market against that? And just further detail against them.

Yes, sure. We don't have a specific date, obviously, as to when they might be launching their product. Their PDUFA date is sometime in December, so we expect them to launch the product sometime in the first quarter of next year. The only thing we can do is certainly give Trokendi XR the best shot we can, and that's what we're doing at this point. As far as differentiation between the 2 products, clearly, that will remain to be seen, depending on the label they get and the breadth of the indication set that they will get on their label versus our label. So far from what we've seen as far as data that they have issued and will be releasing at the American Epilepsy Society, we really don't see any major differences between the products at this point except for some of the things that we might have a slight advantage over their product. But it's a little bit premature for us to really make any confirmed comments on that front at this point.

Our next question comes from David Amsellem of Piper Jaffray.

This is Traver Davis on for David. So just any color on how the dosage mix for Oxtellar has trended over the last few months, and also how do you expect this to trend going forward, particularly from the perspective of ASPs for the product? And then also on -- switching gears to SPN-810, when do you expect the negotiation of the SPA to be complete? And how long do you think the study will take from the first patient enrolled to the top line data?

Yes. As far as the mix of the different dosage thing, and this will apply to Trokendi XR as well, I mean, the comments are fairly the same. What we've seen initially in both launches is at the beginning, physicians tended to use the lower-dose strengths a little bit more than probably you would typically expect. And as time goes on and the launch is well on its way, we start seeing a rebalance in the product mix towards the higher strengths. And we saw that on Oxtellar XR, where the 600 milligrams started picking up a little bit later. And Trokendi XR will probably be in a similar pattern, while it is still early for us to see at this point, given it's only 5 to 8 weeks into the launch. So it's a little bit early to predict, but that's what we would expect on both products. Regarding SPN-810, we had really a very positive meeting with the FDA on the scientific side regarding this program. And as we said, we were looking at doing the SPA process. That whole process, we don't expect it to delay the program by any means. Actually we are still on time, as far as our initial plans for the product. We are very encouraged by the discussions we had with the FDA. And as we mentioned before, some of you may remember, we didn't really put in our plans anything as far as fixed starting a Phase III, as far as next year is concerned. So most probably, a Phase III program will start sometime in 2015. As we get a little bit closer into the process with the FDA, we will get back to you guys with a little bit more clarity as to when in 2015. But we will rather reserve that a little bit later after we've had a little bit more discussions with them with the SPA process, see how that process is going, and then we can give you a better feel for the timing of the Phase III program.

Our next question comes from Bill Tanner of FBR Capital.

Jack, just back on the dose, your comment that physicians are starting out with a higher dose. I mean, is this just a function of being comfortable -- getting more comfort that they can start with a higher dose? It's going to be tolerated better or tolerated well? And is it possible starting at a higher dose, that they are going to have a greater satisfaction, I guess, with the product than if you start at the lower dose and have to titrate that more? Just kind of trying to see how the shift to a higher dose at the outset, if that's going to provide much in a way of benefit or if it's really just a function of the experience that they're gaining.

Yes, sure. I was actually saying that initially when we launched Oxtellar XR, they started with slightly lower doses than we expected. And they are actually migrating now into much higher doses. And we're actually -- from the field, we're starting to hear some real great success stories on Oxtellar XR, for example, where physicians are pushing the dose even higher because of the great experience they're having with the product from a side effect point of view. So they're starting to push doses even higher than normally they would with a Trileptal or immediate-release oxcarbazepine. Again that was part of our expectations given the Phase III data that we have in the product and the great profile that product exhibited. And that's why we're seeing now a rebalance in the mix towards much higher doses as time goes on. At Trokendi XR, there is that same phenomenon but to a lower degree because Trokendi XR is a straight milligram-for-milligram conversion because of our bioequivalence, strong bioequivalence data that we have versus Topamax. So on that one, we're not seeing a strong of a trend with lower doses being spotted initially, but still there is a skew towards lower-dose strengths that we expect to go away as time goes on. Again because Trokendi XR is bioequivalent to Topamax, so they're doing the milligram-for-milligram conversion with no reservations whatsoever.

Okay. And then you mentioned at the outset, some data presentations at AES. Wondering if you could maybe just share some general observations as to what to expect and how you view the importance of the data to the treatment community at least.

Yes, sure. What we released -- a press release, I think it was last week, and what we said, we will be releasing more data at the AES in December next month in Washington D.C. is really about a lot of the data that we have generated from many of the clinical studies that we conducted on Trokendi XR to get the product approved. And while the program was designed to establish bioequivalence between Trokendi XR and Topamax, we're also hoping to see some, at least, trends or signals that the product potentially could. We don't know for sure because we didn't do a well-controlled comparative study between Trokendi XR and Topamax as far as side effects or anything like that. However interestingly, even though we had PK studies that weren't designed or powered to show any differences in AEs and for example, in this case, the cognitive side effects, interestingly, our products showed even statistical significance on some of these cognition tests, which was very exciting and encouraging for us. So those were very surprising results in a good way, obviously, in a very positive way, and we will look at exploring these areas even further. But certainly, that's data we wanted the community to know about. It's not data that will be on our labels. So I just want to clarify that. It's not something that we can promote, and we will not promote that data. But it is something that can be published, and it is a result of the study that we have done.

[Operator Instructions] Our next question comes from Annabel Samimy of Stifel.

I just wanted to go back to your comment about the guidance you mentioned that you were providing guidance for -- for the end -- through the end of the year of $8.5 million. You're switching from the deferred revenue recognition to just direct sales to wholesalers. So are we going to see some kind of adjustment in the fourth quarter that should over time correct in the first, second, third quarter of 2014? Can you help us understand the dynamic of what's about to happen with the revenues?

Right. Well, it's really, I think, fairly straightforward. I don't think there's going to be a major correction in 2014 going forward because we think that over time, the prescriptions for Oxtellar XR, the revenue recognized for that will pretty much mirror the prescriptions sold at the pharmacy level. And that assumes that the levels of inventory held by wholesalers is relatively static over time. And honestly, in the absence of anything to the contrary, that's probably the overwhelmingly reasonable assumption to make. So what's going to happen in the fourth quarter, and again this is premised on our seeing -- or continuing to see a repeatable pattern in allowances, rebates, et cetera, for Oxtellar XR, but assuming we continue to see consistent trends as we saw from the data in the first and the second -- scripts written in the first and second quarter, essentially, what will happen is the balance that you see on the balance sheet that we actually reflected in the press release, Annabel, for Oxtellar XR for deferred revenue, that's going to entirely come off the balance sheet, and that's going to get run through the P&L. And in addition to that, anything that we ship during the fourth quarter will also be recognized as revenue. Because what we're going to be doing is shifting instead of recognizing revenue based on prescriptions at the pharmacy level, it's going to be shipments into the trade. So that balance that you see for deferred revenue as of September 30 for Oxtellar XR, that all comes off. That will no longer exist.

Okay, great. And if I can ask you on, I guess, the recent approval of eslicarbazepine just, I guess, this past week. I didn't notice there was a comment about them potentially filing for not being a scheduled drug. How might that change the dynamic in the -- the competitive dynamic in this space? Do you have any concerns about that? Or is it just a new molecule that will take some time to penetrate the marketplace?

Yes, I mean, regarding eslicarbazepine, it's a little bit difficult depending on how they position in the market, obviously, and what kind of strategy they will have behind the product. However from all the data that they have published and that we know about that product, it's hard for us to see much of a differentiation behind that product versus the Trileptal product and so forth. So we don't see a lot of differentiating points here behind the product itself. Even when we look at certain PK and so forth, it looks more like a b.i.d. medication with a much higher Cmax versus a twice-a-day Trileptal. So we're trying to figure out really what kind of a differentiation they might be able to come in with from a positioning point of view. It's a little bit hard for us to predict at this point. But nothing in their data that really is of a major concern to us.

Okay, great. And if I can also ask, you mentioned that you're going to continue to add more sales reps in the fourth quarter. So do you have a target goal for your sales reps now? Has it changed over time? Or are you still thinking of the same type of doubling that you had talked about in the past?

Still the plan is still the same. As we mentioned, we are looking at 2014 to having something in the -- around 140 reps. Obviously, we are always evaluating that. If we see even a need for a higher number of reps, we could potentially increase that, but we'll certainly let you guys know at that point. But at this time, the plan continues to be the same, yes.

Our next question comes from Jonathan Eckard of Citi.

The first question is probably a simple one, but you gave the numbers $1.8 million with a $0.5 million gross to net discount. And then I think with the remainder of Oxtellar XR of $12 million, you booked $1.6 million of sales deductions. So I'm just trying to figure out with regards to the latter numbers, is that how we should be looking at gross to net going forward? Or is it completely unrelated to those kind of 2 figures?

The gross -- the ultimate gross to net deductions will be a bit more than that. That's based on the allowances and deductions we're aware of as of the time of -- that we booked that balance. So I would not take that as necessary being dispositive for forecasting gross to net going forward.

Okay, great. And then the second question is around 810. I was just wondering if you could refresh, or at least, my memory about prior ADHD agents and have they gone through the SPA process? I'm not as familiar with ADHD, but many companies view SPAs kind of being cumbersome and maybe not beneficial. But maybe is there a reason why in ADHD or for 810 specifically that an SPA would be overall beneficial?

Yes, sure. This SPN-810, just as a refresher, is not to treat ADHD. So it's not a straight development as you would expect if you were to be developing a new ADHD medication. 810 actually is for the treatment of impulsive aggression in ADHD, which is a fairly noncondition, however, for which there has been no products approved. And what we're basically embarking on here is a groundbreaking research and development, which the FDA has been very, very helpful in partnering with us on this program, and therefore, the need for an SPA because it's not as straightforward as ADHD. So that's really the reason for it. To answer your question directly, I'm not aware personally or my memory doesn't serve me well as far as remembering anything as far as ADHD products going the SPA route. You might be right that there are none. But this one is a little bit different because it's really fairly a novel area. There's a lot of scientific development there at the same time, just not a very straightforward, very exciting indication, and therefore, the need for an SPA.

Our next question comes from Alan Yu of Zazove Associates.

Just a quick one, just on the cash flow guidance. I was wondering if any of those reductions in the cash flow burn is a result of the timing of the actual cash spending change.

I'm sorry, a reduction due to what?

Is any of these cash burn reductions due to the timing, maybe the delay of some of the cash spending into next year?

Yes. I mean, the cash burn this year is I think -- we're coming from 3 places. One is, as you just referenced that some of our spending, as it often happens toward the back end of the year just because of delays, will move naturally into early next year. That's clearly the case, and I think that is predominantly in our research and development pipeline that, that comment would be relevant. There have also been -- and we've mentioned throughout our plans in terms of expanding our commercialization team, in particular our sales reps, that as we go forward, we'll fine-tune the timeframe and the numbers of reps that we would add. And in fact, we have done that. And that's been -- created a bit of a beneficial effect in terms of cash burn. And lastly, our cash burn at the onset of the year and even in the middle of the year was predicated on, perhaps, an earlier launch of Trokendi XR than we had -- than what actually -- in actuality turned out to be the case. So we're probably more focused on something which would have -- a launch which would have been earlier in the third quarter that happened later in the third quarter. And just as a result of that, that has also had an impact on our cash needs. So I'd say those 3 sources are probably, when you put together, those are the major impetus between the reduction in cash burn.

At this time, we have time for one final question. Our final question comes from Phil Dumas of Geode Capital.

Quick question for you on the cash burn. So that implies something like at the end of the year, cash of $65 million to $72 million -- $67 million to $72 million. Is it safe to assume we're going to end -- or next year's cash burn is going to be, I don't know if you've guided publicly to this yet, but in your budget's $40 million to $45 million for next year or so?

I think your number with respect to 2013 is a pretty fair number. You're right with respect to 2014. We have not talked about that. So clearly though, it's a number -- it is somewhere in the range -- what you referenced for 2014 might be reasonable, but we haven't talked about that yet. But we want to reaffirm that based on the ramp-up for our 2 commercialized products and our research spend that we believe we'll get the cash flow breakeven by the end of 2014.

Okay, okay. Sorry, last question. So on the share count, can you help us think of -- are the converts in the share count fully converted in the share count with the make-whole? Or how does that work?

The convert is not in the share count as of September 30. We are -- when we file our 10-Q, we will have a subsequent event disclosure. We'll talk about what's happened since September 30 regarding redemptions of the convert. And we'll lay out there the principal map which has been redeemed, the number of shares which have been issued consequent to both the principal of the coupon make-whole provision, as well as any cash that may have been paid out associated with those conversions.

Okay. And when will you release that?

Well, our drop-dead date is the 14th, so somewhere between tonight and the day of the 14th. So it's imminent.

And at this time, I'd like to turn the call back over to CEO, Jack Khattar, for any closing remarks.

Well, thank you so much for your time today. We're very excited about the events that occurred in the third quarter of this year. We launched our second product, Trokendi XR. It's off to a really, really great start as far as market penetration and achievement. It's on market. And Oxtellar XR, as well, continues to perform very well also. So we're looking at these 2 products as a very solid foundation for us as an epilepsy franchise that will really set the stage for a great 2014. Thank you.

Thank you, sir. That does conclude today's program. You may disconnect your lines at this time. Have a great day.