Good afternoon and welcome to Supernus Pharmaceuticals' Second Quarter 2022 Financial Results Conference Call. 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 for Supernus Pharmaceuticals. You may begin.

Thank you, Jason. Good afternoon, everyone and thank you for joining us today for Supernus Pharmaceuticals' second quarter 2022 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. Following remarks by management, we will open the call for questions. During the course of this call, 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 who may be listening to the replay, this call is being held and recorded on August 4, 2022. 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 will now turn the call over to Jack.

Thank you, Peter. Good afternoon, everyone and thanks for taking the time to join us as we discuss our 2022 second quarter results. During the first half of 2022, we continued to execute on our long-term growth strategy, focusing on successfully transitioning from our legacy and mature products to our growth products. For the first half of this year, total revenues were $322.6 million, representing an 18% increase over the same period last year. And adjusted non-GAAP operating earnings were $65.7 million, a 5% increase over the first half of last year, reflecting continued significant investment in Qelbree and its launch activities. Regarding Qelbree, we received approval for adult ADHD in April 2022. We launched the product in late May, expanding the market opportunity for Qelbree into the largest segment of the ADHD market. Qelbree represents true innovation in the adult market as the first novel non-stimulant to be introduced in 20 years. As mentioned previously, according to IQVIA Xponent 52-week data, the above market represents approximately 68% of the total market's prescriptions. The adult segment has been growing at a faster rate than the pediatric market and tends to be less seasonal. Qelbree's launch continues to progress well with increased momentum and prescription growth and shipments. During the second of 2022, total IQVIA prescriptions for Qelbree reached 62,938, representing an increase of 33% compared to the first quarter of 2022. Prescriptions in the most recent month of June reached 23,403, the highest monthly total since the launch of the product. Qelbree continues to expand its base of prescribers with over 9,276 prescribers in the second quarter of 2022, up from 6,900 prescribers in the first quarter of 2022. The product is supported by a sales force of approximately 195 sales representatives, calling on pediatricians, child and adult psychiatrists. The…

Thank you, Jack. Good afternoon, everyone. As I review our second quarter 2022 results, please refer to today's press release. Total revenue for the second quarter 2022 was $170.1 million, a 20% increase compared to $141.3 million in the same quarter last year. Total revenue in the second quarter of 2022 was comprised of net product sales of $165.5 million and royalty revenue of $4.6 million. The increase was primarily due to net product sales of GOCOVRI from the acquisition of Adamas in November 2021 and growth in net product sales of Qelbree and Oxtellar XR. For the second quarter of 2022, combined R&D and SG&A expenses were $116.9 million as compared to $85 million for the same period in 2021. The increase in expense is due to activities to support the launch of Qelbree and cost to support GOCOVRI. Amortization of intangible assets for the second quarter of 2022 were $20.6 million compared to $6 million for the first -- same period in 2021. The increase is due to the Adamas acquisition. Operating earnings on a GAAP basis for the second quarter of 2022 were $11.3 million as compared to $34.1 million for the same quarter in 2021. The decrease in GAAP operating earnings is primarily attributable to the aforementioned amortization of intangibles associated with the Adamas acquisition and higher expenses to support the launch of Qelbree as well as costs associated with GOCOVRI. On a non-GAAP basis which excludes amortization of intangibles, share-based compensation, contingent consideration and depreciation, adjusted operating earnings were $37.6 million compared to $37.4 million in the second quarter of 2021. As I mentioned on our previous call, the company adopted a new accounting standard related to the treatment of convertible debt instruments in January of this year using the modified retrospective approach. The company…

Our first question comes from David Amsellem from Piper Sandler.

I just had a couple. So first on Qelbree. Can you just talk about the gross to net? And specifically, how we should think about the extent to which the gross to net may moderate as the year progresses? And related to that, talk about contracting activities and just where things stand with the big PBMs? So that's the first question. And then, the second question is on Trokendi. I know it might be a little bit early to talk about but the market dynamics are still kind of fluid here in terms of generic presence. Can you talk about how you're thinking about erosion of Trokendi upon generic market formation early next year? And what are your latest expectations for competitive dynamics there?

Yes, sure. I'll take the first one regarding Qelbree and the gross to net. You may recall or most of the folks might recall when about a quarter ago, we said by the time we launch the adult, we would like to be somewhere in the 50% to 55% gross to net. And actually, we're not too far off. We are a little bit more in the very low 60s, so to speak, at this point and that is due to the fact, we haven't been able to finalize negotiations on 1 of the key contracts as far as the PBMs are concerned. We're getting closer negotiation wise. So ultimately, regarding your question as to how we see it progressing through the rest of the year, I mean, certainly, we would shoot for and target and we're trying to target somewhere in the 50 to 55, could be next quarter or definitely by the end of the fourth quarter, so -- which would be our target on an ongoing basis. If you remember, I mean, that's really where we see this going on an ongoing basis for Qelbree. As far as the contracting activities, I mentioned, I mean the other big PBM, we continue our negotiations with them. And I think we're getting to potentially a more reasonable domain here where we can actually have a meaningful discussion. Before that, our positions were very, very far apart. So we're making progress. It is slower than we would like it to be. But nevertheless, our position as far as how we approach the business and how we build it does not really change much. We would rather help our patients get access to our medications through co-pays and patient assistance program than just paying exorbitant rebates, so that really don't add…

Our next question comes from Ken Cacciatore from Cowen.

Jack, you've seen more product launches than many pharma execs. So now that you've had a little bit of time with Qelbree, your understanding where the pricing roughly is going to shake out in the coverage and the market opportunity and how it's performing. Can you talk about what you think this could be? Is this easily over $0.5 billion drug? Is the pathway here fairly clear in your mind as you've had this experience with it? And then on the apomorphine pump, I was wondering if you could help characterize the patient that this would be useful for. Maybe talk a little bit in compare and contrast to DUOPA. And maybe remind us of DUOPA pricing, is that something that you might be thinking about if we're able to successfully get the pump on the market?

Yes. I mean, regarding Qelbree and what we've seen so far and also the different launches we've experienced over the years, even specifically in ADHD, given our heritage in ADHD and given that we have been involved in products like Adderrall XR and Intuniv and Mydayis and so many other products in this space. Qelbree is truly a very unique product and it's proven to be that way through the feedback that we have been getting from the physicians and the patients about the product. This is not a Strattera. This is not just another norepinephrine reuptake inhibitor. Actually, as I mentioned many times and we continue to create more data actually showing that the mechanism of action of viloxazine is very different than atomoxetine. There are some similarities but it's really a different molecule that has a much higher activity on the serotonin side and so forth. And that's why probably its clinical profile is much -- very different than atomoxetine in being a good antidepressant, for example, historically for people who know about the molecule. So Qelbree is truly unique as a novel nonstimulant and it's starting to resonate with folks. We're extremely excited about the upswing that we are starting to see, a meaningful increase in the June monthly prescription. We were up to 23,000 prescriptions in the month of June. And we're really building significant momentum into the back-to-school season which will be upon us very, very soon. All that together with the adult launch as well as our direct-to-consumer campaign which will intensify in the third quarter and that's why our Commercial spend is going to be fairly significant in the third quarter. So we're really giving every shot, every possible opportunity here for the product to be as big as we think. So how…

At this time, there are no further questions, so I would like to turn it back now to Jack for closing remarks.

Thank you. In concluding our call this afternoon, I would like to emphasize that Qelbree's and GOCOVRI's growth are our top priority. We are excited about Qelbree's increased momentum behind the adult launch and the preparation for the upcoming back-to-school season. Similarly, we are pleased with the GOCOVRI's and continued growth since the completion of the Adamas integration and we look forward to building on that momentum for the remainder of the year. I would like to thank our employees for delivering a solid quarter with record revenues for Supernus and look forward to updating everyone through the second half of the year. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.