Good afternoon, and welcome to Supernus Pharmaceuticals Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in 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 Healthcare, Investor Relations representative of Supernus Pharmaceutical. You may now begin.

Thank you, Marvin. Good afternoon, everyone, and thank you for joining us today for Supernus Pharmaceuticals' third 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 November 04, 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.

Thank you, Peter, Good afternoon everyone and thanks for taking the time to join us on today's call. The third quarter of 2024 was characterized by strong performance from the company's key growth drivers Qelbree and GOCOVRI, significant operating earnings growth and advancement of our product pipeline. Total revenues excluding for Trokendi XR and Oxtellar XR increased 26% in the third quarter. Driving this growth was Qelbree's robust performance with 19% growth in prescriptions as reported by IQVIA and 68% growth in net sales. Prescriptions reached another all time quarterly high of 194,000 and net sales were $62 million, representing an approximate annualized run rate of $250 million. Gross-to-net deductions during the third quarter of this year were slightly below our revised target range of 45% to 50% but within expectation based on fluctuation that you would typically expect on a quarterly basis. During the third quarter Qelbree further expanded its base of prescribers by more than 2,000 prescribers, ending the quarter with approximately 30,854, up from 28,326 in the second quarter of 2024. For the back-to-school season, Qelbree performed well with a prescription growth in September of 14% over June. Finally, for the first nine months of this year, Qelbree's IQVIA prescriptions grew by 25% compared to the same period last year, outpacing the ADHD markets growth of 9% for the same period. Regarding GOCOVRI, recovery from the first quarter continued with net sales increasing to $36 million in the third quarter of 2024, representing an 8% growth over the same period in 2023. Switching now to our legacy products Oxtellar XR net sales for the third quarter 2024 were $30 million, essentially flat compared to the third quarter of last year. And for Trokendi XR third quarter net sales were $15 million, down 26% from the same quarter…

Thank you, Jack. Good afternoon everyone. As I review our third quarter 2024 results, please refer to today's press release and 10-Q that were filed earlier today. Total revenue for the third quarter of 2024 was $175.7 million compared to $153.9 million in the same quarter last year. Total revenue in the third quarter of 2024 was comprised of net product sales of $170.3 million and royalty and other revenues of $5.4 million. The increase in net product sales was primarily due to the increase in net product sales of our growth products Qelbree and GOCOVRI. Excluding net product sales of Trokendi XR and Oxtellar XR, total revenues for the third quarter of 2024 increased 26% compared to the same quarter last year. For the third quarter of 2024, combined R&D and SG&A expenses were $98.8 million as compared to $105.4 million for the same quarter last year. The slight decrease was primarily due to an insurance recovery for certain legal costs offset by increased R&D expense associated with the clinical programs for SBN 817 and SBN 820, as we continue to progress our pipeline. Operating earnings on a GAAP basis for the third quarter 2024 were $40.9 million as compared to $8.1 million for the same quarter last year. This is a $32.8 million increase in operating earnings compared to the same quarter last year, driven primarily by an increase in net product sales but also by a decrease in cost of goods sold and the aforementioned decrease in SG&A. GAAP net earnings were $38.5 million for the third quarter of 2024 or $0.69 per diluted share, compared to GAAP net loss of $16 million or $0.29 loss per diluted share in the same quarter last year. On a non-GAAP basis, which excludes amortization intangibles, share-based compensation, contingent consideration…

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of Andrew Tsai of Jefferies. Your line is now open.

Good afternoon. Thanks for taking my questions. Congratulations on the quarter and thanks for the updates. With this new data set, are we interpreting this correctly in that the overall seizure reduction for patients at 3 to 4 mg doses through the maintenance period is now 56% on 10 total patients, which would compare 85% flat time? So is the next batch of four patients performing in a way that decreased the overall seizure reduction from 75% to 58% or 56%, sorry?

And sorry, you were cutting off a little bit, but I think I got the gist of the question on 817, as far as the seizure reduction, we continue to see very healthy levels of seizure reduction, very robust actually. And if you know from the data we just announced today, you’ll see that in the maintenance period where we had 10 subjects, and these are the 10 subjects that were on the 3 milligram and 4 milligram twice daily, 56% reduction and then six of those ended up in the post maintenance extension period. So they stayed through the maintenance period and then kept stay in the study through the extension period and see the reduction in that period went up to 66%. Similarly with the responder rates, you'll notice between the maintenance period and the post maintenance period, you'll notice that the rates are going up. So it's interestingly, again, this is an exploratory study, as we explained earlier, the numbers are fairly small in general, but it's interesting to see that as subjects or what seems like happening here is that as subjects stayed longer on the drug, stayed in the study for longer. And this is the first time we have enough number of weeks, so to speak, as far as reading data because when we reported the interim analysis way back, we had only very few patients on few weeks treatment, not for a long period of time. It's really nice to see that 83% of the subjects had 30% or more seizure reduction. And even at 75% or more seizure reduction, not very nice to see that 50% of patients had that level of seizure reduction. So in general, I mean, we think this really study at the end of the day achieved the objective of leading us to believe that this can be a very strong product in the seizure area. We are improving and working on improving the tolerability as we discussed way back in May. The study achieved its objective in helping us decide what is the dose that we need to study further in the Phase 2b. And that's why we picked the 3 and 4 milligram, because they seem to be the two appropriate doses based on the data we have so far. And that's what we're studying in the Phase 2b. So all in all, we still feel pretty good about the drug. Absolutely, this is an open label. Of course, it's exploratory. Again, smaller numbers. And as we segment the data more and more and cut it down, we end up with like two patients here and three patients there, it becomes even less meaningful. So that's why we're trying to stay focused on the main patient population that we're moving forward with, which is focal seizures and the doses that we're going to move forward, which is 3 to 4 milligram. Hopefully, I answered most of your question.

Yes, thank you. Thank you. And as for the apomorphine pump under review, noticed AbbVie’s pump was recently approved and they spoke highly of its own. Thinking about reading across to your own review, how might AbbVie’s fast approval serve as a positive for you, if at all is carrying?

Yes, regarding the pump, we're pretty actually excited overall for patients in general for the category to see and hopefully our pump will be approved in February to see these pumps eventually get to the marketplace. There's a lot of market education that has to occur and we welcome another company to be doing that with us and educating patients on this specific treatment segment that we will be creating together in the market, in the U.S. Outside the U.S. that market segment have been around for a long time and people have been using the pumps fairly well and are used to using them. So we welcome that opportunity. We think this is a great category. This is a very much needed treatment option for patients before they resort to invasive surgery or treatments. And we think the pumps could be fairly differentiated. We'll see what our label look like and how they do compare, but there will be enough room for both products. No question about it. There is a lot of patients out there that are not really doing that well and they could do really better with phonotics [ph] like this.

Great. And the last question. Thank you. Is SPN-820 for where you saw the 22 point or so MADRS reduction by day 10 in your recent MDD study. Do you expect that similar level of drug effect to be replicated in your TRD study with data in first half? And I'm just curious what you're assuming for drug and placebo at week five, that TRD study? Thank you.

Yes, I mean that's of course the big question, Andrew. Obviously you know the study we reported on is open-label. The study will hopefully report on in the first half of next year is a placebo control. Now simplistically, and I know you're not supposed to do that because these studies are open-label and what have you, but if you look at all depression or a lot of the depression trials out there, you look at the on an average what the placebo rates are on MADRS. I think I saw one report by someone did research in the space looking at around 23 different studies. Placebo rates are in the five points to 10 point reduction on MADRS. And if I apply that to our open-label, I still get very, very meaningful reduction in MADRS with our open-label data. So it's hard to predict clearly. Obviously I would rather have an open-lady study with this kind of data versus much lower reductions. The other encouraging thing is, the new data, we just actually had a post on the Psych Congress, the most recent Psych Congress where we looked at remission data and responder type of data. I mean within four hours you're looking at remission of about 35%. I mean that's really powerful. Or 50% response to MADRS again within four hours of the dose. And that goes up by day 10 to 63% on the remission and 84% with the response rate. I mean these are really fairly strong numbers. Again we should hope that a lot of these will continue to be the case with the Phase 2b. I mean that's obviously the goal.

Right Okay, thank you so much.

Thank you. We'll move it for our next question. Our next question comes from the line of Stacy Ku of TD Cowen. Your line is now open.

Hey there. Congrats on a nice quarter. We have a few questions, so first, just on kind of the key Qelbree launch, how are you thinking about the current volumes that you're seeing and whether you're on the right trajectory for 2025 Qelbree consensus? I think expectations are closer to $282 million at least on FactSet. What are your views there? And then as we think about kind of the net pricing we saw this quarter? How should we be thinking about the remainder of the year and how that might look as we go to 2025 as we tie in that question around consensus? So just curious your views as we look to next year as much as you can comment, just give us some understanding about kind of the growth dynamics into next year. That’s the first kind of set of two questions. And then a quick follow-up. For 820, the dosing strategy in the MDD trial was a touch different than TRD. Are you expecting the placebo response to be a touch more well controlled since you’re not having the patients come in as frequently? There seems to be kind of a need for the patients in the open label trial to come in very frequently. So just help us understand that dynamic as we think about placebo response and what could be expectations for the TRD study? Thanks so much.

Yes. Regarding the first question on Qelbree, as far as volume, I mean, we’ve been very pleased with the way the product is growing, has been growing and the kind of growth it’s shown in 2024 year-to-date about 25% on prescriptions. There are a couple dynamics that we’ve been seeing in the market and on the brand. One of them is we continue to see growth in the 90-day prescriptions. That is something which, obviously, when you read IQVIA data, IMS data, you may not see it firsthand unless you really dig into it deeper. And we’re closing in somewhere around the 11% of the prescriptions for the brand are now 90-day prescriptions. So – and that has grown from about – what used to be 7% of the prescription. So if that continues, that really tells us also that every prescription is much bigger than your usual 30-day prescription. So on a capsule or pill basis, the brand is growing much faster than what you see in the TRx’s clearly [ph]. So that also tells us that people are sticking to the brand. Otherwise the physician will not give you a 90-day prescription if they don’t think you’re doing well on the product clearly. It helps with compliance and retention. We do see also strong rates of retention and what’s really very healthy levels in general on Qelbree compared to the ADHD market overall. So we’re very optimistic as to where the brand is today and how healthy and robust the performance has been so far. And we sure hope that that will continue in 2025. And clearly in February next year we’ll talk a little bit more specifics as far as the sales or anything specific as far as growth rates and so forth. Regarding the net pricing,…

Okay, understood. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of David Amsellem of Piper Sandler. Your line is now open.

Thanks. So I have a couple. First, can you give us your latest thoughts on capital deployment and how you're thinking about M&A specifically whether you're prioritizing commercial stage assets versus pipeline focused assets and just how you're thinking about that, particularly in the context of the advancement of your internal pipeline; so that's number one. Then secondly, regarding Qelbree; wanted to pick your brain about how you're thinking about the competitive landscape longer-term. We're going to get data for Axsome solriamfetol, I believe in adult patients in the near future. So as you're thinking about other non-stimulant entrants like that product, how are you thinking about the potential impact to Qelbree longer term, if at all? Thank you.

Now regarding the first question on capital deployment and M&A, our priorities haven't really changed much. We continue to focus the top priority would be commercial products that bring us further revenue growth, cash flow and so forth. And the next priority would be pipeline assets that are at a later stage than our own pipeline. So clearly the pump hopefully will launch the pump but beyond the pump our two other assets are in Phase 2 or about to finish Phase 2b. So anything in Phase 3 or anything in the NDA stage or whatever will be something of focus for us. So we can bring in other products and launch other products other than on pipeline. So that's the focus of our activities and has been the case for a long time right now. And we continue to focus on CNS as our top priority. But I mentioned several times before that we're not shy about looking at other specific therapeutic areas where we can make an impact and we can market our products efficiently and effectively, other specialty areas. But those situations will have to be a little bit more multi asset type of situations. Not just one product but potentially a product with a pipeline or a couple products that are commercial and that where we can build a very strong presence in that new area, whatever that new area might be. In CNS we're agnostic, whether it's neurology or psychiatry. So we continue to look at both areas given our presence fairly in both of these areas from a salesforce commercial infrastructure perspective. As far as competition to Qelbree, I mean at some point there will be competition, no question about it. You really have to see at the end of the day the profile of these two products for us to really make a comment one way or the other. How would they compare to Qelbree or what kind of patient profile would be ideal for these new products. So clearly we're watching the situation and see as data comes out of the potential competitors, see how they fare, against Qelbree or compared to Qelbree in general. So that remains to be seen. And then also whether there are stimulants or non-stimulants. I mean that's another key factor.

That's helpful. If I may just sneak in a quick follow up. Just regarding M&A, is there a pro forma net leverage target beyond which you would not be comfortable going in the context of a transaction, particularly for a commercial stage asset?

We try to stay fundamental now. We run the business and also conservative as far as leverage, so we don't want to overleverage. We are comfortable in the 2.5 to three times EBITDA maybe. I mean that's as far as we would go. And at the end of the day, it all depends, as we all know, it really depends on the health of the assets that you're acquiring and how quickly you may be able to pay off the debt. And therefore you might make different decisions on leverage depending on that situation. So if these assets have fairly strong cash flows with longevity clearly and high growth rates, you might be able to feel a little bit more comfortable and leverage a little bit higher. But overall, I mean, give or take two and a half to three times will be the area where, we'd be comfortable with. Above that it gets a little bit, especially if there is no longevity or not ideal longevity I should say, or ideal growth rates for these assets.

Okay. Thank you.

Thank you. One moment for our next question. [Operator Instructions] I am showing no further questions at this time. I would now like to turn it back to Jack Khattar for closing remarks.

Thank you. In concluding our call this afternoon, we thank you for joining us to learn about our strong performance in the third quarter and first nine months of this year. The company has executed remarkably well through a multi-year transition and the loss of exclusivity on two of its legacy products. Excluding our legacy products, Trokendi XR and Oxtellar XR, we continue to deliver robust double digit growth in revenues. As a result, Trokendi XR represented only 9% of total revenues in the third quarter of 2024. Moreover, the company continued to generate strong cash flows behind the strength of its portfolio, particularly its growth products and through the efficiency of its operations. In addition, we continue to advance our product pipeline, announcing positive top line data from our open-label Phase 2 studies on SPN-817 and SPN-820 and we look forward to the upcoming catalysts over the next several months. Thanks again for joining us this afternoon. We look forward to updating you on our next call.

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