Q4 2019 Earnings Call

February 26, 2020

Operator: Good morning, ladies and gentlemen, and welcome to the Supernus Pharmaceuticals Q4 and full year 2019 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 Westwicke, investor relations representative for Supernus Pharmaceuticals. You may begin.

Good morning, ladies and gentlemen, and welcome to the support <unk>.

Operator: Ladies and gentlemen, and welcome to the Supernus Pharmaceuticals fourth quarter and full year 2019 financial results conference call. At this time, all participants are in a listen only mode.

Pharmaceuticals fourth quarter and full year 2019 financial results conference call.

Time, all participants are in listen only mode. Later, we will duck the question and answer session and 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 Westwicke Investor Relations representative for Supernus Pharmaceuticals, you may begin.

Operator: 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 Westwick Investor Relations, a representative of Supernus Pharmaceuticals. You may begin. Thank you, Jonathan.

Peter Vozzo: Thank you, Jonathan. Good morning, everyone, and thank you for joining us today for Supernus Pharmaceuticals Q4 and full year 2019 financial results conference call. Yesterday, 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, Greg Patrick. 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 to 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 and can be identified by such words as expect, plan, will, may, anticipate, believe, should, intend, and other words of similar meaning.

Thank you Jonathan Good morning, everyone and thank you for joining us today for Supernus Pharmaceuticals fourth quarter and full year 2019 financial results conference call yesterday. After the close of the market. The company issued a press release announcing these results on the called me today, our Supernus, Chief Executive Officer, Jack Qatar, and Chief Financial Officer brake pad.

Peter Vozzo: Good morning, everyone, and thank you for joining us today for Supernus Pharmaceuticals' fourth quarter and full year 2019 financial results conference call. Yesterday, 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, Greg Patrick. 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 to 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 and can be identified by such words as expect, plan, will, may, anticipate, believe, should, intend, and other words of similar meaning.

Today's call is being made available via the Investor Relations section of the company's website at <unk> IR Dot Supernus dotcom following remarks by management, we will open the call to question.

During the course of this call management may make certain forward looking statements regarding future events in the company's future performance. These forward looking statements reflect supernus is current perspective on existing trends and information that can be identified by such words as expect plan will make participate believes should intend in other words.

Well there meaning.

Peter Vozzo: Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section on the company's 2018 Annual Report on Form 10-K. 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 26 February 2020 at approximately 9:00AM Eastern Time. 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.

Peter Vozzo: 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 2018 Annual Report on Form 10-K. The 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 February 26, 2020, at approximately 9 a.m. Eastern Time. Since then, the company may have made additional announcements related to the topics discussed. Please refer to the company's most recent press releases and current filings with the SEC. Supernus does not have any obligation to update these forward-looking statements except as required by applicable securities laws. I will now turn the call over to Jack.

Any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted and the risk factor section on the Companys 2018 annual report on form 10-K.

Actual results may differ materially from those projected in these forward looking statements for the benefit of those of you who maybe listening to the replay. This call is being held and recorded on February 26, 2020 at approximately 90 am Eastern time. Since then the company may have made additional announcements related to the topics discussed.

Please reference the company's most recent press releases concurrent filings with the FCC.

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.

Jack A. Khattar: Thank you, Peter. Good morning, everyone, and thanks for taking the time to join us as we discuss our 2019 fourth quarter and full year results. In our press release yesterday, we announced the results of the P302 study, which is the second phase three study of SPN810 for the treatment of impulsive aggression in ADHD patients 6 to 11 years old. The study was similar in design to the first P301 Phase III study. It was a randomized, double-blind, placebo-controlled, multi-center, parallel-group clinical trial in patients diagnosed with ADHD. The study missed the primary endpoint, showing that patients receiving the 36 mg dose had a reduction of 51% in the average weekly frequency of impulsive aggression episodes, compared to 54% in the placebo. These results differ from the first phase 3 trial where the drug effect was much higher at 59% reduction in the frequency of episodes, and the placebo effect was much lower at 47% reduction. As in the P301 trial, the drug was safe and well-tolerated.

Jack Khattar: Thank you, Peter. Good morning, everyone, and thanks for taking the time to join us as we discuss our 2019 Q4 and full year results. In our press release yesterday, we announced the results of the P302 study, which was the second phase 3 study of SPN810 for the treatment of impulsive aggression in ADHD patients 6 to 11 years old. The study was similar in design to the first P301 phase 3 study. It was a randomized, double-blind, placebo-controlled, multicenter, parallel group clinical trial in patients diagnosed with ADHD. The study missed the primary endpoint, showing that patients receiving the 36 mg dose had a reduction of 51% in the average weekly frequency of impulsive aggression episodes, compared to 54% in the placebo arm.

Thank you Peter good morning, everyone and thanks for taking the time to join US as we discussed our 2019 fourth quarter and full year results.

Our press release yesterday, we announced the results of the P. thrilled to study, which was the second phase three study of S band aid than for the treatment of impulsive aggression and HD patients six to 11 years old.

The study was similar in designed to the first be three a one phase three study it was a randomized double blind placebo controlled multicenter parallel group clinical trial in patients diagnosed with H D.

The study Miss the primary endpoint showing that patients receiving the 36 milligram those had a reduction of 51% and the average weekly frequencies of impulsive aggression episodes compared to 54% and the placebo.

Jack Khattar: These results differ from the first phase 3 trial, where the drug effect was much higher at 59% reduction in the frequency of episodes, and the placebo effect was much lower at 47% reduction. As in the P301 trial, the drug was safe and well-tolerated. Given the results of the P302 trial and the results we announced last year from the P301 trial, all development activities related to SPN810 in impulsive aggression have been put on hold. Regarding SPN812, the FDA accepted for review our NDA with a PDUFA target action date of 8 November 2020. We remain focused on preparing for the potential commercial launch of SPN812 by year-end. In addition, we expect to complete enrollment in the ongoing phase 3 program with SPN812 in adult patients by the end of 2020.

These results to differ from the first phase three trial for the drug effect was much higher at 59% reduction in the frequency of episodes and the placebo effect was much lower at 47% reduction.

As in the B, three or one trial, the drug was safe and well tolerated given the results of the piece Rio two trial and the results we announced last year from that piece, where your one trial all development activities related to Sps <unk> than in impulsive aggression have been put on hold.

Jack A. Khattar: Given the results of the P302 trial and the results we announced last year from the P301 trial, all development activities related to SPN 810 and impulsive aggression have been put on hold. Regarding SPNA-12, the FDA accepted for review our NDA with a PDUFA target action date of November 8, 2020. We remain focused on preparing for the potential commercial launch of SPNA-12 by year-end. In addition, we expect to complete enrollment in the ongoing Phase 3 program with SPNA-12 in adult patients by the end of 2020. This is an important trial that will potentially help us expand the use of SPNA-12 if approved by the FDA in the adult market. Our launch plans and preparation for the introduction of SPNA-12 are well underway.

Regarding S band AIDS well F.D.A. accepted for review our in D.A. with a PDUFA target action date of November 820 20.

We remain focused on preparing for the potential commercial launch with a span a 12 by year end.

In addition, we expect the complete enrollment and the ongoing phase three program with ESPN 812 in adult patients by the end of 2020.

Jack Khattar: This is an important trial that will potentially help us expand the use of SPN-812 if approved by the FDA in the adult market. Our launch plans and preparation for the introduction of SPN-812 are well underway. We have initiated several programs that focus on disease awareness and education and that have broad reach to parents and patients. We have also made progress in our discussions with managed care plans regarding the importance of SPN-812 in the current treatment paradigm for ADHD. In addition, we have completed important work on the novel mechanism of action of SPN-812, highlighting its activity as a serotonin and norepinephrine modulating agent and scientifically proving that it is much different from existing therapies in the marketplace.

This is an important trial that would potentially help us expand the use of a span a 12, if approved by the F.D.A. and the adult market.

Our launch plans in preparation for the introduction of SP, and a 12 or well under way we have initiated several programs that focus on disease awareness and education and that have broad reach the parents and patients. We have also made progress in our discussions with managed care plans regarding the importance of SP anyway.

Jack A. Khattar: We have initiated several programs that focus on disease awareness and education and that have broad reach among parents and patients. We have also made progress in our discussions with managed care plans regarding the importance of SPNA-12 in the current treatment paradigm for ADHD. In addition, we have completed important work on the novel mechanism of action of SPNA-12, highlighting its activity as a serotonin and norepinephrine modulating agent and scientifically proving that it is much different from existing therapies in the marketplace.

Well in the current treatment paradigm for 80 Judy.

In addition, we have completed important walk on the novel mechanism of action of SP and a 12.

Lighting gets activity as a sort of tone and nor at enough and modulating agent and scientifically proving that it is much different from existing therapies in the marketplace. We plan on presenting in publishing this scientific work throughout the year at various conferencing, starting with a poster presentation next week at the center.

Jack Khattar: We plan on presenting and publishing this scientific work throughout the year at various conferences, starting with a poster and presentation next week at the ASENT 2020 Neurotherapeutics meeting in Bethesda, Maryland. For SPN-604 for the treatment of bipolar disorder, we expect enrollment in the ongoing pivotal phase 3 monotherapy trial for the treatment of bipolar disorder to continue through 2021. Moving on to the existing neurology business. Total prescriptions for Trokendi XR and Oxtellar XR for full year 2019 as reported by IMS reached 836,399 prescriptions, representing a 6.4% increase over 2018.

Jack A. Khattar: We plan on presenting and publishing this scientific work throughout the year at various conferences, starting with a poster and presentation next week at the ASCEND 2020 Neurotherapeutics Meeting in Bethesda, Maryland. For SVN 604 for the treatment of bipolar disorder, we expect enrollment in the ongoing Pivotal Phase III monotherapy trial for the treatment of bipolar disorder to continue through 2021. Moving on to the existing neurology business, total prescriptions for trochandiaxor and oxalatexor for full year 2019, as reported by RMS, reached 836,399 prescriptions, representing a 6.4% increase over 2018. For Chokendi XR, Supernus managed to grow prescriptions to 672,485 for the full year 2019, representing a 5.3% increase compared to 2018, despite the intensified competition by CGRPs and the slight decline in the topiramate market.

2020, new to kind of Butte Ics meeting in Bethesda, Maryland.

For SP and six support for the treatment of bipolar disorder, we expect enrollment and the ongoing pivotal phase three monotherapy trial for the treatment of bipolar disorder to continue through 2021.

Moving onto the existing neurology business total prescriptions for Trokendi XR on Oxtellar XR for full year 2019 as reported by Rpms reached 836399 prescriptions, representing a 6.4% increase over 2018.

Jack Khattar: For Trokendi XR, Supernus managed to grow prescriptions to 672,485 for the full year 2019, representing a 5.3% increase compared to 2018, despite the intensified competition by CGRPs and the slight decline in the topiramate market. However, due to the inventory build in 2018 and continued pressure from managed care, net product sales for Trokendi XR in 2019 were down by 6.4% as compared to 2018. For Oxtellar XR, prescriptions for the full year 2019 were 163,914, representing an increase of 11.1% over 2018.

For Trokendi XR supporting us managed to grow prescriptions to 672485 for the full year 2019.

Representing a 5.3% increase compared to 2018, despite the intensified competition by C.G. Rps and the slight decline into Topiramate market.

Jack A. Khattar: However, due to the inventory build in 2018 and continued pressure from managed care, net product sales for Trocandex R in 2019 were down by 6.4% as compared to 2018. For Oxtheller-XLR, prescriptions for the full year 2019 were 163,914, representing an increase of 11.1% over 2018. This compares favorably to the 3% prescription growth in the oxcorbezapine market and is due to the launch of the monotherapy indication for oxfalar-XR in 2019. As with Trocandy XR, but to a lesser degree, net sales of Oxfeller XR and the comparison towards 2019 were impacted by the inventory build and managed care pressure, yielding a net increase of 4.3% in net sales As we mentioned on our last quarterly earnings call, any positive impact of volume growth and price increases in 2020 is likely to be offset by continued pressure from gross net sales deductions.

However, due to the inventory build in 2018 and continued pressure from managed care net product sales for Trokendi XR and in 2019 were down by 6.4% as compared to 2018.

[noise] for Oxtellar XR prescriptions for the full year 2019 worth 163914, representing an increase of 11.1% over 2018.

Jack Khattar: This compares favorably to the 3% prescription growth in the oxcarbazepine market and is due to the launch of the monotherapy indication for Oxtellar XR in 2019. As with Trokendi XR, but to a lesser degree, net sales of Oxtellar XR and the comparison towards 2019 were impacted by the inventory build and managed care pressure, yielding a net increase of 4.3% in net sales in 2019 compared to 2018. As we mentioned on our last quarterly earnings call, any positive impact of volume growth and price increases in 2020 are likely to be offset by continued pressure from gross-to-net sales deductions. For 2020, we expect a continuation of competitive pressure in the migraine market due to the introduction of additional CGRP treatments and headwinds from managed care.

This compares favorably to the 3% prescription growth and the Oxcarbazepine market and is due to the launch of their monotherapy indication for Oxtellar XR in 2019.

As with Trokendi XR, but to a lesser degree net sales of Oxtellar XR and the comparison towards 2019 were impacted by the inventory build and managed care to pressure, yielding a net increase of 4.3% in net sales in 2019 compared to 2018.

As we mentioned on our last quarterly earnings call any positive impact volume growth in price increases in 2020 or likely to be offset by continued pressure from gross to net sales of deductions for 2020, we expect a continuation of competitive pressure in the migraine market due to the introduction of additional see GRP treat.

Jack A. Khattar: For 2020, we expect a continuation of competitive pressure in the migraine market due to the introduction of additional CGRP treatments and headwinds from managed care. Finally, our activity in corporate development will continue in 2020 as we look for neurology and psychiatry assets that represent a strategic fit with our current portfolio. I'll now turn the call over to Greg, who will provide more details on our fourth quarter and full year financial performance.

Mens and headwinds from managed care.

Jack Khattar: Finally, our activity in corporate development continues in 2020 as we look for neurology and psychiatry assets that represent a strategic fit with our current portfolio. I'll now turn the call over to Greg, who will provide more details on our Q4 and full year financial performance.

Finally, our activity and corporate development continues in 2020, as we look forward neurology and psychiatry assets, that's represent a strategic fit with our product portfolio.

I'll now turn the call over to Greg will provide more details on our fourth quarter and full year financial performance.

Greg Patrick: Thank you, Jack, and good morning, everyone. As I review our fourth quarter and full year 2019 financial results, please refer to yesterday's press release. Total revenue for full year 2019 was $393 million, compared to $409 million in 2018. Total revenue for full year 2019 was comprised of net product sales of $383 million and royalty revenue of $9 million, as compared to net product sales of $400 million, royalty revenue of $8 million, and licensing revenue of $0.75 million in 2018. As we previously disclosed, wholesalers, distributors, and pharmacies increased their inventory levels of the company's products in the fourth quarter of 2018.

Greg Patrick: Thank you, Jack, and good morning, everyone. As I review our Q4 and full year 2019 financial results, please refer to yesterday's press release. Total revenue for full year 2019 was $393 million compared to $409 million in 2018. Total revenue for full year 2019 was comprised of net product sales of $383 million and royalty revenue of $9 million, as compared to net product sales of $400 million, royalty revenue of $8 million, and licensing revenue of $0.75 million in 2018. As we previously disclosed, wholesalers, distributors, and pharmacies increased their inventory levels of the company's products in the Q4 of 2018.

Thank you Jack and good morning, everyone as I review, our fourth quarter and full year 2019 financial result, please refer to yesterday's press release.

Total revenue for full year, 2019 was $393 million compared to $409 million in 2018.

Total revenue for full year 29, Jean was comprised of net product sales of $383 million and royalty revenue of $9 million as compared to net product sales of $400 million royalty revenue of $8 million and licensing revenue from 0.7 $5 million.

In 2018.

As we previously disclosed wholesalers and distributors and pharmacies increase their inventory levels of the company's products in the fourth quarter 2018.

Greg Patrick: We estimate that this caused net product sales in both the fourth quarter and full year of 2018 to be approximately $10 million higher than would have been otherwise had inventory levels remained consistent quarter to quarter. This inventory build in the fourth quarter of 2018 was effectively reversed in the first quarter of 2019. As a result, net product sales were approximately $10 million lower in both the first quarter and for the full year 2019 than would have been otherwise. These fluctuations in net product sales primarily affected Trukendi XR.

Greg Patrick: We estimate that this caused net product sales in both Q4 and full year of 2018 to be approximately $10 million higher than would have been otherwise had inventory levels remained consistent quarter to quarter. This inventory build in Q4 of 2018 was effectively reversed in Q1 of 2019. As a result, net product sales were approximately $10 million lower in both Q1 and for the full year 2019 than would have been otherwise. These fluctuations in net product sales primarily affected Trokendi XR. Net product sales for full year 2019 were $383 million compared to $400 million for full year 2018.

We estimate that this caused net product sales in both the fourth quarter and full year of 2018 to be approximately $10 million higher than would have been otherwise had inventory levels remain consistent quarter to quarter.

This inventory build in the fourth quarter of 2018 was effectively reversed in the first quarter of 29 chain.

As a result net product sales were approximately $10 million lower.

In both the first quarter and for the full year 29 chain than would have been otherwise.

These fluctuations and net product sales primarily affected trokendi XR.

Greg Patrick: Net product sales for full year 2019 were $383 million, compared to $400 million for full year 2018. Net product sales for Drukendi XR for full year 2019 were $295 million, compared to $315 million for full year 2018. Net product sales for Xtellar XR for full year 2019 were $88 million compared to $85 million for full year 2018. Turning to the fourth quarter, total revenue was $100 million compared to $116 million in the fourth quarter of 2018. Total revenue for the fourth quarter of 2019 included net product sales of $98 million and royalty revenue of $3 million, as compared to net product sales of $114 million and royalty revenue of $2 million in the prior year period.

Net product sales for full year, 2019 were $383 million compared to $400 million for full year 2018.

Greg Patrick: Net product sales for Trokendi XR for the full year 2019 were $295 million compared to $315 million for full year 2018. Net product sales for Oxtellar XR for full year 2019 were $88 million compared to $85 million for full year 2018. Turning to Q4. Total revenue was $100 million compared to $116 million in Q4 2018. Total revenue for Q4 2019 included net product sales of $98 million and royalty revenue of $3 million, as compared to net product sales of $114 million and royalty revenue of $2 million in the prior year period.

Net product sales for Trokendi XR for the full year 2019 were $295 million compared to $315 million for full year 2018.

No product sales for Oxtellar XR for full year, 2019 were $88 million compared to $85 million for full year 2018.

Turning to the fourth quarter.

Total revenue was $100 million compared to $116 million in the fourth quarter of 2018.

Total revenue for fourth quarter 29 chain included net product sales of $98 million and royalty revenue of $3 million as compared to net product sales of $114 million and royalty revenue of $2 million in the prior year period.

Greg Patrick: Net product sales for Q4 2019 were $98 million compared to $114 million in Q4 2018. The year-over-year decrease is primarily due to the $10 million inventory build in Q4 2018, which I just described. As with the full year results, these fluctuations in net product sales primarily affected Trokendi XR. Net product sales for Trokendi XR for Q4 2019 were $75 million compared to $88 million in 2018. Net product sales for Oxtellar XR for Q4 2019 were $23 million compared to $25 million in the prior year period. Turning now to expenses.

Net product sales for the fourth quarter of 2900 $98 million compared to $114 million in the fourth quarter of 2018.

Greg Patrick: The year-over-year decrease is primarily due to the $10 million inventory build in the fourth quarter of 2018, which I just described. As with the full year results, these fluctuations in net product sales primarily affected Trochendy XR. Net product sales for Trochendy XR for the fourth quarter 2019 were $75 million, compared to $88 million in 2018. Net product sales for Axtellar XR for the fourth quarter 2019 were $23 million, compared to $25 million in the prior year period.

The year over year decrease is primarily due to the 10 million dollar inventory build in the fourth quarter of 2018, which I just described.

As with the full year results. These fluctuations net product sales primarily affected trokendi XR.

Net product sales for Trokendi XR for the fourth quarter, 2019 were $75 million compared to $88 million in 2018.

Net product sales for Oxtellar XR for the fourth quarter, 2019 were $23 million compared to $25 million in the prior year period.

Greg Patrick: Turning now to expenses, research and development expenses were $69 million for full year 2019 and $20 million for fourth quarter 2019, lower than $89 million and $30 million in the respective prior year periods. The decrease over both periods is primarily attributable to the one-time upfront expense of approximately $14 million for the acquisition of Biscayne Neurotherapeutics, Inc. in the fourth quarter of 2018. In addition, the decrease for full year 2019 was also due to the completion of four phase three clinical trials for SPN A12, partially offset by the cost to manufacture SPN A12 to support our NDA filing.

Turning now to expenses research and development expenses were $69 million for full year, 2019, and $20 million for fourth quarter 29 gene.

Greg Patrick: Research and development expenses were $69 million for full year 2019 and $20 million for Q4 2019, lower than $89 million and $30 million in the respective prior year periods. The decrease over both periods is primarily attributable to the one-time upfront expense of approximately $14 million for the acquisition of Biscayne Neurotherapeutics, Inc. in the fourth quarter of 2018. In addition, the decrease for full year 2019 was also due to the completion of 4 phase 3 clinical trials for SPN-812, partially offset by the cost to manufacture SPN-812 to support our NDA filing. SG&A expenses for full year 2019 were $158 million, essentially unchanged from $160 million in 2018.

Lower than $89 million and $30 million in their respective prior year period.

The decrease over both periods is primarily attributable to the onetime upfront expense of approximately $14 million for the acquisition of this biscayne narrow therapeutics inc. in the fourth quarter of 2018.

In addition, the decrease for full year 29, King was also due to the completion of for phase three clinical trials for SPX 812, partially offset by the cost to manufacture SP, an age 12 to support our Andy a filing.

Greg Patrick: SG&A expenses for full year 2019 were $158 million, essentially unchanged from $160 million in 2018. SG&A expenses in the fourth quarter of 2019 were $36 million, down from $42 million in the same quarter last year. The decrease in SG&A expense in the fourth quarter of 2019 is primarily attributable to the development and production of promotion materials and marketing programs associated with the launch of the Monotherapy Indication for Oxstella XR in the fourth quarter of 2018. In addition, employee-related expenses were lower.

As DNA expenses for full year, 29 chain were $158 million essentially unchanged from $460 million in 2018.

Greg Patrick: SG&A expenses in Q4 2019 were $36 million, down from $42 million in the same quarter last year. The decrease in SG&A expense in Q4 2019 is primarily attributable to the development and production of promotion materials and marketing programs associated with the launch of the monotherapy indication for Oxtellar XR in Q4 2018. In addition, employee-related expenses were lower. Operating expenses for full year 2019 were $149 million compared to $144 million in 2018. The increase in operating earnings is primarily due to lower R&D and SG&A expenses in 2019. Operating earnings for the full year 2019 were negatively impacted by the inventory drawdown in Q1 2019, as I mentioned earlier.

That's DNA expenses in the fourth quarter of 2019 were $36 million down from $42 million in the same quarter last year.

The decrease in SGN expense in the fourth quarter of 2019 is primarily attributable to the development and production of promotion materials and marketing programs associated with the launch of the monotherapy indication for Oxtellar XR in the fourth quarter of 2018.

In addition employee related expenses were lower.

Greg Patrick: Operating expenses for full year 2019 were $149 million compared to $144 million in 2018. The increase in operating earnings is primarily due to lower R&D and SDNA expenses in 2019. Operating earnings for the full year 2019 were negatively impacted by the inventory drawdown in the first quarter of 2019, as I mentioned earlier. This resulted in full year 2018 operating earnings being $10 million higher and full year 2019 operating earnings being $10 million lower than would have been otherwise. Operating earnings in the fourth quarter of 2019 were $41 million, compared to $40 million in the fourth quarter of 2018. The quarterly comparison was negatively impacted by the aforementioned increase in channel inventory holdings in the fourth quarter of 2018. The increase in channel inventory holdings in 2018 caused the fourth quarter 2018 operating earnings to be higher by approximately $10 million than would have been otherwise; earnings were $113 million for full year 2019 or $2.10 per diluted share compared to $111 million or $2.05 per diluted share for full year 2018.

Operating expenses for full year, 29 chain were $149 million compared $144 million in 2018.

The increase in operating earnings is primarily due to lower R&D and S. DNA expenses in 2019.

Operating earnings for the full year 29 gene negatively impacted by the inventory drawdown in the first first quarter of 29 gene as I mentioned earlier.

Greg Patrick: This resulted in full year 2018 operating earnings being $10 million higher and full year 2019 operating earnings being $10 million lower than would have been otherwise. Operating earnings in Q4 2019 were $41 million compared to $40 million in Q4 2018. The quarterly comparison was negatively impacted by the aforementioned increase in channel inventory holdings in Q4 2018. The increase in channel inventory holdings in 2018 caused Q4 2018 operating earnings to be higher by approximately $10 million than would have been otherwise.

This resulted in full year 2018 operating earnings being $10 million hotter and full year 29, teen operating earnings being $10 million lower than would have been otherwise.

Operating earnings in the fourth quarter of 2019 were $41 million compared to $40 million than the fourth quarter of 28.

The quarterly comparison was negatively impacted by the aforementioned increase and channel inventory holdings in the fourth quarter of 2018.

The increase in channel inventory holdings in 2018 caused the fourth quarter 2018 operating earnings to be higher by approximately $10 million than would have been otherwise.

Greg Patrick: Net earnings were $113 million for full year 2019 or $2.10 per diluted share compared to $111 million or $2.05 per diluted share for full year 2018. Net earnings in the Q4 of 2019 were $33 million or $0.62 per diluted share, an increase of 29% on a diluted share amount as compared to $26 million or $0.48 per diluted share in the same period last year. As of December 31, 2019, the company had $939 million in cash equivalents, marketable securities, and long-term marketable securities, an increase of $164 million as compared to $775 million as of December 31, 2018.

Net earnings were $113 million for full year, 2019, or $2.10 per diluted share compared to $111 million or $2.05 per diluted share for full year 2018.

Greg Patrick: Net earnings in the fourth quarter of 2019 were $33 million or $0.62 per diluted share, an increase of 29% on a diluted share amount as compared to $26 million or $0.48 per diluted share in the same period last year. As of December 31, 2019, the company had $939 million in cash, cash equivalents, marketable securities, and long-term marketable securities, an increase of $164 million as compared to $775 million as of December 31. 2018.

Net earnings in the fourth quarter of 29 chain were $33 million or 62 cents per diluted share an increase of 29 cents, 29% on a diluted share amount as compared to $26 million for 48 cents per diluted share in the same period last year.

Yeah.

As of December 31st 29 chain, the company had $939 million in cash cash equivalents marketable securities and long term marketable securities an increase of $164 million as compared to $775 million as of December 31st 20.

18.

Greg Patrick: Turning now to financial guidance for full year 2020, the company is providing the following net product sales guidance range of $360 million to $390 million and operating income guidance of $70 million to $100 million, regarding SG&A expenses other than the impact of the addition of the sales force personnel in anticipation of the 2020 launch of SPN A12. SG&A expenses are expected to be consistent quarter to quarter in 2020, but higher expenses year over year reflect primarily the pre-launch activities for SPN 812. I will now turn the call back to the operator for questions. Thank you.

Greg Patrick: Turning now to financial guidance for full year 2020, the company is providing the following. Net product sales to range from $360 to 390 million, and operating income to range from $70 to 100 million. Regarding SG&A expenses, other than the impact of the addition of the salesforce personnel in anticipation of the 2020 launch of SPN-812, SG&A expenses are expected to be consistent quarter to quarter in 2020. Higher expenses year-over-year reflect primarily the pre-launch activities for SPN-812. I will now turn the call back to the operator for questions. Thank you.

Turning now to financial guidance for full year 2020, the company's providing the following net product sales to range from $360 million to $390 million.

And operating income.

To range from $70 million to $100 million regarding S. DNA expenses other than the impact of the addition of the Salesforce personnel in anticipation of the 2020 launch that's been a 12.

That's DNA expenses are expected to be consistent quarter to quarter in 2020.

Higher expenses year over year reflect primarily the pre launch activities for Sps and 812.

Ill now turn the call back to the operator for questions. Thank you.

Operator: Certainly, ladies and gentlemen, if you have a question at this time, please press star and then one on your touch tone. If your question has been answered and you'd like to remove yourself from the queue... We request that you limit your questions to two at a time, and then feel free to re-enter the queue if you have any further questions.

Operator: Certainly. Ladies and gentlemen, if you have a question at this time, please press star then one on your touch tone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. We request that you limit your questions to two at a time, and then feel free to reenter the queue if you have any further questions. Our first question comes from the line of Ken Cacciatore from Cowen and Company. Your question please.

Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered and you'd like to move yourself from the Q. Please press the pound.

We request that you limit your questions two to the time and then feel free to reenter the queue. If you have any further questions. Our first question comes in the line of can catch told me from Cowen and company. Your question. Please.

Ken Cacciatore: Our first question comes from the line of Ken Cacciatore from Kalanick Company. Your question, please. Hey, good morning, guys.

David Brown: Hey, good morning, guys. As we now think forward to the eight twelve introduction, maybe Jack, you could just give us a sense of the pricing of the current brand ADHD products and maybe talk about their coverage, and why would that be materially different than what you can accomplish with eight twelve? Second question on business development, are you still thinking about CNS and movement disorders, or would you be thinking about maybe venturing into different therapeutic classes? Thank you.

Ken Cacciatore: Hey, good morning, guys. As we now think forward to the eight twelve introduction, maybe Jack, you could just give us a sense of the pricing of the current brand ADHD products and maybe talk about their coverage, and why would that be materially different than what you can accomplish with eight twelve? Second question on business development, are you still thinking about CNS and movement disorders, or would you be thinking about maybe venturing into different therapeutic classes? Thank you.

Hey, good morning, guys. This we now think forward to the 12 introduction, maybe Jack you could just give us a a sense of the pricing of the current.

Jack A. Khattar: As we now think forward to the 8.12 introduction, maybe Jack, you could just give us a sense of the pricing of the current branded ADHD products and maybe talk about their coverage, and why would that be materially different than what you can accomplish with 8.12? And then, second question, on business development, are you still thinking about CNS and movement disorders? Or would you be thinking about maybe venturing into different therapeutic classes? Thank you.

Randy HD products, and maybe talk about their coverage and why would that be materially different than what you can accomplish with a 12 and then second question on business development [noise].

Are you still thinking about CNS and movement disorders or would you be thinking about maybe venturing into different therapeutic classes. Thank you.

Jack A. Khattar: Regarding the current market and the current pricing, as far as brands are concerned, and this covers stimulants, non-stimulants, the whole market actually for ADHD, it ranges somewhere between $350 to $550 or $600 for a 30-day prescription on a branded basis. And as far as contracting and so forth and our discussions with managed care, it's really becoming very important to highlight to them, as I mentioned in my prepared remarks, the fact that SPNA-12 is such a novel compound. And we've been able to actually prove that scientifically through some very interesting work as far as the activity of the product, the receptor activity, and where it's really modulating and what neurotransmitters it's impacting, and relating that actually to the clinical data that we have, which supports all the data that we've been able to generate on the activity side and the mechanism of action side.

Greg Patrick: Yeah, sure. Regarding the current market and pricing, as far as brands are concerned, and this covers stimulants, non-stimulants, the whole market, actually in ADHD, it ranges somewhere between $350 to $550 or $600 for a 30-day prescription on a branded basis. As far as contracting and so forth, and our discussions with Managed Care, it's really becoming very important to highlight to them, as I mentioned in my prepared remarks, the fact that SPN-812 is such a novel compound. We've been able actually to prove that scientifically through some very interesting work as far as the activity of the product, the receptor activity, and where it's really modulating and what neurotransmitters it's impacting.

Jack Khattar: Yeah, sure. Regarding the current market and pricing, as far as brands are concerned, and this covers stimulants, non-stimulants, the whole market, actually in ADHD, it ranges somewhere between $350 to $550 or $600 for a 30-day prescription on a branded basis. As far as contracting and so forth, and our discussions with Managed Care, it's really becoming very important to highlight to them, as I mentioned in my prepared remarks, the fact that SPN-812 is such a novel compound. We've been able actually to prove that scientifically through some very interesting work as far as the activity of the product, the receptor activity, and where it's really modulating and what neurotransmitters it's impacting.

Yeah sure.

Regarding the current market and the current pricing as far as brands are concerned and discovered of stimulants non stimulants the whole market actually an eight each of the it's the ranges somewhere between the.

350 to 550 or 600, Daus 40, 30 day description on the branded basis.

And as far as contracting and so forth and our discussions with managed care, it's really becoming very.

Important to highlight to them as I mentioned in my prepared remarks, the fact that SP any 12 at such a novel compounds.

And we've been able actually to prove that scientifically for with some very interesting ward as far as the activity of the product the receptor.

Activity and word, it's really modulating and what neurotransmitters is impacting and the relating that actually to the clinical data that we have well, which supports all the data we've been able to generate on the activity side and the mechanism of action side. So we're very excited about all this new data that as I mentioned a week.

Greg Patrick: Relating that actually to the clinical data that we have, which supports all the data we've been able to generate on the activity side and the mechanism of action side.

Jack Khattar: Relating that actually to the clinical data that we have, which supports all the data we've been able to generate on the activity side and the mechanism of action side.

Jack A. Khattar: So we're very excited about all this new data that, as I mentioned, we're going to first reveal it publicly next week, and hopefully, with more posters and presentations later in the year. And that has become very important to differentiate SPNA-12 from every other product that is currently on the marketplace, including the non-stimulants that everybody else continues to say you are very similar to them, and we are not. And actually, that's where SPNA-12 differentiates itself, starting with the mechanism all the way to showing very different clinical data that we've talked about numerous times in our Phase 3 program, across all four Phase 3 programs, even the Phase 2 programs, where the data is so consistent and predictable in helping patients and improving their symptoms in the ADHD market.

Jack Khattar: We're very excited about all this new data that, as I mentioned, we're gonna first reveal it publicly next week and hopefully with more posters and presentations later through the year. That has become very important to differentiate SPN 812 from every other product that currently is on the marketplace, including the non-stimulants that everybody else continues to say you are very similar to them, and we are not. Actually, that's where SPN 812 differentiates itself, starting with the mechanism all the way to showing very different clinical data that we've talked about numerous times in our phase III program across all four phase III programs, even the phase II programs where the data is so consistent and predictable in helping patients and improving their symptoms in the ADHD market.

On a first review that publicly next week and hopefully with more to posters and presentations later through the year and that has become very important to differentiate SP and a 12 from every other product. The currently is on the marketplace, including the non stimulants with everybody else continues to say you are very similar.

To them and we are not and actually that's where it SP and a 12 differentiates itself starting with the mechanism all the way to showing very different clinical data that we spoke about a numerous times in our phase three program.

Across all fourth phase three programs, even the phase two programs, where the data so consistent and predictable in helping patients and improving their symptoms and HD market. So we're very excited about there is a you know acceptance over that data the way it came out of the strength of that data and.

Jack Khattar: We're very excited about this, you know, acceptance of that data, the way it came out, the strength of that data, and also very excited about all the discussions we've had so far with managed care plans as they start understanding and seeing that this is truly a novel mechanism, a novel product that this market has not seen for the last decade or even more. It's really a very important therapy that they're looking at, and they're seeing it as something that could really benefit a lot of patients in a much differentiated way. Regarding business development, we continue to be very intensely involved with many opportunities that we're looking at, and that does cover the whole CNS domain, neurology and psychiatry.

Jack A. Khattar: So we're very excited about the acceptance of that data, the way it came out, the strength of that data, and also very excited about all the discussions we've had so far with managed care plans as they start understanding and seeing that this is truly a novel mechanism, a novel product that this market has not seen for the last decade or even more. So it's really a very important therapy that they're looking at, and they see it as something that could really benefit a lot of patients in a much differentiated way. Regarding business development, we continue to be very intensely involved with many opportunities that we're looking at. And that does cover the whole CNS domain, neurology, and psychiatry.

Also very excited about all the discussions we've had so far with managed care plans as they start understanding and seeing that this is truly and novel mechanism and novel product that this market. It has not seen for the last decade or even more.

So it's really a very important therapy that they're looking at them, they're seeing it as something that could really benefit a lot of patients in a much of differentiated way.

Regarding.

Business development, we continue to be very intensely involved with many opportunities that we're looking at.

And the that does cover the whole CNS domain neurology and psychiatry, we continue to emphasize or later stage or commercial assets. If we can find them and or assets that are in late stage development.

Jack A. Khattar: We continue to emphasize later stage commercial assets, if we can find them, and or assets that are in late stage development. In addition to that, we are looking at some of the earlier stuff as well because we are very conscious about the fact that we really need to reload the pipeline. So, as I said in the past, we've been very active and will continue to be very active. We hope to do something this year. Obviously, our goal is to utilize the significant cash balance that we have on our balance sheet. Certainly, we raise the money, and we continue to generate very strong cash flows. And our intention is to use those proceeds and that cash position to bring in new external growth opportunities through acquisitions or licensing. And we're very, very active in that space.

Jack Khattar: We continue to emphasize late-stage commercial assets if we can find them, and/or assets that are in late-stage development. In addition to that, we are looking at some of the earlier stuff as well because we are very conscious about the fact that we really need to reload the pipeline. As I said in the past, we've been very active and continue to be very active. We hope to do something this year. Obviously, our goal is to utilize the significant cash balance that we have on our balance sheet.

In addition to that we're looking at some of the earliest stuff as well because we are very conscious about the fact that we really need to reload the pipeline.

So as I said in the past the we've been very active and continues to be very active we hope to do something this year, obviously our goal is to utilize.

The significant cash balance that we have on our.

Balance sheet, certainly we raise the money and we continue to generate very strong cash flows and our intention is to use of those proceeds and the that cash position to bring in a new external growth opportunities through acquisitions or licensing and would have very very active in that space.

Jack Khattar: Certainly we raised the money, and we continue to generate very strong cash flows, and our intention is to use those proceeds and that cash position to bring in new external growth opportunities through acquisitions or licensing, and we're very, very active in that space.

Yeah.

Does that answer your question.

David A. Amsellem: Does that answer your question? Thank you. Our next question comes from David Samper from Jefferies. Your question, please. Thanks.

Operator: Does that answer your question? Yes, it does. Thank you. Thank you. Our next question comes from the line of David Amsellem from Jefferies. Your question, please.

Operator: Does that answer your question?

Yes, it does.

Ken Cacciatore: Yes, it does. Thank you.

Operator: Thank you. Our next question comes from the line of David Amsellem from Jefferies. Your question, please.

Thank you. Our next question comes in line of David same from from Jefferies. Your question. Please.

Hi, Thanks, I just wanted to follow a ann's question on business development now that.

David A. Amsellem: I just wanted to follow up Ken's question on business development. Your other ADHC asset is no longer going to be marketed. Your pathway is pretty clear.

David Amsellem: Thanks. I just wanted to follow up, Ken's question on business development. Now that your other ADHD asset is no longer gonna be marketed, your pathway is pretty clear. You have one new asset to launch before Trokendi XR, the IP expires and with the settlement generics come in. So I'm just wondering, with just one asset to launch going forward, is there a greater urgency to do an on-market product versus a development stage asset? And then secondly, Jack, I think you said it sounds like there's a very good chance you're gonna actually in-license or buy something this year.

David Steinberg: Thanks. I just wanted to follow up, Ken's question on business development. Now that your other ADHD asset is no longer gonna be marketed, your pathway is pretty clear. You have one new asset to launch before Trokendi XR, the IP expires and with the settlement generics come in. So I'm just wondering, with just one asset to launch going forward, is there a greater urgency to do an on-market product versus a development stage asset? And then secondly, Jack, I think you said it sounds like there's a very good chance you're gonna actually in-license or buy something this year.

Your other Agncs is no longer gonna be marketed your your pathway, it's pretty clear you have one.

David A. Amsellem: You have one new asset to launch before Turkandy, the IP expires, and with the settlement, generics come in. So I'm just wondering, is there a greater urgency to do an on-market product versus a development stage asset? One of the reasons you have not acquired anything, as you said, in 90% of the transactions, the value goes to the seller, not to the buyer, i.e., valuations are too high. So dovetailing your comments, does that mean you're seeing more attractive valuations?

At new assets the launch before a trick handy there can be a the IP expires and with the settlement generics come in so I. Just wondering is there is there a with just one asset to launch going forward is there a greater urgency to do an on market.

Hi that persist the development stage asset and then secondly, Jack I think he said.

It sounds like there's very good chance, you're going to actually in licensure buys something this year I know in the past.

David Amsellem: I know in the past, one of the reasons you have not acquired anything is you said, you know, 90% of the transactions, the value goes to the seller, not to the buyer, i.e., valuations are too high. You're dovetailing your comments, does that mean you're seeing more attractive valuations in the marketplace? Thanks.

David Steinberg: I know in the past, one of the reasons you have not acquired anything is you said, you know, 90% of the transactions, the value goes to the seller, not to the buyer, i.e., valuations are too high. You're dovetailing your comments, does that mean you're seeing more attractive valuations in the marketplace? Thanks.

One of the reasons you have not acquired anything as you said you know 90% of the transactions the value goes to the seller not to the buyer I evaluation to too high. So you Dovetailing. Your comments is that mean, you're seeing more attractive valuations in the marketplace. Thanks.

Jack A. Khattar: Yeah, regarding the, you know, whether we have a higher level of urgency now or not, I mean, I'll tell you, and I know many people have heard me say that, I mean, the urgency level was always there, because nobody, everybody who understands this business, the pharmaceutical business, we all know at any time a project may die for one reason or another. So we never really banked on the fact that 812 would make it all the way or 810 would make it all the way. So we've been really lucky, actually, through our existence to have such a low, low attrition rate in our R&D program since even our inception. As I mentioned to our employees about, you know, a few months ago when we first got the first data on it, and actually, this is the first ever phase 3 data, efficacy and safety data that didn't work for us over the past 20 some years. So actually, yeah, I mean, we always bank on the fact that it's never a straight line.

[noise], Yeah, [laughter] regarding the [noise].

Jack Khattar: Yeah. Regarding the, you know, whether we have a higher level of urgency now or not, I mean, I'll tell you and I know many people have heard me say that, I mean, the urgency level was always there because everybody who understands this business, pharmaceutical business, we all know at any time a project may die for one reason or another. So we never really bank on the fact that SPN-812 will make it all the way or SPN-810 will make it all the way. So we've been really, you know, lucky actually through our existence to have such a low attrition rate in our R&D program since even our inception.

You know whatever we have a higher level of urgency an hour or not I mean, I'll I'll tell you and I'm <unk> and I know many people have heard me say that I mean, the urgency level was always there because nobody everybody who understands this business pharmaceutical business. We all know at anytime They project made the I for one reason or another so we never really.

Bank on the fact that Hey, 12 will make it all the way or eight then we'll make it all the way. So we've been really a you know lucky actually through our existence that have such a low low attrition rate and our R&D programs since even our inception.

Jack Khattar: As I mentioned to our employees about, you know, a few months ago when we first got the first data on SPN-812, and actually this was the first ever Phase III data, efficacy safety data, that didn't work for us over the past 20-some years. Actually, yeah, I mean, we always bank on the fact that it's never a straight line. You never can guarantee that any of your products in the pipeline will work, and therefore you always work with an urgency level, given, you know, the situation we have with Trokendi XR to make sure that we have a transition that is as smooth as possible as far as the revenue and the potential reduction in the revenue when the generics come in. What is that urgency level any higher or not really?

[noise] as I mentioned thought would employees about you know few months ago. When we first got the first data on eight and actually this was the first ever phase three data efficacy safety data that it didn't work for us over the past 20 some years.

So so actually yeah, I mean, we always bank on the fact that it's never a straight line.

Jack A. Khattar: You can never guarantee that any of your products in the pipeline will work, and therefore, you always work with an urgency level given, you know, the situation we have with Trocandex or to make sure that we have a transition that is as smooth as possible as far as revenue and the potential reduction in revenue and the genetics come in. Is that urgency level any higher, or not really? It continues to be at a very high level anyway.

You never can guarantee that any of your products in the pipeline would walk and therefore, you always work with an urgency level.

Given the situation, we have with Trokendi XR, if the make sure that we have a transition that as smooth as possible as far as the revenue and the potential reduction in the revenue when the genetics come in.

What is that urgency level any a high out or not really it continues to be very high level anyway. Yes. We are focused on commercial products, if we can get them.

Jack Khattar: It continues to be very high level anyway. Yes, we are focused on commercial products if we can get them. As far as the valuations, they continue to be challenging out there, but we think we should be able to get something done, and we hope that we will be able. Can I promise timing? No. Unfortunately we can't. We can promise that we're putting the effort and we're working pretty hard to make it happen. That's all that we can really control, clearly. As far as the certainty around the date as to when something like this happens, it is very difficult, yeah, you know, to predict. We're certainly very much involved in a lot of different things we're looking at, we've been looking at, and we hope to get something done.

Jack A. Khattar: Yes, we are focused on commercial products if we can get them. As far as valuations are concerned, they continue to be challenging out there, but we think we should be able to get something done, and we hope that we will be able to. Can I promise timing? No.

So the as far as the valuations they continue to be challenging out there, but we think we should be able to get something done and we hope that we will be able can I promise finding no. Unfortunately, we can we can promise that we're putting the effort and we're working pretty hard to make it happen. That's all we can really control a clearly.

Jack A. Khattar: Unfortunately, we can't. But we can promise that we're making an effort and we're working pretty hard to make it happen. That's all that we can really control clearly as far as the certainty around the date as to when something like this happens is very difficult, you know, to predict. But we're certainly very much involved in a lot of different things we're looking at, we've been looking at, and we hope to get something done.

As far as the certainty out on the date as to when something like this happens is very difficult to predict but we're certainly very much involved in a lot of different things were looking at we've been looking at and we hope to get something done.

[noise] [noise]. Thank you. Our next question comes more Annabel Samimy from Stifel. Your question. Please.

David A. Amsellem: Thank you. Our next question comes in live from Annabel Samimy from Stiefel.

Operator: Thank you. Our next question comes from the line of Annabel Samimy from Stifel. Your question please.

Annabel Eva Samimy: Your question, please. Hi guys. Thanks for taking my question. I just wanted to go back to the comments you made about how to start a conversation with managed care. I know what you are pitching to them in terms of SBN-A12 differentiation, but maybe you can talk about what kind of feedback you've been getting back from them in those initial conversations. And then, secondly, I was hoping for a little bit of clarity on the EBITDA guidance. It is really significantly down, so I imagine that SG&A is going up because of the SPNA 12 launch. You said that SGNA is going to be consistent through the year, but consistent from where? At a new stepped-up level or in the first quarter, and then it steps up towards the end of the year with the sales? Thank you.

Annabel Samimy: Hi, guys. Thanks for taking my question. Just wanted to go back to the comments you made about how to start conversations with managed care. I know what you are pitching to them in terms of SPN-812 differentiation, efficacy. But maybe you can talk about what kind of feedback you've been getting back from them in those initial conversations. Secondly, I was hoping for a little bit of clarity on the EBITDA guidance. It is really significantly down, so I imagine that SG&A is going up because of the SPN-812 launch. You said that SG&A is gonna be consistent through the year, but consistent from where? At a new stepped-up level or for Q4 and then it steps up towards the end of the year with the sales? Thank you.

Hi, guys. Thanks for taking my question just wanted to go back. The comments you made about have started conversations with managed care I know I'm like you are switching to them.

Any differentiation.

Talk about what kind of feedback and getting back from them.

<unk>.

[laughter] and then secondly, I was hoping.

Clarity on the EBITDA guidance it is fairly significantly in Dallas I imagine that.

I'm sorry.

Hi.

Yeah, well launch.

It'd be consistent through the year, but consistent from where I didn't news stepped up level or first quarter and then it steps up towards the end of here. So thank you.

Jack A. Khattar: Yeah, regarding the first portion of the question, which is on managed care and the feedback we have been getting, the more we have discussions with them and the more data we share with them, we started our initial discussions with them clearly on phase three data as we started getting the data, explaining it to them, and putting it in perspective with the current therapies out in the marketplace. And in the initial discussions, I'll tell you, they were saying, well, the market is already saturated.

[noise] regarding the first fortune. The question is your long managed care and the feedback we have been getting.

Jack Khattar: Yeah, regarding the first portion of the question, which is on managed care and the feedback we have been getting. The more we have discussions with them and the more data we share with them, we started our initial discussions with them clearly on the phase 3 data as we started getting the data, explaining it to them, putting it in perspective with the current therapies out in the marketplace. The initial discussions, I'll tell you, they were saying, "Well, the market is already satisfied, so how is SPN-812 different?" As we took the time to explain to them and walk them through the data and showing to them the real clear points of differences, we're having very different discussions recently with them.

The more we have discussions with them into more data we shared with them. We started our initial discussions with them clearly on the phase three data as we started getting that data explaining it to them putting it in perspective, well with the current therapies out in the marketplace.

And the initial initial discussions I'll tell you that we're saying well the market is already satisfied. So how is a 12 different and as we took the time to explain to them and walk them through the data and showing them. The real clear points of differences were having a very different discussions recently with them and specifically.

Jack A. Khattar: took the time to explain to them and walk them through the data and show them the real clear points of difference. We've had very different discussions recently with them, and specifically as we show them also the mechanism of action and the data behind A12 and how truly different it is from everything they've seen. They do also acknowledge that, yes, in the last 10 years or 15 years or whatever, all they saw were different formulations of the same drugs, and they have that attitude, of course, that please don't come to me with another reformulation of amphetamine or methylphenidate or whatever the case might be. So they like the fact that this is a new treatment, a completely new treatment, even different than stratera or any other non-stimulants.

Jack Khattar: Specifically, as we show them also the mechanism of action and the data behind SPN-812 and how truly different it is from everything they've seen. They do also acknowledge that, yes, in the last 10 years or 15 years or whatever, all they saw were different formulations of the same drugs. They have that attitude, of course, that please don't come to me with another reformulation of amphetamine or methylphenidate or whatever the case might be. They like the fact that this is a new treatment, completely new treatment, even different than Strattera or any other non-stimulants. They like the fact that it really presents to patients a true novel treatment option. They acknowledge the fact also that this is a category where you only have 4 molecules that are really options to patients.

As we show them also the mechanism of action and the data behind a 12 and out truly different it is from everything they've seen they do also acknowledge that yes, and the last 10 years or 15 years or whatever all day, so were different formulations over the same drugs and they have that attitude of course.

That please don't come to me with another reformulation of in fed I mean on methylphenidate or whatever the case might be a so are they like the fact that this was in new treatment completely new treatment, even different than straight there or any other non stimulant. They like the fact that it's really presents the patients it's true.

Jack A. Khattar: They like the fact that it really presents to patients a true novel treatment option, and they acknowledge the fact also that this is a category where you only have four molecules that are really options for patients versus when you look at other conditions where you potentially have 10 products or 15 different antidepressants or schizophrenic or products in different CNS conditions. So they're really starting to realize the value of A12 and the benefits, and we've been very encouraged by these discussions. I'll let Greg take over on the second part of the question.

Novel treatment option and they acknowledge the fab also that this as a category where do you only have four molecules that are really options to patients versus when you look at other conditions, where do you have potentially then products or 15 different antidepressants order or schizophrenia, <unk>, you know or product in different.

Jack Khattar: Versus when you look at other conditions where you have potentially 10 products or 15 different antidepressants or schizophrenia, you know, or a product in different CNS conditions. So they're really starting to realize the value of SPN-812 and the benefit it can. We've been very encouraged with these discussions. I'll let Greg take over on the second part of the question.

CNS condition. So so there are really starting to realize oh, the value of 812 and the benefit it and we've been about incorrigible. These discussions I'll, let Greg take over on the second part of the question right. Thank you Jack.

Greg Patrick: Right. Thank you, Jack.

Greg Patrick: Right. Thank you, Jack. And thanks for the question, Annabel. You know, as we commented in our last call, we did note, and I think Jack has continually noted that, the company's put a major effort behind the launch of SPN 812 later this year. The precursor to that is a very much stepped up level of marketing activities, pre-marketing activities as regards to the launch and a preparation for that launch. So the way to, I guess, think about our operating income guidance would be to, first of all, start with R&D expenses and think about them more or less consistent with where we've been over the past couple of years, particularly if you pull out the Biscayne acquisition in 2018.

Greg Patrick: And thanks for the question, Annabel. You know, as we commented in our last call, we did note, and I think Jack has continually noted, that the company has put a major effort behind the launch of SPNA 12 later this year. The precursor to that is a very much stepped-up level of marketing activities, pre-marketing activities as regards the launch and the preparation for that launch. So the way to, I guess, think about our operating income guidance would be to, first of all, start with R&D expenses and think about them more or less consistent with where we've been over the past couple of years, particularly if you pull out the Biscayne acquisition in 2018. You know, there's an ongoing run rate there in the 70 to $80 million range.

The question Annabel now as we commented in our last call.

We did note and I think Jack is continuing noted that other companies could sort of major effort behind the launch of SPD 12. Later this year the precursor to that is a very much stepped up level of marketing activities pre marketing activities as regards to the launch in preparation for that long.

Launch.

So the way to I guess, it think about our operating income guidance.

Would be to first of all start with R&D expenses and think about them.

More or less consistent with where we've been over the past couple of years I'm, particularly if you pull out the Biscayne acquisition in 2018, no. There's an ongoing run rate there in the come $70 million to $80 million range. So let's use that as a basis for comparison.

Greg Patrick: You know, there's an ongoing run rate there, in the kind of $70 to 80 million range. Let's use that as a basis for comparison. That would suggest, as we have mentioned in last call, and I'll reiterate in this call, you know, SG&A expenses north of $200 million is a pretty reasonable expectation for this year. The math would suggest that. That is in contrast of $160 million in 2018. You asked about the question about consistent. That's really consistent quarter to quarter.

Greg Patrick: So let's use that as a basis for comparison. And that would suggest, as we have mentioned in the last call, and I'll reiterate in this call, you know, SG&A expenses north of $200 million is a pretty reasonable expectation for this year. And the math would suggest that. And that is in contrast to $160 million in 2018.

And that would suggest as we have.

I mentioned in last call. It I'll reiterate and this call you may ask DNA expenses north of $200 million is a pretty reasonable expectation for this year.

And the math would suggest that and that is in contrast of $160 million Hot in 2018, you asked about the the kind of question about consistent that's really consistent quarter to quarter. So looking at the base of being in the range of 200, or perhaps a little bit north of that.

Greg Patrick: That's really consistent quarter to quarter. So looking at the base of being in the range of $200 or perhaps a little bit north of that, thinking about them being relatively flat over the course of the year, because that reflects the pre-marketing activities and the like, as I just mentioned. And one exception to that would be the addition of Salesforce. largely, that's going to be a fourth quarter activity. And we've mentioned, you know, the number of reps that the company would anticipate adding, which is north of $100 million. So I think that that math will help you back into how to annualize those expenses. I hope that that helps.

Greg Patrick: Looking at the base of being in the range of $200 or perhaps a little bit north of that, thinking about them being relatively flat over the course of the year because that reflects the pre-marketing activities and the like, as I just mentioned. One exception to that would be the addition of the sales force. Largely, that's gonna be a Q4 activity. We've mentioned, you know, the numbers of reps which the company would anticipate adding, which is north of 100. I think that math will help you back into how to annualize those expenses. Hope that helps.

I'm.

Thinking about them being relatively flat over the course of here because that reflects the pre marketing activities and and the like as I just mentioned a and one exception to that would be the addition of the salesforce largely that's going to be a fourth quarter activity.

And with mentioned or you know the names of reps, which other company would anticipate adding which is north of 100. So I think that that math will help your back into have to annual lifetimes expenses hope that helps.

Greg Patrick: Yeah, that's perfect. Thank you.

Annabel Samimy: Yeah, that's perfect. Thank you.

Perfect. Thank you.

Greg Patrick: [inaudible]

Welcome.

Greg Patrick: Welcome.

Your next question comes from the line of Patrick to choose from Berenberg capital. Your question. Please.

Patrick Truccio: Thank you. Our next question comes from the line of Patrick Truccio from Bernberg Capital. Your question, please.

Operator: Thank you. Our next question comes from the line of Pavan Patel from Berenberg Capital. Your question, please.

Patrick Truccio: Thanks and good morning.

Pavan Patel: Thanks, good morning. I have a follow-up on the commercial launch on SPN-812. Can you talk about the timing for the launch for SPN-812 being later in Q4 relative to the start of the 2020 school year, that would be, you know, well underway at that time? And should we therefore think of an uptick as being more modest in the first couple of quarters, two or three quarters of the launch before picking up at the start of the school year in 2021? And then secondly, can you also discuss your level of engagement with KOLs on SPN-812? What the view of KOLs is on this compound? And finally, when would you anticipate commercial launch expenses to start to build given the late 2020 launch?

Patrick Trucchio: Thanks, good morning. I have a follow-up on the commercial launch on SPN-812. Can you talk about the timing for the launch for SPN-812 being later in Q4 relative to the start of the 2020 school year, that would be, you know, well underway at that time? And should we therefore think of an uptick as being more modest in the first couple of quarters, two or three quarters of the launch before picking up at the start of the school year in 2021? And then secondly, can you also discuss your level of engagement with KOLs on SPN-812? What the view of KOLs is on this compound? And finally, when would you anticipate commercial launch expenses to start to build given the late 2020 launch?

Thanks, Good morning, I have a follow up on the commercial launch on F. <unk> 12 can you talk about the timing for the launch for eat well being later in the fourth quarter relative to the start of the 2020 school year that would be up you know well underway at that time and should we therefore think of an uptick is being more modest in the first.

Patrick Truccio: I have a follow-up on the commercial launch of SPN 812. Can you talk about the timing for the launch of 812 being later in the fourth quarter relative to the start of 2020?

Patrick Truccio: The 2020 school year that would be, you know, well underway at that time.

Patrick Truccio: at that time, and should we therefore think of an uptick as being more modest in the first

Patrick Truccio: A couple of quarters, two or three quarters of the launch before.

Couple of quarters, two or three quarters of the long before picking up the started the school year in 2021, and then secondly can you also discuss your level of engagement with payer wells on a skinny well what the view of carrier wells is on this compound and finally when would you anticipate commercial launch.

Patrick Truccio: Breaking news about bad weather. Mother Nature Angry Caught on Camera, top 5 and top 10. Extreme weather 2021!

Patrick Truccio: at the start of the school year in 2021, and then secondly...

Patrick Truccio: And finally, can you also discuss your level of engagement with KOLs on SPN 812, what the view of KOLs is on this compound, and finally, when would you anticipate commercial launch?

Patrick Truccio: Unknown Speaker 05. Thank you. Unknown Speaker 05.

Since the start to build given the late 2020 launch.

Jack A. Khattar: Okay, yeah, Patrick, I'll start with as far as the timing of the launch, as we said, the PDUFA date is November 8, so basically, we've been working pretty hard that the moment we get the approval, our plan is to launch as quickly as we can. So depending on how ready we can be with the label and expect what the label is before November 8th and how quickly we can get the product done and into the warehouse, you can estimate it's a few weeks from then, basically.

Okay, Yeah, Patrick I'll I'll start with as far as the timing of the launch a as we said the PDUFA is November eight so.

Jack Khattar: Okay. Yeah, Pavan, I'll start with as far as the timing of the launch. As we said, the PDUFA is 8 November. Basically, we've been working pretty hard at the moment we get the approval, our obviously plan is to launch as quickly as we can. Depending how ready we can be with the label and expecting what the label is before 8 November and how quickly we can get, you know, the product done and into the warehouse, you know, you can estimate it. It's a few weeks from then, basically. Our intent is to launch it as soon as possible. Every day will count, even if it is 31 December or whatever it is, we're gonna launch it, you know, whenever quickly we can do that.

Basically we will and we've been working pretty hard at the moment, we get the approval. Our obviously plan is to launch as quickly as weekend, so depending how ready we can be with the label and expecting what the label as before November eight and and how quickly. We can get you know the product are done and into the warehouse.

Are you know you can estimate it's it's a few weeks from then basically so.

Jack A. Khattar: So our intent is to launch it as soon as possible. Every day will count, even if it is December 31st or whatever it is, we're going to launch it as quickly as we can. As far as the comments, launching it during that time of the year versus the back-to-school season, is it ideal to launch an ADHD product around the back-to-school season? Absolutely. And we've said that, you know, even way back a couple years ago, that, you know, we would love to be able to do that. But we are where we are at this point.

I would intend this to launch it as soon as possible every day will count even if it is December 30 force or whatever it is we're gonna long trip you know whenever quickly we can do that as far as the Commons you know launching it during that time of the year versus the back to school.

Jack Khattar: As far as the comment, you know, launching it during that time of the year versus the back to school. Is it ideal to launch an ADHD product around the back to school season? Absolutely. We've said that, you know, even way back couple years ago that, you know, we would love to be able to do that. But we are where we are at this point, and we're obviously planning to optimize the launch and maximize the potential of SPN-812 regardless when we launch it. If it is year-end, then be it, and we'll make the best out of that. Now having said all that doesn't mean, you know, there will be no demand in December or January or whatever.

Is it ideal to launch an HD product around the back to school season, absolutely and we've said that you know even a way back couple of years ago that you know, we would love to be able to do that.

But we are where we ought at this point and our obviously plans are to optimize a the launch and maximize the potential of 812, regardless when we launched with and if it is a year and then be it and we'll make the best out of that.

Jack A. Khattar: And our obvious plans are to optimize the launch and maximize the potential of 8-12 regardless of when we launch it. And if it is year end, then that will be it, and we'll make the best out of that. Now, having said all that, that doesn't mean, you know, there will be no demand in December or January or whatever, because if you really think about it from a patient perspective and from a parent perspective, there are a lot of kids who start seeing problems during the school year. So not all the problems, ADHD symptoms, and issues surface only at the beginning of the school year. Actually, many of those problems do surface later in the year as some of these patients or kids start getting report cards, start really struggling in class, start getting suspension letters later on. These issues don't, you know, surface from day one. So clearly, we will have demand. But will the uptake be slower? Most likely, yes, it will be slower than it would have been, you know, launched around the school year and the window, you know, during the summer or September, and October timeframe.

Now having said all that that doesn't mean, you know there will be no demand in December or January or whatever because.

Jack Khattar: Because if you really think about it from a patient perspective and the parents, there's a lot of kids during the school year start seeing problems surfacing. Not all the problems, ADHD symptoms and issues surface only at the beginning of the school year. Actually, many of those problems do surface later in the year as some of these patients or kids start getting report cards, start really struggling in the class, start getting suspension letters later on. These issues don't, you know, surface from day one. Clearly, we will have the demand. Will the uptake be slower? Most likely, yes, it will be slower than if it would have been, you know, launched around the school year and the window, you know, during summer or September, October timeframe.

If you really think about it's from a patient perspective, and the parents. There's a lot of kids. During the school you start seeing problem surfacing. So not all the problems H.D. symptoms and issue surface only at the beginning of the school you actually many of those problems do surface later in the year as.

Some of these patients sort of kids started getting report cards thought really struggling in the class or started getting suspension. Let those later on these issues long you know surface from day one.

So clearly we will have the demand will the uptake be slower most likely yes, it will be slower than it would have been launched a at around the school year on the window.

You know doing somewhat or September October timeframe. So they have to the uptake we expected to be a little bit slower, but in the long term the potential of the product really does not change at all or whether you launched it in January December already launched in the summertime before to school.

Jack A. Khattar: So yes, the uptake, we expect it to be a little bit slower, but in the long term, the potential of the product really does not change at all, whether you launch it in January, December, or you launch it in the summertime before school. As far as the KOLs, I mean, I have to really tell you, I mean, KOLs obviously were the first people to see the data from SPNA-12, not even see it, but also experience it because some of them, although they were blinded, of course, in our phase three studies, and they didn't know whether the kids are on placebo or the drug, but the results that they were seeing firsthand from these patients, as they tell us, were truly remarkable, that they always felt, you know, the drug should work, should be successful, and so forth, and as we shared with them the actual data, it just confirmed everything they saw firsthand in the phase three studies that we've done.

Jack Khattar: Yes, the uptake, we expect it to be a little bit slower, but in the long term, the potential of the product really does not change at all, whether you launch it in January, December, or you launch it in the summertime before school. As far as the KOLs, I mean, I have to really tell you. I mean, KOLs obviously were the first people to see the data from SPN-812, not even see it, but also experience it, because some of them, although they were blinded, of course, in our phase 3 studies, and they didn't know whether the kids are on placebo or the drug, but the results that they were seeing firsthand from these patients, as they tell us, were truly remarkable.

[noise] as far as the Caone <unk> I mean, I I have to really tell you I mean, K wells, obviously, where the first people to see.

The data from S band aid well not even see it but also experienced said because some of them. Although they were at a blinded of course.

Our phase three study is and they didn't know whether the kids are on placebo the drug but the results that there were seeing first hand from these patients are as they tell us what truly remarkable that they always felt you know the drug should reward shouldn't be successful and so forth and as we shared with them the actual data.

Jack Khattar: That they always felt, you know, the drug should work, should be successful and so forth. As we shared with them the actual data, it just confirmed everything they saw firsthand in the phase 3 studies that we've done. It's very exciting to them to know that they potentially could have an option out there as a non-stimulant, non-controlled substance that could work as early as week 1 and with an effect that they saw firsthand, again, in the studies that lasted through the whole study, and that could also work in both inattention and hyperactivity equally as the data has shown and proven.

It just confirmed everything they so first and in the phase three studies that we've done and it's very exciting for them to know that they potentially could have an option out there as a non stimulant non controlled substance that could do aren't as early as week one.

Jack A. Khattar: And it's very exciting for them to know that they potentially could have an option out, that could work as early as week one, and with an effect that they saw firsthand again in the studies that lasted through the whole study. And that could also work for both inattention and hyperactivity equally, as the data has shown and proven. And finally, at the same time, giving them, and this is important to physicians, giving them a wide therapeutic window and dose range that they can work with, 100 all the way to 400 milligrams without sacrificing any tolerability or safety, and having the assurance that this product is gonna be very well tolerated given the profile we talked about numerous times and the very low discontinuation rates behind this product. So they're really excited about having that option. Many of them don't even see a downside to trying it. It's like, "What do we have to lose?"

And we'll then effect that they saw firsthand again in the studies that lasted through the whole study.

And that could also walk in both in attention and hyperactivity equally as the data has shown in put all women.

Jack Khattar: Finally, at the same time, giving them, and this is important to physicians, giving them a wide therapeutic window and dose range that they can work with 100 all the way to 400 mg without sacrificing any tolerability or safety, and having the assurance that this product is gonna be very well tolerated given the profile we talked about numerous time and the very low discontinuation rates behind this product. So they're really excited about having that option. Many of them don't even see a downside for trying it. It's like, what do we have to lose? It's an uncontrolled substance, so easy to use on top of that. We may not even need titration for many kids. The 100 mg worked extremely well in our clinical studies, so it is so easy to use.

And finally at the same time, giving them and this is important to physicians, giving them a wide therapeutic window and those range that they can work with.

Under the all the way to 400 milligram without sacrificing any tolerability or safety.

And having their short answer this product is gonna be very well tolerated given the profile, we talk about numerous times and the very low discontinuation rates behind this product.

So there were really excited about having that option many of them don't even see a downside for trying get it's like what what do we have to lose that's an uncontrolled substitutes. So easy to use on top of that we may not even need nitration for many kids. The hundred milligram worked extremely well in our clinical studies. So it is so easy to.

Jack A. Khattar: It's an uncontrolled substance, so easy to use on top of that, we may not even need titration for many kids. The 100 milligram dose worked extremely well in our clinical studies. So it is so easy to use; you will know pretty quickly whether it is going to work for these kids or not. And, worst case, you can always add a stimulant if you would like to. So it's really been very, very positively received by the KOLs, and they can't wait until we have the product on the marketplace. So that's really, you know, the summation of where we are at this point on 8-12 and how excited, I mean, our excitement level just... keeps going up and up every day.

We use you will know pretty quickly whether it is going to work for these kids or not and worse case, you can always add stimulant. If you would like to so it's really had been very very positively received by the K oils and they can't wait until four out you know for us to have the product on the marketplace.

Jack Khattar: You will know pretty quickly whether it is going to work for these kids or not. Worst case, you can always add a stimulant if you would like to. It's really been very, very positively received by the KOLs, and they can't wait until you know, for us to have the product on the marketplace. That's really, you know, the summation of where we are at this point on eight-twelve and how excited. I mean, our excitement level just keeps going up and up every day as we get closer to the launch date, hopefully.

So that's really you know the this formation off where do we ought at this 0.8 12, and how excited I mean, our excitement level just.

Keeps going up in up every day as we get closer to launch date awful.

And then just when would you anticipate commercial launch expenses to start to build this year.

Pavan Patel: Just when would you anticipate the commercial launch expenses to start to build into this year?

Patrick Truccio: And then, just when

Patrick Trucchio: Just when would you anticipate the commercial launch expenses to start to build into this year?

Greg Patrick: to start to build into this year. Yeah, well, Patrick, as I mentioned previously to Annabel's question, the launch expenses are building. Actually, they've been building in 2019, and since there's a step up, a very significant step up between 2019 and 2020 in terms of SG&A expenses, they are embedded in the full year of 2020. So we've been spending in anticipation of launch, and that spending is going to really ramp up this year. So the answer to your question is now.

Yeah, well Patrick as I mentioned previously to Annabel question. The launch expenses are building actually they've been building in 2019 and since as a step up a very significant step up between 2019 and 2020 in terms of best DNA expenses. They are embedded in the full year of 2020. So.

Greg Patrick: Yeah. Well, Pavan, as I mentioned previously to Annabel's question, the launch expenses are building. Actually, they've been building in 2019. Since there's a step up, a very significant step up between 2019 and 2020 in terms of SG&A expenses, they are embedded in the full year of 2020. We've been spending in anticipation of launch, and that spending is gonna really ramp up this year. The answer to your question is now. The other component of the launch expenses is that which is related to the sales force. As I mentioned in response to Annabel's question, that's largely gonna be a Q4 expense. We're gonna tweak that so that those reps are added just prior to the anticipated approval date.

We've been spending in anticipation of launching that spending is going to really ramp up this year. So answered. Your question is now.

Greg Patrick: The other component of the launch expenses is that which is related to the sales force. And as I mentioned in response to Annabel's question, that's largely going to be a fourth quarter expense. We're going to tweak that so that those reps are added just prior to the anticipated approval date. So I think from an expense forecasting standpoint, you would anticipate that expense to be essentially a fourth quarter affair.

The other component of the launch expenses is that which is related to the salesforce and as I've mentioned in response to animals question, that's largely going to be a fourth quarter expands we're going to tweak that so that those reps are added just prior to the anticipated approval date.

Greg Patrick: I think from a expense forecasting standpoint, you would anticipate that expense to be essentially a Q4 affair. Really, the only back-loaded expenses are the sales force expense, but the marketing launch expenses are fairly spread out across all the quarters. That's the point we really wanna make sure folks understand. It's not like all the launch expenses are gonna be backloaded in the H2 of this year. It's gonna be fairly, you know, spread out across the quarters with the exception of the cost of the sales force itself.

So I think for but from an expense forecasting standpoint, you would anticipate that expense to be essentially a fourth quarter affair. So really the only back loaded expenses or the sales force expense, but the marketing launch expenses are fairly spread out across all the quarters, that's the point where either when it makes for.

Greg Patrick: So really, the only backloaded expenses are the sales force expenses, but the marketing launch expenses are fairly spread out across all the quarters. That's the point we really want to make sure folks understand. So it's not like all the launch expenses are going to be backloaded in the second half of this year. They're going to be fairly, you know, spread out across the quarters with the exception of the cost of the sales force itself.

Folks understand so it's not like all the launch expenses are gonna be back loaded in the second half of this year is gonna be fairly you know spread out a across the quarters with the exception of the costs of the sales force itself.

Patrick Truccio: That's helpful. Thank you very much. Shred. Knuckle.

That's helpful. Thank you very much.

Pavan Patel: That's helpful. Thank you very much.

Patrick Trucchio: That's helpful. Thank you very much.

Jack Khattar: Sure. You're welcome.

Sure right Bob.

David A. Amsellem: Transcribed by https://otter.ai, Q&A: A reminder, ladies and gentlemen, if you have a question at this time, please press star then 1. Our next question comes from David Amsellem from Piper Sandler. Your question, please. Hi, everyone. This is Zach on behalf of David.

Thank you and as a reminder, ladies and gentlemen, if you happy question at this time. Please press Star then one.

Operator: Thank you. As a reminder, ladies and gentlemen, if you have a question at this time, please press star then one. Our next question comes from the line of David Amsellem from Piper Sandler. Your question, please.

Our next question comes in line of David Amsellem from Piper Sandler Your question. Please.

[Analyst] (Piper Sandler): Hi, everyone. This is Zach on for David. Thank you for taking my question. Just a few quick ones from me on SPN-812. If you've already said this, but we were hoping to get a sense of what you're initially thinking in terms of payer contracting and specifically what your views are, in regards to the potential for patients to maybe go through a step therapy of a generic version of Strattera or Intuniv in order to gain access to SPN-812. Secondly, I think you've already alluded to this, but what you're thinking on in terms of pricing and gross-to-net for the product. Thank you.

Hi, everyone. This is back on for David. Thank you for taking my question just.

David A. Amsellem: Thank you for taking my question. Thank you. Okay. Thank you. Thank you. We are hoping to, I don't know if you've already said this, but we are hoping to get a sense of what you're up to. [inaudible] Transcribed by https://otter.ai

Quick ones from me on that.

Well.

I'm sorry, if you've already said this but we were hoping to get a sense.

Like your initially thinking in terms of payer contracting and specifically what your views are in regards to.

Potential for patients.

That's correct.

It's just hair or.

It is in order to gain access 80, 812, and secondly, I think you've already alluded to this and what you're thinking on in terms of pricing I first met for the product. Thank you.

David A. Amsellem: Transcripts provided by Transcription Outsourcing, LLC.

Yes, sure as I mentioned earlier as far as the payers.

Jack A. Khattar: Yeah, sure. As I mentioned earlier, as far as the payers are concerned, it's an ongoing discussion at this point, so it's not like we have a final position that they have taken one way or the other. So those will continue all the way through before the launch, and our aim is clearly to have as much coverage as possible from day one. But all the discussions so far, and as we continue to have more and more discussions and share with them the data that I refer to as far as the mechanism and the novelty of the product, I think they're truly starting to understand that this is not like a generic Spratera or a generic Intuniv, and therefore, it is worth considering it as a very different product than those products.

Jack Khattar: Yeah, sure. As I mentioned earlier, as far as the payers, it's an ongoing discussion at this point, so it's not like we have a final position that they have taken one way or the other. Those will continue all the way through before the launch. Our aim is clearly to have as much coverage as possible, you know, from day one. All the discussions so far, and as we continue to have more and more discussions and share with them the data that I referred to as far as the mechanism and the novelty of the product, I think they're truly starting to understand that this is not like a generic Strattera or a generic Intuniv, and therefore it is worth considering it as a very different product than these products.

Its an ongoing discussion at this point so it's not like we have a final position that they have taken one wherever they are that's all those will continue through all the way through before the launch in our aim is clearly to have as much coverage as possible you know from day one.

But all the discussion so Florida and as we continue to have more and more discussions and share with them. The data that I referred to as far as of the mechanism in a novelty of the product I think the truly starting to understand that this is not like a genetics threat there at all or a genetic intuitive.

And therefore it does it is worth considering it as a very different product. Then these products, having said that that doesn't mean you know they're gonna welcome you with an open arm and make it easy for you. So I don't want people also misunderstand my comments it will be challenging of course, but we will walk through it and we have a lot of data to help.

Jack A. Khattar: Having said that, that doesn't mean they're going to welcome you with an open arms and make it easy for you. So I don't want people to misunderstand my comments, either. It will be challenging, of course, but we will work through it, and we have a lot of data to help us separate SPNA-12 from these products. Regarding pricing, we don't make any specific comments on what our pricing strategy will be or what the price will be, but a question before me was asked about the range of branded products in the marketplace, and I mentioned somewhere in the $350 to $550 is the range of branded products currently in the marketplace, and that covers from non-stimulants all the way to stimulants.

Jack Khattar: Having said that doesn't mean, you know, they're gonna welcome you with an open arm and make it easy for you. I don't want people also to misunderstand my comments. It will be challenging of course, but we will work through it and we have a lot of data to help us separate SPN-812 from these products. Regarding pricing, you know, we don't make any specific comments on what our pricing strategy will be or what the price will be. A question before was asked about the range of branded products in the marketplace, and I mentioned somewhere in the $350 to $550 is the range of branded products currently in the marketplace, and that covers from non-stimulants all the way to stimulants.

A separate a span a 12 from these products.

Regarding pricing.

You know, we don't make any specific comments on what our pricing strategy will be or what the price or will be but the question before was asked about the range of branded products in the marketplace and I mentioned somewhat in the 350 to 550 is the range of from branded products currently in the marketplace.

And that covers from non stimulants, all the way the stimulus.

Jack A. Khattar: Thank you. This does conclude the question and answer session for today's program. I'd like to hand the program back to Jack Khattar for any further remarks.

[noise] true.

[Analyst] (Piper Sandler): Okay. Thank you.

Jack Khattar: Sure.

Thank you. This does conclude be question and answer session of today's program I'd like to handed program back to check Qatar for any further remarks.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Jack Khattar for any further remarks.

Jack A. Khattar: Thank you. We are focused on getting approval for SPNA-12 and, if approved, the launch of what would be the first novel treatment to be introduced into the ADHD market in more than a decade. While the results from our SPNA-10 program are disappointing, we continue to invest in our R&D pipeline and plan on providing an R&D update later in the year. We will also continue to pursue external growth opportunities through corporate development. Thank you for joining us this morning. We look forward to updating you throughout the year.

[laughter]. Thank you Oh, we are focused on getting approval for a span a 12 and if approved the launch before it would be the first novel treatment to be introduced in the eight each D market and more than a decade, while the results from our span. Eight then program are disappointing we continue to invest in our R&D pipeline and plan on provide.

Jack Khattar: Thank you. We are focused on getting approval for SPN-812, and if approved, the launch of what would be the first novel treatment to be introduced in the ADHD market in more than a decade. While the results from our SPN-810 program are disappointing, we continue to invest in our R&D pipeline and plan on providing an R&D update later in the year. We will also continue to pursue external growth opportunities through corporate development. Thank you for joining us this morning. We look forward to updating you throughout the year.

Writing and R&D update later in the year.

We will also continue to pursue external growth opportunities through corporate development.

Thank you for joining us. This morning, we look forward to updating you threw out the.

Thank you, ladies and gentlemen for your participation in todays conference. This does conclude the program you may now disconnect good day.

Operator: Thank you, ladies and gentlemen, for your participation. This does conclude the program. You may now disconnect. Good day.

Operator: Thank you. Ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

[music].

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