Q3 2022 Supernus Pharmaceuticals Inc Earnings Call
Good afternoon, and welcome to <unk> Pharmaceuticals, third quarter 2022 financial results Conference call.
At this time all participants are in a 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.
And I would now like to turn the conference over to Peter embargo of ICR Westwood Investor Relations representative for <unk> Pharmaceuticals, Sir you may begin.
Thank you Chris Good afternoon, everyone and thank you for joining us today for <unk> Pharmaceuticals third quarter 2022 financial results conference call today. After the close of the market. The company issued a press release announcing these results on the call with me today are <unk>, Chief Executive Officer, Jackatar, Chief Financial Officer, Tim Dec.
Today's call is being made available via the Investor Relations section of the company's website at IR <unk> Dot com.
During the course of this call management may make certain forward looking statements regarding future events and the Companys future performance. These forward looking statements reflect some furnaces current perspective on existing trends and information any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the risk factors section.
Of the company's latest SEC filings.
Actual results may differ materially from those projected in these forward looking statements for the benefit of those of you who may be listening to the replay. This call is being held and recorded on November eight 2022. Since then the company may have made additional announcements related to the topics discussed. Please reference the Companys. Most recent press releases and current filings with the SEC.
So furnace declines any obligation to update these forward looking statements, except as required by applicable securities laws I will now turn the call over to Jack.
Thank you Peter good afternoon, everyone and thanks for taking the time to join US as we discuss our 2022 third quarter results.
During the first nine months of 2022, we continue to execute on our long term growth strategy focusing on successfully transitioning from our legacy in mature products to our growth products.
Our products acquired or launched since 2020 accounted for 42% of our total net product sales slightly surpassing trokendi XR net product sales contribution in the third quarter.
For the first nine months of this year total revenues were $500 million, representing a 19% increase over the same period last year.
Adjusted non-GAAP operating earnings of $91 million reflected continued significant investment in Calgary.
During the third quarter the company increased its commercial efforts, including a direct to consumer campaign to build more momentum behind the adult launch and to support the important back to school season.
Calories launch continues to progress well with increased momentum and prescription growth and shipments due to the launch and the adult population and the back to school season.
During the third quarter of 2022 total IQ via prescriptions for calibration reached 94328, representing an increase of 50% compared to the second quarter of 2022.
Prescriptions in the most recent month of September reached 34633, the highest monthly total since the launch.
Based on the weekly IQ via prescription data by age at the end of the third quarter adult prescriptions represented approximately 23% of total calories prescriptions.
During the third quarter, which was the first full quarter. After the launch in adults adult prescriptions grew by 77% in pediatric prescriptions showed solid growth of 43%.
Caliber continues to expand its base of prescribers with over 14265 prescribers in the third quarter of 2022 up from 9276 prescribers in the second quarter of 2022.
We continue to receive positive feedback from prescribers regarding the performance of Calgary in patients.
Recent survey among prescribers for adult patients showed a 90% overall satisfaction level with Calgary compared to only 51% for straight era.
Regarding the recovery the product delivered another quarter of solid growth with net sales, reaching $27 $9 million in the third quarter of 2022.
A 16% increase compared to the third quarter of 2021 for the first nine months of 2022 recovery net product sales were $75 2 million, an increase of 22% compared to net product sales reported by <unk> in the first nine months of 2021.
<unk> continues to perform well with net product sales of $88 million for the first nine months of this year.
Presenting a 7% increase compared to the same period last year.
For the nine months of 2022 net product sales of Trokendi XR were $204 million down from $232 million in the same period last year.
The company has significantly reduced its in person sales efforts in the second half of the year, but continues to provide support to physicians and patients through various sales and marketing programs.
Moving on to the pipeline as we announced last month. The FDA issued a complete response letter for the SPN 830, new drug application.
The CRA audit and request additional efficacy and safety clinical studies, but there are other required additional information and analysis related to the infusion device and drug product across several areas of the NDA, including labeling product quality and manufacturing device performance and risk analysis.
The FDA you mentioned that the approval of the NDA requires inspections that could not be completed in a timely manner due to COVID-19 travel restrictions.
We will continue to work closely with the FDA and our partners to address all questions and to provide clarity regarding the potential timing of a resubmission of the NDA.
FDA has made an initial determination that the amendment to the company's application in response to the CRM will be subject to a class two or six months review timeline.
For SPN eight <unk>, our first in class orally active <unk> activator of the phase II multi center randomized double blind placebo controlled study in adults with treatment resistant depression is ongoing the.
The study will examine the efficacy and safety of SPN 820 over the course of five weeks of treatment and approximately 270 patients.
Primary outcome measure is the change from baseline to end of treatment period on the Montgomery asset book Depression rating scale total score a standard depression rating scale.
We are on track also to initiate an open label phase two clinical study with SPN 807 in the fourth quarter of this year in patients with treatment resistance seizures.
SPN 807 represents a novel mechanism of action for an anti convulsion and utilizes synthetic form of <unk>, which is a potent super cholinesterase inhibitor with pharmacological activities in CNS conditions, such as epilepsy.
And finally, we continue to be active in corporate development looking for strategic opportunities to further strengthen our future growth and leadership position in CNS.
With that I will now turn the call over to Tim.
Thank you Jack good afternoon, everyone.
As I review, our third quarter 2022 results. Please refer to today's press release.
Total revenue for the third quarter of 2022 was 144, $177 4 million, a 19% increase compared to $148 5 million in the same quarter last year.
Total revenue in the third quarter of 2022 was comprised of net product sales of 107 to $2 7 million and royalty revenue of $4 7 million.
Third quarter revenue is the highest quarterly revenue in our company's history.
The increase was primarily due to net product sales of <unk> from the acquisition of <unk> in November of 2021 and growth in net product sales of Calgary and ox stellar XR.
For the third quarter of 2022, combined R&D and SG&A expenses were $131 9 million as compared to $91 7 million for the same period in 2021.
This increase was primarily due to activities to support the launch of <unk> and the investment in the <unk> direct to consumer campaign as Jack mentioned, the DTC campaign and associated expenditures were substantially complete in the third quarter of 2022.
Amortization of intangible assets for the third quarter of 2022 was $20 6 million compared to $6 million for the same period in 2021. The increase is due to the <unk> acquisition.
Operating loss on a GAAP basis for the third quarter 2022 was $1 5 million as compared to an operating gain of $32 6 million in the same period of 2021.
The decrease in GAAP operating earnings, which was expected is primarily attributable to higher expenses to support the launch of Calgary the investment in the DTC campaign, and the aforementioned amortization of intangibles associated with the <unk> acquisition.
Income tax for the third quarter of 2022 was a tax benefit of $2 2 million as compared to income tax expense of $7 4 million for the same period in 2021.
This benefit was primarily due to our quarter to date loss kind of windfall benefit from stock based awards has compared to the prior quarter to date expense.
GAAP net earnings were $1 7 million for the third quarter of 2022, or <unk> <unk> per diluted share compared to $21 6 million or <unk> 46 or.
<unk> 40 per diluted share in the same period last year.
On a non-GAAP basis, which excludes amortization of intangibles share based compensation contingent consideration and depreciation adjusted operating earnings.
Or $25 4 million compared to $43 3 million in the third quarter of 2021.
Total revenue for the nine months ended September 32022 was $500 million.
19% increase compared to $427 million in the same period last year.
Total revenue was comprised of net product sales of $485 6 million and royalty revenue of $14 3 million.
The increase was primarily due to net product sales of <unk> from the acquisition of <unk> in November 2021, and growth in net product sales of Calgary Annex dollar XR offset in part by a decline in net product sales of Trokendi XR and <unk>.
<unk>.
For the nine months ended September 32022, combined R&D and SG&A expenses were $360 million as compared to $272 4 million for the same period in 2021.
The increase in expenses is primarily due to activities to support the launch of Calgary the investment in the DTC campaign and costs to support recovery.
Amortization of intangible assets for the first nine months ended September 32022 was $61 9 million compared to $18 million for the same period in 2021.
Operating earnings on a GAAP basis for the first nine months ended September 32022 was $11 8 million as compared to $79 9 million for the same period in 2021.
The decrease in GAAP operating earnings is primarily attributable to the higher expenses to support the launch of Calgary, The DTC campaign, and the aforementioned amortization of intangibles.
Other income expense for the first nine months of September 32022 was $13 8 million of income as compared to $8 8 million of expense in the first nine months of 2021.
The increase is primarily due to a gain recognized on our share of a distribution from a sale of a subsidiary of <unk>.
And a decrease in interest expense due to the adoption of a new accounting standard in the first quarter of 2022.
Income tax for the first nine months ended September 32022 was a tax benefit of $9 6 million as compared to an income tax expense of $20 1 million for the same period in 2021.
The benefit was primarily due to our corporate reorganization of the Adonis entities in the first quarter of this year.
GAAP net earnings were $35 2 million for the first nine months ended September 32022, or <unk> 62 per diluted share compared to $51 million or <unk> 94 per diluted share in the same period last year.
On a non-GAAP basis.
Which again excludes amortization of intangibles share based compensation contingent consideration and depreciation adjusted operating earnings for the first nine months of 2022 or $91 9 million.
Compared to $106 million in the same period in 2021.
Yeah.
As of September 32022, the company had approximately $523 7 million in cash cash equivalents and marketable securities compared to $458 8 million as of December 31, 2021.
This increase is primarily due to cash generate generated from operations.
For the full year 2022, the company is raising the midpoint and narrowing the expected ranges of full year 2022 financial guidance for total revenue and for GAAP and non-GAAP operating earnings.
As such we expect total revenue to range from $650 million to $680 million compared to our prior guidance of $640 to $680 million.
For the full year 2022, we expect combined R&D and SG&A expenses to range from $460 million to $475 million compared to our prior guidance of $460 million to $490 million.
Overall, we expect 2022, GAAP operating earnings to range from $35 million to $45 million compared to our previous guidance of 20 million to 40.
We expect our non-GAAP operating earnings to range from $135 million to $155 million as compared to our previous guidance of $130 million to $165 million.
With that I will now call.
Turn the call back to our operator for Q&A.
Operator.
Thank you Sir.
To ask a question you will need to press star one one on your phone.
Please standby as we compile the Q&A roster.
One moment for our first question.
Our first question will come from David <unk> of Piper Sandler Your line is open.
Hey, Thanks, So just had a few first on Calgary can you just talk about the gross to net.
And <unk> looks like it.
Stable or trend down a little bit.
So talk about those dynamics and are you still sticking to your aspirational target of 50% to 55% over time.
And then related to that and talk about your.
Fair Slash PVM contract negotiations and where things may stand there.
So thats number one.
Number two is on.
Trokendi might be a little bit early to talk about this but can you give us some of your latest thoughts on what you think the erosion might look like over has differently.
You are thinking about generic market formation.
And overall.
Erosion of volumes and sales next year that would be helpful. As well. Thank you.
Yes sure.
Regarding the first question on calibrating the gross to net in Q3.
As fairly stable, a little bit better than Q2, but that's a quarter to quarter type of fluctuation. So.
So yes, it did trend down, but it's more in the 60% in the third quarter.
The target.
Although they are still in the $50 to 55% that will be great. We're working pretty hard to get to that target as soon as we can within reasonable contracting parameter is if we can achieve those so we will continue to have discussions with.
The various pbms.
Hopefully, reaching something that could be reasonable that will also help us on the gross the net eventually.
As far as Trokendi XR and the erosion.
We are planning at this point, obviously you were getting very close to the next year and we will talk more about it hopefully in February but we.
We're going to plan at this point and we.
Ask people to look for as we said earlier erosion, probably around 90% of erosion by December so over 12 months.
Kind of 90% erosion by the end of 2023.
It might be a little bit slower in the first quarter and then it.
We'll later the Quaker the timing is really difficult to predict on whether you have a second generic and on how many skus out of the four different.
S skus or product strengths that we have.
So it looks like there will be a first gen. Eric that will come in January one as the settlements allow on three product strengths.
But there is still a very open question on 180 day exclusivity on these three product strength as well open question on the 180 day exclusivity on the forest product strength.
There is a second genetic who has approval on all four product strength. So depending on the 180 day exclusivity status of these products strengths. It will determine then the timing of the entry of the second generic so all of that is still.
At this point, not 100% clear or certain.
But that's where we are at this point and that's the latest information we have on that.
Okay. That's helpful. Thanks.
Sure.
Thank you.
As a reminder to ask a question you will need to press star one on your phone.
One moment please for our next question.
The next question will come from Annabel <unk> of Stifel. Your line is open.
Yes.
Hi, This is Jack calling in for Annabel. Thanks for taking my questions two from US. So first on Calvary, we've seen a pretty meaningful uptick in prescriptions. Since the adult launch is this early penetration primarily from a growing desire for non stimulant option or more.
Due to either a rebound from the back to school season, or a lack of availability from adderall given manufacturing delays just wanted to know if you think this is a sustainable trend or one that you could see reversed the love when stimulant supplies return.
And secondly on <unk> I know you've mentioned previously that your intention with the effective relaunch or two essentially rework the narrative and focus on dyskinesia first and I'll start with the second.
Better differentiate it from competitors.
Do you have any early indications on how receptive physicians have been the strategy and if they've begun to more meaningfully understand the advantages of the dual profile. Thanks.
Yes.
Regarding the first question on <unk> and the uptick.
And the prescriptions certainly we have two dynamics on top of each other and working together in a growing category and accelerating its growth in the third quarter as you well pointed out first adult launch, which we launched it at the end of May.
But then as the summer season dwindled down so to speak in back to school season starts coming up you had the back to school effect on the pediatrics as.
As I mentioned in the remarks as far as the adult growth was around 77% growth in the third quarter, which was fairly the first full quarter right. After the launch.
And we continue to see although the growing so that is still growing.
And then at the same time, we didn't see pediatric slowing down so pediatric continues to grow in the third quarter because of the back to school season. So we're pretty pleased right now with both patient populations.
<unk> continued to show solid growth in both sides of the business.
As I mentioned, 23% of our prescriptions per the weekly data that we get which breaks it down by age is showing that about 23% is in adult. So we have a long way to go as far as the growth potential because if you remember the market is split up 67% adult and the remainder of <unk>.
<unk>. So we have a lot of potential out there that we can tap into.
And what's really keeps us positive about all this is certainly at the end of the day is the feedback we get from physicians about the performance of the product.
So consistent with what we've seen now for almost a year and a half almost soon will be two years in the pediatric side.
We are seeing the same thing on the adult side with positive feedback from physicians about the use of the product.
<unk> population as I mentioned, the overall satisfaction is 90%, which is really high compared to what they are used to and these are the same physicians who are typically prescribed stress there or other non stimulants and on strip era. For example, I mentioned theres only 51% overall satisfaction so clearly.
Liberty of separating itself from other non stimulants so.
Also continued to be used or the primary reasons and the primary type of patients that physicians are putting on Calgary.
These are patients who are coming from the stimulant segment. So there is still a lot of dissatisfaction and the stimulant market. Despite the fact that stimulants dominate the market about 90% of the prescriptions, but theres. So many patients either dissatisfied and stimulants are not the right option for them. So we continue to.
Bring a lot of the patients and the primary source of our patients at least all of this.
Since we launched it in 2021 seems to be coming from the stimulant segment.
As well as of course with folks who are not satisfied with the other non stimulants in the marketplace. So all in all looks like the source of the business is coming from different areas of the market. So it would not only seen as one treatment option and non stimulant, but were drawing in a lot of stimulants usage.
We don't believe the Adderall shortage for example, which many people have asked us about a lot of the shortages in the immediate release product and so forth actually may be the wrong patient profile, we're looking at here.
So we completely focus on selling our product based on the merits of our product and we want the right patients to be on our product because if you have the wrong patients they may not end up being.
Fulfilled with the product that we have because it's the wrong product for what they're looking for.
And then finally on go coverage regarding an additive over the positioning.
It is actually one of the unique issues on the attractiveness of a recovery in the marketplace in part concerns. The fact that we can treat both of episodes in dyskinesia and what we're finding out is that among physicians, whether they're movement disorder specialists or neurologists, who are very well entrenched in the parkinsons space in there.
Well versed about treating Parkinson's and then you have the general General Neurologists there are differences in how they treat there are differences in how they look at dyskinesia.
Everybody pretty much treats off.
The most common thing obviously.
But not every physician has as attentive of or every patient is as well spoken about their issues and really raised the issues with their physicians about dyskinesia and other things. So it takes a lot of market education, which we've been doing a lot since we took over the product.
And really helping folks understand the dynamics between both the fact that they don't have to have a tradeoff between treating off and dyskinesia and they can treat both at the same time, but it does require a change in habits and these things do take time, they take frequency by our sales force to continue hammer.
That message.
And the importance of looking at the overall condition of the patient not just of episodes or not just dyskinesia, but you could actually treat both and look at the overall condition and the overall status of the patient. So it's a work in progress we're pretty pleased with the.
Continued solid growth of the business clearly, we're doing the right things and is resonating with physicians and we continue to grow the brand.
Yeah.
Great. Thank you.
Thank you.
Again to ask a question you will need to press star one on your phone.
Please standby as we compile the Q&A roster.
And I am seeing no further questions in the queue.
I'd now like to turn the conference back to Jack <unk> for closing remarks.
Thank you and concluding our call. This afternoon, I would like to emphasize that calories and recoveries growth out of our top priority.
We're excited about calories momentum as well as recoveries performance and continued growth since the completion of the acquisition. We look forward to building on the memorandum and finishing the year strong I would like to thank all our employees for delivering a solid quarter with record revenues for us and look forward to updating everyone.
On our next call.
Yeah.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.
The conference will begin shortly to raise your hand during Q&A you can dial one one.
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