Q3 2023 Supernus Pharma ceuticals Inc Earnings Call
Good afternoon, and welcome to Supernova Pharmaceuticals third quarter 2023 financial results Conference call.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session.
Structures 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 fossil of ICR Westwood Investor Relations representative for <unk> Pharmaceuticals, you may begin.
Thank you Steven good afternoon, everyone and thank you for joining us today for <unk> Pharmaceuticals third quarter 2023 financial results conference call to 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 deck 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 company's future performance. These forward looking statements reflect <unk> current perspective on existing trends and information.
Any such forward looking statements are not guarantees of future performance and about 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 2023.
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 2023 third quarter results.
So partners continues to execute well during a transition year with the loss of exclusivity on its flagship brand Trokendi XR.
Our third quarter performance underscores our strong execution with combined net sales of $70 million for our growth products Calgary and go cover.
Representing an increase of 52% in the third quarter of 2023 compared to the same period last year.
This $70 million in net sales from calibrate and recovery far exceeded the $49 million decline in Trokendi XR net sales in the third quarter compared to the same period last year.
Similarly for the first nine months of 2023 combined net sales of calibrating <unk> coverage grew by 61%.
Reaching $182 million far exceeding the $129 million decline in net sales of Trokendi XR during the same period.
In addition, and excluding Trokendi XR total year to date 2023 revenues for <unk> grew by 25% compared to the same period last year.
Moving on to the ADHD market. This year's back to school season showed a decline of 3% and total U S. ADHD prescriptions in the month of September 2023, when the New school year is mostly in full swing across the U S as compared to them.
Month of June 2023, when the prior school year, mainly ends.
This contrasts with the 4% to 10% growth in the previous four years over the same time period.
While the overall ADHD market had a soft back to school season, calibrate delivered robust prescription growth of 16, 6% in September 2023, compared to June 2023, and.
Addition category accelerated its quarterly sequential prescription growth in the third quarter, 2023% to 12% up from the 9% sequential growth in the second quarter of this year.
During the third quarter of 2023, the average net price per prescription for Calgary was $227, an increase of 7% compared to the second quarter of 2023.
This increase was primarily due to an improvement in gross to net which was around 58, 7% the lowest since the launch of the product and a key step towards our year end target of 50% to 55%.
As a result category net sales in the third quarter grew by 20% and 100% compared to the second quarter of this year and the third quarter of last year, respectively.
Finally during the third quarter calorie expanded its base of prescribers to approximately 24189 up from 21291 prescribers from the second quarter of 2023.
Switching now to recovery net sales increased to $33 million in the third quarter of 2023, representing a healthy increase of 18% over the same period in 2022 and 14% over the second quarter of this year.
We continue to be pleased with the performance of the brand, which is now at an annualized run rate of approximately $130 million and net sales.
Regarding <unk> XR third quarter net sales were $30 million.
Essentially stable compared to net sales in the same period last year.
For Trokendi XR net sales in the third quarter were $21 million up slightly from $19 million in the second quarter and down from $70 million in the third quarter of last year.
Given the performance of Trokendi XR in the first nine months of this year, we are revising our financial guidance and now expect approximately $90 million in net sales for full year 2023.
Regarding SPN 830 earlier this month, the FDA accepted the resubmission of the NDA and assigned to it a producer date of April five 2024.
A few weeks ago, we held an R&D day and shared an overview of our emerging CNS pipeline of novel product candidates.
We highlighted an exciting pipeline of new chemical entities, some of which are first in class mechanisms of action to treat multiple therapeutic areas in CNS.
The company has a significant number of near term milestones.
First the initiation of a phase four study with <unk> in ADHD patients with co morbid mood disorders, such as depression and anxiety before year end 2023.
Second the initiation of a phase two open label study with SPN 820, and approximately 40 subjects with major depressive disorder also before year end 2023.
Third getting top line data in the first half of 2024 from the Phase Iia study of SPN 807, four treatment resistant focal seizures.
Fourth the initiation of a phase <unk> placebo controlled study with SPN 807 in patients with treatment resistant focal seizures also in the first half of 2024.
And fifth the potential launch in the second half of 2024 of SPN 834, the continuous treatment of motor fluctuations in Parkinson's disease, if approved by the FDA.
Finally, we remain active in corporate development looking for strategic opportunities to further strengthen our future growth and leadership position in CNS.
That I will now turn the call over to Tim.
Thank you Jack.
Good afternoon, everyone.
As I review, our third quarter 2023 results. Please refer to today's press release and 10-Q that was filed earlier today.
Total revenue for the third quarter of 2023 was $153 9 million compared to $177 4 million in the same quarter last year.
Total revenue in the third quarter of 2023 was comprised of net product sales of $149 million and royalty revenue of $4 $9 million.
The $23 $7 million decrease in net product sales was primarily due to a $49 million decline in net product sales of Trokendi XR offset by a $23 $8 million increase in net product sales of our growth products.
Calgary NGO covering.
Excluding net product sales for <unk> XR in both periods total revenue for the third quarter of 2023 increased 24% compared to the same period last year.
For the third quarter of 2023, combined R&D and SG&A expenses were $105 4 million as compared to $131 9 million for the same period last year.
The decrease was primarily due to lower SG&A expenses in the third quarter of 2023 compared to the third quarter of 2022.
As activities to support the launch of Calgary to the adult population and the direct to consumer campaign substantially occurred in the third quarter of 2022.
Operating earnings on a GAAP basis for the third quarter of 2023 was $8 1 million as compared to an operating loss of $1 5 million for the same period last year.
Income tax expense in the third quarter of 2023 was $25 9 million as compared to an income tax benefit of $2 2 million for the same period last year.
GAAP net loss was $16 million for the third quarter of 2023, our loss per diluted share up 29 <unk>.
Compared to GAAP net earnings of $1 7 million or earnings per diluted share of <unk> in the same period last year.
On a non-GAAP basis, which excludes amortization of intangibles and share based compensation.
Tension consideration and depreciation adjusted operating earnings was $37 3 million compared to $25 4 million in the same period last year.
Total revenue for the nine months ended September 32023 was $443 2 million compared to $499 9 million in the same period last year.
Total revenues were comprised of net product sales of $417 9 million and royalty revenue of $25 3 million.
The $67 $7 million decrease in net product sales was primarily due to a $129 $3 million decline in net product sales can be XR.
Partially offset by a $68 $6 million increase in net product sales of our growth products Calgary NGO coverage.
Excluding net product sales of Trokendi XR in both periods total revenues for the nine months ended September 32023 increased 25% compared to the same period last year.
Combined R&D and SG&A expenses for the nine months ended September 32023, or $323 3 million as compared to $360 million for the same period last year.
Again. This decrease was primarily due to lower SG&A expenses in 2023 as compared to 2022 as activities to support the launch of Calgary to the adult population and a direct to consumer campaign occurred in 2022.
Operating loss on a GAAP basis for the nine months ended September 32023 was $4 3 million as compared to operating earnings of $11 8 million for the same period last year.
Income tax expense for the nine months ended September 32023 was $1 6 million as compared to an income tax benefit of $9 6 million for the same period last year.
GAAP net earnings was 141000 for.
For the nine months ended September 32023, or zero cents per diluted share compared to $35 2 million or <unk> 62 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 was $77 9 million compared to $91 1 million in the same period last year.
As of September 32023, the company had approximately $225 3 million in cash cash equivalents and marketable securities compared to $555 2 million as of December 31, 2022.
The decrease was due to repayment of the convertible security notes.
In 2023 offset by cash generated from operations.
The company has a strong balance sheet and significant financial flexibility for potential BD and other value creating opportunities.
Now turning to guidance.
For the full year 2023, the company is amending its financial guidance as follows for total revenue, we are narrowing the range to $590 million to $610 million.
<unk> to our prior guidance of $580 million to $620 million.
For the full year 2023, we expect combined R&D and SG&A expenses to range from $420 million to $440 million down from our prior guidance of $450 million to 480.
Overall, we expect 2023, GAAP operating loss to range from $5 million to $15 million an improvement from the previous guidance range of an operating loss of 10 million to $30 million.
Yes.
We are also increasing our GAAP operating earnings non-GAAP operating earnings for the full year 2023, and now expect a range of $95 million to $110 million compared to a range of $75 million to $100 million previously.
Please refer to the earnings press release issued prior to the call that identifies the various ranges of reconciling items between GAAP and non-GAAP.
With that I will now turn the call over to the operator for Q&A.
Later.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
First question comes from the line of Andrew Tsai of Jefferies. Your line is now open.
Okay. Good afternoon, thanks for taking my questions.
I thought I'd start this quarter by asking on pipeline questions.
After your R&D day, so maybe for the first one for your for epilepsy data set later in first half 2024 remind us again, what would be meaningful data to you on efficacy in terms of seizure reductions in seizure freedom rates understanding. This is an open label study.
And then secondly for SPN eight <unk> your depression asset you are evaluating the pulsatile action of this dose every three days 40 patients data I believe also first half 'twenty 'twenty four.
So what kind of Madras Ham D separation deal. So I wanted to see what's positive data to you and why thank you.
Yes, I'll take this one.
Starting with SPN 807.
As we did share as we've mentioned in the R&D day, the interim data. The first look at the data we have from the I think it was six or seven patients.
It looks really promising and the profile that is emerging on this product. So far is showing seizure reduction and the 60 or even up to 80% in certain situations. So that is extremely promising yet. It is early obviously it is early and a small set of.
Number of patients so what we hope to see obviously is consistent.
Data with that trend with that emerging data that we've seen early on that the full study will show very very similar type of ranges in seizure reduction because that will clearly differentiate the product.
So as other products on the marketplace.
Seizure freedom, so far it's a very small numbers of whatever we have we have one patient that we talked about I guess from the.
Study in Australia, which had three patients and we still have one left on that study and he has been seizure free I think for three years or more.
Again, very small numbers early on but very promising and very encouraging certainly so so we sure hope at the study eventually it will be very consistent with all of these trends that we've seen so far on SPN 8000.
The second study that we are starting before year end, which is the pulsatile dosing.
As well as the other important point, it's also the major depressive disorder and MDT instead of <unk>. So we want to explore that.
Expanded type of potential use for the product. So it's not only 40 already.
Clearly, we're looking for meaningful reductions.
<unk>.
That could be seen.
On the endpoints, we are looking at so many secondary endpoints in that study as well as we are in the phase II B study that is currently going on with TRT. So both studies.
Well clearly in the form us tremendously.
And looking forward and how to design the phase III, whether the pulsatile dosing will be better than the once a day dosing and so forth. So we're trying to explore as many different aspects of the study of the molecule as possible to give us better.
Information as we start working on the design of the Phase III program.
Got it.
One more is just for the.
Phase <unk> ongoing with data 2025.
Target of 268 subjects I think a month ago I think you had 87 patients in the screening phase or in a later.
So where would you want to be on that number and let's just say three to six months and how do you. How are you ensuring you get there on time.
Yes.
We're hoping we can really complete the enrollment.
A significant way.
In the second half of 2024.
And Thats why were saying topline data in 2025, clearly, we're working very hard to make it as early as possible in 2025.
It's a little bit hard for us to guess right now because the enrollment.
A lot of times, you'll have a couple of weeks are very good strong enrollment then it softens a little bit then it picks up again.
It's not always a linear.
Trend from a recruitment perspective enrollment perspective, we're also and we continue to make different revisions to the protocol.
Remember this is a first in class molecule mechanism of action that are so much. So that we don't know about this class.
Orphan drugs clearly so it's not like somebody has been before us. So we've been very cautious from the beginning and designing the study the different protocols. We've had we've had now.
Three amendments to the protocol and then every amendment, we incorporate some of the learnings we have from the study.
And.
Facilitating recruitment by either relaxing inclusion criteria and exclusion criteria and making adjustments to their so so all of this to say basically that the recruitment hasn't been always very predictable in a linear fashion.
We certainly looking at hopefully fully enroll the study in a meaningful way by the second half of 2024, and therefore to get data.
As early as we can in 2025 as we get closer in time or as time goes on we'll certainly update.
<unk>.
Be a little bit more specific as to when in 2025.
Alright, Thank you very much.
Sure.
Alright. Thank you one moment for our next question.
Next question comes from the line of David <unk> of Piper Sandler Your line is now open.
Hi, Thanks, Skyler on for David.
First just looking at the script data for calibrate how does the acceleration in volumes for back to school season look versus your expectations can you speak to any dynamics regarding back to school that you think will be impactful in the fourth quarter and then second can you speak to the adult and pediatric patient mix for calibration.
How was adoption in the adult ADHD setting impacting or will impact the average value of any given prescription.
Yes regarding the back to school season, as I mentioned in the prepared remarks of this year.
It is softer.
It was softer than previous years, we actually.
So significant acceleration in the back to school growth.
Around Covid time continued a little bit for a couple of years and then start trending down and this year was the lowest point, which I mentioned was a minus three actually growth decline of 3%, which is the first time, we see in several years looking back at the ADHD market in total.
Now with even despite that calibrate actually grew.
By 16, 6% in the way we are measuring back to school season, just to clarify here, we're looking at the September month.
One of the really the school is in full swing everybody is already in school.
And we're looking at June which typically when everybody is out of school. So that's why we picked these two months.
Surrogate measure so to speak for the back to school season, and Thats, where the number that I referred to that this past season. There was a decline of 3% September from June.
<unk> actually grew 16, 6%, so we clearly did extremely well and much better than the market itself can.
Can we do better we will always look for doing better clearly overall.
As far as the recent weeks, we have seen a little bit stronger.
Weekly data if you look at the fourth quarter sequential data versus the third quarter. So.
So far we are trending more in the 20%, 24%, so clearly a little bit healthier than the third quarter, but it remains to be seen how the full quarter ends up.
Trending.
Regarding your next question on the mix.
<unk> is about 28% to 30% of the business. So it's been stable, which you would expect because the third quarter was a major push for us on the pediatrics, although adult is still in the launch mode.
During the third quarter, we clearly put a lot of effort and prioritization behind the pediatric business because of their back to school season. So as time goes on we do expect to continue to grow.
However, we don't think it will mirror exactly like the market, which is 70% or 67% adult and 30% pediatric I don't think we will get to that level, but it may settle on an ongoing in the future maybe a 50 50.
Probably that would be great, if we get to that kind of mix.
Great. Thank you.
Alright, Thank you Im showing no further questions at this time.
I'd now like to turn it back to Jack Qatar for closing remarks.
In concluding our call. This afternoon, our growth products Calverley <unk> delivered strong growth of 61% in net sales in the first nine months of this year and far exceeded the loss of Trokendi XR net sales, we will continue to focus on making the 2023 transition.
As smooth as possible as we move away from the legacy products and set the stage for continued growth in 2024 and beyond.
We are well positioned for continued growth with three key areas first the existing portfolio that we have today with Calgary NGO covering driving significant growth and together with the rest of the portfolio generating strong cash flow, allowing us to invest in our pipeline.
An innovative R&D pipeline of differentiated first in class molecules and finally continued execution on the corporate development side to augment our growth through external growth opportunities. Thanks for joining us. This afternoon, we look forward to updating you on our next call.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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