Q2 2019 Earnings Call

BF-WATCH TV 2021

Transcribed by https://otter.ai

Good morning, ladies and gentlemen, and welcome to the permit Pharmaceuticals second quarter 2019 financial results Conference call.

Operator: Good morning, good morning ladies and gentlemen, and welcome to the Supernus Pharmaceuticals second quarter 2019 financial results conference call. At this time, our participants are in a listen-only mode; later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to turn the call over to Peter Vozzo of Westwick Investor Relations for Supernus Pharmaceuticals. You may begin.

At this time all participants are in a listen only mode. Later, we'll conduct a question and answer session and instructions will follow at that time.

As a reminder, this call is being recorded.

I would now like to turn the call over to Peter Vozzo Leslie.

Investor Relations first apartment Pharmaceuticals, you may begin.

Peter Vozzo: Thank you Sarah. Good morning everyone, and thank you for joining us today for Supernus Pharmaceuticals' second quarter 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.

Thank you Sarah good morning, everyone and thank you for joining us today for Supernus Pharmaceuticals second quarter 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 Qatar, and Chief Financial Officer, Greg Patrick.

Peter Vozzo: 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, or other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the risk factor section of the company's 2018 annual report before the 10-K. The actual results may differ materially from those projected in these forward For the benefit of those of you who may be listening to the replay, this call was held and recorded on August 7, 2019, at 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 declines any application to update these forward-looking statements except as required by applicable securities laws. I will now turn the call over to Jack.

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 in other words of similar meaning any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the risk factor section of the company's 2018 annual report on Form 10-K .

Actual results may differ materially from these projected in these forward looking statements.

For the benefit of those of you who maybe listening to the replay of this call is being held and recorded on August seven 2019.

90, M. 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.

Jack A. Khattar: Thank you.

Jack A. Khattar: Thank you, Peter. Good morning, everyone, and thanks for taking the time to join us as we discuss our 2019 second quarter results. Total prescriptions for Trukendi-XR and Oxtheller-XR in the second quarter of 2019, as reported by IMS, increased to 209,066 prescriptions, a 7.4 percent increase over the same period last year. TROPANDI XR prescriptions in the second quarter of 2019 were 168,682, which is a 6.4% increase over the same quarter last year. Sequential quarterly growth in prescriptions for Tropendix R improved in the second quarter to 4.8 percent following the first quarter sequential quarterly decline of 5.7 percent. However, this rebound in sequential growth was not enough and not as fast as we expected to recover from, first, the seasonal weakness we experienced in the first quarter of 2019, and second, the softness in the overall pyramid market in the first six months of 2019.

Thank you Peter good morning, everyone and thanks for taking the time to join US as we discuss our 2000 might be in second quarter results.

Although prescriptions for Trokendi, XR and Oxtellar XR in the second quarter of 2019 as reported by Rtms increased to 209066 prescriptions, a 7.4% increase over the same period last year.

For Trokendi XR prescriptions in the second quarter 2019 word 168682, which is a 6.4% increase over the same quarter last year.

Sequential quarterly growth in prescriptions for Trokendi XR improved in the second quarter to 4.8% following the first quarter sequential quarterly decline, 5.7%. However, this rebound in sequential growth was not enough and as not as fast as we expected to recover from first the seasonal weakness we experienced in the first quarter of 2019 and the second the softness in the overall prepared to meet market in the first six months of 2019.

Jack A. Khattar: Similarly, recovery from the first quarter seasonal impact on market share of the total number of pyramid market prescriptions this year was slower than in previous years. For example, based on IMS monthly market share data in 2018, Trocandex R had recovered from the typical first quarter seasonal decline in market share by the end of the quarter in March. This year, on the other hand, and based on data available only through June, the product is expected to have recovered in July to the 5.13% market share that we had before the first quarter seasonal decline. In addition, sales deductions have not improved as we had expected in the second quarter of 2019 relative to the first quarter of 2019, but instead have remained relatively flat.

Similarly recovery from the first quarter seasonal impact on market share of the total to kind of meet market prescriptions. This year was slower than in previous years. For example, based on I.M.S. monthly market share data in 2018, Trokendi XR had recovered from the typical first quarter seasonal decline and market share by the end of the quarter in March.

This year on the other hand and based on data available only through June the product is expected to have any color in July to the 5.13% market share that we had before the fourth quarter seasonal decline.

In addition sales reductions have not improved as we had expected in the second quarter of 2019 relative to the first quarter of 2019, and instead have remained relatively flat.

Jack A. Khattar: Because of these factors, we are revising the full year 2019 guidance for net product sales and, to a lesser extent, operating earnings as we are able to continue to leverage our infrastructure and manage our operating expenses. For Oxtheller XR, the launch of the indication for monotherapy of partial seizures continues to go well. In the second quarter, Oxtheller XR prescriptions were 40,384, representing an increase of 12% over the same period last year.

Because of these factors we are revising the full year 2019 guidance for net product sales and to a lesser extent operating earnings as we are able to continue to leverage our infrastructure and manage our operating expenses.

For Oxtellar XR the launch of the indication of monotherapy in partial seizures continues to go well in the second quarter Oxtellar XR prescriptions were 40384, representing an increase of 12% over the same period last year. The increased level of focus by our sales force in the first six months of the year is supporting a healthy prescription trends on Oxtellar XR, we look forward to continuing this momentum behind the brand.

Jack A. Khattar: The increased level of focus by our sales force in the first six months of the year is supporting a healthy prescription trend for Oxtheller XR. We look forward to continuing this momentum behind the brand. Moving now to our pipeline, in July, we completed our pre-NDA clinical meeting with the FDA for SPNA-12, our novel treatment for ADHD, and remain on track to submit the NDA in the second half of this year. Our plans and preparations for a potential launch of SPNA-12 in the second half of 2020, if approved by the FDA, continue to progress well. In addition, we plan to start a Phase III program in adult patients with SPNA-12 in the fourth quarter of this year. For SPN 810, our novel treatment for impulsive aggression in patients with ADHD, enrollment in the Phase 3, 301 study pediatric trial is complete.

Moving now to our pipeline in July we completed our three M.D.A. clinical meeting with the FDA for scan a 12 hour novel treatment for 80, HD and remain on track to submit the NVCA in the second half of this year.

Our plans and preparations for the potential launch of SPM 812 in the second half of 2020, if approved by the FDA continues to progress well.

In addition, we plan to start a phase three program in adult patients would have spent eight wells in the fourth quarter of this year.

What a scan a band our novel treatment of impulsive aggression in patients with 80 HD enrollment in the phase three three or one study pediatric trial is complete we expect data from this trial in the fourth quarter <unk> for this year.

Jack A. Khattar: We expect data from this trial in the fourth quarter of this year; enrollment in the phase 3, 3, or 2 trial continues, with data expected in the first quarter of 2020. This change is not expected to impact the timing of submission of the NDA for SVN 810. We continue to expect to submit an NDA for SVN 810 in the second half of 2020 and to launch the drug pending approval by the FDA in the second half of 2021. Regarding SPN 604 for the treatment of bipolar disorder, we expect to commence the phase three program in the fourth quarter of this year. Finally, our activity on the corporate development side continues 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 second quarter financial performance.

Enrollment in the phase three three or two trial continues with data expected in the first quarter of 2020.

This change is not expected to impact the timing of submission of the end behave or what has to be any then we continue to expect to submit an NDA for Spanish than in the second half of 2020 and to launch the drug pending approval by the FDA in the second half of 2021.

Regarding SP on six before for the treatment of bipolar disorder, we expect to commence the phase three program in the fourth quarter of this year.

Finally, our activity on the corporate development side continues 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 second quarter financial performance.

Greg Patrick: Thanks, Jack, and good morning, everyone. As I review our second quarter 2019 financial results, I remind listeners to refer to the second quarter results issued in yesterday's press release after the market closed. Total revenue for the second quarter of 2019 was $104.7 million, which is 5.2% higher than the $99.5 million recorded in the second quarter of 2018. Net product sales for Tropendi XR for the second quarter of 2019 were $79 million, an increase of 3.3% versus the second quarter of 2018. For AuxStellar XR, net product sales in the second quarter of 2019 were $23.4 million, a 13.8% increase as compared to the second quarter of 2018.

Thanks, Jack and good morning, everyone as I review, our second quarter 2019 financial results I'll remind listeners to refer to the second quarter results issued in Yesterdays press release after the market closed.

Total revenue for the second quarter of 2019 was $104.7 million, which is 5.2% higher than the $99.5 million recorded in the second quarter of 2018.

Net product sales for Trokendi XR for the second quarter of 2019 were $79 million, an increase of 3.3% versus the second quarter of 2018.

For Oxtellar XR that product sales in the second quarter of 2019 or $23.4 million and 13.8% increase as compared to the second quarter of 2018.

Greg Patrick: Total revenue for the second quarter of 2019 was comprised of net product sales of $102.4 million and royalty revenue of $2.3 million, as compared to net product sales of $97 million, royalty revenue of $1.8 million, and licensing revenue of $0.8 million in the second quarter of 2018. Turning now to expenses, research and development expenses were $17 million in the second quarter of 2019 as compared to $20 million in the same quarter the prior year. This decrease is primarily attributable to the completion of the four phase three clinical trials for SPNA-12 in late 2018 and in early 2019, partially offset by the cost to manufacture SPNA-12 to support our upcoming NDA filing. Selling general and administrative expenses in the second quarter of 2019 were $41 million, essentially equivalent to the $40.1 million in the same quarter last year. For the second quarter of 2019, operating earnings totaled $42 million, a 19.3% increase over $35.7 million in the same period last year. Operating earnings increased faster than net product sales, which grew by 5.5%, demonstrating the company's ability to manage operating expenses and leverage its established infrastructure. This constitutes a record for the company.

Total revenue for the second quarter of 2019 was comprised of net product sales of $102.4 million.

And royalty revenue of $2.3 million as compared to net product sales of $97 million royalty revenue of $1.8 million and licensing revenue of zero point $8 million in the second quarter of 2018.

Turning now to expenses research and development expenses were $17 million in the second quarter of 29 chain as compared to $20 million in the same quarter the prior year.

This decrease is primarily attributable to the completion of the four phase three clinical trials for S. P and K 12 in late 2018, and early 2019, partially offset by the cost to manufacture SP on a 12 to support our upcoming and da filing.

Selling general and administrative expenses in the second quarter of 2019 were $41 million essentially equivalent to the $40.1 million in the same quarter last year.

For the second quarter of 2019 operating earnings totaled $42 million, 19.3% increase over $35.7 million in the same period last year.

Operating earnings increased faster than net product sales, which grew by 5.5% demonstrating the company's ability to manage operating expenses and leverage our established infrastructure. This constitutes a record for the company.

Greg Patrick: In fact, this is the first quarter in which our earnings have exceeded $40 million. Net earnings in the second quarter of 2019 were $32.7 million, or $0.61 per diluted share, as compared to $30.7 million or $0.57 per diluted share in the same period last year. Growth in net earnings was driven primarily by higher operating earnings, partially offset by the higher effective tax rate in the second quarter of 2019 compared to the year-earlier period. However, the effective tax rate in the second quarter of last year benefited from employees exercising stock options, and the rate was materially lower than the rate in the second quarter of this year.

In fact, this is the first quarter in which our earnings have exceeded $40 million.

Net earnings in the second quarter of 2019 were $32.7 million or 61 cents per diluted share as compared to $30.7 million.

For fall 57 cents per diluted share in the same period last year.

Gross and net earnings was driven primarily by higher operating earnings partially offset by the higher effective tax rate in the second quarter of 2019 compared to the year earlier period.

The effective tax rate in the second quarter of last year benefited from employees exercising stock options.

And the rate was materially lower than the rate in the second quarter of this year.

Greg Patrick: We entered the second quarter of 2019 with $852.3 million in cash, cash equivalents, marketable securities, and long-term marketable securities, an increase of $77.5 million as compared to $774.8 million as of December 31, 2018. Now, as to financial guidance for full year 2019, As Jack mentioned, we're revising our guidance for net product sales and operating earnings while reaffirming expectations for R&D expenses and the effective tax rate. We now expect net product sales to range from $400 million to $410 million, as compared to the previously expected range of $435 million to $455 million. We continue to expect R&D expenses to range from $70 million to $80 million. We now expect operating earnings to range from $150 million to $160 million as compared to the previously expected range of $160 million to $180 million. Guidance for the effective tax rate of 23 to 25% remains unchanged. I will now turn the call back to the operator for questions.

We ended the second quarter of 2019 with $852.3 million in cash cash equivalents marketable securities and long term marketable securities an increase of $77.5 million as compared to $774.8 million.

As of December 31st 2018.

Turning to financial guidance for full year 2019, as Jack mentioned revising our guidance for net product sales and operating earnings while reaffirming expectations for R&D expenses and the effective tax rate.

We now expect net product sales to range from $400 million to $410 million as compared to the previously expected range of $435 million to $455 million.

We continue to expect R&D expenses to range from $70 million to $80 million.

We now expect operating earnings to range from $150 million to $160 million as compared to the previously expected range of $160 million to $190 million.

Guidance for the effective tax rate, 23% to 25% remains unchanged.

I would now turn the call back to the operator for questions.

Thank you ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone.

Operator: Thank you. Ladies and gentlemen, if you have a question at this time, please press star then 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound. We request that you please limit yourself to one question and one follow-up, and then feel free to re-enter the queue if you have further questions. Our first question comes from the line of Ken Cacciatore with Cohen and Company. Your line is now open.

If your question has been answered or you wish to remove yourself from the queue.

Please press the pound key.

We request that you please limit yourself to one question and one follow up and then feel free to reenter the queue. If you have further questions.

Our first question comes from the line of Ken Cacciatore with Cowen and company. Your line is now open.

Ken Cacciatore: Hey guys, thanks for taking the question. Just wanted to look into 2020 from both a potentially positive and then a preparation perspective. So obviously, we're hopeful that we could have 812 on the market, but with flattening Trocandi and Extellar growth to a certain extent and spending likely coming up, can you just prepare us from a P&L perspective of what we could be generally speaking next year as we think about augmenting the portfolio with 812 and then on BD, Jack, you touched on it, but can you just talk to us a little bit more? There seems to be a lot of corrected valuations out there in the marketplace, and so wondering if the environment's improving for you, and then as you look at some of the companies that have launched products and have kind of maybe experienced failed launches, is there a way to rehabilitate assets like that, or should we just think some of those assets are gone and by the wayside for a company like you? Thank you.

Hey, guys.

Thanks for taking the question just wanted to look in to 2020 for both potentially positive and then a preparation from a modeling perspective. So obviously, we're hopeful that we could have 812 on the market, but was flattening trokendi.

Annex stellar.

Growth to a certain extent and spending likely coming up can you just prepare us from a penal perspective of what we could be generally speaking next year as we think about augmenting the portfolio with a 12 and then on the BD Jackie you touched on it but can you just talk to us a little bit more there seems to be a lot of corrective valuations out there in the marketplace and so wondering if the environment is improving for you and then as you look at some of the companies that have launched products and kind of maybe experienced a failed launches is a way to rehabilitate assets like that or should we just think some of those assets are gone and by the way side for a company like you. Thank you.

Greg Patrick: Okay. Hi Ken. This is Greg Patrick speaking.

Okay, Hi, Ken This is Greg Patrick speaking with respect to next year.

Greg Patrick: With respect to next year, when we talk about expenses to start off, and then we can circle back and talk about net product sales. From an expense standpoint, this is clearly going to be a launch year for Supernus in SP&A 12. We're very excited about that, and the anticipation ought to be that we will build out our sales force in the manner that we described at our investor day earlier this year, with the sales force somewhere around 150 sales reps. And marketing expenses, which will be commensurate with that. So from an expense standpoint, it will clearly be a year in which we launch the product in the way that it needs to be launched and ought to be launched, and with the strong effort that we have been speaking about since we started talking about the launch.

When we talk about expenses to start off and then we can circle back and talk about net product sales from an expense standpoint. This is clearly going to be a launch year for supernus for S. P and K 12, we're very excited about that anticipation for it to be that.

We will build out our salesforce consistent in the manner that we described with or at our Investor relations or our Investor day earlier this year.

With the Salesforce somewhere around 150 sales reps.

And marketing expenses, which will be commensurate with that so from an expense standpoint, it will clearly be a year in which.

We're going to launch the product in a way that it needs to be launched in fourq to be launched.

And with a strong effort that we have been speaking about since we've been talking about the launch.

As regards net product sales I would say that.

Greg Patrick: As regards net product sales, I would say that SPN A-12, since it will be launched toward the back end of the year, one would expect that the contribution from SPN A-12 will be there, but it will not be material to the company's results. And we'll think about that a little bit more as we get closer. This is going to be very much timing driven and, quite frankly, also heavily driven by where we stand with respect to managed care in terms of reimbursement and coverage.

That's been a 12 cents will be launched towards the back end to the year, one but expect that some contribution from S. Band 12 will be will be there, but and it will not be material to the company's results and we'll think about that a little bit more as we get closer. This is going to be very much timing driven quite frankly also be heavily driven by.

Where we stand with respect to managed care in terms of reimbursement and coverage and that's something we'll update investors on as we go forward.

Greg Patrick: And that's something we'll update investors on as we go forward. With respect to our existing products, I think a way to frame this year and last year to look forward to next year is to remove the $10 million inventory buildup from this year's results. So, 2018, if you're correct, the $10 million inventory buildup in the fourth quarter would be closer to $390. And if you made the same adjustment in 2019's guidance, our guidance being 400 to 410, so I'll just bump that up by $10 million, let's say, to 410 to 420. So if you look at that trajectory, it's really kind of 390 if I pick the midpoint of the range to 415, and I think we would expect next year's sales progression to be in line with that. It's too early to really speculate, but something which I think would not be too inconsistent with that trend, with that corrected trend.

With respect to our existing products.

I think a way to frame that or this year and last year to look forward to next year is to remove the the $10 million or inventory build up from 20 Eighteen's results for 2018, if you're correct.

Oh for the $10 million inventory build up in the fourth quarter would be closer to three Nandi and if you've made the same adjustment in 29 teams guidance our guidance being 400 before 10, so I'll just.

Yeah bump that up by $10 million, let's say to four tend to fourq money. So if you look at the got trajectory, it's really kind of 390, if I pick the midpoint of the range to 415.

And I think we would expect you know next year sales progression to be in line with that it's too early to really speculate but.

Something which I think would not be true in consistent with that trend, but that corrected trend.

Yeah.

Jack A. Khattar: Yeah, and let me add, I mean, as far as Oxtellar XR is concerned, clearly, it continues to show healthy growth trends. Candy XR is also a growing product; it's not a declining product, but the growth is slowing down. So, clearly, when you look at year-to-date prescriptions, they are up 9% for the first six months of the year versus last year. I mean, that's actually pretty good for a product that is seven years old and facing the competition that it is facing.

And let me add I mean as far as Oxtellar XR clearly that continues to show healthy growth trends for Kennedy X autism is also growing products not a declining product, but the growth is slowing down. So clearly when you look at the year to date prescriptions are up 9% for the first six months of the year versus last year I mean, that's.

Actually pretty good support a product that is seven years old and facing the competition that it is facing.

Jack A. Khattar: Also, as I mentioned in my prepared remarks, we had a much deeper hole to climb in the second quarter because of the steep decline we had in the first quarter this year compared to previous years. The first quarter results didn't decline as steeply as they did this year. So, we had a much deeper hole to come out of and recover from in the second quarter than we had in previous years.

We also as I mentioned in my prepared remarks, we had a much deeper hole declined in the second quarter because of the steep decline we had in the first quarter of this year versus previous years. The first quarter results didn't decline as steeply as they did this year. So we had a much deeper hole to come out and recover from in the second quarter than we had in previous years.

Jack A. Khattar: So, in general, to keep it in perspective, I think quarter-to-date in the third quarter, for Candy XR, it also is showing some growth in the 1% to 2% range, which I'm sure listeners on this call will remember several previous quarterly transcripts where people asked us, how would you expect Candy XR to grow in the future. I said, you know, between 1% and 2%, quarter-to-quarter, we'll be happy with something like that. So, if we go back to that norm, I think, you know, for Candy XR, we'll be fine as well. As far as business development is concerned, Ken, obviously, we're all seeing corrections in certain valuations. I agree that there have been some corrections out there in some of the companies.

So so in general to keep it in perspective, I think quarter to date in the third quarter.

Okay, and the Axalta also showing some growth in the 1% to 2%, which I'm sure listen those are on this call will we're living member of several previous quarterly transcripts for people to ask loss.

How would you expect trokendi XR to grow in the future. What I said, you know between the 1% to 2% quarter to quarter wouldn't be happy with something like that so if we go back to that more I think you know trokendi XR will be fine as well.

As far as a business development, Ken obviously, we're all seeing the of the corrections and spoke on the valuations I agree that there has been some corrections out there and some of the companies. Some launches, yes have not gone as well as probably people have expected. So I don't I don't want to be really too specific on two particular on names or anything like this but the answer is yes, we do see the environment improving from that perspective, and we are very intensely involved and situations and we continue to be looking at it very diligently.

Jack A. Khattar: Some launches, yes, have not gone as well as probably people expected. So, I don't want to be really too specific and too particular on names or anything like this, but the answer is yes, we do see the environment improving from that perspective. We are very intensely involved in situations, and we continue to be looking at it very diligently. Thanks so much.

Thanks, so much.

Thank you. Our next question comes from the line of Annabel Samimy with Stifel. Your line is now open.

Operator: Thank you. Our next question comes from the line of Annabel Samimy with Cefal. Your line is now open.

Hi, Thanks for taking my question so.

Annabel Eva Samimy: Hi, thanks for taking my question. So just to get a little more granularity on Trekendi and understand... I guess the trajectory going forward. You mentioned higher deductions and rebates as well as the topyramid market contracting. So on the first point, how much of it is the hole that you're climbing out of versus increased rebates that could essentially continue going forward and maybe into the next years? And with the contraction of the topyramide market, I guess part of me wonders why that should matter given that you're still only single-digit penetrated in that molecule regardless of how big that market is. Does that mean that you've essentially tapped out on the conversion of that molecule?

Yes.

More granularity on for Ken Dan understand.

I guess the trajectory going forward, you mentioned higher deductions and rebates as well as a tougher market contracting so on the first point how much of it is.

Hold that you're climbing out of versus increased rebates that could essentially continue going forward and maybe into the next years and with contraction of the to pure meet market I guess part of the wonders why that should matter given that you're still.

Only single digit penetrated of that molecule, regardless of how big that market does that mean that you've essentially tapped out on conversion of that molecule and then if I could just switch one more question to ask in a 10, I guess I'm a little curious.

Jack A. Khattar: And then if I could just switch one more question to SPN 810. I guess I'm a little curious about the enrollment process and why you're still struggling to complete enrollment. I would think that after one trial is completed, you'd see more of an acceleration rather than continuation to enroll in the second trial. And on the first trial that's completed, I guess why not release it now? Why wait until the fourth quarter? It was presumably finished already. So I guess that's a lot of questions, but maybe we can get a little more understanding around that.

On the enrollment and why you're still struggling to complete enrollment I would think that after one trials compete see more of an acceleration rather than continuation to to enroll in the second trial and.

On the first try that's complete I guess why not really sit now why wait until the fourth quarter. It was presumably finish so I guess, that's a lot of questions, but if we can get a little and more understanding around that thank you.

Jack A. Khattar: Yeah, sure. Well, let me start with the deduction rebates. Just to clarify, we said it was basically flat versus the 1Q. It didn't go up versus the 1Q. Now, typically, we would have expected it to actually taper off a little bit in the second quarter. But it didn't happen to the same extent we would like it to. And there were other factors other than just rebates that occurred within the gross net that caused it to be flat. So, it wasn't really rebates that were the major, major issue here. We do expect it to improve slightly for the rest of the year. I mean, that's the normal pattern we've always had.

[laughter], Yeah sure well, let me start with the deductions rebates or do you just to clarify we said, it's basically flat versus the one Q or didn't go up reverse as one Q no typically we would have expected it to actually taper off a little bit in the second quarter didn't happen to the same extent, we would like it.

And there were other factors other than just the rebates that occurred within the gross to net that caused it to be flat. So it wasn't really rebates that wherever the major major issue here.

We do it we do expect it to improve slightly for the rest of the year I mean, that's the normal pattern, we've always had.

As far as the contraction of the market, you're absolutely right and we have said that numerous times of our market share of the Proto made the still fairly slow small and we still and we continue to believe we have a a lot of business out there that we could convert.

Jack A. Khattar: As far as the contraction of the market is concerned, you're absolutely right, and we have said that numerous times that our market share in the pyramid is still fairly small. And we continue to believe we have a lot of business out there that we could convert. But the reason I cited it in my comments was the fact that, actually, our forecast was for 1% growth in the market. And when it declined by 2%, we had a three-point difference in the market. And if you only take our market share of 5% and translate that into net sales, that is not a small number. And just by the fact that the market went down, naturally, our business shrunk a little bit with the market. That's the only reason I was citing that, just to keep people aware of it. But you're correct.

But the reason I cited in my comments is the fact that actually our forecast was a 1% growth in the markets and when it declined by 2% do you have a pretty point difference in the market and if you only take our market share at a 5% and translate that into a net sales you know that that is not a small number and just by the fact that the market is going down.

You know naturally our business should aren't they little bit to what the market. That's what that's the only reason I was citing that just to keep people aware of it but you are correct and we continue to believe that the market is fairly stable I mean in relative terms of minus 2% or to plus 1% that is still stable, but when it comes to the numbers themselves. These small percentages. They do translates a meaningful change in the net sales numbers for us.

Jack A. Khattar: And we continue to believe that the market is fairly stable. I mean, in relative terms, the minus 2% or plus 1%, that is still stable. But when it comes to the numbers themselves, these small percentages, they do translate to a meaningful change in net sales numbers for us. So, we continue to believe we can still convert immediate release prescriptions to Trocandy XR. Nothing has changed here as far as the fundamentals behind the product itself and the benefits the product delivers even compared to CGRPs. But a lot of things will take time to play out, even the market expansion that we have talked about beyond the pyramid as far as migraine sufferers come into the market. We continue to believe this will eventually benefit us as well, but maybe it's not coming as fast as we would have hoped or we would like ourselves. As far as SBN 810, let me just clarify, you know, to take you back to what happened, you know, six months ago and what we are doing right now.

So we continue to believe we can still gonna vote immediate release prescriptions to Trokendi XR and nothing has changed here as far as the fundamentals behind the product itself and the benefits of the product.

Deliveries, even compared to see geographies, but a lot of things will have find it will take time to play out you know even the market expansion that we have talked about beyond that I made as far as migraine sufferers coming into the market. We continue to believe this will eventually will benefit us as well, but maybe it's not coming as fast as we would have hoped that we would like our cells.

As far as that span a Ben let me just clarify you know could take you back to what happened you know six months ago, and what are we doing right now.

Jack A. Khattar: 8-10 The 301 trial had actually achieved its original enrollment dates about five, six months ago, and we had said at that time, we're going to continue to keep it open for enrollment so that the 302 trial can catch up with it. And the 302 trial was about a few months behind the 301 trial; that was just the start of the trials, about that time period difference between the two. And also, each of these trials had different sites. So it happens that the 301 study has better sites or sites that enrolled a little bit faster; we don't control that as much. And we were hoping the 302 trial would actually catch up, but the 302 trial continues to trail behind the 301 study.

Hey, Ben the city or one trial had actually achieved its original enrollment dates about five six months ago and we have said at that time, we've got to continue to keep that often fall enrollment. So that this surreal to trial can catch up with it.

And the three or food drive was about few months behind the three or one trial that was just the start of the trials was about that time period the difference between the two.

And also each of these trials have different sites. So it happens at the 301 study have better sites or sites that enrolled a little bit fast. So you know, we don't control that as much.

And we were hoping that pretty well to try with actually catch up but the three or two throughout continues to trail behind the three on so we made the decision. We said you know what let's just stop this video one would have done with the enrollment and we need to.

Jack A. Khattar: So we made the decision, we said, you know what? Let's just stop the 301, we're done with the enrollment, and we need to get the data as soon as we can because we have other operational decisions that we have to make as a company as far as preparing for production, ordering API, and what have you. So as the data continues to, you know, lack or we don't have that data in front of us, it makes these decisions a little bit more difficult. So that's why we made the decision to open up the 301 trial, and you can only open up the trial until the last patient is out of the trial; you lock the database, you clean it up, and that's why the data will come in in the fourth quarter of this year; we don't have it right now.

Surgeons to open up to 301 trial and you can only opened up the trial until the last patient is out of the trial you lock the database you clean it up and that's why the data will come in in the fourth quarter over this year, we don't have it right now.

And therefore, the three or two trial, which is actually not too far from completion, it's probably somewhere around the 10 to 15 patients. We still have left I mean, we're not talking about we need another 40 or 50 patients here I mean, we're really getting there and we could potentially finish enrollment this year and maybe get the results real early next year I mean, it will be a little bit more specific but we've had some months, where we have six patients enrolled on other months, we have zero patients enrolled so we really don't control the pattern.

Jack A. Khattar: And therefore, the 302 trial, which is actually not too far from completion, it's probably somewhere around the 10 to 15 patients we still have left, I mean, we're not talking about we need another 40 or 50 patients here, I mean, we're really getting there, and we could potentially finish enrollment this year and maybe get the results real early next year, I mean, we'll be a little bit more specific, but we've had, you know, some months where we have six patients enrolled, and other months we have zero patients enrolled, so we really don't control the pattern, we're trying to be a little bit cautious here, but even if we do get the data as we did, for example, this year on 8-12 on the last study, we got it in the first quarter, so if we get the 302 data on SPNA-10 also in the first quarter of next year, we will be able to still submit the NDA in the second half of 2020. So that's really the progress or the sequence of events that occur and why we made the decision we did recently in opening up the 301 trial and get the data out there.

We're trying to be a little bit cautious here, but even if we do get the data as we did for example, this year on a 12 on the left study we got it in the first quarter.

So if we get to three or two data on espionage. Then also in the first quarter of next year, we will be able to still submit to end the day in the second half of 2020, So thats really.

The the progress or the sequence of events that occur and why we made the decision. We did recently and opening up the three or one trial and get the data out there.

Great. Thank you.

Thank you. Our next question comes from the line of Irene out Koffler with Mizuho. Your line is now open.

Hi, Thanks for taking my questions I wanted to focus on S.P.N. 810.

Can you help us understand again, you know how severe these patients were how long they've been treated with stimulants before enrolling in your study and did they have any anti psychotic utilization before they came in to your trial or are these kids ones that are fairly naive to anti psychotics.

Jack A. Khattar: Great, thank you. Thank you. Our next question comes from the line of Irena Koffler with Mizugo. Your line is now open.

Operator: Hi, thanks for taking my questions. I wanted to focus on SPN 810.

Yes, I mean, the the the simple answer is yes. These stations.

Irena Koffler: Can you help us understand, again, you know, how severe these patients were? How long they had been treated with stimulants before enrolling in your study? And did they have any antipsychotic utilization before they came into your trial? Or, you know, are these kids ones that are fairly naive to antipsychotics?

As is the market today actually a lot of these patients on things that are used off label. These things are that off label for impulsive aggression or even the stimulants are themselves that are the 380 HD. So what physicians initially tried to do is tight freight and play around with it those of the stimulant to proactive tamper down the aggression and the behavior that could work in some basins with a lot of patience. It doesn't work with them and also if it does work of only as very temporary and therefore as a second step they resort to things like anti Psychotics and so forth. So the answer is yes. Our trials do have these patients who have been on anti psychotics.

Jack A. Khattar: Yeah, I mean, the simple answer is, yes, these patients, as is the market today, actually, a lot of these patients are on things that are used off-label. These things that are off-label for impulsive aggression are even the stimulants themselves that are supposed to treat their ADHD. So what physicians initially try to do is titrate and play around with the dose of the stimulant to try to tamper down the aggression and the behavior. That could work in some patients, but in a lot of patients, it doesn't work with them. And also, if it does work, it is only very temporary.

Differentiated set of lives antidepressants, I mean people use all kind of agency side for controlled aggression and that's why part of the enrollment actually and the screening period as to wash out. These patients from all these medications, except except the AIDEA, Judy medication, which is required to keep the HD sometimes control because Hispanic then is not designed to treat HCV. It's designed to be an add on to the 80 to the treatment to treat the impulsive aggressive component of their behavior.

Jack A. Khattar: And therefore, as a second step, they resort to things like antipsychotics and so forth. So the answer is yes, our trials do have these patients who have been on antipsychotics, sedatives, and antidepressants. I mean, people use all kinds of agents to try to control aggression. And that's why part of the enrollment, actually, and the screening period is to wash out these patients of all these medications, except their ADHD medication, which is required to keep their ADHD symptoms controlled. Because SPN 810 is not designed to treat ADHD. Instead, it's designed to be an add-on to the ADHD treatment to treat the impulsive-aggressive component of the behavior.

Okay. That's helpful. Also you have this adolescent study that's going on on which on clinical trials Dot Gov looks like it's expected to read out at the end of the year can you update us on the timing of that study and.

Is it possible that if one of your two three or one or three or Q doesn't work would you be able to supplement your anda with the adolescent study.

Yeah sure the other five or three study that youre, referring to is for the adolescent and we have started this trial last year. It is a continuous to enroll we expect to actually to continue enrollment through next year. So not data through next year unless it surprised us and had really the recruitment is way faster than we had experienced before with the pediatric.

Jack A. Khattar: Okay, that's helpful. Also, you have this adolescent study that's going on, which on clinicaltrials.gov looks like it's expected to read out at the end of the year. Can you update us on the timing of that study? And is it possible that if one of your two, you know, 301 or 302, doesn't work, would you be able to supplement your NDA with the ad

Now that trial regarding our NB a and this is the approach we're taking at this point with the FDA and so for US we will be submitting the NDA for pediatric indication.

Jack A. Khattar: Yeah, sure, the 503 study that you are referring to is for adolescents, and we started this trial last year. It continues to enroll.

Not the adolescent indication and therefore, we look at the five or three clinical trial in adolescence as supportive from a safe the safety Tolerability perspective.

Jack A. Khattar: We expect it to actually continue enrollment through next year, so not data through next year unless it surprises us and really the recruitment is way faster than we've had experience before with the pediatric indication. Now that trial regarding our NDA, and this is the approach we're taking at this point with the FDA and so forth, is we will be submitting the NDA for the pediatric indication, not the adolescent indication. And therefore we look at the five or three clinical trials in adolescents as supported from a safety and tolerability perspective. So we will include as part of our NDA submission for the pediatric population whatever we've learned and observed in the 503 study just from a safety and tolerability perspective so that the FDA has some data on the use in the adolescent population. And later on, we could seek an indication for the treatment of adolescents later on as the trial completes, and we could submit it later on as an SNDA. So that's the strategy we're taking at this point. So that's why we don't believe it should really delay our NDA submission for the pediatric population.

So we will include as part of our NDS submission for the pediatric as whatever we've learned and observed in the five or three study just from a safety and Tolerability. So that the FDA has some data in the U.S in the adolescent population and later on we could seek an indication for the treatment of adolescent later on as the trial completes and we submitted later on as an S and the so that's the strategy. We're taking at this point. So that's why we don't believe it should really delay our NDS submission for the pediatric population.

Okay. Thank you very much.

Okay.

Thank you. Our next question comes from the line of David Steinberg with Jefferies. Your line is now open.

Thanks.

Three questions first.

I know you said use co pay assistance in Q1 I was wondering if you.

Roll that back in Q2, or whether you use that in the second quarter.

Jack A. Khattar: Okay, thank you very much.

Operator: Thank you. Our next question comes from the line of David Steinberg with Jeffries. Your line is now open.

Secondly, could you give us a little more granularity Jack on the timing.

David Steinberg: Thanks. I have three questions. First, I know you said you used copay assistance in Q1. I was wondering if you rolled it back in Q2 or whether you used that in the second quarter. Secondly, could you give us a little more granularity, Jack, on the timing of the NDA for A12. I know you said the second half of the year. That's a pretty wide window. Um, and I'll think of the other one after you answer those questions.

The end da for 812, I know you said second half of the year, that's pretty wide window.

And.

I'll speak to the other one after you answer this question.

Hi, guys. This is Greg with respect to the question about the co pay program that is actually.

Rolled back during the first quarter, it's it's got a higher reimbursement level for the first month or two.

Greg Patrick: Hi David, this is Greg. With respect to the question about the co-pay program, that was actually rolled back during the first quarter. It's got a higher reimbursement level for the first month or two, and then no later than the end of February or early March, it's actually rolled back to the levels that it continues on for the rest of the year. What has happened in both the first quarter and second quarter is that, plus the fact that the utilization of the overall program has run a bit higher than past history indicated and our expectations would have indicated. So the program is actually where it has been from March on forward, but from a utilization standpoint, a little bit heavier than we have seen historically and a little bit heavier than we expected.

And then in <unk> no later than they had in February early March it's actually rolled back to the optimal levels that it continues on for the rest of the year.

What has happened in both the first quarter and second quarter is.

That plus the fact that the utilization of the overall program has run a bit higher than our past history indicated in our expectations.

Would have indicated so the programs actually where it has been.

From March on forward, but from a utilization standpoint, a little bit heavier than.

Then we have seen historically and that's a little bit heavier than we expected.

Yeah and regarding the timing for the eight wells and VA as you would expect US I mean were working pretty hard to get it as early as we can in the fourth quarter of this year. So I wouldn't have looking at December here, Oh, we were looking at earlier in the quarter and clearly we will make an announcement when we do make the filing because of course, we're also trying to launch of the product ideally you want to launch it at around the school year them next year. So.

Jack A. Khattar: Yeah, and regarding the timing for the A-12 NDA, as you would expect us, I mean, we're working pretty hard to get it as early as we can in the fourth quarter of this year, so we're not looking at December here, we're looking at earlier in the quarter, and clearly we will make an announcement when we do make the filing, because of course, we're also trying to launch the product, ideally you want to launch it around the school year next year, so that's why we're working pretty hard to have it as early as possible in the fourth quarter.

That's why we're working pretty hard to have it as early as possible in the fourth quarter.

David Steinberg: Right. And my third question is about your cash balance. You know, you keep building up cash. You've been fairly reluctant to buy anything. I know that valuations have been high, but that's a prudent thing to do. I'm just curious.

Right.

And my third question is on your cash balance.

You know you keep building up cash even fairly reluctant to buy anything I know that valuations have been hives that that's the prudent thing to do I was just curious.

Jack A. Khattar: How would you think about perhaps share buybacks? I know growth companies typically don't do that. On the other hand, given where your stock is, is that something you would consider going forward? Thanks.

How would you think about perhaps share buybacks I know growth companies typically don't do that on the other hand.

Given where your stock is is that something you consider going forward. Thanks.

Hmm for first quick answers.

Jack A. Khattar: First quick answer and quick reaction, probably not on the share buyback. I mean we are a growth company and we actually, our intent is to use the cash as you said in growing the company and bringing other opportunities from the outside. Given the nature of the first, you know, the question that Ken asked actually as far as potential valuations, getting to a little bit more reasonable zip code so to speak, you know, and our intensity as far as looking at these transactions, I mean, there is a good chance we will use that cash and that's what it's for, is to end up using it for external growth activities, not to give it back in the share buyback or dividends or anything like that.

And quick reaction, probably not on the share buyback I mean, we are a growth company and Oh, we actually our our intent is to use the cash as you said.

In growing the company and bring in other opportunities from the outside given the nature of the first you. Another question Thats, Ken asked actually as far as potential valuations getting to a little bit more reasonable ZIP code. So to speak you know and and our intensity as far as looking at these transactions I mean, there is a good good chance, we will use that cash and that's what it's for us to end up using it for external growth activity isn't enough to give us back and the share buyback or dividends or anything like that.

The safe to say that there's a good chance you would buy something before your.

Jack A. Khattar: It's safe to say that there's a good chance you would buy something before your sales force moves into action and launches 8.12 next year.

For your sales force moves into action launching.

Hey, 12 next year.

But it's really hard to predict that timing or very very specifically, but if we do something obviously, we'll make sure. It doesn't distract us from the launch of SDMA 12, it would have to.

Jack A. Khattar: It's really hard, you know, to predict that timing very, very specifically. But if we do something, obviously, we'll make sure it doesn't distract us from the launch of FDNA-12. It will have to stand on its own, or we will find the synergies and the infrastructure, you know, overlap and benefits in a different area of the business. So anything we do, we'll make sure it does not distract us from our launch of SPNA.

Either stand on its own order, we will find the synergies and the infrastructure you know overlap and benefits in a different area in the business. So.

So anything we do will make sure it does not distract our long shelf life span eight work.

Thanks.

Thank you. Our next question comes from the line of Patchy She'll Nierenberg capital. Your line is now open.

Operator: Thank you. Our next question comes from the line of Patrick Truccio with Varenburg Capital. Your line is now open.

Patrick Truccio: Hi, good morning. First question regarding existing products. I'm wondering if the payer dynamics and the prescription trends you discussed this morning alter your view of peak revenue potential for tritandia and oxalor and migraine and epilepsy of at least 500 million. And can you remind us what the timeframe is for this peak?

Hi, good morning.

First question regarding the existing products I'm wondering if the payer dynamics and the prescription trends you discussed this morning.

Alter your view for peak revenue potential for Trokendi, and Oxtellar and migraine epilepsy of at least 500 million and can you remind us what the timeframe is for this peak potential then I have a few follow ups on eight times.

Jack A. Khattar: Yeah, on that $500 million of peak potential, as I mentioned a couple of times before, Patrick, it's not going to happen in the same year, right? Because the peak of TROPENDIX-R is in a certain year, but the peak of OXFELLER-XR is much later. So, it's not like it's going to happen in the same fiscal year that both products will hit that peak. So, when you look at it that way, absolutely, we still believe the combined peak, you know, as far as revenue generated by these two products for this company is $500 million or more. Because, you know, OXFELLER-XR, of course, is going to go on until 2027, potentially more than that with bipolar disorder and so forth.

Yeah and that you don't have the 500 million of peak potential as I mentioned, a couple of times before I don't know Patrick you know, it's not going to happen at the same year right because the peak of Trokendi XR is in a certain year, but the peak of Oxtellar XR as much later, so it's not like it.

It's going to happen in the same fiscal year that both products will hit that peak. So when you look at it that way absolutely. We still believe combined peak you know as far as revenue generated by these two products for this company you know as 500 million or more because you know oxtellar XR of course is going to go to 2027, even potentially more than that with the bipolar and so forth. So so that's really where you know obviously they have to remark that we've been making a you know over the years and of course, our hope is that as far as the market itself for Trokendi XR you know it will be continue to stabilize and the recovery in Trokendi XR will continue around the kind of levels that we've seen at this point as far as prescription growth.

Jack A. Khattar: So, that's really where, you know, obviously, that remark that we've been making, you know, over the years. And, of course, our hope is that as far as the market itself for TROPENDIX-R is concerned, it will continue to stabilize, and the recovery in TROPENDIX-R will continue around the kind of levels that we've seen at this point as far as prescription growth is concerned.

Jack A. Khattar: So regarding the phase three data release for 810 that's expected in the fourth quarter of this year, can you tell us how the impulsive-aggressive behaviors are being defined? Secondly, what frequency of impulsive-aggressive behaviors per seven days relative to placebo would be considered a clinically relevant improvement? Thirdly, are there any comparable studies to benchmark the frequency of impulsive-aggressive behaviors? And finally, can you tell us how 810 is expected to fit in the treatment paradigm for IA with ADHD?

So regarding the phase three data released for a time that's expected in the fourth quarter of this year can you tell us how the impulsive aggressive behaviors are being defined secondly, what frequency of impulsive aggressive behaviors per seven days relative to placebo would be considered a clinically relevant improvement.

Thirdly are there any comparable studies to benchmark the frequency of impulsive aggressive behaviors to.

And finally can you tell us how it Ken is expected to fit in the treatment paradigm for I'd with 80 HD.

Yeah, well, let me see if I can cover all of them as far as the number of you know frequency off episodes, which as of the end point you know it's the change in the number of these episodes and the frequency of these episodes during that 28 day period versus the placebo. So as long as we separate from the placebo from us from a statistical significance point of view obviously the fraud is considered a successful in general and this is really a very powerful rule of thumb kind of thing from a clinical perspective.

Jack A. Khattar: Yeah, let me see if I can cover all of them. As far as the number of, you know, frequency of episodes, which is the end point, it's the change in the number of these episodes and the frequency of these episodes during that 28-day period versus the placebo. So as long as we separate from the placebo from a statistical significance point of view, obviously, the trial is considered successful. In general, and this is really a very rule-of-thumb kind of thing from a clinical perspective, if you look at the Phase 2B study, we had an improvement between 58 and 62%, if I'm not mistaken, if my memory serves me well. So somewhere, clinicians tell you an improvement of 50% or higher versus the baseline would be something that is a meaningful signal. And what we got back in the Phase 2B study was somewhere between 58 to 62% on the low dose and the medium dose. So we sure would hope, you know, obviously in the Phase 3 study, we'll have something consistent with what we saw in the Phase 2B study that we think would be meaningful.

If you look at the Phase Twob study, we had an improvement between 58 and 62% if I'm not mistaken if my memory serves me well, so somewhere clinicians tell you an improvement of 50% or higher.

Versus the baseline clinically you know would be something that is a meaningful signal and when we got back into phase two B study is somewhere in the 58, 62% on the load those any medium those so we surely would hope you know obviously in the phase three study will have something consistent with what we saw in the phase three study that we think would be meaningful and again as far as the success of the trial itself. It has to be of course compared to what the placebo on shows.

Jack A. Khattar: And again, as far as the success of the trial itself, it has to be, of course, compared to what the placebo one shows. And then as far as how 810 will fit in the treatment paradigm that exists today, as I mentioned earlier, today, physicians just scramble around and try to use a lot of different agents that are not designed to treat impulsive aggression. They are not proven to treat impulsive aggression, and there is absolutely no data whatsoever to show any of these off-label drugs that are being used that they actually have any meaningful benefit to the patients. If they do, a lot of them, it's very short term and it's very temporary, a quick reaction to the drug, and then it goes away because they're not really working on impulsive aggression as SPN810 would.

And then as far as the how eight then will fit in the treatment paradigm that exist today as I mentioned earlier.

Today physicians, just scramble around and try to use a lot of different agents are not designed to treat impulsive aggression.

They are not proven to treat impulsive aggression and there was no data whatsoever to show any of these off label drugs are being used that they actually have any meaningful benefit for the patients.

If they do a lot of them, it's very short term and its very temporary it quick reaction to the drug and then it goes away because they're not really working on impulsive aggression as wood SDN. Eight then so clearly we would look for SPX. They tend to be a first line treatment will be the only product ever clinically studied develop the right way through the regulatory process with.

Jack A. Khattar: So clearly, we would look for SPN810 to be a first-line treatment; it will be the only product ever clinically studied, developed the right way through the regulatory process with good phase three data, hopefully, and we'll find out in the next quarter whether we can actually promote it to physicians and explain to them how this product is actually designed to treat impulsive aggression with data, and, of course, if it gets approved, that means it's And nothing else has ever been approved for treating this condition. So we clearly would be the treatment of choice and should be the treatment of choice because all these other agents, especially all other antipsychotics, have major issues that they cause for children when they are given to these children, such as weight gain, you know, metabolic changes, prolactin hormone increases, you know, and all kinds of issues for the children where Molyndone actually, our product, which is the SPNA10, hasn't shown any of these So we're very, very excited about how this product can be positioned in the marketplace and the role it can really play in, for once and for all, a product that is actually designed to treat this condition.

Good phase three data hopefully and we'll find out in the next quarter.

That we can actually promote the physicians and explain to them. How this product is actually designed to threed impulsive aggression with data and of course, if it gets approved that means it's a good product that works well for these patients.

And nothing else is ever approved for treating this condition. So we clearly would be the treatment of choice and shouldn't be the treatment of choice because all these other agents specially all other anti psychotics have major issues that they cause.

For children when they are given to these children from weight gain you know you know metabolic changes prolactin hormone increase as you know and all kinds of issues for the children wear to Mount Marlin don't actually our product, which was the S band eight than hasn't shown any of these different.

To the to the same levels that any of these agents have shown historically so we're very very obviously excited about how this product can be positioned in the marketplace and they're all it can really play and for once and for all that product that actually is designed to treat this condition.

That's helpful. Thank you very much.

Jack A. Khattar: That's helpful. Thank you very much.

Thank you, ladies and gentlemen, as a reminder, if he would like to ask a question at this time. Please press Star then one on your touched on telephone.

Operator: Ladies and gentlemen, as a reminder, if you would like to ask a question at this time, please press star and then one on your touchtone telephone. We ask that you please limit yourself to one question and one follow-up. Our next question comes from the line of David Amsellem with Piper Jaffray. Your line is now open.

Yes, if you please limit yourself to one question and one follow up.

Our next question comes from the line of David Amsellem with Piper Jaffray. Your line is now open.

Thanks, So I had question couple of questions on Oxtellar. So wanted to get your thoughts on what has happened regarding the monotherapy a label expansion and do you think you're going to be able to get any kind of inflection or a significant inflection in terms of growth.

David A. Amsellem: So I have a couple of questions on OxStellar. I wanted to get your thoughts on what has happened regarding the monotherapy label expansion, and do you think you're going to be able to get any kind of inflection or significant inflection in terms of growth as a result of that label expansion? Hopefully, we eventually do get a label expansion in bipolar for that product. Thanks.

As a result of that label expansion doesn't look like machine all that much there so help us.

I understand your thought process, there and then regarding bipolar I'm looking further ahead you know just given the overall you know tanger landscape than you know the usage of sodium channel blockers in.

Jack A. Khattar: Yeah, sure. For the first question, as far as monotherapy is concerned, as everybody would recall, you know, we did say that we were launching monotherapy, but it's not going to have the same inflection point that people saw way back in 2017 on migraine, which was MDXR. So, the way we look at monotherapy, this is an area for us to continue to give us growth, a very steady, consistent growth, and I would say growing by 12% in real prescriptions for a product, again, that is into its seventh or eighth year, that is very remarkable in a very competitive area in the epilepsy space. So, we're very encouraged with what we've seen so far. It's only six months into the launch of this product, and with the sales force and the support that we gave it and the extra attention that we gave it in the first six months, so we continue to be optimistic.

Bipolar help us understand your thought process regarding access.

To the extent you eventually do get a label expansion in bipolar for that product. Thanks.

Yeah sure for the first question as far as a monotherapy as everybody would recall you know we did say that we are launching them on a saturday, but it's not going to have the same inflection point of people. So way back in 2017 on the migraine was for 10 days or so the way we look at monotherapy. This is an area for us to continue to give us the growth Kent very steady consistent growth.

And I would say you know growing by 12% in real prescriptions for a product again that is into his seventh or eighth year that is pretty remarkable in a very competitive area in at the end the epilepsy space. So we're very encouraged with what we've seen so far it's only six months into the launch of this product or with the sales force and the support that we gave it and the extra attention that we gave it in the first six months. So we continue to be optimistic you are not going to see an inflection point, if I'm understanding what you're referring to that's going to be like a hockey stick or anything like that but you will see very slow migration towards you know higher and consistent growth rates, which has been the case in the past six months as well as in the first quarter of this year if you remember.

Jack A. Khattar: You're not going to see an inflection point, if I understand what you're referring to, that's going to be like a hockey stick or anything like that, but you will see a very slow migration towards higher and consistent growth rates, which has been the case in the past six months, as well as in the first quarter of this year. If you remember, Abstellar XR actually did not witness a decline that is typical of As far as bipolar disorder is concerned, yes, I mean the payer landscape, of course, is difficult and continues to be difficult. Of course, what really speaks for it at the end of the day is the phase three data that we will have to generate with clear differentiation versus some of the other agents out there.

Oxtellar XR actually did not witness a decline that this typical of a lot of the new brands in that space and we believe that is actually part of the fact that we were launching the monotherapy indication at that time as well.

As far as the bipolar, yes, I mean, the payer landscape of course is difficult and continues to be difficult of course, the what really speaks for it at the end of the day is the phase three data that we will have to generate with clear differentiation versus some of the other agents out there it will be the first and only oxcarbazepine controlled release to be approved or bipolar or some of the benefits that we have today in epilepsy will apply definitely for the bipolar patients as well as far as.

Jack A. Khattar: It will be the first and only oxcorbezapine controlled release to be approved for bipolar. Some of the benefits that we have today in epilepsy will definitely apply to bipolar patients, as well, as far as a lot of patients see a remarkable difference in the side effects and tolerability profile that they see with oxcorbezapine immediate release, for example. So, whether you're an epileptic patient or a bipolar patient, those benefits we expect them to translate as well into the bipolar population.

A lot of the patients seeing remarkable difference on the side effects on tolerability profile that they see with Oxford of his opinion immediate release for example, so whether it be an epileptic patients or bipolar patients those benefits, we expect them to translate as well into the bipolar population.

David A. Amsellem: Thank you.

Thank you.

Operator: Thank you. We have time for one last question. Our last question comes from the line of Esther Hong with Jannie. Your line is now open.

Thank you.

We have time for one last question. Our last question comes on the line of Aster <unk> with Janney. Your line is now open.

Esther Hong: Hi, thanks for taking my question. So on SPN 812, regarding launch expectations, data has demonstrated, you know, from SPN 812, a quick onset of action of about a week. So can we expect a longer and a stronger launch than would normally be expected, maybe driven by demand building through word of mouth between parents and physicians? And then, on the flip side, given that stimulants are recommended as first-line therapy, do you believe educating physicians will be a higher hurdle than with other products?

Hi, Thanks for taking my question I'm, sorry, SPM 812 regarding launch expectations.

Data demonstrated a you know from asking a top on a quick onset of action about a week. So can we expect a longer a stronger launch than would normally be expected, maybe driven by demand building through word of mouth between parents and positions.

And then on the flip side given that stimulants are recommended as first line therapy.

Do you believe educating physicians would be a higher hurdle.

Dan with other products. Thanks.

Jack A. Khattar: Thanks.

Yeah sure well I'll start with the second question as a lead into the next question as far as H.D. in General physicians are very well educated obviously about a lot of these products.

Jack A. Khattar: Yeah, sure. I'll start with the second question as a lead into the next question.

Jack A. Khattar: As far as ADHD in general, physicians are very well educated about a lot of these products. Stimulants, non-stimulants, what typically are the treatment paradigms, and so forth. However, we do expect 812 to actually shake that paradigm and to give physicians an option that they haven't had before. And that's where we believe the uniqueness of 812 is and the excitement around 812 that we continue to see from KOLs as we continue to share the data with them and educate them on this product and its profile, specifically, as you pointed out, as far as the fast onset of action from a non-stimulant that they haven't really seen historically, and they continue to struggle with products like Stratera out there.

Stimulants non stimulants, what typically you know are the treatment paradigms on and so forth.

However, we do expect a 12 to actually shake that paradigm and to give physicians an option that they haven't had before and that's where we believe the uniqueness of a 12 isn't the excitement around a 12 that we continue to see from Kao Els as we continue to share the data with them and educate them on what this product and the profile of this product specific as you pointed out as far as the fast onset of action.

From a non stimulant that they haven't really seen historically and they continue to struggle with with products like spread there are out there. So we certainly looked at this product a 12 to be a real meaningful game changer for many many of these patients as we pointed out in our Investor day as well given the clear differentiation. It has specifically with the.

Jack A. Khattar: So we certainly look at this product, 812, to be a real meaningful game changer for many, many of these patients, as we pointed out in our investor day as well, given the clear differentiation it has, specifically how quick it works. But not only how quick it works, it's actually, no trouble at all for the physician, and all the patients, because you don't even need to titrate for many of these patients. So you give a child 100 milligrams; you don't even need to titrate to 100 milligrams, and in the first week, they know whether it's going to start working or not. The parents will really know. They don't have to wait the four, five, six weeks they normally are used to with the Stratera product they've experienced historically.

How quick it works, but not only how quick it works, it's actually it's not trouble at all for the physician all the patients because you don't even need to type freight for many of these patients. So you give it.

Child, 100 milligram, you don't even need to fight trade to the hundred milligram and the first week. They know whether it's going to start walking or not the parents, who are really no. They don't have to wait the 456 weeks. They normally are you still with the split that up.

Product that they've experienced historically, so how quickly this product war, how easy it does work actually without a very complex nitration mechanism.

Jack A. Khattar: So how quickly this product works, how easy it does work, actually, without a very complex titration mechanism. These are very different from the current marketplace and the options out there. And then secondly, the fact that it works in hyperactive as well as the inattention subscales of the product equally, of the condition equally, is another major benefit that this product brings. So we see all these different angles, obviously, helping the product to be positioned as a first-line treatment. And why even try a child on a stimulant-controlled substance if you have an option like SPNA-12? There's no reason for the parent or the, you know, the physician to even consider a stimulant if you have an option that you will know from week one whether it is going to work or not.

These are very different than the current marketplace on the options out there and then secondly, the fact that it works and hyper active as well as the in attention or sub scales of the product equally of the of the condition equally is another major benefit that this product brings them. So we see all these different angles, obviously, helping the product to be position.

As a first line treatment and why even try a child honest stimulant controlled substance. If you have an option like espionage. While there is no reason for the parent or the.

The physicians, even consider a stimulant.

If you have an option that you will know from week, one that is that going to work or not and what it is very simple to actually penetrate and most of the cases, you don't need even tighter duration.

Jack A. Khattar: And where it is very simple to actually titrate, and in most cases, you don't even need titration. And second of all, this is now a product that you can potentially sample as well. And as for dealing with refills, you don't have to deal with the complication of refills for controlled substances. So it's really, if you step away from it, if you're a physician or a parent, you look at A12, and you say, "There is no downside." I'll try it. And why wouldn't I try it first? It's easy, simple, and then I will wait only for a week and see if it works or not. So, certainly, we believe all these key points and, of course, safety and tolerability and the flexibility and how high you can go without even risking any safety and tolerability by going all the way to 400 or even 600 milligrams. So it's a remarkable, flexible dosing scheme that physicians also have at their disposal to treat patients with different conditions as far as the severity of the condition and how easy it is to use. So clearly, all the aspects are there for us to position this product as a first-line treatment.

And second of all this is now a product that youve also could potentially sample as why and they can thrive versus control substances, where they cannot sample.

And as well in dealing with the refills you don't have to deal with the complication of refills for controlled substances. So it's really if you step away from it if you had a physician or a pair and you look at a 12 and you say.

There is no downside I'll try it and why wouldn't I try it's for US. It's easy it's simple and then I will wait only for a week and see if it works or not so it's certainly we believe all these key points and of course, the safety and the Tolerability and the flexibility in how high you can go without even risking.

Any of the safety and Tolerability by going all the way for 406 hundred milligram.

So its remarkable the flexible dosing scheme that physicians also have.

The disposal to treat patients with different condition as far as the severity of the condition and how easy it is to use so clearly all the aspects are there for us to position this product as a first line treatment.

Thank you.

Jack A. Khattar: Thank you. This concludes today's question and answer session. I would now like to turn the call back to Jack Khattar for closing remarks.

This concludes today's question and answer session.

I would now like to turn the call back to Jack Qatar.

For closing remarks.

Jack A. Khattar: Thank you. We are focused on advancing our late stage pipeline as we look forward to building our next phase of future growth at Supernus. The remainder of 2019 represents a cornerstone in our future with three important milestones. First, the submission of the NDA for SPN 812. Second, getting the first set of phase 3 data on SPN 810. And third, initiating the phase 3 bipolar program on SPN 604. In addition, we are excited and we are well on our way to the potential launch of SPN 812 next year, if approved by the FDA. Finally, we look forward to building on the momentum we have behind Oxtheller XR and to the continued recovery and growth behind Trucandy XR. Thanks again for joining us this morning. We look forward to sharing with you the upcoming updates for the rest of the year.

Thank you.

We are focused on advancing our late stage pipeline as we look forward to building our next phase of future growth and supporting us.

The remainder of 2019 represents a cornerstone in our future with three important milestones first the submission of the NVCA for scan a 12 second getting the first set of phase three data on SGN eight then and third initiating the phase three bipolar program on SPM six or four.

In addition, we are excited and we are well on our way in the preparations for the potential launch of SPM 812 next year if approved by the FDA.

Finally, we look forward to building on the momentum we have behind Oxtellar XR and to the continued recovery in growth behind Trokendi XR. Thanks again for joining US. This morning, we look forward to sharing with you the upcoming updates through the rest of the year.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude todays program you may all disconnect.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.

Everyone have a great day.

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