Good morning, ladies and gentlemen and welcome to Supernus Pharmaceuticals Third Quarter 2019 Financial Results Conference Call. At this time, all 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 conference is being recorded.I would now like to turn the conference over to Peter Vozzo of Westwicke Investor Relations, representative for Supernus Pharmaceuticals. Sir, you may begin.

Thank you, Towanda. Good morning, everyone and thank you for joining us today for Supernus Pharmaceuticals third 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. Today's call is being made available via the Investor Relations section of the company's website at ir.supernus.com. Following remarks from the management, we will open the call to questions.During the course of this call, management may make certain forward-looking statements regarding future events and the company's future performance. These forward-looking statements reflect Supernus' current perspective on existing trends and information and can be identified by such words as expect, plan, will, may, anticipate, believe, should, intend and other words of similar meaning.Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of the company's 2018 Annual Report on Form 10-K. 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 6, 2019 at approximately 9:00 AM Eastern Time. Since then, the company may have made additional announcements related to the topics discussed. Please reference the company's most recent press releases 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.

Thank you, Peter. Good morning, everyone, and thanks for taking the time to join us as we discuss our 2019 third quarter results. In our press release yesterday, we announced the results of the P301 first Phase III study for SPN-810 for the treatment of impulsive aggression in ADHD patients six to 11 years old.The study was a randomized double-blind, placebo-controlled, multicenter, parallel-group clinical trial in patients diagnosed with ADHD. Patients receiving SPN-810 36 milligram showed a median percent reduction of 58.6% in the average weekly frequency of impulsive aggression episodes from the baseline that was not statistically significant with a p-value of 0.092 compared to placebo.These results are based on the combined analysis of the data from stages one and two in the study. In stage one, which was the stage right before the interim analysis, the median percent reduction was 60% which was statistically significant with a p-value of 0.029 compared to placebo.However, post the interim analysis in stage two of the study, the increase in variability in the 36 milligram treatment arm seems to have adversely impacted the results in the combined analysis. Clearly, we are disappointed with the lack of statistical significance, given that the magnitude of reduction in the frequency of episodes, we believe, as clinically meaningful reduction for many patients.In addition, the median percent reduction in frequency of IA behavior in this Phase III study is consistent with the range of 58% to 62% improvement in the retrospective modified aggression scale that we saw in the two treatment arms that was statistically significant versus placebo in the Phase IIb study. The Company will continue its analysis of the results to better understand the reasons behind the increased variability in the 36 milligram treatment arm in the P301 Phase III study.Overall, the trial exhibited favorable…

Thank you, and good morning, everyone. As I review our third quarter 2019 financial results, I'll remind listeners to refer to the third quarter results issued in yesterday's press release after the market closed.Total revenue for the third quarter of 2019 was $102 million essentially unchanged from $103 million in the third quarter of 2018.Net product sales for Trokendi XR for the third quarter of 2019 were $77 million, modestly down from the $80 million in the third quarter of 2018. Year-over-year growth in prescriptions of 5% and year-over-year impact of price increase will offset by higher gross-to-net deductions.Net product sales for Oxtellar XR in the third quarter of 2019 were $22.7 million, an 11.3% increase as compared to the third of 2018. Growth in prescriptions of 12% and the year-over-year impact of price increases were partially mitigated by the impact of higher gross-to-net deductions.Total revenue for the third quarter of 2019 was comprised of net product sales of $100 million and royalty revenue of $2.1 million as compared to net product sales of $100.2 million and royalty revenue of $2.8 million in the third quarter of 2018.Turning now to expenses. Research and development expenses were $17 million in the third quarter of 2019 modestly lower than $20 million in the same quarter of the prior year. This decrease is primarily attributable to the completion of the four Phase III clinical trials for SPN-812 in late 2018 and early 2019 partially offset by the cost to manufacture SPN-812 to support our NDA filing.Selling, general and administrative expenses in the third quarter of 2019 were $41 million essentially unchanged from the same quarter last year.For the third quarter of 2019, operating earnings totaled $40 million, a 6% increase over $37.5 million in the same period last year. This improvement was primarily…

Thank you. [Operator Instructions] Our first question comes from the line of Ken Cacciatore with Cowen. Your line is open.

Hey, guys. Starting with the news on 810. Jack over the last couple of years, you've been incredibly prudent on BD; really it's only been a early stage as said. You do have plenty of cash and obviously still very profitable. So can you just talk about business development now that you've had this SPN-810 set back and does it change things?And then on 812 just maybe your view again on the market opportunity and how this product could be positioned. There clearly is a big debate on the street about its effectiveness and the need for it. So maybe give you another chance to just talk about how you think it will fit into the treatment paradigm? Thank you.

Yeah, sure. Starting with business development. As far as our strategy, there's really not much of a change regarding our priorities with the assets -- the kind of assets we're looking forward in neurology and psychiatry and the quality of the assets that we have been looking forward as well.So this doesn't really change as much because we have been aggressive all these years. We have been intensely involved in the BD side, and the only reason we haven't done anything from a commercial point of view or late stage point of view is, because we haven't found anything that we believe at that time when we assess those kind of assets that they actually fit or that they actually add and create value to our story and our shareholder. So, everything we've been doing in BD will continue to be consistent as it has been over the years.And one important thing that I would like to remind folks, because I get this question all the time and people say or -- and I read it in some people's notes that we've been saying we want to do something for the last several years and we haven't done anything. Well, an important point is to remind people is that we actually became profitable in 2015, and we haven't been sitting on $800 million in cash since 2015.So, our cash position in 2016 and 2017 was still building up over the years, and only until the next last year that we actually raised $400 million in the convertible debt deal that got us to this position. So, it's not like we have been sitting on a pile of cash for three, four years and we haven't been active doing anything.And the other important thing is, I'm sure everybody remembers in the…

Excellent. Thank you.

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

Hi guys. Thanks for taking my questions. I have a couple. First on SPN-810, sorry to see that outcome, I guess my question is what is the logic in ending enrollment at 98% should we assume that the extra 2% enrollment would not have provided any further statistical benefit and what are your suspicions regarding the variability. Is there anything you can do to address that P302, at this point?

Yeah regarding the our decision on the P302 study to start enrollment at this point as all of you know and we know it very well it was pretty slow as far as recruitment in these studies in general. So for us even to finish the other 2% as you remember our timeline was to get data basically in the first quarter of next year.So we don't think that -- extra 2% or 3% enrollment is going to change the picture for us. And especially that what we saw with P301 is up more patients who can really help the case for some reason and we are trying to obviously understand the reasons behind it.So therefore we are pretty comfortable that whether you are at 98% or 100% as far as enrollment the picture doesn't really change much and we would rather get the data earlier.And therefore if we stop it now, stop enrollment and open up the data and analyze it as quickly as we can, we should be able to have an understanding of the project overall and what it means for the program moving forward. So we chose to make that decision at this point so that we can get the data earlier than waiting another five or six months for it to come in because we have to enroll another five or six patients.As far as the variability itself, it was really very surprising given that, it doesn't look like there is no variability or similar variability in the placebo arm. So it was very puzzling for us. It is very surprising. It is one of the main factors obviously that impacted the statistical analysis and calculations yielding a p-value of 0.09.So clearly you would expect us at this point we will be digging very deep…

Okay. And if I could have a follow-up, bigger picture. In the payer landscape there's clearly a lot of changes going on in reimbursement. And I don't think it's necessarily unique to you. But it does seem unique to products that are -- that are maybe reformulations or in well served market.So, is there anything you can point to in terms of key systemic issues going on that are directly impacting you. And what does that mean for the possibility of successfully launching 812, not from a clinical side, but more from the reimbursement side. I think that's where there is a lot of concern. Thanks.

Yeah. Generally speaking what we're seeing on the payer side is not really peculiar to Supernus or Supernus products per se. Now SPN-812 is not just a reformulation, it's actually a whole new chemical entity. It doesn't exist in the United States, in the market. So there is no immediate release of viloxazine.So clearly, just by that it will be a very different scenario, versus a reformulation of an existing molecule, in an existing generic market. So there is no generic market over viloxazine.And the other thing as I mentioned, is a completely totally novel mechanism of action as well, it is not just the new molecule. But also the mechanism within which -- we believe to treat ADHD is also very different than Strattera. And any other drug in the marketplace that is prescribed for ADHD.So we think it should be a little bit different. But as far as what we know today, we believe it will be welcome. Because a lot of folks what they've seen in the last decade or so is exactly what you are mentioning and referring to, or just reformulations of amphetamines or methylphenidate and so forth.So, we think this will be given a very different new fresh look and examine -- and looking at the value it brings to the category as far as a novel, and totally a new mechanism of action in treating this condition.

Thanks.

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

Thanks. Couple of questions, I would like to tell that you correct -- exactly predicted the launch should be very measured. And I think scripts are growing about 10%, 11%, 12% year-over-year basis which is a modest increase from prior to the launch the recent launch. I was curious do you expect this sort of gains to continue? Or would you start to see acceleration for monotherapy in the next year or two?And then secondly, Jack I think you indicated, you expect to launch an NDA -- file the NDA for 812 this month. What would be a realistic actual launch date for 812 assuming approval?

Yeah. On Oxtellar XR and the monotherapy as you said -- I mean we have said and we'll continue to expect that to be the case as far as measured growth behind Oxtellar XR and the monotherapy indication.And we think it's actually a major reason why the franchise is doing pretty good. We believe, given that it's already six years old and would be seven years coming up in February this coming February as far as the brand and in its life cycle.So, we've been very excited about it. And we will continue to be excited about it. It is epilepsy. Epilepsy is always a much slower steady kind of build and growth. So certainly, we would hope to be able to continue to achieve 11% to 12% that is our goal, that's our target or even more than that.So, this is a product that we have till 2027 as far as the patent expiry. So we're very excited about it. And we will continue to view it as a growth asset for us no question about that. As far as the 812, the NDA this month it really all depends on the PDUFA date that the FDA will assign to of the submission and also whether they will end up reviewing it within 10 months or 12 months. So that is still to be determined. So we clearly won't know till the end whether it's going to take 10 months or it's going to takes 12 months. So depending on that, obviously our launch date will be correlated with that.

Thank you. Our next question comes from the line of Patrick Trucchio with Berenberg Capital Market. Your line is open. Patrick, check to see if your phone is on mute?

Sorry about that. Good morning. So just first, a follow-up question on Trokendi. With the understanding that there is some incremental pressure from payers, I'm wondering if we should expect a new step down in price next year or if you feel comfortable with the visibility that you have for the business that sort of -- the outlook as you see it now is going to be consistent next year?

Well, I mean, it's really what we communicated in the press release. As far as the growth in the net product sales, we expect it to be more on the flat side, because any price increases we take, if we take any next year we don't make comments on the future pricing strategy, but any price increases we've taken in -- especially this year and unit growth has been pretty much offset with a wider spread on the gross-to-net deductions.So we think that at this point that's the only thing we can go by and we will assume that will probably will prevail next year as well and that's why we gave a kind of a draft guidance so to speak regarding 2020 and what to expect as far as net sales growth moving forward on Trokendi XR.I mean really what's happening there is when the unit growth becomes more in the single-digit, as I mentioned earlier in my comments, it becomes difficult for the overall volume to really overcome the fluctuations and the increase in the spread on the gross-to-net deductions and that's basically an issue that clearly we didn't face as much off last year because we grew last year by 29%. So when you are growing in the double-digits, you're still able to whether some of these fluctuations, some of these increases in the gross-to-net deductions.And many of you have asked us this question on gross-to-net for many years actually and we always said, it never gets better, it always gets worse. And as time goes on, it will always increase because managed care is always asking for more rebates, more admin fees, more of this and more of that and that's a phenomena again, not peculiar or special to Supernus. That's the present environment we're all living in.And therefore, as these unit growth become more in the single-digit, as is the case for Trokendi XR, it will become very hard to show higher net sales grow. And actually you have another example in our case with Oxtellar XR. It is still growing in the double-digit and we still continue to manage to grow the net sales so far given that it is growing in the 11% to 12%. The payer coverage for Oxtellar XR, Trokendi XR really don't vary that much. So a lot of the contracts we have are very similar give or take on both products.

And then I just had -- if I may ask few follow-ups on SPN-812. So just first, when should we anticipate the ramp-up in sales and marketing and building the sales force in 2020?And then secondly, can you provide some context around the payer environment in terms of what we should be anticipating from a price perspective compared to other branded products in the market and how we should anticipate 812 positioning verse generics both on the stimulant and on the non-stimulant side? And then just lastly if I could, is there an update on the potential for an international collaboration partner on 812? Thanks.

Yeah. Okay. Let me start with the first. As far as the ramp-up on sales force and commercial infrastructure behind 812, specifically the sales force, we typically get the sales force up and running right after the approval and around the launch time. So that's going to be obviously in the second half of next year. Again, when exactly I mean which quarter it's a -- still little bit harder for us to predict at this point until we have a better visibility on the PDUFA date and the expected launch date.So -- but given that we're filing in November obviously I don't believe it will be like -- in the late second quarter or early third quarter probably be a little bit later than that. And that's when we will build the sales force for the psychiatry and to launch SPN-812. Again, we've set so far our plans of somewhere around the 125 reps 150 reps as far as launching SPN-812.Regarding the payer coverage. As I said earlier in my previous comments, I mean, we expect the product to have a decent coverage. We're working pretty hard right now and starting to discuss with the payers and sharing with them our data and so forth and the positioning of the product and the additional benefits it brings to the patients versus our genetics or even branded stimulants and non-stimulant so that is still in the works as we speak and will continue through 2020. So really we don't have a final position obviously and we won't know until the -- right before the launch as to where we stand on the formulary.And similarly with the pricing specific pricing of the product. I think what we -- all we did and give you at the Investor Day was basically the bracket prices for the branded products in both segments non-stimulant and stimulant. Again, we will not make comments on the specific price. Obviously, we will be launching the product at this point.And then finally, I think, your question on international. Our strategy so far has been to out-license our products internationally. So that applies to the existing products as well as the pipeline. So we will continue to look for potential partners overseas for 812 for our pipeline and for the existing products.

Thank you.

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

Thanks. So I wanted to get a sense from you and maybe some more specifics on the extent to it. The landscape for both Trokendi and Oxtellar is restrictive how difficult is it to get a prescription filled? How difficult or onerous is the documentation step-throughs? So I know you've talked a lot about the gross-to-net, but what I'm getting at here is the extent to which doctors may just not want to write it because of headaches or patients may not want to fill the scripts because of hurdles on their end. So if you can talk about that that would be helpful. Thanks.

Yeah, sure. The hurdles that we have today are the same hurdles we've had before as far as you know whether a physician might not be willing to be aggressive and push for the patient and cite for a prior authorization or a step-through or whatever. So there is really nothing new in that situation versus what we face last year or the year before and so forth. And we continue to have the same programs in assisting the physicians and going through PAs or any of this the paper work and so forth. So there is really nothing meaningfully that has changed as far as mechanistically trying to get the prescriptions through from the time a physician writes it or if they're willing to writer it until the patient gets the prescription.A lot of the gross-to-net issues are more whether it's higher rebates enriched co-pay program that we have to do in Q1 or a lot of the factors that go into the gross-to-net reductions that have impacted the wider spread that we are talking about. So as far as the physician dynamics the patient dynamics as far as the story around the two products and the benefits they bring to the patients there is really no fundamental change here on both products. So it's not like we're facing additional hurdles from that perspective.

And David this is Greg if I can just add on to Jack's comments. The overwhelming dynamic in terms of getting a script to authorize were driven by an automated process that can be adjudicated to the pharmacy. And for both products it largely vest on they are having been on generic topiramate or generic oxcarbazepine beforehand. There is a minimum, I would say almost no people work required. And as I mentioned, all of this could be adjudicated at the pharmacy in an automated fashion.

Okay. Do you think that that mechanistically any of that could change going forward particularly in migraine, where there is more competition. I mean if you look to 2020 and even beyond, I mean do you expect largely status quo as you described or do you think there could be meaningful change?

It could change. I mean, we really don't know for sure. It could change and that's why we're trying to be cautious in trying to give people as to what 2020 or the things we could face. 2020 will also see potentially oral CGRPs. So, even that environment might change on all the CGRPs, and how they are treated by payer. So, there is a lot in 2020 that could really keep the environment fluid overall. So, it's really very hard for us to predict, how will that pan out.

Yeah, that's right, David. That being said, I'm not aware of anything specifically regarding additional mechanistic hurdles that we have to go through that have presented themselves for next year.

Okay. Thanks. That's helpful.

You're welcome.

Thank you. Ladies and gentlemen, we have time for one more question. Our final question comes from the line of Esther Hong with Janney. Your line is open.

Hi. Thanks for taking my question. So, my question is on SPN-812. So -- assuming approval, what are expectations around a launch trajectory? Can we expect a quicker uptake in launch based on the quicker onset of action and the fact that it's a non-stimulant and of course, taking into account that reimbursement will play a role? Thanks.

Yeah, I mean at this point, what I would say, you know expect launch to be consistent with a lot of the launches you have seen. So, it's not going to be a hockey stick. I don't think it will be a hockey stick kind of an effect. So, we will expect it to be very commensurate with other launches in this space. The good news here, obviously, this is a non-stimulant, so there is also other ways for us that we have at our disposal where we can get patients to really start on this product and get the experience with it through sampling. Where on the other hand, if it were stimulant, you can't really sample stimulant.So we have at least a lot of tactics, if we can employ to get patients on the product, let them try it, let them really see for themselves that this could work within a week given the data we have seen so far and hopefully that will translate and it should translate into the marketplace with real experience. And then maybe, the uptake will be very quick. So, it remains to be seen, but at this point, we will just be a little bit cautious, and try not to model this really too crazy as far as the hockey stick kind of effect in general. So, we have the right expectations out there.

Thank you.

Thank you. I would now like to turn the call over to Jack Khattar for closing remarks.

Thank you. While we are disappointed with the topline results from the first Phase III study, we look forward to conducting further analysis on the data and for getting the results from the second study.In the meantime, we're working diligently toward the submission of the NDA for SPN-812, which we expect to happen soon. For the remainder of 2019 and into 2020, we're preparing for launch the SPN-812, if approved in the second half of 2020. Thanks again, for joining us this morning.

Ladies and gentlemen, that concludes today' conference. Thank you for participating. You may now disconnect. Everyone, have a wonder day.