Supernus Pharmaceuticals, Inc. Wells Fargo 21st Annual Healthcare Conference

Good afternoon, ladies and gentlemen. I'm Rahul Sood, Managing Director in the Healthcare Investment Banking Group at Wells Fargo. I have the pleasure of hosting Jack Khattar, CEO of Supernus Pharmaceuticals.

Jack, welcome. Thank you. Thanks for having us.

I heard that you've had a slow summer. You just announced the largest and the most transformative transaction in Supernus' history. Can you tell us a little bit about the company you're building and the opportunity you see in front of you?

Yeah, sure. Good afternoon, everyone, and just a quick reminder that I'll be making forward-looking statements, so please check all the SEC filings for the risks associated with our business. For those of you who are familiar with us at Supernus, for a long time now, we've been building the company based on couple strategies, primarily in R&D, investment in R&D, and also doing transactions from external growth perspective, bringing products into the portfolio so we can continue to secure future growth behind the company. We've done that extremely well over the years. From an R&D perspective, our R&D capability has been actually proven over the years. We have about 12 products. I know not a lot of people know probably that 12 products that are marketed that have been developed by Supernus, before the Shire team, technology, scientists in our own facilities and so forth.

Some examples of that are like the Adderall franchise, which at one point it was a $1.4 billion franchise, came from our technologies and capabilities. Other examples like Orenitram for United Therapeutics, which is actually a $500 million franchise right now in the marketplace, and so forth. Then we employed these capabilities and will continue to develop our own products. We started with Oxtellar XR, Trokendi XR as an epilepsy migraine franchise, and that was actually at peak around the $500 million, generated significant cash for the company that allowed us to continue to build, and be able to do outside transactions.

In combination with the M&A, we were able to manage the LOEs, the exclusivities of Trokendi XR, Oxtellar XR, which we just basically finished that transition phase, allowed us to have new products in the mix, which are developed internally by our R&D capabilities like Qelbree, as well as bringing high growth products like ZURZUVAE and ONAPGO and even GOCOVRI to a certain extent that came through M&A. So by employing these two strategies, we will continue to build the company moving forward, and continue to plan for LOEs. You're always going to have LOEs in pharma. That's part of life in our business, clearly. You have to always be ahead of it and be able to employ strategies in the right way and execute on them to be able to get future growth into the mix.

That's how we've been successful so far in being able to hold the line on revenue, even in the last couple of years, losing $300 million, $400 million on Oxtellar XR, Trokendi XR. We're able to hold the line on revenues despite all that, continue to launch products, invest in R&D, and even maintain profitability at the same time.

Great. Jack, can you talk about your approach to CNS? There are different verticals within Supernus today and going forward. Can you talk about your commitment to each of those verticals?

Yeah, we've been focused on CNS right from the beginning. Some of it goes to our heritage when we were part of Shire Pharmaceuticals. Naturally, we had a lot of experience in the CNS space. For example, ADHD, there is no company in the industry that have developed more products in ADHD than Supernus. We've developed Adderall, ADDERALL XR, MYDAYIS, Intuniv, and now Qelbree. So we're very experienced in that space, specifically ADHD, epilepsy, migraine, and so forth. Given our heritage when we started Supernus, we decided to stay with that focus. A lot of these diseases are chronic diseases that lend themselves to some of the capabilities we had early on back then.

Right now, our portfolio is pretty much focused on both ends on the neurology side, the movement disorder through our Parkinson's portfolio, and then on the psychiatry side with ADHD and postpartum depression, which is the new asset that we brought in last year through the Sage acquisition. We'll continue to be as focused as possible. Now, of course, ZURZUVAE got us. It is a CNS product, postpartum depression, but also interestingly gave us a little bit a leg in the women's health space, and we did say that is an area we will continue to look for potential possibilities. If we can expand in that space, we will be willing to do that, given that now we have a good infrastructure, a good sales force, and presence in that space.

Understood. Just switching gears a little bit, your first half results have been strong. Revenue was up 32% in the second quarter, and your four growth products were up over 50%, and you raised the full year guidance to $860 million to $890 million. What's working better than your expectations for this year?

Well, in a way, better in the sense, clearly we are now at a stage, as I mentioned earlier, the LOEs are behind us. We are at a stage where our portfolio is picking up from a growth perspective, accelerated growth phase. We are in that phase where our growth is accelerating behind basically three and a half or four growth products.

Primarily Qelbree, of course, which is currently our flagship product. ONAPGO that we launched only about a year and a half ago. XADAGO, which is still very early in its growth stage, only it was launched 2 and a half years ago. All these products are contributing to that trend, to the health of the business, and to the robustness of the growth that we've been able to deliver. That's why we had a pretty strong first half. We're pretty happy with that, really, and very excited. Of course, third quarter is always exciting quarter for us because Qelbree back to school, the momentum over there that typically carries us through the fourth quarter and try to finish the year pretty strong on that brand.

Great. Let's talk about the Qelbree and the ADHD franchise for a couple of minutes. Qelbree has become one of the more successful CNS launches that I can think of the last 5 years. You did about just shy of $90 million of revenue in the quarter, which was up 15% on more than 250,000 prescriptions. Tell us about the franchise and where do you see it going from here?