On August 18, 2020 Supernus Pharmaceuticals, Inc. (Nasdaq: SUPN), a pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, reported financial results for the second quarter of 2020 and associated Company developments (Press release, Supernus, AUG 18, 2020, View Source [SID1234563779]).

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Commercial Update

Second quarter 2020 net product sales of $124.0 million, 21% higher than the same period in 2019, driven by higher net product sales of Trokendi XR and Oxtellar XR and the addition of $10.6 million of net product sales from the acquired PD products. Net product sales of Trokendi XR and Oxtellar XR increased 11% compared to the same period in 2019 due to the beneficial impact of lower gross-to-net sales deductions in the second quarter of 2020, coupled with the price increase taken in January 2020. The year over year impact of volume, on an extended units basis (i.e., number of capsules/tablets), was neutral.

Corporate and Product Pipeline Update

SPN-812 – Novel non-stimulant for the treatment of ADHD in children and adults

The Company continues to prepare for the commercial launch of SPN-812, with shipments to the trade in December 2020. The Company remains engaged with the U.S. Food and Drug Administration (FDA) regarding its New Drug Application (NDA) for the treatment of ADHD. The NDA Prescription Drug User Fee Act (PDUFA) target action date is November 8, 2020.
Recruitment has resumed in the Phase III program in adult patients, after being put on hold in March 2020 due to the impact of the COVID-19 pandemic. The trial is expected to complete enrollment this year, with topline data expected in the first quarter of 2021.
SPN-830 (Apomorphine infusion pump) – continuous treatment of motor fluctuations ("on-off" episodes) in PD

NDA submission is expected in the fourth quarter of 2020, with launch, if approved by the FDA, in the second half of 2021.
SPN-820 – novel first-in-class activator of mTORC1

Preclinical and development activities are ongoing, with the initiation of the Phase II clinical program in patients with treatment-resistant depression targeted for the second half of 2021.
Operating Expenses

Second Quarter

Research and development (R&D) expenses in the second quarter of 2020 were $22.2 million, compared to $17.0 million in the same quarter last year. This increase was primarily due to the $10.0 million option fee paid to Navitor as part of the collaboration agreement for SPN-820, coupled with expenses incurred in the SPN-812 Phase III program for adults. Increased expenses were partially offset by reduced spending for the SPN-810 Phase III trials.

Selling, general and administrative (SG&A) expenses in the second quarter of 2020 were $48.1 million, compared to $39.8 million in the same quarter last year. This increase is primarily due to $7.4 million of expense associated with the transaction to acquire the CNS portfolio of US WorldMeds in the second quarter of 2020, partially offset by $3.1 million in PDUFA fee refund from the FDA.

Operating Earnings and Earnings Per Share

Operating earnings (GAAP) in the second quarter of 2020 were $45.5 million, compared to $42.6 million in the second quarter of 2019. The increase was primarily due to increased net product sales, partially offset by the aforementioned option fee paid to Navitor and acquisition-related expenses associated with the acquired PD products.

Net earnings (GAAP) in the second quarter of 2020 were $34.7 million, or $0.65 per diluted share, as compared to $32.7 million, or $0.61 per diluted share, in the same period last year. Net earnings (GAAP) were subject to a higher effective tax rate of 27% in the second quarter of 2020 relative to the second quarter of 2019, due to the aforementioned transaction-related expenses associated with the acquired PD products, which are partially tax deductible, and an increase in the number of states in which the Company pays income tax.

Weighted-average diluted common shares outstanding were approximately 53.6 million for the second quarter of 2020, as compared to approximately 53.9 million for the prior year period.

Balance Sheet Highlights

As of June 30, 2020, the Company had $733.5 million in cash, cash equivalents, marketable securities and long term marketable securities, compared to $938.8 million at December 31, 2019. During the first six months of 2020, inclusive of net changes in working capital, the Company generated $100.9 million of cash from operations. During the second quarter, the Company made cash payments of approximately $300 million for the acquired PD products, as well as the aforementioned $10.0 million fee paid to Navitor as part of the development and option agreement for SPN-820.

Financial Guidance

Guidance was suspended in May 2020 due to several factors: the uncertainty caused by the COVID-19 pandemic; the second quarter 2020 acquisition of the PD products; and the impact of the partnership with Navitor. The Company is now reinstating and updating full year 2020 financial guidance, which consists of the following components, inclusive of the impact of acquiring the PD products as of June 9, 2020:

Net product sales to range from $460 million to $500 million, including approximately $80 million from the PD products.
Gross margins of approximately 90%.
R&D expenses of approximately $85 million.
Selling, general and administrative expenses to range from $240 million to $250 million.
Operating earnings (GAAP) to range from $90 million to $110 million, which includes amortization of intangible assets of approximately $15 million.
Conference Call Details

The Company will hold a conference call hosted by Jack Khattar, President and Chief Executive Officer, and Greg Patrick, Senior Vice President and Chief Financial Officer, to discuss these results at 9:00 a.m. Eastern Time, on Wednesday, August 19, 2020.

Please refer to the information below for conference call dial-in information and webcast registration. Callers should dial in approximately 10 minutes prior to the start of the call.

Conference dial-in: (877) 288-1043
International dial-in: (970) 315-0267
Conference ID: 5175177
Conference Call Name: Supernus Pharmaceuticals Second Quarter 2020 Earnings Conference Call
Following the live call, a replay will be available on the Company’s website, www.supernus.com, under "Investor Relations".