Thank you, May. Good afternoon, everyone and thank you for joining us today for Supernus Pharmaceuticals' preliminary fourth quarter and full year 2021 financial results conference call.

Today 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, Tim Dec.

Today's call is being made available via the Investor Relations section of the company's website at ir.supernus.com. 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.

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 latest SEC filings. Actual results may differ materially from those projected in these forward-looking statements.

For the benefit of those of you who may be listening to the replay, this call is being held and recorded on February 28, 2022. 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'll now turn the call over to Jack.

Thank you, Peter. Good afternoon, everyone and thanks for taking the time to join us as we discuss our preliminary 2021 fourth quarter and full year results.

I would like to first make a few comments about the year 2021 as a whole and then get into more details about specific corporate accomplishments. 2021 was another outstanding year for Supernus during which we continue to execute on our long-term growth strategy and to work towards minimizing the impact of the 2023 Trokendi XR transition.

During 2021, we launched Qelbree, the first novel non-stimulant ADHD treatment to be launched in over a decade. We also closed on the acquisition of Adamas adding GOCOVRI as another key growth asset and we resubmitted the NDA for SPN-830 the apomorphine infusion device, which represents our third future growth driver.

In addition, we closed the year with a record revenues for Supernus of approximately $580 million up 11% compared to 2020. Finally, we advanced to Phase II, the clinical development of SPN-820 our novel product candidate for treatment-resistant depression and nominated SPN-443 and SPN-446 two internally discovered novel CNS drug candidates for development in CNS indications.

Moving on to specific corporate accomplishments and starting with the Adamas acquisition, we made significant progress with the integration of the business with our Parkinson's sales force that is now fully trained in the field promoting GOCOVRI. GOCOVRI recorded a total of 3,330 prescriptions in the month of January, the product's first full month under Supernus in 2022 representing a 30% increase compared to the month of January in 2021.

The Adamas transaction contributed approximately $10 million in revenues in the fourth quarter and we are on track regarding our goal of $60 million to $80 million in synergies over the first 12 months of owning the business. As mentioned earlier, we resubmitted the NDA for SPN-830 infusion device for the continuous treatment of motor fluctuations in Parkinson's disease in the fourth quarter.

And since then we have received FDA acceptance of the submission with a PDUFA date in early October 2022. The company is preparing for the potential commercial launch of SPN-830 in the first quarter of 2023 assuming timely approval by the FDA.

Regarding Qelbree, the launch is progressing well continuing its growth trajectory with total IQVIA prescriptions in the fourth quarter reaching 34,328, an increase of 122% compared to total prescriptions of 15,453 in the third quarter of 2021. In January 2022, the most recent month available, total prescriptions reached 14,177.

Moreover in the first quarter of 2022, total prescriptions are showing a quarter-to-date during the first seven weeks, sequential growth rate of 42% versus the corresponding same seven-week period in the fourth quarter of 2021. In addition, Qelbree continues to expand its base of prescribers with over 5,600 prescribers in the fourth quarter of 2021, up from 3,470 prescribers in the third quarter of 2021.

And finally preparations for the potential launch in the adult market are well underway assuming timely approval by the FDA of the supplemental NDA for the adult indication. Supernus will continue its heavy investment in Qelbree's launch activities in 2022 as it enters the adult segment of the ADHD market, which represents about 50% to 60% of the total market.

On the managed care side we have made good progress in managed care coverage with continued improvement in gross-to-net deductions. For SPN-820 our first-in-class orally active mTORC1 activator we initiated a Phase II multi-center randomized double-blind placebo-controlled parallel design study in adults with treatment resistant depression.

The Phase II study will examine the efficacy and safety of SPN-820 over a course of five weeks of treatment in approximately 400 patients. The primary outcome measure is the change from baseline to end-of-treatment period on the Montgomery-Asberg Depression Rating Scale total score, which is a standard depression rating scale.

We continue to expect to start a Phase II program with SPN-817 in the second half of 2022 for the treatment of focal seizures in adults. If you recall SPN-817 represents a novel mechanism of action for an anticonvulsant and utilizes synthetic form huperzine A, which is a potent acetyl cholinesterase inhibitor with pharmacological activities and CNS conditions such as epilepsy.

Moving on to the commercial products. Oxtellar XR finished another year with strong performance reaching net sales of $111 million, up 12% compared to 2020.

Also Trokendi XR continues to hold up well, despite the increased competition in the migraine prevention market, finishing the year with approximately $305 million in net sales. For full year 2021, the two products combined delivered net product sales of $416 million essentially flat compared to $418 million in 2020.

Apokyn closed out the year with sales close to $100 million given the competitive headwinds it faced during the year. Recently the company became aware of an approval of a generic to the Apokyn injection cartridge.

The timing of availability of such a product is still largely unknown and the generic cartridge will still need to be paired with the Apokyn Pen to administer the apomorphine injection. Finally we will continue to be active in corporate development looking for strategic opportunities to further strengthen our future growth and leadership position in CNS.

With that, I will now turn the call over to Tim.

Thank you, Jack. Good afternoon everyone.

As I review our preliminary fourth quarter and full year 2021 results, please refer to today's press release. As noted in that press release the company currently anticipates, it will require additional time to finalize the financial statements for the year ended December 31st 2021, due to the following reasons.

As discussed in November 2021, the company was a target of a ransomware attack. While the attack had no significant impact on the business or caused any long-term disruption to the company's operations, it did impact the long-term viability of our accounting system.

The attack required us to restore securely backed up data into its legacy ERP system, manually process certain functions which were previously automated in its legacy ERP system and simultaneously accelerate its planned transition to upgrade to a more modern ERP system. Also in November 2021, the company completed its acquisition of Adamas Pharmaceuticals.

The integration of Adamas is well underway and is expected to be complete by the end of Q2 of this year. As a result of having to restore our legacy ERP system, running a parallel ERP implementation and the integration of Adamas operations the company will be unable to file the 10-K timely.

We will be filing a 10b-25 tomorrow after market close. The challenges over the past several months have been significant.

I am very proud of the progress that it's been made. Realistically, a new ERP implementation can generally take between nine and 15 months depending on its complexity.

The implementation of our new ERP system is expected to take six to eight months and should be completed during Q2 of this year. Therefore, we hope to be able to file our 10-K on or before the end of the two-week grace period ending March 16.

Before I go over the numbers for the fourth quarter and full year 2021, I want to remind everybody that the financial information is preliminary and therefore subject to change. Preliminary total revenue for the fourth quarter of 2021 will be approximately $159.1 million an 11% increase compared to $143.6 million in the same quarter last year.

Total revenue in the current period was comprised of net product sales of $155 million and royalty revenue of $4.1 million. The increase was primarily due to net product sales of GOCOVRI from the acquisition of Adamas in November 2021 and the launch of Qelbree in the second quarter of 2022.

For the fourth quarter of 2021, combined research and development and SG&A expenses are expected to range between $105 million and $110 million, as compared to $74.4 million for the same period in 2020. The increase in expenses is primarily due to activity to support the launch of Qelbree and transition costs associated with the Adamas acquisition.

Amortization of intangible assets for the fourth quarter of 2021 are expected to range between $11 million and $12 million compared to $5.6 million for the same period in 2020. The increase is primarily due to the acquired intangible assets of Adamas.

Operating earnings for the fourth quarter of 2021 are expected to range between $20 million and $25 million, as compared to $40 million for the same period in 2020. The decrease in operating earnings is primarily attributable to higher expenses to support the launch of Qelbree and transition and other costs associated with the Adamas acquisition.

For the full year 2021, total revenue was $579.8 million, an 11% increase over $520.4 million in 2020. Total revenue was comprised of net product sales of $567.5 million and royalty revenue of $12.3 million.

The increase was primarily due to the acquisition of the CNS portfolio of US WorldMeds in June of 2020, growth in net product sales of Oxtellar XR, the launch of Qelbree in the second quarter of 2021 and net product sales of GOCOVRI from the acquisition of Adamas in November of 2021. For the full year 2021 combined R&D and SG&A expenses are expected to range between $377 million and $382 million as compared to $276.6 million for full year 2020.

Again, the increase in expenses is primarily due to activities to support the launch of Qelbree as well as timing of both the Adamas and US WorldMed acquisitions. Amortization of intangible assets for the full year 2021 are expected to range between $29 million and $30 million compared to $15.7 million for the full year of 2020.

The increase is primarily due to the timing of the US WorldMeds and Adamas acquisition. Operating earnings for the full year 2021 are expected to range between $100 million and $105 million as compared to $173.7 million for the full year 2020.

The decrease in operating earnings is primarily due to increase in expenses to support the launch of Qelbree and the timing of the US WorldMed acquisition. As of December 31, 2021, the company had approximately $458.8 million in cash, cash equivalents and marketable securities compared to $772.9 million as of December 31, 2020.

The decrease is due to the acquisition of Adamas, offset by cash flow from operations. As discussed on our last call and giving the magnitude of the growing number of acquisition-related items, starting in 2022, we will be adding non-GAAP financial measures to our quarterly earnings releases as we believe they provide greater transparency and can assist in understanding and assessing Supernus' business as well as reflect how we manage the business internally and set operational goals.

These non-GAAP adjustments will be amortization of intangible assets, share-based compensation, changes in contingent consideration and depreciation. Now turning to our GAAP financial guidance for the full year 2022.

We expect total revenue to range from $640 million to $680 million comprised of net product sales and royalty revenue. For the full year 2022, we expect combined R&D and SG&A expenses to range from $460 million to $490 million.

Overall, we expect full year 2022 GAAP operating earnings to range from $20 million to $40 million. We expect an effective tax rate of 25% to 28%.

And finally, turning to our non-GAAP financial guidance for full year 2022. We expect our non-GAAP operating earnings to range from $130 million to $165 million.

It is important to note as Jack mentioned earlier, we will continue to invest heavily in the Qelbree launch activities in 2022, as we enter the adult segment of the ADHD market. Please refer to the earnings press release issued prior to this call that identifies the various ranges of reconciling items between GAAP and non-GAAP.

With that, I will turn the call over to the operator for Q&A.

Thanks and good afternoon. I have a couple of questions.

First Jack, you gave a total revenue guide number, but can you break it down for us a little more specifically guidance for Apokyn Qelbree and Gocovri? And I ask that in particular because you mentioned Apokyn just had a generic.

You've obviously had competition last year from Kynmobi, but what is in your guidance particularly for Apokyn given the generic? I know that previously you talked about a mid-20s quarterly run rate.

And then secondly, on the adult pending approval, what's the average dose of Qelbree so far? I know that if it's below 200 milligrams, the WAC is $300.

And if it's above 200 milligrams, it's $600 WAC. And related to that would be -- once it gets approved in adults would effectively the revenue prescript be double the adult versus the pediatric given the weight-based dosing?

Thanks.

Yes, sure. First on the revenue side, I mean some of the key dynamics around the portfolio and the different products I will just note some of the most important points to talk about.

Clearly, the growth is going to be coming from Qelbree, mainly Gocovri. Oxtellar XR, a very minor degree so to speak.

I mean Oxtellar XR grew last year by about 12%. I don't know if it will grow by exactly the same amount, but it's still holding very nicely.

The brands that will face pressure are going to be Trokendi XR Apokyn as you mentioned in the question. And Trokendi XR is obviously has been a major surprise for us.

We've been -- kudos and credit to all our employees in managing the business and maintaining it in a much healthier situation as we -- much healthier than we ever all expected and it's really holding up extremely well. So the question will always remain in 2022 will it continue to hold up as well?

It's going to decline a little bit but to what extent and how far it will decline. So between Apokyn and Trokendi XR that's where you see most of the pressure from a competitive point of view.

As far as the generic to APOKYN and its impact on the brand, I mean, it's really still so early for us at this point to make a deep assessment and very detailed assessment as to what the impact on the brand will be. This is a very recent news that just came in within the last 48 hours or 24 hours.

As I noted in my remarks, the cartridge will require the use of our pen. So it's not going to be a similar situation as if this were an oral tablet or capsule that is quickly substitutable.

So the impact for this year may be limited. Again, it all depends on the timing of -- and the availability of that product to start with.

And then secondly, depending on all the logistics and the tactics surrounding an availability of a generic product. I will remind everyone that we have a very strong support network around the product, starting with the nurse educators, the importance of the intervention of the nurse and initiating new patients on apomorphine, as well as very significant hub services surrounding the patient to help them to get on therapy and stay on therapy.

So we always felt, these are important services that are important to the patients and they value these services in being on the product and getting that help through these hub and clinical educators. So I hope that gives you at least a framework as to where the pressure points are within the products and the portfolio.

In Qelbree, as I mentioned, since we're talking about the revenue, I mean, we will be investing heavily behind the product and we will continue to invest heavily. I mean, we just launched pediatric, so we're not like even done with the launch in pediatrics.

And clearly, we're very excited about also launching in the adult segment, which is about half the market or a little bit more than half of the market. So very exciting times for us with Qelbree.

We're going to go all-in on the product. We think this is a huge, huge product for Supernus and we're going to invest appropriately behind the product.

And then in relation to that, regarding the average dose from the adult perspective, we think it will be probably somewhere between around the 500-milligram daily dose, 500 to 600, more broadly on the 500. Initially it starts -- it always starts lower, as physicians start using the product, getting more comfortable with it and then they titrate a little bit up.

So it certainly will be much higher than it is currently with the pediatric and adolescent, which we project to be more in the 300 to 400 range. Adult will be probably more on the 500 to 600 in the long term.

Thank you. But just a follow-up, Jack, you did give overall revenue guidance and the generic was approved Friday.

And you had said previously that you should expect APOKYN to be in the mid-20s on a quarterly run rate. So in your overall guidance is that still the case that APOKYN will be averaging about $25 million a quarter?

Can you give us some view there? And then, just a final question.

How much sampling are you doing on Qelbree? And how much understated would the actual scripts be if you stopped sampling?

Yes. On APOKYN, I mean, we are factoring potentially some impact on generics, but, again, it's so difficult for us to quantify it for folks at this point, so back to your number, which we had said the 25 per quarter.

Well, obviously, with the news we would plan on maybe being much lower than that -- than the 25. And so again, I know you're looking for a number or more a real framework from a quantitative perspective, but it's really hard for us to give a specific and we try to shy away from giving guidance per product so to speak.

Maybe by next quarter, we'll have more visibility on the status of the generic and we can be a little bit more specific. We'll be more than happy to do that.

As far as the samples for Qelbree, we will continue with a very similar level of activity and we'll do the same with the adults. So that continues to be.

And as far as is there a gross-up factor or a discount factor that you can apply to the prescriptions because of the sampling? We've talked about historically something in the 15% to 20% maybe potentially as the conversion that we would hope to getting from the samples, that otherwise would be real prescriptions.

Okay. Thanks, Jack.

Sure.

Thanks. So I have a few and I wanted to switch gears and ask you some questions on GOCOVRI as a starting point.

So Adamas provided a number of metrics regarding volumes and new starts. Is that something that you're going to do in some way going forward?

And can you talk to what volumes were like in 4Q, where new starts are trending? So that's number one, on GOCOVRI.

And then number two, I know you haven't provided product-specific sales guidance. But in thinking about GOCOVRI, what's your take on how new starts are going to trend as 2022 progresses?

I know that there were some pandemic-related headwinds cited by Adamas. Can you talk to how the pandemic or the easing of the pandemic might provide something of a lift for the product and just your overall impressions in terms of where those -- of where GOCOVRI is going to trend in 2022?

Thanks.

Yes. I mean, regarding the brand overall, I mean one of the metrics I mentioned, where obviously the prescriptions in January versus the previous year same period last 2020, which was about 30% growth in January of 2022 versus January 2021 from a prescription basis, we'll be happy to dig deeper and give you guys more various metrics if you find some of these are really helpful.

But we think -- I mean the brand will continue on its growth trajectory, as we've experienced last year perhaps some enhancement as we take more control of the product and have more effect on the way it is being promoted and positioned and so forth as time goes on. Now clearly, you have a lot of other factors.

One of them you mentioned is the pandemic and we hope that it is easing off completely not just on GOCOVRI, on all our products or even Qelbree as far as access to physicians and so forth. So we hope that actually does go away as time goes on, on all the products not just the GOCOVRI franchise.

So certainly, as time goes on again back to probably next quarter, we will have a much better feel to all these dynamics. Also the Q1 will be behind us so to speak.

As we all know Q1 is always a difficult quarter anyway in our business because of the high deductibles insurance and so forth. And therefore, we'll be able to give you guys a little bit better much more educated numbers around many metrics not just patients or volumes or things like this.

But also, we will have a better feel on how the pandemic is gone or not gone by then.

Okay. And can you talk to new starts, or is that something that you're not going to provide on GOCOVRI?

I mean we can. I don't have it with me.

I wasn't prepared to talk about it today but we're happy to look at those numbers and provide them.

Okay. And then just overall on the guide on the top line guide.

I mean obviously, it's hard to – it's a hard question to ask in terms of where you guided relative to consensus but it is lower than consensus or where The Street is. So I guess with that in mind is that a function of some conservatism or reality on APOKYN?

Is it a function of perhaps some channel destocking on Trokendi ahead of the generic? I'm just trying to get a sense of some of the assumptions underlying that the $640 million to $680 million.

Yes. The main differences are Trokendi XR and APOKYN, which are the pressure points that I mentioned versus consensus for example.

So we are assuming probably a little bit worst case on both products than what consensus have. So that's where the pressure points are.

It's not about growth in GOCOVRI or growth in Qelbree. So it's more about the legacy mature products like APOKYN and Trokendi XR.

So are we more conservative? Yes.

I mean we might end up being actually proven to be very conservative in that guidance. But at this point, not knowing a lot of things that could happen this year so we're trying to be on the safe side, especially on these two products.

So a lot of the difference between our guidance and the consensus is really on these two products.

Okay. That's helpful.

And then last question if I may just on biz dev and I apologize if I missed this. But with the closing of Adamas and integrating that asset and also advancing some internal products through the pipeline, how are you thinking about acquisitions these days in terms of your lean?

And are you leaning more into commercial stage or development stage assets or maybe ideally you want something like WorldMeds, where you get the best of both worlds? How are you thinking about that?

Yes. I mean ideally, yes probably a similar acquisition like US WorldMed gives you commercial product and gives you a really nice quality late-stage pipeline product that of course will be hitting both goals or achieving both goals.

We always would favor commercial, if we can find it and find it in a reasonable manner and it's a quality asset. But short of that, we are very focused on really building the pipeline, specifically where it comes in the area of mid-stage to late-stage, because if you really think about Qelbree and the launch in adult, you think about hopefully, the launch of the pump also sooner than later.

Then you look at our pipeline, the rest of our pipeline is Phase 2 or earlier. So ideally and we are focused right now on trying to find pipeline assets that could be later than Phase II or between Phase II and Phase III or in Phase III those would be very nice assets that we would look for and would be in either case neurology or psychiatric so we're fairly agnostic as to what -- which area in CNS those assets could be.

Good. Thanks, Jack.

Yes.

This is Jack calling in for Annabel Samimy. Thanks for taking our question.

We were -- we had some questions on guidance. What is the assumption baked in for the timing on the normalization of the Qelbree gross to net?

Is that going to be more of a second half event rather than a first half one? And if that comes later than expected will that have any impact on the SPN-830 opportunity?

Yes. As far as the gross to net improvement I did hint to a little bit in my remarks that we are improving the gross to net on Qelbree.

Actually it's been moving along much better than we expected and had planned and hopefully it will stay that course. Some of you might remember that in my previous remarks I made the -- I specified the goal that probably by the time we launched the adult we would like to be in somewhere 50% to 55% which is in line with typical portfolio that you normally have on current products.

Actually, we're approaching that much quicker. Now Q1 is always going to be an anomaly and it's going to screw up.

Any trend you start with in the fourth quarter so the Q1 will always go up a little bit because of the obvious reasons we all know. But it looks like we should be able to hit that goal that around the adult launch we should be somewhere in that neighborhood of 50% to 55% in gross to net.

And I missed the relationship between that and the SPN-830 part of your question?

That was just -- if that happened to come later than expected would that have any impact on that opportunity? But if it's going to become as expected then and that should be...

Yes. No I mean the two opportunities are fairly separate from that perspective.

I mean we view both products extremely important and we will launch as soon as we can on any of them whether it's the adult Qelbree or it's the SPN-830 pump. I mean those products you can bet that we'll do everything possible to get them to the market as soon as possible once we can.

Great. Thank you.

Sure.

Okay. Thank you.

We close our 2021 as a banner year for Supernus with significant corporate achievements that will prepare us for the next phase in our history as a growth company. We look forward to driving growth behind Qelbree, GOCOVRI and SPN-830 as well as continuing to manage our legacy products and significantly reduce our dependency on Trokendi XR.

I would like to thank all our employees for delivering another strong performance in 2021 and positioning us well to have a great year in 2022. Thanks again for joining us today.

We look forward to updating you on our progress throughout the year.