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spk03: Good afternoon, and welcome to the Superness Pharmaceuticals Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Peter Vazzo of ICR Westwick, Investor Relations Representative for Superness Pharmaceuticals. You may begin now.
spk07: Thank you, Corinne. Good afternoon, everyone, and thank you for joining us today for Sopernos Pharmaceuticals' second quarter 2024 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 Sopernos' Chief Executive Officer, Jack Attar, and Chief Financial Officer, Tim Deck. Today's call is being made available via the investor relations section of the company's website at ir.sopernos.com. 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 Sopernos' current perspective on existing trends and information. Any such forward-looking statements are not guaranteed 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 foreign-looking statements. For the benefit of those of you who may be listening to the replay, this call is being held and recorded on August 6, 2024. Since then, the company may have made additional announcements related to the topics discussed. These reference the company's most recent press releases and current filings with the SEC. Sopranos declined any obligation to update these foreign-looking statements, except as required by applicable security laws. I'll now turn the call over to Jack.
spk06: Thank you, Peter. Good afternoon, everyone, and thanks for taking the time to join us on today's call. In the second quarter of 2024, we delivered strong net sales growth from our key growth drivers, Calgary and Recovery, and continue to advance our product pipeline, including SPNA-17 for treatment-resistant seizures and SPNA-20 for depressions. Total revenues, excluding Potendi XR and Oxtel XR, increased 32% in the second quarter. Driving this growth was Calgary's strong performance with 26% growth in prescriptions, as reported by IQVIA, and 92% growth in net sales. Prescriptions reached an all-time quarterly high of 184,342, and net sales were $59 million. In the first six months of 2024, Calgary prescriptions grew by 28% compared to the same period last year, and net sales were 105 million, representing an 84% growth over the same period last year. Growth in net sales of Calgary in the second quarter of 2024 benefited from both prescription growth and gross to net improvements compared to the same period last year. gross-to-net deductions during the second quarter of this year were below our target range of 50% to 55%. We saw a more favorable product returns trend with initial launch batches experiencing lower return rates than assumed and continued lower copay deductions in the quarter. As a result, for the remainder of 2024, we expect the gross-to-net for Calgary to be in the 45% to 50% range with fluctuations that you would typically expect on a quarterly basis. During the second quarter, Calgary also expanded its base of prescribers, ending the quarter with approximately 28,326 prescribers, up from 27,138 in the first quarter of this year. Prescriptions from adult patients now account for approximately 32% of Calgary's total prescriptions. Switching now to recovery, net sales increased to $32 million in the second quarter of 2024, representing a healthy increase of 10% over the same period in 2023, and reflecting recovery from some of the negative factors the brand faced in the first quarter of 2024. As you recall, earlier this year, we saw a significant increase in sample distribution by physicians, to patients to help them through their out-of-pocket expenses in the first quarter. This negatively impacted our prescriptions in the first quarter, but reversed in the second quarter as patients started transitioning from their samples to refilling their prescriptions. Switching to our legacy products, Oxtelra XR net sales for the second quarter of 2024 were $30 million compared to $24 million in the second quarter of last year. And for Trochendi XR, second quarter net sales were $17 million, down by 12% from the same quarter last year. For the first six months of 2024, net sales of Trochendi XR were down 39%. We expect further erosion in Trochendi XR sales and the entry of Oxfeller XR generics later this year. Given the trends in the first half of 2024, we now anticipate combined net sales of Trapendix R and Oxtelix R in 2024 to be in the range of $135 million to $145 million. Regarding SBN 830, we resubmitted the NDA last week and expect to learn from the FDA in a few weeks whether this submission will be considered as a Class I requiring a two-month review, or class two requiring a six-month review. We remain committed to Parkinson's patients who need this potential new treatment option. Moving on to our CNS pipeline of novel product candidates, we have exciting catalysts coming up in the next six to 12 months. For 8-20, the company expects to provide data from its Phase IIb study in adults with treatment-resistant depression in the first half of 2025. Three-quarters of the targeted number of patients are now enrolled in the study. Also, enrollment in the Phase II open-label study in patients with major depressive disorder is ongoing, and top-line results from that study are expected by the end of this year. In May 2024, we announced data from the planned interim analysis of our exploratory open-label Phase IIa study of SPN817, for treatment-resistant seizures. The interim analysis was based on 41 enrolled subjects, of which 19 completed the maintenance period at that time. We continue to expect top-line results for the full study in the second half of this year. In addition, the Phase IIb randomized double-blind placebo-controlled study with SBN817 in patients with treatment-resistant focal seizures is expected to start by the end of 2024. Also, we plan to initiate a phase one single-dose study of SPM443 in healthy adults following submission of an IND. SPM443 is our newest stimulant-like product candidate for ADHD and other CNS disorders. Finally, we remain 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.
spk08: Thank you, Jack. Good afternoon, everyone. As I review our second quarter 2024 results, please refer to today's press release and 10Q that were filed earlier today. Total revenue for the second quarter of 2024 was $168.3 million compared to $135.5 million in the same quarter last year. Total revenue in the second quarter of 2024 was comprised of net product sales of $162.5 million and royalty, licensing, and other revenues of $5.8 million. The increase in net product sales was primarily due to the increase in net product sales of our growth products, Calvary and GoCovery, as well as Oxteller XR. Excluding net product sales of Tritendi XR and Oxteller XR, Total revenues for the second quarter of 2024 increased 32% compared to the same quarter last year. For the second quarter of 2024, combined R&D and SG&A expenses were 112.1 million as compared to 111.2 million for the same quarter last year. This slight increase was primarily due to R&D spend associated with clinical programs for SBN 817 and SBN 820. as we continue to progress our pipeline. Operating earnings on a GAAP basis for the second quarter of 2024 was 22.6 million as compared to an operating loss of 17.6 million for the same quarter last year. Income tax expense in the second quarter of 2024 was 6.4 million. GAAP net earnings was 19.9 million for the second quarter of 2024 or $0.36 per diluted share compared to a GAAP net loss of $831,000 or $0.02 loss per diluted share in the same quarter last year. On a non-GAAP basis, which excludes amortization intangibles, share-based compensation, contingent consideration, and depreciation, adjusted operating earnings for the second quarter of 2024 was $45.5 million compared to $10 million. in the same quarter last year. Total revenues for the six months ended June 30th, 2024 were 312 million compared to 289.3 million in the same period last year. Total revenues were comprised of net product sales of 301 million and royalties, licensing, and other revenue of 11 million. Compared to second quarter 2024 results, the 12% increase in net product sales was primarily due to the increase in net product sales of Calgary, GoCoverty, and Extellar XR. Excluding net product sales of Trichendi XR and Extellar XR, total revenues for the six months ended June 30, 2024, increased 22% compared to the same period last year. Combined R&D and SBN expenses for the six months into June 30, 2024 were $223.5 million as compared to $218 million for the same period last year. Again, this increase was primarily due to R&D expenses associated with clinical programs for SBN 817 and SBN 820 as we continue to progress our pipeline. Operating earnings on a GAAP basis for the six months into June 30, 2024, were $19.4 million, as compared to an operating loss of $12.4 million for the same period last year. That is a $31.8 million increase in operating earnings compared to the same period last year. For the six months into June 30, 2024, we reported income tax expense of $6.5 million. and to June 30, 2024, or $0.36 per diluted share, compared to $16.1 million, or $0.29 per diluted share, in the same period last year. On a non-GAAP basis, which again excludes amortization intangibles, share-based comp, contingent consideration, and depreciation, adjusted operating earnings were $67.7 million compared to $40.5 million in the same period last year. That is a 67% increase in adjusted operating earnings compared to the same period last year. As of June 30, 2024, the company had approximately $347.2 million in cash, cash equivalents, and current and long-term marketable securities, compared to $271.5 million as of December 31, 2023. This increase was primarily due to cash generated from operations. It should be noted that we have generated approximately $200 million in cash from operations in the past 18 months. Because of that, the company has a strong balance sheet with no debt, with significant financial flexibility for potential M&A and other growth opportunities. Now turning to guidance. For full year 2024, the company raises its financial guidance for total revenue and gap and non-gap operating earnings while reiterating combined R&D and SG&A expenses. As a result, we expect total revenue to range from $600 million to $625 million, up from the previous range of $580 to $620 million, comprised of net product sales, royalties, licensing, and other revenues. For the full year 2024, we expect combined R&D and SGN expenses to range from $430 million to $460 million. Overall, we expect full year 2024 GAAP operating earnings to range from break-even to $20 million, and non-GAAP operating earnings to range from $100 million to $125 million. Please refer to the earnings press release issued prior to this call that identifies the various ranges of reconciled items between GAAP and non-GAAP. With that, I will now turn the call back over to the operator for Q&A.
spk03: Thank you. At this time, we will now conduct a question and answer session. To ask a question, you need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our next question comes from Andrew Tsai of Jefferies. Your line is now open.
spk00: Hi. Good afternoon. Congrats on a nice quarter. Thanks for taking my questions. The first one is on SPM 830, the April marketing pump. Congrats on resubmitting that. Just wanted to gauge your level of confidence. It will be approved this time. It's kind of interesting since we know the competitor also received a CR recently. So maybe talk about your level of confidence about this. Thanks.
spk05: Yeah, sure. A couple of things.
spk06: I mean, the first time we got a CRL, I try to give the example. It probably was, you know, a few pages. This time we got this URL that was maybe half a page, you know, give or take, just to make an example of the number of issues we were dealing with. So certainly with this resubmission, the number of issues we were dealing with was much, you know, a lower number of items and issues that we had to address. The second thing is we did have a meeting with the FDA, you know, before the resubmission to make sure we have the fullest, you know, level of confidence before we resubmit. So we feel pretty good about the filing right now and our chances of getting approved. Of course, as I mentioned in our remarks, what we're still not sure about is whether it will be a, you know, class one or class two resubmission, but hopefully we'll have the FDA accepts the filing and assigns a PDUPA date for the review.
spk00: Makes sense. Thanks. And shifting to 817, we're going to have the full Phase 2A data cut later this year. Can you remind us, I think, 19 of 41 patients completed the maintenance period. How many more patients do you think will be completing that maintenance period, and how many more specifically? at the three to four milligram dose, the high doses?
spk06: Yeah, at that time back in May when we reported the interim results, in addition to the 19, we had about seven or eight, if I remember the number correctly, of patients who were still in the study at various stages. So we would expect, you know, when we report the full results, to have, you know, at least another maybe, I don't know, five, six, depending on how many discontinue or how many stay in all the stages of the study. We should have, you know, a good handful of people in addition to the 19 that we will report on. So that will complete the initial portion of the study, just to clarify. The second portion was the extension which we talked about back in May where we are going to test coupled strategies. One of them is adding an anti-emetic where, you know, we try to address the nausea and so forth. So that portion of the study has already started, but we won't have data in the fourth quarter or before year end for this year, just to clarify that. There are two different pieces of the study. The initial one, which we will report on, but the extension, which we added in May, we will not have the data to report on that.
spk00: Okay. And the last one is on A20, the depression asset. You're having pulsatile data in 40 patients with MDD later this year. Can you just remind us how long this study is and what kind of Madras or Hamdi efficacy benefit you want to see at the end of the study, what would be positive data to you and why? Thank you.
spk06: Yeah, I mean, this is a short study. I think it's about 10 days treatment, so it's not a very long study. It is open label, about 40 patients that we're, you know, targeting. So we think we have a very good chance we will be able to report before year end. And as far as, I mean, the number of... the reduction in the scales and what would we expect. Of course, the larger the better, especially that it is open label. So we would hope to see certainly a large improvement on madras versus if it were a placebo control.
spk05: Thanks again.
spk03: Thank you. Our next question comes from David Anselm of Piper Sandler, your line is now open.
spk02: Thanks. A couple of questions on Calgary. So with the back-to-school season coming up, help us understand your expectations for acceleration in volumes, particularly with the different gross-to-net framework that you've been talking about, and also in the context of, I believe, last back-to-school season, the RX growth or acceleration was a bit muted. So help us understand how you're thinking about this year's back-to-school season. That's number one. And then number two is how much of the growth through the back half of the year is the year-on-year growth is volumes, and how much of it is improvement in gross to net and just help us better understand how we should be thinking about Calgary. In other words, what I guess I'm trying to get at is, is Calgary a volume growth product going forward or is a lot of the growth that's being captured is really just a function of improved economics? And that just doesn't apply to this year, but also how you're thinking about it. the product beyond this year. Thanks.
spk06: Yeah, I mean, as an overall comment on the prescription growth of Calgary, I mean, as we mentioned in the first half, we grew by about 28%. So we continue to expect to have, you know, robust growth in prescriptions versus last year. As far as specifically the back-to-school seasons, you're absolutely right. Last year, overall, the market, the ADHD market, there was a much softer back-to-school season than normally we would see. And actually, looking at year-to-date ADHD market growth, this year so far it's up 8% in 2024 year-to-date in the first half of this year versus 2023. And if you might remember, the ADHD market grew only by 3% in 2023 in total. So this year already is showing a recovery in the market, in the overall market in general, at least in the first half of 2024, you know, at a much higher growth rate than last year. So I'm hoping, you know, that the back-to-school season would be back to what normal growth would be versus what happened in 2023. I mean, in 2023, we actually, you know, saw some decline, actually, in the ADHD market with the measurement that we talked about it back then, which was June through September. You know, it was not necessarily a calendar quarter increase. to get a better feel for what happened in the back to school while recovery continued to grow last year and it grew by about 19% in the back to school season. So I'm hoping that the market does better and of course that means we will also do better than we did last year as far as growth. But the short answer to your question is The growth in calorie is not just improvement in growth. Certainly, we continue to have robust growth. I mean, we're already in year four as far as the launch of this product, and we're still delivering 20% plus growth in prescriptions. And from a penetration perspective, we still have a lot of room to go here as far as the potential of this product and its penetration in the market, adult and pediatric at the same time.
spk05: Hopefully that touches on all the questions.
spk02: Yeah, and if I just make, sneak in a quick follow-up, the gross to net, I mean, it's, you know, getting below 50%, I mean, which is, you know, better than what you had cited as a target in the past. I mean, is that 45% to 50%, you know, and just to be clear, that's your view of steady state gross to net over the long term for the product or, and... Maybe I'll ask it differently. Is there room for even further improvement?
spk06: Yeah, I mean, what I referred to in my prepared remarks, which was the issue of return, just to explain it a little bit more, typically when you first launch a product, you make an assumption on how much of these initial batches that you ship out, how much of those could potentially come back at some point from a return perspective. And you book it, you know, you enter, you know, in your books as far as potential liability, accruals, what have you, on these returns. And then as time goes on, these batches, they will either be consumed or they expire because time goes on and they have a certain fixed expiration date. So as they approach or go beyond the expiration date, basically they're not going to be returned anymore. Or if you do have much lower experience from a return perspective versus the initial assumption, that's when you can, you know, take back some of that. So, these are things that could potentially continue that way. I mean, there is a possibility we continue to benefit from that trend in the next quarter or so. So it may not be a one time, but we can only see that when we get the data, you know, every quarter. And therefore, back to your question, on an ongoing basis, would the target be 45 to 50? I sure hope so. I mean, I sure hope that next quarter gives us even more confidence. And in that case, we will, you know, we will emphasize or confirm that that probably is our long-term target versus the 50 to 55%.
spk05: Okay, that's helpful. Thank you.
spk03: Thank you. Our next question comes from Stacy Koo of TD Cohen. Your line is now open.
spk04: Wonderful. Thanks so much for taking our questions. What a great quarter for Calgary and just a solid net value for prescription. So we have a few follow-ups. Just for Q1, can you just talk a little bit more about what approach you're trying to do to grab share in the back of school season? So just to clarify, you said the next quarter or so you could see a benefit in gross to nets, but do you think any of these back-to-school plans could impact the gross to nets in Q3? So this is the first question. And then to ask the question a little bit differently, how do you think about your comfort with the $200 and $220 million consensus rates for Calgary that you've kind of commented on in the past? Could this be exceeded as we think about just the solid gross to net improvements? And then the last question is on the adult growth. talked about 32% split, but is this driving the net pricing? Are you seeing kind of encouraging growth and how should we think about the remainder of the year as you think about really trying to drive that adult launch as well? Thank you so much.
spk06: Yeah, on the first question as far as the back to school programs, I mean, It's fairly intense as far as the level of support that we will be going out with and the momentum that we will be building and are building actually as we speak right now in preparation for the back-to-school season. So we will put a lot of investment and effort behind the season, given the importance of the season for the whole year for the brand in general. At the same time, we're not neglecting the adult portion of the business, of course, in Q3, but the top priority is clearly children and pediatric because of the back-to-school. As far as the annual, so to speak, soft guidance or whichever way you want to... You know, describe it, the 200 to 220. I mean, clearly, in the first six months, we did 104.5 or 105. You know, double that is 210. And, of course, you've got to add some growth to it. So, clearly, we feel comfortable with that range. Is it going to be a little bit closer to the upper range, hopefully? Again, it all depends on the back-to-school season, you know, which was a lot of what we've been talking about today. If the back-to-school season is really strong this year and not soft like it was last year, maybe we will be closer to the upper end of that range on caliber. And then finally, I mean, in the first, you know, in this past quarter, in the second quarter, To give you an idea, adult, our adult prescriptions or business grew by about 26%. The pediatric grew by about 22, 23%. So we had put some more emphasis on the adult patient population in the second quarter as time. So we are experiencing a little bit more growth in adult, but again, on a quarter-to-quarter basis, as I mentioned earlier or in previous calls, Sometimes we on purpose shift the emphasis one quarter versus another depending on the seasonality and the importance of that specific patient population.
spk04: Incredibly helpful. Thank you.
spk03: Thank you. Our next question comes from Annabelle Samimi of Stifle. Your line is now open.
spk01: Hi. Thanks for taking my question and great quarter on Calibri. I just want to put a finer point on the adult versus pediatric. To what extent is the adult population driving some of maybe the improved pricing? Obviously, they have higher doses, so potentially a higher price point. And given that that's where a good chunk of the growth was and some of your efforts had been lying in that area. Can you maybe share some of the feedback that you're getting from the adult population? Is this an area that you can continue to push, and is there any pushback from the adults in terms of whether they're favoring a stimulant versus a non-stimulant, if they're still transitioning with lower doses than you expected, etc., etc.? Just trying to understand why with the growth that you have, why it's still sitting at 32% of your total prescriptions, and also with the efforts that you were making last quarter? Thanks.
spk06: Yeah, regarding the price points and so forth, I'll just give you a couple of numbers. I mean, these are more gross numbers. But for the adult, I mean, we estimate the average blended cost of prescription is around $600, $615. By comparison, it's around $525 for pediatrics. So there is about 15, 17% difference between, you know, the price for prescription pediatric versus adult. And that actually is obviously a result of the size of the, So with adults, you normally have 50 to 52 tablets per prescription or capsules per prescription. You know, with pediatric, it's more around the 44, 45 capsules per prescription. So these are some of the metrics. Obviously, it does change over time, quarter to quarter, but that's where we are right now as far as the, you know, pediatric versus adult. As far as the feedback on the adult patient population, I mean, very consistent, fairly consistent with the pediatric about the product, its performance, clinical benefits, all of the above. The power ability and safety, I mean, very, very consistent across all patient populations with both of them, you know, showing the growth and acceptance of the product. And by no means we are even anywhere close to saturation as far as our penetration rates. I mean, our market share in adult is very low. And we have a huge, huge opportunity here for us to continue to push the product. And again, as long as the product continues to perform, we see no reason for it to slow down and try to get a much higher market share penetration within the adult segment.
spk01: Got it. And maybe you can just share what your expectations are for the level of penetration you might have in that adult population in your, you know, either for the year or for the long-term outlook. Is this still going to be a 32% type of, well, I mean, is it going to account still for about 32% of your prescriptions or do you expect that number to continue to go up through the year?
spk06: Yeah, I mean, we do expect it to go up eventually, whether through this year or next quarter or the quarter after, but more on a long-term basis, definitely we would expect and we certainly will be working pretty hard, you know, to get that portion to be a bigger, you know, part of the mix. So will Calvary end up being a 40% adult and 60% pediatric where the market is pretty much 67% adult and 33% pediatric. Probably, I mean, we are a non-stimulant anyway in general, so you are going to have some bias of the business being a little bit more pediatric than adult in general, generally speaking. But certainly, you know, we are pushing pretty hard to get that 32% much higher as being part of the mix. And, you know, as far as The adult in general, as I mentioned earlier, I mean, the satisfaction, the performance, everything is very similar to what we're seeing with the pediatrics. So we see no reason why we shouldn't be able, you know, to continue to grow within the adult market. At this point, our market share within the adult market is around 0.3% in pediatrics. We're in the 2%, you know, give or take. So we, you know, we continue to look for the whole brand Calvary, You might remember we talked about somewhere between 4% and 5% market share, or it could be as high as 10% market share of the total ADHD market. So we clearly have a long way to go here with Pelvin.
spk01: Okay. And if I can just ask a quick question on SPN830. I guess this is several times now through the review process. Are there any indications from FDA on the breadth of the population that might be included in the label. I'm not sure if you ever got to that point where you got to label discussions, but is FDA considering a broader label, or is it still mostly in the severe camp? Thanks.
spk06: Yeah, I mean, at this point, it's really premature for us to make any comment on that because we haven't gotten that far as far as discussions. So we really don't know at this point.
spk01: Okay, great. Thank you.
spk03: Thank you. This concludes the question and answer session. I would now like to turn it back to Jack Katar for closing remarks.
spk06: In concluding our call this afternoon, we thank you for joining us to learn about our strong performance in the second quarter and first half of this year. The company continues to execute remarkably well through a multi-year transition and the loss of exclusivity on two of its legacy products. The company has generated strong positive cash flows behind the strength of its portfolio, particularly our growth products and the efficiency of its operations. In addition, we are excited about our progress on the pipeline across several programs. These programs will be generating significant data over the next six to 12 months. Thanks again for joining us this afternoon. We look forward to updating you on our next call.
spk03: Thank you for your participation in today's conference. This does conclude our program you may now disconnect.
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