Supernus Pharmaceuticals Inc

NASDAQ:SUPN

Earnings Call Transcript 2019-Q1

[Operator]

Good morning ladies and gentlemen and welcome to the Supernus Pharmaceuticals First 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 call is being recorded.

I would like to turn the conference over to Peter Vozzo of Westwood Partners, Investor Relations for Supernus Pharmaceuticals. You may begin.

[Peter Vozzo, Investor Relations]

Thank you, Michelle. Good morning everyone and thank you for joining us today for Supernus Pharmaceuticals first 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 by management, we will open the call to questions.

During the course of this call, management may make certain forward-looking statements regarding the 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, believes, 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 our 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 who may be listening to the replay, this call is being held and recorded on May 8, 2019 at approximately 9:00 am Eastern time. Since then, the company may have made additional announcements relating 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.

[Jack Khattar, President, Chief Executive Officer]

Thank you, Peter. Good morning everyone and thanks for taking the time to join us as we discuss our 2019 first quarter results.

Our financial results for the first quarter were adversely impacted by several factors converging all at once: first, the build-up of inventory in the fourth quarter of 2018, which impacted shipments in the first quarter this year by approximately $10 million; second, beginning of the year insurance plan dynamics that typically put pressure on prescription growth; third, the resulting increase in gross to net deductions through our co-pay assistance program; and finally, much higher effective tax rate this year compared to that in the same period last year.

Aside from the effective tax rate, these events are not expected to continue in subsequent quarters; in fact, we have already seen a normalization of shipments and prescription trends for Trokendi XR and Oxtellar XR in the second quarter of this year. For example, sequential quarterly prescription growth has resumed in the second quarter on both products. During the first quarter, IMS prescriptions on Trokendi XR and Oxtellar XR were down by 5.7% and 1.7% respectively compared to the fourth quarter in 2018, primarily due to the seasonal 1Q high deductible insurance dynamics. However, sequential growth has resumed in the first four-week period of the second quarter, reaching 3.2% and 1.9% increase in prescriptions respectively compared to the first four-week period in the first quarter. Year-to-prescriptions ending the week of April 26, based on weekly IMS data, also shows growth for Trokendi XR and Oxtellar XR at 11% and 12% respectively compared to the same period last year.

For Oxtellar XR in the first quarter, the company also launched the recently approved indication of monotherapy for partial seizures. Our team continues to execute well on the launch and we believe that the seasonal 1Q adverse impact on prescription growth on Oxtellar XR was softened by the increased commercial activity behind the launch.

Moving now to our pipeline, we were excited to provide a detailed discussion of our clinical development programs during our investor day on April 16. You can find that presentation our website, which includes details on our clinical programs and upcoming milestones and timelines. Without going into too much of the detail, let me provide you a quick overview of our three main clinical programs.

During the first quarter of this year, we completed the last of the four Phase III clinical studies in children and adolescents with ADHD for our lead novel product candidate, SPN-812. We are very excited about this program as top line results from these trials point to a well differentiated product with consistent efficacy, fast onset of action, and a good safety profile across all trials. We are on track to file the NDA in the second half of 2019 for SPN-812 and, pending FDA approval, launch the product in the second half of 2020. In addition, we plan to start a Phase III program in adult patients in the second half of 2019.

For SPN-810, our novel treatment of impulsive aggression in patients with ADHD, enrolment in the pediatric trials continue, and we expect to report results on this program in the second half of this year. As we stated previously, we expect to submit an NDA for SPN-810 in the second half of 2020 and to launch the drug, pending approval by the FDA, in the second half of 2021.

Finally regarding SPN-604 for the treatment of bipolar disorder, the Phase III program is expected to commence in the second half of this year.

In summary, the company has a rich calendar of upcoming clinical and regulatory milestones behind three late stage pipeline products.

Our activity on the corporate development side continues in 2019 as we look for neurology and psychiatry assets that represent a strategic fit with our current portfolio.

I’ll now turn the call over to Greg, who will provide more details on our first quarter financial performance.

[Greg Patrick, Chief Financial Officer]

Thanks Jack, and good morning everyone. As I review our first quarter 2019 financial results, I remind listeners to refer to the first quarter results issued in yesterday’s press release after the market closed. Total revenue for the first quarter of 2019 was $85.5 million compared to $90.4 million in the first quarter of 2018.

As discussed during our call in February, increased wholesaler, distributor, and pharmacy channel inventory in the fourth quarter of 2018 as compared to the prevailing inventory levels in the third quarter of 2018 increased our net product sales in the fourth quarter by approximately $10 million versus what they would have been otherwise; that is, had inventory remained constant between the third and fourth quarters of 2018. This process was effectively reversed in the first quarter of 2019. Inventory has now returned to what we believe our steady state levels. As a result of this channel inventory reduction, net product sales decreased in the first quarter of 2019 by approximately $10 million as compared both to the prior year as well as to the prior quarter.

Eliminating the adverse impact of the approximately $10 million channel inventory reduction in the first quarter, net product sales would have exceeded the net product sales reported in the first quarter of 2018. In addition to the impact of the channel inventory reduction, net product sales were also adversely affected by the growing impact of high deductible patient healthcare plans. In response to these high deductible plans, we improved our patient co-pay assistance program as we have done in prior years during the first quarter of the year. This year, however, the program was enhanced and the level of utilization increased as compared to 2018; consequently, our gross to net deductions increased by approximately $4 million in 2019 over and above the level of the first quarter of 2018.

Net product sales for Trokendi XR for the first quarter of 2019 were $63.7 million, down from $70.5 million in the first quarter of 2018. For Oxtellar XR, net product sales in the first quarter of 2019 were $19.4 million, a 4% increase as compared to the first quarter of 2018.

Total revenue for the first quarter of 2019 was comprised of net product sales of $83.1 million and royalty revenue of $2.4 million, as compared to net product sales of $89.1 million and royalty revenue of $1.3 million in the first quarter of 2018.

Turning now to expenses, research and development expenses were $15.4 million in 2019 as compared to $18.9 million in the same quarter the prior year. This decrease is primarily attributable to the completion of the four Phase III clinical trials for SPN-812, partially offset by manufacture of validation and registration lots for SPN-812 to support our upcoming NDA filing.

Selling, general and administrative expenses in the first quarter of 2019 were $41 million as compared to $36.8 million in the same quarter last year. This increase in SG&A expense was driven primarily by the development and production of promotional materials and marketing programs associated with the launch of the monotherapy indication for Oxtellar XR.

Operating earnings of $25.4 million in the first quarter of 2019 were adversely impacted by the approximately $10 million inventory draw down mentioned previously. Excluding this effect, operating earnings would have been approximately $9.5 million higher in the first quarter and therefore would have exceeded the $31.4 million recognized in the same period in 2018.

Net earnings in the first quarter of 2019 were $18.3 million or $0.34 per diluted share as compared to $26.4 million or $0.49 per diluted share in the same period last year. In addition to the impact of the approximately $10 million channel inventory reduction, net earnings were adversely affected by a higher effective tax rate, 24% relative to the effective tax rate in the first quarter of 2018, 15%. The tax rate in the first quarter of 2018 benefited from employees exercising stock options and was materially lower than our expected ongoing rate.

We ended the first quarter of 2019 with $815.5 million in cash, cash equivalents, marketable securities and long term marketable securities, as compared to $774.8 million as of December 31, 2018.

Turning to financial guidance for 2019, the company is maintaining its net product sales guidance ranging from $435 million to $455 million and operating income guidance ranging from $160 million to $180 million for 2019. Net product sales and operating income guidance assumes that channel inventory levels from this point on forward are stable. Guidance for research and development expenses ranging from $70 million to $80 million and tax rate guidance 23% to 25% remains unchanged as well.

I will now turn the back to the Operator for questions.

[Operator]

[Operator instructions]

Our first question comes from the line of Ken Cacciatore with Cowen & Company. Your line is open, please go ahead.

[Ken Cacciatore, Cowen & Co.]

Hey, good morning guys. Just wanted to ask about the marketplace in general, migraine marketplace in general and the CGRPs. Any sense of any shifts or changes that you’re seeing from them? Also, clearly you have a lot of cash on hand and put yourself in a position to be more aggressive to leverage the infrastructure that you have, so maybe an update on what you’re seeing in a general sense in terms of business development. Then lastly - and I know I’m going to squeeze in too many here - but lastly on 812, still a lot of arguments with investors about pricing in this environment, differentiated assets. Can you just talk generally speaking about the complexities of these patients and maybe comorbidities, and how a product like this may fit in? Thanks a lot.

[Jack Khattar, President, Chief Executive Officer]

I’ll start with the migraine question, Ken. The marketplace continues with the same trends that we saw back in 2018, meaning of course the CGRPs are getting penetration and growth as everybody has seen in the IMS numbers, but the great news so far and continues to be the fact is that if you look at the topiramate market, which was the one relevant to us, obviously, in the first quarter it basically went down by only 2%, so the topiramate market continues to hold up very nicely, although now you have the two other CGRPs that launched later in the fall of 2018 getting more and more traction this year, as you would expect. Topiramate still holds up pretty good, and of course Trokendi XR, per se, on its own managed to also grow another 11% this quarter, first quarter 2019 versus last year. So, we continue to watch it pretty closely.

As I made reference in our remarks, the 1Q effect on Trokendi XR was actually a little bit worse this year than it was in previous years, so that is something that we watched closely. Obviously, that’s why also Greg made reference to some of the enhancements we put in place on the co-pay program just to make sure we don’t get hit too--you know, even worse than that. So, we are pleased with what we’ve seen so far and continue to be so, specifically with the market and so forth. As I mentioned also in my remarks, the sequential growth in the second quarter, we have seen already the prescription trends recovering and hopefully as it was in previous years. Typically, the recovery accelerates as the quarters progress through the year.

As far as the question on BD and the cash that we have on the balance sheet, there is really no significant change in our strategy, first of all, which continues to be looking at neurology and psychiatry assets. Also, no change in the level of activity and intensity in pursuing these opportunities, so we continue to be very, very active looking at very selective assets that could really make a big difference for us moving forward.

Regarding 812, we really don’t like to make specific comments on pricing at this point. First of all, it is a little bit premature, other than what we provided back at the investor day where we gave people at least where the market is as far as branded stimulants and branded non-stimulants, as far as the range of the wholesaler acquisition costs of those two segments of the market. We are in the middle of doing pricing research and so forth, so we don’t even have the answer yet ourselves, and it would be premature to make any specific comments on the pricing.

Regarding the 812 profile, again as we strongly emphasized in our investor day, we continue to believe and specifically as we continue to gather more and more data and as we share the profile with the real audience who really matters at the end of the day, which is the physicians and KOLs, they continue to be very excited about the profile and what 812 can represent in therapy as far as the great alternative option not only versus the current non-stimulants but even versus stimulants.

Very, very briefly, if you have a product that is not a controlled substance, it’s not a stimulant, it works well and very consistently as the data have shown across all the trials and the data that we have already shared with everyone. It also works on the two subscales in a very meaningful way and consistent way in hyperactivity and in the inattention subscale. It has a fast onset of action - in a week, basically, and a great safety and tolerability profile. If you present that option and tell a parent about this potential new treatment, there is no reason for a parent to go and choose a stimulant that has all the other issues that we’re all very aware of and know about.

We think the chances for SPN-812 to even be a first line treatment are fairly high, and we certainly--you know, our plans and our execution will be targeted towards making SPN-812 available to every patient out there, because we believe it’s a product that works, works fast, is tolerable and safe, and if that is the case and it is proven in the marketplace as it has been proven already with more than 1,000 patients in our trials, there is no reason whatsoever for a parent to choose to put their kid on a stimulant, a controlled substance that presents all kinds of issues for them.

[Ken Cacciatore, Cowen & Co.]

Thank you.

[Operator]

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

[David Steinberg, Jefferies]

Okay, thanks. A couple questions. First, I think, Jack, you’d said that some of the promotional activities had some dampening impact on Oxtellar in the first quarter. I just wanted some more clarification on that. Second, related to that, I think you said that we shouldn’t expect a steep launch trajectory in this new indication like you had with Trokendi in migraine, but given that, do you think we’ll see some uplift in the second half of the year? Then related to Trokendi, I know you indicated that co-pay assistance and dampened gross to net had an impact, but isn’t there some pricing that you needed to give up to stay on formulary and be competitive with the CGRPs, and if that’s the case, then why would the gross to net dissipate after the first quarter and not be in effect for the entire year?

[Jack Khattar, President, Chief Executive Officer]

Let me take the first question on Oxtellar XR. Given the history on the product and what it typically does in 1Q versus 4Q, if you look at the IMS numbers, and there is always a difference in looking at monthlies versus weeklies, if you look actually at the monthly, it looks like Oxtellar XR in the first quarter of this year went down by about 1.6%, 1.7% in prescriptions. If you look at the weeklies, it shows actually it went up by 1.6%, so it really held up very nicely compared, for example, to Trokendi XR that we just mentioned went down by 5.7%. If we were to assume that the increased relevance of high deductible plans as the years go on, and I think we’re seeing with not just Supernus but across the industry, that this phenomenon gets worse and worse, unfortunately, over the years. If we assume we would have probably had a similar impact like we had on Trokendi XR, or maybe it doesn’t have to be exactly, like 5.7 or 5%, but to have it somewhere around 1.6%, we have to believe that because we were launching the monotherapy during that same quarter, we had more intense activity, more intense promotional support obviously, we were in launch mode, that we have softened that net effect that the 1Q came in a little bit better than it could have been.

Do I have a real way of quantifying that? It’s a little bit hard other than really comparing the prescription growth rates, one product versus the other. Of course, you have a difference also here - one is in migraine, one is in really epilepsy, so that’s why it’s not a perfect comparison. But we think from a trend perspective, Oxtellar XR is building momentum. You’re exactly right, as I mentioned and will continue to mention--I mean, it’s not going to be a hockey stick effect as far as the monotherapy. It will be a very steady--slow, steady growth behind the monotherapy as we continue to promote the product.

As far as Trokendi XR and the formulary positions, we don’t have really any meaningful changes in the formulary position. As time goes on, yes, things do cost more, there continues to be pressure from managed care, but the main 1Q phenomenon this year we have to say we have had it a little bit worse than we’ve see historically. Actually this quarter--I keep saying this quarter, 1Q, the first quarter in a way had a very unfair comparison because as some of you might remember, 1Q 2018 was also an unusually strong quarter for us and surprised a lot of people in those days. It was actually much stronger than people had expected, so we’re comparing a quarter in 2019 that had all these events that I explained, that happened to be all on top of each other, and on top of that comparing it to a much--or a little but unusual stronger quarter that we had back in 2018.

So the short answer is yes, the managed care pressures continue, as we’re always expecting them to continue. The co-pay, we always do that every year, so we didn’t do anything specific this year that was that much different than previous years. We always in the first quarter enhance a little bit the co-pay assistance so that we can counter some of these high deductible issues that patients face, and we expect the rest of the year that the gross to net will improve quarter to quarter, again as it did in previous years. We’ll continue to watch it closely and update folks as time goes on.

[Operator]

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

[Nick Rubino, Stifel]

Good morning everyone, this is Nick Rubino on for Annabel. Thanks for taking our questions. The impact of high deductible plans is pretty remarkable this year. Why do you think these patients were so markedly impacted this particular year? Then in a similar vein, will the co-pay assistance program impact also continue on a go-forward basis? You also have the first quarter on the expanded Oxtellar label. What’s been the immediate reception from physicians and what dynamics have you seen so far in shifts of use? Lastly, just building on your topiramate comments, you mentioned the generally stable topiramate class. Digging into that stability, is this a function of CGRP switches offset by an expanding migraine market, or is there just not a large impact on this specific class? Thank you.

[Jack Khattar, President, Chief Executive Officer]

Regarding the high deductibles, why this year is worse than previous years, our theory here - and I don’t know what you’re hearing from other companies - but we believe more and more people are actually getting influenced with a high deductible. A lot of listeners will probably say yes because they’re on insurance plans, we all have insurance plans and we know how they get worse and worse every year, shifting more of the burden on the patients themselves, on the consumers themselves, so I think this is more of an overall macro trend that we’re seeing in the industry in general, which is a combination of more people on these plans, and then second, the plans are getting worse and worse because insurance companies are just making it worse for patients and trying to pass on more of the cost onto the patient and the consumers themselves.

As far Oxtellar XR, we are really encouraged with the early reaction to the monotherapy. Of course it’s certainly very early - we only launched it two, three months ago, but given the comments I made a little bit earlier, we think the launch helped in softening the blow, the typical blow of the first quarter phenomenon, and we’ll continue to watch it. The prescriptions year to date, even through April 26, although you’re using weekly numbers here versus monthlies, if you look from January all the way to April 26, which is the last week recorded by IMS, we are very encouraged to see that it’s up by 12% versus the previous year. We hope to see even more acceleration. Again, it’s going to be acceleration and growth, but it’s going to be slow and steady, nothing significant in one quarter versus the other.

The final question on the topiramate, the stability, I think that continues to support and reinforce the notion that we always had since the CGRPs initially launched, that topiramate continues to be a foundational therapy that a lot of physicians and patients believe they need to have, and then add onto it a CGRP or add onto it something else. That’s why you’re not seeing a major, major decline in the topiramate market itself, because as a molecule it works, it works really well. The CGRPs work but they haven’t been proven to be like the holy grail or the thing that we’ve been waiting for. Their efficacy is okay but it’s nothing really that much different than a lot of existing therapies out there, and therefore probably that’s why you’re not seeing a lot of decline in the topiramate market itself. As long as that market is there for us, then that’s why we continue to believe that we can continue to tap into it and continue to grow Trokendi XR.

I will repeat what I said in other quarterly earnings. We cannot expect Trokendi XR to continue to grow at 20% and 30% and so forth. Clearly this is a product that’s also maturing over time, and therefore the growth rates will slow down a little bit and that’s what we’ve seen. But as long as the topiramate market is there and the effort on our commercial side is there, we should be able to continue to move it along and progress it nicely.

[Operator]

Thank you. Our next question comes from the line of Patrick Trucchio with Berenberg Capital. Your line is open, please go ahead.

[Patrick Trucchio, Berenberg Capital]

Thanks, good morning. Can you tell us what proportion of Trokendi and Oxtellar are reimbursed by Medicare and how this proportion has changed over time since the initial launches, and has its proportion changed meaningfully this year? Then with regard to the payor dynamics cited in the first quarter, was any of this adverse impact tied to more of the business being reimbursed from government payors more broadly, and if so, why would we anticipate this impact to normalize? Then just a follow-up, if I may, would be what is your level of confidence that Trokendi and Oxtellar will generate peak sales of more than $500 million before you lose exclusivity on Trokendi, and do these recent payor dynamics alter this view at all?

[Greg Patrick, Chief Financial Officer]

Okay, I’ll take the first question, the last two questions I’ll leave to Jack, Patrick. As regards Medicare, Medicare has always been a fairly small footprint in both products, low to single digits. Medicaid on the other hand is a higher proportion. With respect to Oxtellar XR, it has grown from the low to mid 20s; it now approximates 30% of the underlying patient population and in fact has gotten a little bit north of 30%. As regards Trokendi XR, that proportion has actually declined a bit over time. It was in the low teens and coincident with the migraine launch, it has actually trended more toward 10% for a quarter--it ducked below 10%, but right around 10%, and that’s because we believe that the migraine market is primarily a private pay market, not a Medicaid market.

The other two questions, I will defer to Jack.

[Jack Khattar, President, Chief Executive Officer]

As far as the question on the peak revenue for Trokendi XR and Oxtellar XR, we’re not that far away. We’re within striking distance of the 500, and remember Oxtellar XR is not going to peak in 2023, Oxtellar XR is going to peak actually in 2027 because we have the product all the way through the expiration of the patent. By then, the product is going to be much bigger, clearly, and therefore the $500 million is within reach and certainly achievable, no question about that. The peak years for both products, and I think I’ve made that point before, it’s not the same year, so for us to expect the 500, because it’s a peak of Trokendi XR and Oxtellar XR, because Oxtellar XR is going to go beyond the 2023.

As far as the formulary, I think as I mentioned before, we have seen that in previous years, so we’re speaking actually out of the experience and the trends that we’ve seen before, that the gross to net do improve over the subsequent quarters, specifically in the third quarter and the fourth quarter, and that’s where we think the normalization is going to get even better, and better specifically in the third and fourth quarter. We don’t give guidance by quarter, clearly, but as the year progresses and as these things become more and more stable, we believe the third quarter and fourth quarter will be much stronger quarters. That’s why, if we didn’t believe we have a shot at the guidance, clearly we wouldn’t have kept the guidance.

[Operator]

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

[Mick Ingerman, Piper Jaffray]

Good morning, this is Mick Ingerman on for David. Thanks for taking the questions. Just a few quick ones. In light of the announcement that Trokendi XR will be excluded from the Express Script 2019 preferred formulary, can you comment on the impact that this could have? That’s one.

Two, do you have a sense of the proportion of Oxtellar XR prescriptions that were written for monotherapy prior to the label expansion? Then one just quick follow-up on the bipolar study, do you guys have any more color that you can provide on trial design, both in terms of size of enrollment and efficacy endpoints? Thanks.

[Jack Khattar, President, Chief Executive Officer]

Yes, regarding the first question, I’m not sure what announcement you’re referring to. As far as we’re concerned, we are not excluded from Express Scripts on Trokendi XR, so let me clarify that if there is any confusion out there. I’m not sure where you got that information.

As far as the bipolar study, we gave a little bit more detail in the investor day as far as the potential design of the studies. We do need to do basically two studies for approval, because this will be a new indication for oxcarbazepine, although it’s a 505(b)(2) strategy but it’s basically two studies that you need for a new indication, and we’re finalizing those as we speak. They are going to be fairly large studies, 300 to 500 patients per study. One of them will be a little bit larger because it might have a flexible dose kind of design and the other one will be more of a fixed dose design.

I forgot the second question, if you don’t mind repeating it? There was a question in the middle.

[Mick Ingerman, Piper Jaffray]

The proportion of Oxtellar XR prescriptions that were written for monotherapy prior to the label extension.

[Jack Khattar, President, Chief Executive Officer]

Oh, prior to the label extension, it’s really a very, very tough guess and estimate, because Oxtellar XR prescription base, as you would appreciate, is a smaller base. We think it was more in the--probably it ranges, depending when you look at the data, probably somewhere between the 15 to 30%. It jumps up and down. That’s probably as good of a guess or estimate that we can get before the launch.

[Mick Ingerman, Piper Jaffray]

Great, thank you.

[Operator]

Thank you. We have time for one more question. Our last question will come from the line of Esther Hong with Janney. Your line is open, please go ahead.

[Esther Hong, Janney]

Great, thank you. Just on the higher deductible plans and co-pay assistance, do you expect gross to net to take longer to normalize this year versus prior years, and in terms of normalization, if you could drill down on that. Then second, can you discuss the regulatory path forward for the Phase III trial of SPN-812 expected to initiate in adults later this year? Thanks.

[Greg Patrick, Chief Financial Officer]

Esther, this is Greg. I’ll take the first part of your question regarding the normalization of the gross to net program. In fact, that has already happened. The enhanced programs are in place for a couple of months during the first quarter. They are in place, as Jack mentioned, because of the growing prevalence of these high deductible programs, not only did they affect more patients, more consumers, but they also generally experienced a ratcheting up, if you will, of the annual co-pay that each patient must accommodate. However, with respect to our co-pay programs, those programs have actually already waned off. My expectation in terms of the improvement, if you will, in the gross to net actually could be a little bit more than prior years. As Jack mentioned, we do see gross to net improvement during the course of the year sequentially from quarter to quarter, and that is largely an artifact of the improvement both in terms of lower utilization rates, fewer patients applying for co-pay, as well as just less cost per patient. We would expect those impacts to be reflected second, third and fourth quarter, and we have seen them reflected in the second, third and fourth quarter every year. My guess this year, it will be a little bit more of a snap back, but time will tell as to whether that’s correct or not.

As regards the path forward on the SPN-812 approval, I’ll let Jack respond to that.

[Jack Khattar, President, Chief Executive Officer]

On the SPN-812 from a regulatory perspective, we will be filing this year on the pediatric and adolescent patient populations, so using obviously the data from all the trials that we have conducted. Typically you’re going to have a--we think it’s a 10 to 12 month review, is the typical review time. Then as far as the adult patient population, our plan is to follow that with the adult filing as soon as we get obviously the data from the Phase III trial.

If I were to guess, and this is a real tough guess at this point given that we haven’t even started the adult study, but we plan on starting it this year obviously, as we said, it could be an 18-month, 24 months at worst difference between when we file the pediatric/adolescent and then the adult to follow on with that. That’s a rough estimate, as good as we can get at this point given we haven’t even started the trial.

[Esther Hong, Janney]

Thank you, very helpful. Thanks.

[Operator]

Thank you. I would like to turn the conference back over to Jack Khattar for any further remarks.

[Jack Khattar, President, Chief Executive Officer]

The remainder of 2019 is an exciting time at Supernus. We look forward to achieving significant milestones, including submitting the NDA on SPN-812 in ADHD; second, completely the Phase III trials for SPN-810 in impulsive aggression and releasing top line results from these trials later this year; and then finally, initiating a Phase III bipolar program for SPN-604. In addition, we continue to be focused on maximizing the Trokendi XR and Oxtellar XR brands through continued commercial execution.

Thanks again for joining us this morning, and we look forward to sharing with you the upcoming updates throughout the year. Thank you.

[Operator]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.