PART I — FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the reporting period Item 1. Unaudited Condensed Consolidated Financial Statements This section presents Supernus Pharmaceuticals, Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, including balance sheets, statements of earnings (loss), comprehensive earnings (loss), changes in stockholders' equity, and cash flows, along with detailed notes explaining business organization, accounting policies, revenue disaggregation, investments, contingent consideration, intangible assets, debt, share-based payments, earnings per share, income tax, leases, segment reporting, and commitments and contingencies Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total current assets | $687,584 | $686,070 | | Total assets | $1,347,290 | $1,368,073 | | Total current liabilities | $281,772 | $292,397 | | Total liabilities | $316,585 | $332,340 | | Total stockholders' equity | $1,030,705 | $1,035,733 | - Cash and cash equivalents increased significantly to $115.8 million as of March 31, 2025, from $69.3 million as of December 31, 20249 - Marketable securities decreased to $347.7 million as of March 31, 2025, from $384.3 million as of December 31, 20249 Condensed Consolidated Statements of Earnings (Loss) Details the company's revenues, costs, expenses, and net earnings or loss over specific reporting periods Condensed Consolidated Statements of Earnings (Loss) (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $149,824 | $143,644 | | Total costs and expenses | $160,080 | $146,797 | | Operating loss | $(10,256) | $(3,153) | | Net earnings (loss) | $(11,827) | $124 | | Basic EPS | $(0.21) | $0.00 | | Diluted EPS | $(0.21) | $0.00 | - Total revenues increased by 4% year-over-year, from $143.6 million in Q1 2024 to $149.8 million in Q1 202511 - The company reported a net loss of $11.8 million in Q1 2025, a significant decline from net earnings of $0.1 million in Q1 2024, primarily due to increased costs and expenses, including a contingent consideration loss11 Condensed Consolidated Statements of Comprehensive Earnings (Loss) Presents the total change in equity from non-owner sources, including net earnings (loss) and other comprehensive income (loss) Condensed Consolidated Statements of Comprehensive Earnings (Loss) (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net earnings (loss) | $(11,827) | $124 | | Unrealized gain on marketable securities, net of tax | $30 | $59 | | Comprehensive earnings (loss) | $(11,797) | $183 | - Comprehensive loss for Q1 2025 was $11.8 million, compared to comprehensive earnings of $0.2 million in Q1 2024, reflecting the net loss for the period14 Condensed Consolidated Statements of Changes in Stockholders' Equity Outlines the changes in the company's equity accounts, including common stock, additional paid-in capital, and retained earnings Changes in Stockholders' Equity (in thousands, except share data) | Metric | Balance, Dec 31, 2024 | Share-based Comp. Expense | Issuance of Common Stock | Net Earnings (Loss) | Unrealized Gain | Balance, Mar 31, 2025 | | :-------------------------------- | :-------------------- | :------------------------ | :----------------------- | :------------------ | :-------------- | :-------------------- | | Common Stock (Shares) | 55,743,095 | — | 246,153 | — | — | 55,989,248 | | Common Stock (Amount) | $56 | — | — | — | — | $56 | | Additional Paid-in Capital | $479,440 | $8,068 | $(1,299) | — | — | $486,209 | | Retained Earnings | $556,426 | — | — | $(11,827) | — | $544,599 | | Total Stockholders' Equity | $1,035,733 | $8,068 | $(1,299) | $(11,827) | $30 | $1,030,705 | - Total stockholders' equity decreased from $1,035.7 million at December 31, 2024, to $1,030.7 million at March 31, 2025, primarily due to the net loss incurred during the quarter, partially offset by share-based compensation17 Condensed Consolidated Statements of Cash Flows Summarizes the cash inflows and outflows from operating, investing, and financing activities for the reporting period Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $30,599 | $38,401 | | Net cash provided by (used in) investing activities | $37,317 | $(51,624) | | Net cash provided by (used in) financing activities | $(21,399) | $1,570 | | Net change in cash and cash equivalents | $46,517 | $(11,653) | | Cash and cash equivalents at end of period | $115,848 | $63,401 | - Net cash provided by operating activities decreased to $30.6 million in Q1 2025 from $38.4 million in Q1 202420 - Investing activities shifted from a net cash outflow of $51.6 million in Q1 2024 to a net cash inflow of $37.3 million in Q1 2025, driven by changes in marketable securities20 - Financing activities resulted in a net cash outflow of $21.4 million in Q1 2025, compared to an inflow of $1.6 million in Q1 2024, primarily due to a contingent consideration payment20 Notes to Condensed Consolidated Financial Statements Provides detailed explanations of the company's accounting policies and specific financial statement items 1. Business Organization Describes the company's core business, therapeutic focus, and key product portfolio - Supernus Pharmaceuticals, Inc. is a biopharmaceutical company focused on developing and commercializing products for central nervous system (CNS) diseases22 - The company's portfolio includes approved treatments for ADHD, Parkinson's Disease (PD) dyskinesia and hypomobility, epilepsy, migraine, cervical dystonia, and chronic sialorrhea22 - In February 2025, the FDA approved ONAPGO (apomorphine hydrochloride) injection for motor fluctuations in advanced PD, which was launched in April 202523 2. Summary of Significant Accounting Policies Outlines the key accounting principles and methods used in preparing the financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with SEC requirements for interim financial information and U.S. GAAP23 - The company operates in one operating segment, primarily located in the U.S.25 - Advertising expense increased to approximately $26.1 million for Q1 2025 from $24.3 million for Q1 2024, recorded as a component of Selling, general and administrative expenses32 - Approximately $4.4 million of insurance recoveries were recorded in Q1 2025, reducing Selling, general and administrative expenses, with no recoveries in Q1 202434 - The company adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) on January 1, 2024, and plans to adopt ASU 2023-09 (Improvements to Income Tax Disclosures) for fiscal year 2025 and ASU 2024-03 (Disaggregation of Income Statement Expenses) for fiscal year 2027353637 3. Disaggregated Revenues Provides a breakdown of total revenues by product and revenue type for the reporting periods Disaggregated Revenues (dollars in thousands) | Product | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | Qelbree | $64,745 | $45,104 | | GOCOVRI | $30,689 | $26,562 | | APOKYN | $14,976 | $16,649 | | Trokendi XR | $12,801 | $15,989 | | Oxtellar XR | $10,198 | $26,943 | | Other | $8,579 | $7,214 | | Total net product sales | $141,988 | $138,461 | | Royalty, licensing and other revenues | $7,836 | $5,183 | | Total revenues | $149,824 | $143,644 | - Qelbree net product sales increased by 44% to $64.7 million in Q1 2025, while Oxtellar XR sales decreased by 62% to $10.2 million38 - The company adjusted its estimated provision for product returns in Q1 2025 due to favorable actual returns experience for Qelbree, with prior year sales returns provision being less than 5% of net product sales, primarily from Qelbree39 4. Investments Details the company's marketable securities, including their amortized cost, unrealized gains and losses, and fair value Marketable Securities (dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Amortized cost | $347,903 | $384,481 | | Gross unrealized gains | $12 | $89 | | Gross unrealized losses | $(173) | $(289) | | Total fair value | $347,742 | $384,281 | - All unrestricted available-for-sale marketable securities as of March 31, 2025, have contractual maturities of one year or less40 - There was no impairment due to credit loss on any available-for-sale marketable securities as of March 31, 202541 5. Fair Value of Financial Instruments Presents the fair value measurements of financial assets and liabilities, categorized by valuation input levels Financial Assets and Liabilities at Fair Value (dollars in thousands) as of March 31, 2025 | Asset/Liability | Total | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Cash and cash equivalents | $115,848 | $115,848 | $— | $— | | Marketable securities | $347,742 | $— | $347,742 | $— | | Marketable securities - restricted (SERP) | $617 | $23 | $594 | $— | | Contingent consideration | $30,000 | $30,000 | $— | $— | - Contingent consideration liability was $30.0 million as of March 31, 2025, classified as Level 1, a change from Level 3 at December 31, 2024434647 - The fair value of accounts receivable, accounts payable, and accrued expenses approximates their carrying amounts due to short-term maturities45 6. Contingent Consideration Details the company's contingent consideration liabilities, including changes in fair value and milestone payment expectations Contingent Consideration (dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Contingent consideration, current portion | $30,000 | $47,340 | | Total | $30,000 | $47,340 | - The remaining $30 million USWM contingent consideration payment related to ONAPGO's commercial launch is expected to be due and paid in 2025, following its FDA approval in February 2025 and launch in April 202547 - The 2024 Milestone for Adamas Acquisition's GOCOVRI sales was not met, and the probability of achieving the 2025 Milestone ($225 million in aggregate worldwide net sales) is remote as of March 31, 20255051 - A $7.7 million expense was recorded in Q1 2025 due to the change in fair value of USWM contingent consideration liabilities, primarily from accretion to the full milestone payment amount upon ONAPGO's approval52 7. Intangible Assets, Net Provides a breakdown of intangible assets, including acquired technology, product rights, and amortization expenses Intangible Assets, Net (dollars in thousands) | Asset Type | March 31, 2025 (Net) | December 31, 2024 (Net) | | :-------------------------------- | :------------------- | :-------------------- | | Acquired developed technology and product rights | $502,126 | $397,912 | | Capitalized patent defense costs | $— | $— | | Acquired in-process research and development | $— | $124,000 | | Total intangible assets | $502,126 | $521,912 | - Amortization expense for intangible assets was $19.8 million for Q1 2025, a slight decrease from $20.1 million in Q1 202454 - Upon FDA approval of ONAPGO in February 2025, its acquired in-process research and development asset was reclassified as a definite-life intangible asset subject to 10-year amortization55 - U.S. patents for Trokendi XR and Oxtellar XR expire no earlier than 2027, with generic entry for Trokendi XR in January 2023 and Oxtellar XR in September 202456 8. Debt Details the company's debt arrangements, including its uncommitted demand secured line of credit - The company has an uncommitted demand secured line of credit of up to $150 million with UBS, secured by certain assets5758 - As of March 31, 2025, and December 31, 2024, there was no outstanding debt under the Credit Line61 9. Share-Based Payments Reports on share-based compensation expense, outstanding stock options, and restricted stock units Share-Based Compensation Expense (dollars in thousands) | Expense Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $1,412 | $1,365 | | Selling, general and administrative | $6,656 | $4,532 | | Total | $8,068 | $5,897 | - Total share-based compensation expense increased by 36.8% to $8.1 million in Q1 2025 from $5.9 million in Q1 202462 - As of March 31, 2025, 7,649,242 stock options were outstanding with a weighted average exercise price of $31.01, and 407,867 restricted stock units (RSUs) were nonvested6263 10. Earnings (Loss) per Share Presents basic and diluted earnings per share calculations, including the impact of anti-dilutive securities Earnings (Loss) per Share | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net earnings (loss) | $(11,827) | $124 | | Weighted average shares outstanding, basic | 55,864,692 | 54,801,748 | | Weighted average shares outstanding, diluted | 55,864,692 | 55,626,663 | | Earnings (Loss) per share, basic | $(0.21) | $0.00 | | Earnings (Loss) per share, diluted | $(0.21) | $0.00 | - Basic and diluted earnings per share were $(0.21) for Q1 2025, compared to $0.00 for Q1 2024, reflecting the net loss65 - 505,385 stock options and stock awards were excluded from diluted EPS calculation in Q1 2025 as their inclusion would be anti-dilutive65 11. Income Tax Expense Reports the income tax expense and effective tax rate for the reporting periods, explaining significant changes Income Tax Expense (dollars in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Income tax expense | $5,996 | $119 | | Effective tax rate | (102.8)% | 49.0% | - Income tax expense significantly increased to $6.0 million in Q1 2025 from $0.1 million in Q1 2024, resulting in an effective tax rate of (102.8)% due to near break-even pre-tax losses666768 12. Leases Details the company's operating lease assets and liabilities, including current and long-term portions Operating Lease Assets and Liabilities (dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Operating lease assets | $22,724 | $24,477 | | Operating lease liabilities, current portion | $5,937 | $6,889 | | Operating lease liabilities, long-term | $26,368 | $27,382 | | Total lease liabilities | $32,305 | $34,271 | 13. Segment Reporting Describes the company's operating segments and how performance is assessed and resources are allocated - The company operates in one operating segment, deriving revenue primarily from commercial product sales in the U.S.71 - The Chief Executive Officer, as the chief operating decision maker (CODM), assesses performance and allocates resources based on net income (loss)72 Segment Revenue and Significant Expenses (dollars in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :-------------------------------- | :------------- | :------------- | | Total revenues | $149,824 | $143,644 | | Cost of goods sold | $15,763 | $16,309 | | Selling | $42,614 | $39,014 | | Marketing | $20,664 | $20,553 | | General and administrative | $26,666 | $26,949 | | Total research and development expenses | $26,927 | $24,930 | | Net earnings (loss) | $(11,827) | $124 | 14. Composition of Other Balance Sheet Items Provides detailed breakdowns of inventories, accounts payable, accrued liabilities, and product returns and rebates Inventories, Net (dollars in thousands) | Category | March 31, 2025 | December 31, 2024 | | :---------------- | :------------- | :---------------- | | Raw materials | $8,664 | $11,127 | | Work in process | $18,694 | $26,725 | | Finished goods | $22,065 | $16,441 | | Total | $49,423 | $54,293 | Accounts Payable and Accrued Liabilities (dollars in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Accounts payable | $7,072 | $4,587 | | Accrued compensation, benefits, & related accruals | $17,596 | $21,225 | | Accrued sales & marketing | $14,832 | $11,007 | | Accrued manufacturing expenses | $11,067 | $11,652 | | Accrued R&D expenses | $5,413 | $5,898 | | Operating lease liabilities, current portion | $5,937 | $6,889 | | Accrued royalties | $6,250 | $8,105 | | Other accrued expenses | $8,724 | $6,989 | | Total | $76,891 | $76,352 | Accrued Product Returns and Rebates (dollars in thousands) | Category | March 31, 2025 | December 31, 2024 | | :---------------- | :------------- | :---------------- | | Accrued product rebates | $120,208 | $115,330 | | Accrued product returns | $49,925 | $53,375 | | Total | $170,133 | $168,705 | 15. Commitments and Contingencies Outlines the company's contractual obligations, potential milestone payments, and ongoing legal proceedings - The company has product licenses requiring milestone payments and royalties on net product sales7980 - Under the Navitor Development Agreement for SPN-820, the company has committed up to $50 million for Phase I and Phase II development costs and has the potential for total payments of $410 million to $475 million contingent on milestones8285 - The company assumed an annual minimum purchase requirement of estimated €3.9 million for MYOBLOC under a contract manufacturing agreement87 - The company was released from its obligations under the Corporate Integrity Agreement (CIA) in April 2025, which was assumed as part of the USWM Acquisition88 - Ongoing legal proceedings include the NAMENDA XR/Namzaric Qui Tam Litigation, where the Ninth Circuit affirmed dismissal of the federal FCA claim in January 2025, and the APOKYN Litigation, an antitrust lawsuit with mediation held in April 2025 that did not result in settlement919293 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition for the three months ended March 31, 2025, compared to the same period in 2024. It covers an overview of the business, commercial products, research and development pipeline, commercial highlights, critical accounting policies, detailed results of operations, financial condition, liquidity, and capital resources, and recently issued accounting pronouncements Overview Provides a high-level summary of the company's business, therapeutic focus, and product development strategy - Supernus Pharmaceuticals is a biopharmaceutical company focused on developing and commercializing products for central nervous system (CNS) diseases99 - The company's neuroscience portfolio includes approved treatments for ADHD, Parkinson's Disease (PD) dyskinesia and hypomobility, epilepsy, migraine, cervical dystonia, and chronic sialorrhea99 - A broad range of novel CNS product candidates are under development for epilepsy, depression, and other CNS disorders99 Commercial Products Lists and describes the company's currently marketed pharmaceutical products and their indications - Qelbree (viloxazine) extended-release capsules are indicated for ADHD in adults and pediatric patients 6 years and older; an expanded label update was approved in January 2025101 - ONAPGO (apomorphine hydrochloride) injection, approved by the FDA in February 2025 and launched in April 2025, is the first and only subcutaneous apomorphine infusion device for motor fluctuations in advanced PD101 - Other commercial products include GOCOVRI for PD dyskinesia and 'OFF' episodes, Oxtellar XR and Trokendi XR for epilepsy and migraine prophylaxis, APOKYN for PD hypomobility, XADAGO for PD 'OFF' episodes, and MYOBLOC for cervical dystonia and chronic sialorrhea101 Research and Development Outlines the company's pipeline of product candidates, their indications, and current development status Key R&D Programs and Status | Program | Indications | Status | | :------ | :---------- | :----- | | ONAPGO | PD | Approved in February 2025 - Launched in 2Q 2025 | | SPN-817 | Epilepsy | In clinical development, received Orphan Drug Designation | | SPN-820 | Depression | Phase 2b study did not show statistical significance on primary/secondary endpoints | | SPN-443 | ADHD/CNS | Completed Phase 1 study, showed adequate bioavailability and tolerability | | SPN-449 | CNS | Preclinical | | SPN-443 | ADHD/CNS | Completed Phase 1 pharmacokinetic study, lead indication expected by end of 2025 | - SPN-817, a novel anticonvulsant for epilepsy, is in Phase 2b study targeting 258 adult patients with treatment-resistant focal seizures103108 - For SPN-820 in depression, a Phase 2b study did not meet statistical significance, but the company plans a follow-on Phase 2b trial for Major Depressive Disorder (MDD) with intermittent dosing105109 Commercial Highlights Summarizes key commercial achievements and market performance indicators for the company's products - Total IQVIA prescriptions for Qelbree increased by 22% to 214,908 in Q1 2025 compared to the prior year, with monthly prescriptions reaching an all-time high of 75,277 in March 2025112 - Qelbree's prescriber base expanded to approximately 34,416 in Q1 2025, up from 27,902 in the same period last year112 - ONAPGO was launched in April 2025, with initial physician response described as encouraging112 Critical Accounting Policies and the Use of Estimates Discusses the accounting policies that require significant judgment and estimates in financial reporting - There were no significant changes to the company's critical accounting policies as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024111 Results of Operations Analyzes the company's financial performance, including revenues, expenses, and profitability, for the reporting periods Revenues Examines the sources and changes in total revenues, including net product sales and royalty income Revenues (dollars in thousands) | Revenue Type | Q1 2025 | Q1 2024 | Change Amount | Change Percent | | :-------------------------------- | :------ | :------ | :------------ | :------------- | | Net product sales | $141,988 | $138,461 | $3,527 | 3% | | Royalty, licensing and other revenues | $7,836 | $5,183 | $2,653 | 51% | | Total revenues | $149,824 | $143,644 | $6,180 | 4% | - Total revenues increased by 4% to $149.8 million in Q1 2025, driven by increases in both net product sales and royalty/licensing revenues113 Net Product Sales Provides a detailed breakdown of net product sales by individual product and analyzes their year-over-year changes Net Product Sales by Product (dollars in thousands) | Product | Q1 2025 | Q1 2024 | Change Amount | Change Percent | | :---------------- | :------ | :------ | :------------ | :------------- | | Qelbree | $64,745 | $45,104 | $19,641 | 44% | | GOCOVRI | $30,689 | $26,562 | $4,127 | 16% | | APOKYN | $14,976 | $16,649 | $(1,673) | (10)% | | Trokendi XR | $12,801 | $15,989 | $(3,188) | (20)% | | Oxtellar XR | $10,198 | $26,943 | $(16,745) | (62)% | | Other | $8,579 | $7,214 | $1,365 | 19% | | Total net product sales | $141,988 | $138,461 | $3,527 | 3% | - Net product sales increased by 3% to $142.0 million in Q1 2025, primarily due to higher volume and price for Qelbree and GOCOVRI114 - The increase was partially offset by declines in Oxtellar XR and Trokendi XR sales due to generic erosion114 - Adjustments for prior year sales returns were less than 5% of net product sales in Q1 2025, mainly attributable to Qelbree's favorable actual returns experience115 Sales Deductions and Related Accruals Analyzes changes in accrued product returns, rebates, and sales discounts, and their impact on net product sales Accrued Product Returns and Rebates Activity (dollars in thousands) | Metric | Balance Dec 31, 2024 | Provision Current Year | Provision Prior Year | Actual Payments/Credits | Balance Mar 31, 2025 | | :-------------------------------- | :------------------- | :--------------------- | :------------------- | :---------------------- | :------------------- | | Accrued Product Returns | $53,375 | $4,645 | $(6,988) | $(1,107) | $49,925 | | Accrued Product Rebates | $115,330 | $104,957 | $253 | $(100,332) | $120,208 | | Sales Discounts | $12,347 | $16,680 | $99 | $(15,362) | $13,764 | | Total | $181,052 | $126,282 | $(6,636) | $(116,801) | $183,897 | - Accrued product returns decreased to $49.9 million as of March 31, 2025, primarily due to a $7.0 million estimated provision for prior year sales returns, mainly from Qelbree's favorable experience120 - Accrued product rebates increased to $120.2 million as of March 31, 2025, primarily due to the timing of payments associated with government programs121 - The provision for product rebates increased to $105.2 million in Q1 2025, driven by higher Qelbree sales and unfavorable government programs due to Q1 2025 product price increases123 Royalty, Licensing and Other Revenues Discusses the growth and drivers of royalty, licensing, and other revenue streams for the period - Royalty, licensing and other revenues increased by 51% to $7.8 million in Q1 2025 from $5.2 million in Q1 2024, primarily due to increased royalty revenues from Oxtellar XR124 Cost of Goods Sold Analyzes the changes in the cost of products sold and the factors influencing these costs - Cost of goods sold decreased to $15.8 million in Q1 2025 from $16.3 million in Q1 2024, mainly due to lower APOKYN royalties and declining net product sales of Oxtellar XR and Trokendi XR from generic erosion125 Research and Development Expenses Examines the trends and drivers of research and development expenditures, including clinical program costs - Research and development (R&D) expenses increased to $26.9 million in Q1 2025 from $24.9 million in Q1 2024, primarily due to higher clinical program costs for SPN-817 and the Qelbree open-label study126 Selling, General and Administrative Expenses Analyzes the components and changes in selling, general, and administrative expenses for the reporting periods Selling, General and Administrative (SG&A) Expenses (dollars in thousands) | Expense Type | Q1 2025 | Q1 2024 | Change Amount | Change Percent | | :-------------------------------- | :------ | :------ | :------------ | :------------- | | Selling and marketing | $63,278 | $59,567 | $3,711 | 6% | | General and administrative | $26,666 | $26,949 | $(283) | (1)% | | Total | $89,944 | $86,516 | $3,428 | 4% | - Total SG&A expenses increased by 4% to $89.9 million in Q1 2025, mainly driven by a 6% increase in selling and marketing expenses due to the timing of product sample shipments127 Amortization of Intangible Assets Discusses the amortization expense related to intangible assets and the factors influencing its changes - Amortization of intangible assets decreased slightly to $19.8 million in Q1 2025 from $20.1 million in Q1 2024128 - The decrease was due to Oxtellar XR and Namzaric intangible assets being fully amortized in 2024, partially offset by new ONAPGO amortization expense in 2025128 Contingent Consideration Loss (Gain) Explains the contingent consideration loss or gain recognized and the events driving its change - The company recorded a contingent consideration loss of $7.7 million in Q1 2025, a significant change from a $1.1 million gain in Q1 2024129 - This change was primarily driven by the accretion of USWM contingent consideration liabilities to the full milestone payment amounts following ONAPGO's FDA approval in February 2025129 Other Income (Expense) Reports on other non-operating income and expenses, such as interest income, and their impact on results - Other income increased to $4.4 million in Q1 2025 from $3.4 million in Q1 2024, primarily due to higher interest income on marketable securities from an overall higher investment balance130 Income Tax Expense Analyzes the income tax expense and effective tax rate, explaining the factors contributing to their changes - Income tax expense was $6.0 million in Q1 2025 (effective tax rate of (102.8)%) compared to $0.1 million in Q1 2024 (effective tax rate of 49.0%)131 - The change was primarily due to near break-even pre-tax losses in Q1 2025 and the full year 2025 forecast, compared to the same periods in 2024131 Financial Condition, Liquidity and Capital Resources Assesses the company's financial health, ability to meet short-term obligations, and sources of funding Cash and Cash Equivalents and Marketable Securities Reports on the total cash, cash equivalents, and marketable securities, and their changes over the period Cash and Cash Equivalents and Marketable Securities (dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change Amount | Change Percent | | :-------------------------------- | :------------- | :---------------- | :------------ | :------------- | | Cash and cash equivalents | $115,848 | $69,331 | $46,517 | 67% | | Marketable securities | $347,742 | $384,281 | $(36,539) | (10)% | | Total | $463,590 | $453,612 | $9,978 | 2% | - Total cash, cash equivalents, and unrestricted marketable securities increased by 2% to $463.6 million as of March 31, 2025134 - The company believes its current cash balances, cash from operations, and access to debt markets will be sufficient to meet cash requirements for the next 12 months and beyond134 - Future profitability may vary significantly due to market pressures, loss of patent exclusivity for Trokendi XR and Oxtellar XR, upcoming loss of exclusivity for XADAGO, R&D funding, and ONAPGO launch costs135 Cash Flows Provides a summary of cash flows from operating, investing, and financing activities for the reporting periods Cash Flows Summary (dollars in thousands) | Activity | Q1 2025 | Q1 2024 | Change Amount | | :-------------------------------- | :------ | :------ | :------------ | | Net cash provided by (used in) operating activities | $30,599 | $38,401 | $(7,802) | | Net cash provided by (used in) investing activities | $37,317 | $(51,624) | $88,941 | | Net cash provided by (used in) financing activities | $(21,399) | $1,570 | $(22,969) | | Net change in cash and cash equivalents | $46,517 | $(11,653) | $58,170 | | Cash and cash equivalents at end of period | $115,848 | $63,401 | $52,447 | Operating Activities Analyzes the net cash generated or used by the company's primary business operations - Net cash provided by operating activities decreased to $30.6 million in Q1 2025 from $38.4 million in Q1 2024138 - The decrease was primarily due to lower net income and changes in working capital, reflecting timing impacts of cash collections and payable settlements138139 Investing Activities Examines the cash flows related to the acquisition and disposal of long-term assets and investments - Net cash provided by investing activities was $37.3 million in Q1 2025, a significant shift from $51.6 million cash used in Q1 2024140 - This change was mainly due to decreased cash outflows from purchases of marketable securities and higher cash inflows from maturities of marketable securities140 Financing Activities Reports on cash flows from debt, equity, and dividend transactions, and other financing-related activities - Net cash used in financing activities was $21.4 million in Q1 2025, compared to $1.6 million provided in Q1 2024141 - The change was primarily due to the payment of the USWM contingent consideration milestone associated with the FDA approval of ONAPGO141 Material Cash Requirements Refers to disclosures regarding significant future cash obligations and commitments - Material cash requirements are discussed in the Annual Report on Form 10-K for the year ended December 31, 2024, and Note 15, Commitments and Contingencies, in this report142 Recently Issued Accounting Pronouncements Summarizes new accounting standards and their potential impact on the company's financial statements - For a discussion of new accounting pronouncements, refer to Note 2, Summary of Significant Accounting Policies, in the Notes to the Condensed Consolidated Financial Statements143 Item 3. Quantitative and Qualitative Disclosures about Market Risk This section outlines the company's exposure to market risks, primarily related to investments in cash, cash equivalents, and marketable securities, as well as potential interest rate risk from its credit line. It also addresses foreign currency exchange rate risk and the impact of inflation - The company's primary investment objective is to preserve capital and maximize income from investments in investment-grade securities with maturities of four years or less144146 - As of March 31, 2025, cash, cash equivalents, and marketable securities totaled $463.6 million144 - Variable rate borrowing under the $150 million Credit Line exposes the company to interest rate risk, and collateral maintenance requirements could necessitate posting additional collateral if asset values decline145 - The company does not hedge foreign currency exchange rate risk and does not believe inflation had a significant impact on Q1 2025 results, but acknowledges potential future impacts on labor and vendor costs147149 Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting during the quarter ended March 31, 2025 - The company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025150 - No changes occurred in internal control over financial reporting during Q1 2025 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting151 PART II — OTHER INFORMATION This section provides disclosures on legal proceedings, risk factors, equity sales, and other miscellaneous information Item 1. Legal Proceedings This section provides updates on various legal proceedings involving Supernus Pharmaceuticals, Inc., including patent infringement lawsuits related to Trokendi XR, an antitrust lawsuit concerning APOKYN, and a qui tam complaint against Adamas related to NAMENDA XR and Namzaric - In the Trokendi XR litigation, the company settled with Ajanta and won a trial against Torrent, with the District Court ruling in Supernus's favor on patent validity and infringement; Torrent filed an appeal with the U.S. Court of Appeals for the Federal Circuit155156157 - The APOKYN antitrust litigation is ongoing, with a mediation held in April 2025 that did not result in settlement, and a jury trial scheduled for January 2026158159 - In the Adamas Qui Tam Litigation, the Ninth Circuit affirmed the District Court's dismissal of the Federal False Claims Act claim in January 2025, and the plaintiff's petition for rehearing was denied in April 2025167 Item 1A. Risk Factors This section highlights substantive changes or additions to the risk factors previously disclosed in the company's Annual Report on Form 10-K, specifically addressing the potential impact of tariffs on costs - New risk factors include the potential for tariffs to increase costs, as the company relies on international suppliers and vendors for active product ingredients and raw materials171 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities during the reporting period - There were no unregistered sales of equity securities during the period172 Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the period172 Item 4. Mine Safety Disclosures This section indicates that there are no mine safety disclosures to report - There are no mine safety disclosures to report172 Item 5. Other Information This section provides information on insider trading arrangements and policies, specifically detailing a Rule 10b5-1 trading arrangement adopted by Charles Newhall Insider Trading Arrangements Adopted in Q1 2025 | Name and Title | Rule 10b5-1 Trading Arrangement | Trading Arrangement Adopted or Terminated | Date of Adoption or Termination | Duration of Trading Arrangement | Aggregate Number of Securities to be Purchased | Aggregate Number of Securities to be Sold | | :------------- | :------------------------------ | :-------------------------------------- | :------------------------------ | :------------------------------ | :--------------------------------------------- | :------------------------------------------ | | Charles Newhall | Yes | Adopted | March 3, 2025 | 3/3/2027 | 31,000 | 31,000 | Item 6. Exhibits This section lists the exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including certifications, financial information in Inline XBRL, and the cover page - Exhibits include CEO and CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and financial information formatted in Inline XBRL174 SIGNATURES This section contains the signatures of the registrant's authorized officers, including the President and Chief Executive Officer, and the Senior Vice-President and Chief Financial Officer, certifying the report - The report is signed by Jack A. Khattar, President and Chief Executive Officer, and Timothy C. Dec, Senior Vice-President and Chief Financial Officer, on May 6, 2025178
Supernus Pharmaceuticals(SUPN) - 2025 Q1 - Quarterly Report