We estimate that the net proceeds from the sale of common stock that we are
offering will be approximately $45.5 million, or $52.4 million if the
underwriters exercise their over-allotment option in full. This projection is
based upon the initial public offering price of $5.00 per share and after
deducting underwriting discounts and commissions as well as estimated offering
expenses payable by us.
We anticipate that we will use the net proceeds as follows:
• Approximately $25.7 million for sales and marketing expenses in conjunction
with the expected commercial launch of SPN-538 and the preparation for the
commercial launch of SPN-804, assuming timely approval by the FDA.
• Approximately $2.3 million to fund the continued clinical development of
SPN-810, including: preclinical carcinogenicity testing; process development
for commercial bulk active pharmaceutical ingredient; and completion of
current Phase II testing.
• Approximately $1.3 million to fund the continued clinical development of SPN-
812, including: preclinical carcinogenicity testing; process development for
commercial bulk active pharmaceutical ingredient; continued Phase II testing;
and formulation development.
• Approximately $5.8 million to repay a portion of the principle of the term
loans under our secured credit facility.
• The remainder, if any, for general corporate purposes including general and
administrative expenses, capital expenditures and working capital.
We believe that net proceeds from this offering will be sufficient to complete
the development of SPN-538 and SPN-804 through FDA approval and to fund the
expected commercial launch of SPN-538 and preparation for the commercial launch
of SPN-804, assuming FDA approval on their respective PDUFA dates. In addition,
our operating plan, including our planned commercialization of SPN-538 and SPN-
804, may change as a result of many factors.
As of December 31, 2011, we had $30.0 million of term loans outstanding under
our secured credit facility, of which $15.0 million mature in August 2014 and
$15.0 million mature in January 2015. The term loans bear interest at a fixed
rate per annum of 11.0%. We used the proceeds of the terms loans to fund
ongoing clinical trials for SPN-538, SPN-804 and SPN-810, to prepare for
manufacturing validation of SPN-538 and SPN-804, to support formulation for
various clinical stage products, to prepare commercial marketing of SPN-538 and
for regulatory filing fees.
Although we currently anticipate that we will use the net proceeds as described
above, there may be circumstances where a reallocation of funds may be
necessary. The amounts and timing of our actual expenditures will depend upon
numerous factors, including the progress of our development and
commercialization efforts, the progress of our clinical trials, whether or not
we enter into strategic collaborations or partnerships and our operating costs
and expenditures. Accordingly, our management will have significant flexibility
in applying these net proceeds.
The costs and timing of drug development and commercialization and of
regulatory approval, particularly conducting clinical studies, are highly
uncertain, are subject to substantial risks and can often change. Accordingly,
we may change the allocation of use of these proceeds as a result of
contingencies such as the progress of research, progress of clinical trials,
ability to secure approval of our products from the FDA, uptake of our products
in the marketplace and competitive responses.
Pending use of the proceeds from this offering as described above or otherwise,
we intend to invest the net proceeds in short-term, interest-bearing,
investment-grade securities.
The biotechnology and pharmaceutical industries are highly competitive. A
number of multinational pharmaceutical companies as well as large biotechnology
companies are pursuing the development of or are currently marketing
pharmaceutical products in the anti-epilepsy and ADHD markets on which we are
focusing.
Epilepsy
There are currently over 15 branded products, as well as their generic
counterparts, on the U.S. market indicated to treat some form of epilepsy.
Several NCEs are expected to enter the epilepsy market in the next few years.
Based on IMS Health prescription data from 1994 to 2005 for NCE launches for
seizure disorders, such NCEs, on average, experienced slow market penetration
characterized by a 0.58% to 1.1% market share point gain on an annual basis.
We believe this is because physicians are often reluctant to change a stable
patient's existing therapy and risk a breakthrough seizure in their patients.
If approved, SPN-538 (extended release topiramate) will compete with all
immediate release topiramate products including Topamax and related generic
products. We are aware that Upsher-Smith announced the initiation of a Phase
III clinical trial for an extended release topiramate product, which it has
described as an internally developed program for the management of epilepsy in
adults using its proprietary formulation technology. If this product candidate
is approved by the FDA before SPN-538, then Upsher-Smith could obtain three
years of marketing exclusivity, which would significantly delay our entry into
the U.S. market.
In late December 2011, Upsher-Smith submitted a citizen petition to the FDA,
stating that the FDA refrain from approving any application for extended-
release topiramate that does not include an adequate and well-controlled
clinical study demonstrating the safety and efficacy of an extended release
topiramate product. The citizen petition states that the FDA required Upsher-
Smith to conduct such a study for its extended-release topiramate candidate and
that it would be inequitable, in Upsher-Smith's opinion, for the FDA not to
require other applicants for extended-release topiramate to conduct similar
studies. The Federal Food, Drug, and Cosmetic Act provides that the FDA shall
not delay approval of a pending Section 505(b)(2) application on the basis of a
citizen petition unless such delay is necessary to protect the public health.
To our knowledge, the FDA has not yet substantively responded to the citizen
petition.
If approved, SPN-804 (extended release oxcarbazepine) will compete with all
immediate release oxcarbazepine products including Trileptal and related
generic products. We are not aware of any other company that is currently
developing an extended release oxcarbazepine product in the United States. In
addition, we believe that SPN-804's once-daily formulation solves a drug
delivery challenge specific to oxcarbazepine that must be overcome by all
potential competitors. We are aware of companies who have modified-release
oxcarbazepine products that are marketed outside of the United States but, to
our knowledge, such products are not being pursued for the U.S. market. These
modified-release oxcarbazepine products include Apydan, which is developed by
Desitin Arzneimittel GmbH and requires twice-daily administration.
ADHD
Competition in the U.S. ADHD market has increased with the launch of several
products in recent years, including the launch of generic versions of branded
drugs, such as Adderall XR. Shire plc is one of the leaders in the U.S. ADHD
market with three products: Adderall XR, an extended release stimulant
treatment designed to provide once-daily dosing; Vyvanse, a stimulant prodrug
product launched in 2007; and Intuniv, a non-stimulant treatment launched in
November 2009. Other stimulant products for the treatment of ADHD in the U.S.
market include the following once-daily formulations: Concerta; Metadate CD;
Ritalin LA; Focalin XR; and Daytrana. Other non-stimulants are Strattera and
Clonicel. We are also aware of clinical development efforts by several large
pharmaceutical companies including Shire plc, GlaxoSmithKline plc, Eisai Inc.,
AstraZeneca plc and Abbott Laboratories to develop additional treatment options
for ADHD.
then
as a U.S. subsidiary of Shire plc and, upon our acquisition of substantially
all the assets of Shire Laboratories Inc. in late 2005, as Supernus
Pharmaceuticals. We are developing several product candidates in neurology and
psychiatry to address large market opportunities in epilepsy and attention
deficit hyperactivity disorder, or ADHD, including ADHD patients with impulsive
aggression. We intend to market our product candidates in the United States
through our own focused sales force targeting specialty physicians, including
neurologists and psychiatrists.
We use our proprietary technologies to enhance the therapeutic benefits of
approved antiepileptic drugs, or AEDs, through advanced extended release
formulations. Our two epilepsy product candidates are SPN-538 (extended release
topiramate), for which we submitted a new drug application, or NDA, that was
accepted for filing by the U.S. Food and Drug Administration, or the FDA, in
November 2011, and SPN-804 (extended release oxcarbazepine) for which we
submitted an NDA that was accepted for filing by the FDA in February 2012. The
Prescription Drug User Fee Act, or PDUFA, date for SPN-538 is in July 2012. The
PDUFA date for SPN-804 is in October 2012. Our ADHD product candidates include
SPN-810 (molindone hydrochloride), which is in a Phase IIb trial as a novel
treatment for impulsive aggression in patients with ADHD, and SPN-812, which
completed a Phase IIa trial as a novel non-stimulant treatment for ADHD. In
addition to these four lead product candidates, we have several additional
product candidates in various stages of development, including SPN-809, for
which we submitted an investigational new drug application, or IND, in 2008.
SPN-809 would represent a novel mechanism of action for the U.S. antidepressant
market. We believe our broad and diversified portfolio of product candidates
provides us with multiple opportunities to achieve our goal of becoming a
leading specialty pharmaceutical company focused on CNS diseases.
The table below summarizes our current pipeline of novel product candidates.
Product Indication Status
SPN-538 Epilepsy NDA accepted by FDA
SPN-804 Adjunctive therapy for epilepsy NDA accepted by FDA
SPN-810 Impulsive Aggression in ADHD Phase IIb
SPN-812 ADHD Phase IIa
SPN-809 Depression IND filed
Our Late-Stage Neurology Portfolio
Epilepsy is a chronic neurological disorder characterized by recurrent
convulsive seizures resulting from hyperactivity in the brain cells. It is
estimated to affect 50 million people worldwide (1) and 2 million people in the
United States. (2) Achieving reliable seizure control for patients, and
avoiding the serious health and life dangers that can be associated with sudden
unexpected, or breakthrough, seizures depends on patients being compliant and
diligent in taking their medications. We believe there are a number of benefits
associated with extended release products in epilepsy that create a significant
market opportunity for us, including:
(1) Bialer, M., Key factors in the discovery and development of new
antiepileptic drugs , published January 2010 in Nature .
(2) U.S. Centers for Disease Control and Prevention, Epilepsy Self-Management
Tools (citing DiIorio, C., The Prevention Research Centers' Managing
Epilepsy Well Network , published September 2010 in Epilepsy &
Behavior ).
• Extended release products have been shown to improve compliance and
reduce breakthrough seizures. (3)
(3) Balzac, F., Medication Noncompliance in Epilepsy , published March 2006 in
Neurology Reviews .
• Extended release products have been shown to reduce side effects and
improve tolerability. (4)
(4) Miller, A.D., Improved CNS tolerability following conversion from
immediate- to extended-release carbamazepine, published June 2004 in Acta
Neurologica Scandinavia .
• Managed care plans have not limited the success of extended release
products. (5)
(5) IMS Health data and Epilepsy Foundation, Private Health Insurance and
Medication Switching .
• Extended release products generally have performed well in the market.(6)
(6) IMS Health data.
SPN-538 (extended release topiramate)
Our most advanced product candidate, SPN-538, is a novel oral once-daily
extended release topiramate product for the treatment of epilepsy. Topiramate
is marketed by Johnson & Johnson under the brand name Topamax and is available
in a generic form. Topiramate is currently available only in immediate release
form and is indicated for monotherapy and adjunctive therapy of epilepsy and
for the treatment of migraine. It works by enhancing the inhibitory effect of
the GABA (Gamma-Aminobutyric Acid) neurotransmitter that regulates neuronal
excitability throughout the nervous system, blocking the excitatory effect of
the glutamate neurotransmitter, blocking the sodium channel and inhibiting the
carbonic anhydrase enzyme. The side effects associated with taking topiramate,
which have tended to limit its use, include, among others, dizziness, fatigue,
somnolence and slowing of certain cognitive functions.
SPN-538 is designed to improve patient compliance and to have a better
tolerability profile compared to the current immediate release products that
are taken multiple times per day. SPN-538's pharmacokinetic profile delivers
lower peak plasma concentrations and lower input rate over an extended time
period, resulting in smoother and more consistent blood levels of topiramate
during the day compared to immediate release Topamax. We have conducted
fourteen clinical trials in support of the development of SPN-538 and one
additional clinical trial is ongoing. The NDA for SPN-538 was accepted for
filing by the FDA in November 2011 and the PDUFA date is in July 2012. We are
pursuing a regulatory strategy under Section 505(b)(2) of the Federal Food,
Drug and Cosmetic Act, which allows us to rely in our submission on the
existing data and knowledge the FDA has from the NDA of Topamax.
SPN-804 (extended release oxcarbazepine)
Our second late-stage product candidate, SPN-804, is a novel oral once-daily
extended release formulation of oxcarbazepine for which we submitted an NDA
that was accepted for filing by the FDA in February 2012. Oxcarbazepine is
marketed by Novartis under the brand name Trileptal and is available in a
generic form. Trileptal is indicated for monotherapy and adjunctive therapy of
epilepsy. Oxcarbazepine is an active voltage-dependent sodium channel blocker
that, despite its effectiveness in treating epilepsy, is associated with many
side effects that tend to limit its use. The side effects associated with
taking oxcarbazepine include, among others, dizziness, double vision,
somnolence, nausea and vomiting.
With a novel pharmacokinetic profile that delivers lower peak plasma
concentrations, a slower rate of input, smoother and more consistent blood
levels compared to immediate release products such as Trileptal, we believe
SPN-804 has the potential of improving the tolerability of oxcarbazepine by
reducing the side effects experienced by patients. We have conducted nine
clinical trials, including bioequivalence trials and a Phase III trial, and we
are conducting two ongoing clinical trials to support the development of SPN-
804. The NDA for SPN-804 was accepted for filing by the FDA in February 2012
and the PDUFA date is in October 2012. We are pursuing a Section 505(b)(2)
regulatory strategy, which allows us to rely in our filing on the existing data
and knowledge the FDA has from the NDA of Trileptal.
Our Psychiatry Portfolio
ADHD is a common CNS disorder characterized by developmentally inappropriate
levels of inattention, hyperactivity, and impulsivity. ADHD affects an
estimated 6% to 9% of all school-age children and 3% to 5% of adults in the
United States. (7) An estimated 60% to 80% of children with ADHD continue to
meet the criteria for ADHD into adolescence, and as many as 67% of children who
have ADHD may have coexisting conditions such as oppositional defiant disorder,
conduct disorder, anxiety disorder and depression. (8) In addition,
approximately 25% of children with ADHD also exhibit persistent conduct
problems, such as impulsive aggression. (9)
(7) Dopheide, J.A., Attention-Deficit-Hyperactivity Disorder: An Update,
published June 2009 in Pharmacotherapy .
(8) Floet, A.M.W., Attention-Deficit/Hyperactivity Disorder, published
February 2010 in Pediatrics in Review .
(9) Jensen, P.S., Consensus Report on Impulsive Aggression as a Symptom Across
Diagnostic Categories in Child Psychiatry: Implications for Medication
Studies , published March 2007 in Journal of the American Academy of Child
and Adolescent Psychiatry .
SPN-810 (molindone hydrochloride)
We are developing SPN-810 as a novel treatment for impulsive aggression in
patients with ADHD. We initiated a Phase IIb trial of SPN-810 in the United
States in June 2011 for which we expect results in the second half of 2012. If
approved by the FDA, SPN-810 could be the first product available to address
this serious, unmet medical need. SPN-810 is based on molindone hydrochloride,
which was previously marketed in the United States as an anti-psychotic to
treat schizophrenia under the trade name Moban. Molindone hydrochloride is
unusual among anti-psychotics in that it is less likely to be associated with
weight gain.
We have completed four clinical trials for SPN-810, including a Phase IIa trial
in which we tested the safety and tolerability of immediate release molindone
hydrochloride in children with ADHD who suffer from serious persistent conduct
problems. This open-label, dose-ranging trial randomized 78 children, 6-12
years of age, into one of four treatment groups, which were given four
different doses of immediate release molindone hydrochloride, between 10 mg and
40 mg per day, depending on weight, three times a day over a six-week treatment
period, after 2-5 weeks of titration. SPN-810 was well tolerated in the trial
with no clinically meaningful changes in standard hematology, clinical
chemistry values, vital signs or electrocardiogram results. SPN-810 also showed
improvements on the primary and secondary outcome measures, such as conduct
problem and ADHD scales, across all four treatment groups.
SPN-812
We are developing SPN-812, which is currently in Phase II development, as a
novel non-stimulant treatment for ADHD. SPN-812 is a selective norepinephrine
reuptake inhibitor that we believe could be more effective and have a better
side effect profile than other non-stimulant treatments for ADHD. We completed
a proof-of-concept Phase IIa trial of SPN-812 in the first quarter of 2011, in
which SPN-812 was well tolerated and demonstrated a statistically significant
improvement over placebo as a treatment for ADHD. The trial was a randomized,
double-blind, placebo-controlled trial in 52 adults with a current diagnosis of
ADHD, with 26 subjects per treatment group. SPN-812 has not been developed and
marketed in the United States and, therefore, it would be considered and
reviewed by the FDA as a new chemical entity.
-----
We were incorporated in Delaware in 2005. Our principal executive office is
located at 1550 East Gude Drive, Rockville, Maryland 20850. Our telephone
number is (301) 838-2500. Our website address at www.supernus.com.