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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to              
Commission File Number: 001-35518
SUPERNUS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware20-2590184
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
9715 Key West Avenue
Rockville MD20850
(Address of principal executive offices)(Zip Code)
(301838-2500
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer 
Non-accelerated filer Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   No
Securities registered pursuant to Section 12(b) of the Exchange Act
Title of each classOutstanding at October 30, 2024Trading SymbolName of each exchange on which registered
Common Stock, $0.001 par value per share55,219,273SUPNThe Nasdaq Global Market

1

SUPERNUS PHARMACEUTICALS, INC.
FORM 10-Q — QUARTERLY REPORT
FOR THE QUARTERLY PERIOD ENDED September 30, 2024
Page No.

2

PART I — FINANCIAL INFORMATION

Supernus Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
September 30,December 31,
20242023
(unaudited)
Assets
Current assets
Cash and cash equivalents$31,673 $75,054 
Marketable securities371,537 179,820 
Accounts receivable, net145,408 144,155 
Inventories, net63,981 77,408 
Prepaid expenses and other current assets27,404 16,676 
Total current assets640,003 493,113 
Long-term marketable securities 16,617 
Property and equipment, net11,876 13,530 
Intangible assets, net540,156 599,889 
Goodwill117,019 117,019 
Other assets33,647 37,505 
Total assets$1,342,701 $1,277,673 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued liabilities$75,803 $79,569 
Accrued product returns and rebates169,124 154,274 
Contingent consideration, current portion46,581 52,070 
Other current liabilities 4,283 
Total current liabilities291,508 290,196 
Contingent consideration, long-term403 1,380 
Operating lease liabilities, long-term28,926 33,196 
Deferred income tax liabilities, net7,364 24,963 
Other liabilities7,350 6,422 
Total liabilities335,551 356,157 
Commitments and contingencies (Note 14)
Stockholders’ equity
Common stock, $0.001 par value; 130,000,000 shares authorized; 55,219,273 and 54,723,356 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
55 55 
Additional paid-in capital465,919 439,493 
Accumulated other comprehensive earnings (loss), net of tax78 (593)
Retained earnings541,098 482,561 
Total stockholders’ equity1,007,150 921,516 
Total liabilities and stockholders’ equity$1,342,701 $1,277,673 



See accompanying notes.
3

Supernus Pharmaceuticals, Inc.
Condensed Consolidated Statements of Earnings (Loss)
(in thousands, except share and per share data)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
(unaudited)(unaudited)
Revenues
Net product sales$170,302 $149,004 $471,301 $417,915 
Royalty, licensing and other revenues5,387 4,876 16,357 25,292 
Total revenues175,689 153,880 487,658 443,207 
Costs and expenses
Cost of goods sold(a)
17,583 19,601 51,808 64,152 
Research and development29,036 22,655 80,149 68,246 
Selling, general and administrative69,753 82,700 242,173 255,079 
Amortization of intangible assets19,488 21,242 59,733 61,316 
Contingent consideration gain(1,016)(456)(6,466)(1,313)
Total costs and expenses134,844 145,742 427,397 447,480 
Operating earnings (loss)40,845 8,138 60,261 (4,273)
Other income (expense)
Interest and other income, net4,098 1,751 11,227 8,467 
Interest expense   (2,415)
Total other income (expense)4,098 1,751 11,227 6,052 
Earnings before income taxes44,943 9,889 71,488 1,779 
Income tax expense6,446 25,865 12,951 1,638 
Net earnings (loss)$38,497 $(15,976)$58,537 $141 
Earnings (loss) per share
Basic$0.70 $(0.29)$1.06 $0.00 
Diluted$0.69 $(0.29)$1.05 $0.00 
Weighted average shares outstanding
Basic55,149,760 54,608,963 54,977,199 54,498,687 
Diluted56,016,350 54,608,963 55,791,185 55,574,922 
_____________________________
(a) Excludes amortization of acquired intangible assets




See accompanying notes.
4

Supernus Pharmaceuticals, Inc.
Condensed Consolidated Statements of Comprehensive Earnings (Loss)
(in thousands)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
(unaudited)(unaudited)
Net earnings (loss)$38,497 $(15,976)$58,537 $141 
Other comprehensive gain
Unrealized gain on marketable securities, net of tax450 569 671 2,004 
Other comprehensive gain450 569 671 2,004 
Comprehensive earnings (loss)$38,947 $(15,407)$59,208 $2,145 






































See accompanying notes.
5

Supernus Pharmaceuticals, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
Nine Months Ended September 30, 2024 and 2023
(unaudited, in thousands, except share data)

jCommon StockAdditional 
Paid-in Capital
Accumulated Other
Comprehensive
Earnings (Loss)
Retained
Earnings
Total
Stockholders’
Equity
SharesAmount
Balance, December 31, 202354,723,356 $55 $439,493 $(593)$482,561 $921,516 
Share-based compensation expense related to employee stock purchase plan and share-based awards— — 5,897 — — 5,897 
Issuance of common stock related to employee stock purchase plan and share-based awards, net of taxes withheld241,960 — 1,570 — — 1,570 
Net earnings— — — — 124 124 
Unrealized gain on marketable securities, net of tax— — — 59 — 59 
Balance, March 31, 202454,965,316 55 446,960 (534)482,685 929,166 
Share-based compensation expense related to employee stock purchase plan and share-based awards— — 6,552 — — 6,552 
Issuance of common stock related to employee stock purchase plan and share-based awards, net of taxes withheld80,733 — 1,658 — — 1,658 
Net earnings— — — — 19,916 19,916 
Unrealized gain on marketable securities, net of tax— — — 162 — 162 
Balance, June 30, 202455,046,049 55 455,170 (372)502,601 957,454 
Share-based compensation expense related to employee stock purchase plan and share-based awards— — 7,674 — — 7,674 
Issuance of common stock related to employee stock purchase plan and share-based awards, net of taxes withheld173,224 — 3,075 — — 3,075 
Net earnings— — — — 38,497 38,497 
Unrealized gain on marketable securities, net of tax— — — 450 — 450 
Balance, September 30, 202455,219,273 $55 $465,919 $78 $541,098 $1,007,150 





6

Supernus Pharmaceuticals, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
Nine Months Ended September 30, 2024 and 2023
(unaudited, in thousands, except share data)
Common StockAdditional 
Paid-in Capital
Accumulated Other
Comprehensive
Earnings (Loss)
Retained
Earnings
Total
Stockholders’
Equity
SharesAmount
Balance, December 31, 202254,253,796 $54 $408,115 $(3,210)$481,245 $886,204 
Share-based compensation expense related to employee stock purchase plan and share-based awards— — 6,306 — — 6,306 
Issuance of common stock related to employee stock purchase plan and share-based awards, net of taxes withheld216,826 — 1,811 — — 1,811 
Net earnings— — — — 16,948 16,948 
Unrealized gain on marketable securities, net of tax— — — 881 — 881 
Balance, March 31, 202354,470,622 54 416,232 (2,329)498,193 912,150 
Share-based compensation expense related to employee stock purchase plan and share-based awards— — 6,088 — — 6,088 
Issuance of common stock related to employee stock purchase plan and share-based awards, net of taxes withheld122,279 1 1,946 — — 1,947 
Net loss— — — — (831)(831)
Unrealized gain on marketable securities, net of tax— — — 554 — 554 
Balance, June 30, 202354,592,901 55 424,266 (1,775)497,362 919,908 
Share-based compensation expense related to employee stock purchase plan and share-based awards— — 7,920 — — 7,920 
Issuance of common stock related to employee stock purchase plan and share-based awards, net of taxes withheld37,857 — (230)— — (230)
Net loss— — — — (15,976)(15,976)
Unrealized gain on marketable securities, net of tax— — — 569 — 569 
Balance, September 30, 202354,630,758 $55 $431,956 $(1,206)$481,386 $912,191 






See accompanying notes.
7

Supernus Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended September 30,
20242023
(unaudited)
Cash flows from operating activities
Net earnings$58,537 $141 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization61,569 63,183 
Amortization of deferred financing costs and debt discount 532 
Amortization of premium/discount on marketable securities2,497 (849)
Change in fair value of contingent consideration(6,466)(1,313)
Realized gains from sales of marketable securities(9) 
Other noncash adjustments, net8,281 10,485 
Share-based compensation expense20,123 20,314 
Deferred income tax benefit(20,064)(15,255)
Changes in operating assets and liabilities:
Accounts receivable(1,253)21,155 
Inventories12,619 1,082 
Prepaid expenses and other assets(8,542)(8,138)
Accrued product returns and rebates14,850 10,808 
Accounts payable and other liabilities(14,597)(36,018)
Net cash provided by operating activities127,545 66,127 
Cash flows from investing activities
Purchases of marketable securities(542,608) 
Maturities of marketable securities365,891 335,297 
Purchases of property and equipment(512)(587)
Net cash provided by (used in) investing activities(177,229)334,710 
Cash flows from financing activities
Proceeds from Credit Line
 93,000 
Payments on Credit Line (93,000)
Payment on convertible notes (402,500)
Proceeds from issuance of common stock8,031 5,518 
Employee taxes paid related to net share settlement of equity awards(1,728)(1,990)
Net cash provided by (used in) financing activities6,303 (398,972)
Net change in cash and cash equivalents(43,381)1,865 
Cash and cash equivalents at beginning of year75,054 93,120 
Cash and cash equivalents at end of period
$31,673 $94,985 
Supplemental cash flow information
Cash paid for interest on debt$ $1,946 
Cash paid for income taxes40,343 27,055 
Cash paid for operating leases13,224 13,242 
Noncash investing and financing activities
Lease assets obtained for new operating leases$3,547 $5,903 

See accompanying notes.
8

Supernus Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
1.    Business Organization
Supernus Pharmaceuticals, Inc. (the Company, see Consolidation in Note 2, Summary of Significant Accounting Policies) is a biopharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases. The Company's diverse neuroscience portfolio includes approved treatments for epilepsy, migraine, attention-deficit hyperactivity disorder (ADHD), hypomobility in Parkinson’s Disease (PD), cervical dystonia, chronic sialorrhea, and dyskinesia in PD patients receiving levodopa-based therapy. The Company is developing a broad range of novel CNS product candidates including new potential treatments for hypomobility in PD, epilepsy, depression, and other CNS disorders.
The Company has seven commercial products that it markets: Qelbree®, GOCOVRI®, Oxtellar XR®, Trokendi XR®, APOKYN®, XADAGO®, and MYOBLOC®. In addition, SPN-830 (apomorphine infusion device) is a late-stage drug/device combination product candidate for the continuous treatment of motor fluctuations ("OFF" episodes) in PD patients that are not adequately controlled with oral levodopa and one or more adjunct PD medications. In August 2024, the Company resubmitted to the U.S Food and Drug Administration (FDA) the New Drug Application (NDA) for apomorphine infusion device (SPN-830) for the continuous treatment of motor fluctuations ("OFF" episodes) in Parkinson’s disease. On August 16, 2024, the FDA acknowledged the resubmission of the NDA for the apomorphine infusion device (SPN-830). The resubmission is considered filed, with a user fee goal date (PDUFA date) of February 1, 2025.
2.    Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) for interim financial information. As permitted under Generally Accepted Accounting Principles in the United States (U.S. GAAP), certain notes and other information have been omitted from the interim unaudited condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s most recent Annual Report on Form 10-K, for the year ended December 31, 2023, filed with the SEC.
In management’s opinion, the unaudited condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows. The results of operations for any interim period are not necessarily indicative of the Company’s future quarterly or annual results.
The Company, which is primarily located in the U.S., operates in one operating segment.
Reclassifications
The prior year amount related to the caption Employee taxes paid related to net share settlement of equity awards in the condensed consolidated statements of cash flows has been reclassified to conform to current year presentation. The reclassification did not affect the other condensed consolidated financial statements.
Consolidation
The Company's unaudited condensed consolidated financial statements include the accounts of Supernus Pharmaceuticals, Inc. and its wholly owned subsidiaries. These are collectively referred to herein as "Supernus" or "the Company." Supernus Pharmaceuticals, Inc. and each of its subsidiaries are distinct legal entities. All material intercompany transactions and balances have been eliminated in consolidation.
The unaudited condensed consolidated financial statements reflect the consolidation of entities in which the Company has a controlling financial interest. In determining whether there is a controlling financial interest, the Company considers if it has a majority of the voting interests of the entity, or if the entity is a variable interest entity (VIE) and if the Company is the primary beneficiary. In determining the primary beneficiary of a VIE, the Company evaluates whether it has both: the power to direct the activities of the VIE that most significantly impact the VIE's economic performance; and the obligation to absorb losses of, or the right to receive benefits from the VIE that could potentially be significant to that VIE. The Company's judgment with respect to its level of influence or control of an entity involves the consideration of various factors, including the form of an ownership interest; representation in the entity's governance; the size of the investment; estimates of future cash flows; the ability to
9

participate in policymaking decisions; and the rights of the other investors to participate in the decision making process, including the right to liquidate the entity, if applicable. If the Company is not the primary beneficiary of the VIE, and an ownership interest is maintained in the entity, the interest is accounted for under the equity or cost methods of accounting, as appropriate.
The Company continuously assesses whether it is the primary beneficiary of a VIE as changes to existing relationships or future transactions may affect its conclusions.
Use of Estimates
The Company bases its estimates on: historical experience; forecasts; information received from its service providers; information from other sources, including public and proprietary sources; and other assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from the Company’s estimates. The Company periodically evaluates the methodologies employed in making its estimates.
Advertising Expense
Advertising expense includes the cost of promotional materials and activities, such as printed materials and digital marketing, marketing programs and speaker programs. The cost of the Company's advertising efforts is expensed as incurred.
The Company incurred approximately $19.6 million and $67.5 million in advertising expense for the three and nine months ended September 30, 2024, respectively, and approximately $25.1 million and $76.9 million for the three and nine months ended September 30, 2023. These expenses are recorded as a component of Selling, general and administrative expenses in the unaudited condensed consolidated statements of earnings (loss).
Insurance Recoveries
The Company has several policies with third-party insurers that provide for the recovery of certain costs incurred by the Company. The Company records our rights to insurance recoveries as a receivable when the respective costs are reimbursable under applicable insurance policies, it is probable that such costs will be reimbursed, and reimbursement can be reasonably estimated. As such, the Company estimates the percentage of costs that will be reimbursed by the insurance provider to determine the proper amount to record for the insurance recovery receivable.
The Company recorded approximately $11.5 million and $12.0 million of insurance recoveries during the three and nine months ended September 30, 2024, respectively. There were no insurance recoveries during the three and nine months ended September 30, 2023. To date, there have not been any material adjustments to our prior estimates of the insurance recovery receivable. Insurance recoveries recognized in fiscal year 2024 were recorded as a reduction to Selling, general and administrative expenses.
Recently Issued Accounting Pronouncements and Disclosure Rules
New Accounting Pronouncements Not Yet Adopted
Accounting Standards Update (ASU) 2023-07, Improvements to Reportable Segment Disclosures (Topic 280) - The new standard, issued in November 2023, improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing reporting requirements under Topic 280. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis, with early adoption permitted. The Company plans to adopt the guidance for the fiscal year ending December 31, 2024. The Company expects ASU 2023-07 to require additional disclosures in the notes to its consolidated financial statements. The Company is currently evaluating the effects the adoption of this guidance will have on the consolidated financial statements.
ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) - The new standard, issued in December 2023, requires entities to disclose additional information with respect to the effective tax rate reconciliation and to disclose the disaggregation by jurisdiction of income tax expense and income taxes paid. The standard is effective with annual periods beginning after December 15, 2024, with early adoption permitted. The standard is to be applied on a prospective basis, although optional retrospective application is permitted. The Company plans to adopt the guidance for the fiscal year ending December 31, 2025. The Company expects ASU 2023-09 to require additional disclosures in the notes to its consolidated financial statements. The Company is currently evaluating the effects the adoption of this guidance will have on the consolidated financial statements.
SEC Final Climate Rule
10

In March 2024, the U.S. Securities and Exchange Commission (SEC) adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors (Final Rule). This rule will require registrants to disclose certain climate-related information in registration statements and annual reports with staggered compliance dates for large accelerated filers for the various aspects of the Final Rule. On April 4, 2024, the SEC issued an order staying the Final Rule. The SEC’s administrative stay is expected to remain in place until the completion of litigation filed in various federal courts challenging, among other things, the agency’s authority to adopt the Final Rule. The Company is currently evaluating the final rule to determine its impact on the Company's disclosures.
3. Disaggregated Revenues

The following table provides information regarding total revenues (dollars in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
(unaudited)(unaudited)
Net product sales
Qelbree$62,359 $37,081 $166,857 $93,840 
GOCOVRI35,657 32,889 93,922 87,650 
Oxtellar XR29,805 29,644 86,265 82,359 
APOKYN19,867 21,510 53,811 56,324 
Trokendi XR15,318 20,625 48,393 74,734 
Other(1)
7,296 7,255 22,053 23,008 
Total net product sales170,302 149,004 471,301 417,915 
Royalty, licensing and other revenues5,387 4,876 16,357 25,292 
Total revenues$175,689 $153,880 $487,658 $443,207 
___________________________________________
(1) Includes net product sales of MYOBLOC, XADAGO and Osmolex ER.
In December 2023, the Company submitted to the FDA a notification of discontinuance to withdraw Osmolex ER from distribution. Distribution of Osmolex ER ceased on April 1, 2024.
The Company recognized noncash royalty revenue of $4.0 million for the nine months ended September 30, 2023. The Company no longer recognizes noncash royalty revenue as ownership of the royalty rights reverted back to the Company during the second quarter of 2023.
4. Investments
Marketable Securities
Unrestricted available-for-sale marketable securities held by the Company are as follows (dollars in thousands):
September 30, 2024December 31, 2023
(unaudited)
Corporate, U.S. government agency and municipal debt securities
Amortized cost$371,381 $197,153 
Gross unrealized gains263 5 
Gross unrealized losses(107)(721)
Total fair value$371,537 $196,437 
As of September 30, 2024, all of our unrestricted available-for-sale marketable securities have contractual maturities of one year or less.
As of September 30, 2024, there was no impairment due to credit loss on any available-for-sale marketable securities.
5.    Fair Value of Financial Instruments
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The fair value of an asset or liability represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between unrelated market participants.
The Company reports the fair value of assets and liabilities using a three level measurement hierarchy that prioritizes the inputs used to measure fair value. Fair value hierarchy consists of the following three levels:
Level 1—Valuations based on unadjusted quoted prices in active markets that are accessible at measurement date for identical assets.
Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and model-based valuations in which all significant inputs are observable in the market, either directly or indirectly (e.g., interest rates; yield curves).
Level 3—Valuations using significant inputs that are unobservable in the market and inputs that reflect the Company’s own assumptions. These are based on the best information available, including the Company’s own data.
Financial Assets and Liabilities Recorded at Fair Value
The Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis are as follows (dollars in thousands):
Fair Value Measurements as of September 30, 2024 (unaudited)
Total

Level 1

Level 2

Level 3
Assets:
Cash and cash equivalents
Cash$31,080 $31,080 $ $ 
Money market funds593 593   
Marketable securities
Corporate, U.S. government agency and municipal debt securities371,537  371,537  
Other noncurrent assets
Marketable securities - restricted (SERP)635 19 616  
Total assets at fair value$403,845 $31,692 $372,153 $ 
Liabilities:
Contingent consideration$46,984 $ $ $46,984 
Total liabilities at fair value$46,984 $ $ $46,984 
12

Fair Value Measurements as of December 31, 2023
Total

Level 1

Level 2

Level 3
Assets:
Cash and cash equivalents
Cash$35,957 $35,957 $ $ 
Money market funds39,097 39,097   
Marketable securities
Corporate, U.S. government agency and municipal debt securities179,820  179,820  
Long-term marketable securities
Corporate and municipal debt securities16,617  16,617  
Other noncurrent assets
Marketable securities - restricted (SERP)568 16 552  
Total assets at fair value$272,059 $75,070 $196,989 $ 
Liabilities:
Contingent consideration$53,450 $ $ $53,450 
Total liabilities at fair value$53,450 $ $ $53,450 
The fair value of restricted marketable securities is recorded in Other assets on the condensed consolidated balance sheets. There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy.
Other Financial Instruments
The carrying amounts of other financial instruments, including accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term maturities.

6. Contingent Consideration
The following table provides the current and long-term portions related to the contingent consideration for the USWM Acquisition and Adamas Acquisition (as defined below) (dollars in thousands):
September 30,
2024
December 31,
2023
Reported under the following captions in the condensed consolidated balance sheets:(unaudited)
Contingent consideration, current portion$46,581 $52,070 
Contingent consideration, long-term403 1,380 
Total$46,984 $53,450 
The Company's contingent consideration liabilities are related to the USWM Acquisition in 2020 and the Adamas Acquisition in 2021. The contingent consideration liabilities are measured at fair value using either a Monte Carlo simulation or the income approach. The Company classifies its contingent consideration liabilities as Level 3 fair value measurements based on the significant unobservable inputs used to estimate fair value. These reflect the inputs and assumptions the Company believes would be made by market participants. Changes in any of those inputs together or in isolation may result in significantly lower or higher fair value measurement. The change in fair value is reported on the condensed consolidated statement of earnings (loss) in Contingent consideration gain.
USWM Contingent Consideration
On June 9, 2020 (the USWM Closing Date), the Company completed its acquisition of all the outstanding equity of USWM Enterprises, LLC (USWM Enterprises) (USWM Acquisition). The USWM Acquisition included potential additional contingent consideration payments for regulatory and development milestones and sales-based milestones. As of September 30, 2024, the remaining potential contingent consideration payments are up to $55 million in regulatory and development milestones
13

comprised of (1) $25 million related to the FDA's approval of the SPN-830 NDA and (2) $30 million related to the subsequent commercial product launch.
The key assumptions considered in estimating the fair value include the estimated probability and timing of milestone achievement, such as the probability and timing of obtaining regulatory approval, timing of projected revenues, and the discount rate.
Adamas Contingent Consideration
On November 24, 2021 (the Adamas Closing Date), the Company completed its acquisition of all the outstanding equity of Adamas (Adamas Acquisition). The Adamas Acquisition included payment of two non-tradable contingent value rights (CVRs) each of which represents the contractual right to receive a contingent payment upon the achievement of the applicable aggregate worldwide net product sales of GOCOVRI.
Each CVR represents the contractual right to receive a contingent payment of $0.50 per share in cash, less any applicable withholding taxes and without interest, upon the achievement of the applicable milestone (each such amount, a Milestone Payment) in accordance with the terms of a Contingent Value Rights Agreement entered into between the Company and American Stock Transfer & Trust Company, LLC, as rights agent, as further defined in the CVR agreement. One Milestone Payment is payable (subject to certain terms and conditions) upon the first occurrence of the achievement of aggregate worldwide net sales of GOCOVRI in excess of $150 million during any consecutive 12-month period ending on or before December 31, 2024 (Milestone 2024). Another Milestone Payment is payable (subject to certain terms and conditions) upon the first occurrence of the achievement of aggregate worldwide net sales of GOCOVRI in excess of $225 million during any consecutive 12-month period ending on or before December 31, 2025 (Milestone 2025 and, together with Milestone 2024, the Milestones). Each Milestone may only be achieved once. The possible outcomes for the contingent consideration range from $0 to $50.9 million on an undiscounted basis.
The key assumptions considered in estimating the fair value of the Adamas sales-based milestones include the estimated revenue projections, volatility, estimated discount rates and risk-free interest rate.
Change in the Fair Value of Contingent Consideration
The following tables provide a reconciliation of the beginning and ending balances related to the contingent consideration for the USWM Acquisition and Adamas Acquisition (dollars in thousands):
USWM AcquisitionAdamas AcquisitionTotal
Balance at December 31, 2023$46,400 $7,050 $53,450 
Change in fair value recognized in earnings130 (6,596)(6,466)
Balance at September 30, 2024 (unaudited)$46,530 $454 $46,984 
USWM AcquisitionAdamas AcquisitionTotal
Balance at December 31, 2022$46,270 $8,697 $54,967 
Change in fair value recognized in earnings(390)(923)(1,313)
Balance at September 30, 2023 (unaudited)$45,880 $7,774 $53,654 
The Company recorded the following changes in fair value of the contingent consideration liability for the USWM milestones:
The Company recorded a $1.3 million expense and a $0.1 million expense due to the change in fair value of contingent consideration liabilities for the USWM milestones for the three and nine months ended September 30, 2024, respectively. The change in fair value of contingent consideration for the USWM milestones was primarily due to the change in timing of milestone achievement and estimated discount rate in the third quarter of 2024 and passage of time in both periods.
The Company recorded a $0.7 million expense and a $0.4 million gain due to the change in the fair value of the contingent consideration liabilities for the USWM milestones for the three and nine months ended September 30, 2023, respectively. The change in the fair value of contingent consideration for the USWM milestones was primarily driven by the change in estimated fair value of regulatory and developmental milestones due to passage of time in both periods, as well as the change in timing of milestone achievement and estimated discount rate in the first quarter of 2023.
14

The Company recorded the following changes in fair value of the contingent consideration liabilities for the Adamas CVRs:
The Company recorded a $2.3 million gain and a $6.6 million gain due to the change in fair value of the contingent consideration liabilities for the Adamas CVRs for the three and nine months ended September 30, 2024, respectively. The change in fair value of contingent consideration was primarily due to passage of time.
The Company recorded a $1.1 million gain and a $0.9 million gain due to the change in fair value of the contingent consideration liabilities for the Adamas CVRs for the three and nine months ended September 30, 2023, respectively. The change in fair value of contingent consideration for the Adamas milestones was primarily due to passage of time and changes in the estimated discount rate.
7.    Intangibles Assets, Net
The following table sets forth the gross carrying amounts and related accumulated amortization of intangible assets (dollars in thousands):
September 30,
2024
December 31,
2023
(unaudited)
Remaining Weighted
Average Life (Years)
Carrying Amount, GrossAccumulated AmortizationCarrying Amount, NetCarrying Amount, GrossAccumulated AmortizationCarrying Amount, Net
Acquired in-process research and development$124,000 $— $124,000 $124,000 $— $124,000 
Intangible assets subject to amortization:
Acquired developed technology and product rights6.15661,311 (245,155)416,156 661,311 (190,395)470,916 
Capitalized patent defense costs0.0043,820 (43,820) 43,820 (38,847)4,973 
Total intangible assets6.15$829,131 $(288,975)$540,156 $829,131 $(229,242)$599,889 
Amortization expense for intangible assets was $19.5 million and $59.7 million for the three and nine months ended September 30, 2024, and $21.2 million and $61.3 million for the three and nine months ended September 30, 2023, respectively.
U.S. patents covering Trokendi XR and Oxtellar XR will expire no earlier than 2027. The Company entered into settlement agreements that allowed third parties to enter the Trokendi XR market on January 1, 2023. The Company entered into settlement and license agreements that allowed a third party to enter the Oxtellar XR market in September 2024.
The Company entered into settlement and license agreements that allows third parties to enter the XADAGO market in December 2027, or sooner under certain conditions.
8.    Debt
Uncommitted Demand Secured Line of Credit
On February 8, 2023, the Company entered into a credit line agreement with UBS (the Credit Line). The Credit Line provides for a revolving line of credit of up to $150 million, which can be drawn at any time. Any fixed rate borrowing will bear interest at a fixed interest rate, equal to the sum of (i) the UBS Fixed Funding Rate (as defined in the Credit Line) plus (ii) the applicable Percentage Spread established in the Credit Line. Any variable rate borrowing will bear interest at a variable interest rate, equal to the sum of (i) the UBS Variable Rate (as defined in the Credit Line) plus (ii) the applicable Percentage Spread established in the Credit Line.
The Credit Line is secured by a first priority lien and security interest in certain of the Company’s assets, including each account of the Company at UBS Financial Services Inc. (the Collateral Account), and other such collateral (collectively, the Collateral), as further defined in the Credit Line. The Company may be required to post additional collateral if the value of the Collateral declines below the required collateral maintenance requirements.
15

Upon certain customary events of default, all amounts due under the Credit Line will become immediately due and payable without demand, and UBS has the right, in its discretion, to liquidate, transfer, withdraw or sell all or any part of the Collateral and apply the proceeds to repay any borrowings pursuant to the Credit Line.
The Company has the right to repay any variable rate advance under the Credit Line at any time, in whole or in part, without penalty. The Company may repay any fixed rate advance in whole, but may not repay any fixed rate advance in part. In its discretion and without cause, UBS has the right at any time to demand full or partial payment of amounts borrowed pursuant to the Credit Line and terminate the Credit Line.
On March 30, 2023, the Company borrowed $93.0 million under the Credit Line, which bore a variable interest rate. The funds from this borrowing were used to repay outstanding indebtedness under the 0.625% Convertible Senior Notes Due 2023 (2023 Notes). In the second quarter of 2023, the Company repaid the total principal balance of $93.0 million under the Credit Line and the interest incurred on the Credit Line of $0.7 million. As of September 30, 2024, there was no outstanding debt under the Credit Line.
9.    Share-Based Payments
Equity Incentive Plan
On June 14, 2024, the Company's shareholders approved, and the Company has adopted, the Amended and Restated 2021 Equity Incentive Plan (the Amended 2021 Plan) to increase the number of shares of the Company's common stock available for issuance under the 2021 Plan by 4,000,000.
Share-based compensation expense is as follows (dollars in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
(unaudited)(unaudited)
Research and development$1,350 $1,254 $3,946 $3,458 
Selling, general and administrative6,324 6,666 16,177 16,856 
Total$7,674 $7,920 $20,123 $20,314 
Stock Option
The following table summarizes stock option activities:
Number of
Options
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term (in years)
Outstanding, December 31, 20236,583,822 $29.20 5.90
Granted 1,171,612 $28.05 
Exercised (336,868)$20.23 
Forfeited (251,657)$31.71 
Outstanding, September 30, 2024 (unaudited)7,166,909 $29.34 5.87
As of September 30, 2024 (unaudited):
Vested and expected to vest7,166,909 $29.34 5.87
Exercisable 4,560,609 $27.95 4.33
As of December 31, 2023:
Vested and expected to vest6,583,822 $29.20 5.90
Exercisable4,110,537 $26.58 4.43
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Restricted Stock Units
The following table summarizes restricted stock unit (RSU) activities:
Number of
RSUs
Weighted Average
Grant Date Fair Value per Share
Nonvested, December 31, 2023300,141 $36.90 
Granted198,414 $28.06 
Vested(100,891)$36.51 
Forfeited(19,124)$34.64 
Nonvested, September 30, 2024 (unaudited)378,540 $32.48 

Performance Share Units
The following table summarizes performance share unit (PSU) activities:
Performance-Based UnitsMarket-Based UnitsTotal PSUs
Number of PSUsWeighted
Average
Grant Date Fair Value per Share
Number of PSUsWeighted
Average
Grant Date Fair Value per Share
Number of PSUsWeighted
Average
Grant Date Fair Value per Share
Nonvested, December 31, 2023251,630 $32.22 20,000 $28.63 271,630 $31.96 
Granted252,700 $26.91  $ 252,700 $26.91 
Vested(62,980)$33.67  $ (62,980)$33.67 
Forfeited(58,050)$29.37  $ (58,050)$29.37 
Nonvested, September 30, 2024 (unaudited)383,300$28.91 20,000$28.63 403,300$28.90 
10.    Earnings (Loss) per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands, except share and per share amounts):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
(unaudited)(unaudited)
Numerator:
Net earnings (loss)$38,497 $(15,976)$58,537 $141 
Denominator:
Weighted average shares outstanding, basic55,149,760 54,608,963 54,977,199 54,498,687 
Effect of dilutive securities:
Stock options and stock awards866,590  813,986 1,076,235 
Weighted average shares outstanding, diluted56,016,350 54,608,963 55,791,185 55,574,922 
Earnings (loss) per share, basic$0.70 $(0.29)$1.06 $0.00 
Earnings (loss) per share, diluted$0.69 $(0.29)$1.05 $0.00 
The following table sets forth the common stock equivalents of outstanding stock-based awards and shares associated with the conversion of the 2023 Notes excluded in the calculation of diluted earnings (loss) per share, because their inclusion
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would be anti-dilutive:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
(unaudited)(unaudited)
2023 Notes   2,261,312 
Stock options and stock awards712,457 411,506 772,255 486,080 
11.    Income Tax Expense
The following table provides information regarding the Company’s income tax expense for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):
Three Months Ended
September 30,
Nine Months Ended September 30,
2024202320242023
(unaudited)(unaudited)
Income tax expense
$6,446 $25,865 $12,951 $1,638 
Effective tax rate14.3 %261.6 %18.1 %92.1 %

Income tax expense was $6.4 million (14.3% effective tax rate) and $13.0 million (18.1% effective tax rate) for the three and nine months ended September 30, 2024, as compared to an income tax expense of $25.9 million (261.6% effective tax rate) and $1.6 million (92.1% effective tax rate) for the three and nine months ended September 30, 2023. The change in both periods was primarily due to higher forecasted earnings before taxes for the three and nine months ended September 30, 2024 as compared to the near break-even forecasted earnings before taxes in 2023.

The Company's effective income tax rates for the three and nine months ended September 30, 2024 vary from the statutory federal tax rate in United States (U.S. federal tax rate) of 21% primarily due to increased tax benefits related to current and prior years research and development tax credits. The Company's effective income tax rates for the three and nine months ended September 30, 2023 vary from the statutory U.S. federal tax rate primarily due to near break-even forecasted earnings before taxes.

The annual forecasted earnings represent the Company's best estimate as of September 30, 2024 and 2023, are subject to change and could have a material impact on the effective tax rate in subsequent periods. Accounting Standard Codification 740, Income Taxes (ASC 740), requires the Company to estimate the annual effective income tax rate for the full year and apply it to pre-tax income (loss) for each interim period, taking into account year-to-date amounts and projected results for the full year.
12.    Leases
Operating lease assets and lease liabilities as reported on the condensed consolidated balance sheets are as follows (dollars in thousands):

Balance Sheet ClassificationSeptember 30, 2024December 31, 2023
(unaudited)
Assets
Operating lease assetsOther assets$26,086 $28,994 
Total lease assets$26,086 $28,994 
Liabilities
Operating lease liabilities, current portionAccounts payable and accrued liabilities$9,227 $8,331 
Operating lease liabilities, long-termOperating lease liabilities, long-term28,926 33,196 
Total lease liabilities$38,153 $41,527 

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13.    Composition of Other Balance Sheet Items
The following details the composition of other balance sheet items (dollars in thousands for amounts in tables):
Inventories, Net
September 30,
2024
December 31,
2023
(unaudited)
Raw materials$11,571 $16,274 
Work in process28,102 31,212 
Finished goods24,308 29,922 
Total$63,981 $77,408 
Property and Equipment, Net
September 30,
2024
December 31,
2023
(unaudited)
Lab equipment and furniture$13,174 $13,069 
Leasehold improvements14,023 14,023 
Software883 883 
Computer equipment1,037 960 
29,117 28,935 
Less accumulated depreciation and amortization(17,241)(15,405)
Property and equipment, net$11,876 $13,530 
Depreciation and amortization expense on property and equipment was approximately $0.6 million and $1.8 million for the three and nine months ended September 30, 2024 respectively, and $0.6 million and $1.9 million for the three and nine months ended September 30, 2023, respectively.
Accounts Payable and Accrued Liabilities
September 30,
2024
December 31,
2023
(unaudited)
Accounts payable$6,392 $1,964 
Accrued compensation, benefits, & related accruals20,284 20,722 
Accrued sales & marketing10,466 11,666 
Accrued manufacturing expenses5,573 11,652 
Accrued R&D expenses7,911 10,530 
Operating lease liabilities, current portion (1)
9,227 8,331 
Accrued royalties (2)
7,849 7,918 
Other accrued expenses8,101 6,786 
Total$75,803 $79,569 
_______________________________
(1) Refer to Note 12, Leases.
(2) Refer to Note 14, Commitments and Contingencies.
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Accrued Product Returns and Rebates
September 30,
2024
December 31,
2023
(unaudited)
Accrued product rebates$111,695 $96,984 
Accrued product returns57,429 57,290 
Total$169,124 $154,274 
14.    Commitments and Contingencies
Product Licenses
The Company has obtained exclusive licenses from third parties for proprietary rights to support the product candidates in the Company's CNS portfolio. Under these license agreements, the Company may be required to pay certain amounts upon the achievement of defined milestones. If these products are ultimately commercialized, the Company is also obligated to pay royalties to third parties, computed as a percentage of net product sales, for each respective product under a license agreement.
Through the USWM Acquisition, the Company acquired licensing agreements with other pharmaceutical companies for APOKYN, XADAGO, and MYOBLOC. The Company is obligated to pay royalties to third parties, computed as a percentage of net product sales, for each of the products under the respective license agreements. The royalty expense incurred for these acquired products is recognized as Cost of goods sold in the condensed consolidated statements of earnings (loss).
Navitor Development Agreement
In April 2020, the Company entered into a development agreement (Development Agreement) with Navitor Pharmaceuticals, Inc. (Navitor Inc.). The Company can terminate the Development Agreement upon 30 days' notice. Under the terms of the Development Agreement, the Company and Navitor Inc. will jointly conduct a Phase II clinical program for NV-5138 (SPN-820) for treatment-resistant depression. The Company agreed to bear certain Phase I and Phase II development costs incurred by either party, up to a maximum of $50 million, which amount could be increased under the terms of the Development Agreement upon Navitor’s request and the Company’s consent. In 2020, the Company paid a one-time, nonrefundable, and non-creditable fee of $10 million for the option to acquire or license NV-5138 (SPN-820) and made a $15 million equity investment representing approximately 13% ownership in Navitor Inc. There are also certain additional payments which could be incurred by the Company that are contingent upon Navitor Inc. achieving defined milestones. These payments include an additional license or acquisition fee depending on whether the Company ultimately licenses or acquires NV-5138 (SPN-820), and subsequent clinical, regulatory and sales milestone payments. The total payments, exclusive of the royalty payments on net sales of NV-5138 (SPN-820) and development costs paid by the Company under the agreement, have the potential to reach $410 million to $475 million, which includes an aggregate upfront payment of $25 million paid in 2020 for the option to acquire or license NV-5138 (SPN-820) and the equity investment, an additional license or acquisition fee depending on whether the Company ultimately licenses or acquires NV-5138 (SPN-820), and subsequent clinical, regulatory and sales based milestone payments. The Company also will have the first right of refusal for any compound with a similar mechanism of action to NV-5138 (SPN-820) on mTORC1 in the central nervous system.
In addition to entering into the Development Agreement in April 2020, as above mentioned, the Company acquired Series D Preferred Shares of Navitor Inc. (the Navitor Shares), an equity investment representing an approximately 13% ownership position in Navitor Inc. As part of a legal restructuring in March 2021, the Company's Navitor Inc. Shares were exchanged for membership interests in Navitor Pharmaceutics LLC (Navitor LLC), which became the sole shareholder of Navitor Inc. The Company has determined that although Navitor LLC is a VIE, the Company does not consolidate the results of this VIE into its financial results because the Company lacks the power to direct the activities that most significantly impact Navitor’s economic performance.
In the second quarter of 2024, the Company consented to payment of additional Phase II development costs for NV-5138 (SPN-820) as they are incurred, but reserves the right to terminate payment of future development costs at its discretion.
The maximum exposure to losses related to Navitor LLC includes the approximately $50 million for Phase I and Phase II development of NV-5138 (SPN-820) already paid by the Company, plus the cost of other development and formulation activities provided by the Company and additional Phase II development costs the Company agreed to pay pursuant to the Development Agreement.
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Subsequent to the Development Agreement entered into in 2020, no additional equity investment has been made or financing has been provided to Navitor Inc. or Navitor LLC.
USWM Enterprise Commitments Assumed
As part of the USWM Acquisition, the Company assumed the remaining commitments of USWM Enterprises and its subsidiaries, which are discussed below.
The Company assumed the annual minimum purchase requirement of MYOBLOC, amounting to an estimated €3.9 million annually, under the contract manufacturing agreement with Merz for manufacture and supply.
MDD US Operations, LLC (formerly US WorldMeds, LLC) and its subsidiary, Solstice Neurosciences, LLC (US) (collectively, the MDD Subsidiaries) entered into a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services which was effective in April 2019. Under the CIA, the MDD Subsidiaries agreed to and paid $17.5 million to resolve U.S. Department of Justice allegations that it violated the False Claims Act and committed to the establishment and ongoing maintenance of an effective compliance program. The fine was paid by the MDD Subsidiaries prior to closing of the USWM Acquisition. As part of the USWM Acquisition, the Company assumed the obligations of the CIA and could become liable for payment of certain stipulated monetary penalties in the event of any CIA violations. In addition, the Company continues to maintain a broad array of processes, policies and procedures necessary to comply with the CIA and submitted its final report during the second quarter of 2024.
Claims and Litigation
From time to time, the Company may be involved in various claims, litigation and legal proceedings. These matters may involve patent litigation, product liability and other product-related litigation, commercial and other matters, and government investigations, among others. On a quarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated, the Company will accrue a liability for the estimated loss. Because of uncertainties related to claims, legal proceedings and litigation, accruals will be based on the Company's best estimates based on available information. The Company does not believe that any of these matters will have a material adverse effect on our financial position. The Company may reassess the potential liability related to these matters and may revise these estimates. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect the Company, its results of operations, financial condition and cash flows.
NAMENDA XR/Namzaric Qui Tam Litigation
On April 1, 2019, Adamas was served with a complaint filed in the United States District Court for the Northern District of California (the District Court) (Case No. 3:18-cv-03018-JCS) against it and several Allergan entities alleging violations of federal and state false claims acts (FCA) in connection with the commercialization of NAMENDA XR and Namzaric by Allergan. The lawsuit is a qui tam complaint brought by an individual, asserting rights of the federal government and various state governments. The lawsuit was originally filed in May 2018 under seal, and Adamas became aware of the lawsuit when it was served. The complaint alleges that patents held by Allergan and Adamas covering NAMENDA XR and Namzaric were procured through fraud on the United States Patent and Trademark Office and that these patents were asserted against potential generic manufacturers of NAMENDA XR and Namzaric to prevent the generic manufacturers from entering the market, thereby wrongfully excluding generic competition resulting in artificially high price being charged to government payors. Adamas' patents in question were licensed exclusively to Forest Laboratories Holdings Limited. The complaint includes a claim for damages of "potentially more than $2.5 billion dollars," treble damages and statutory penalties. To date the federal and state governments have declined to intervene in this action. This case is currently stayed pending Adamas's and Allergan's interlocutory appeal of the District Court's December 11, 2020 order denying Adamas's and Allergan's motion to dismiss the complaint. The appeal is pending in the United States Court of Appeals for the Ninth Circuit (Case No. 21-80005). Argument was held on January 10, 2022. On August 25, 2022, the Ninth Circuit sided with the defendants by reversing the District Court’s public disclosure bar rulings and remanding the case back to the District Court to decide certain issues in the first instance. On October 11, 2022, the plaintiff filed a petition for rehearing with the Ninth Circuit which was denied on November 3, 2022. On December 23, 2022, the defendants filed renewed motions to dismiss directed to the remaining unresolved issue. On March 20, 2023, the District Court entered an order and final judgement dismissing with prejudice the FCA claim while declining to exercise supplemental jurisdiction over the state false claims act claims which were dismissed without prejudice. On April 19, 2023, the plaintiff appealed the District Court's dismissal of the Federal False Claims Act claim. On February 20, 2024, the plaintiff filed a motion for an indicative ruling and to set aside the judgment in the District Court, based on the same arguments raised in his appeal. That motion was fully briefed and the District Court determined that the motion for an indicative ruling was suitable for determination
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without a hearing. On May 7, 2024, the District Court denied the plaintiff’s motion for an indicative ruling. The appeal is fully briefed, and the Ninth Circuit has set oral argument for November 21, 2024.
APOKYN Litigation
On October 3, 2022, Sage Chemical, Inc. and TruPharma, LLC filed a lawsuit in the United States District Court for the District of Delaware (Case No.22-cv-1302) alleging that Supernus Pharmaceuticals, Inc., Britannia Pharmaceuticals Limited, and US WorldMeds Partners, LLC violated state and federal antitrust law in connection with APOKYN. On January 10, 2023, the Company filed motions to dismiss all claims and the lawsuit in its entirety. Between May 9, 2024 and June 4, 2024, the Court ruled on all motions to dismiss, declining to dismiss any claims against the Company, its subsidiaries, or Britannia Pharmaceuticals Limited and dismissing US WorldMeds Partners, LLC, USWM, LLC, and all of the individual defendants (former US WorldMeds executives) out of the case completely. On June 13, 2024, the Court issued a scheduling order that provides for a pretrial conference on September 12, 2025 and a jury trial beginning on September 22, 2025. Pre-trial discovery is ongoing as of the date of this filing. The Company intends to defend itself vigorously. However, the Company can offer no assurances that it will be successful in a litigation.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and the financial condition of Supernus Pharmaceuticals, Inc. The interim condensed consolidated financial statements included in this report and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2024.
In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These forward-looking statements may include declarations regarding the Company’s belief or current expectations of management, such as statements including the words “budgeted,” “anticipate,” “project,” “forecast,” “estimate,” “expect,” “may,” “believe,” “potential,” and similar statements or expressions, which are intended to be among the statements that are forward-looking statements, as such statements reflect the reality of risk and uncertainty that is inherent in our business. Actual results may differ materially from those expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of the date this report was filed with the Securities and Exchange Commission. Our actual results and the timing of events could differ materially from those discussed in our forward-looking statements because of many factors, including those set forth under the “Risk Factors” section of our Annual Report on Form 10-K and elsewhere in this report as well as in other reports and documents we file with the Securities and Exchange Commission from time to time. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.
Unless the content requires otherwise, the words "Supernus," "we," "our" and "the Company" refer to Supernus Pharmaceuticals, Inc. and/or one or more of its subsidiaries, as the case may be. These terms are used solely for the convenience of the reader. Supernus Pharmaceuticals, Inc. and each of its subsidiaries are distinct legal entities. For example, MDD US Operations, LLC, a wholly-owned indirect subsidiary of Supernus Pharmaceuticals, Inc., is the exclusive licensee and distributor of APOKYN in the United States and its territories. Adamas Operations, LLC, a wholly-owned indirect subsidiary of Supernus Pharmaceuticals, Inc., wholly owns the patents and patent applications related to GOCOVRI and Osmolex ER and has a license agreement with Supernus Pharmaceuticals, Inc., granting Supernus Pharmaceuticals, Inc. rights to market and sell GOCOVRI and Osmolex ER.
Solely for convenience, in this Quarterly Report on Form 10-Q, the trade names are referred to without the TM symbols and the trademark registrations are referred to without the circled R, but such references should not be construed as any indicator that the Company will not assert, to the fullest extent under applicable law, our rights thereto.

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Overview
We are a biopharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases. Our diverse neuroscience portfolio includes approved treatments for epilepsy, migraine, attention-deficit hyperactivity disorder (ADHD), hypomobility in Parkinson’s Disease (PD), cervical dystonia, chronic sialorrhea, and dyskinesia in PD patients receiving levodopa-based therapy. We are developing a broad range of novel CNS product candidates including new potential treatments for hypomobility in PD, epilepsy, depression, and other CNS disorders.
We have a portfolio of commercial products and product candidates.
Commercial Products
Qelbree® (viloxazine) extended-release capsules is a novel non-stimulant product indicated for the treatment of ADHD in adults and pediatric patients 6 years and older. The United States Food and Drug Administration (FDA) approved Qelbree for the treatment of ADHD in pediatric patients 6 to 17 years of age in April 2021, and in adult patients in April 2022. The Company launched Qelbree for pediatric patients in May 2021 and for adult patients in May 2022 in the United States (U.S.).
GOCOVRI® (amantadine) extended-release capsules is the first and only FDA approved medicine indicated for the treatment of dyskinesia in patients with PD receiving levodopa-based therapy, with or without concomitant dopaminergic medications, and as an adjunctive treatment to levodopa/carbidopa with PD experiencing "OFF" episodes.
Oxtellar XR® (oxcarbazepine) is indicated as therapy for the treatment of partial onset seizures in patients 6 years of age and older. It is also the first once-daily extended-release oxcarbazepine product indicated for the treatment of epilepsy in the U.S. market.
Trokendi XR® (topiramate) is the first once-daily extended-release topiramate product indicated for the treatment of epilepsy in patients 6 years of age and older in the U.S. market. It is also indicated for the prophylaxis of migraine headache in adults and adolescents 12 years and older.
APOKYN® (apomorphine hydrochloride injection) is a product indicated for the acute, intermittent treatment of hypomobility, "OFF" episodes ("end-of-dose wearing off" and unpredictable "ON/OFF" episodes) in patients with advanced PD.
XADAGO® (safinamide) is a once-daily product indicated as adjunctive treatment to levodopa/carbidopa in patients with PD experiencing "OFF" episodes.
MYOBLOC® (rimabotulinumtoxinB injection) is a product indicated for the treatment of cervical dystonia and chronic sialorrhea in adults. It is the only botulinum toxin type B available on the market.

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Research and Development
We are committed to the development of innovative product candidates in neurology and psychiatry, including the following:
product pipeline.jpg

SPN-830 (apomorphine infusion device)
SPN-830 is a late-stage drug/device combination product candidate for the continuous treatment of motor fluctuations ("OFF" episodes) in PD patients that are not adequately controlled with oral levodopa and one or more adjunct PD medications. If approved, it would be the only continuous infusion of apomorphine available in the U.S. and an important step for PD patients that would have otherwise been candidates for potentially invasive surgical procedures, such as deep brain stimulation. Continuous slow infusion may also limit some of the side effects of a bolus injection of apomorphine.
In April 2024, the FDA issued a Complete Response Letter regarding the NDA for SPN-830. In August 2024, we resubmitted the New Drug Application (NDA) for SPN-830 to the FDA. For further discussion, see Operational Highlights section below.
SPN-820 (NV-5138)
SPN-820 is a first-in-class, orally active small molecule that increases the brain mechanistic target of rapamycin complex 1 (mTORC1) mediated synaptic function intracellularly. SPN-820 does not bind to or modulate any cell surface receptors and therefore is unlikely to have abuse potential given lack of binding to targets implicated in drug abuse. In addition, unlike leucine, it is not incorporated into proteins during protein synthesis, and therefore, it is more available at the target site in the brain than leucine.
SPN-817 (huperzine A)
SPN-817 represents a novel mechanism of action (MOA) for an anticonvulsant. SPN-817 is a novel synthetic form of huperzine A, whose MOA includes potent acetylcholinesterase inhibition, with pharmacological activities in CNS conditions such as epilepsy. The development will initially focus on the drug's anticonvulsant activity, which has been shown in preclinical models to be effective for the treatment of partial seizures and Dravet Syndrome. SPN-817 is in clinical development and has received Orphan Drug designation for several epilepsy indications from the FDA.
Operational Highlights
Total IQVIA prescriptions for Qelbree were 194,025 in the third quarter 2024, an increase of 19% compared to the prior year period.
In August 2024, the Company resubmitted to the FDA the NDA for apomorphine infusion device (SPN-830) for the continuous treatment of motor fluctuations ("OFF" episodes) in Parkinson’s disease. On August 16, 2024, the FDA
25

acknowledged the resubmission of the NDA for the apomorphine infusion device (SPN-830). The resubmission is considered filed, with a user fee goal date (PDUFA date) of February 1, 2025.
Product Pipeline Update
SPN-820 – Novel first-in-class molecule that increases mTORC1 mediated synaptic function for depression
In October 2024, the Company announced and discussed the data from its exploratory open-label Phase 2a clinical study of SPN-820 in adults with major depressive disorder (MDD). The data were based on 40 enrolled subjects, of which 38 completed the 10-day treatment period. The primary objective of the study was to assess efficacy in MDD, as well as the onset of efficacy. The Phase 2a study demonstrated rapid and substantial decrease in depressive symptoms, and 80% decrease in suicidal ideation. SPN-820 was well-tolerated with few adverse events.
In addition, the Company presented new data at the 2024 Psych Congress in October 2024 that demonstrate a rapid Montgomery–Asberg Depression Rating Scale (MADRS) response rate (≥50% reduction) and remission (MADRS ≤10), reaching 50.0% and 35.0% of participants, respectively, at 4 hours, with additional improvement to 84.2% and 63.2% of participants by Day 10.
The Company expects to complete enrollment in the ongoing Phase 2b multi-center randomized double-blind placebo-controlled parallel design study of SPN-820 in adults with treatment-resistant depression in November 2024. The study will examine the efficacy and safety of SPN-820 over a course of five weeks of treatment in approximately 236 patients in approximately 50 clinical sites. The primary outcome measure is the change from baseline to end of treatment period on the MADRS Total Score. Topline data from the Phase 2b trial are expected in the first half of 2025.
SPN-817 – Novel first-in-class highly selective AChE inhibitor for epilepsy
The Company is conducting an open label Phase 2a study in patients with treatment-resistant seizures. In May 2024, the Company announced data from a planned interim analysis from the initial stage of the study (Stage A). The Company has now completed enrollment of Stage A and is reporting topline data from all subjects with focal seizures who received the 3mg and 4mg twice daily doses, completed the maintenance period (n=10), and enrolled in the post-maintenance extension period (n=6).
Maintenance period:
56% median seizure reduction from baseline.
70% of subjects had 30% or more seizure reduction.
60% of subjects had 50% or more seizure reduction.
30% of subjects had 75% or more seizure reduction.
Post-maintenance extension period:
66% median seizure reduction from baseline.
83% of subjects had 30% or more seizure reduction.
67% of subjects had 50% or more seizure reduction.
50% of subjects had 75% or more seizure reduction.
Seizure Freedom:
Maintenance period: 1 out of 10 subjects (10%) who completed a post-baseline seizure diary had at least one four-week seizure free period.
Post-maintenance extension period: 1 out of 6 subjects (17%) had at least one four-week seizure free period.
Assessment by EpiTrack®, a validated cognitive screening tool designed for patients with epilepsy, indicated that 75% of 16 subjects was equally split between those who improved and those who had no change in cognitive function.
SPN-817 was safe and had acceptable tolerability with 2 subjects discontinuing because of treatment related adverse events out of the 26 subjects who entered the maintenance period. Stage B of the study is on-going and includes the concomitant use of an anti-emetic to reduce cholinergic adverse events observed in the study.
A Phase 2b randomized, double-blind, placebo-controlled study in patients with treatment resistant focal seizures is expected to start by the end of 2024 studying 3mg and 4mg twice daily doses.
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SPN-443 – Novel stimulant for ADHD/CNS
The Company initiated a Phase 1 single dose study in healthy adults in the third quarter of 2024. The primary objective of the study is to assess safety and tolerability.
Critical Accounting Policies and the Use of Estimates
A summary of our significant accounting policies is included in Note 2, Summary of Significant Accounting Policies of our audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023. There were no significant changes to the disclosures with respect to our critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2023.
Results of Operations
Comparison of the Three and Nine Months ended September 30, 2024 and 2023
Revenues
Revenues consist primarily of net product sales of our commercial products in the U.S., supplemented by royalty and licensing revenues from our collaborative licensing arrangements. The following table provides information regarding our revenues during the three and nine months ended September 30, 2024 (dollars in thousands):
Three Months Ended September 30,ChangeNine Months Ended
September 30,
Change
20242023AmountPercent20242023AmountPercent
Net product sales
Qelbree$62,359 $37,081 $25,278 68%$166,857 $93,840 $73,017 78%
GOCOVRI35,657 32,889 2,768 8%93,922 87,650 6,272 7%
Oxtellar XR29,805 29,644 161 1%86,265 82,359 3,906 5%
APOKYN19,867 21,510 (1,643)(8)%53,811 56,324 (2,513)(4)%
Trokendi XR15,318 20,625 (5,307)(26)%48,393 74,734 (26,341)(35)%
Other(1)
7,296 7,255 41 —%22,053 23,008 (955)(4)%
Total net product sales170,302 149,004 21,298 14%471,301 417,915 53,386 13%
Royalty, licensing and other revenues
5,387 4,876 511 10%16,357 25,292 (8,935)(35)%
Total revenues$175,689 $153,880 $21,809 14%$487,658 $443,207 $44,451 10%
___________________________________________
(1) Includes net product sales of MYOBLOC, XADAGO and Osmolex ER.
Net Product Sales
Net product sales were $170.3 million and $149.0 million for the three months ended September 30, 2024 and 2023, respectively. The increase was primarily due to increases in net product sales from Qelbree and GOCOVRI partially offset by the decline in net product sales of Trokendi XR due to generic erosion.
Net product sales were $471.3 million and $417.9 million for the nine months ended September 30, 2024 and 2023, respectively. The increase was primarily due to increases in net product sales from Qelbree and GOCOVRI, partially offset by the decline in net product sales of Trokendi XR due to generic erosion.
Sales Deductions and Related Accruals
We record accrued product returns and accrued product rebates as current liabilities in Accrued product returns and rebates, on our condensed consolidated balance sheets. We record sales discounts as a reduction against Accounts receivable, net on the unaudited condensed consolidated balance sheets. Both amounts are generally affected by changes in gross product sales, changes in the provision for net product sales deductions, and the timing of payments/credits.
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The following table provides a summary of activity with respect to accrued product returns and rebates during the periods indicated (dollars in thousands):
Accrued Product Returns and Rebates
Product
Returns
Product
Rebates

Sales Discounts
Total
Balance at December 31, 2023$57,290 $96,984 $10,719 $164,993 
Provision
Provision for current year sales15,615 295,831 52,372 363,818 
Adjustments relating to prior year sales(7,345)(2,244)(6)(9,595)
Total provision8,270 293,587 52,366 354,223 
Less: Actual payments/credits(8,131)(278,876)(52,097)(339,104)
Balance at September 30, 2024$57,429 $111,695 $10,988 $180,112 
Accrued Product Returns and Rebates
Product
Returns
Product
Rebates

Sales Discounts
Total
Balance at December 31, 2022$45,008 $106,657 $12,995 $164,660 
Provision
Provision for current year sales17,484 310,166 48,766 376,416 
Adjustments relating to prior year sales(52)1,657 32 1,637 
Total provision17,432 311,823 48,798 378,053 
Less: Actual payments/credits(8,096)(310,351)(50,960)(369,407)
Balance at September 30, 2023$54,344 $108,129 $10,833 $173,306 
Accrued Product Returns and Rebates
The accrued product returns balance increased to $57.4 million as of September 30, 2024 from $54.3 million as of September 30, 2023. This increase was primarily due to higher net product sales and timing of related return activity offset by the $7.3 million adjustment in the estimated provision for product returns related to prior year sales. The majority of this adjustment is attributable to Qelbree, reflecting favorable actual returns experienced in 2024 for Qelbree. As a result, the Company changed its estimated provision for product returns based on the most recent experience.
The accrued product rebates balance increased to $111.7 million as of September 30, 2024 from $108.1 million as of September 30, 2023 due to timing of payments associated with government programs.
Provision for Product Returns and Rebates
The provision for product returns decreased to $8.3 million for the nine months ended September 30, 2024 from $17.4 million for the nine months ended September 30, 2023. The decrease was primarily due to the aforementioned $7.3 million adjustment in the estimated provision for product returns related to prior year sales.
The provision for product rebates decreased to $293.6 million for nine months ended September 30, 2024 from $311.8 million for the nine months ended September 30, 2023. The decrease was primarily attributable to lower Trokendi XR sales, partially offset by higher Qelbree sales and favorability in commercial programs.
Royalty, Licensing and Other Revenues
Royalty, licensing and other revenues were $5.4 million and $4.9 million for the three months ended September 30, 2024 and 2023, respectively. The increase was due to increase in royalty revenues from royalty arrangements with third parties.
Royalty, licensing and other revenues were $16.4 million and $25.3 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease was primarily due to lower royalties on generic Trokendi XR due to the increased number of generic entrants.
Cost of Goods Sold
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Cost of goods sold was $17.6 million and $19.6 million for the three months ended September 30, 2024 and 2023, respectively. Cost of goods sold was $51.8 million and $64.2 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in both periods was primarily driven by manufacturing efficiencies of Qelbree and a decline in net product sales of Trokendi XR due to generic erosion.
Research and Development Expenses
R&D expenses were $29.0 million and $22.7 million for the three months ended September 30, 2024 and 2023, respectively. R&D expenses were $80.1 million and $68.2 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in both periods was primarily due to increased clinical program costs on SPN-817, SPN-820 and on the open-label study of Qelbree, and increased manufacturing costs of our product candidates.
Selling, General and Administrative Expenses
The following table provides information regarding our selling, general and administrative (SG&A) expenses during the periods indicated (dollars in thousands):
Three Months Ended
September 30,
ChangeNine Months Ended
September 30,
Change
20242023AmountPercent20242023AmountPercent
Selling and marketing $54,329 $56,785 $(2,456)(4)%$172,700 $173,909 $