Supernus Pharmaceuticals Inc (NASDAQ:SUPN) shares got smacked on Thursday in response to the company’s announcement of what it called “positive results!!” in its press materials. Investors were left wondering why shares dropped. We will give our sense here.

First off, here are the basic facts: two pivotal Phase III studies of SPN-812 in children for the treatment of attention deficit hyperactivity disorder (ADHD) resulted in successful results in terms of achieving the primary endpoint, with SPN-812, at daily doses of 100 mg and 200 mg in study P301 and 200 mg and 400 mg in study P303. With respect to the effect size in the P301 trial, patients receiving SPN-812 100 mg and 200 mg had an effect size of 0.54 and 0.57, respectively and 0.46 and 0.49, respectively, in the P303 trial. Effect sizes are used to compare the effectiveness of ADHD treatments.

Supernus Pharmaceuticals Inc (NASDAQ:SUPN) shares dropped sharply on these results because the company will need to conduct a ton of marketing to pay off the bet on these development projects. You see, the effect size was not markedly different from standard options (intuniv and strattera) already on the market in generic form.

The only way to have generated big upside today for SUPN would have been to turn in results that suggested a medication for ADHD that stood to truly revolutionize the marketplace.

Anything other than that implies at least one major capital raise, and quite possibly several, as the company prepares for something like trying to sell fast food hamburgers with a drive-thru restaurant that will be competing with McDonald’s and Burger King.

Nonetheless, management was predictably enthusiastic: “These are very exciting data demonstrating the important role we believe SPN-812 can play in treating patients with ADHD,” stated Jack Khattar, President and Chief Executive Officer of Supernus Pharmaceuticals. “We believe these data from the two pivotal Phase III studies, which are consistent with the Phase IIb data, demonstrate that SPN-812 is a well-differentiated novel non-stimulant treatment option for many children with ADHD.”

All of that said, the trials did pass muster in terms of the technical endpoints, so the drug is viable. Data from the first adolescent trial are due by the end of the month, and we will see the second trial data early next year.

But this situation is an excellent learning example for new biotech investors because it highlights important considerations other than technical endpoints. The goal is to generate returns invested capital in the R&D process.

In this case, the only way to apparently make that happen is to win on marketing because the asset in question, it would seem, is not fundamentally differentiated from its competitors in the marketplace.

Hence, the selling on Thursday.


Bird’s Nest

Supernus Pharmaceuticals Inc (NASDAQ:SUPN) trumpets itself as a specialty pharmaceutical company that focuses on the development and commercialization of products for the treatment of central nervous system diseases in the United States.

It offers Oxtellar XR, an extended-release oxcarbazepine for use in the treatment of epilepsy; and Trokendi XR, an extended-release topiramate, which is used for the treatment of epilepsy.

The company’s product candidates comprise SPN-810, a molindone hydrochloride that is in Phase III clinical trial for the treatment of impulsive aggression in patients with attention deficit hyperactivity disorder (ADHD); and SPN-812, a viloxazine hydrochloride, which is in Phase III clinical trial that is used for the treatment of ADHD. It also develops SPN-809, a viloxazine hydrochloride, which is in Phase II ready clinical trial for the treatment of depression.

The company markets its products through wholesalers and pharmaceutical distributors. Supernus Pharmaceuticals, Inc. was founded in 2005 and is based in Rockville, Maryland.

Supernus Pharmaceuticals Inc (NASDAQ:SUPN) managed to rope in revenues totaling $103M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 28.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($280.2M against $138.3M).

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