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Supernus Pharmaceuticals Inc (NASDAQ:SUPN)
Q1 2019 Earnings Call
May. 8, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Supernus Pharmaceuticals' First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded.

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

Peter Vozzo -- Investor Relations

Thank you, Michele. Good morning everyone and thank you for joining us today for Supernus Pharmaceuticals First Quarter 2019 Financial Results Conference Call. Yesterday after the close of the market, the company issued a press release announcing these results.

On the call with me today are Supernus' Chief Executive Officer, Jack Khattar; and Chief Financial Officer, Greg Patrick. Today's call is being made available via the Investor Relations section of the company's website at ir.supernus.com. Following remarks by management, we will open the call to questions.

During the course of this call, management may make certain forward-looking statements regarding future events and the company's future performance. These forward-looking statements reflect Supernus' current perspective on existing trends and information and it can be identified by such words as expect, plan, will, may, anticipate, believe, should, intend and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of our 2018 Annual Report on Form 10-K.

Actual results may differ materially from those projected in these forward-looking statements. For the benefit of those of you, who may be listening to the replay, this call is being held and recorded on May 8, 2019, at approximately 9 a.m. Eastern Time. Since then the company may have made additional announcements related to the topics discussed. Please reference the company's most recent press releases and current filings with the SEC. Supernus declines any obligation to update these forward-looking statements, except as required by applicable securities laws.

I will now turn the call over to Jack.

Jack A. Khattar -- President and Chief Executive Officer, Director

Thank you, Peter. Good morning everyone and thanks for taking the time to join us as we discuss our 2019 first quarter results. Our financial results for the first quarter were adversely impacted by several factors converging all at once. First, the buildup of inventory in the fourth quarter of 2018, which impacted shipments in the first quarter of this year by approximately $10 million.

Second, beginning of the year Insurance plan dynamics that typically put pressure on prescription growth. Third, the resulting increase in gross to net deductions through our copay assistance program. And finally, much higher effective tax rate this year compared to that in the same period last year.

Aside from the effective tax rate these events are not expected to continue in subsequent quarters. In fact, we have already seen a normalization of shipments and prescription trends for Trokendi XR and Oxtellar XR in the second quarter of this year. For example, sequential quarterly prescription growth has resumed in the second quarter on both products.

During the first quarter, IMS prescriptions on Trokendi XR and Oxtellar XR were down by 5.7% and 1.7% respectively compared to the fourth quarter in 2018, primarily due to the seasonal 1Q high deductible insurance dynamics. However, sequential growth has resumed in the first four-week period of the second quarter, reaching 3.2% and 1.9% increase in prescriptions respectively compared to the first four-week period in the first quarter.

Year-to-date prescriptions ending the week of April 26 based on weekly IMS data also show growth for Trokendi XR and Oxtellar XR at 11% and 12% respectively compared to the same period last year. For Oxtellar XR in the first quarter, the company also launched the recently approved indication of monotherapy for partial seizures. Our team continues to execute well on the launch and we believe that the seasonal 1Q adverse impact on prescription growth on Oxtellar XR was softened by the increased commercial activity behind the launch.

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

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

In addition, we plan to start the Phase III program in adult patients in the second half of 2019. For SPN-810, our novel treatment of impulsive aggression in patients with ADHD, enrollment in the pediatric trials continue and we expect to report results on this program in the second half of this year. As we stated previously, we expect to submit an NDA for SPN-810 in the second half of 2020 and to launch the drug pending approval by the FDA in the second half of 2021.

And finally, regarding SPN-604 for the treatment of bipolar disorder, the Phase III program is expected to commence in the second half of this year. In summary, the company has a rich calendar of upcoming clinical and regulatory milestones behind three late-stage pipeline products. Our activity on the corporate development side continues in 2019 as we look forward neurology and psychiatry assets that represent a strategic fit with our current portfolio.

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

Gregory S. Patrick -- Chief Financial Officer

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

As discussed during our call in February increased wholesaler, distributor and pharmacy channel inventory in the fourth quarter of 2018. As compared to the prevailing inventory levels in the third quarter of 2018 increased our net product sales in the fourth quarter by approximately $10 million versus what they would have been otherwise. That is at inventory levels remain constant between the third and fourth quarters of 2018. This process was effectively reversed in the first quarter of 2019. Inventory has now returned to what we believe are steady state levels.

As a result of this channel inventory reduction net product sales decreased in the first quarter of 2019 by approximately $10 million as compared both to the prior year, as well as to the prior quarter. Eliminating the adverse impact of the approximate $10 million, channel inventory reduction in the first quarter, net product sales would have exceeded the net product sales recorded in the first quarter of 2018.

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

Net product sales for Trokendi XR for the first quarter of 2019 were $63.7 million, down from $70.5 million in the first (technical difficulty) '18. For Oxtellar XR net product sales in the first quarter of 2019 were $19.4 million, a 4% increase as compared to the first quarter of 2018.

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

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

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

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

Net earnings in the first quarter of 2019 were $18.3 million or $0.34 per diluted share as compared to $26.4 million or $0.49 per diluted share in the same period last year. In addition to the impact of the approximately $10 million channel inventory reduction net earnings were adversely affected by a higher effective tax rate, 24% relative to the effective tax rate in the first quarter of 2018, 15%. The tax rate in the first quarter of 2018 benefited from employees exercising stock options. It was materially lower than our expected ongoing rate. We ended the first quarter of 2019 with $815.5 million in cash, cash equivalents, marketable securities and long-term marketable securities as compared to $774.8 million as of December 31, 2018.

Turning to financial guidance for 2019. The company is maintaining its net product sales guidance ranging from $435 million to $455 million and operating income guidance ranging from $160 million to $180 million for 2019.

Net product sales and operating income guidance assumes that channel inventory levels from this point on forward are stable. Guidance for research and development expenses ranging from $70 million to $80 million and tax rate guidance 23% to 25% remains unchanged, as well.

I will now turn the call back to the operator for questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions). Our first question comes from the line of Ken Cacciatore with Cowen and Company. Your line is open. Please go ahead.

Kenneth Cacciatore -- Cowen and Company -- Analyst

Hey, good morning guys. Just wanted to ask about the marketplace in general, migraine marketplace in general in the CGRPs. And so, any sense of -- any shifts or changes that you're seeing from them. And then also clearly, you have a lot of cash on hand and put yourself in a position to be more aggressive to leverage the infrastructure that you have. So maybe an update on what you're seeing in a general sense in terms of business development.

And then lastly, and I know I am squeezing too many here but lastly on 812, still a lot of arguments with investors about pricing in this environment, differentiated asset. Can you just talk generally speaking about the complexities of these patients and maybe comorbidities and how a product like this may fit in. Thanks a lot.

Jack A. Khattar -- President and Chief Executive Officer, Director

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

So we continue to watch it very closely. As I made the reference in our -- in our remarks that 1Q effect on Trokendi XR was actually a little bit worse for this year than it was in previous years. So that is something that we watch that closely obviously, that's why also Greg made reference to some of the enhancements we've put in place on the co-pay program just to make sure, we don't get hit too, even worse than that. So we're pleased with what we've seen so far and continue to be so specifically with the market and so forth.

And as I mentioned also in my remarks, the sequential growth in the second quarter we've seen already, the prescription trends recovering and hopefully as it was in previous years, typically the recovery accelerates, as the quarters progress through the year.

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

And regarding 812, I mean we really don't like to make specific comments on pricing at this point. First of all, it is a little bit premature, other than what we provided back at the Investor Day, where we gave people at least for the market as far as branded stimulants and branded non-stimulants as far as the range of the wholesaler acquisition cost of those two segments of the market. We are in the middle of doing pricing research and so forth. So we don't even have the answer yet ourselves and it will be premature to make any specific comments on the pricing.

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

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

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

Kenneth Cacciatore -- Cowen and Company -- Analyst

Thank you.

Operator

Thank you. And our next question comes from the line of David Steinberg with Jefferies. Your line is open. Please go ahead.

David Steinberg -- Jefferies -- Analyst

Okay, thanks. Couple of questions, first, I think, Jack, you've said that some of the promotional activities had some dampening impact on Oxtellar in the first quarter. Just wanted some more clarification on that.

And second, related to that, I think you've said that we shouldn't expect a steep last trajectory in this new indication, like you have the Trokendi and Migraine but given that do you think we'll see some uplift in the second half of the year. And then related to Trokendi, I know you indicated that Co-pay assist and dampened gross to net had an impact, but isn't there some pricing that you needed to give up to stay on formulary and be competitive with the CGRPs. And if that's the case and why would the gross net disappeared after the first quarter and not being in effect for the entire year.

Jack A. Khattar -- President and Chief Executive Officer, Director

Yeah. Let me take the first question. On Oxtellar XR, given the history on the product and what it typically does in the 1Q versus 4Q. If you look at the IMS numbers and there was always a difference in looking at monthlies versus weeklies. If you look actually at the monthly, it looks like Oxtellar XR in the first quarter of this year, went down by about 1.6%, 1.7% in prescriptions.

If you look at the weeklies, it shows actually went up by 1.6%. So it really held up very nicely compared for example to Trokendi XR that we just mentioned went down by 5.7%. So if we were to assume that the increased relevance of high deductible plans as the years go on and I think we're seeing it. We're not just Supernus, this is across the industry that this phenomenon gets worse and worse, unfortunately over the years. If we assume we would have probably had a similar impact like we had on Trokendi XR or maybe it doesn't have to be exactly like 5.7% or 5%, but they had it somewhere around 1.6%.

We have to believe that, because we were launching the monotherapy during that same quarter, we had an -- more intense activity, more intense promotional support. Obviously, it was -- we were in the launch mode that we have softened that net effect that the 1Q came in a little bit better than it could have been. As I had a real way of quantifying that it's a little bit hard other than really comparing the prescription growth rates, one product versus the other. Of course, we have a difference also here, one is in migraine was in really epilepsy. So that's why it's not a perfect comparison. But we think from a trend perspective Oxtellar XR is building momentum.

And you're exactly right as I mentioned, and we'll continue to manage I mean, it's not going to be a hockey stick effect as far as the monotherapy. It will be a very steady slow steady growth behind the monotherapy as we continue to promote the product. As far as Trokendi XR and the formulary positions, I mean we don't have really any meaningful changes in the formulary position.

As time goes on, yes, things do cost more they are continued to be pressured from managed care. But the main, main 1Q phenomenon this year we have to say, we've had it a little bit worse than we've seen historically. And actually this quarter, I keep saying this quarter 1Q of the first quarter. I keep saying this quarter 1Q of the first quarter in a way had a very unfair comparison because of some of you might remember 1Q 2018 was also an unusually strong quarter for us and surprise, a lot of people in those days that is, it was actually much stronger than people would have expected. So we are comparing a quarter in 2019 that have all these events that I explained that happens to be all on top of each other. And on top of that comparing it very much or a little bit unusual stronger quarter that we have back in 2018.

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

Operator

Thank you. And our next question comes from the line of Annabel Samimy with Stifel. Your line is open. Please go ahead.

Unidentified Participant

Good morning, everyone. This is Mikel (ph) on for Annabel. Thanks for taking our questions. And so the impact of high deductible plans is pretty remarkable this year, why do you think these patients are so markedly impacted this particular year. And in a similar vein, well, the Co-pay assistance program impacts also continue on a go-forward basis. You also have the first quarter on the expanded Oxtellar label, what's been the immediate reception from physicians and what dynamics have you seen so far and shift the views. And lastly, just building on your topiramate comments, you mentioned the generally stable to topiramate class digging into that stability. Is this a function of CGRP switches offset by an expanding migraine market or is there just not a large impact on the specific class. Thank you.

Jack A. Khattar -- President and Chief Executive Officer, Director

Yeah. I think regarding the high deductibles, why this year is worse than previous years. I mean our theory here and I don't know what you're hearing from other companies. But we believe more and more people are actually getting influenced with high deductible. I mean, probably a lot of listeners will probably say, yes because they know their own insurance plans. We all have insurance plans and we know how they get worse and worse every year, shifting more of the burden on the patients themselves, on the consumers themselves.

So I think this is more of a overall macro trend that we're seeing in the industry in general, which is a combination of more people on these plans. And then second, the plans are getting worse and worse because insurance companies are just making it worse for patients and trying to pass on more of the cost onto their patients and the consumer themselves.

As far as Oxtellar XR, we're really encouraged with the early reaction to the monotherapy. Of course, it's very early. We only launched it two, three months ago. But given the comments I made a little bit earlier, I mean we think the launch help in softening the blow, the difficult blow of the first quarter phenomena and we'll continue to watch it. I mean the prescriptions year-to-date, even through April 26, although you're using weekly numbers here versus monthlies.

If you look from January, all the way through April, 26, which is the last week reported by IMS, we are very encouraged to see that it's up by 12% versus the previous year. So we hope to see even more acceleration. Again, it's going to be acceleration in growth, but it's going to be slow and steady, and nothing, significant in like one quarter versus the other.

And then the final question on the topiramate stability, I think that continues to support and reinforce the notion that we always have since the CGRP is initially launched, that topiramate continues to be a foundational therapy that a lot of physicians and patients believe they need to have and then add on to it, the CGRP or add onto it something else. And that's why you're not seeing a major, major decline in the topiramate market itself because as a molecule it works, it works really well. The CGRPs work but they haven't been proven to be like the Holy Grail or the thing that we've been waiting for, our efficacy is OK, but it's nothing really that much different than a lot of existing therapies out there and therefore you are probably -- that's why you're not seeing a lot of decline in the topiramate market itself.

And as long as that market is there for us, then, that's why we continue to believe that we can continue to tap into it. It continues to grow through Trokendi XR. And I will repeat what I said in other quarterly earnings. We cannot expect Trokendi XR to continue to grow at 20% and 30% and so forth. Clearly, this is a product that's also maturing over time and therefore the growth rates will slow down a little bit and that's what we're seeing. But as long as we, the topiramate market is there and the effort on our commercial side is there, we should be able to continue to move it along and progressive -- nicely.

Operator

Thank you. And our next question comes from the line of Patrick Trucchio with Berenberg Capital. Your line is open. Please go ahead.

Patrick Ralph Trucchio -- Berenberg Capital -- Analyst

Thanks, good morning. Can you tell us what proportion of Trokendi and Oxtellar are reimbursed by Medicare and how this proportion has changed over time, since the initial launches and it's proportion changed meaningfully this year.

And then with regard to the payer dynamics tied in the first quarter, was any of this adverse impact tied to more of the business being reimbursed from government payers more broadly. And if so, why would we anticipate this impact to normalize. And then I just on a follow-up if I may, would be, what is your level of confidence that Trokendi and Oxtellar will generate peak sales of more than $500 million before you lose exclusivity on Trokendi and (inaudible) recent payer dynamics alter this view at all.

Gregory S. Patrick -- Chief Financial Officer

Okay, I'll take the first question. And last two questions I'll leave to Jack Khattar. So as regards Medicare, Medicare has always been a fairly small footprint in both products, low to signal digits. Medicaid on the other hand is higher proportion with respect to Oxtellar XR it has grown from the low to mid '20s, it now approximates 30% of the underlying patient population, and in fact has gotten a little bit north of 30%.

As regards Trokendi XR that proportion has actually declined a bit over time, it was in the low teens and would -- coincident with the migraine launch, it is actually trended more toward 10% for a quarter to adopt (ph) below 10% but right around it's 10% and that's because we believe that the migraine market is primarily a private pay market, not a Medicaid market.

The other to questions, I will refer to Jack.

Jack A. Khattar -- President and Chief Executive Officer, Director

As far as the end of the question on the peak revenue for Trokendi XR and Oxtellar XR, I mean, we are not that far away. We are within a striking distance of the 500 and remember Oxtellar XR is not going to peak in 2023. Oxtellar XR is going to peak actually in 2027, because we have the products, all the way through the expiration of the patent. So by then the product is going to be much bigger. Clearly, and therefore the $500 million is within the reach and certainly achievable. No question about that. So the peak years of both products. And I think I've made that point before, they're not -- it's not the same here. So for us to expect the $500 million because it's a peak of Trokendi XR and Oxtellar XR because Oxtellar XR is going to go beyond the 2023.

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

Operator

Thank you. And our next question comes from the line of David Amsellem with Piper Jaffray. Your line is open. Please go ahead.

David Amsellem -- Piper Jaffray -- Analyst

Good morning. This is Mikel (ph) on for David. Thanks for taking questions. Just a few quick ones. In line of the announcement that Trokendi XR will be excluded from the Express Scripts (ph) 42:46 2019 Preferred Formulary. And can you comment on the impact that this could have, that's one. And two, do you have a sense of the proportion of Oxtellar XR prescriptions that were written from monotherapy prior to the label extension. And then one just quick follow-up on the bipolar study. Do you guys have any more color that you can provide on trial design, both in terms of size of enrollment and efficacy endpoints. Thanks.

Jack A. Khattar -- President and Chief Executive Officer, Director

Yeah. Regarding the first question, I'm not sure what announcement you're referring to. As far as we are concerned, we are not excluded from Express Scripts on Trokendi XR. So let me clarify that, if there is any confusion out there. So I am not aware, where you got that information. As far as the Bipolar study, we gave a little bit more detail in the Investor Day, as far as the potential design of the studies. We do need to do basically two studies for approval, because this will be a new indication for Oxtellar (ph) recipient although it's a 505-B2 strategy, but it's basically two studies that you need for a new indication and we are finalizing those as we speak. They are going to be fairly large studies in the 300 to 500 patients per study. One of them would be a little bit larger, because it might have a flexible dose kind of, design and the other one would be more of a fix dose design and I forgot the second question, if you don't mind repeating it. There was a question in the middle.

David Amsellem -- Piper Jaffray -- Analyst

The proportion of Oxtellar X are prescriptions that were written for monotherapy prior to the label extention.

Jack A. Khattar -- President and Chief Executive Officer, Director

So prior to the label extension, it's really a very, very, very tougher guess and estimate because Oxtellar XR prescription base, as you would appreciate as a smaller base. Excuse me -- but we think it was more in the valley. Its ranges depending, when you look at the data, probably somewhere between the 15% to 30% jumps up and down, that's probably a good guess or estimate that we can get before the launch.

David Amsellem -- Piper Jaffray -- Analyst

Great. Thank you.

Operator

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

Esther Hong -- Janney -- Analyst

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

Gregory S. Patrick -- Chief Financial Officer

Okay, Esther, this is Greg. I'll take the first part of your questions regarding the normalization of the gross net program in fact, that has already happened, the enhanced programs are in place for a couple of months during the first quarter. They are in place as Jack mentioned because of the growing prevalence of these high-deductible programs not only did they affect more patients, more consumers, but they also generally experienced, kind of, ratcheting up if you will, of the annual Co-pay that each patient must accommodate. However, with respect to our Co-pay programs, those programs have actually already went off. My expectation in terms of the improvement, if you will is the gross and that actually could be a little bit more than prior years as Jack mentioned.

We do see gross to net improvement during the course of the year, sequentially from quarter-to-quarter and that is largely an artifact of the improvement, both in terms of lower utilization rates, fewer patients applying for Co-pay as well as just less cost per patient. So, we would expect those -- those impacts to be reflected, second, third and fourth quarter. And we have seen them reflected in the second, third and fourth quarter every year. My guess, this year it will be a little bit more of a snap back, but time will tell as to whether that's correct or not. As regards the path forward on SG&A 12 approval. I'll let Jack respond to that.

Jack A. Khattar -- President and Chief Executive Officer, Director

Yeah. On the SG&A 12 from a regulatory perspective, we will be filing this year on the pediatric and adolescent patient populations. So using obviously the data from all the trials that we have conducted. And then, so typically you're going to have, we think it's a 10 months to 12 months review. I mean it's a typical review time. And then as far as the adult patient population. Our plan is to follow that with the adult filing as soon as we get, obviously the data from the Phase III trial. So, probably, I mean if I were to guess. And this is a real tough guess at this point, we having -- even though we haven't even started the adult study but we plan on starting it this year obviously, as we said, I mean, it could be an 18 months, 24 months at worse difference between when we file the paid pediatric, adolescent and then the adults to follow-on with that. So that's a rough estimate as good as we can get it at this point, you know we haven't even started the trial.

Esther Hong -- Janney -- Analyst

Thank you. Very helpful. Thanks.

Operator

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

Jack A. Khattar -- President and Chief Executive Officer, Director

As a remainder of 2018 is an exciting time at Supernus. We look forward to achieving significant milestones including submitting the NDA on SPN-812 in ADHD. Second, completing the Phase III trials for SPN-810 an impulsive aggression and releasing top line results from these trials later this year.

And then finally, initiating a Phase III bipolar program for SPN-604. In addition, we continue to be focused on maximizing the Trokendi XR and Oxtellar XR brands to continue the commercial execution. Thanks again for joining us this morning and we look forward to sharing with you the upcoming updates throughout the year. Thank you.

Operator

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

Duration: 40 minutes

Call participants:

Peter Vozzo -- Investor Relations

Jack A. Khattar -- President and Chief Executive Officer, Director

Gregory S. Patrick -- Chief Financial Officer

Kenneth Cacciatore -- Cowen and Company -- Analyst

David Steinberg -- Jefferies -- Analyst

Unidentified Participant

Patrick Ralph Trucchio -- Berenberg Capital -- Analyst

David Amsellem -- Piper Jaffray -- Analyst

Esther Hong -- Janney -- Analyst

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