Supernus Is Once Again A Super Value

Kenneth Pittman profile picture
Kenneth Pittman
1.43K Followers

Summary

  • Since my last recommendation of Supernus, the stock rose from ~39 to 60 before recently falling back to 30.
  • Meanwhile, the pipeline has progressed close to expectations although growth of current products has slowed somewhat.
  • Supernus is in a strong financial position and seems to be a value based on earnings.
  • Supernus remains attractive for future growth and is perhaps more derisked now than it ever has been.

Review of Price Since Last Article

I last wrote about Supernus (NASDAQ:SUPN) on March 1st, 2018, when it was trading just below 39. At that time I stated that Supernus was worth a "Super-Sized" portfolio position based off of its growth and pipeline. By the end of June, Supernus briefly broke $60 and seemed on its way to meeting my $75 1-year price target. Had an investor taken idealized profits, they would have been up over 50% at that time. However, since late June, Supernus has fallen and closed at $29.96 on 6/3/19 due to a combination of market weakness, concerns about slower growth, and negative market reaction to SPN-812 Phase III Studies. This could have resulted in a 50% loss for a poorly-timed investment.

This leads to the question - is Supernus an even better value than it was in March 2018 or have the concerns lowered the potential for the stock?

Current Status of the Pipeline

SPN-812 (Viloxazine)

Since my last article, Supernus has published results of four Phase 3 studies for SPN-812 (viloxazine). Viloxazine is a serotonin-norepinephrine modulating agent that has previously been used in Europe as an antidepressant, but has never been approved or marketed in the US. Supernus has been investigating its formulation of viloxazine for ADHD.

There is only one similar approved drug on the market and it is now generic (Strattera/atomoxetine). Strattera sales peaked at $854 million in 2016 before going generic. There was one other potential competitor in the form of dasotraline by Sunovion (OTCPK:DNPUF), but Sunovion received a CRL in August 2018 in response to its NDA. The primary concern was the FDA wanting additional evidence on efficacy and particularly tolerability. Sunovion has continued to pursue dasotraline and a study of dasotraline was published in March that

This article was written by

Kenneth Pittman profile picture
1.43K Followers
I am a Physician (Board Certified in Child Psychiatry, Adult Psychiatry, and General Pediatrics) and I have been an investor in individual biotech companies for about 7 years. I first published on Seeking Alpha in 2014 and began writing regularly in mid 2017. My focus is finding value in Biotech companies while also reviewing technical aspects of their stocks.  I concentrate on Neuroscience companies and share my perspective in this area.

Disclosure: I am/we are long SUPN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have had 6-8 marketing lunches provided to my office by Sunovion in the past year. I have had marketing lunches provided by several ADHD-related companies that were not mentioned in this article. I am contracted to speak for Tris Pharmaceuticals, a private company, and Neos Pharmaceuticals, a public company, who have products in the ADHD market that were not discussed in this article. I have had one snack provided by Supernus at a conference booth, but no other direct marketing from Supernus.

Recommended For You

Comments (20)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.