Catalyst Pharmaceuticals, Inc.
Q1 2019 Earnings Call Transcript

Published: 13 May 2019

[Operator:]

Greetings. Welcome to Catalyst Pharmaceuticals First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to Alicia Grande, Chief Financial Officer. Thank you. You may begin.

[Alicia Grande:]

Good morning, everyone, and thanks for joining today’s conference call. On today’s call, we have Pat McEnany, Chairman and Chief Executive Officer; Dr. Steve Miller, Chief Operating Officer and Chief Scientific Officer; Dr. Gary Ingenito, Chief Medical Officer and Head of Regulatory Affairs; and Dan Brennan, Chief Commercial Officer.

[Pat McEnany:]

Thank you, Ali. Good morning everyone and thank you for joining us on our first quarter 2019 results conference call. First quarter of 2019 was a very important one for us, beginning with the mid-January launch of Firdapse for adult patients with Lambert-Eaton Myasthenic Syndrome or LEMS. With the launch of Firdapse, we are now starting to deliver on our mission to make a positive and meaningful impact in the lives of patients suffering with rare neuromuscular diseases like LEMS, as well as driving value for Catalyst shareholders. We have heard from doctors and patients alike that have – since the availability of Firdapse has helped many to access treatment for the first time. Before Firdapse’s approval, many patients were poorly served with very limited access. Under a diagnosis by physicians was the norm. We’ve taken a full approach on generating awareness, educating the patient population, and equipping all docs nationwide with what they need to provide this life altering medicine to LEMS patients. We’ll spend most in today’s call discussing our first quarter results and metrics that we believe support that our launch of Firdapse has been a success by any measure. However, it is important that I first discuss the news from last Monday of the FDA’s decision to approve an NDA from Jacobus Pharmaceuticals for an amifampridine product to treat pediatric LEMS patients, six to less than 17 years of age. One of the press reports regarding their approval stated that there are less than 15 pediatric LEMS patients in the United States. We believe that this action by the FDA may affect whether pharmaceutical companies will invest in the development of other therapies to treat patients suffering from ultra-rare orphan designated diseases. Our management and legal teams along with our regulatory advisors are actively assessing the impact of the decision on our Company, the legality of the FDA’s actions and our options going forward. We will have more to say about this subject in the very near future.

[Dan Brennan:]

Thanks, Pat, and good morning everyone. I would like to reiterate Pat’s enthusiasm for the initial phase of our commercial launch of Firdapse. But first before getting into the commercial numbers and execution, I’d like to step back for a second on what we’re focused on in our commercial organization. There are over 1,500 patients diagnosed and suffering from this previously little known rare disease called LEMS, which is truly debilitating. These patients experience a loss of independence or loss of mobility and often a loss of their livelihood as they try to manage this illness and that is often after they spend years through the healthcare system, trying to understand their symptoms and obtain a firm and accurate diagnosis. The burden of LEMS goes beyond the patient to impact caregivers and loved ones as well. Those with LEMS are mainly adults who are working, often the breadwinners for their family and they get surprised out of nowhere with these debilitating symptoms. I’m proud to say that we’ve helped a great number of these patients, as you have heard from Pat, over 400 of those living with LEMS. We have worked hard to support and will continue to make great efforts to support them in a manner that recognizes the significant impact of LEMS and the anxieties of navigating a complex challenging healthcare system. Back in mid-December, we began describing our commercial priorities and goals for our commercial launch, which included instituting excellent services, programs and support to Catalyst Pathways and to ensure a comprehensive reimbursement access and approval with the majority of payers. Additionally, since then, we have laid out our strategic focus to help patients in three phases. First, commercial product availability to help transition patients on any investigational amifampridine formulations to Firdapse, starting on January 15 having no gap or lapse in therapy for these patients. Second, opening up commercial availability on February 4th to the approximate 1,200 remaining patients who had been diagnosed with LEMS in the past two years but did not have access or opportunity or awareness of amifampridine, but now we can make Firdapse available to them to treat the LEMS.

[Steve Miller:]

Thank you, Daniel, and good morning everyone. As Pat mentioned, we are pleased with our launch while remaining focused on our clinical development plan for additional neuromuscular indications for Firdapse. I would like to remind everyone that when we submitted our NDA for Firdapse for launch, we decided not to include an indication for CMS. By doing this, we sought to simplify the NDA review process and allow for a timely approval for Firdapse to launch. However, we currently have a Phase III trial ongoing in CMS. We expect to report top-line results from that trial in the second half of this year. And in completion of this trial, we anticipate filing a supplemental NDA to the FDA for CMS in 2020. There are currently no approved therapies for off label alternatives for the treatment of CMS. So we are excited about potentially bringing this important treatment option to these patients. In addition to CMS, we also have an ongoing Phase III trial for MuSK-MG. This trial is currently enrolling across about 30 trial sites in the U.S. and Europe, and the trial follows a successful proof-of-concept trial that completed in 2017. The proof-of-concept trial demonstrated clinical improvement with statistical significance and multiple assessments and we look forward to seeing the top-line results from this Phase III trial in the second half of this year. As a reminder, the study is being conducted under a Special Protocol Assessment Agreement or SPA with the FDA. Again, having positive results for this Phase III study, we look forward to filing a supplemental NDA to our approved label for Firdapse to include the additional indications for MuSK, myasthenia gravis. Our third clinical program that we are focused on is Firdapse for the treatment of Spinal Muscular Atrophy or SMA Type 3. We recently enrolled the first patient in this trial and we expect top-line results in the first half of 2020. As we have discussed, we have been transitioning our LEMS patients from our Expanded Access Program, but we continue to support the patients in this program as Firdapse is still being studied in CMS. In patients with CMS, the Expanded Access Program provides these patients access to amifampridine phosphate free of charge that the patients have no other treatment option and their physicians believe this is the proper treatment for them. We remain committed to supporting these patients and their access to an appropriate treatment. We also are working diligently to ensure that there are always adequate uninterrupted supplies of medication so that we can provide Firdapse to every patient that needs it. We work hard to make sure that there are no unforeseen interruptions to medication and maintain an inventory of tablets to ensure we always have medication available for patients in need. When we focus on these clinical programs, we also are in the early stages of developing a longer acting formulation of Firdapse in order to provide a better treatment alternative for patients that will integrate well with their daily activities. We're working to develop a formulation that provides optimum level of efficacies throughout the day and through the night in order to optimize patient performance of the drug. I will now turn the call over to Ali Grande, Chief Financial Officer, to review our financial results.

[Alicia Grande:]

Thanks, Steve. All references to per share in this call refer to basic and diluted shares. On Friday May 10, we filed our Quarterly Report on Form 10-Q for the first quarter ended March 31, 2019, in which we reported a net loss of $645,000 or $0.01 per share for the first quarter of 2019 as compared to a net loss of $5.7 million or $0.06 per share for the first quarter of 2018. For the quarter ended March 31, 2019, net product revenue from the launch of Firdapse during January 2019 was $12.4 million. Related cost of sales for the same quarter were $1.7 million. Research and development expenses were $3.3 million for the first quarter of 2019, in line with the comparable quarter of 2018. Research and development expenses for the first three months of 2018 primarily consisted of expenses in medical, regulatory affairs and quality assurance program, as well as expenses from our Firdapse clinical trials and studies, and our Expanded Access Programs. Research and development expenses in the comparable period in 2018, primarily consisted of consulting expenses as we prepared to submit our NDA for Firdapse for the treatment of LEMS during March 2018, as well as expenses from our Fridapse clinical trials and studies and our Expanded Access Program. The Company expects that the costs related to research and development activities will continue to be substantial throughout 2019 as we continue our ongoing clinical trials and studies in the MuSK-MG, CMS and SMA Type 3 and our Expanded Access Program for Firdapse. Selling, general and administrative expenses for the first quarter of 2019 totaled $8.4 million as compared to $2.7 million in the first quarter of 2018. The increase when compared to the same period 2018 is primarily due to increased selling expenses, including cost of our sales force and supporting personnel, product launch expenses, patient support programs, market access and market research expenses. The Company expects selling, general and administrative expenses to increase in 2019 as we continue to build up our infrastructure and commercial and patient programs in support of Firdapse sales activities in 2019. At March 31, 2019, Catalyst had cash and investments of $50.6 million and no funded debt. Although there can be no assurance, based on current available information, we believe that these resources will be sufficient to support our planned operations for at least the next 12 months. More detailed financial information and analysis may be found in the Company's annual report on Form 10-Q, which was filed with the Securities and Exchange Commission Friday, May 10, 2019, and can be found on the Investor Relations page of our website at www.catalystpharma.com. I will now turn the call back to Pat.

[Pat McEnany:]

Thank you, Ali. I'd like to continue to reiterate how pleased we are with our initial launch results, while remaining cautiously optimistic as we know a lot of work lies ahead. We will continue our work to better understand our patients and their needs in order to refine the patient experience. We look forward to providing additional information regarding our advisors' assessment of the Jacobus pediatric approval, as well as our progress in other areas of our business. This ends the formal presentation. I'll now turn the call over to the operator for questions.

[Operator:]

Thank you. Our first question is from Charles Duncan with Cantor Fitzgerald. Please proceed.

[Charles Duncan:]

First of all, congratulations on first quarter of launch and execution on that. Secondly, thanks for taking my questions. I had a couple of them, a little bit surprised by the 81 new patients – surprised and impressed. And I guess I'm wondering, if you think that some of those patients were newly diagnosed patients or are they mostly patients that were known to have been previously diagnosed with Firdapse – or with LEMS, excuse me, and then were not able to get the drug either in the Expanded Access or in other ways?

[Pat McEnany:]

Yes, I'll turn that call – that question over to Dan, Charles.

[Dan Brennan:]

Charles, yes, I think there's a mix, a majority of them have been diagnosed and had been aware of or awaiting but just hadn't had access to clinical studies or to a site that was providing amifampridine previously. But we do also know of many patients that are newly diagnosed as well and a lot of the attention that's been generated around our entire launch has brought, we know, phone calls even into our office here. People like saying, you know I think I have these symptoms, how can I learn more about LEMS and we get them in touch with their doctors. So, I think it's a mixm but it predominantly thus far has been people that had already had a diagnosis. We're not accessing our drug and perhaps were on mestinon steroids in many cases and are happy to be switched over to Firdapse.

[Charles Duncan:]

And then perhaps as a follow-up and this may be difficult to answer, but have you -- just take a shot at it. If you think about the difference between the number of patients that had access to the drug and the possible incidence and prevalence of LEMS, do you think that that difference is driven by under diagnosis primarily or lack of access and insurance coverage to the medication previously, or is it really driven by a lack of clear evidence based dosing information that's based on published clinical data?

[Dan Brennan:]

Well, again, I think we've shared before that we've done a pretty exhaustive claims data analysis, and in the most recent two years of claims data from a very good source, we saw approximately 1,500 patients that have been diagnosed. So the patients that are diagnosed with LEMS are out there, and they're suffering as I mentioned and it's sad to know that they're out there without a medication like this. But we know from the claims data that they're out there. But we also know from stories and even some of our own experience right now that they are also the undiagnosed and misdiagnosed with other diseases and many of these patients have been going from doctor to doctor with different diagnoses that are sometimes close and sometimes way off. And ultimately, we know that many of these patients will get the proper diagnosis. We're going to be educating and helping, provide diagnostic tools to neurologists. We were just at AAN, we had a good number of physicians come by our booth and say that you know what, I do have LEMS patients or I was thinking that this might be LEMS and so we see a tremendous opportunity to educate on both sides of that – for both the ones that are already diagnosed as well as ones that are yet to be diagnosed.

[Charles Duncan:]

Okay, that's helpful. My last question is regarding the progress with payers. It does seem like you're getting traction, I think, you mentioned 306 patients of 380 that have some insurance coverage. And I guess, I'm wondering what has been the feedback with regard to payors? Do they appreciate the burden of disease relative to the pharmacoeconomic value that Firdapse can create for those patients? And then the last question regarding that is would you expect reimbursement policies that are established for adults to also cover pediatric approved only drug?

[Dan Brennan:]

Yes, the initial positive response from payers does go in line with when we had a lot of our conversations with them before launch and it's very much in line with those conversations then when they understand what this disease is, they do realize the debilitating nature. They see a lot of these patients are on a bunch of different prescriptions that they're hoping are going to work, a lot of them are on IVIG, or plasmapheresis, or even other kind of a hard and challenging medications that have no proof. And so I think when they hear FDA approve, they understand how it works, they realize that patients will know quickly whether or not they're going to respond and they combine that with a debilitating disease like this, they say this makes sense. And we've seen that in action and it's gone very quickly compared to any expectations we would see from coverage, from payers across other medications, especially orphan medications when they first come out. As far as your second part of your question, we don't – I've never seen before a policy that where insurance company puts something that's off label on to a formulary or policy, but we'll see how that plays out. I don't know, Pat, if you want to provide any color on that.

[Pat McEnany:]

Yes, Charles, we're trying to get our arms around them now and we're fully assessing this and we're not ready to comment on that beyond what Dan said.

[Charles Duncan:]

Okay, thanks. That's helpful. I appreciate all the granularity in terms of how things are going so far. I'll hop back in the queue.

[Pat McEnany:]

Thank you, Charles.

[Operator:]

Our next question is from Joe Catanzaro with Piper Jaffray. Please proceed.

[Joe Catanzaro:]

Hey guys, thanks for taking the question. Just a few from me. I just wanted to follow-up maybe on the naive population. It sounds like patients are being – those type of patients are actively reaching out to you guys. But I was wondering if there's work you guys are doing on your end to go out and find these LEMS patients who are naive to amifampridine? And maybe if you could just speculate on how many naive patients you expect to have by the end of the year, see you at 81, maybe just think about how that number grows moving forward?

[Dan Brennan:]

Okay. So yes, there's a number of different ways that we're aware of in targeting education efforts for those naive patients. I mentioned before we have Tier 1 to Tier 4 physicians out of those 1,200 neurologists and neuromuscular physicians. Our Tier 1 and Tier 2s are physicians that are known to have seen in this most recent two years worth of data. They're known to have seen at least one LEMS diagnosed patients. And so we're actively going out and talking with those physicians. We have a great sales force, very experienced rare disease sales force, and in some cases, they know in rare diseases you'll have one physician that was associated with the patient and they realize, well, no, actually I don't treat that patient but it's so and so down the street or in this other office and it's investigative work, but these physicians or these sales reps are experienced in tracking down these physicians to educate them to make them aware that a product is now available, and in some cases these physicians because it is so rare, they forget that they forget in some cases what LEMS is, but much less that they have a patient in their practice. And so it's a lot of work from the sales force, but we also send out digital means, and emails and targeted communications to these physicians in their offices and other ways and we've seen that as being fruitful thus far as well. So a number of different ways that we can try to raise the awareness, and in some cases, educate and reeducate these physicians that they have a patient with LEMS in their practice.

[Pat McEnany:]

So, Joe, the second part of your question about the guidance on number of naive patients by the end of the year. As we stated earlier, we're just not in a position to comfortably make an estimate of that number as the year progresses and we have more experience and data. I think we'll be comfortable in talking about what our goal is for the year, but we don't have that at this point.

[Joe Catanzaro:]

Okay, great. So maybe my next question, I appreciate it's only been a few days since the Jacobus approval and that you guys probably can't speak too much to it. But maybe just a question around your interactions with the FDA, I was just wondering, when you applied did the FDA or you guys ever bring up the potential for a pediatric label? And if I look at your FDA approval letter, it specifically states in there that because of your Orphan Drug Designation, you're exempt from having to test the efficacy, and safety and the claims indication in pediatric patients. Just wondering how you guys read that wording?

[Pat McEnany:]

Joe, we've been advised not to comment on that at this point, and we're again doing a full assessment with our regulatory and legal counsel. And just not prepared to talk about that at this point. We think over the coming days we will be able to elaborate further on questions like that.

[Joe Catanzaro:]

Okay, fair enough. Maybe just one more, would you be able to point to anything similar where the FDA has approved the drug for pediatric indication the way they did for Jacobus or if there's any specific cases that have been litigated that you can point to?

[Pat McEnany:]

Joe, we've not at this point.

[Joe Catanzaro:]

Okay. Okay, thanks. That's all I have.

[Pat McEnany:]

Okay. Thanks Joe.

[Operator:]

Our next question is from Edward Nash with SunTrust Robinson Humphrey. Please proceed.

[Edward Nash:]

Hi, good morning guys. Appreciate you were taking my call. I wanted to ask, first of all, could you give us an idea of what the gross to net was for Firdapse in the first quarter?

[Pat McEnany:]

Yes, I don't think that we've elaborated on that in our 10-Q, but I don't think we have an issue discussing that, Dan.

[Dan Brennan:]

No. I think originally we expected somewhere in the 15% to 20% range. We're seeing that it's on the low end of that and actually is even lower in the first quarter, but we do expect that to increase over time for a variety of different reasons, including 340B coming in potentially, more Medicaid patients. So we're definitely on low end of that, and we're going to keep an eye on that and we'll update that throughout the remainder of the year. But we're very comfortable with our initial estimates.

[Edward Nash:]

Okay, great. Thank you. And in your 10-Q that you filed on Friday, you mentioned the Company is taking steps to seek approval for Firdapse from candidate. Could you let us know what the timing for a filing or potential approval would be there for Canada.

[Pat McEnany:]

Edward, we will have more to say about that. For competitive reasons, we're going to be a bit guarded on some of the things we talk about going forward. So -- but the initiative is under way at this point I can say that.

[Edward Nash:]

Great, understood. And my last question is with regard to, you might have mentioned this, what percent of patients are currently unable to obtain coverage despite having insurance?

[Pat McEnany:]

I don't want to get into all the granularity, because there's different levels of not obtaining insurance, there's initial benefits investigation and then you go through your PA and appeals and in some cases – and we're working through all of these different cases and types of cases. But probably the easiest directional answer I can give to you is, the difference between that 380 patients that are active on treatment and the 306 that I mentioned that are receiving insurance reimbursed prescriptions in there are people that are on this bridge therapy. So they're on therapy and they're working through the PA process and also in some cases appeals, but also when there are patient assistance programs patients who have already received the final determination that their insurance company may not approve the treatment. So there's a mix. I don't want to get down into, because it moves around quite a bit, but your best guide there is the difference between the 380 and 306.

[Edward Nash:]

Okay, great. Thank you. And I didn't say it before, but congratulations. Really outstanding first quarter.

[Pat McEnany:]

Thank you, Edward.

[Operator:]

Our next question is from Leland Gershell with Oppenheimer and Company. Please proceed.

[Leland Gershell:]

Good morning, Pat. Thanks for taking my questions and congratulations as well.

[Pat McEnany:]

Thank you, Leland.

[Leland Gershell:]

Yes, in terms of the patient numbers with a 380 active, 409 prescribed and I think the guidance earlier maybe that was a number that wasn't completely well-defined, but about 300 who were on previous forms of 34-DAP, whether under your program or other. It would seem that you effectively converted all or just about all of the prior patients. I know you've guided to end of Q2 conversion, but it seems like that's pretty much complete. Is that correct?

[Pat McEnany:]

Yes.

[Leland Gershell:]

Okay great. And then just along the same lines, you had mentioned agreements that you'd entered into with some of the centers, the academic centers that had been providing amifampridine before. Any updates on those agreements or other relationships?

[Pat McEnany:]

No nothing there.

[Leland Gershell:]

Okay. Well, that's all for me. Thanks very much and congratulations again.

[Pat McEnany:]

Thank you, Leland.

[Dan Brennan:]

Thank you.

[Operator:]

We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

[Pat McEnany:]

Thank you, operator. And thank you to everyone who joined us on today's call. As always, we appreciate your continued support of Catalyst. We'd like to thank all of our shareholders, employees, and most importantly, our patients and physicians. Have a great day.

[Operator:]

Thank you. This concludes today's conference. You may disconnect your lines at this time and thank you for your participation.