Catalyst Pharmaceuticals, Inc.
Q4 2018 Earnings Call Transcript

Published: 19 Mar 2019

[Operator:]

Greetings and welcome to the Catalyst Pharmaceuticals Fourth Quarter and Year-End 2018 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Ali Grande, Chief Financial Officer for Catalyst Pharmaceuticals. Thank you. You may begin.

[Ali Grande:]

Good morning, everyone. And thanks for joining our 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; and Dan Brennan, Chief Commercial Officer.

[Pat McEnany:]

Thank you, Ali. Good morning, everyone and thank you for joining us today. 2018 was a pivotal year for Catalyst that culminated in the approval of Firdapse, which was commercially launched on January 15th. It was also a transformational year for adult patients in United States who struggle with the debilitating effects of Lambert-Eaton myasthenic syndrome or LEMS. Prior to the approval of Firdapse, these patients had no evidence-based treatment option that was approved, for years. Furthermore, only a small number of LEMS patients had access to any treatment at all in the form of an unapproved investigational amifampridine treatment. I'd like to focus my remarks today on our three strategic priorities. First and most importantly, the successful execution of the Firdapse launch plan; second, the continued execution of our other clinical trials evaluating Firdapse for the treatment of CMS, MuSK antibody positive MG and SMA Type 3; and third, our efforts to develop a longer acting formulation of Firdapse. I'd like to start by informing you all about what has been a very strong start to the commercial launch of Firdapse. As most of you know, we were launch-ready as of January 15th. Our primary goal during this initial phase of the launch period has been a smooth and seamless transition of all 3,4-DAP experienced patients to commercial Firdapse. As part of that effort, we have successfully transitioned patients from the Cleveland Clinic, Duke University, the Mayo Clinic, as well as other centers of excellence. During this transition, I'm pleased to report that so far, we are not aware of any patient from an early access program desiring to remain on therapy that has missed a single dose of drug. In addition, despite some patient concerns initially, most all patients that are now being treated with Firdapse have experienced an out-of-pocket expense of $10 per month or less. The first and most important priority is to remain laser-focused on our continued efforts to execute a successful launch of Firdapse. We are quite pleased with the strong momentum that we have achieved in the first few months of the launch, including the breadth of prescribers and number of patient enrollment or start forms in Catalyst Pathways, which is our comprehensive patient services program that was launched at the time of the Firdapse approval.

[Dan Brennan:]

Thanks, Pat. Good morning, everyone. We are encouraged by the early Firdapse launch trends, and I'd like to take a moment today to share what we have seen thus far. Let me remind you, we estimate that there are about 3,000 LEMS patients in the United States and claims data reviewed over the most recent two-year period indicates that approximately 1,500 unique patients are currently diagnosed. This estimate triangulates well with other epidemiology data published in literature. Furthermore, we believe that approximately 300 of these 3,000 patients were accessing investigational 3,4-DAP via the Jacobus Pharmaceuticals or via our Expanded Access study at the end of last year.

[Dr. Steve Miller:]

Thank you, Dan, and good morning. We are very excited about the approval of Firdapse as this marks an incredible milestone, both for LEMS patients and Catalyst. Following the approval of Firdapse for LEMS, we continue to focus our development efforts on clinical programs for new indications to help patients with unmet medical needs and on product improvements for Firdapse to improve the treatment experience for all patients. When we submitted our NDA for Firdapse for LEMS, we decided not to include an indication for the limited types of CMS that are mechanistically similar to LEMS in order to simplify the NDA review process for the FDA and to ensure timely approval of the NDA, which occurred on the assigned PDUFA action date of November 28th. However, we're still committed to our clinical program for CMS. This program is currently in Phase 3 development with enrollment completion and reporting of top-line results expected in the second half of 2019. Assuming positive top-line results from this trial, we will work closely with the FDA to evaluate the suitability of Firdapse for all available CMS types and hope to file a supplemental NDA for a new indication for the treatment of one or more types of CMS in 2020. There are currently no approved therapies or off-label alternatives for the treatment of CMS and we are excited about potentially bringing a treatment option to these patients. In addition to CMS, we are evaluating Firdapse for the treatment of MuSK antibody positive, myasthenia gravis or MuSK-MG. We are currently conducting a Phase 3 trial for this new indication at 29 trial sites in the U.S. and Europe. This trial follows our prior successful single site proof-of-concept trial, which demonstrated clinical improvement with statistical significance in multiple assessments, including the FDA required primary endpoint of MG-ADL. We enrolled our first patient in this current trial in the second quarter of 2018 and look forward to report top-line results in the second half of this year. This trial is being conducted under a Special Protocol Assessment or SPA with the FDA. Pending positive top-line Phase 3 results in the second half of this year, we've been working with the FDA to file a supplemental NDA in 2020 to include MuSK-MG as a new indication to already approved label for Firdapse. Lastly, we are studying Firdapse for the treatment of spinal muscular atrophy or SMA Type 3 in a proof-of-concept trial. We enrolled our first patient in this trial in the first quarter of 2019 and remain on track to report top-line results in the first half of 2020. We are hopeful of the potential for Firdapse for an SMA Type 3 based on input of several neuromuscular medical experts that believe Firdapse could be a valid treatment option for these patients. As Firdapse is being studied in CMS, we continue to support our Expanded Access Program, which provides CMS patients access to amifampridine phosphate tablets. For these eligible patients, therapies provide free of charge if the patients have no other treatment option and the physicians believe that this treatment could provide relief to their patients. Catalyst is also supporting MuSK-MG patients to participate in our Phase 3 study by providing Firdapse at no cost to these patients as part of a long-term safety study, if these patients have no other treatment options and the physicians belief that this treatment could provide relief to their patients. In addition to these clinical programs, as Pat mentioned earlier, we are in the early stages of our work to develop a longer acting formulation of Firdapse. We continue to receive input from patients that need a meditation that is longer acting that will eliminate the need to plan their daily activities around their current dosing schedule antiques and efficacy of Firdapse. We hope that this new dosage for would ensure an optimum level of efficacy throughout the day and through the night. And in addition to these clinical benefits, we hope that it would also be a more patient finally medication, leading to better compliance. In order to accelerate the ongoing clinical programs that I just described, Catalyst has been adding to our R&D. We now employ 14 clinical and medical affairs staff members which includes the recent hire of Stanley Iyadurai, PhD, MD, as our Vice President of Clinical Operations. Dr. Iyadurai is a noted neuromuscular specialist with many professional relationships within the neuromuscular physician community and extensive research experience in neuromuscular diseases. Under his leadership as VP of Clinical Operations and leveraging his relationship and experience, we hope to bring the previously described clinical progress to a timely and successful conclusion. Catalyst is committed to provide Firdapse to every patient that needs it. And we have established a robust supply chain to ensure that there will always be adequate, uninterrupted supplies of medication. Firdapse and its active ingredient are made in the United States. We use two different manufacturers of Firdapse in order to ensure that unforeseen interruptions to manufacturer will not affect the availability of medication. Finally, we maintain inventories of hundreds of thousands of tablets to assure that Firdapse will always be available to anyone that needs it. I will now turn the call over to Ali Grande, our Chief Financial Officer to review our financial results.

[Ali Grande:]

Thanks, Steve. All references to per share in this call refer to basic and diluted shares. Yesterday, we reported a GAAP net loss of $34 million, or $0.33 per share for the year ended December 31, 2018 as compared to a GAAP net loss of $18.4 million or $0.21 per share for the year 2017. For 2018, non-GAAP net loss was the same as GAAP net loss as there were no non-GAAP adjustments. In comparison 2017, non-GAAP net loss was $18.2 million or $0.21 per share, which excludes a non-cash loss of a $187,000 attributable to the change in fair value of liability-classified warrants. For the fourth quarter of 2018, we reported a GAAP net loss of $14.5 million or $0.14 per share compared to a GAAP net loss of $5.4 million or $0.06 per share for the same period in 2017. For the fourth quarters of both 2018 and 2017, non-GAAP net loss was the same as GAAP net loss as there were no non-GAAP adjustments. Research and development expenses were $8.4 million a $19.9 million for the fourth quarter and full-year 2018, respectively, as compared to $3.4 million and $11.4 million for the fourth quarter and full-year 2017. The increase in R&D for the year 2018 was primarily due to increases in consulting expenses as we prepare to submit our NDA, milestone expenses in connection with the acceptance and approval of our Firdapse NDA for LEMS, expenses from our medical affairs program and compensation and related personal costs as we expanded our headcount to support our clinical trials and programs. We expect that research and development costs will continue to be substantial in 2019 as we work towards completing trials evaluating Firdapse for the treatment of CMS, MuSK-MG and SMA Type 3, continue our Expanded Access Program for Firdapse and begin development of a sustained release formulation of Firdapse. General and administrative expenses for the fourth quarter and full year 2018 totaled $6.9 million and $15.9 million, respectively, compared to $2.1 million and $7.3 million in the fourth quarter and full-year 2017. The increase for the year 2018 was primarily due to increases in pre-commercialization expenses, headcount and corporate expenses as we built up our infrastructure and commercial programs in preparation for the launch of Firdapse in the first quarter of 2019. We expect G&A cost excluding commercialization expenses that going forward will be reported as selling expenses to continue to increase in 2019 as we continue to expand our workforce and operations to support the launch of Firdapse. During the fourth quarter and year 2018, Catalyst had revenues of $500,000 from our collaboration with Endo for generic Sabril that began during December 2018. Catalyst had no revenues for the fourth quarter or year 2017. At December 31, 2018, Catalyst had cash and investments of $58.5 million and no 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 information and analysis may be found in the Company's Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission Yesterday, March 18, 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. As I mentioned earlier, we believe this is just the beginning of the Firdapse platform. We are pleased with the initial results, but we're very early in the launch and much more work lies ahead. The efforts to further refine our understanding of the patients’ needs as well as the market dynamics remain ongoing. And as the year progresses, we expect to have more information to share. For now, we are very encouraged by the early results and remain optimistic. This will end the formal presentation. And we’ll now turn the call over to the operator for questions.

[Operator:]

Thank you. At this time, we'll be conducting a question-and-answer session. Our first question comes from the line of Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

[Charles Duncan:]

Hi, guys. First of all, congratulations on what appears to be a good execution thus far, early in this launch for LEMS patients. I had just a couple of questions. The first one is, I think, you've referred to 165 unique prescribers. Can you tell us whether or not any of those prescribers are outside of the centers, which were the primary catchment base for the previous -- access to the previous forms of 3,4-DAP?

[Pat McEnany:]

Dan, do you want to answer that, please?

[Dan Brennan:]

Sure. Yes. Many of the physicians of the 165 are outside of those centers that both Pat mentioned, at Mayo, Duke; Cleveland actually wasn't in the Jacobus IND cycle; it’s part of our EAP. But, there are many physicians outside of the main centers, but had perhaps 1 or 2 patients or a handful of patients that were part of the Jacobus IND. And then, also, you heard us mention that 39 patients have been prescribed that were previously naïve to treatment. And many of those physicians are completely outside of previous experience with 3,4-DAP or amifampridine.

[Charles Duncan:]

Okay. That’s helpful. And I'm glad you brought up those 39 patients, because my next question was on those Firdapse naïve patients. Do you have any feedback from the physicians on how they're doing and what their persistence with the therapy is thus far?

[Dan Brennan:]

It's very early going on that to understand the persistence. The general reaction has been positive. We don't get regular updates. Our Catalyst Pathways folks are definitely reporting that these patients are pleased or happy with -- and pleasantly surprised with the co-pay amounts that they actually have to pay. But, it is a bit early to report back as far as the level of efficacy and persistence. We do expect it would track along the lines as what we saw in our clinical studies and EAP for the naïve type patients that have never been on 3,4-DAP previously.

[Charles Duncan:]

Okay. And then, regarding disease awareness, I think you mentioned a program for some being held in Dallas certainly I think next month. Do you have similar programs that you're planning throughout the rest of the year? And are there any regional areas that you want to focus on?

[Pat McEnany:]

I don't think, Charles, that additional meetings have been planned as of yet. This is our first of what I explained would be more of these meetings. So, we anticipate before the end of this year, there'll be another meeting. I’m not sure where it will be, at this point. Though, we’ll certainly advise you in advance.

[Charles Duncan:]

Okay. And then, final question is for Steve regarding further clinical development of Firdapse. I'm wondering if you could give us a sense of the timing of the CMS data versus the MuSK-MG data and if you have any perspective on a blinded basis the types of patients that are being enrolled in MuSK-MG, are they clearly MG patients -- or excuse me, MuSK patients, and how do you feel about the conduct of their trial thus far?

[Dr. Steve Miller:]

With regard to the overall completion timing, I can't comment beyond what we've already said, which is second half of 2019. With regard to the overall progress of the trials, they're progressing well and patients do respond to the medication.

[Charles Duncan:]

Final question for you Steve is, the longer acting formulation, you talked about that briefly, but do you have any timelines, any goal dates, next steps that you can share with us, when could we see a longer acting formulation start to enter, call it clinical evaluation?

[Dr. Steve Miller:]

Well, we don't have any specific information or guidance that I can provide with regard to the development of that. In addition to that, there is limitations to what I can say anyway for intellectual property reasons. And finally, I think it's important to point out that the development of the product includes both formulation development as well as some clinical trials. So, it will take a few years to get it developed and introduced to the patients. We will try to get it introduced to them as quickly as reasonably possible because the patients have a desire for a long-acting formulation.

[Charles Duncan:]

Okay, thanks for taking my questions and thanks also further granularity on metrics thus far.

[Pat McEnany:]

Thank you, Charles.

[Operator:]

Thank you. Our next question comes from the line of Joe Catanzaro with Piper Jaffray. Please proceed with your question.

[Joe Catanzaro:]

Hey guys. Thanks for taking my questions, and congrats on the progress. I just have a couple questions here. So, for the patients who have converted from investigational 3,4-DAP to Firdapse, can you just give us a sense about what percent of those patients are currently being covered by their insurance?

[Pat McEnany:]

Dan, why don't you answer that?

[Dan Brennan:]

Yes. I think that we're going to wait until May to give the specifics to that. But, a very large proportion of these have already received a payer positive decision and are either being shipped reimbursed drug right now or because they're waiting for their existing supply to exhaust, for example, if they haven’t had their closeout visit from our Expanded Access Program study or if they still had a good amount on hand from Jacobus, it seems these patients want to wind those down before getting shipped the drug, but a good percentage of these have been already received -- have already received a positive pay or reimbursement decision.

[Joe Catanzaro:]

I ,guess my other question, so on your last call, you guided towards having 250 to 300 patients on treatment by the end of 2019. It seems like you guys are almost already there or very close. Is that a number you're still speaking toward to at the moment?

[Pat McEnany:]

That was our original guesstimate back in December, Joe. And it appears that we all have our arms around all of those that had early access by the end of the second quarter, a little quicker than we expected. So, yes, it's -- previously we had expected to have all of those patients on reimbursed drug by the end of the year. It looks like that should happen by the end of Q2.

[Joe Catanzaro:]

And I guess my last question. So, from your discussions and interactions with payers, what kind of metrics are they going to want to see to measure patient benefit? From some of our discussions, it sounded like QMG, which is realistic endpoint in a clinical trial is not maybe as realistic in the real world settings. So, what are kind of feedback are you hearing payers to that end?

[Pat McEnany:]

In general, we've been pleasantly surprised at how well the payers are understanding and picking up on the severe symptoms and of the benefits of Firdapse being a very symptomatic and easily identifiable benefit by the patients. And really, we haven't had the payers push back on providing this information. Actually, we have a program in place where we are asking the patients this SGI, the subject global impression question that was provided in our studies for naïve patients. But, it's not necessarily a requirement by any of the payers back on us. The main requirement that we're seeing is that there is a confirmation of diagnosis of LEMS. And so, many of these patients have called their insurers directly and told them how important this drug is. And they themselves have been telling to insures how quickly works and how significant the impact is on them able to walk around. And the payers are getting the picture that this is something that if it's not working, the patients just aren’t going to use it or conversely that they're going to keep on using it if it's providing that good value and they can see and sense that value right away.

[Operator:]

Our next question comes from the line of Edward Nash with SunTrust Robinson Humphrey. Please proceed with your question.

[Unidentified Analyst:]

This is Frank on for Edward. Congratulations on the progress, especially the early launch for Firdapse. My first question is, can you talk about -- you mentioned that the reimbursement tracking better compared to prior thoughts about 60 days and 90 days. Can you talk more about the color on that in terms of how quickly the reimbursement turnaround looks like right now?

[Pat McEnany:]

Yes. I’ll let Dan answer that but we're not prepared yet, we don't have enough information or experience to be able to speak specific to that, other than a general statement is that as Dan has pointed out, it's been a very positive event or discussions with payers. And I think that again, on our May conference call on Q1 results, we’ll have more data to share with you at that time, so we can be a little bit more specific on the turnaround time. Anything to add to that, Dan?

[Dan Brennan:]

The only thing to add is and again, as I mentioned before, we really haven't seen any problems with denials in the early launch. There are oftentimes immediate rejections of a prior authorization just because the payer doesn't have it in the system. We saw that but we've seen those get reverse very quickly. We do see that the overall trends on time to reimbursement are beating the 60 to 90 days that we originally thought back in December, but that's all I have to shake out. And we'll have a lot better color and metrics on that at the May call.

[Unidentified Analyst:]

Got it. That's really helpful. And second question is on -- so, given the recent political rhetoric on drug pricing, do you see any changes in terms of patient enrollment and reimbursement, like since the topic is on the press?

[Pat McEnany:]

No, we -- I'm not sure that we’re really prepared to comment on that, other than to say that it's clearly -- it's been an issue for a number of years, not just now. And so, as long as we feel that we are delivering value to our patients, which we are, and I think it's being recognized with all the various stakeholders, including physicians, patients, payers, that's what we're most concerned about. And we've not see or experienced necessarily any impact. But, again, it's early in the launch for us, but I'm not sure that that global issue is impacting us.

[Dan Brennan:]

And we don’t see that any of the proposed rule changes are currently causing a financial risk to us. And we're monitoring the progress of a lot of these different proposals. And of course, in the future, if we think it represents a risk, we’ll let you know.

[Operator:]

Thank you. Ladies and gentlemen, this concludes our time allowed for questions. I'll turn the floor back to Mr. McEnany for any final comments.

[Pat McEnany:]

Thank you all for your participation on the call this morning. Thank you again to our various stakeholders for your support of Catalyst and assistance in bringing Firdapse to patients suffering from rare neuromuscular disorders. This is very exciting time for the Company and our dedicated team members. We look forward to again providing you with further updates on additional progress. Thank you.

[Operator:]

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