Catalyst Pharmaceuticals Inc (CPRX) 2018 Q2 法說會逐字稿

Greetings and welcome to Catalyst Pharmaceuticals Second Quarter 2018 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ali Grande, Chief Financial Officer. Please go ahead.

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

Before we begin, I would like to remind you that in the following comments and in the Q&A session, we will make statements about expected future results, which may be forward-looking statements for purposes of the federal securities laws. These statements relate to our current expectations, estimates and projections and are not guarantees of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and which may prove not to be accurate. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors in our annual report on Form 10-K.

At this time, it is my pleasure to turn the call over to Pat McEnany, our Chile Executive Officer.

Thank you, Ali, and good morning, everybody. Thanks for joining us today, and welcome to our second quarter 2018 results call. We are pleased to update you on our recent milestones and developments. Steve Miller will provide a status report on our pipeline and development activities for Firdapse, and lastly Ali will review our financial results for the second quarter. We will then take your questions.

Further, on future calls, we expect that our new Chief Commercial Officer, Dan Brennan will join us to provide you with updates about our Firdapse commercialization activities. With that, let me start by highlighting the key takeaways from the second quarter as well as recent activities. During the second quarter of this year, we are pleased to report that the FDA had accepted for priority review our new drug application for Firdapse for the symptomatic treatment of Lambert-Eaton myasthenic syndrome or LEMS. Priority review is granted by the FDA for drugs such as Firdapse that have the potential to both address and provide a significant improvement in safety or effectiveness of the treatment of a condition.

We are working closely with the FDA to assist them in the review process and we have received a PDUFA goal date of November 28 of this year. Our NDA submission, which is currently under active review includes the positive results from our LMS-003 confirmatory Phase III trial in patients with LEMS that was previously announced in November of 2017. This trial achieved statistical significance for both the coprimary endpoints and the secondary endpoint.

With the FDA acceptance and review of our NDA, our focus is now on working closely with the FDA to assist them in the review process of this NDA continuing to enroll patients in the LEMS and CMS [and] Expanded Access Program, pushing forward as quickly as possible with our currently ongoing clinical trials evaluating Firdapse for the treatment of congenital myasthenic syndromes, MuSK antibody positive myasthenia gravis, and spinal muscular atrophy type 3, preparing for the potential launch of Firdapse early next year, completing our plans for a comprehensive patient services program to ensure that all underscored all patients will have access to Firdapse and exploring other potential indications for Firdapse for other rare neuromuscular disorders.

As previously announced, we have recently appointed Dan Brennan as Chief Commercial Officer. Dan is responsible for leading sales, marketing and commercial operations as we prepare for a potential launch of Firdapse in early 2019. Dan has extensive experience in leading commercial efforts at biopharmaceutical companies, particularly ones focused on rare neurological diseases. We are excited to have him on board and look forward to utilizing his extensive knowledge in the commercialization of our therapeutics for rare neuromuscular disorders. Dan shares the same passion as the rest of the Catalyst team in bringing safe and effective therapies to patients suffering from rare diseases. Since joining us in June, Dan has already made great progress in building out commercial leadership team.

On Monday, we announced that we have added several key senior leadership positions to the commercial operation, which will be an integral part of our plan for a potential launch of Firdapse. These include, Senior Vice President of Commercial Operations and Analytics, Senior Vice President of Sales and Marketing, Senior Director of Patient Services and Senior Director of Patient Advocacy and Engagement. This talented team has extensive experience of launching treatments for a number of rare neurological disorders. Additionally, we have recently hired 3 additional senior medical science liaisons that have a wealth of experience in working within the neuromuscular physician community. This brings the number of MSLs currently on our medical affairs team to 5.

Lastly, as part of our patient services program, we have finished our manufacturing plans to assure that all patients will have access to Firdapse, assuming approved. We are also developing a program to assist patients who are in our Expanded Access Program with an easy and smooth transition to the commercial product once we launch the product. To ensure that the transition is a positive experience, we've already begun the process to manufacture adequate supplies of commercial product to meet the expanded requirements of all of these patients.

I will now turn the call over to Steve Miller, our Chief Operating Officer and Chief Scientific Officer, who will provide more information about our development programs.

Thank you, Pat, and good morning everyone. As Pat previously mentioned, our NDA for the symptomatic treatment of LEMS was accepted by the FDA and is under active review at this time. The NDA was granted priority review and was assigned a PDUFA goal date of November 28 of this year. Catalyst remains hopeful that the NDA will be approved on or about this call date.

As we previously announced, the NDA submission that we filed in March is only for Firdapse for the treatment of LEMS and did not include an indication for the limited subtypes of congenital myasthenic syndromes, or CMS, that are mechanistically similar to LEMS. Catalyst continues to work diligently in conducting our Phase III trial evaluating Firdapse in patients with CMS in order to collect additional safety and efficacy data in both adult and pediatric CMS patients. Enrollment for the CMS trial is currently ongoing and we anticipate top line results in the first half of 2019. Assuming successful top line results, Catalyst anticipates meeting with the agency to discuss the suitability of the clinical results as well as the structure and content of a supplement to include a general CMS indication in the Firdapse label. Pending a successful outcome of such a meeting, Catalyst hopes to file a supplement to its NDA for the additional CMS indication.

We also continue to enroll patients in our Phase III trial evaluating Firdapse for the treatment of MuSK-antibody positive myasthenia gravis or MuSK-MG. This trial is being conducted under an FDA Special Protocol Assessment or SPA. We look forward to continuing enrollment and expect top line results in the second half of 2019. This Phase III trial is a confirmatory clinical trial that Catalyst hopes will confirm and expand on the previously announced positive results of a proof of concept trial that was reported in early 2017. Catalyst is hopeful that if this confirmatory trial is successful that it, together with the results of the previously reported proof of concept study, will provide adequate evidence of safety and efficacy for the MuSK-MG indication that Catalyst hopes to include in the Firdapse label by way of a future supplement to its already approved NDA.

As previously reported, Catalyst has been granted Orphan Drug Designation for Firdapse for the treatment of myasthenia gravis. We have recently initiated our proof of concept trial of Firdapse in spinal muscular atrophy or SMA Type 3 and expect to dose our first patient in the second half of 2018. This trial will be conducted in Europe and we expect to enroll approximately 12 patients. We look forward to announcing top line results from this trial in the second half of 2019.

Lastly, we continue to support our Expanded Access Program, which provides amifampridine phosphate tablets to patients with LEMS and CMS. In these cases, amifampridine phosphate tablets are provided free of charge if the patients have no other treatment option and their physicians believe that this treatment could provide relief to their patients.

I will now turn the call over to Ali Grande, our Chief Financial Officer to review our financial results.

Thanks, Steve. All references to per share in this call refer to basic and diluted shares. For the quarter ended June 30, 2018, Catalyst reported a GAAP net loss of $6 million or $0.06 per share compared to a GAAP net loss of $3.9 million or $0.05 per share for the same period in 2017. For the second quarter of 2018, non-GAAP net loss was the same as GAAP net loss as there were no non-GAAP adjustments. Excluding a non-cash gain of $210,000 attributable to the change in fair value of liability-classified warrants, non-GAAP net loss was $4.1 million or $0.05 per share for the second quarter of 2017.

Research and development expenses were $3.7 million for the second quarter of 2018 compared to $2.5 million for the same period in 2017. The increase in R&D when compared to the same period in 2017 was principally due to increases in consulting expense, milestone expense in connection with the acceptance of our NDA submission in May 2018, expenses from our medical affairs program and compensation and related personnel costs as we expand our headcount to support currently ongoing clinical trials and programs. We expect that research and development costs will continue to be substantial during the balance of 2018 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 other development programs and prosecute our recently accepted NDA submission for Firdapse for LEMS.

General and administrative expenses for the second quarter of 2018 totaled $2.6 million compared to $1.7 million in the second quarter of 2017. The increase when compared to the same period 2017 is primarily due to the increases in pre-commercialization expenses, headcount and corporate expenses as we build up our infrastructure and commercial programs in preparation for a potential Firdapse launch in 2019. We expect the G&A costs, including pre-commercialization costs will continue to increase in 2018 compared with the G&A costs incurred in 2017 as we continue to expand our operations in preparation for a potential launch in 2019.

Catalyst had no revenues in either the second quarter of '18 or '17. At June 30, 2018, Catalyst had cash and investments of $73.4 million and no debt. Although there can be no assurance, we believe that these resources will be sufficient to support our planned operations through 2019 without considering revenues and cash receipts that we might receive in 2019 if we are successful in obtaining an approval for Firdapse and launching the product in 2019.

More detailed information and analysis may be found in the company's quarterly report on Form 10-Q, which was filed with the Securities and Exchange Commission yesterday, August 7, 2018, 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.

Thanks, Ali. The Catalyst team is highly motivated with the acceptance of our NDA and its receipt of the priority review. We are working closely with the FDA to assist them in their review of our NDA and we look forward to the potential approval of our NDA for Firdapse for the treatment of LEMS and bringing to the LEMS community an FDA approved therapy. We are also pleased about the progress we're making in evaluating Firdapse for additional indications.

Finally, we are excited to have expanded our commercial leadership team and are grateful for the experience these new hires bring in commercialization activities for therapies for rare and neurological diseases. We are confident that we are taking the steps necessary for a successful commercial launch of Firdapse for LEMS, pending FDA approval. We also look forward to providing you with any additional update on our other pipeline and business development activities as they become available.

This will end the formal presentation and we will turn the call over to the operator for questions.

(Operator Instructions) Our first question today comes from Edward Nash of SunTrust Robinson Humphrey.

I wanted to start maybe -- Pat, maybe you could [just see], I know we've discussed this before, but as we're getting now closer to that PDUFA -- or Steve, what are [your guys'] thoughts on an AdCom? Do you still feel that there won't be an AdCom or how do you feel about that?

We don't believe there is going to be an AdCom and that's based on communications with the FDA. So, it's unlikely, let's put it that way.

Okay. And then can you just remind us with regard to the -- appreciate the update on the timing for the CMS in the MuSK-MG trials, but could you just remind us again the number of patients [that your] target enrollment for each and what the -- the primary endpoints for both?

Steve, would you like to take that?

Sure. For the CMS trial, the target enrollment is about 20 patients. The endpoints is MFM or motor function measure and SGI. And for the MuSK-MG trial, the target enrollment is 60 patients and the primary endpoint is MG-ADL or myasthenia gravis activities of daily living.

Okay. And the SMA trial, you said that will start in the second half of this year?

Yes. Enrollment.

Okay. And in that -- so that trial -- based on that data that you'll get from that trial, I assume you would still need to move on to do a second study or is there any chance that based on positive data that trial could be potentially filed for accelerated approval?

No. We believe that that will actually require a second trial. The design of the trial does not include a duration of treatment that is long enough to assess whether or not Firdapse would reduce the progression of the SMA disease.

Okay. And then my last question and I'll jump off is the -- with regard to the CMS in the MuSK-MG indications, would both of those be -- those are -- both of those would be supplemental filings -- supplemental NDA filings?

That's correct. Our NDA that is currently being reviewed by the FDA is only for the LEMS indication. Any new indications that we add would be supplements to an already approved NDA.

The next question is from Scott Henry of Roth Capital.

First question, Pat, now that the NDA for Firdapse has been accepted, can we assume that that puts the whole Jacobus risk kind of to bed in terms of them beating you to a filing? Is that -- by being accepted, is that now clear?

Well, technically I don't believe it is, Scott. I think that, again they're a privately-held company. So we don't know where they are or if they are at all pursuing an NDA. And so until you receive your approval, it's really not game, set, match. So -- and again, there's not very much public information out there about where they are. The only information we get is really anecdotal and it's from our MSLs who are in the field, calling on the KOLs and the LEMS experts. And so -- so we're moving ahead and we expect that we will be approved by the PDUFA date.

Okay. Thanks for that clarity. And then with regards to the model, I thought we may see the $2.6 million milestone in Q2. I gather will that be fully expensed in Q3 or is it possible to be amortized? How should we think about that $2.6 million?

We've actually renegotiated that [in a 10-Q], Scott, with the Huxley shareholders who are parties to the license with BioMarin. And -- so we renegotiated that and the milestones have changed and those details are laid out in the Q. And so, we did pay $1 million and that was -- that did hit -- did that hit, Ali?

[That's Q3. That will be in Q3, yes.]

That's a Q3 expense, even though it occurred and was earned when we signed an amendment to that agreement.

Yes, if you're referring to the milestone upon approval of the NDA, we will...

No, [he is] talking about the acceptance of $2.6 million.

Yes. We only paid a portion of that and that has been recorded on Q2. You'll see...

It's been renegotiated, Scott, favorably for us.

Yes. You'll see a...

Okay. I'll take a look at the 10-Q. I did see that appendix at the end. And then as far as the G&A, approximately how much of that is selling in 2Q and any color on how much you would see selling expenses at sort of a steady state?

Yes. I don't know if Ali you have that at your fingerprint -- tips. But I expected that from you, Scott. So we've got that number. Of the $5.3 million in G&A that we had for 6 months, $1.5 million of that was selling expense that once we're approved that will then shift to a selling expense and not in G&A. So if you back out the $1.5 million, we were at $3.8 million outside of selling expense.

(Operator Instructions) Our next question comes from Ari Wald of Oppenheimer.

This is Ari Wald on for Leland at Oppenheimer. I understand you're looking to monetize your legacy drug assets. Just wanted to know how progress has been on that front.

We don't have any new information to report at this time. We -- we've been saying this for a while, but we think we're fairly close to monetizing at least one of those assets and the other we are currently in a little bit of a dispute over our license with Northwestern and we're hoping to amicably resolve that in the very near future. The generic Sabril asset, we are making great deal of progress on the regulatory front and as we do that, it makes it more likely that we will then be in a position to monetize that or partner it.

There are no further questions at this time. I'd like to turn the call back over to Patrick McEnany for closing remarks.

Thank you all for your participation in this morning's call. We are pleased with the progress we've achieved and anticipate the balance of 2018 being an exciting year for us. And thank you again for the shareholder support as we move forward with our programs. Thank you.

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