Catalyst Pharmaceuticals Inc (CPRX) 2022 Q4 法說會逐字稿

Greetings, and welcome to the Catalyst Pharmaceuticals Fourth Quarter and Full Year 2022 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce one of your host, Ali Grande, Chief Financial Officer. Please go ahead.

Good morning, everyone, and thank you for joining our conference call to discuss Catalyst's fourth quarter and full year 2022 financial results and corporate highlights. Leading the call today is Patrick McEnany, Chairman and Chief Executive Officer. We are also joined by Dr. Steven Miller, our Chief Operating Officer and Chief Scientific Officer; and Jeffrey Del Carmen, our Chief Commercial Officer. Further for the Q&A session, we will also have Dr. Gary Ingenito, our Chief Medical and Regulatory Officer.

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 our expected future results, which may be forward-looking statements for purposes of 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 may prove not to be accurate. Actual results may vary from the expectations contained in our forward-looking statements. These forward-looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our 2022 annual report and Form 10-K.

At this time, I will turn the call over to Pat.

Thanks, Ali, and welcome, everyone, to our fourth quarter and full year 2022 results conference call. I'm pleased today to highlight the progress we've made across our business throughout 2022 and now into the start of 2023. As we did in yesterday's press release, let me highlight several key points.

2022 is a pivotal year for Catalyst as we delivered exceptional financial performance exceeding our 2022 total net revenue guidance projections driven by consecutive quarterly revenue growth and fiscal discipline. The robust results capped an important year of transformation as we successfully executed our strategic initiatives across all segments of the business.

This included attaining a favorable resolution of the patent litigation relating to the Ruzurgi, along with the U.S. rights, underscoring the strength of the Firdapse intellectual property portfolio. The receipt of a positive U.S. court decision supporting Firdapse orphan drug exclusivity, the approval of an expanded pediatric indication for Firdapse, and the recent acquisition of FYCOMPA.

With our site set on further expansion, these accomplishments added considerable strength to our neuroscience presence and confidence that we can accelerate the company's long-term growth strategy.

Important to note, Firdapse continues its strong performance and remains the cornerstone of our success. We are pleased with the strong demand and growth for Firdapse, as we continue to see very positive trends across a number of our key performance indicators, which Jeff will address shortly.

Our full year 2022 total net revenues were $214 million, representing a 52% year-over-year increase compared to $141 million in total net revenue for 2021. Fourth quarter total net revenues were $61 million, a 59% increase compared to $38 million in 2021.

We reported GAAP net income of $83 million for the full year 2022 or $0.80 per basic share and $0.75 per diluted share, a 110% increase compared to $39 million or $0.38 per basic share and $0.37 per diluted share in 2021. Further, non-GAAP net income for the full year 2022 was $114 million or $1.10 per basic share and $1.02 per diluted share, a 93% increase compared to $59 million or $0.57 per basic share and $0.55 per diluted share for the full year 2021.

Additionally, we ended 2022 with $298 million in cash and cash equivalent.

With another year of expected growth in front of us, we have recently provided the market with our forecast of full year 2023 total net revenues of between $375 million and $385 million, representing a 75% to 80% increase in total net revenue compared to 2022.

We have also forecasted Firdapse 2023 net revenues to be between $245 million and $255 million. And based on 11 months of sales projections, we expect FYCOMPA 2023 net revenues to be approximately $130 million, having closed the acquisition of FYCOMPA in late January of this year. Additionally, we continue to expect that FYCOMPA will be accretive to our EBITDA and EPS for this year. Ali will provide further financial highlights and details during her remarks.

During the quarter -- third quarter, our focused and diligent process to pursue value-added transaction opportunities has come to fruition with the successful acquisition of the U.S. rights for FYCOMPA from Eisai Company Limited. We are extremely pleased to have delivered on this important objective for 2022. FYCOMPA not only broadens our commercial product portfolio with the first and only noncompetitive AMPA receptor antagonist for epilepsy, but also adds a growing revenue base, further augmenting our already strong revenue and earnings growth of Firdapse.

More importantly, the addition of FYCOMPA serves as a complementary growth driver and a strategic market adjacency within neuroscience that establishes a potential gateway to expand into rare epileptic diseases. We are already working closely and collaboratively with the Eisai FYCOMPA U.S. leadership and expect to complete the full transaction of FYCOMPA transition -- of FYCOMPA activities by midyear 2023, and we look forward to the future onboarding into the Catalyst family.

Many of the Eisai employees have been responsible for the success of FYCOMPA epilepsy program to date.

During this quarter, although we did not enter into any new contracts to acquire additional products, we continue to make significant strides in our efforts to identify acquisition opportunities that align with our overarching growth strategy to build a diversified patient-centric portfolio.

Our key priority on the strategy and business development front remains our intention to broaden and diversify our product portfolio through collaborative partnerships and acquisitions of commercial stage assets and/or companies. Currently, we are in advanced stages of due diligence on several commercial stage products in our companies and strongly we believe that a transformational expansion of our portfolio that offers the potential to further implement our near- and long-term growth strategy could occur in 2023.

We remain optimistic about Firdapse's long-term growth prospects. During 2022, we made significant advancements related to Firdapse's intellectual property estate, which included the affirmation of the token drug market exclusivity.

Additionally, we were granted 3 new patents and ended the year with 6 FDA Orange Book listed patents [that go out to 2037,] which we believe supports the product's long-term durability. We remain confident about the strength of Firdapse's intellectual property estate, supported by the successful outcomes achieved in 2022.

That said, we are limited to what we can say at this point about ongoing patent litigation other than to say that we intend to vigorously defend and prosecute any infringers of our intellectual property related to Firdapse.

We will, of course, provide regular updates in our disclosures filed with the SEC, which will be available on the company's website.

Having ended the year with several significant achievements that aided the company's growth, we are pleased to be recognized for these accomplishments. These included being recognized as one of Forbes 2023 America's Best Small Companies for the second consecutive year, inclusion in Fortune's 2022 top 100 small companies, and being honored as BioFlorida's 2022 Company of the Year as well as being added to the S&P Small Cap 600 Index.

These recognitions represent the culmination of our Catalyst team's patient-centric attitude, work ethic and commitment to excellence.

In closing, the Catalyst team's accomplishments underscore the significant advancements in our evolution to becoming a leading innovative rare disease biopharmaceutical company. We expect these achievements, coupled with our expanded capabilities and disciplined approach to capital allocation, to drive sustainable growth and enhance value as part of our long-term vision.

I'll now turn the call over to Jeff Del Carmen, our Chief Commercial Officer, who will provide an update on our commercial activities.

Thanks, Pat, and good morning, everyone. 2022 was a very successful year for Catalyst as well as the LEMS community. First, we are very proud to announce that over 1,000 unique patients have now received the Firdapse enrollment from launch to date, which is a tremendous milestone for LEMS patients in the United States.

We are very pleased with the full year Firdapse net sales of $214 million, representing a 52% increase year-over-year, driven by consecutive quarterly Firdapse net product sales growth.

In Q4, net Firdapse sales were $61 million, a 6% growth quarter-over-quarter. These achievements demonstrate the strength of our commercial strategy and capabilities, giving confidence for continued organic growth.

The foundation of the Firdapse business is solid. Operational excellence drove new patient starts, maintained favorable prescription approval rates of greater than 90% across all payers, government or private commercial insurers; continued high compliance of 90% and lower discontinuations.

Naive new enrollment in 2022, not including LEMS patients that transition from Ruzurgi to Firdapse were 25% greater year-over-year, while the annual discontinuation rate was 15%. The Q4 discontinuation rate was only 2.8%. Patients enrolled in Catalyst Pathways, including those who are covered by Medicare and accessing foundation assistance, have an average co-pay of less than $2 per month.

As Pat mentioned, we have forecast Firdapse's net revenues of $245 million to $255 million in 2023. We are confident that our strategic growth initiatives will drive organic growth moving forward.

LEMS education programs targeting healthcare providers, patients and caregivers have led to a significant increase in voltage-gated calcium channel antibody test, which will shorten the diagnostic journey for LEMS patients and lead to more patients being eligible for treatment with Firdapse.

Additionally, we will increase the share of voice of thoracic oncologists through the newly hired oncology thought leader liaisons, small cell lung cancer, LEMS-focused educational programs available on a variety of platforms as well as greater lung cancer conference participation.

Also we are working on strategic partnerships with institutions to help more small cell lung cancer patients get screened and diagnosed.

We consistently identify steady stream of approximately 450 diagnosed primarily nontumor LEMS patients that are not yet on Firdapse, which contribute around 50% of new patient enrollments each quarter. Thus far, in Q1, net new patients are tracking to match or exceed Q4, driven by consistent new patient enrollments and low discontinuation rates.

The commercial organization is excited about the addition of FYCOMPA, which serves as a complementary growth driver and strategic market adjacency within neuroscience that establishes a potential gateway for Catalyst to expand into rare epileptic diseases.

FYCOMPA net revenues for 2023 are forecast to be $130 million for approximately 11 months of sales. Catalyst will capitalize on proven commercial capability to enhance the growth potential of FYCOMPA, an established first-in-class commercial stage epilepsy asset.

We are making great progress, hiring marketing, sales and build leadership for our epilepsy franchise with an effective Catalyst start date of May 1. The vast majority of the epilepsy franchise will be staffed from Eisai employees currently dedicated to FYCOMPA.

We were proud to participate in the ringing of the NASDAQ closing bell on February 28, 2023, in recognition of International Rare Disease Day to help shed light on the important unmet need for rare diseases in partnership with leading advocacy groups. Catalyst is committed to continue collaboration with the rare disease and LEMS advocacy and new partnerships with epilepsy advocacy groups.

We will continue to ensure access to Firdapse to LEMS and FYCOMPA for appropriate epilepsy patients through established assistance programs.

In closing, we are very optimistic about the organic growth potential for Firdapse and thrilled with the addition of a best-in-class epilepsy franchise. Demonstrated operational excellence positions Catalysts well to deliver the forecast combined net revenues of $375 million to $385 million in 2023 and leverage the 45% overlap in FYCOMPA and Firdapse physician call points.

I want to thank the entire team at Catalyst for their unwavering commitment to patients and look forward to a successful 2023.

I will now turn the call over to Dr. Steven Miller, our Chief Operating Officer and Chief Scientific Officer, for an update on R&D activities.

Thanks, Jeff. Our clinical development and regulatory strategy for Firdapse continues to focus on expanding access to all LEMS patients, enhancing the Firdapse patent to state to maximize its commercial potential and to integrate the newly acquired FYCOMPA product into Catalyst's systems.

First, I would like to discuss our development efforts to increase the indicated maximum dose of Firdapse from 80 milligrams per day to 100 milligrams per day. We anticipate meeting with the FDA to outline our strategy in the second quarter, and assuming a positive outcome of that meeting, plan to file a supplemental NDA in the third quarter of this year, seeking to increase the indicated maximum daily dosage of Firdapse to 100 milligrams per day.

A number of LEMS patients are already being treated at 100 milligrams daily dosage of Firdapse after their physician worked with the pharmacy and insurance providers to justify the higher dose. Other patients on the current indicated maximum dose of 80 milligrams per day and their physicians have expressed a need to increase the indicated daily dosage to 100 milligrams to optimize therapy and this plan supplement, if approved, will help those patients.

The previously acquired Ruzurgi rights gave us access to safety and efficacy data for those patients treated at 100 milligram daily dose, and that data has been incorporated into our strategy, along with our own data, including safety data for patients treated at a 100 milligram daily dose of the Firdapse, and we believe that the combined data set constitutes an acceptable basis for seeking a 100 milligram maximum indicated daily doses for Firdapse. The investment community will be regularly updated on this project as it progresses.

I would next like to comment on our previously approved supplemental new drug application for Firdapse to treat pediatric LEMS patients. During the first quarter of 2022, we filed this supplemental NDA, and it was approved by the FDA on September 29, 2022. With the approval of this supplemental NDA, all pediatric patients aged 6 and above and all adults now have access to Firdapse as an FDA-approved product to LEMS in the United States.

The pediatric LEMS patient population is a very small patient group, estimated to be less than 30 patients in the United States. With this supplement highlights our commitment to ensure that all LEMS patients have access to Firdapse.

Regarding our global expansion, our sublicense partner, DyDo Pharma in Japan, has completed enrollment in their Firdapse Phase III clinical trial, which is required to seek approval for the Japanese market, and the safety follow-up phase of that study to collect safety data in a Japanese patient population is ongoing. We continue to anticipate completion of that trial by the end of the year. And assuming the trial is successful, a Japanese NDA submission in 2024.

It is estimated there are about 1,200 to 1,300 LEMS patients in Japan.

Moving on to our recent business development success. We completed the acquisition of the U.S. rights to FYCOMPA from Eisai in January of this year. FYCOMPA, or perampanel, is the first and only approved AMPA receptor antagonist or inhibitor. AMPA receptors enable fast, excitatory synaptic transmission throughout the central nervous system and are indispensable for learning, memory and synaptic plasticity.

Epileptologists believe that seizure generation and spreading can be dependent on overactivation of AMPA receptors. Hyperactivity induced by seizures might also alter AMPA receptor function and duration of excitation. Hyperactivation of AMPA receptors is highly neurotoxic, adding to secondary damage induced by seizures and electrogenesis. FYCOMPA, as an AMPA receptor antagonist can actually reverse these effects and improve seizure control.

FYCOMPA is approved as a unique antiseizure medication to treat partial onset seizures with or without secondarily generalized seizures of people with epilepsy who are 4 years of age and older and with other medications to treat generalized tonic-clonic seizures in people with epilepsy who are 12 years of age and older.

A recently published case review from a group of European neurologists treating rare epilepsies working under the framework of the network for therapy and rare epilepsies reported in the widely respected Journal Epilepsia how FYCOMPA is capable of significantly reducing seizures in patients with epilepsies that resulted from specific genetic mutations.

Of the 137 patients treated with perampanel, 60 patients, or 43.5%, sustained over 75% reduction in seizure frequency and includes 38 patients or 27.5% with a greater than 90% reduction in seizure frequency. High efficacy was consistently observed and reported in 7 different rare genetic epilepsies.

Moving on to our medical information function. Catalyst neuromuscular medical sales liaisons, or MSLs, are actively reaching out to thoracic oncologists to build relationships and provide education about the importance of testing their patients for LEMS in order to expand the use of Firdapse by those patients. Oncologists that already treat LEMS in their practices have found that Firdapse maintain muscle strength, improve the patient's and physician's perception of well-being and the patient's ability to maintain functional mobility.

All of these domains are critical in the minds of an oncologist, and they understand the quality of life and functional mobility are important for a better treatment outcome. These efforts will help broaden the use of Firdapse to treat LEMS across additional medical specialties, including oncology.

With the acquisition of FYCOMPA, Catalyst also plans to add up to 6 additional MSLs in the U.S. to support the FYCOMPA product. FYCOMPA is a mature product that has extensive public knowledge base within the medical community that treats epilepsy.

This MSL team will be responsible for continuing to spread this knowledge among physicians to treat epilepsy and to also address any questions and concerns that these physicians may have about using FYCOMPA to treat epilepsy patients.

As a service to the physician community, Catalyst provides support for the development of continuing medical education, or CME programs, that are part of the former ongoing educational positions. A new LEMS Medscape CME case-based virtual symposium will launch next week entitled the dysfunction in the neuromuscular junction and the emphasis on cancer-associated LEMS.

Part of Catalyst's efforts to develop new therapies for rare disease patients include the development, maintenance and enforcement of patents. Firdapse is protected by 6 patents listed in the FDA's approved drug products with therapeutic equivalents, the so-called Orange Book, and is also protected by other granted appending patents.

Three companies have filed generic drug applications for Firdapse. And on March 1 of this year, Catalyst initiated legal proceedings against all of them to protect and enforce our intellectual property rights. Catalyst remains confident on the strength and enforceability of our patents. As these cases proceed, Catalyst will provide regular updates to the investment community. But please understand, like all litigation, our comments and updates will need to be limited to information in the public court records, with no additional forward-looking statements.

Regarding FYCOMPA, there are a few patents listed in the FDA's Orange Book for the FYCOMPA suspension and tablet products. The first of these is a composition of matter and primary indication patent. Prior to our acquisition of this asset, the Patent and Trademark Office determined that an extended expiration date of May 23, 2025.

Subsequent to that, a redetermination of the expiration date was requested, that is still pending, and which compends that it should be June 8, 2026, due to the approximately 13 additional months it took the DDA to determine that FYCOMPA should be Schedule III, which the agency and PTO omitted from their prior expiration date calculations.

There is no assurance this latest request will succeed. And if it does not, the final expiration date will be May 23, 2025, which Catalyst could still challenge if we feel it is appropriate to do so.

The other Orange Book listed patent claims the commercial personnel form of perampanel or FYCOMPA, and this patent expires on July 1, 2026. Catalyst is evaluating whether or not to enforce this patent at this time, and upon completion of that evaluation, we will inform the investment community on our plans regarding this patent.

Moving on to business development. Pat described our significant portfolio expansion with the acquisition of FYCOMPA this quarter, and we are continuing to identify additional assets for potential acquisition. It is also important to point our strategy.

As the specific biochemical origins of epilepsy are increasingly being elucidated, the medical field of epilepsy treatment is evolving into more of a precision medicine approach, with increasing numbers of rare epilepsies being identified and with specific therapies being developed for each.

As a rare disease company, Catalyst's acquisition of FYCOMPA is our entree into an expanding rare disease field in a way that self-funds the commercial infrastructure that will support the acquisition and marketing of additional new rare epilepsy assets.

At this time, I would now like to turn the call over to Alicia Grande, our CFO.

Thanks, Steve. We are very pleased with our financial results for the fourth quarter and full year 2022 and remain steady in our performance.

We reported GAAP net income for 2022 of $83.1 million or $0.80 per basic and $0.75 per diluted share, a 110% increase year-over-year, compared to 2021 GAAP net income of $39.5 million or $0.30 (sic) [$0.38] per basic or $0.37 per diluted share.

Total net revenue for 2022, principally from Firdapse's product revenue net, was $214.2 million, a 52% increase year-over-year when compared to total net revenue of $140.8 million for 2021.

For the year 2022, our effective tax rate was 21% compared to 25% for the year 2021. The decrease in the effective tax rate for 2022 is due to an increase in stock option exercises during the year due to an increase in our stock price.

We expect that our effective tax rate will fluctuate in future periods and maybe higher in future periods than was for the year 2022. Non-GAAP net income for 2022 was $113.9 million or $1.10 per basic and $1.02 per diluted share, which excludes from GAAP net income of $83.1 million, stock-based compensation expense of $7.9 million, depreciation of $141,000, amortization of $1.1 million and an income tax provision of $21.6 million.

This compares to non-GAAP net income for 2021 of $58.9 million or $0.57 per basic and $0.55 per diluted share, which excludes from GAAP net income of $39.5 million, stock-based compensation expense of $6.1 million, depreciation of $192,000 and an income tax provision of $13.2 million.

The above represents an approximately 93% year-over-year increase of non-GAAP net income.

Cost of sales of $34.4 million for 2022 increased when compared to $21.9 million for 2021. For both years, 2022 and 2021, cost of sales was approximately 16% of product revenue net and consisted principally of royalties due to our Firdapse licenses.

Research and development expenses were $19.8 million in 2022 compared to $16.9 million in 2021, an increase of $2.9 million in R&D was principally related to the acquisition of $4.1 million of Ruzurgi inventory, fully recorded to expand in the third quarter of 2022, offset by an overall decrease in R&D expense.

R&D expenses decreased as a percentage of total operating expenses to 18% for 2022 from 19% for 2021.

SG&A expenses for 2022 totaled $58.2 million compared to $49.6 million for 2021. The increase of $8.6 million when compared to the prior year is due to, among other changes, increases in compensation and benefit expenses as we continue to grow our business, additional charitable contributions to (inaudible) organizations supporting LEMS patients and amortization of intangibles, acquiring connection with the Ruzurgi acquisition in July of 2022.

As a percentage of total operating expenses, SG&A expenses decreased to 52% for 2022 compared to 56% for 2021. As reported, we ended 2022 with cash and equivalents of $298 million. Our continued revenue growth and prudent expense management allowed us in late January 2023 to use approximately $162 million of our cash to acquire FYCOMPA without any diluted finances. We believe our strong cash position continues to allow us to such financial flexibility to execute on our current programs and strategic initiatives.

Catalyst is aware of the [second value] and situation. The company does not hold any deposits or securities of such events or any other regional banks. More detailed information and analysis of fourth quarter and full year 2022 financial performance may be found in our annual report on Form 10-K, which was filed with the Securities and Exchange Commission yesterday, March 15, and can be found on the Investor Relations page of our website at www.catalystpharma.com.

And with that, I will turn the call over to Pat.

Thanks, Ali. We entered 2023 focused on growing and diversifying our revenues, strengthening our position within the neuroscience space with our site set on further expansion and serving our patient communities. We have all the elements in place for another strong year. We are well positioned to drive sustainable growth that aligns with our core mission to deliver value to our patients, healthcare providers and shareholders.

Finally, I thank all of our employees for their continued dedication and commitment to positively impacting patients' lives.

At this time, I'd like to turn the call over to the operator to open the line for questions.

(Operator Instructions) Our first question comes from Joe Catanzaro with Piper Sandler.

Guys, congrats on the nice quarter. Maybe just 2 quick ones from me around Firdapse. So you said with -- there's about 1,000 unique patients since launch, and that's obviously over a period of about 4 years. But wondering what you could say that number suggests about the penetration into what you see as a total LEMS opportunity. .

And then a follow-up, Steve, I think you said there are some patients already on the 100 mg dose. Can you say what percent do you think that is? And then what are your expectations around what percent of patients currently on 80 mg that would step up to 100 mg, if that label is updated in the future?

Jeff, do you want to take the first question, please, and then I'll turn it over to Steve.

Sure. Joe, the question about penetration of the total population, we feel the penetration is around 25% right now. Significant opportunity remaining because if you look at the total population of about 3,000 patients and, unfortunately, some of these patients passed away and then new patients are diagnosed. So while there's about 25% penetration, like I mentioned, very optimistic and confident about the continued growth sustainability.

Steve, do you want to take the milligram?

Yes. Joe, we haven't actually publicly disclosed the number of patients on the 100 milligram dose because it requires the physicians to work independently at Catalyst to get authorization to move to that dose.

It's not a very large number, but it's -- there are some patients who are on the 100-milligram daily dose.

With regard to the number of 80-milligram patients, I really don't want to speculate on that. All I can say to you is that about 40% of the patients are on 80 mg. We believe a portion will move to 100 mg. And there are some patients on 60 mg who may move to 80 mg as well.

Our next question comes from Charles Duncan with Cantor Fitzgerald.

This is Pete Stavropoulos on for Charles. Pat and team, congratulations on all the progress for the quarter. I just have a couple of questions that relates to FYCOMPA. The first is, can you discuss your strategy for reinvigorating the brand? And how can -- or will Catalyst leverage the company's current infrastructure for the FYCOMPA franchise?

All right. Thank you. Jeff, do you want to take that, the reinvigorating the brand?

Sure. I think first and foremost, our priority is to fully integrate the epilepsy franchise with the FYCOMPA personnel. That's what we hope to do by midyear. When we take over the sales and marketing on May 1, we are going to focus on applying resources to the physicians that are currently prescribing FYCOMPA, the ones that are prescribing new to brand.

There are about 6,700 targets that we'll be focusing all our resources towards, and that's how we've staffed our field force. So hopefully, that gives you a little bit of a (inaudible) behind how we're going to do this. We'll be more prepared to share our business approach during our next conference call -- earnings call in May.

Yes. And as Jeff had pointed out, there's about a 45% overlap between the call points for Firdapse and FYCOMPA, and we don't want to confuse things out of the gate. But when the transition is completed, we expect in the second half of the year that basically the reps for FYCOMPA and Firdapse will actually carry both products.

I just want to add one comment about the medical sales liaisons as well. I mentioned during the earlier part of the call that we are adding up to 6 medical sales liaisons, who will be doing a lot of efforts to educate the physician community on FYCOMPA, particularly the safe use of FYCOMPA.

All right. Second question I have is what's the potential for developing FYCOMPA in rare epilepsy indications?

Yes. We are not -- this is Pat. Thanks for the question. We're really not prepared to talk about that at this point. We're, right now, just getting our arms around the program and the full opportunity to look at rare epilepsies.

There was a paper published recently, which Steve referred to, in Epilepsia, which is available online. I suggest that you take a look at that. But I think we'll have a lot more to say when we have our first quarter call in May with regard to the other opportunities that -- where FYCOMPA can be successfully used as a treatment of rare diseases.

One thing I also want to add to that, FYCOMPA has a very broad label for the treatment of epilepsies, and many of the rare epilepsies fall into that category. In other words, the patients exhibit the epilepsy characteristics that are consistent with the product label.

So our MSL team will be educating the physicians on which specific types of genetic epilepsies that fall within the product label can be successfully treated with FYCOMPA.

Our next question comes from Joon Lee with Truist Securities.

This is Les on for Joon. First question is for Jeff. Could you quantify how many antibody tests were provided and utilized by physicians perhaps in 4Q? And how has that trended? And then specifically in the small lung cancer patient population, and what drivers would push for that additional testing?

Les, thanks for the question. I'll turn that over to Steve.

We haven't actually provided any specific numbers of patients who are treated with the antibody test. However, it is increasing significantly. We have visibility to how the test is being utilized, and we buy that data from the test providers. And it has been increasing significantly.

And I'll add to that, too. What we did see starting in the fourth quarter of 2021, you did see a significant increase in the number of VGCC test done, and then you saw that number carry through 2022.

So we're seeing consistent high levels of the VGCC tests that are done when compared to previous years.

As far as the small cell patients, our approach is to be working with the top small cell academic institutions and to put that in the protocol, so that when a small cell lung cancer patient gets diagnosed that there's a paraneoplastic panel that's done, which includes the VGCC antibodies. So that's our approach and more of a top-down approach.

That is helpful. Perhaps with Steve, it appears the reasoning on the 100 milligram dose is primarily from patient feedback. Other than safety, what data do you plan to present to the regulators? And essentially, what does the higher dose impact your pricing strategy?

I'll let Jeff and Pat address anything about pricing. But with regard to the strategy, I'll just remind you that when Ruzurgi was on the market before the FDA removed it, it was approved for up to 100 milligrams. And so we will be using all the data that is in the reserve of the NDA as part of the basis of our supplemental NDA to increase the strength -- to increase the maximum daily dose for up to 100 milligrams.

And as I previously mentioned on the call, we also have a number of patients who are on the 100 milligram strength -- who are taking 100 milligrams of Firdapse per day, and all of that safety data will also be included. And again, as I said, all of that data as a whole, we believe, constitutes sufficient body of evidence to convince the FDA to let us apply for an increased maximum daily dosage of Firdapse.

And Les, with regard to pricing, remember, it is dose related, and our typical patient is on about 6 -- a typical adult patient is on about 60 milligrams per day, more or less. And our net price after gross to net discounts and rebates and what have you, for that patient is around $375,000. So you could extrapolate from there with regard to what the pricing might be.

Great. That's very helpful. And then last one for the team. I guess on the regulatory process in Japan, just kind of go over that, if you could. And if all goes well, how soon can DyDo enter the market in Japan? And what's the strategy for the periphery countries?

Well, Steve?

Yes, I'm limited by what I can say because our partners don't disclose a lot to the public markets. I'll just generally go over the process that happens in Japan. As I said during the call, they're collecting safety data from their ongoing safety follow-up phase. Upon completion and collection of all that data, the next step is to file the NDA in Japan, which I mentioned will be in 2024.

As an orphan drug, the typical review cycle time in Japan for an orphan drug NDA is about 6 to 8 months. So I would anticipate that if their cycle time is on an average that they should be approved towards the end of 2024, provided, of course, their NDA is acceptable for the Japanese authorities.

Our next question comes from Scott Henry with ROTH Capital Partners.

Congratulations on a strong year. A couple of questions. And I know you don't want to disclose a lot, but with regards to the 3 patent filings, do you know if there's a -- or is there a first filer among those 3?

Steve, do you want to take that?

Sure. The short answer to your question is, yes, that's public information. It's on the FDA's website. The answer is that all 3 of them are first filers. In other words, they're all tied for first.

Okay. Great. A couple other questions. With the shift from the 80 milligram to the 100 milligram dose, would you expect to see some revenue creep upward per patient? I mean often, higher doses generates higher revenue per patient. Just want to make sure that is correct.

Scott, I'll turn that over to Jeff.

Yes, Scott. So we do anticipate the average daily dose will increase for our patients. I've mentioned it before, our average daily dose is about 61 milligrams right now. And we do have feedback from healthcare providers and patients asking for -- that they feel they would benefit -- the patient would benefit from -- being able to go above 80 mg if that was within the label. So with that, we anticipate our average daily dose to creep up over time significantly.

Okay. And then FYCOMPA, I believe, $130 million in revenues in 2023 guidance. As far as trajectory, should we just kind of allocate that over 11 months? Or is there any trends we should expect there?

Well, we're in the process of the transition, Scott, and we expect the full integration to be completed by midyear. And so I would expect that the run rate will, by quarter, sequentially increase over the course of this year, the first year of our ownership.

Remember, it's a pretty mature product that's been in the market for 9 to 10 years and got a very established base, and we're looking to get the integration completed and then grow the product.

Okay. And then Pat, if I break out the FYCOMPA revenue from your overall guidance, you get to $245 million to $255 million, if I did my math correctly for Firdapse. Q4 was $60 million, and it sounds like Q1 is better than Q4.

So it seems like -- I guess the question is, would you say you're perhaps being conservative? Or are you expecting more of a flattening? It sounds like it's just being conservative.

For Firdapse, you're talking about, Scott?

Correct.

Yes. I think the trend will be typical as it has been. Remember, last year's first quarter was impacted with the resolution of the 11th Circuit Court when the approval for Ruzurgi pediatric indication was overturned, and a number of the Ruzurgi patients during Q1 of last year transitioned to Firdapse.

So it's probably going to be a difficult comparison for the first quarter. But as Jeff pointed out, we continue to enroll new patients in Catalyst Pathways that are naive to either product and discontinuation rates are down. And we want to continue to see that. And so we think that we're going to have a typical year quarterly sequentially up each quarter.

Okay. Great. And then just finally, just a couple clerical questions. First, the cash is significant. I guess I don't want to get into the business of predicting interest rates. But it sounds like you're probably generating around 4% on that for the interest income line.

Is that a reasonable assumption? And staying on the income statement as well. As far as taxes, will you be -- will you start to pay taxes at this point? That tax asset, how much more cover do you have there?

Your first question, Scott, was about where we've invested our remaining cash, and it's -- we've been very conservative and typically been a 90-day T-bills. And you're right, it's -- what a difference a year makes. This time last year, we were getting about 7 basis points on our investable cash. Today, I would say, our blended yield right now on our 90-day T-bills is somewhere between 4% and 5%.

So it's -- you're right. It's going to be hard to predict going forward. But I think we are in a pretty good spot right now because I do believe that we're going to generate a lot of cash this year, again, with Firdapse and FYCOMPA.

Ali, maybe you can address the taxation.

Yes, regarding the tax issue, as we mentioned, our effective tax rate for 2022 was 21%. However, we fully utilized our federal net operating losses and state net operating losses. So we do expect a more normalized 23% to 25% rate in future periods.

Yes. I would say that starting midyear last year, Scott, we were guiding that we anticipated a more normalized 25% tax rate going forward, and that's going to vary according to -- based on some of the state taxes that we pay and also (inaudible).

Which for 2022 really better rate, but we can anticipate that will be the same for future years.

It appears we have no further questions at this time. With that, I would now like to turn the floor back over to Patrick McEnany for closing comments.

Thanks, everyone, for joining our call. We look forward to our next corporate update and have a great day. Thank you.

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