Catalyst Pharmaceuticals Inc (CPRX) 2022 Q1 法說會逐字稿

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

It is now my pleasure to introduce your host, Ali Grande, CFO of Catalyst Pharmaceuticals. Please go ahead, ma'am.

Good morning, everyone, and thank you for joining our conference call to discuss Catalyst's first quarter 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'll have Dr. Gary Ingenito, our Chief Medical and Regulatory Officer; and Brian Elsbernd, our Chief Legal and Compliance Officer.

Before we begin, I would like to remind you that in our presentation this morning and in the Q&A session, we will make statements about 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, especially in light of the effects of COVID-19. 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 2021 annual report on Form 10-K.

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

Thanks, Ali. Good morning, everyone, and thank you for joining us today for Catalyst's first quarter 2022 financial results and update call. As you can see, we had a remarkable first quarter as we delivered record net product revenue of $43 million, a 42.5% increase compared to Q1 of 2021 and ended the quarter with $198 million in cash and short-term investments. Net income before income taxes for Q1 of 2022 was $17.5 million, a 76.7% increase compared to $9.9 million for Q1 of 2021. We reported GAAP net income of $13.2 million for Q1 of 2022 or $0.13 per basic share and $0.12 per diluted share.

During Q1 of this year, we repurchased 400,000 shares of our common stock from the open market at an average price of $6.38. Since we started the program in March of last year, we have repurchased a total of 2.6 million shares at an average price of $5.61. We continue to make purchases at times when we feel it is prudent and beneficial to our shareholders. As a result of the outstanding performance for the quarter, we are reiterating our full year 2022 total revenue guidance of $195 million to $205 million, representing a 38% to 45% increase in total revenues compared to 2021. We also anticipate our cash OpEx, that is research and development and SG&A expenses, to be between $65 million and $70 million for the full year.

I'd like to begin today's discussion with a brief overview of our commercial performance and execution for the quarter. Our robust growth was attributed in part to the positive outcome from the Eleventh Circuit decision, reaffirming our orphan drug exclusivity for FIRDAPSE for the treatment of Lambert-Eaton myasthenic syndrome or LEMS. The removal of Ruzurgi from the market in February of this year, following our favorable court ruling was a defining inflection point for additional new patient enrollment growth, as those patients previously prescribed Ruzurgi sought to transition to FIRDAPSE. We anticipate the number of those patients to be about 125, almost all of which are adult LEMS patients.

As of the end of April, most all of those patients have transitioned to FIRDAPSE from their prior treatment. We anticipate the conversion of the remaining patients to be completed by the end of this quarter. We believe the success rate is attributed to the exceptional competencies of our patient assistance teams and programs that were ready and prepared to help ensure these patients with a seamless transition. We also continue to achieve high organic new patient growth for FIRDAPSE attributed to the successful execution of our commercial plan. We benefited from the several key initiatives that have been underway, including enhanced awareness and education to patients, caregivers, health care professionals and expanded focus on paraneoplastic patients, LEMS patients and thoracic oncologists that treat those paraneoplastic patients and access to a diagnostic test to help accelerate the process for a definitive diagnosis.

We're extremely pleased with the performance of our commercial organization. As we enter the second quarter with continued momentum, we expect to sustain the organic growth rate driven by newly diagnosed patients and the considerable number of patients diagnosed with LEMS, who are not yet on FIRDAPSE. We estimate that there are approximately 3,000 LEMS patients in the U.S., of which based on insurance claims data, half are without a diagnosis or are misdiagnosed. Although approximately 1,500 patients that have received a definitive diagnosis for LEMS, we've only reached slightly over 800 patients, leaving much work to be done to assist the remaining patients to a definitive diagnosis and to find their way to an FDA-approved therapy to treat their LEMS condition.

We've also fortified our intellectual property estate with the issuance of 3 new patents, which are now listed in the Orange Book. These pats are directed to the treatment of patients suffering from LEMS and covering all amifampridine metabolizer types within the LEMS patient population. We believe that these new patents will enhance the commercial durability of FIRDAPSE, which has U.S. patent protection until 2034. During the quarter, we've made considerable progress in our effort to build a more diversified portfolio that aligns with our growth strategy and revised acquisition criteria.

Our key priority on the strategy and business development front remains to broaden and diversify our product portfolio through collaborative partnerships, acquisition of commercial stage assets or companies with FDA-approved rare disease therapies. To accomplish these objectives, our Chief Strategy Officer, Dr. Preethi Sundaram, is task with spearheading a stringent and disciplined approach to evaluating assets for portfolio expansion. At this time, we are actively engaged in evaluating several potential opportunities to acquire products and/or companies with drug products in commercial stage. However, no agreements have been entered into to date.

On April 8, 2022, Jacobus Pharmaceutical filed a petition of writ of cert with the U.S. Supreme Court to appeal Catalyst favorable decision from the Eleventh Circuit Court of Appeals. Now that the petition is filed, they are waiting for a decision as to whether the high court will grant the request for cert. With only about 1% of all such petitions typically granted by the court for review, we have been prepared for the prospect of this filing. This appeal process could take several months during which time Ruzurgi status remains not approved in the U.S. We have submitted an sNDA for pediatric label expansion to the FDA as part of our commitment to provide the very few pediatric LEMS patients with access to an approved therapy.

In the meantime, we continue to make FIRDAPSE available to any pediatric LEMS patients through our expanded access program at no cost. In March of 2022, we also received a favorable Canadian Federal Court ruling enforcing for FIRDAPSE innovative drug data protection. This resulted in setting aside of the approval of Ruzurgi, and it has been removed from the market in Canada. The matter has been remanded to the Minister of Health for redetermination. Our other litigation is the patent infringement case against Jacobus and PantherRx, the specialty pharmacy for Ruzurgi. This suit is in the early stages of discovery. We'll continue to keep you advised as this case progresses.

On Global Rare Disease Day at the end of February, we are proud to partner with several national patient organizations to increase awareness about rare diseases, focusing on important health messages about LEMS diagnosis, treatment and quality of life issues. The goal included raising awareness of rare diseases and helping amplify the voices of those patients in need of innovative new therapies.

I'll now turn the call over to Jeff Del Carmen, our Chief Commercial Officer, who will provide you further highlights on our commercial execution.

Thanks, Pat, and good morning, everyone. The commercial team delivered a very strong quarter, building upon the momentum from 2021. Q1 FIRDAPSE net sales were $43 million, which represents 13% growth quarter-over-quarter and 42% growth quarter versus the same quarter last year. I'm proud of the flawless execution demonstrated by the entire commercial organization. Commercially we had 2 primary objectives in Q1. First and foremost, to transition the majority of Ruzurgi patients to FIRDAPSE without a lapse in therapy; second, to demonstrate significant organic growth through naive new patient enrollments.

By the end of March, over 90% of adult LEMS patients we estimated to have been on Ruzurgi had been successfully transitioned to FIRDAPSE with the remaining balance expected to transition by the end of the second quarter. The full impact of the transition of the former Ruzurgi patients will be realized in the second quarter. Payer approval rates were greater than 95% for adult LEMS patients transitioning from resurge. I am particularly proud of the Catalyst patient services team, which is doing a tremendous job supporting the needs of adult LEMS patients, caregivers and health care professionals during this process. As for organic growth, naive new reimbursed patients were 18% greater versus Q1 2021 and 5% greater versus Q4 2021.

In fact, March 2022 naive new enrollments matched the highest monthly total since launch. Additionally, operational excellence maintained favorable access of greater than 90% across all payers, government or private commercial insurers, continued high compliance of greater than 90% and contributed to a discontinuation rate of approximately 5%. We expect considerable organic growth each quarter in 2022, primarily driven by new patient enrollments of already diagnosed LEMS patients not yet on FIRDAPSE, in a significant number of patients that are unfortunately misdiagnosed or undiagnosed.

April naive new patient enrollments remain strong, while discontinuation rates were steady and in line with forecast. Our marketing strategies continue to generate significant returns on investment. Approximately 15% of the active adult LEMS patients on FIRDAPSE have opted into our patient marketing campaign, which offers resources such as LEMS symptoms tracker, LEMS physician locator and LEMS patient journal. Additionally, educational content to small cell lung cancer treaters continues to show strong engagement, which will yield more patients with a proper diagnosis of LEMS and accelerate the opportunity to receive treatment for this disease.

In addition to ringing the opening bell at NASDAQ to celebrate Rare Disease Day, Catalyst launched a LEMS Podcast on the award-winning disease-specific educational website, lemsaware.com, to increase awareness and connections in the Lambert-Eaton myasthenic syndrome community. Furthermore, we've partnered with key professional societies like the American Academy of Neurology, Muscular Dystrophy of America to educate their members about LEMS and FIRDAPSE at their respective conferences. Our Catalyst Pathways Patient Services did a tremendous job in Q1, not only supporting patients transitioning from Ruzurgi but also providing financial and educational resources to new and existing adult LEMS patients, caregivers and health care professionals.

In closing, we are pleased with our performance in Q1 and are excited about the significant opportunity ahead to help all adult LEMS patients. We are confident that the strategies and tactics we have put in place will deliver sustained organic growth in 2022 and beyond. I want to thank the entire team at Catalyst for their unwavering commitment to the LEMS community.

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 for the commercial update, Jeff. I'll now provide an update on our operational initiatives. Our objectives for 2022 are straightforward, which are to continue to increase the number of adult LEMS patients being treated with FIRDAPSE, expand the commercial potential of FIRDAPSE and identify synergistic opportunities in the rare disease space.

Our medical affairs team continues to make significant progress in engaging with health care providers to provide valuable direct education and content. We also promote and support accredited CME programs designed to increase awareness of LEMS within the prescriber community. The largest of these CME programs educate physicians through an online program on how to recognize, formally diagnosed and treat LEMS, and it is currently available to all U.S. physicians through Medscape. To date, over 6,000 health care providers have viewed the Medscape course. And of April 21 of this year, 1,772 licensed health care providers have obtained CME credit.

In addition to this Medscape program, on May 4, Catalyst supported a LEMS session and a live tumor board of oncologists that was hosted by Physicians' Education Resource. This recorded session is the basis for another program that will be provided to physicians free of charge for 1 year as an enduring CME course intended primarily for oncologists and promoted to all oncologists in the Physicians' Education Resources network and in several neurology and oncology publications.

We recently announced that 3 new patents covering additional patient amifampridine metabolizer types had been issued by the Patent and Trademark Office, bringing the total number of issued patents for taking FIRDAPSE franchise to 5. All 3 patents are listed in the FDA's Orange Book, bringing the total number of patents now listed to 5. This important milestone now provides broad comprehensive protection for the FIRDAPSE franchise regardless of the NAT2 metabolizing type. We will continue to execute on our key initiatives to strengthen and protect the long-term durability of FIRDAPSE, which currently has patent exclusivity protection in the U.S. until mid-2034.

Our sublicense partner, DyDo Pharma, continues to progress on its Phase III clinical study for FIRDAPSE to treat Lambert-Eaton myasthenic syndrome in Japan. In December 2021, they initiated this small-scale Phase III study and enrollment of patients is progressing as planned. We expect the enrollment period to be completed by the end of this year or early 2023. Catalyst supports DyDo's study program by supplying clinical trial materials and collaborating in their efforts and is also providing all needed technical information to file an NDA in Japan. In alignment with our commitment to provide an improved treatment for all LEMS patients, we filed a supplementary NDA submission package for a pediatric LEMS label expansion for FIRDAPSE. This submission, if approved, would expand the use of FIRDAPSE to all LEMS patients over the age of 6.

As a reminder, the pediatric LEMS patient population is a very small patient group with a total population in the U.S. estimated at less than 30 patients. The vast majority of patients that suffer from LEMS are adult patients for which FIRDAPSE is already approved. If the extent the label indication is granted, it will help simplify and improve access to the product for pediatric LEMS patients. While this is an important initiative, our development priorities are fully aligned on advancing our objectives to expand our portfolio of rare disease treatments beyond FIRDAPSE. Our FIRDAPSE development program initiatives are focused on those discussed today and to maximize most of our internal resources on strategic expansion initiatives and we are making substantial progress.

Our teams are very focused on evaluating several products and opportunities. We remain highly confident in identifying the right opportunities to maximize our capabilities and resources. The clinical and operational insights we have gained within our core market provide us with the expertise to drive progress in our current initiatives and pursue additional prospects. We have good momentum behind our business development activities and contributions to the overall progress of the portfolio. We are building upon key enterprise relationships and making meaningful progress on our strategic partnership initiatives. We are very well-positioned to meet our objectives to foster future growth opportunities for the near and long-term and are excited about the path ahead.

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

Thanks, Steve. It goes without saying that we are very pleased with our financial results for the first quarter of 2022. Our total net revenue for Q1 '22, principally from FIRDAPSE revenue was $43.1 million, a 42.7% increase when compared to total revenues of $30.2 million for Q1 '21. Net income before income taxes for Q1 '22 was $17.5 million, a $76.7 million increase over net income before income taxes for Q1 '21 of $9.9 million. We reported GAAP first quarter 2020 net income of $13.2 million or $0.13 per basic share and $0.12 per diluted share, an increase of 72.8% year-over-year compared to first quarter 2021 GAAP net income of $7.7 million or $0.07 per basic and diluted share.

As a reminder, in the first quarter of the calendar year, like many companies in our industry were impacted by the reset of the patient deductibles. Further, in the first quarter of 2022, we recorded an increase of $2.1 million in expense relating to our commitment to make charitable donations to 501(c)(3) foundations that support LEMS patient programs while GAAP requires such contributions to the expense in the first quarter of 2022. When we committed to make these contributions, they will support LEMS patient programs for the full 2022 years. Our effective tax rate for Q1 '22 on an annualized basis was 24.2% compared to 22.5% for Q1 '21. For 2022, we expect that we will continue to benefit from the use of our deferred tax assets, primarily relating to Florida state net operating losses and the orphan drug credit, although those are subject to certain limitations resulting in a more normalized tax rate.

Non-GAAP net income for the first quarter of 2022 was $19.4 million or $0.19 per basic share and $0.18 per diluted share, which excludes from GAAP net income, stock-based compensation of $1.9 million, depreciation of $34,000 and an income tax provision of $4.2 million. This compares to non-GAAP net income for the first quarter of 2021 of $11.6 million or $0.11 per basic and diluted share, which excludes from GAAP net income the wage compensation of $1.6 million depreciation of 97,000 and an income tax provision of $2.2 million. The above represents an approximately 67.9% increase of non-GAAP income year-over-year.

Cost of sales expenses were approximately $5.9 million in Q1 '22 compared to $4.7 million in Q1 '21. This represents 2.9% of total operating costs in both periods. For Q1 '22, cost of sales were 14% of product revenue net and consisted principally in royalties. As a reminder, royalties increased by 3% when net product sales exceed $100 million in any calendar year. So we expect cost of sales to trend higher as the year progresses.

Research and development expenses were $3.4 million in Q1 '22 compared to $3 million in Q1 '21. R&D expenses decreased slightly as a percentage of total operating expenses to 13% with Q1 '22 compared to 15% for Q1 '21. SG&A expenses for Q1 '22 totaled $16.4 million compared to $12.7 million in Q1 '21. SG&A expenses increased slightly as a percentage of total operating expenses to 64% for Q1 '22 compared to 62% for Q1 '21. The overall increase of SG&A expenses in Q1 '22 was in large part caused by our contributions during the first quarter of 2022 to 501(c)(3) organizations, where the contributions will be used over the full year 2022, as previously noted.

As reported, we ended the quarter with cash and investments of $198 million and no funded debt. We believe this allows us the financial flexibility for our existing R&D programs, as well as support our strategic initiatives supplying opportunities, leading to future growth and value creation. More detailed information and analysis of our Q1 '22 financial performance may be found in our quarterly report on Form 10-Q, which was filed with the Securities and Exchange Commission yesterday, May 10, and can be found on the Investor Relations page of our website, www.catalystpharma.com. And with that, I'll turn the call over to Pat.

Thanks, Ali. In closing our prepared remarks, I'd like to add that Catalyst is well-positioned to deliver sustained performance with an unwavering commitment to the LEMS community and execution of our strategic priorities. We anticipate this to be a transformative year for the company with increased momentum to diversify and invest in innovative opportunities for rare diseases. We approach these objectives from a position of strength and look forward to enhancing our growth potential and long-term value for all of our stakeholders.

Finally, I'd like to thank all of our valued employees for their continued dedication and commitment to positively impacting patients' lives. Operator, we'd now like to open the call for questions.

(Operator Instructions) The first question comes from Joe Catanzaro of Piper Sandler.

Maybe the first one from me. So with 90% of the former Ruzurgi patients have been transitioned to FIRDAPSE, I'm wondering if you could say whether you're a 125-patient estimate has proven accurate? Or is it still a little bit of a moving target? And I think you mentioned something about payer decisions for these patients, but what percent of patients were transitioned to free drug? And when would you expect those patients to become paid reimbursed scripts? Thanks, and I have a follow-up.

Good morning, Joe, thanks for the question. I'll turn that over to Jeff del Carmen.

Sure. So Joe, to answer your question about the patients being approved, greater than 95% of the patients that transition from Ruzurgi the adult LEMS patients were approved by the payer. And so they only were on bridge for a short time, and we expect the full impact of these patients to truly be felt in Q2.

I'll add to that, Jeff, that yes, we're pretty comfortable, Joe, with that number of 125. We think that's pretty accurate within 5% either way. So we'll stand by that for the moment.

And I think if I heard correctly, you mentioned that March was the highest month for naive new patient enrollment since the launch. Just can you speak to whether you've continued to observe those favorable trends into April? And is the organic growth you're expecting it this year driven entirely by improving diagnosis rates? Or are there other levers that you're looking to pull?

Yes, Joe, we did continue to see strong enrollment numbers, April almost matched March. So very strong numbers and a lot of things contributing to that. But another thing is the country is opening up again, patients are able to go see these physicians. We have a strong pipeline of patients that we suspect as being diagnosed as LEMS. So the vast majority of them are over 500 of these patients that are leads. And a lot of times, these patients are just waiting to see their physicians. So we suspect strong continue to organic growth, but it's going to come from these new enrollments is where our great organic growth is in 2022.

And maybe one just last one and obligatory one on business development. Wondering what -- where you are in the process on some of those diligence that you're doing now. I think, Pat, you mentioned you were active on a couple of potential deals, but maybe you could just give a little bit more commentary on that?

Sure. Yes, our criteria has changed a little bit, Joe, in that we believe that we're more interested today in commercial opportunities, perhaps drugs that have been approved by the FDA that haven't been launched yet or very early in their launch, we think that we can add great value to those opportunities with our commercial team and our experience in launching rare disease drugs. And so it's hard to be specific. We are fairly deep into due diligence on several opportunities. And I think that's probably as far as I can go in describing where we are in the process.

The next question comes from Charles Duncan of Cantor Fitzgerald.

Pat and team, congratulations on a good quarter commercially. I had a few questions on that side of the business, but then also a couple of others. Just kind of to continue on to some of the past questions. I guess when you think about 2Q and some of the trends that you see going into it, what do you think is going to be the primary contributor in terms of revenue? Would it be the impact of the Ruzurgi switches? Or would it be organic growth in 2Q, if you had to project?

Thanks, Charles, for the question. I'll let Jeff take that question.

Sure. So Charles, 2-fold really, and you mentioned the -- we do expect the full impact of the Ruzurgi transition those patients that transitioned from Ruzurgi, I should say, to be felt in Q2. So that's going to be a huge contributor to the increase, but also the organic growth that we're seeing from new patient enrollments is very strong as well. So those new enrollments that we saw in March, those -- the revenue, the impact of those patients will be felt until the second quarter as well. And then we're also seeing a strong -- we saw a strong April, and we're seeing a strong start to May 2. So I think it's going to be a 2-fold. Both those things will be contributing strongly to the revenue on Q2.

And then when you consider the prescribers, so going beyond the patients, when you consider past prescribers of Ruzurgi, are you getting feedback from them that would contribute to, I think you mentioned about 500 possible patients that you've identified. Are you getting feedback from prescribers that would suggest that they call it, pool of patients is expanding as a result of -- in part as a result of the Ruzurgi switches?

Yes, I do think that, that's an accurate statement. In essence, you're eliminating a distraction or another product that they can prescribe for LEMS. So these physicians, we do see some potential there from these physicians. Those 500 patients are from either [Symphony] leads that we're seeing from claims data or a field force that's out there with -- so it's field intelligence where they are. But we do think that we will have some tailwinds because of these prescribers now focusing on FIRDAPSE for LEMS only.

Last question on the switches. I imagine it's a little too early to really clean many takeaways. But in your discussions with patients and who have done this switch, have you gotten any compare and contrast relative to the services that were provided by the Jacobus and Ruzurgi in the past relative to your service and not only the drug, the responsiveness to the drug but also the broader services of providing access and support?

Yes. And I'll focus on the services that we provide. And I can tell you, Charles, I would not -- I don't think there's a better team out there. We have a tremendous field force, including our regional account managers, our sales force, our patient services team with the rare disease experience. We apply significant resources out there because it is our responsibility to make sure that these LEMS patients are taken care of, that they have all the resources out there. And they didn't have that if they were on another drug. And now that they are part of Catalyst Pathways, they now have access to all of these services and resources.

And then in some cases, it's not just product related. It's a - go to lemsaware.com, I encourage everybody to go out there and look at the resources provided there. So we do the right thing for the LEMS community. And I think the patients that have come over have told us that and have experienced that. Very proud of what the team has done.

Last question for Pat or Steve, perhaps regarding the biz dev activities, you kind of alluded to this in the previous questioner's question. But Steve, you mentioned substantial progress to expand the portfolio, and Pat mentioned, engaged in several diligence projects. And I guess I'm wondering if you could provide some additional color on the progress? Or would you anticipate being able to consummate some type of portfolio expansion effort by the end of this year?

Charles, we don't want to be specific about particular opportunities other than to say, as I mentioned earlier, we are in fairly deep due diligence on a couple of projects that look very promising. And so that -- I think that's about all the color that we can provide at this point. But we are looking at -- we have shifted away from looking at later development stage opportunity to really improve our commercial opportunities.

Is the current market environment helped in terms of valuations?

Yes, I think so. I mean, it's been a difficult 12 months in biotech land. You just look at the indexes that are down 15% or more from a year ago, and the window for financing looks like it's not wide open as it was a year ago. So I think the backdrop is certainly making it more interesting and frankly, to the point where we're being -- we've had a few companies actually approach us, which is kind of interesting. And I think it speaks to the environment a company that may have to go out and do another financing and looking at their stock trading at a 52-week low and knowing that they're probably going to have to discount it 15% to 20%. A number of those emerging biotech companies are looking at what their strategic options might be other than going to the market for a follow-on offering. So I would say that the environment is certainly better today than it was a year ago for a buyer.

Also likely speaks to your operational, yes, progress and performance.

The next question comes from Joon Lee of Truist Securities.

This is Les on for Joon. First, I believe in your prepared remarks, you have identified about 30 pediatric LEMS patients. How many of those are currently on FIRDAPSE? Then, secondarily, what will be the approval of the supplementary package FDA grant you and I'll have a follow-up.

Yes. The number of pediatric patients we believe is really actually less than 20. We have a number without being specific. We have a number of those pediatric patients that we currently provide the drug to an expanded access basis at no cost. So we have -- as I mentioned in our prepared remarks, we have filed a supplement with the FDA. We're hoping to get the label expansion approved, whereby pediatric patients who all those very small number of patients will all have access to an FDA-approved therapy without being prescribed off-label or through an expanded access program.

And then second, in the past, you've mentioned around 22% of new enrollments have been from tumor LEMS patients. Can you provide the latest figure, if possible or perhaps how that number has trended? And then also, what resources have you applied to target the tumor LEMS patient population?

Sure, Lez. I'll have Jeffrey answer that?

Sure. So Les, we are still tracking around the low 20s as far as the percent of new patient enrollments that are also tumors that are tumor LEMS patients. We expect the education that we're putting out there to gain traction this year, next year to help increase that percentage. What we're currently doing, we're providing significant educational content that has focused on oncologists, so thoracic oncologists or any oncologists that treat small cell lung cancer patients. And that education -- those educational resources, I should say, are offered in a variety of platforms. So to help find some of these physicians that do treat these patients. But we're very confident in this strategy and the resources that we're putting out there, which will help identify these patients properly diagnose these patients with LEMS and then become effectively treated with FIRDAPSE. So we expect that growth later this year as well as next year.

Les, I'd also like to reiterate something that was said in my prepared statements about our new CME program that is made available through physician education resources to oncologists.

The next question comes from Scott Henry of ROTH Capital.

Really strong results, nice job there. A couple of questions. First, we've talked a lot about the organic growth. Where would you -- perhaps you want to put a range on that, but what rate do you think organic growth in terms of volume approximates right now?

Well, Scott, from the day that we launched in early 2019, year-to-year, we've seen about a 15% to 20% growth rate organically. And that's through the last couple of years being in under pandemic conditions. So I think that we've done a great job in growing organically. And as physician practices continue to open and diagnose patients, get them a definitive diagnosis. We think that the high-end of that range could be our growth factor going forward. So Jeff, anything to add to that?

Fully confident in the 15% to 20% you mentioned, Pat. And like you said, I think the biggest impact is the backlog and patient visits that we're waiting to alleviate here and we should -- we expect to see that this year and beyond, which will help these patients that are currently diagnosed, not yet on therapy, become effectively treated by these physicians with FIRDAPSE.

And then shifting over to the income statement. I think you said $65 million to $70 million of operating expenses. I'm assuming that is excluding stock comp, if that is in fact, the case, would you expect Q1 to sort of be representative of the rest of the year? I know there were some front-end loaded expenses. But if that range excludes stock comp, that's probably what would get you there. Just want to see if I should expect any trends within the year or if Q1 is representative?

Scott, noncash comp is something, of course, we have every quarter, we have expenses or charges. And those, again, are not cash. So those are excluded from our cash OpEx, and that OpEx is defined as research and development and SG&A. We do have some seasonal, what I'll call, seasonal expenses in Q1 that most of our peers have as patients are getting reauthorized and having to meet new deductibles. Our gross to net has obviously affected in Q1. Also, we have a sizable expense for 501(c)(3) charitable foundation contributions. And of course, as our sales ramp up, we have higher contributions. And those are estimates based on -- at the beginning of the year based on what we expect to contribute over the course of the year.

And -- but unfortunately, we -- general accounting practices require us to take that full charge in Q1. And that is rather than amortized over 4 quarters like you would expect, that full contribution for the year is charged in Q1. So that to a certain degree, really skews certainly G&A expenses for Q1.

And then I assume R&D should probably stay at these low levels until you acquire something? Is that fair?

Yes. That's a good assumption.

And then final question, I guess, for Ali. With regards to the royalty structure, I recall reading in the K, about 7% of BioMarin, and other perhaps 7% sub royalties. You mentioned that it goes up after $100 million per year. Could you just remind me of what the terms of that were?

So the royalties will go up once we hit $100 million in sales as defined by the contract. So that's why we expect royalties to increase as we progress in the year.

And how much is that step-up? And I assume that's a reset every year, but approximately how much does it go up on the sales over $100 million?

3%. It will go up an additional 3%.

Thank you, Scott. Just one thing to add that you should be aware of, and I think we've talked about it previously, now that most of our NOL has been used up, I think that going-forward tax rate of about close to 25% between federal and state and local taxes that we have to pay would be good for modeling purposes.

Ladies and gentlemen, we have reached the end of the question and answer session. I'd now like to hand the floor over back to Mr. Pat McEnany for closing remarks.

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

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