Catalyst Pharmaceuticals Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 10, 2023

There are 8 speakers on the call.

Operator

Hello, and welcome to the Catalyst Pharmaceuticals Second Quarter 2023 Financial Results Conference Call and Webcast. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Chief Financial Officer, Ali Grande. Please go ahead, Ali.

Speaker 1

Good morning, everyone, and thank you for joining our conference call to discuss Catalyst Q2 2023 Financial Results and Corporate Highlights. Leading the call today is Patrick McEnany, Chairman and Chief Executive Officer. We are also joined by Doctor. Stephen Miller, our Chief Operating Officer and Chief Scientific Officer and Jeffrey Del Carmen, our Chief Commercial Officer. Before we begin, I want to remind you that in our remarks this morning and in the Q and A session, we will make statements about expected future results, which may be forward looking statements for purposes of Ferrell Securities Laws.

Speaker 1

These statements relate to our current expectations, estimates and projections and do not guarantee 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. 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 on Form 10 ks. At this time, I'll turn the call over to Pat.

Speaker 2

Thanks, Ali, and welcome everyone to our 2nd quarter Catalyst outstanding results for the Q2 of 2023 reflect Firdapse Strong organic growth performance, meaningful Ficompa revenue contributions and continued execution excellence. Our achievements reinforce our confidence for sustained growth and further underscore the exceptional execution capabilities across all functional areas of our business. At this time, I'll present key highlights of our quarterly results. We achieved total revenues of $99,600,000 during the quarter, representing 87.5% growth year over year. The strong performance reflects Firdapse product net revenues of $64,900,000 achieving a net revenue increase of 22.3% year over year.

Speaker 2

We are confident about the continued growth expectations for Firdapse based on our recent initiatives targeting oncologists to treat the subset of LEMS patients suffering from small cell lung cancer as well as more recent LEMS epidemiology data that Jeff will discuss. Total revenues were bolstered by Viacomco's 2nd quarter net product revenue contribution of $34,600,000 the 1st full quarter under the Catalyst umbrella. Non GAAP net income for the 2nd quarter was $60,400,000 were $0.57 per basic share and $0.53 per diluted share. This excludes from GAAP Net income, non cash stock based compensation, depreciation, amortization of intangible assets and our income tax provision. The expenses related to the amortization of the intangible assets associated with the acquisition of Fycompa and Resurgi are approximately $8,500,000 for the quarter and $3,300,000 in non cash stock based compensation.

Speaker 2

GAAP net income for the 2nd quarter was $37,800,000 or $0.36 per basic share and $0.33 per diluted share. We ended the quarter with cash and cash equivalents of $178,800,000 Several factors including continued strong underlying demand for Firdapse from both autoimmune and small cell lung cancer limb patients, as well as continued diagnosis of new LEMS patients provides us with the confidence to raise our total net revenue guidance for 2023 of between $380,000,000 to $390,000,000 Ellie will provide more detailed financial highlights during her discussions in this call. Our operational synergies have been strong And we are pleased by the efficiencies and enthusiasm demonstrated by our teams in achieving the successful Commercial and Medical Affairs integration of Fycompa into our product portfolio. With the integration nearly complete, We are focused on realizing the product's full potential. In July, we further diversified Catalyst product portfolio With the addition of Vemoralone, a promising dissociative anti inflammatory steroid candidate for the treatment of Duchenne muscular dystrophy or DMD, a devastating rare neuromuscular disease.

Speaker 2

As part of the DMD treatment regimen, steroids such as prednisone are commonly administered in addition to other therapies and are known to have notable side effect burden. Filmoralone has the potential to be an innovative new treatment option to address this important unmet need. In clinical studies, Formorlone demonstrated efficacy With a significant reduction of steroid associated side effects and benefits for both health, Bone Health, Growth and Height and Behavior along with reduced cardiovascular and pulmonary risk longer term. Filmora loan has been granted orphan drug and fast track designation and has signed a PDUFA action date of October 26, 2023. If approved, it would serve as a meaningful advancement to the current DMD standard of care treatment paradigm and represent a pivotal reflection point for the company's growth potential.

Speaker 2

We anticipate the commercial launch in Q1 of 2024 based on the current timeline. Lastly, with regard to Vemoralone, we'll have more details to provide in our Q3 conference call regarding our commercial launch details, financial impact and expectations for the near and longer term. I want to take this opportunity to make several accounting points on the Memorial loan program. We believe that we will take a one time 3rd quarter charge of $75,000,000 for the acquisition of the Vemura loan license as that expense is considered In process R and D, because Remora loan is not as of yet FDA approved or commercial. Also as part of the transaction, we made an approximate $15,000,000 investment in Panthera, Representing approximately 11% ownership in Centerra, that investment will be recorded on the balance sheet and mark to the market at the end of each quarter.

Speaker 2

Additionally, we anticipate a modest Increase in OpEx in the second half of this year as we prepare for the anticipated launch of Memorial Loan in Q1 of next year. Steve, Jeff and Ali will have more to say about the Memorial loan program shortly. Last week, we submitted the supplemental NDA to the FDA seeking to increase the maximum daily dose of Firdapse from 80 to 100 milligrams. We believe that a substantial number of LEMS patients may benefit from an improved increased dosage And we are confident that this has the potential to address an important need for these patients. In Japan, our Japanese partner, Daido Pharma continued to make meaningful progress with its ongoing Phase 3 In mid July, they reported positive interim Phase 3 results And we now anticipate the NDA submission to the PMDA in Japan by the end of this year.

Speaker 2

Upon submitting the NDA for Firdapse in Japan, our territorial rights We plan to use this expansion to accelerate our global growth strategy for Firdapse. First, into targeted markets like China and South Korea before evaluating and pursuing others. Initiatives are underway to identify potential partners in these targeted territories as part of our strategic plan. We look forward to providing further updates on these activities after the NDA submission in Japan. Clearly, we've been very busy on the business development front, as I discussed earlier.

Speaker 2

We continue to successfully execute our portfolio expansion efforts as well as our continuing effort to identify Additional assets for potential acquisition or in licensing in the rare neurology and epilepsy therapeutic areas and expand the geographical footprint of our existing products. We are reviewing additional therapies at our commercial stage and or late stage product development. As Jeff will discuss, the recent in licensing of Vermoreland is a synergistic addition to our Firdapse commercial and medical affairs teams, which will enable Catalyst to provide High levels of service to both DMD physicians and patients and highlights part of our strategy to add new products that leverage our expertise, capabilities in rare disease infrastructure. Our investments in the 2 new assets attained this year align with our capital allocation priorities. Our fiscal discipline has enabled us to fully fund these programs in the entirety using available cash reserves.

Speaker 2

Our operational and commercial performance continues to fortify our growing cash position, providing a strong foundation to support our future growth initiatives. We expect to have an event driven second half of the year that started with the closing of the license for vomerolone in July. The submission of the supplemental NDA to the FDA last week to increase the maximum daily dose of Firdapse from 80 to 100 milligrams per day. And just several months away now from a PDUFA action date of October 26 for a Vermura loan, as well as the NDA submission in Japan by Daidopharma by year end. As we move forward in the second half of this year and into next year, our business plan is fairly straightforward.

Speaker 2

Continue to grow the Firdapse and Ficapa brands, defend vigorously all of our intellectual property, Prepare for a highly successful launch of Memorial Loan, geographic expansion of our Firdapse footprint and to bring in another product for company ideally an epilepsy program. This past quarter, we are pleased to announce the appointment of Tamar Thompson to Catalyst Board of Directors. Her knowledge and experience in rare diseases, health policy and government affairs will add valuable insights to our Board and strategic planning. I want to take this time to acknowledge and thank our very patient centric and dedicated team here at Catalyst for all that they do every day to improve the lives of people that are suffering with rare neurological conditions. I'll now turn the call over to Jeff Del Carmen, our Chief Commercial Officer, We'll update you on our commercial activities.

Speaker 3

Thanks, Pat, and good morning, everyone. We are very pleased with the Q2 combined net revenue of $99,600,000 fueled by Firdapse's all time high $64,900,000 Revenues and meaningful Fycompa revenue contributions of $34,600,000 positioning Catalyst well to achieve our revised revenue guidance of $380,000,000 to $390,000,000 I'd like to begin by discussing our progress with Firdapse, the only FDA approved treatment For LEMS, Q2 net sales of $64,900,000 represents a 22% increase quarter over the same quarter last year and a 12.8% increase quarter over quarter, a direct result of steady new patient starts and low discontinuation rates. As a reminder, LEMS is a chronic condition, so patients typically remain on treatment once diagnosed. Prescription approval rates were greater than 90% across all payers, government or private commercial insurers. Patients enrolled in Catalyst Pathways, including those who are covered by Medicare and accessing foundation assistance, had an average co pay of less than $2 per month.

Speaker 3

Sustained organic growth will be driven by several key areas. First, we have a pipeline of greater than 4.50 patients that are diagnosed with Lyme disease, but not yet on Firdapse. Approximately 50% of new enrollments are generated from these leads. We have identified additional sources For potential new LEMS patients that will enable us to maintain a high level of quality leads for the foreseeable future. Next, Our LEMS education programs have resulted in a significant increase in voltage gated calcium channel antibody test, which shorten the diagnostic journey for LEMS patients and lead to more patients being eligible for treatment with Firdapse.

Speaker 3

It is important to note that we provide these tests at no cost to patients through a partnership with a national laboratory. Additionally, our focused educational efforts to thoracic oncologists are working. We continue to see an increase in the number of diagnosed small cell lung cancer LEMS patients. The oncology thought leader liaisons have actively focused on the top 30 thoracic oncology centers to accelerate the diagnosis of small cell lung cancer LEMS patients. Currently, we assess that greater than 80% of small cell lung cancer LEMS patients are undiagnosed, representing a significant opportunity for growth.

Speaker 3

We are pleased to report that in the coming weeks, The results from a quantitative small cell lung cancer LEMS market size analysis will be presented at an upcoming leading lung conference, which will provide further insight into the small cell lung cancer LEMS patient population. This analysis is part of an initiative to reassess the LEMS market size, which may increase the overall prevalence above 3,000 LEMS patients in the U. S. We hope to provide an update later in Q3. Now I would like to provide some highlights of our progress with Fycompa.

Speaker 3

We swiftly executed the seamless integration of Fycompa into our newly established epilepsy franchise. While we are still in the early stages, Ficompa commercialization is progressing well and in line with our expectations. We successfully onboarded and trained 27 Ficompa regional account managers equipped with the necessary tools and knowledge to hit the ground running for their 1st full quarter with Catalyst. We are encouraged by the continued adoption of Fycompa as well as the overwhelming support from key opinion leaders and advocacy within the epilepsy community. Q2 net revenues For Fycompa were $34,600,000 which adds further confidence toward achieving our Fycompa full year 2023 revenue estimate of $130,000,000 As I have mentioned, adding Fycompa to our portfolio is an ideal strategic fit For our existing commercial infrastructure, with a 45% overlap in Fycompa and Firdapse prescribers and increased share of voice that will benefit both franchises in driving growth.

Speaker 3

We will begin to fully leverage this overlap later this year. Let's turn to Vemoralone, a promising best in class associated anti inflammatory steroid treatment for DMD. The U. S. Prevalence for DMD is estimated to be between 11,013,000 patients.

Speaker 3

Corticosteroids are the current standard of care for treating DMD. Of patients currently being treated for DMD, Approximately 75% of these patients received concomitant steroid treatment. However, steroid treatment is associated with significant side effects. We believe bemoorelone, if approved, would offer an advancement to the current treatment paradigm addressing an important unmet need for DMD patients and caregivers. If approved by the PDUFA date of October 26, 2023, we expect a commercial launch in the Q1 of 2024.

Speaker 3

We plan to integrate Vemoralone into our neuromuscular franchise where we can leverage the team's demonstrated capabilities, If approved, Memorial Sloan will be supported by our best in class Catalyst Pathways program to help ensure that all eligible patients can access the product. In summary, we are very pleased With Q2 results, I am confident in achieving our revised 2023 revenue guidance of $380,000,000 to $390,000,000 Additionally, we will leverage our demonstrated commercial capabilities as we prepare for the expected launch I want to thank the entire team at Catalyst for their unwavering commitment to patients and look forward to a successful second half 2023. I will now turn the call over to Doctor. Stephen Miller, our Chief Operating Officer and Chief Scientific Officer for an update on R and D activities.

Speaker 4

Thanks, Jeff. Our clinical The Firdapse patent to state to maximize its commercial potential and integrating the newly acquired Fycompa and vomerolone products into Catalyst organization. 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. Catalyst has now submitted a supplementary NDA to the FDA for this change to the maximum daily dose. While there can be no assurance Since their approval of this sNDA, barring any significant issues with the submission, Catalyst anticipates completion of the agency's review in the Q1 of 2024.

Speaker 4

Currently, there are a number of LEMS patients who are already being treated at 100 milligram 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 desire to increase the patient's daily dosage to 100 milligrams to optimize therapy. And this supplement, if approved, will help those patients. Based on our Type C meeting with the FDA in May of this year, we believe that our submission strategy constitutes an acceptable basis for seeking a 100 milligram Maximum daily dosage for Firdapse. Regarding our global expansion, we anticipate that Daito Pharma, our partner in Japan, will submit their NDA for Firdapse Submissions of this type typically take about 10 months to review by the PMDA, but there can be no assurance that such a submission As previously reported, Catalyst acquired U.

Speaker 4

S. Rights to Fycompa or pyrampinil, which is the 1st and only approved AMPA receptor antagonist or inhibitor. Fycompa is approved as an Anti seizure medication to treat partial onset seizures with or without secondarily generalized seizures in people with epilepsy who are 4 years of age or older and with other medicines to treat primary generalized tonic clonic seizures in people with epilepsy who are 12 years of age or older. As previously reported in March, an article published in Epilepsia showed that parampinil effectively reduces seizures in patients with 8 In the second quarter, researchers published 4 abstracts highlighting FICOPPA that were subsequently presented both at the 2023 AAM meeting in Boston this quarter and virtually. These were ENCORE presentations sponsored by Eisai, who continues to hold the rights to FiCompa in countries and regions outside the U.

Speaker 4

S. The published abstracts detail the results from 4 independent clinical studies further documenting the uses of parampanel in both focal and generalized epilepsy across a Diverse range of patients, including those with a history of psychiatric and behavioral events, underage patients and patients with seizures linked to Lennox Gastaut Just this month, researchers published 3 papers summarizing studies of the first safety and efficacy of Fycompa in pediatric patients second, a study on the use of IV Fycompa as an alternative to oral Fycompa in epilepsy patients and third, a Taken as a whole, all this academic research activity highlights the interest in Fycompa's unique mechanism of action, Next, I would like to discuss our recent in licensing of vamoralone for the treatment of Duchenne muscular dystrophy or DMD from SANTHERA for the North American territory. Vemoralone is a promising dissociative anti inflammatory steroid treatment for DMD. In clinical studies, Vemoralone demonstrated efficacy with offering the potential to address an important unmet medical need in DMD patients. Vemoralone has received FDA orphan drug and fast track designations and has been granted a PDUFA action date of October 26, 2023.

Speaker 4

The FDA has also granted DMD is a rare genetic disorder occurring in about 600 male newborns each year. The prevalence is about 11000 to 13000 patients and is gradually increasing as the available treatments continue to increase the survival of patients suffering from this tragic DMD is a condition that weakens skeletal and heart muscle that quickly gets worse with time and is the most common form of muscular dystrophy. It is an X linked genetic defect to the dystrophin gene and like virtually all X linked diseases almost exclusively affects males. Approximately 30% of the patients are amenable to one of the approved exon skipping therapies with the other 70% meeting other treatments like corticosteroids. However, even the patients treated with exon skipping treatments continue to need other treatments like corticosteroids at some level.

Speaker 4

The parent project for muscular dystrophy or PPMD reported just this month Earlier this year, Jafar Shah et al. In a meta analysis of published clinical data for vamorilant hypothesized how vamorilant may exhibit better safety Interaction sites with the glucocorticoid receptor, thus altering vamorilant's interaction with this receptor type. This difference sets it apart from all other Approved and researched medications in the corticosteroid class. In animal models, formalin retains the anti inflammatory properties of steroid medications, but lacks its side effects such as growth retardation, bone morbidities and muscular atrophy as a result of this difference. Furthermore, numerous corticosteroids such as prednisone and deflazacort act as agonists of the mineralocorticoid receptor, raising blood pressure and volume via the renin angiotensin system.

Speaker 4

In contrast, in preclinical models, fomorolone has the same activity as the approved eplarone or spironolactone drugs, which are both potent antagonists of the mineralocorticoid receptors, thus eliminating mineralocorticoid side effects in most of the glucocorticoid and mineralocorticoid side effects due to its unique binding and agonism or antagonism of the various corticosteroid receptors. Overall, Vemoralone has the potential to be a differentiated treatment for DMD with a desirable profile in comparison Moving on to our medical information function, Catalyst Neuromuscular Medical Science Liaisons or Our 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 patients treated with Firdapse maintain muscle strength, improving the patient's and physician's perception of well-being and the patient's ability to maintain functional mobility. All these domains are critical for the patient's quality of life. As previously reported, Catalyst has also onboarded the new Fycompa MSL team and their new director All with prior epilepsy experience to support Fycompa.

Speaker 4

Fycompa is a mature product for which extensive published information and real world data is available, including the publications and abstracts I previously mentioned. The MSL team will bring this information to healthcare providers that treat epilepsy and also address any questions that those physicians may have about using Fycompa. Additionally, Catalyst Fycompa MSL team attends epilepsy conferences like AES and With the in licensing of Vemoralone, Catalyst will be adding 4 new MSL specializing in Duchenne muscular dystrophy. Due to the unique mechanistic features of Vemoralone, it has and continues to be an active area of research that will result in Future updates will be provided as medical information programs are developed and implemented for Vemoralen. 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 formal ongoing Education of Healthcare Providers.

Speaker 4

Catalyst has over the past 3 years provided support for 3 CME programs for various aspects of the diagnosis, Over this period of time, thousands of healthcare providers have utilized the CME programs learning modules and hundreds of them are taking CME Each quarter in order to be granted CME credit toward maintenance of their medical licenses. In the Q4 of 2022, We sponsored a new CME program that targeted oncologists that treat small cell lung cancer due to the correlation between this cancer and associated lymph. In just over 4 additional months since the use of this course was last reported, almost 100 additional oncology healthcare providers have taken the CME test for credit. In short, these programs are popular with lunch treaters and based on the CME test taking frequency appear to be At this time, I would like to turn the call over to Alisa Grande, our CFO.

Speaker 1

Thanks, Steve. Results from Catalyst's Q2 of 2023 kept us on pace for On the business development front, we continue to be busy as we enter into an agreement for the North American license rights for Valmora loan. It is important to note that the Valmora loan transaction did not close until July in Q3 of 2023. Our total revenues for the Q2 of 2023 were $99,600,000 an 87.5% increase when compared to total revenues of $3,100,000 for the Q2 of 2022. Product revenues net for the Q2 of 2023 from our lead product Firdapse was CAD64,900,000 a 22.3% increase year over year compared to $53,000,000 for the Q2 of 2022.

Speaker 1

Product revenue net for Ficompa was $34,600,000 for the Q2 of 2023. Net income before taxes for the Q2 of 2023 was $48,500,000 a 71.8 Percent increase year over year compared to $28,200,000 for the Q2 of 2022. We reported GAAP net income for the Q2 of an increase of 74.7 percent year over year compared to GAAP net income for the Q2 of 2022, $21,600,000 or $0.21 per basic and $0.20 per diluted share. Non GAAP net income for the Q2 of 2023 was $60,400,000 or $0.57 per basic and $0.53 per diluted share, which excludes from GAAP net income, the income tax provision of $10,800,000 amortization of intangible assets related to our acquisitions of Resurgi G and Fi Compa of $8,500,000 stock based compensation expense of $3,300,000 and depreciation of 82,000 This compares to non GAAP net income for the Q2 of 2022 of $30,300,000 or $0.29 per basic and $0.28 per diluted share, which excludes from GAAP net income, the income tax provision of $6,600,000 stock based compensation of $2,000,000 and depreciation of $37,000 The above represents an approximately 99.2 Intangibles acquired in connection with both the FiCompa and the Resurgi products was approximately $8,500,000 for the Q2 of 2023.

Speaker 1

We did not have any amortization in the comparable 2022 quarter as we had not acquired either product during the Q2 of 2022. We expect intangible amortization for our acquired products to be approximately $8,500,000 for the Q3 of 2023. Subsequent to the Q2, during July 2023, we closed the North American license acquisition of Amora Loan and paid approximately $75,000,000 upon closing. We believe this amount will be recorded as a one time charge to research and development expenses during the Q3 of 2023 and will not impact future intangible amortization. However, it will be significantly It will significantly increase research and development expenses for the Q3 of 2023, making it not comparable to prior periods.

Speaker 1

Our effective tax rate for the Q2 of 2023 on an annualized basis was 21.5% compared to 23.7% for the Q2 of 2022. For 2023, the difference to the statutory federal income tax rate of 21% was primarily driven by state income taxes and anticipated annual permanent differences, offset by the orphan drug tax credit claims. The effective tax rate is affected by many factors, including the number of stock options exercised in any given period and is likely to fluctuate in future periods. Cost of sales expenses were approximately $12,000,000 in the Q2 of 2023 compared to $7,600,000 in the Q2 of 2022 and consisted primarily of royalties. As a reminder, royalties for Firdapse increased by 3% when net product sales exceed $100,000,000 in any calendar year.

Speaker 1

In 2023, this threshold was met during the Q2, making related royalties trend up for the Q2. We expect all Firdapse net product sales for the remaining of the year to be subject to the higher royalty rate. Cost of sales related To fight COMPA in 2023 is exclusive of amortization of intangible assets. Research and development expenses were $4,000,000 in both the 2nd quarters of 20232022. As previously discussed, we expect a significant increase in R and D expenses during the Q3 of 2023 for the one time expense of $75,000,000 related to the acquisition of the North American license rights for Valmoralone during July 2023.

Speaker 1

Vamoradone is a late stage drug candidate with a PDUFA date of October 26, 2023. SG and A expenses for the Q2 of 2023 totaled $28,400,000 compared to $12,900,000 in Q2 2022. SG and A expenses increased slightly as a percentage of total operating expenses to 54% for Q2 'twenty three compared to 53 percent for Q2 'twenty two. The overall increase of SG and A Expenses in the Q2 of 2023 was principally due to expenses related to Fi Compa such as commercial expenses under the transition services agreement, Selling expenses and an increase in headcount, principally for the sales and marketing force hired during May 2023. As reported, we ended the quarter with cash and cash equivalents of $178,800,000 As a reminder, subsequent to the quarter, during July We used approximately $75,000,000 of our available cash in connection to the license acquisition of the North American rights for Balmoral loan and approximately $15,000,000 for a strategic investment in common stock of the licensed source, Sunterra.

Speaker 1

In addition, We paid $10,000,000 under our Resurgi license upon the 1st anniversary of the transaction also occurring in July 2023. We believe our current funds continue to allow us the financial flexibility to fund our existing R and D programs, meet our potential contractual and support our strategic initiatives and portfolio expansion efforts leading to future growth and value creation. In the event the FDA approves vivorilant on its PDUFA date in the 4th quarter as we anticipate, Catalyst will owe $36,000,000 in milestones under our agreement with Sunferra. More detailed information and analysis of our Q2 2023 financial performance may be found in our quarterly report on Form 10Q, which was filed with the Securities and Exchange Commission yesterday, August 9th, and can be found on our Investor Relations page on our website at www.catalystpharma.com. And with that, I'll turn the call over to Pat.

Speaker 2

Thanks, Ali. In closing, the first half of twenty twenty three It's been a remarkable period of accomplishments for the company, demonstrated by our success in executing on our strategic vision. As we advance into the second half of this year, we are well poised for sustained momentum to capitalize on our expanded product portfolio and have a sound strategy for our company's future. I want to thank our Catalyst team, Partners and collaborators for their hard work and ongoing commitment to the patient communities. I'm proud of our accomplishments that align with our core mission to deliver value to patients, healthcare providers and shareholders.

Speaker 2

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

Operator

Thank you. We'll now be conducting a question and answer session. Our first question today is coming from Joe Canaccaro from Piper Sandler. Your line is now live.

Speaker 5

Everybody, thanks so much for taking the questions. And of course, I want to congratulate you, Pat, on all your success you've had and hope you enjoy a well deserved Retirement. I had two questions, maybe first on Firdapse. It seems that the patient lead pool is holding pretty steady at around 4 50 patients. Just Do you know how that lead pool splits between autoimmune and small cell lung cancer patients?

Speaker 5

And I guess as a follow-up, I think last You said around 25% of new enrollments came from Tumor LEMS. So wondering if you could speak to that dynamic in 2Q? Thanks. And I have a follow-up.

Speaker 2

Thanks, Joe. And thanks for your kind wishes about retirement. Yes, great quarter. Good questions. Jeff, you want to take the question with regarding to the lead pool?

Speaker 3

Sure. So Joe, when you I mentioned the 450 working leads, where we're getting those leads, we've identified new sources and a lot of those are stemming from the increase in the VGCC testing. We partner with National Laboratories that they provide us some leads of patients that had positive VGCC antibody test. So we know the patients that most likely And then that's when our field force goes and tries to help these patients if Firdapse is the appropriate treatment for those patients. They work directly with the healthcare providers.

Speaker 3

So that's where we do that, but we continually source new leads and new Find new ways to maintain that 450, because we know it's very important in ultra orphan disease to identify the patients. As far as the mix goes, the vast majority of these leads are the autoimmune or the non small cell lung cancer And but we are seeing an increase in the number of these leads that also have small cell lung cancer. And that's what's giving us Validation that all the efforts we're putting out there, the educational efforts and the resources are paying off, because we're able to help these patients get diagnosed. I hope that helps, Joe.

Speaker 5

That's really helpful. Maybe my follow-up is on Remora Loan. I just wanted to see if you could contextualize the future And I guess more specifically, Jeff, I think you said there are about 75% of DMD patients that are currently receiving steroids. So just wondering if there are expectations that you would see patients switching and if so, to what extent and what drives that? Thanks.

Speaker 2

Jeff, you want to take that

Speaker 3

as well? Sure. So Joe, we'll provide more details about the launch probably on our Q3 conference call. But yes, you're correct. And it's about 70% or so of DMD patients are on steroids as the backbone of treatment for DMD.

Speaker 3

And we do feel like there is a value proposition with the Memorial Loan versus what's available in the market. And we do feel that some of these patients will like to switch over to vomerolone when available.

Speaker 2

Joe, we'll have a lot more to talk about on our Q3 call after the PDUFA date, October 26. So we're working on our launch details now, budgets, forecast and I think that We'll be far more informative about our path forward with the Ramor alone on that call.

Speaker 5

Okay, perfect. Got it. Appreciate you taking my questions. Thanks so much.

Speaker 2

Thanks, Joe.

Operator

Thank you. Next question is coming from Joon Lee from Truist Securities. Your line is now live.

Speaker 6

Good morning. This is Les on for June. Actually just wanted to echo Joe's comments and congrats to you Pat on retirement well deserved. So just in regards to Fycompa, what are your thoughts on the recent script trends? And could you provide any sort of update on the sales force transition?

Speaker 6

I have a follow-up.

Speaker 2

Jeff, you want to take that?

Speaker 3

Sure. Hey, Les, the transition has been extremely smooth. Integration is the way we wanted it. It was swift and effective. Now as far as The numbers, we forecasted a flat for Fycompa versus 2022.

Speaker 3

And we've met those expectations. Great news is in the recent 4 week rolling 4 week data from new prescriptions, We are seeing a stabilization and actually a slight growth for the first time. And so we know our efforts are working. What we will continue to analyze how our marketing resources are gaining traction, but we're very confident they will be effective. And the other part is I mentioned it earlier, we're so confident about VYCOMPA because of the overwhelming That we've received from key opinion leaders and also the advocacy out there.

Speaker 3

So, it's been a great transition and we're confident about the future of Vycompa.

Speaker 6

That's helpful. Thank you. And in regards to the cadence Do you have a little bit more visibility now in FairVaps that gives you, I guess, some sort of comfort level into the guidance? And what do you think about the gross margins as we exit the year? Beginning first half was around 88.

Speaker 6

Do you think we can And then what's the additional ramp up in SG and A for

Speaker 2

Yes, I'll take the last one first, Les. We're not ready to talk about the increase in SG and A yet. As I mentioned, we're putting together the plan. We do believe obviously there's going to be an uptick in OpEx in the second half of the year As Jeff starts to add a few more to his commercial team and marketing team and a few of the MSLs. With regard to margins, we expect that our margins will stay pretty close to where they are now.

Speaker 2

They've been Fairly consistent year to year. And then your first point Being the what we see in the second half and what gives us confidence with regard to the To our revised guidance was that and we never deviated even in Q1 to talk about the seasonality of most ultra rare disease drugs. And we experienced that. But despite that, For the first half, Firdapse revenues were up 28% year over year, 23% versus 22%. So consistent with what we've said all along and remember with ultra rare disease drugs, the growth is not Necessarily linear because patients are hard to find, patients are hard to get on Therapy, once they're found.

Speaker 2

And so it's a little bit of a sawtooth, But we're very confident in achieving our guidance And hopefully towards the high end of that guidance for the second half of this year.

Speaker 6

Great. Thank you.

Operator

Thank you. Next question is coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.

Speaker 7

Yes. Good morning. Congrats on the decision regarding the near term transition.

Operator

Pardon me, Charles. The operator, would you mind picking up your handset?

Speaker 7

Yes. Can you hear me now?

Speaker 2

Well, no, it's not great, Charles.

Speaker 7

Sorry, can you hear me now?

Operator

Yes, please proceed.

Speaker 7

Okay. Sorry for the technical issue. So congrats on the guidance raise. Congrats Pat to you and your transition near term transition. I had a couple of questions.

Speaker 7

First of all, with regard to Firdapse, I guess I'm wondering, Jeff, if you had one thing that you would like to see in terms of the future for Firdapse. Would it be new patients or Increased persistence for Firdapse. And then I had a question regarding Fycompa, but I'll wait for your answer on Firdapse.

Speaker 3

Sure. I mean, the persistence is already very high, Charles, over 90%. So our focus is really helping more patients get on treatment, because we know these patients will benefit from Firdapse. So that's the primary goal. Do you

Speaker 7

have any internal metrics by which you measure that And what your kind of goal number is, if you will, not necessarily granularity, but

Speaker 3

We do have an internal goal that as you know, we have not disclosed how many patients on specific patient count. But yes, we do have that goal and it's really about Getting the net new patients. So the discontinuation on an annual rate is also very low, about 80 I'm sorry, 20% on an annual basis, 20% discontinuation and making sure ensuring that we get a lot of new enrollments per month. So that's what we look at. It's more of a new So that's what we look at.

Speaker 3

It's more of a new patient net new patients coming in. The other thing I wanted to add is, I mentioned in the script, The revised assessment of the LEMS prevalence in the U. S, it's going to be an important part for us and help us Grow well into the future, helping some of these patients. I mentioned it also that greater than 80% of these small cell lung cancer LEMS patients are unfortunately undiagnosed with LEMS. So that is one of our key focus areas is educating these Thoracic oncologists that when small cell lung cancer patients are diagnosed have symptoms similar to LEMS symptoms That they do apparently a plastic panel that includes VGCC antibody test.

Speaker 3

That's what we're excited about. But We look forward to sharing more information about the increased prevalence here later this quarter.

Speaker 7

Very good. Sorry, I missed those prepared remarks. I'm juggling calls. Quick question on Fycompa. I'm wondering if you could provide Some color on the synergies that you're seeing in terms of marketing, sales and back office efforts relative to Firdapse for that for Fycompa?

Speaker 7

Thanks.

Speaker 3

Jeff? So Charles, it's interesting. We've had a lot of anecdotes from the field and we're just so incredibly thankful that the And I know you mentioned the back office, but when you look at some of the Firdapse, We've had so many physicians, probably 80 plus percent of our physicians have only prescribed once. That talks about that speaks volumes about The ultra rare part of LEMS that there are only 3,000 patients out there. So physicians may only see one patient.

Speaker 3

So when you have a Fycompa RAM that's out there speaking to a physician about Fycompa and then it comes up about LEMS, Then they have a question. They actually collaborate with the RAM from the Firdapse side and say the physician wants to talk to you about this. And we've seen successes where physicians that we did not have targeted that a ficompiram went in there, Connected the 2 and then a LEMS patient was put on Firdapse. So that's just a quick example of how we can leverage this overlap. And in the back office, it's the same thing.

Speaker 3

You have Speaker programs or you have launches with some offices that why not bring both Rams into that appointment. So all those things, the collaboration, the overlap And the synergies are great and what we expected, if not more.

Speaker 2

Charles, remember, we The FiCompar Rams have only been on board with us a couple of months. So they're getting their feet wet with catalyst. And I expect in the second half and into next year, we'll see a lot more cross promotion Between the two products and the two teams, we're excited about the synergistic effect of This acquisition for us.

Speaker 7

Very good. Doing well by doing good. Thanks for taking my questions.

Speaker 2

Thanks,

Operator

Charles. Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to Pat for any further or closing comments.

Speaker 2

Thank you everyone for joining our call today and we look forward to providing updates on our continued process. Thank you. Have a great day.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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Earnings Conference Call
Catalyst Pharmaceuticals Q2 2023
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