Catalyst Pharmaceuticals Inc

NASDAQ:CPRX

Earnings Call Transcript 2019-Q3

[Operator]

Greetings. Welcome to the Catalyst Pharmaceuticals CPRX Third Quarter 2019 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

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

[Alicia Grande, Chief Financial Officer]

Good morning, everyone. Thanks for joining today’s conference call. Joining me on today’s call are members of the Catalyst Management team including Pat McEnany, Chairman and Chief Executive Officer; Dr. Steve Miller, Chief Operating Officer and Chief Scientific Officer; and Dan Brennan, Chief Commercial 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 expected future results, which may be forward-looking statements for purposes of the federal securities laws. These statements relate to our current expectations, estimates and projections, and are not guarantees of future performance.

They involve risks, uncertainties and assumptions that are difficult to predict, which may prove not to be accurate. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our Annual Report on Form 10-K.

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

[Patrick McEnany, Chairman and Chief Executive Officer]

Thank you, Ali, and good morning everyone and thank you for joining us today. Well, it's been an exciting third quarter and nine months of 2016 for Catalyst and we have a lot of progress to update you on across our various work streams.

Let me start by making some comments about our commercial launch of Firdapse. We remain quite enthused about the strong progress of our launch through the third quarter 2019. We continue to see encouraging trends across a variety of metrics, as well as very positive reaction from treating physicians, payors and most importantly patients.

As we discussed in the early days of our launch, the breadth and depth of prescribing have continue to exceed our expectations, underscoring the significant previously unmet need for Firdapse in this largely underserved patient population.

With three, four quarters of performance now completed, we grow increasingly confident in the long-term potential of Firdapse. Patients starts and discontinuations are trending positively and Dan will go into the key performance metrics that we measured daily in greater detail.

Overall, we're off to a great start and our optimism is growing for potential for Firdapse to help patients with not only leveraging myasthenic syndromes or LEMS, but other ultra-rare neuromuscular conditions.

At this stage into the launch, we're now comfortable with providing for the first time revenue guidance of approximately $100 million for the full year of 2019 and a range of revenue guidance of $135 million to $155 million for calendar year 2020. As we continue to gain more experience next year, we'll look to tighten the range of forecast for 2020.

As we budget for next year's anticipated growth, we will be making further investments to add commercial resources to achieve our stated goal for 2020. To that end we expect to hire up to an additional 10 regional account managers to complement our current 10 regional account managers. And we expect to add team of seven to 10 inside contract sales representatives. They will be targeting the roughly 9,000 neurology and neuromuscular healthcare providers that might be treating an adult LEMS patient that could benefit from Firdapse.

As the number of patients being treated with Firdapse grows, I am pleased to announce that in 2020 we will be expanding our contributions to the independent qualified 501-c3 charitable foundations that provide support to LEMS patients.

We are increasing this both in dollar amount of contributions and in the number of charitable foundations that we support going from three to four. While we do everything we can to support the adult LEMS patients enrolled in our Catalyst Pathway's programs these contributions are intended to address needs and patients who cannot support to – who we cannot support directly. It is one of the main things that we work to support the LEMS community.

Last month we attended and exhibited at the Annual American Association of Neuromuscular and Electrodiagnostic Medicine meeting in Austin, Texas, which is always an important venue for us to engage with physicians, scientific and efficacy communities.

As this was our first year attending as a commercial stage company it was most important to get our very positive messages out to neuromuscular physicians about the clinical benefits of Firdapse for adult LEMS patients; Catalyst Pathways, our patient assistance program and our various educational programs for physicians and neuromuscular fellows.

At this meeting we hosted a lunch in symposium. It was attended by more than 170 physicians. I might add that was standing room-only. Dr. Perry Shieh, a noted Neuromuscular Specialist from UCLA presented a program titled; Why LEMS in Adults Warrants a Closer Clinical Insight and Common Misdiagnosis. It was during this symposium that we introduced our new free LEMS antibody testing program for patients suspected to have LEMS.

This program will allow physicians to order LEMS antibody testing without concern about insurance covering the cost as Catalyst will ensure that no patient is out-of-pocket for this test. We hope that this will help to shorten the otherwise lengthy journey to an accurate diagnosis for LEMS patients and quickly eliminated LEMS as a possible diagnosis for others.

As you know, we recently announced the top on results from our CMS-001 clinical study and we are disappointed that we did not achieve statistical significance in the primary or the secondary endpoints in this small 16 patients study. We did observe however that several patient showed noticeable signs of improvement.

Congenital Myasthenic Syndromes or CMS is a very complicated ultra-rare neuromuscular disease afflicting an estimated 1000 to 1500 patients in the U.S. We are scheduled to meet with the FDA before the end of this year to discuss our findings from the study as well as our next steps.

We have been commended by a number of neuromuscular specialists for even attempting to study in this very small complicated patient population, while attempting to provide an FDA approved therapy to treat CMS patients. Our MuSK-MG study continues to enroll and we anticipate completing enrollment by the end of this year and reporting topline results from this trial in the first half of 2020.

Over the past quarter, we've initiated several new sites for this trial in two European countries. Also we are on target to complete and announce top line results of the small proof-of-concept study for spinal muscular atrophy Type 3 in the first half of 2020. Steve will provide you with more information shortly regarding these programs.

One of our strategic priorities as you previously stated to start is to expand our commercial footprint globally. Within the past few weeks we have filed our New Drug Submission or NDS with Health Canada and have been granted a priority review. Assuming your submission is accepted this means six-month review of our application. We're also in the process of evaluating commercial plan for Canada with options to partner with the Canadian firm or launch with an effective and efficient Catalyst team.

Additionally, over the past several months we have met with the Japanese regulatory authorities including the Ministry of Health, Labor and Welfare, as well as the Pharmaceuticals and Medical Device Agency or PMDA to discuss our existing data and understand what additional data maybe required to submit a new drug application for Firdapse in Japan.

We've also recently applied for orphan drug designation, which if granted, would give us a nine-month priority review, 10 years of market exclusivity against generics and certain tax credits. We anticipate meeting with the PMDA in the first quarter of next year to hopefully finalize a plan to register Firdapse in Japan.

We've been conducting market research there and as the second largest economy in the free world, we believe that Japan can be very strategic for us and offers a very promising opportunity to expand our global footprint.

We have began the process for assessing and evaluating external drug development programs that are late-stage as well as potential drug acquisitions that we believe may have a clear path to value creation through their impact on unmet medical needs for patients suffering from rare debilitating disease.

As we reported yesterday, we ended the third quarter with approximately $81.6 million in cash and investments and no funded debt. Our cash continues to build quarterly and near-term we see no need for a sale of our common stock. Further, we believe that if we have access to alternative forms of nondilutive financing such as a term loan from conventional bank lenders in the event that we source a promising acquisition or product opportunity.

Lastly, a few words about a lawsuit against the FDA. We filed that suit in June and it challenges the FDA's decision to approve Ruzurgi for pediatric LEMS patients on four different grounds, which I will state here in great detail. This suit is progressing as we expected and the current briefing schedule called for all filings to be made by late January.

As you can understand, we are eager to get this case before the judge and get a decision. But at this time this is the best timetable that I can provide you as more than likely always there's a chance of additional delays. We will keep you posted on this front.

This has been another very solid quarter and nine months of execution and performance from the Catalyst team. We are extremely pleased by the number of naïve patients that we continue to enroll in Catalyst Pathways which again further illustrates the need for Catalyst to have made the necessary investments required to bring an FDA-approved, evidence-based medicine to the LEMS community.

I'll now turn the call over to Dan Brennan, our Chief Commercial Officer to provide you with further specifics on our launch of Firdapse.

[Dan Brennan, Chief Commercial Officer]

Thanks Pat, and good morning every. We remain very excited about the launch of Firdapse here in United States for adult suffering from LEMS. All metrics continue to depict a strong successful execution of an ultra orphan drug launch.

We've now completed three quarters with commercial availability having started on January 15 and whether the metric is total number of patients, percent of diagnosed patients treated with Firdapse, physicians and patients satisfaction, insurance coverage or patient affordability, this is a product launch that is exceptionally helping many patients in a very rare, very debilitating disease condition.

In the first nine months of launch, nearly 30% of the diagnosed adult LEMS patient population has now received a Firdapse prescription which is very high hurdle and a rare result for a new medication. This is also great indication that we brought availability of Firdapse is improving the standard of care for treatments in LEMS and that physicians, patients and payors recognize it as such.

If we continue with this level of use and adoption to help LEMS patients, we will continue to rise to the ranks as one of the more successful orphan drug launches. Some key highlights I'd like to share. Till the end of Q3 over 490 patients have now been prescribed Firdapse since launch, over 50 of whom initiated therapy in Q3 alone. Over 170 of these patients had never before been treated with 3, 4-DAP and what we call naïve to therapy.

When you consider patients who initially transitioned over from the Catalyst expanded access program, there are now more than 250 patients on Firdapse who never would had access to 3, 4-DAP, if it were not for Catalyst Pharmaceuticals and our efforts.

Over 275 unique writers have prescribed Firdapse and over 370 patients were on insurer reimbursed therapy at the end of Q3. And we understand that there maybe some concerns about the recent and unforeseen added entry into the LEMS market space and many of them asking about potential use of another amifampridine product, Ruzurgi with adult LEMS patient.

I'd like to point out a few key differentiated points to consider. First, Ruzurgi is not indicated or approve for use in adult LEMS patient. Second, Ruzurgi requires refrigeration and supply chain to prevent spoilage and Firdapse doesn't require any refrigeration. Third, patient support programs for Ruzurgi are limited by comparison with Firdapse.

And finally, as a company, we believe that any entrance in a rare disease category and especially in this LEMS market needs to be thoughtful and fully committed to education and patient support for product like this where there are important safety and dose education consideration.

Insurers and physicians should be careful about having patient use a drug off label and we believe that insurers and physicians are generally not inclined to do so. That is why we are taking good care with insurers and physicians to ensure they understand Firdapse and its proper and safe use.

That said, we have seen some patients mainly ones we believe we run with Jacobus compassionate use study who have love Firdapse to try the Jacobus commercially available product. In August and early September we saw a small group of commercial insured patient leave and then another small group of Medicare insured patients switch over in September and October.

However, it is important to note, we have seen this slow down quite a bit in the last three weeks. We believe that most patients and physicians are fully satisfied with the support that they've been receiving here at Catalyst for Firdapse.

As I mentioned earlier, we continue to see high level of patient's satisfaction. Now with over 280 customer satisfaction surveys completed and our average rating remains at 4.8 out of five stars. Our insurance approval rate and are -- our insurance approval rate for commercial and government insured patients is over 95% with most prior authorization being approved within seven to 14 days.

In addition, the average co-pay across all patients in September stood at a $1.66 per month per patient. For all these reasons we believe this is why only a relatively small group of the over 490 Firdapse patients have left to try the pediatric LEMS approved product.

I should also point out that there are other discontinuations for normal than expected reasons like the lack of response, experiencing side-effects and some patients who have been unfortunately succumbed to cancer. But discontinuation rates for these reasons remain in line with what we saw in the clinical study about 20% to 25% of patients.

Having met our initial launch goal by the end of Q3, which included bringing on over 200 adult LEMS patients from the Jacobus 3, 4-DAP study also transitioning patients from our expanded access program and receiving enrolments from our naïve patients who have been waiting the approval of Firdapse.

While doing this with a high level satisfaction, we are now turning to the next phase of our commercial launch by executing and initiating several new commercial strategies and activities to sustain our momentum including a continued focus on raising awareness, the availability, extensive patient support and patient affordability of Firdapse for adult LEMS patient, which includes raising awareness to general neurologists beyond the neuromuscular expert population.

We have a very productive discussion at recent medical meetings including the AAMEM meeting, the fall AAN conference, the American Autonomic Society meeting and various other regional and local meetings of neuromuscular experts and general neurology physicians.

In addition, as Pat mentioned, we launched our no-cost LEMS antibody test program for physicians who suspect that their patient may have LEMS so that there is no need to hesitate or submit and wait for insurance approval to perform this diagnostic test.

We are readying a find-a-physician web tool where we can help patients who are looking for physicians that have experience treating LEMS, identifying those physicians located near them.

This includes an increase in our level of non-personal promotion and advertising mainly digital communication to physicians and patients. We are also preparing and working in earnest to help patients to the upcoming insurance reauthorization process that comes at the end and turn of each calendar year.

Lastly, our largest and most complex commercial edition includes expanding and retargeting our sales force and inside sales contract group on over 9000 neurologists that we know treat LEMS or LEMS like symptoms and this is up from our current target list of about 2500 neurologists. We believe that all of these efforts will help continue to success in identifying and treating new adult LEMS patient with a high level of patient and physician satisfaction.

To conclude, I'm happy to say that just a few weeks ago we cross that important milestone of 500 patients prescribed Firdapse, which is an impressive 33% of the diagnosed adult LEMS population. I'm very excited the idea of helping that next 500 adult LEMS patient. I'm also excited about what lies ahead for our company as we get ready for the prospect of helping adult LEMS patients in Canada and Japan, and potentially helping additional patience with MuSK antibody positive myasthenia gravis, CMS, and SMA Type 3 in the years to come.

And with that, I'll hand the call over our Chief Scientific Officer, Steve Miller, who will report on the progress in our clinical activities. Steve?

[Steve Miller]

Thanks for the commercial update there. And now I'll provide an update on our clinical pipeline to develop Firdapse for additional neuromuscular indications. First, I would like to touch on the news regarding our Phase 3 trial for congenital myasthenic syndromes or CMS.

This Phase 3 trial called CMS 001 was the first ever double-blind placebo controlled clinical trial for the symptomatic treatment of genetically confirm CMS. There are currently estimated to be about 1000 to 1500 U.S. CMS patients representing a spectrum of over 50 different possible genetic defects. This wide range of genetic defects produces a broad spectrum of clinical presentations of the disease and variations in response to therapy.

We treated 16 patients in this two period to tripling crossover Phase 3 trial and given the sample size to trial did not achieve overall statistical significance for the primary endpoint of subject global impressions or the secondary endpoint of muscle function measure. Because this trial was crossover design, each subject received both placebo and amifampridine, so each patient's with their control enabling individual responses to treatment to be assessed and some of the patients showed a positive response to treatment in the trial.

This clinical trial took almost four years to recruit from a variety of reasons. First, CMS is a very rare disease with only a few hundred patients diagnosed at this time. In order to aid with diagnosis over the past four years the Catalyst has provided genetic testing free of charge for any patient they needed within our EAP and clinical trial network of physicians.

And despite the outcome of this trial, Catalyst will continue to provide this service to patients for the foreseeable future. Second, many of the patients are children and many parents are reluctant to allow their child to participate in the clinical trial where the possibility exist that their child maybe treated with placebo.

Third, due to the pediatric nature of the disease and its complexity the patient's and doctor's were often understandably reluctant to be referring to a new physician at one of the existing clinical trial sites and it is unfortunately that more doctors treating CMS were not willing to be clinical trial sites, so their patients could be included in the CMS 001 trial.

Finally, clinical trials require a commitment of time that many families cannot make given the existing burden of already caring for a patient's with this disease. Catalyst thanks all the families who agree to have their child participate in this trial.

While we were disappointed in the clinical trials statistical outcome, we remain encouraged by the response of some individual patients to treatment. We are continuing to conduct analysis of the full dataset and are scheduled to meet with the FDA by the end of the year to discuss the results, the observe responses to treatment and potential next steps. We will provide updates as they become available.

While the outcome of the trial was complex, we believe the data provides valuable clinical information for this patient population and their physicians. We are also conducting an ongoing Phase 3 multi-site international trial on MuSK-MG which is being conducted under an FDA Special Protocol Assessment or SPA.

This Phase 3 trial continues following our successful proof-of-concept trial for this indication. We expect to report topline results from this trial in the first half of 2020. As described previously, the CMS trial had a lot of variability due to many genetic defects involved resulting in a very heterogeneous patient population and variation in response to treatment.

However MuSK-MG like LEMS is caused by a single antibody to a single protein in the neuromuscular junction resulting in a more homogeneous patient population which should exhibit consistency in response to treatment between patients, sites and across multiple trials.

Due in no small part to the success or previous proof-of-concept trial we remain cautiously optimistic about the outcome of this ongoing Phase 3 trial for MuSK-MG. MuSK-MG is an autoimmune for which there is currently no approved treatment and we believe there are about 3000 to 4800 U.S. patients with MuSK-MG. Assuming this trial a successful we look forward to one day potentially being able to provide an FDA approved treatment options for these patients.

Lastly, we have a proof-of-concept study ongoing its spinal muscular atrophy or SMA Type 3. This trial is ongoing in Italy and Eastern Europe and is evaluating the safety, tolerability and potential efficacy of amifampridine and ambulatory patients diagnosed with SMA Type 3.

We plan to enroll approximately 12 patients in this study and look forward to announce topline results from this study in the first half of 2020. SMA is caused by related genetic defects to the SMN protein motor neurons, which should result in a relatively homogeneous disease differing mainly on severity.

Moving on to market expansion plans for Firdapse Catalyst has now submitted a New Drug Submission or NDS in Canada, seeking approval of Firdapse for the symptomatic treatment of LEMS. Catalyst has also been granted priority review for this NDS, which should reduce the review cycle time to six months.

With the priority of review cycle time plus the required acceptance review time of 35 days, Catalyst expects to receive a response to Health Canada's review over NDS in about seven months provided the NDS is accepted for filing and review this month. Catalyst has not yet start commercialization activities in Canada and when those activities commence we will provide an update regarding our commercial plans in Canada.

Catalyst also recently announced an expansion to the marketing territories to include Japan. Recently, we have begun discussions with the Japanese Ministry of Health, Labor and Welfare or MHLW regarding the regulatory pathway to seek approval of Firdapse in Japan.

Approximately two years ago, the Japanese government designated the approval of Firdapse as a priority drug for the MHLW and they have been actively soliciting companies to develop and file an NDA for this drug.

An update on the regulatory pathway for filing an NDA in Japan, we'll be providing most Catalyst and the MHLW come to an agreement of what will be required to file that NDA in Japan. Catalyst continues to provide access Firdapse for CMS patients in our Expanded Access Program or EAP.

We also provide assistance to EAP patients and their physicians if needed to obtain genetic testing in order to obtain an accurate CMS diagnosis. This accurate diagnosis and genetic subtype confirmation helps physicians tailor the treatment strategy to optimize the treatment of each CMS patient.

We also plan assuming a successful outcome of MuSK-MG Phase 3 clinical trial to begin including the symptomatic treatment of MuSK-MG and our EAP and we'll work diligently with the many IRBs involved in the EAP to add this new treatment protocol.

Finally, patients have requested a long acting version of Firdapse in order to eliminate the need to plan their daily activities around multiple doses of Firdapse. We are now actively developing this new product and provide updates in the future when the product characteristics have been finalized.

At this stage of the development program, candidate formulations are being developed and their drug release properties are being studied in order to optimize the long acting symptomatic treatment of LEMS.

Overall, we are excited about the opportunities to expand the current Firdapse label into additional indications, as well as in additional countries tend to develop a better product for all these patients. We will provide any updates on these clinical and regulatory path as they become available.

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

[Alicia Grande, Chief Financial Officer]

Thanks Steve. Yesterday November 12th, we filed our quarterly report on Form 10-Q for the third quarter ending September 30, 2019, which we reported net income of $13.6 million or $0.13 per basic and diluted share for the third quarter of 2019.

This compares to a net loss of $7.8 million or $0.08 per basic and diluted share for the third quarter of 2018. For the quarter ended September 30, 2019, net product revenue from the launch of Firdapse 30.9 million with related costs of sales for the same quarter at $4.4 million.

Research and development expenses were $4.6 million for the third quarter of 2019 compared with $4.5 million in the third quarter of 2018. Research and development expenses for the third quarter of 2019 primarily consisted of expenses for medical, regulatory affairs and quality assurance programs, as well as expenses from our ongoing Firdapse clinical trials and studies on our expanded access program.

Research and development expenses in the comparable period in 2018 primarily consisted of consulting expenses as we prepared to submit our NDA for Firdapse up to other treatments of LEMS as well as expenses of our Firdapse clinical trials and studies of our expanded access program.

The company expects that the costs related to research and development activities will continue to be substantial throughout 2019 and into 2020 as we continue our ongoing clinical trials and studies in MuSK-MG, SMA Type 3 on our expanded access program for Firdapse.

Selling, general and administrative expenses for the third quarter of 2019 total $8.1 million, that's compared to $3.6 million in the third quarter of 2018. The increase when compared to the same period in 2018 is primarily due to increased setting expenses including cost of commercial, system implementations of our sales force and supporting personnel, product launch expenses, market access and market research expenses and professional fees associated with our lawsuit against the FDA.

The Company expects selling, general and administrative expenses to increase in 2019 and into 2020, as we continue to build our infrastructure and commercial inpatient programs in support of Firdapse sales activities and pursue our lawsuit against the FDA.

On September 30, 2019 Catalyst had cash and investments of $81.6 million and no funded debt. Although there can be no assurance based on current available information, we believe that these resources will be sufficient to support our planned operations for at least the next 12 months.

More detailed financial information and analysis may be found in the Company's quarterly report at Form 10-Q which was filed with the Securities and Exchange Commission on Tuesday November 12, 2019 and can be found on the Investor Relations page or website at www.catalystpharma.com.

I'll now turn the call back to Pat.

[Patrick McEnany, Chairman and Chief Executive Officer]

Thank you, Ali. As always I'd like to extend our thanks to everyone who has made this success for LEMS community possible including our patients, physicians, employees and other Catalyst stakeholders. Our mission remains to better the lives of people with neuromuscular disease and we look forward to providing you update on each of our clinical and commercial programs in the near future.

This is our formal presentation. I'll now turn the call over to the operator for questions.

[Operator]

Thank you. [Operator Instructions] The first question is from Charles Duncan of Cantor Fitzgerald. Please go ahead.

[Charles Duncan, Cantor Fitzgerald]

Good morning, Pat and team. Congrats on the progress in the quarter and the performance and I really appreciate all the granularity on the launch metrics. That's helpful to understand this market. I had a couple of questions that are kind of commercial oriented and then one that is related to the pipeline. And so I'll really start with the commercial question and that is that when you consider the guidance what really are some of the drivers or key inputs for the guidance? And then if you could touch on the LEMS market dynamics, You said a few things in your prepared remarks, but I'm wondering if he could provide a little bit more color on maybe the competitive front and new patient identification?

[Patrick McEnany, Chairman and Chief Executive Officer]

Thank you, Charles for your question. Dan, do you want to address the commercial metrics and our guidance with Charles.

[Dan Brennan, Chief Commercial Officer]

Yes. I mean, as far as the guidance for the remainder of this year for next year in general, Charles, where were you going?

[Charles Duncan, Cantor Fitzgerald]

Yes. Really it's next year because that's the nice surprise to see. I'm a little bit surprised that you're able to provide that at this time.

[Dan Brennan, Chief Commercial Officer]

Yes. I think I mean that the key elements and there's a couple of elements going on. One is, we had a fantastic launch and really transitioned patients over. I think we've been describing this in Q1 and Q2 call that when you have such a good launch of new enrollments it becomes harder to get into that next phase. And so we do see that the new enrollments are going to be in the more moderate 15. And I think with these additional programs that we're putting in place with our expansion in the sales force and in a new target list of additional physicians that we can call on with inside sales and folks in the field that it'll probably be in the 15 to 20 patients per month.

And then the thing that we kind of got a little spoiled about in the first and second quarter is when you have a rapid launch of all these transitioning patients none of them discontinue and it's not until you start getting the patients that are naïve to treatment that you start seeing these things like I mentioned about there's some patients, not all patients respond. Some patients have intolerable or experience intolerable side effects, and so you get somewhere in the neighborhood of 20% to 25% discontinuations. And then as you -- as I mentioned a small trickle of patients that are going over to the pediatric LEMS approved product. You have to subtract out patients that have those discontinuation. So you get into a more moderate growth rate versus what you see in quarters one, two and three. Hope that helps.

[Charles Duncan, Cantor Fitzgerald]

Yes.

[Patrick McEnany, Chairman and Chief Executive Officer]

Charles, your other question, about a little more color around the competition, I think Dan addressed it head on. We anticipated that we would lose some small amount of patients which we've seen and typically, they've been when your commercial insurance kicked in or when they were able to get Medicare coverage and there were two what I'll call small boluses for each of those. And those patients for the most part we believe, have converted and they launch their product in July. I suspect anybody who wanted to go back to the product that they were taking under the Jacobus compassionate use program have for the most part made that transition already. And so we're feeling more comfortable as we move ahead and we think that with our broad offerings of patient support and services it's -- we're in a better position to going forward to retain these patients.

[Charles Duncan, Cantor Fitzgerald]

Okay. That seems like it should be the case. And then, with regard to adding the sales reps. I wasn't clear where you're adding 10 and then what is the seven to 10 additional folks that you're adding. What can you give us a sense of the expansion that you're trying to looking at?

[Patrick McEnany, Chairman and Chief Executive Officer]

Yes. I let Dan to take that question, Charles.

[Dan Brennan, Chief Commercial Officer]

So, we've purchased some additional prescribing data on physicians that use medications that are often used with LEMS patients or patients that are experiencing and displaying LEMS symptoms. And by doing that we've been able to find 9,000 neurologists which is much higher than this existing list of 2500 that we've seen that have seen a diagnosed LEMS patients. So they're using a medication that is often used when those physicians have seen these types of patients. So we are going to in essence reach in to with our sales force field face to face interactions with patients that go all the way up to about 2500 to 3000 of them with the field force and then we're going to supplement that with an inside sales group that we train and they make phone calls to these officers to understand, hey, has one of these types of patients come by the office. And once we get in essence a lead, a confirmed lead from the inside sales they will then hand that over to the regional account manager who will go out and visit that area.

It's just a more effective and efficient way of covering more ground including these patients who will go to some of these lower decile physicians more infrequently, but they still go there and this is the type of work you need to do when you're in an orphan and especially an ultra orphan disease area to catch the right timing of when that patient is in for example, a general neurologist office in Peoria, Illinois when you don't have a regional account manager right near there.

[Charles Duncan, Cantor Fitzgerald]

Okay. That's helpful. A lot of groundwork on that to be done seems, but then perhaps if I could transition to the pipeline question that I had for Steve. Appreciate all the commentary on MuSK-MG relative to CMS in terms of the patient heterogeneity as well as symptom presentation. But I'm wondering if you could provide actual information regarding number or kind of general trends in terms of enrollment in that MuSK-MG?

And then, in the second half of next year if the data are positive out of the MuSK-MG study, would you anticipate an sNDA? Or would you anticipate perhaps a second Phase 3 would be kicked off by year end next year?

[Steve Miller]

Okay, Charles. With regards to your first question, I can't provide any specific guidance on the number of patients currently enrolled in the trial. I will say that the enrollment is going well and we're scheduled to complete enrollment by the end of the year. With regard to the plans upon successful completion of the current ongoing trial, keep in mind that this is for all practical purposes or second trial. And in their prior meeting with the agency they have indicated that the two trials; the proof-of-concept trial combined with a successful Phase 3 trial would be sufficient to file an sNDA for the indication. And therefore we anticipate assembling and filing an sNDA after the successful completion of this clinical trial to seek approval for the MuSK-MG indication.

[Charles Duncan, Cantor Fitzgerald]

Okay. And just remind me maybe of the number of patients targeted to be enrolled in that trial and whether they all have to pass an antibody test?

[Steve Miller]

The patients do have to pass an antibody test to be eligible for enrollment and we are targeting 60 MuSK-MG patients. Also as a reminder this patient is enrolling 10 to 20 acetylcholine receptor patients as well that there is no hypothesis testing for that group. The FDA simply requested that we enroll some acetylcholine receptor MG patients and tabulate the data so that they can determine whether or not there's any effect on those patients as well.

[Charles Duncan, Cantor Fitzgerald]

Okay. That's helpful. Thanks for the added color. Congrats on the progress in the quarter.

[Steve Miller]

Thank you.

[Patrick McEnany, Chairman and Chief Executive Officer]

Thank you, Charles.

[Operator]

The next question is from Joe Catanzaro of Piper Jaffray. Please go ahead.

[Joe Catanzaro, Piper Jaffray]

Hey guys, thanks for taking the questions. Just a couple quick ones for me. Maybe the first around guidance more so the 2019 guidance, if we look at that it suggests that that 4Q is going to be a down quarter. What's driving that? Is that simply patient's transitioning off of Firdapse to Ruzurgi. And what gives you confidence that that trend is going to reverse heading into 2020?

[Patrick McEnany, Chairman and Chief Executive Officer]

Well, I'll let Dan get into a little bit of the details on that Joe. But really, we put the guidance out at approximately $100 million to be a conservative guidance and without giving a range. And maybe we should have given a range for this that would have demonstrated that we're not sure that that assumption is correct, that our revenues for the quarter are going to be down. But, Dan, maybe you want to address that as well.

[Dan Brennan, Chief Commercial Officer]

Yes. No. I think it's partially just, again, that great and rapid success we had in the first three quarters, may get into and start settling into a more stable once we get the enrollments past this transition, plus the discontinuation. I mean, you mentioned that you also have to subtract out any discontinuation for normal reasons, as well as we still do see a trickle of continued discontinuation is going to the pediatric LEMS approved product. And so when you have a quick ramp in a small market, there's going to be a period of adjustment in the early launch period, and this is what we're seeing. So it's going to flatten out and in quite handsomely, the better success you have in that initial LEMS, the more severe the flattening is.

And so, that's what we see in Q4. And we do think that some of this discontinuations that we had with the early naïve patients, we studied to try to understand what was happening. And it was initially much higher and we've got it now with understanding better messaging and setting better expectations with physicians and patients, and providing very good guidance on the initial dosing periods. What was originally a 40% discontinuation is now gotten down to lower than 30%, which is more in line with what we saw in our studies.

So that's continuing, and we believe that by next year, we'll have that honed where both on the discontinuation end that will be into a normal cadence. And then on the enrollments with all the – with all those programs that we mentioned in the expansion, we see that stabilizing and growing. And the last point I'll just say is that, and Pat mentioned this. There's still has a range around that 100 million number. We want to make sure that we don't surprise anyone on the low side. And now Q4 is always challenging, there's less selling days with the holidays and such and the weather actually is getting a bit colder. And there's a bit of a seasonal effect with patients in the symptoms of LEMS. And so we dial all these things and try to make sure that we're giving you the best guidance with no surprises on the low side.

[Joe Catanzaro, Piper Jaffray]

Okay. Got it. And forgive me, you may have said this in your prepared remarks, but previously you provided numbers on patients on Firdapse at the end of the quarter, I think it was 337 at the end of 1Q and 409 at the end of Q2. Could you say what it was at the end of 3Q?

[Patrick McEnany, Chairman and Chief Executive Officer]

Yes. So at the end of the second quarter, we had 49 patients on active therapy and that includes all patients getting free drugs. So our Patient Assistance Program or Bridge Program, and they actually, overall that had flattened out and at the end of the third quarter, is it about the same rate, about 410 or so patients. And so, we saw a growth in the number of our patients getting reimbursed, which reflects just really good work by our payer team and our team at Catalyst Pathways helping patients that were previously getting kind of just bridge and waiting for insurance coverage, transitioned over and onto paid therapy. But that also reflects again, the not only the addition new enrollments, but the subtracting outs of anyone that has discontinued.

[Joe Catanzaro, Piper Jaffray]

Okay. Got it. And then maybe just last one for me here. So, you mentioned this small group of patients that transition off of Firdapse on to Ruzurgi. Can you provide some numbers around that? And maybe, in general, what's the percentage you're seeing a patient's doing that? And do you expect that to continue slowdown? What's the driver of that? Thanks.

[Dan Brennan, Chief Commercial Officer]

Yes. It's really hard to know exactly how many patients have switched to Ruzurgi because they really don't call up and just say I'm going to switch to another drug. But because we have such good communication with many and most of these patients and their physicians, we do try to capture that information and understanding the different reasons why a patient is discontinuing. So, we believe that at the end of Q3 there were about 20 patients that had made this transition to the other drug. And as we mentioned, or as I mentioned, most of them seem to be the patients that were on the Jacobus commercial, you know, compassionate you study, originally.

And then, right now, currently we see that about 30, but very few in the past two to three weeks. And so, we continue to work with these patients as best we can, all patients throughout the journey and if they're ever showing any signs of discontent for any reason, we're addressing that. And if they say that they're going to lead to another medication, we just make sure that they know that they can return to Catalyst Pathways and Firdapse at any time, and they will be able to pick up where they left off. And we do expect that, that some of these patients will come back when they realize that it's no better or actually worse without Firdapse and Catalyst working on their behalf.

[Joe Catanzaro, Piper Jaffray]

Okay. Got it. That's very helpful. Thanks for taking all my questions.

[Dan Brennan, Chief Commercial Officer]

Thanks, Joe.

[Operator]

The next question is from Leland Gershell of Oppenheimer. Please go ahead.

[Leland Gershell, Oppenheimer]

Hey, good morning. Thanks for taking my questions, and also congratulations on the great progress and for sharing all the detail. Question on the commercial for Firdapse, Pat, you had previously declined kind of 1500 who are diagnosed or somehow in the system versus another 1500 who may not be? Would it be fair to say that the additional 10 reps you would be bringing on into the New Year will be focusing on that second 1500 group and kind of as a part of that, if you could characterize any patients you brought into Firdapse who were in that second group as the launch has proceeded so far. And then I have a follow-up.

[Dan Brennan, Chief Commercial Officer]

I'm happy to take that again, Pat.

[Patrick McEnany, Chairman and Chief Executive Officer]

Yes, Dan.

[Dan Brennan, Chief Commercial Officer]

So, the additional representatives that come on board, all representatives still have basically a couple of different areas of opportunity. With 500 patients are so now being prescribed Firdapse. We do believe that there are still about a 1000 patients that are already diagnosed with LEMS that are not yet treated and they are talking with physicians or they're not -- you know, the physician hasn't yet saw the urgency to ask those patients to come back in and to try Firdapse. So there is still some work to be done. But that said, once you get past 30%, 33% of a diagnosed market, it does become challenging. But we do see that that's still as a target.

In addition, there are about what we believe is 1500 undiagnosed patients or misdiagnosed. And the additional headcount both in the field and inside sales are going to be asking questions of those offices. Do you see patients experiencing these types of symptoms? Have you considered LEMS? Here, we have this no cost antibody test. Why not test to see if you're -- if this hunch is correct, rather than in some cases physicians are just thinking to themselves, well, it's probably not LEMS. That's so rare. I'm sure it's not LEMS.

We're trying to take some of those barriers or those hesitations off the table, both with our field force, our programs like the antibody test, as well as the inside sales people calling up the offices asking them if they're seeing patients like this.

[Leland Gershell, Oppenheimer]

Okay. Thanks. That's, that's helpful. And also a commercial question. With regard to the dosing of Firdapse, wondering if you could comment if you've seen -- I know there's a standard dose that the drug has to be taken, but if you've seen any variability or flexibility that's been used by patients kind of on one-off basis to manage their symptoms as effectively as possible with Firdapse?\

[Dan Brennan, Chief Commercial Officer]

Yes. There's quite a bit of variability overall, but the initial expectation of the average dose across all patients being around 60 milligrams has helped pretty firm and it's moved around a little bit where the initial patients that came on board were on the higher end of that transitioning over from kind of longer term maintenance. And as we brought in some of the new patients, the new naïve patients, they were at the lower dose, obviously, as they started titration. But the drug itself as a narrow therapeutic window, and I'm not quite sure that many of the patients previously on the Jacobus study or even Jacobus realized how, how there is metabolism difference between some patients that are fast metabolizers and slow metabolizers, and some patients do very well at 30, 40, 50 milligrams a day, whereas others the fast metabolizers will require at the high end of the range of 80 milligrams and that's where, again, you have to be very careful with patients and, and some of the side-effects and dosing. You have to explain that the physicians and such. But overall the population of patients that have come over with a prescription for us and that have stayed on, the average dose across all is about 60 milligrams slightly, slightly less.

[Leland Gershell, Oppenheimer]

All right. Very much appreciated for the extra color. Thank you.

[Dan Brennan, Chief Commercial Officer]

Thanks Leland.

[Operator]

The next question is from Scott Henry of ROTH Capital. Please go ahead.

[Scott Henry, ROTH Capital]

Thank you and good morning.

[Dan Brennan, Chief Commercial Officer]

Good morning, Scott.

[Scott Henry, ROTH Capital]

Just a couple of questions. Has the price environment -- pricing environment changed at all since Ruzurgi made it to the market or are you seeing general stability in net pricing?

[Dan Brennan, Chief Commercial Officer]

The pricing hasn't changed at all, Scott. We priced this at what we thought was fair value and we did a lot of work as to decide on where it should be priced based on all the patient services we provide, and all the additional studies that we're conducting for other indications. And so the pricing, despite the entry of the other company has been very stable for us

[Scott Henry, ROTH Capital]

Okay, great. Thank you for that color. Another question with regards to Ruzurgi, do you have any sense of what kind of market share that product is getting? I know there was talk about 20 switches in Q3. But how do you think it's doing among new patients? Just -- you may not know, but I thought I would say, if you have any color on that?

[Patrick McEnany, Chairman and Chief Executive Officer]

Well, I'll give you my thoughts and then Dan probably has some as well. I think for the most part naive patients are those that are not 3, 4-DAP experienced are really not aware of the work that we're doing in physician offices in a patient education, as well as physician education. So there's a lot of work going on. And so I think with regard to naive patients, it's like Dan pointed out, there a little more difficult to find. There's more work that's required by the field, Sales force or the regional account managers to find the docs who are treating patients with rare neuromuscular disease to find out if in fact, they have any LEMS patients.

So I don't think that we can tell you their impact as a percentage of market share. I think as Dan pointed out, and we talked about previously, that the number of patients is not large. And it's been somewhat of a trickle, if you will. And again, the product by the end of the year will have been out there for about six months. So I think anybody that was already experienced on 3, 4-DAP and wanted to go back if they were in the compassionate use program would have done so by the end of the year.

So I think maybe as we go forward we'll be in a better position as we gain more experience to be able to talk in terms of market share. But I think, for the most part, that's all I can provide at this point. Dan, do you have any color on that?

[Dan Brennan, Chief Commercial Officer]

Yes. I mean, I think I think there's a couple of other elements. I mean, it's interesting. We do hear from many of these patients that we're on the 3,4-DAP, that they actually say, well, I actually think the drug is working much better for me with Firdapse and then vice versa. Obviously, the people that -- that are -- have left, are thinking, well, I kind of remember that my old 3,4-DAP was working a bit better and that's why, I think that we'll see some of those patients come back ultimately, because it seems to be all over the place.

And the reason why I bring that up is -- is that the -- the physicians that are treating a new patient and we don't have data on this. I mean, you kind of alluded to this. It's hard for us to tell. We don't have data, but these physicians that are treating the new patients they don't necessarily like writing something off label. It makes it a little bit easier for them when they have a patient who is in their office saying, but it was working for me for a year and a half. And they're like, okay, well this actually make some sense. But, on new patients, I don't think that they're getting many new patients. And I think that's appropriate. And I think that that's in line with what the payers and the physicians are most comfortable with which is prescribing a drug that's on label, that's been studied, that's been reviewed by the FDA and such.

[Scott Henry, ROTH Capital]

Okay, great. Thank you for that color. Another question, just with regards to the CMS data, do you expect to present that anytime in the near future or how can we get a closer look at that data?

[Patrick McEnany, Chairman and Chief Executive Officer]

Steve?

[Steve Miller]

Well, basically, we'll have to speak to the principal investigator. I would anticipate that we would present the data at an appropriate forum at some time. We also plan on publishing the data. And so we certainly wouldn't want to impact the ability to publish at a high impact journal as well. So all of those factors will have to be taken into account, but I would anticipate sometime next year that the data will be made publicly available.

[Scott Henry, ROTH Capital]

Okay, great. Thank you, Steve. Final question, just an accounting question. As you continue to be profitable on a quarterly basis, at some point, you will fully tax the number. When would you expect us to see a more fully taxed EPS number just for modeling purposes?

[Patrick McEnany, Chairman and Chief Executive Officer]

Scott, we have hired a separate firm to do an analysis of our NOLs and to look at our tax credits and orphan credits. And so that's hard to -- that's hard for us to say, right now. Certainly, it's not going to impact us this year, perhaps, sometime next year. And as we get our arms around the work that's being conducted right now to analyze our NOLs and our R&D expenditures, as soon as we have that, we will provide that to the Street.

[Scott Henry, ROTH Capital]

Okay, great. Thank you for the color there, Pat and thank you for taking the questions.

[Patrick McEnany, Chairman and Chief Executive Officer]

Great. Thank you, Scott.

[Operator]

We have reached the end of the question and answer session. And I will now turn the call over to Patrick McEnany, Chairman and CEO for closing remarks.

[Patrick McEnany, Chairman and Chief Executive Officer]

Thank you. Again, thanks for joining us on today's call. We look forward to providing you with further updates as they occur. Thank you.

[Operator]

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