Catalyst Pharmaceuticals Inc

NASDAQ:CPRX

Earnings Call Transcript 2020-Q3

[Operator]

Greetings and welcome to Catalyst Pharmaceuticals, CPRX Third Quarter 2020 Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Alicia Grande, Chief Financial Officer.

[Alicia Grande, Chief Financial Officer]

Good morning everyone and welcome to today's conference call. Joining me on today's call are members of the Catalyst executive team including Patrick McEnany, Chairman and Chief Executive Officer; Dr. Steven Miller, Chief Operating Officer and Chief Scientific Officer; Dr. Gary Ingenito, Chief Medical and Regulatory Officer; and Jeffrey Del Carmen, 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 federal securities laws.

These statements relate to our current expectations estimates and projections and are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict and may prove not to be accurate especially in light of the COVID-19.

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 2019 Annual Report on Form 10-K and our recently filed quarterly report on Form 10-Q for the quarter ended September 30, 2020.

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

[Patrick McEnany, Chairman & Chief Executive Officer]

Thank you, Ali and thanks everyone for joining us this morning for our third quarter results and business update call. I hope that everyone is staying safe and healthy during these unprecedented and challenging times.

I have a number of items to update you on this morning. I'll start with how pleased we are with the third quarter financial results that were achieved. Despite operating under very difficult conditions in this COVID-19 environment, we generated product revenue of $29.2 million and net income from operations of $11.6 million, which included a non-cash stock-based compensation expense of $1.5 million which resulted in approximately $13 million of cash flow from operations.

Additionally, we ended the quarter with $127.1 million in cash and cash equivalents and no funded debt. Ali will provide you with more financial details in a few minutes.

I want to reiterate how proud I am of the team's ongoing effort to demonstrate their steadfast commitment to the patients that we serve. We have shown a remarkable resilience and ability to continue to expand the number of patients benefiting from Firdapse to treat their LEMS condition. COVID-19 continues to make it difficult for patients who have LEMS who have not received a definitive diagnosis from their physician because of their inability to schedule an in-person appointment or their personal concerns about in-person visits with their treating physician.

These issues have been an impact on the number of patients enrolled in Catalyst pathways. As a result new patient starts in Q2 and Q3 of this year were modest on a relative basis compared to the pre-COVID period.

I'm pleased to report that we're beginning to see significant improvement in new patient starts on Firdapse during September and October. I'm not ready to call this a trend at this point, but we are encouraged by the improvement.

Additionally, patient 90-day discontinuations continue to fall and recent defections to RESURG has been minimal if at all. We stand by our decision at the beginning of this year to expand our field salesforce, to add inside telemarketing support, and to expand our marketing efforts using non-personal promotions.

Having already made those investments, we are thrilled by yesterday's news regarding Pfizer and BioNTech's COVID-19 vaccine it demonstrated 90% efficacy in a Phase III trial. This is amazing news for all of us as most experts were predicting that 60% to 70% efficacy would be a home run for that trial.

Additional vaccine trial results are right around the corner from other companies. And ultimately as these vaccines begin to reach the market, we are hopeful that the effects of COVID-19 pandemic will begin to resolve. As we turn the page on 2020, I believe that you will see that we have well positioned the company for future growth. Jeff will provide you with more details on our commercial operations shortly.

As you recall on our last earnings call we announced that our U.S. patent for Firdapse or amifampridine had been allowed. Since then it has issued and has been published in the FDA's Orange book. The U.S. patent number 10-793-893 methods of address of administering 3 four amifampridine will expire on April 7, 2034.

We are pleased that our pending patent has been issued and believe that it will create significant barriers to therapeutically equivalent competition from entering the market for approximately nine years beyond orphan drug exclusivity. The patent is directed to the use of citical doses of amifampridine to treat patients that are slow metabolizers of amifampridine regardless of the therapeutic indication.

We will continue to attempt to add value to catalysts in all of our various stakeholders by further enhancing our intellectual property portfolio. With regard to our clinical and product development programs as we have previously announced, we were deeply disappointed with the top line results of our MuSK-MG trial which did not achieve statistical significance on the primary or secondary endpoints.

We continue to evaluate the data with our clinical experts and should have more to say around year-end regarding the future of this program. Steve will have more to add when he reports on our R&D activities and other clinical programs.

For the corporate development side, we continue to evaluate multiple strategic options for accelerating our growth and enhancing shareholder value, including acquiring a marketed product or a company with late-stage assets as well as other strategic combinations. While no agreements have been entered to date, we expect to have more to say on this topic over the next several quarters.

During Q3 we are pleased to have announced that Firdapse had been approved in Canada and that we had partnered exclusively with Kai Pharmaceuticals a privately held specialty pharmaceutical company focused on bringing medicines that fulfill clinically significant unmet needs to the Canadian market.

Most recently Firdapse was launched by Kai and I'm pleased to announce that adult LEMS patients in Canada now have access to Firdapse and several have already begun treatment. We are excited to partner with the experienced team at Kai in making Firdapse available to LEMS patients throughout Canada.

As we previously announced on our last earnings call, we met with pharmaceutical and medical device agency or PMDA the regulatory agency responsible for approving drugs in Japan to discuss the clinical and regulatory requirements for gaining an approval of Firdapse for LEMS patients.

We have now received the official minutes from that meeting which details our regulatory path forward for an approval in Japan. As a result we are now in the final stages of discussions with a potential partner in Japan and we anticipate finalizing such an agreement about year-end.

On the litigation front, we were very disappointed with Judge Flon's decision to accept the magistrate's report and recommendation in our lawsuit challenging the FDA's decision to approve RESURG for the treatment of pediatric patients with Lambert-Eaton Myasthenic Syndrome or LEMS.

Important to note, this decision in no way affects Catalyst pathways, patient services programs, market access for Firdapse or our ongoing marketing efforts for Firdapse to adult patients, which represent about 99% of the LEMS community. Judge Blooms' decision also does not change the fact that Jacobus Pharmaceuticals is not permitted to market Ruzurgi to adult LEMS patients in the United States.

Catalyst intends to continue to aggressively take all steps necessary to protect Firdapse's exclusivity under the Orphan Drug Act which is specifically intended to encourage and ensure the development of drugs for patients with rare diseases. We have appealed Judge Blooms' ruling to the 11th Circuit Court of appeals in Atlanta. We've also filed a motion seeking to have an appeal heard on an expedited basis which was granted last week.

Additionally, we have recently filed two separate lawsuits in federal courts for patent infringement on our recently issued patent against Jacobus Pharmaceuticals and PantherRx Ruzurgi's exclusive distributor. It is still in the very early stages in both of these cases and far too soon to be providing any estimate on the timetable for development in these cases. As to details of the lawsuit, I refer you to the public filings for those matters. We are confident in the strength of our patent and will pursue litigation wherever we detect someone commercially infringing our product.

Lastly, on litigation we have filed suit along with KAI Pharmaceuticals, our marketing licensee in Canada against Health Canada and Medunik, the exclusive distributor in Canada for Ruzurgi. Our complaint charges that Medunik’s submission for Ruzurgi was granted despite multiple uses of Firdapse’ protected data in that submission. This litigation is moving rapidly and we currently anticipate a decision in the first quarter of 2021.

At this point, I'd like to turn the call over to Jeff Del Carmen, our Chief Commercial Officer to provide you with other details on our commercial operations.

[Jeffrey Del Carmen, Chief Commercial Officer]

Thanks, Pat and good morning, everyone. As Pat mentioned, we are very pleased with the third quarter performance of $29.2 million net sales, resulting from our continued success engaging both healthcare providers and patients in this largely virtual setting. As anticipated, we continue to see signs of recovery during the third quarter in underlying demand trends.

New patient enrollments were significantly above Q2, while we saw the maintenance of strong medication compliance and persistence. We feel that the bottom for new patient enrollments was observed in the second quarter with a significant uptick in the third quarter as many adult patients diagnosed with LEMS were finally able to visit their healthcare provider.

As one might expect, we are seeing stronger trends in enrollment forms in regions where offices have higher reopening rates and consequently higher in-person patient visit volumes. The 90-day discontinuation rates have remained steady at around 15% and discontinuations to Ruzurgi continue to be minimal. I'm extremely pleased with our commercial team's ability to deliver this result despite the ongoing impact of the COVID-19 pandemic.

Based on early observations in the fourth quarter, we are cautiously optimistic that this strong performance will continue. Our October new patient enrollments were higher than any month since July of 2019. Among our existing base of patients, compliance and adherence remain very high and discontinuation rates remain low in October.

We remain confident in our assessment of the remaining potential adult LEMS addressable market. Besides the already diagnosed LEMS patients not yet on Firdapse, there are significant number of patients that are unfortunately misdiagnosed or undiagnosed. To help shorten the diagnostic journey for these patients, Catalyst has invested heavily in robust LEMS educational resources corrected towards both patients and healthcare professionals.

By doing so, we feel that we will accelerate the potential treatable LEMS population as these initiatives gain traction. Our Catalyst Pathways patient services team continues to do a tremendous job supporting the needs of adult LEMS patients, caregivers and healthcare professionals. Prescription approval rates remain over 90% across all payers, government or private commercial insurers. Our financial and co-pay support programs continue in full force. Patients enrolled in Catalyst Pathways, including those who are covered by Medicare and accessing foundation assistance have an average co-pay of less than $2 a month.

This further exemplifies our goal of making Firdapse affordable and accessible to all adult LEMS patients. While there are – while there is still some uncertainty related to COVID as we enter the winter season, we are confident the strategies and tactics we have put in place will successfully position the company for growth in the fourth quarter and beyond.

The combined effort of the expanded field team, non-personal promotion in inside sales, enables efficient coverage of close to 20,000 health care professionals that potentially treat adult LEMS patients. Furthermore, our field team is well equipped with the resources and training to effectively engage with physicians and patients both virtually or face-to-face, accommodating the preference of our customers and abiding by local guidelines.

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

[Steven Miller]

Thanks for the commercial update, Jeff. I'll now provide an update on our clinical pipeline to develop Firdapse for additional neuromuscular indications. Our analysis of the MuSK, Myasthenia Gravis trial data remains ongoing and we are discussing the results with our MuSK-MG key opinion leaders.

During the clinical trial, significant clinical improvement was seen during the dose titration period and persisted throughout the safety follow-up period of the trial as well for more than a year in many cases. However, the randomized portion of the clinical trial did not reach statistical significance. And paradoxically in some cases, patients that were randomized to continue on amifampridine illness withdrawal design trial shown a worsening of their condition and then clinically improved upon entering the safety follow-up period of the trial when placed on open-label amifampridine. This outcome is in contrast to the successful prior proof-of-concept trial outcome.

We are conducting an extensive expanded analysis of the trial data and thorough review of all of the clinical results from all periods down to the individual patient level to determine, if there are patterns and who responded, and who did not and also looking for unusual features in the data of those that had unexpected responses to treatment.

These patterns if found, would help us determine how well the drug really works and also determine what types of trial designs may be suitable for a new clinical trial, if one is warranted on the basis of this analysis. We anticipate providing an update on our findings by the end of this year.

All subjects in our proof-of-concept study conducted in Italy and Serbia for the treatment of SMA Type 3 have completed their last visits and we are analyzing the study data. We remain on schedule to report top line results for this proof-of-concept trial this quarter.

Spinal muscular atrophy is classified into Type 1 through 4 with Type 1 being the most severe. SMA is caused by the defects in the gene that codes for the SMN protein in motor neurons. All SMA types are caused by defects to the same gene while severity is related to the number of defected copies and type of defect in the SMN protein.

If amifampridine results in symptomatic improvement in SMA Type 3, it likely would have efficacy in other types as well. SMA Type 3 has an estimated prevalence of between 2,900 and 3,600 patients and the total prevalence of all types is about 10,000 patients. If this proof-of-concept study is successful, Catalyst intends to discuss the design of a multicenter Phase III clinical trial with input from the FDA.

I'll now move on to market expansion plans for Firdapse. Catalyst as Pat mentioned, has partnered with Kai pharmaceuticals for the Canadian market and Firdapse has been launched in that market. Catalyst is also continuing its market expansion activities in the territory of Japan.

As previously reported we have reached agreement with the Japanese PMDA on a regulatory pathway to seek approval of Firdapse in Japan. Catalyst will be conducting a small clinical trial in Japanese subjects. As Pat mentioned, we are continuing to seek sales and marketing partner for the Japanese market

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 have developed the first group of candidate long-acting formulas and have also completed a pharmacokinetic or PK study of those candidate formulations. The PK results from that study will inform on the design of future formulations with the ultimate goal of providing patients with an effective medication that they only need to take once in the morning and once in the evening.

We have also interviewed numerous physicians and LEMS patients to get input into the design of an optimal product that they feel would be superior to the current Firdapse product offering. Catalyst will also be supporting a proof-of-concept study for the additional neuromuscular condition of hereditary neuropathy with liability to pressure policies for HMPP. The basis for exploring Firdapse in this disease is related to potassium channel leakage along the length of the motor neurons. Firdapse is a potassium channel blocker that may mitigate the pathological potassium leakage.

For aminopyridine has demonstrated benefit in an animal model of HMPP, but it would not be suitable for treating this peripheral nervous condition for the same reasons it is unsuitable for treating LEMS, which is the elevated seizure risk at the necessary therapeutic doses needed to treat a peripheral nervous disease. Catalyst will provide more details about the trial as the plan is finalized.

Moving on to intellectual property. Pat described the recent issuance of a Firdapse patent methods of administering 3,4-Diaminopyridine expiring on April 7, 2034. This patent claims a method of treating a human patient diagnosed with a 3,4-Diaminopyridine sensitive disease by administering 3,4-Diaminopyridine or its salt to slow satelliting patients having certain mutations in each allele of the NAP 2G. We believe this patent will provide additional protection for the Firdapse product franchise. And as Pat previously mentioned, we have already begun defending our intellectual property rights.

This extended period of product protection will permit Catalyst to carry out research on new uses and product improvements for Firdapse for years to come. Catalyst is also working on new inventions for Firdapse that if successful will be described in future patents. This patent will also -- this patent was also listed in the FDA's Orange book with an expiration date of April 7, 2034. Upon being listed in the Orange book, no generic equivalent of Firdapse may be approved by the FDA unless the generic drug applicant can prove that they do not infringe the listed patent or until the applicant successfully challenges the validity of the listed patent.

Should Catalyst succeed in having other patents issued for Firdapse, those patents will also be listed in the FDA's Orange book, further strengthening the exclusivity of Firdapse as allowed under the Hatch-Waxman Act. Our current supply of Firdapse for patients with LEMS and for ongoing clinical trials has not been affected by COVID-19. Overall, we are excited about the opportunities to expand the current Firdapse label as well as in additional countries and to develop a better product for all these patients. We will provide updates on our clinical and regulatory progress 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, we filed our third quarter 2020 Form 10-Q and reported GAAP net income of $43.3 million or $0.42 per basic and $0.41 per diluted share, compared to GAAP net income of $13.6 million or $0.13 per basic and diluted share in the same period of 2019. For the third quarter of 2020, non-GAAP net income excluding $1.5 million of expenses related to non-cash stock based compensation was $44.8 million or $0.43 per basic and $0.42 per diluted share.

In comparison, third quarter 2019 non-GAAP net income excluding $817,000 of expenses related to non-cash stock-based compensation was $14.4 million or $0.14 per basic and $0.13 per diluted share. Net product revenue for Firdapse was $29.2 million for the third quarter of 2020 with related cost of sales of $3.9 million. In comparison for the third quarter of 2019, net product revenue from Firdapse was $30.9 million with related cost of sales in the quarter of $4.4 million.

It's important to remember that our gross margins in both the 2020 and 2019 periods continue to benefit from the inventory manufacturer or in process and expense prior to the FDA approval of Firdapse.

Research and development expenses were $3.8 million for the third quarter of 2020 as compared to $4.6 million for the third quarter of 2019. Research and development expenses for the third quarter of 2020, as compared to $4.6 million for the third quarter of 2019.

Research and development expenses for the third quarter of 2020 decreased when compared to those for the third quarter of 2019, primarily due to decreases in expenses for medical and regulatory affairs or quality assurance programs, expenses for our ongoing Firdapse clinical trials and studies as we closed out the MSK-002 trial and costs for our expanded access program.

We expect that research and development costs will continue to be substantial in 2020, as we continue our ongoing clinical trials and studies, including the SMA type 3 proof of concept, continue our expanded access programs and our long-acting formulation program for Firdapse, began to move forward with our required clinical study evaluating Firdapse for the treatment of LEMS in Japan and began to evaluate Firdapse as the treatment for other neuromuscular diseases.

SG&A expenses for the third quarter of 2020 totaled $10 million compared to $8.1 million in the third quarter of 2018. The increase, when compared to the same period in 2019, is primarily attributable to the expansion of our sales force in the first quarter of 2020, including related non-cash stock based compensation, the cost of additional supporting personnel and the cost of contracting with a rare disease experience in telesales agency.

We expect that SG&A expenses will continue to be substantial in 2020, as we continue to build our infrastructure and commercial and patient programs, in support of the expansion of our sales activities for Firdapse. We continue to pursue our losses against the FDA and Health Canada and continue to prosecute our cases alleging infringement of our patents.

On September 30, 2020, Catalyst had cash and investments of $127.1 million and no funded debt. More detailed information and analysis may be found in the company's quarterly report on Form 10-Q, which was filed with the Securities and Exchange Commission yesterday, November 9, and can be found on the Investor Relations page of our website at www.catalystpharma.com.

Now, I'll turn the call over to Pat.

[Patrick McEnany, Chairman & Chief Executive Officer]

Thanks, Ali. I just want to say once more, how pleased I am with the operational results that our team has realized to date during 2020. We look forward to continuing our effort to assist adult LEMS patients with their treating physicians and find ways for an FDA-approved therapy for this debilitating disease. We will continue our efforts to study Firdapse for other rare neuromuscular conditions that are without an effective therapy, as well as advancing our work in a more patient friendly long-acting formulation of Firdapse.

Our recent announcements regarding the issuance of patent and legal challenges show our commitment to protecting Firdapse and patients, as we continue to invest in Firdapse as a potential therapy for other rare neuromuscular conditions. Also we are excited to see our global footprint expand as we partner with KYE Pharmaceuticals in Canada and as we continue our efforts to finalize partnering in Japan. And lastly, we are very committed to bringing in other molecules and/or companies under the Catalyst umbrella.

And with that, we'll open the line for questions. Operator?

[Operator]

Thank you. [Operator Instructions] Our first question today is from Joe Catanzaro of Piper Sandler. Please proceed with your question.

[Joe Catanzaro, Piper Sandler]

Hey, guys. Thanks for taking my questions here. Maybe, first, Pat you had just mentioned the opportunities in Canada and Japan. Just wondering if you could help us think about the size of those opportunities, pricing of Firdapse in those territories? And then maybe just remind us the type and extent of exclusivity you're operating on in Canada and potentially in Japan? Thanks.

[Patrick McEnany, Chairman & Chief Executive Officer]

Sure. Joe, thanks for the questions. So in Canada, we believe that the Canadian population representing about 10% of the U.S. market, is we believe based on a few studies that we've conducted that there are probably 300 to 400 LEMS patients in Canada. So, obviously, it's a much smaller opportunity than we had here in the U.S. And as you probably are well aware pricing in Canada is somewhat less than it is here in the U.S. So currently Catalyst is negotiating with -- they will begin negotiations with government or public payers and as well with private payers in the near future. So we expect that the pricing will be less than in the U.S., but not ready to talk about where their pricing is going to be at this point.

Japan again represents about a 40% market size to U.S. We think there are about 1,200 LEMS patients in Japan. There's some epidemiology data that we think supports that opportunity. We also recognize that pricing in Japan is much different than in the U.S. They use a sort of a basket approach using other countries several EU countries, Canada and U.S. to get to the pricing. So pricing has not been established in Japan at this point. And it will likely be certainly less than U.S. pricing for Firdapse.

[Joe Catanzaro, Piper Sandler]

Okay. Got it. That’s helpful. Thanks. If I could just ask a follow-up maybe for Steve and his comments on the MuSK MG trial and that patients seem to benefit during the run-in and worsened during the randomized period and then improved once again in the open label. Just wondering if at this point you have any thoughts on why you saw that? Was it -- is it aspects of the trial design underlying baseline characteristics for some patients. Just wondering if you have any initial thoughts there?

[Steven Miller]

There's really not much more detail than I can provide than what I already described. Basically, we observed a significant clinical improvement in the patients during the open-label portions of the trial, which is consistent with the large clinical improvement that we saw in our first proof-of-concept trial. And the randomization phase of the most current trial is what is inconsistent with all of the prior data and the open-label portion of the most current trial.

As for the reason, we still aren't sure. The preponderance of evidence would lead us to believe that it could be trial design related, but it's not possible to say that for certain at this point in time.

[Joe Catanzaro, Piper Sandler]

Okay. Got it. Thanks so much for taking my questions.

[Steven Miller]

Thank you, Joe.

[Operator]

The next question is from Charles Duncan of Cantor Fitzgerald. Please proceed with your question.

[Charles Duncan, Cantor Fitzgerald]

Hi, Pat and team, congrats on a good quarter. Thanks for taking my question. I had a couple of questions for the commercial side then the pipeline and then even the CFO. So quickly in terms of the commercial side like to hear the commentary regarding the new patient adds. I guess, I'm wondering if you can provide any color maybe remind us as to what it looked like in July of 2019 in terms of numbers and if you would anticipate with the kind of infection rate to see that modulate? Or do you believe that and I know you said this Pat, that you can't call a trend yet, but do you think that there is sufficient demand to see new patient adds continue to tick up?

[Jeffrey Del Carmen, Chief Commercial Officer]

Yes. Thank you for that question. As I mentioned, we are very confident in the ability to enroll new patients moving forward. October was our strongest month since July of 2019 and which is a very, very good sign for us. We feel that there is a significant pent-up demand that was sitting there during coronavirus early on in the pandemic, where a lot of patients were not able to visit their health care providers. And when we take a look at some data that's out there about the impact that COVID-19 has had on the pharmaceutical market, neurologists are about 40% less likely to prescribe, a new product for patients via telehealth, versus inpatient visits. So the biggest part of the enrollments is the opportunity for patients to actually be able to go visit in-person their physicians, which is why we feel that once the country started opening up in the early part of the third quarter that that happened and then physicians were then able to start patients – or more likely to start patients on Firdapse. So and we – early on in November, we're seeing the same trend. So to your question, do you see that continuing? October was strong November is just as strong. So we're very confident in the short-term trend that we're seeing.

[Charles Duncan, Cantor Fitzgerald]

Okay. That's helpful. And consistent with our diligence in neurology, I hear you that, it's a challenge particularly for more interventional type diagnosis. So I wish you luck with that continued trend. Maybe move over to say Steve in the pipeline. Steve first of all, with regard to Japan appreciate the recent question that you're asked on that in terms of market size. But can you provide us any additional color on timing? I know that, you may do work with a partner by the end of the year, but what would be required to actually get Firdapse on the market in Japan?

[Steven Miller]

Well, as I said, we have reached agreement with PMDA. Specifically, they're requiring us to do a small study in Japanese patients, and also collect after the randomization period of that study about a year's worth of safety data. So we haven't been specific on timing, but obviously, it's going to involve the setup of that trial, the execution of the trial, the collection of the data, and then filing of a Japanese NDA. The overall time period is about three years probably.

[Charles Duncan, Cantor Fitzgerald]

Okay. That's helpful. And then perhaps, if I can ask a follow-up on the MuSK-MG analysis you're working on, any patient characteristics that you're looking at such as symptom severity, metabolism, concomitant meds or genotype? Or is this perhaps a trial design and conduct issue that you're investigating?

[Steven Miller]

Well, the answer to your question is all of the above except for genotype. As you know MuSK-MG is an autoimmune condition. So there's really no genes that are actually involved. But naturally, we're looking at age, gender, concomitant medications in particular to see what they were on. And we're also comparing that to our past proof-of-concept trial as well. And so that also adds a little bit of time to the overall analysis, because we have to pool all of that data together and take a look at it.

And we're looking at each individual patient looking to see how their MuSK-MG symptoms varied from point-to-point throughout the trial at each individual patient level looking at means of all the different groups and pulling different groups together to see, if we can see any kind of a pattern in terms of who responded and who didn't.

And more importantly why? Because that will help us answer whether or not we're dealing with something that's trial related or perhaps a response only in certain subgroups of patients or both. And it also will inform us on what kind of future trial design might be needed to ensure that we can get a positive signal, if in fact we decide to proceed with this and do a new trial in the future.

[Charles Duncan, Cantor Fitzgerald]

Yeah. Make sense. Genotype could also refer to metabolism as well. Moving on Pat last question, with regard to kind of bigger picture Pat, I guess, as you think about corporate development what do you think is the best strategy to – or a good strategy to best leverage the core infrastructure in terms of the traction you've gotten with establishing your commercial infrastructure sales? Or is it really looking to leverage the clinical development capabilities or even the back office in terms of focused on providing a drug for the orphan indication. What would you like to do?

[Patrick McEnany, Chairman & Chief Executive Officer]

Charles, we have been from day one really focused – and I'll say day one was January of this year. We've been focused on opportunities to leverage our sales force for other neuromuscular opportunities. As you can imagine there are very few of those that might be available. And so we've expanded our reach to look at other CNS or neurological type products, clearly late-stage Phase 3 or beyond. We have no interest in really early opportunities or going back to the bench. Those are too expensive and too risky.

And so -- and we've begun recently to look at other therapeutic areas that we thought that represented opportunities -- if we had to put together another sales team for example endocrinology, which we don't have, it's sort of a bolt-on for us to look at other therapeutic areas, rare disease that didn't require a 200 man sales force where we could basically replicate what we've done in neuromuscular to another therapeutic area. So in doing so that's given us an opportunity to expand the universe of companies or products that we're looking at.

[Charles Duncan, Cantor Fitzgerald]

Thanks, perfect. I appreciate all the color, and I’ll hop back in the queue. Thank you.

[Patrick McEnany, Chairman & Chief Executive Officer]

Thank you.

[Operator]

The next question is from Scott Henry of Roth Capital. Please proceed with your question.

[Scott Henry, Roth Capital]

Thank you and good morning.

[Patrick McEnany, Chairman & Chief Executive Officer]

Good morning, Scott.

[Scott Henry, Roth Capital]

A couple of accounting related questions. With the reversal of the tax allowance, I would assume you'll be a full taxpayer going forward. Forgetting about any changes in the tax rate what would you expect your tax rate to be approximately?

[Alicia Grande, Chief Financial Officer]

So I believe that's noted on the income tax note. You'll see that we've -- that we put three, four -- $31.3 million of deferred tax assets on the books.

[Scott Henry, Roth Capital]

I think what I'm asking is what would you expect the ongoing tax rate to be, 22%? Just trying to get a sense of what your tax rate will be going forward?

[Patrick McEnany, Chairman & Chief Executive Officer]

Yeah. Scott we're estimating now and it's early to say, but we think 22% to 25% is certainly appropriate range for us to be considering.

[Scott Henry, Roth Capital]

Okay. Thank you. And when we think about 2021, it seems like there was -- the clinic was pretty active in 2020. Do you think R&D might dip down a little sequentially in 2021 from 2020?

[Steven Miller]

That's going to depend on the outcome of our analysis for the MuSK MG. It would be a similar cost to do another trial if the decision is made to move forward again. So there might be a little low early in 2021. And, of course, HPP will be running as well. And there'll be some R&D costs there as well. I would expect it to be approximately equivalent to where we were in 2020.

[Scott Henry, Roth Capital]

Okay. Thank you. And then, on the selling side, I believe you've almost doubled the sales force. And revenues are kind of the same. Now it's not your fault. It's obviously a COVID-19 factor. But I guess the question is do you ever consider paring back expenses, until we get a greater opening or maybe freezing hiring? How should we think about selling in the next couple of quarters versus two years out or whenever when we think we'll be back to a normal?

[Patrick McEnany, Chairman & Chief Executive Officer]

Yeah. Good question, Scott. We've had a hiring freeze really for the last several quarters. So we've really not meaningfully added to FTEs [ph]. And that was by design by the way. But as far as paring back, no, we've positioned the company to really accelerate our growth on revenues, by basically doubling the sales force, bringing in the in-house telemarketing support team, in the non-personal promotion that we're doing.

We added about $5 million in selling expenses to this year's budget, versus last year's. And we did that at the beginning of the year. And we executed on that flawlessly and so we've really got a great team put together, despite the fact that you haven't seen an acceleration in revenues during this COVID period, it's not unusual.

And I think that frankly, holding our own basically has been pretty good, in this environment. And so, we want to be ready. We don't want to have terminated folks that we hired at the beginning of the year because of COVID. We in fact have done the opposite. We've gotten the team ready to go.

And I think we're already starting to see that, with the increased patient starts in September and October and November off to a really good start as well. So I don't think we're hitting full stride. We're far from it. And I think we'll probably be looking at Q1, God willing.

And this pandemic is more in the rearview mirror, than the front windshield. So, anyhow I hope I've answered your question. But we're pleased with what we did early in the year on the FTE side, for commercial. And we stand by that. And I think we're already seeing positive benefits from doing so.

[Scott Henry, Roth Capital]

Okay. Thank you. That’s helpful, Pat. Final question, just with regard to the LEMS market on Firdapse, are you seeing any change in pricing? Or is pricing relatively stable?

[Patrick McEnany, Chairman & Chief Executive Officer]

Pricing is relatively stable.

[Scott Henry, Roth Capital]

Okay. Great. Thank you and thanks for taking my questions.

[Patrick McEnany, Chairman & Chief Executive Officer]

Great. Thank you, Scott.

[Operator]

There are no additional questions at this time. I'd like to turn the call back to, Pat McEnany for closing remarks.

[Patrick McEnany, Chairman & Chief Executive Officer]

Thank you very much for joining us today. We look forward to future calls. Thank you. And have a great day.

[Operator]

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