Catalyst Pharmaceuticals Inc

NASDAQ:CPRX

Earnings Call Transcript 2017-Q4

[Operator]

Greetings and welcome to the Catalyst Pharmaceuticals Inc. Fourth Quarter 2017 Financial Results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ali Grande, Chief Financial Officer for Catalyst Pharmaceutical’s Incorporated. Thank you. Ms. Grande, you may begin.

[Alicia Grande, VP, CFO and Treasurer]

Good morning, everyone, and thanks for joining our conference call. On today’s call, we have Pat McEnany, Chairman and Chief Executive Officer; Dr. Steve Miller, Chief Operating Officer and Chief Scientific Officer; and Dr. Gary Ingenito, Catalyst’s Chief Medical Officer and Head of Regulatory Affairs.

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 the 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 and 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 in our Annual Report on Form 10-K.

At this time, it is my pleasure to turn the call over to Pat McEnany, our Chief Executive Officer.

[Patrick McEnany, Co-Founder, Chairman, President and CEO]

Thank you, Ali. And good afternoon, everybody. Thanks for joining us today and welcome to our fourth quarter and year end 2017 results call. We look forward to updating you on our recent milestones and development activity. Steve Miller will provide a status report on our pipeline and development activities for Firdapse and Ali will review our financial results for the fourth quarter and full year. We will then take your questions at the end of the call.

This was a very productive quarter and overall year for us as we advanced our clinical and regulatory activities for Firdapse, and as we prepare to resubmit our NDA to the FDA later this month.

In November, we announced positive topline results from our second Phase 3 trial of Firdapse in patients with Lambert-Eaton Myasthenic Syndrome, known as LEMS. The study achieves statistical significance for the co-primary endpoints, as well as the secondary endpoint.

In December we submitted our briefing package to the FDA in advance of a proposed Type C meeting which included these top line results, as well as the data from our abuse liability studies.

In January we held our meeting with the FDA in which we were advised that based on our briefing documents our proposed NDA should be sufficient for resubmission. After receiving this feedback from the FDA we remain on track to resubmit our NDA in the next few weeks.

In addition to these development activities for Firdapse in patients with LEMS, we have progressed our platform and other neuromuscular indications as well. We are currently conducting a Phase 3 study for Firdapse for the treatment of congenital myasthenic syndromes, otherwise known as CMS. We expect to complete enrollment of this trial in the second half of this year and report topline results from this trial in the first quarter of 2019. And we look forward to working collaboratively with the FDA to bring Firdapse forward in this indication, assuming positive data.

This past quarter, we have also advanced our studies for Firdapse indicated for patience with the MuSK antibody positive subtype of myasthenia gravis, otherwise known as MuSK-MG.

As previously announced, we have been granted a special protocol assessment for SPA agreement with the FDA for our Phase 3 MuSK-MG trial and we expect to begin enrollment for this trial within the next few weeks. We believe this trial will take roughly 12 months to complete and we expect to announce topline results in the first half of 2019.

We are looking forward to commencing enrollment as there is currently no approved treatment for the myasthenia gravis subtype which affects about 5% to 8% of the total myasthenia gravis population.

We recently announced that we’d initiated a Phase 2 proof-of-concept study to evaluate Firdapse in ambulatory patients with spinal muscular atrophy or SMA Type 3. We expect to enroll approximately 12 patients in this study and we anticipate the announcement of topline results in the study in the second half of 2019.

As we have previously stated, we have restarted many of our pre-commercialization activities in advance of a potential launch of Firdapse. We are updating our commercial plan based on current market research, regarding reimbursement, market access, medical affairs and communications, distribution logistics and field sales force sizing.

Additionally, we are working to develop a very comprehensive patient services program, as we are committed to providing all patients affordable access to Firdapse. In addition to our activities on Firdapse, we continue our efforts to advance CPP-115 for refractory infantile spasms and to advance our development program for a generic version of Sabril. We are also continuing our effort to reach partnering deals for both CPP-115 and generics Sabril. We will provide updates on these programs as they become available.

Finally, we were pleased to have completed a successful public offering in November with a great group of both new and existing life science investors, raising almost $54 million in net proceeds. As a result of this offering, we ended last year with cash and investments of approximately $84 million and no debt.

I will now turn the call over to Dr. Steven Miller, our Chief Operating Officer and Chief Scientific Officer, who will provide more details about the status of our development pipeline.

[Steve Miller, COO and CSO]

Thank you, Pat. And good afternoon, everyone. As Pat mentioned, we have made significant progress as it relates to Firdapse for the treatment of LEMS. We announced in November positive topline results from our second Phase 3 trial in LEMS. The co-primary endpoints were Quantitative Myasthenia Gravis or QMG and the subject global impression or SGI, that prospectively defines secondary endpoint was the physicians clinical global impression of improvement or CGI-I.

Both of the primary endpoints, as well as the secondary endpoint achieves statistical significance in the trial. Catalyst plans to present the results of this trial at a scientific conference in the future and also plans to publish the results of a peer reviewed journal. We remain on track to submit the NDA in the first quarter of this year.

As Pat mentioned we provided to the FDA a comprehensive subscription of all information that will be submitted in our NDA, including data from our second Phase 3 trial in LEMS, as well as data from our abuse liability studies.

The data from these abuse liability studies indicated that Firdapse does not have abuse potential. After submitting this data to the FDA and having a type C meeting with the FDA to discuss it, we are confident that our submission package will be sufficient for the FDA to accept the NDA for review and we expect to resubmit our NDA to the FDA before the end of this quarter.

We continue to expect to complete enrollment before the end of 2018 in our Phase 3 clinical trial titled CMS-001 using Firdapse to treat patients suffering from congenital myasthenic syndromes also known as CMS and to report the topline results from this trial in the first quarter of 2018. The FDA reviewed our protocol for this trial and we have incorporated their comments into the protocol.

As we have previously reported, we are considering - we were considering including in our initial filing for LEMS those limited types of CMS that are generally considered mechanistically similar to us. However, after discussions with the FDA and after a thorough internal evaluation, we have concluded that it is best not to overcomplicate the review of our NDA submission for LEMS with the addition of a second indication and we plan to add the CMS indication to our labeling for Firdapse at a later date.

This will also enable Catalyst to seek an initial CMS indication for a broader population of CMS patients by using the results from our ongoing CMS trial, assuming it is successful.

We also plan to enroll the first patient in the MuSK-MG Phase 3 trial in the near future. This will be a double blinded outpatient study which will include about 20 trial sites in the U.S. and Italy. We expect that the trial will take approximately 12 months to complete and therefore we expect to announce topline results in the first half of 2019.

We hope to submit the results of this trial if they are positive in a supplement to an approved NDA for Firdapse in support of the new indication for symptomatic treatment of MuSK-MG.

We support - we supported an investigator sponsor trials that previously demonstrated that Firdapse may be an efficacious symptomatic treatment for MuSK-MG and we were granted a special protocol assessment agreement from the FDA in August of last year for the conduct of this new multi-center trial. The development of Firdapse for the treatment of MuSK myasthenia gravis is a high priority for us, as there are approximately 3000 to 4800 patients suffering from this disease in the U.S. and an effective FDA treatment - FDA approved treatment for this sub-type of myasthenia gravis is desperately needed.

We recently announced the initiation of a Phase 2 study in ambulatory patients suffering from spinal muscular atrophy or SMA Type 3. This study is a company sponsored, investigator led adequate and well controlled proof-of-concept clinical trial evaluating safety, tolerability and efficacy of Firdapse in these SMA Type 3 patients.

We expect to receive topline results from this study in the second half of 2019 and following such [ph] results if they are positive we plan to submit an application to the FDA for orphan drug designation for SMA and also schedule a meeting with the FDA to discuss the further development of the SMA indication.

We believe that Firdapse can be effective in enhancing neuromuscular junction transmission which could slow the motor neuron degradation and also provide symptomatic relief for these patients.

Our expanded access program continues to grow and provide access to amifampridine phosphate tablets free of charge for patients to qualify for treatment and for which the patients treating physicians feel this could improve their disease condition. The program is currently accepting patient’s diagnosed with LEMS and CMS.

I will now turn the call over to Ali, to review our financial results.

[Alicia Grande, VP, CFO and Treasurer]

Thanks, Steve. All references to per share in this call refer to basic and diluted shares. Today we report our GAAP net loss of $18.4 million or $0.21 per share for the 12 months ended December 31, 2017, as compared to a GAAP net loss of $18.1 million or $0.22 per share for the same period in 2016.

Excluding non-cash loss of 187,000 attributable to the change in fair value of liability-classified warrants, non-GAAP net loss was $18.2 million or $0.21 per share for the year 2017. In comparison 2016 non-GAAP net loss was $19 million or $0.23 per share, which excludes a non-cash gain of 886,000 attributable to a change in fair value of liability-classified warrants.

For the fourth quarter of 2017, we reported GAAP net loss by $24 million or $0.06 per share compared to a GAAP net loss of $4.2 million or $0.05 per share for the same period in 2006.

For the fourth quarter 2017, non-GAAP net loss was the same as GAAP net loss as they were no non-GAAP adjustment. In comparison non-GAAP net loss for the fourth quarter of 2016 was $4.3 million or $0.05 per share, which excludes non-cash gain of 107,000 for the changing fair value of liability classified warrants.

Research and development expenses were $3.4 million and $11.4 million for the fourth quarter and full year in 2017 respectively, as compared to $2.8 million and $11.4 million for the fourth quarter and full year of 2016.

We expect that our R&D spend will continue to be substantial in 2018 if we continue our clinical programs for Firdapse in CMS, MuSK myasthenia gravis and SMA Type 3, continue our expanded access program and manufactured Firdapse launch supplies.

General and administrative expenses for the fourth quarter and fully year 2017 totaled $2.1 million and $7.3 million respectively, compared to $1.5 million seven and $7.9 million in the fourth quarter and full year of 2016. We expect G&A expenses excluding pre-commercialization expenses to increase in 2018 as we build up the infrastructure to prepare for the Firdapse commercialization.

We also expect pre-commercialization expenses which are reported as part of G&A to significantly increase in 2018 as we prepare for a potential launch of Firdapse in 2019.

As a development stage biopharmaceutical company, Catalyst had no revenue in the fourth quarters or full years of 2017 or 2018. As Pat mentioned earlier, we closed the public offering in November raising approximately $54 million in net proceeds. At December 31, 2017 Catalyst had cash investments of 84 million and no debt. Although there can be no assurance, we believe that these resources will be sufficient to support our planned operations of patients through 2019, we are considering revenues and cash receipts that we might receive in 2018 if we are successful in obtaining an approval for Firdapse and launching the product in 2019.

More detailed financial information and analysis may be found in the company’s annual report and Form 10-K which was filed with the Securities and Exchange Commission earlier today and can be found on the Investor Relations page of our website at www.catalystpharma.com.

I will now turn the call back to Pat.

[Patrick McEnany, Co-Founder, Chairman, President and CEO]

Thanks, Ali. With positive data from our confirmatory LMS-003 Phase 3 trial and a productive type C meeting with FDA we continue to advance toward bringing Firdapse to patients who are currently in need. We are pleased with the results from our meeting with the FDA and we look forward to resubmitting our NDA for Firdapse within the next few weeks.

This will be a significant milestone not just for Catalyst, but also for the patients suffering from LEMS who do not currently have an FDA approved treatment option. In addition, we are progressing with several other potential indications for which we believe that Firdapse could be a very promising treatment.

We will continue to provide updates on our programs and trials as they become available and we look forward to the milestones that hardly come. This will be the end of our formal portion of the meeting and we'll turn it over for questions.

[Operator]

Thank you. [Operator Instructions] Our first question comes from the line of Charles Duncan with Piper Jaffray. Please proceed with your question.

[Charles Duncan, Piper Jaffray]

Hi, guys. Thanks for taking my questions. Congrats on the progress in the last quarter. So I did want to ask you about the NDA [ph] for Firdapse and LEMS. Wondering what are the final kind of you know steps to giving that submitted. And then also are you working within NDA, call it preparation consultant firm, are you handling all of this in-house?

[Patrick McEnany, Co-Founder, Chairman, President and CEO]

I’ll let Steve answer that Charles. Thanks for the question.

[Steve Miller, COO and CSO]

Okay, Charles. We are actually using a consulting firm to help us with the NDA. As you know, NDAs typically are quite large. In fact, we expect this one to be somewhere between 75,000 and 100,000 pages. Certain key critical parts of the NDA have been written by us. Many other parts have been written by other consultants and we work very closely and review documents and share information.

[Charles Duncan, Piper Jaffray]

Okay. And then just moving on quickly to CMS timing, not at all concerned that you're not going to include that in the initial NDA filing. But I am wondering about that timeline. It seems a little bit longer than I had recalled for CMS you know, enrollment and then data. And so what does that get you, does it get you more patients or does it get you a broader set of patients in terms of their baseline characteristics? Could you give us a little thought on - little color on CMS?

[Steve Miller, COO and CSO]

Yes. CMS trial has been - if you'll recall from previous presentations, it's a crossover design which requires four office visits for the patient over a period of a month and in addition to that many of the patients are naïve to amifampridine and so they have a run-in period, which also involves a number of office visits.

As a result of that, it has been more complex to enroll that study. And so part of it is that enrolment hasn't gone quite as fast as we had hoped. In addition to that, we also are ensuring that we have a very good mix of patients including both adults and pediatric patients and trying to get a good representative mix of CMS genetic defects as well.

[Charles Duncan, Piper Jaffray]

Okay. And then just moving on to some of your pre-commercial activities. You've mentioned that you're dusting [ph] off the old models. I guess I'm wondering if you have any further thoughts, burden of disease and the key drivers for pharmaco economic value that you've identified from LEMS [ph] patients. I know you probably don't want to talk about pricing or anything, but what are the things that you're looking at to consider that in the future?

[Steve Miller, COO and CSO]

Charles, we are working with contractors on that now. We're not prepared to talk about what we think the value drivers would be. We're still doing some of our market research if you will. And I would suspect by the next conference call we'll have a lot more to talk about with regard to that.

We understand the value of the pharmaco economics studies and quality of life issues, things like that. And it's just a little premature at this point.

[Charles Duncan, Piper Jaffray]

Okay. Last question on SMA Type 3, really intrigued with that. I think that's the ambulatory subgroup that you're working with. First, I'm wondering - I think you said data in the second half of ‘19 and then I'm wondering if there's a way for you to expand that approach to look at other subtypes an earlier stage - earlier younger patients?

[Steve Miller, COO and CSO]

Well, the current trial is designed specifically for the Type 3 patients. The use of the endpoints that we have implemented for this trial make it much easier for the ambulatory patients to conduct the - assessments in this trial.

So as a result of that there's really not much of an opportunity for Type 2 which are more severe, less ambulatory patients or the most severe which is the Type 1 patients to participate in the trial. So for right now the inclusion criteria is limited to Type 3 patients.

[Charles Duncan, Piper Jaffray]

Is it the case that you might expand going forward if you get some data that's core [ph] above that?

[Steve Miller, COO and CSO]

Well, if we get very favorable data from this trial, that's part of what we want to discuss with the agency after the proof-of-concept trial is done is how we might not only conduct a trial that will be acceptable for them for SMA Type 3, but also whether or not we could and it's appropriate to expand it to other SMA types as well.

[Charles Duncan, Piper Jaffray]

Okay. Thanks for taking all my question. It’s very useful.

[Steve Miller, COO and CSO]

Thank you, Charles.

[Operator]

There appears to be no further questions at this time. I'd like to turn the floor back over to Mr. McEnany for closing comments.

[Patrick McEnany, Co-Founder, Chairman, President and CEO]

Thank you. I’d like to thank everybody today for your participation on the call. I'd also like to thank our stakeholders for their support in helping Catalyst deliver on its promise to advance the treatment for patients suffering from rare unmet medical needs. I'm very pleased with all that we accomplished in 2017. I look forward to an even more transforming 2018. Thank you.

[Operator]

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