Catalyst Pharmaceuticals, Inc. (CPRX) Earnings Call Transcript & Summary

My name is Bhavin Patel. And I'm one of the biopharma equity research analyst at BofA. I'm joined today by Rich Daly, CEO; and Steve Miller, Chief Operating Officer and Chief Scientific Officer of Catalyst Pharmaceuticals.

So I guess we'll start off today more high-level strategy questions. So first, can you speak to how actively the company is engaged in finding another BD deal? And how important is it to have an asset to mitigate any near-term FYCOMPA-related generic headwinds?

Well, Bhavin, thank you, and I want to thank BofA for the invitation to be here today. So we're really appreciative. So thank you very much for the support that the bank has given us. So on the strategy, we're looking at the opportunity to go and to stay in the orphan space, obviously, and spend our time looking at opportunities to broaden our opportunities in the space, beyond CNS. We like the opportunities that we see out there, and we are deeply engaged in multiple conversations with many, many banks -- sorry, I apologize many, many companies for the opportunity to build our portfolio. We are a buy-and-build company. We've done a really good job of buying assets and integrating them into the business and then executing on the assets that we have. We're really excited about FIRDAPSE. We've done a really good job there. The growth there is phenomenal. It's double digit, 15% to 20% year-on-year for 5 years. FYCOMPA was a great asset for us. It's a solid player. And then we look at the launch of AGAMREE, and we're really excited about that. So we continue to look in that space, and we see ourselves as an orphan company looking to expand beyond CNS as well.

And maybe can you walk us through the criteria in terms of deal sizing of the stage of the assets and the therapeutic areas that you're looking for? And then the second part of the question is in what time horizon do you think you're going to move beyond the buy-and-build stages of company and move into developing R&D capabilities?

Great questions. So we want to buy assets that are immediately accretive or nearly immediately accretive. We want to build on that income statement and build the balance sheet. So we look at things that are either on market. The NDA is filed or the NDA is about to be filed. So Phase III is pretty much over and done. So we're mitigating our clinical risk. We're willing to take on reasonable regulatory risk and then we really understand the commercial space. We're willing to take that risk on because we understand that we do -- we face that risk really well. Moving beyond those things and moving further back into the pipeline, Steve and his team did a great job of developing FIRDAPSE. We had a development organization at one time, and we did that really, really well to bring that product to market. And again, you look at the way that product was developing and delivering 15% to 20% growth for 5 years in a row. That's phenomenal. So we want to work our way back into the pipeline again at the appropriate time because we believe that there are inflection opportunities there that will help drive the value of the company. But right now, it's not our time. We still need to build that diversity and opportunity in our income statement and so that we have that stability across the entire income statement, so we can feel a lot more comfortable taking what we believe is measured risk from a development standpoint. We're not there yet. So time frame to be measured. I think another asset acquisition, another digest it, see where we stand and go from there.

Then last question on BD before we move on to the product portfolio. But in terms of deal sizing, I mean, we see the cash on the balance sheet and the cash flow generation. But are you willing to take on any debt to flex in terms of deal sizing. I guess Pat's philosophy was that he was averse to debt. But do you have a similar sort of view on that?

Yes. So when you're a start-up company, obviously, I think you want to be very, very conservative in your approach to how you run the business. And I give kudos to Pat, what a phenomenal job, what an absolutely phenomenal job. He and Steve did in shepherding the company through some very challenging times. And I think the leadership that he showed over the years and bringing the company to where it is. I mean, if you did a screen on companies that were CNS, orphan and profitable, I think you might find one, and that's us. And so Pat did a great job. Pat is obviously our Chairman of the Board now, and we've had a number of conversations. So we have about $300 million on the balance sheet right now, and we want to put that money to use. Would we go higher than that? Could we take on debt? The answer is yes. Absolutely. We would do that. For the right deal at the right time, we would absolutely do that. Yes.

Perfect. Let's get into the product portfolio. So AGAMREE is the newest product that you guys have added to your portfolio, and you had -- you launched the product on March 13. And can you speak to the prelaunch efforts and the number of unsolicited requests for patients to get on to AGAMREE? And how do you expect that to benefit early revenue generation?

Sure. So yes, no and yes. So I can speak to the early marketing efforts. We did an early enrollment starting December 1. And we've got a number of patients engaged with us. We did our early -- our earnings announcement on December -- sorry, on February 29, and we gave guidance for the product and launch it because we saw what was happening with the product and the interest in the product and where the patients were coming from. So Duchenne, there's not an opportunity to grow this market. This is a cannibalization opportunity. And so we saw where they were coming from. We saw a lot of parameters about the patients. We had a lot of confidence about what was happening in the marketplace. So we were really excited about that. We have not given guidance or not given any indication of the numbers of patients. So that's the no part of it. I apologize for that. What was the third part of your question?

Third part of the question -- and how do you expect that to benefit early revenue generation?

So great. So we had about $1.2 million in revenue in the first 2 weeks of the product over the last 2 weeks of the quarter with product launch, and so really excited about that. So we see these patients rolling through very quickly, and we're getting approval for these patients, and we're really excited about that because of the potential benefits we think this can bring for the patients and their families and the communities in which they live. We think there's a lot of opportunity here. But we also saw physicians being very conservative in letting their patients enroll in the program, this precommercial launch program because they didn't want the patients to be disappointed. So they said, wait until the product actually launches even though the product is approved and will let you enroll in this program. And what we said, and we're very clear about this, we expected first quarter sales to be very thin. That's one thing I said, probably 100 times is we expect it to be very thin, but then we expect it to step up in the second quarter. And so we really saw this once the product was launched, it was announced, we saw a significant step-up in enrollments. And so we expect this to carry over to the second quarter and beyond. So we're really excited about that.

And so longer term, do you -- can you describe where you expect patients to come from, whether that's prednisone or EMFLAZA? And how does the genericization of EMFLAZA impact your outlook on the launch for AGAMREE?

Great. So because of this pre-enrollment we did, we have great insight into where the patients are coming from. Again, cannibalization markets, so 47% of the patients who were pre-enrolled prior to the launch of the product were from EMFLAZA, 41% were from prednisone and 10% were naive or the remainder, I should say, were naive. So the opportunity there is really interesting because we expected it mostly to come from EMFLAZA, but there's a lot of interest in potentially -- the products that might be potentially better than what's on the market. So we're really excited about that opportunity. So as we go through this, we see that there's this opportunity to improve the standard of care. And so we want to take this and help the patients get better.

Maybe I'll turn to Steve next. In terms of AGAMREE's clinical profile, what aspects do you think differentiated the most in the treatment landscape?

Well, during the clinical trials, it was observed by the physicians and the patients and caregivers in that trial, anecdotally, they observe much better behavioral patterns from the children who are taking the drug. It's a little short to observe growth, but there was some comments about growth. And generally, they observed less side effects that were corticosteroid kinds of side effects. And it's a result of all those observations that the -- both the caregivers and the doctors are very optimistic about the future for AGAMREE and are willing to give it a try.

And is there any additional data that you might publish or present in terms of head-to-head versus prednisone on bone biomarkers and stature.

I think most of the data versus prednisone has already been published. We are actually starting a study called the SUMMIT study that will run for at least 5 years in which we will collect data from a number of patients who will be treated with AGAMREE. The purpose of that study is to collect additional safety data so that we can periodically update our label and the study will be conducted in accordance with the FDA's guidance on use of real-world data to amend and expand your product label.