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

Good morning everyone. We hope you have been enjoying the 43rd Annual JPM Conference. Today we have Richard Daly, President and CEO of Catalyst Pharma, joined by his team, to speak to you today. Over to you.

Thanks, [ Veduci ]. Good morning, everyone. I'm joined by my colleagues Steven Miller, Dr. Steven Miller, who's our Chief Scientific Officer and Chief Operating Officer; and Michael Kalb, who is our Chief Financial Officer. I want to thank JPMorgan for the opportunity to present this morning. Really appreciate that opportunity. So we're happy to be here and really excited to be talking to you today. Obviously, we have our safe harbor statements. You can see this on our web. So if you need a reference to it, it's there. Thanks so much. Catalyst is a commercial-stage pharmaceutical company. We in-license products. We develop the products, we commercialize the products, and we are focused on rare diseases. And we're in a -- we're a very exciting company. We really like the opportunity to serve in this space, and we really do put patients at the center of everything we do. We're really excited to serve for the patients. We're really excited to have incredible relationships with our patient communities, and we're going to focus on that today and really excited to go into all of that with you. So let's talk about The What, The How and The Why of what we do. We're a growth-oriented rare disease-focused company. Our commercial model is one where we acquire products and develop them. We're maximizing the value of differentiated commercial products or near commercial products to serve patients with rare diseases. How we do that? We really have 2 pillars for this: ongoing life cycle management and development for our products in our commercial portfolio, we drive organic growth for our products and then we look at strategic portfolio expansion for our products as well. We have a buy-and-build strategy, and we have great success in incorporating products into our portfolio and launching them successfully in various communities. And The Why. Why are we successful? We have great operational excellence. We continue to emphasize efficiency, innovation and execution. You can see that in everything we do. We've proven capabilities, Obviously, we have great touch with the patient communities, the patients themselves and the caregivers and the providers, and we have a successful track record of launching products and delivering great value across all of the communities we serve. And our financial discipline is outstanding. We are a profitable orphan drug company focused in CNS, although that is not the only area we want to be in an orphan, but that's where we're focused right now. So let's focus a little bit more on the pillars that drive our growth. So we talked about organic-driven growth and acquisition-focused growth. So market penetration and label expansion under organic-driven growth. We really want market penetration for our existing products and label expansion. We think these represent significant opportunities for us, and we're focused on these areas. We also have geographic expansion, we prioritize these in markets where we think we can make a difference, and we focus on health equity and market -- and patient access in markets where patients don't have access to critical therapies. For instance, Lambert-Eaton myasthenic syndrome in Japan. We're working with a partner, we licensed it to a partner, and we're working there. On the acquisition side of our growth, we focus on immediate or nearly immediately accretive orphan opportunities. We want to drive the diversity of our income line. We want to keep growing, so we can serve more patients across the board. And again, as I mentioned before, we're a strong financial and business position. Our balance sheet is strong, our income is strong and it drives our ability to continue to acquire products. At the core, at the heart of who we are, is this relationship with the patient community. We do this in a compliant way. We're doing it through permission marketing with the patients. We facilitate seamless care through comprehensive personalized treatment opportunities with patients, patient centric, to provide access to our patients, and we work with health care providers to ensure that they're properly educated. We're really in a micro orphan environment. Many of the physicians we deal with will only treat one patient in their entire career in the therapeutic areas in which we work. So working closely with physicians becomes incredibly important, developing those relationships, developing that trust. We do things like provide free care -- I'm sorry, free access to testing. So we see the example on the right-hand side of the slide for LEMS or Lambert-Eaton myasthenic syndrome, we provide free testing for VGCC testing. So we want to be sure that the patient can get the right diagnosis, can get the right therapy and optimize their dose to ensure that they have appropriate care. And they will work very, very closely with patient communities and patient groups to be sure that those communities understand the value of the therapies that we offer. So how is this relationship we have, this infrastructure we have and the things that we do turned into a result for the company and for the shareholders? Since we launched our products in 2019, we've experienced a 37% CAGR in the commercial. This is outstanding based on the 3 products that we have. FIRDAPSE is our flagship product. We launched it in 2019. This is the only evidence-based approved product in the U.S. for Lambert-Eaton myasthenic syndrome. And as I mentioned, we want to have this product in other markets where it can benefit patients. AGAMREE, we launched in 2024, and this is for Duchenne's muscular dystrophy. We believe that this is a novel corticosteroid treatment. And as you know anything about DMD, this is an exciting, exciting time to be involved in Duchenne's muscular dystrophy for the care of patients, and we believe that this is a differentiated product. We also operate in the epilepsy space as well with FYCOMPA, this is the only noncompetitive AMPA receptor antagonist for epilepsy. We'll talk more about these products in a moment. Let's focus on LEMS for a moment and FIRDAPSE. So LEMS is a debilitating nerve-muscle communication disorder causing progressive weakness and fatigue. This is a hyper-focused market. About 3,600 patients up to maybe 5,400 patients, but let's just focus on the 3,600 patients for a moment. It's a 50-50 split. These are 2 diverse or distinct markets. There's an idiopathic market, which cause not really understood, 50% of those patients of the LEMS patients are idiopathic, and 50% of the patients are associated with cancer, typically small cell lung cancer. The growth that we've experienced, and we'll talk about that in a moment, is really driven by a number of elements. First and foremost, we work closely with physicians, as I said earlier. We identify patients through data that we get for patients who are diagnosed and we work with those patients and the physicians as they go through their treatment journey. And we keep a portfolio of patients about 500 patients who are moving through their treatment journey and about half of the patients we enroll on FIRDAPSE every quarter, every year come from this 500 deep patient pipeline. This is one of the things that sustains our success. We use market data, relationships with physicians to do this in a compliant way. We think this is one of the most exciting things that drives our growth for FIRDAPSE. This treatment journey that the patient is on, this diagnostic journey, can last as long as 18 months. And this is a prospecting market. So it takes a great deal of patience, a great deal of commitment and a great deal of willingness to work very closely with the health care community. So FIRDAPSE, as I mentioned before, is the only evidence-based approved product for the treatment of LEMS. We've experienced 14 consecutive quarters year-over-year, a 15%-plus growth. And this goes back to how we work with the communities, how we identify the patients, how we keep this 500-patient pipeline fresh, and we expect to be able to continue to do this for the near future. And the key growth drivers for our business, previous to June of last year, our upper dose was 80 milligrams. In June, we got approval for 100-milligram maximum dose and we're seeing growth in every single cohort, whether they be idiopathic, whether they be cancer, whether they be lower dose, et cetera, we're seeing growth everywhere. One of the most interesting opportunities that we have is in myasthenia gravis. And I know that seems a little different, but myasthenia gravis is the most frequent misdiagnosis for LEMS. And as you track the biotech industry, you know myasthenia grafts is a very exciting area. Lots happening in myasthenia gravis. That means we'll be seeing a lot more patients trying therapies from myasthenia gravis, likely failing. That will create spillover for FIRDAPSE. So we're very interested. And again, we can track those patients through data. Some of these patients will try it. We'll see their data, again, in a compliant way or they'll be tested and they'll get what's called a sero-negative test and we'll be able to track those patients. So again, this is an opportunity to get patients on appropriate therapy because they actually don't have myasthenia gravis. So we can work in tandem with companies coming out with gMG therapies. And then there's a cancer-associated LEMS therapy. We are pivoting toward working with community-based oncology physicians, 70% of all cancer is treated in the community and therefore, we'll be able to target more robustly those patients who are coming from small cell lung cancer and working with those physicians who see those patients on a more regular basis. We believe we have great growth opportunities here as well. So just how big is this opportunity is the question. Obviously, those of us familiar with pharmaceuticals and biotech think in terms of addressable markets. We don't think in terms of the whole market, how big is the addressable market. When we think about the opportunity, we really think about how many patients can we actually serve. We think about addressable market in terms of today's dynamics, patients today, the lower end of the market, the 3,600 patients at today's price, not tomorrow's price, this market for LEMS is greater than $1 billion. And if you follow the company, you know our guidance for last year, which we updated in November of last year for FIRDAPSE was between $300 million and $310 million. We are roughly at about a 30% penetration of this market, growing at 15% quarter-over-quarter, year-on-year. We think there's tremendous upside in this market. We are very, very excited about this opportunity. We believe that we have an opportunity with VGCC testing because it's as close as you can get to a definitive test. It's applicable in both sides of the market, whether it's idiopathic or cancer associated. Prescription approval rates are above 90%. Managed care is not a problem for us here. Patient retention rates are very, very high in both sides of the market, and we work very closely with the prescribers. Great opportunity to grow the market. Again, this is the organic growth that I talked about initially. Let's move on to Duchenne's. As I said before, this is an incredibly exciting time to be involved in Duchenne's therapy. Duchenne's, there's a lot going on. I'd draw your attention to the very last line at the bottom. Steroids will continue to be the standard of care for the treatment of Duchenne's muscular dystrophy. Think about it this way. Steroids are the drug that drugs get added to, not the drug that gets added. It is the first drug that patients get when they get diagnosed with Duchenne's. So let's take a look at the market. In the U.S., there are about 11,000 to 13,000 boys and young men with Duchenne's. It's a 95% diagnosis rate. These boys and young men are treated in 100 centers in the U.S. by 250 physicians and those 250 physicians write 95% of the steroid prescriptions. This is a highly concentrated market. We know where the physicians are. We know where the patients are and we know what they're taking, and steroids are foundation therapy. It's a great market to be in lots happening. Regardless of whether a patient takes gene therapy or some other therapy, they're going to be on a steroid. It matters. 90% of patients have been on a steroid at some point in time. 70% are on a steroid today. Why the gap? Well, there's an unmet medical need. If you had a better steroid perhaps patients would stay on steroids longer. We believe that AGAMREE has the potential to be a better steroid. So let's talk about that. So 84% of the DMD centers of excellence have written a prescription for AGAMREE since we launched in March of last year. Conversions account for 90% of our utilization. This is a market with a brand in it and prednisone, a generic. The brand also recently went generic. We are sourcing 90% of our patients, 45% from the generic and 45% from the brand and 10% de novo. Prior to launching the product, we believe that we would be sourcing almost all of our patients from the brand. Instead of participating in about 35% of the market, which is what the brand represented, the opposing brand, we are now sourcing our patients about 100% of the market. This is a tremendous upside for this brand. The growth drivers are, as you can see here, current standard of care is associated with behavioral and safety issues. We believe that AGAMREE has potential to improve behavior or reduce aggression associated with long-term steroid use and a number of other factors as well, which I'll talk about in a second. We intend to look at this through the SUMMIT study, which we'll talk about in a moment. So what's the market potential here? Again, addressable market, looking at the 70% of patients who take steroids. We believe, again, this market, market potential and again, nobody ever believed when I talk about market potential, that get 100% of the market. There are 4 players in the market, Prednisone, EMFLAZA and Generic EMFLAZA and AGAMREE. All else being equal, we get our fair share of 25%. If we're better, we get an unfair share. If we can prove we are better, we get an unfair share. We believe we have clicked. We know we're clinically proven to improve muscle strength. We're equivalent to prednisone on an efficacy basis. Now it's up to us to work with the clinicians to show that we can do better, and that's what we're working on. But again, this is the market potential I want to be really clear, not necessarily the potential for AGAMREE, but just to be clear. So what are we doing? We have the SUMMIT study, so we seek to demonstrate the potential clinical superiority of AGAMREE. This is 250 DMD patients on commercial drug in 25 centers of excellence, it's a real world versus historic control. And we're looking at behavioral improvement, reduced aggression; stature, patients on long-term steroids generally tend to not grow as quickly as their peers; bone health, improved bone health and density; ophthalmologic status, patients on prednisone generally develop -- not generally, but can develop cataracts; and cardiovascular health, #1 reason for cause of death of patients with DMD, cardiovascular issues. So SUMMIT is looking to do this. So we'll be able to look at this. It's an open-label study. We'll be able to look at this over the course of 5 years and see if we can prove this out. The order you see this in from behavioral to stature to bone health to ophthalmologic to cardiovascular is the order in which we believe we will see the benefits. And because it's open label, we will be able to go into it, and Steve can help us dive in if you have questions about that. Let's talk about our last product, FYCOMPA. So FYCOMPA is for epilepsy. As we talked about, the only noncompetitive AMPA receptor antagonist for epilepsy. Patient preference is very strong for epilepsy products. This product -- the solid dose form will go generic in May, we expect to lose share, as we've said consistently. However, epilepsy is a little bit stickier than typical retail products. Epilepsy patients like to stay on branded drugs. Obviously, if there's an event, if you're on a statin or a diabetes product, if you go out of range, it's not visible. If you're an epilepsy patient, you have an event, it is visible. So obviously, they're a little bit stickier. But because managed care is managed care, payers are payers, we expect to lose share. We're going to implement some events or some strategies to help elevate our share a little bit, but we do expect to lose share here. It is a strong profile. Seizure freedom is up 72% when used adjunctively. So it's a very good product, but products do in fact go generic. So that was our product profile for growth and for organic opportunities, but we also have an acquisition strategy. We want to build our profile, build our diversity of income, and we've been very, very good at this, looking at FIRDAPSE, looking at AGAMREE, looking at FYCOMPA. We're focused on rare and orphan diseases across therapeutic areas, differentiated therapies that address medical -- unmet medical need and immediately or nearly immediately accretive opportunities. Why would we be successful? Well, we have proven capabilities here. We've got an established track record of identifying and integrating orphan products. We have an exceptional commercial capabilities, best-in-class patient support programs and deep experience in serving these rare communities, which really counts. You have to have the trust of the orphan and rare communities to succeed. So what does the world look like? So I want to orient you to this next slide first, but really just take a look at the title. So as we said -- as I said earlier, we gave guidance in the fall that we would reach we'd be reaching about $475 million to $485 million in total sales. If you look at the title, we are now saying we're going to exceed or slightly exceed our guidance from the fall. So we're really excited about our continued performance here as a company. Our cash position is $500-plus million and no debt. We believe we are in a great position to continue to take on new products. And we really like the opportunity to continue to succeed to do so. So as we look at this, from accelerating momentum and strategic disciplined execution, 2024 was a great year, a phenomenal year for the company. Look at third quarter growth, outstanding third quarter growth. Obviously, we haven't finalized the fourth quarter growth yet. We have the successful launch of AGAMREE. We initiated the SUMMIT study, which we talked about. We expanded our presence for AGAMREE by licensing AGAMREE to Kye Pharmaceuticals in Canada. We got approval, as I talked about for the 100-milligram for FIRDAPSE, which is expanding in every cohort as we talked about. And the Ministry of Health, Labor and Welfare in Japan approved our NDA or the DyDo's NDA for FIRDAPSE, and they expect to launch sometime in the first quarter. The 2025 priorities continue to protect FIRDAPSE intellectual property, as some of you may have seen, Teva settled with us, and we have extended our agreement with Teva to 2035 for the patent for FIRDAPSE, which we are incredibly excited about that outcome. We have to continue -- and we're going to continue to pursue new assets, we're going to sustain our organic growth with FIRDAPSE. And we continue to drive the success of the AGAMREE launch. We think this is a real driver of value for us and for patients. And obviously increase the health equity and access that we talked about through FIRDAPSE launch in Japan and then the AGAMREE application submission for Health Canada and Kye in Canada. So with that, that's the end of our presentation, and we look forward to taking questions. Thank you.

We've had a couple of questions come through on the mic, so we can kick off with those. I guess in -- regarding the recent news of the Teva settlement, what is your view of FIRDAPSE's potential?

So we believe that FIRDAPSE has a great potential. We're the only player in the space. We have 2 additional defendants to work with. Steve, do you want to talk a little bit about the defendants in the situation?

Yes. We have 2 remaining defendants, Lupin Pharmaceuticals and Hetero Pharmaceuticals. Lupin has already paragraph 3 on entire family of patents and remains under litigation for one final patent listed in the Orange Book, and Hetero is still being sued for infringement of all 6. Historically, usually, when you have multiple first filers and a settlement occurs with one of them, typically the other settlements are clustered around the first settlement.

So we believe that we'll continue to pursue our rights, our patent rights. But we think that the Teva settlement is a very solid sign for where we're headed. And we like the additional 10 years. We think that this is a great side. And as we said, we think that with the strategies that we have looking forward for the product and the benefit that this product -- that patients accrue from this product, we think we can make significant inroads, especially on the cancer side of the business. We're very excited about it.

Okay. And then can you provide some further perspective on the AGAMREE launch? And are you pleased with the launch so far?

Further perspective? I just lost you for a second.

Can you provide further perspective on the AGAMREE launch? And are you pleased with the launch so far?

Yes, we're very pleased with the launch. So when we look at the opportunity, as I said, this is a really exciting time to be engaged in DMD, very, very exciting time. There's so much going on, right? And we get the question consistently. One of the reasons why I pointed at the very bottom of the slide is because people ask us, are you going to get displaced? Are steroids going to get displaced? The answer is steroids are foundation. It's the first drug they get used. It's the drug that's going to be getting used. If you can prove that you are a better steroid, you have a better behavioral benefit. This is just going to be an outstanding product for patients, and we're really excited about it. The feedback we get on behavior, this is a benefit you can see within weeks. We're just really excited. Stature is going to take more time. Bone health is going to take even more time. Cataracts a little bit more, but we're very pleased with the outcome so far and especially sourcing the patients from the entire market, not just one brand, that's a very, very good sign, and that's been consistent since -- before the launch, when we did early enrollments all the way through the end of the year. That number changes by 1% or 2% on either side, whether it's the brand, the other brand or prednisone but it's 45%, 45%, 10%. It's just consistent, which is a wonderful result.

And then you mentioned that you have a solid cash balance and no debt. How big can you go? And are there any specific types of assets you're pursuing?

Mike loves to handle this question.

So given our strategy of accretive or near accretive, we believe that we can ultimately do a deal that's north of $1 billion.

And are there any types of assets that you're looking to pursue in particular?

So we're agnostic. We believe that the infrastructure we have behind this, helping the patients get on to the right therapy, stay on the therapy and get on the optimum dose is what's essential in orphan. And we have this incredible infrastructure that most people can't see. And when you start an orphan company, having worked in orphan since the '90s, people are shocked. Like what does it take to actually run an orphan company and run it successfully. They're just shocked that this is something that you have to do for patients. And we made -- I served on the Board for Catalyst for 9 years before becoming CEO and I remember, we were in the boardroom talking about this, what are we going to do for patients. And we talked about this opportunity, and Steve was there. When a patient goes on drug, you need to make the promise to that patient that regardless of what happens, they will have the opportunity to stay on drug. If they lose insurance, it doesn't matter. You have to provide them the opportunity or a pathway to, whether it's through charity organizations or it's free drug or a bridge drug, so when a patient gets a prescription from us or from a doctor, I should say, we immediately get them on bridge drug until they can get insurance. And if that takes a long time, we keep them on. Right now, for AGAMREE, it's 14 days. But if it takes 3 months, they get bridge drug. But if they lose insurance, they get free drug because it's too important. You cannot cut the patient off. So this is the thing that we love this, this backbone of what we do for patients is just foundational to who we are.

Are there any questions from the floor?

Yes, I'm very interested in the product you talk about DMD because person that work on that for a long time as well. So the question just to think, I'm hearing that outworth on initial launch, it seems very positive. What is your perspective in terms of the supply?