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

Ladies and gentlemen, the program is about to begin. At this time, it is my pleasure to turn the program over to your host, Jason Gerberry.

Good day, everybody, and thanks for joining us at the BofA virtual CNS conference. My name is Jason Gerberry I'm one of the biotech analysts here, and I'm joined by Pavan Patel, who's one of my colleagues who helps with Catalyst Pharma. Catalyst Pharma is our next company presenter and -- Rich Daly, CEO. So Rich, thanks so much for joining us and giving us the latest update on Catalyst.

Jason, thanks for having us. I really appreciate it and looking forward to the conversation. So thank you.

So maybe just starting with kind of the overarching BD in licensing, that's obviously kind of core to what you do in building out the business. And you had sort of a stopgap product with FYCOMPA, but your 2 main assets for kind of the longer-term are AGAMREE and FIRDAPSE. And so how important is it for you to get a resolution with FIRDAPSE IP before you deploy capital in a more significant way? Maybe just talk about the importance of doing a deal in 2026 as a priority. Maybe we can start there and then delve into additional questions.

Sure. So we feel like with the acquisition or the arrangement with the AGAMREE and Santhera. Santhera is the originator of the product. We feel like we've had ample time to incorporate the product and digest the product and move the product forward. We're always on the look for opportunities. As you mentioned, we're a buy-and-build company. And so we're looking for those products that are immediately accretive or nearly immediately accretive. They're in the rare space, differentiated unmet clinical need and a ceiling of about $500 million in sales. So what we're trying to do in that scenario is eliminate the clinical risk, minimize the regulatory risk. We did take some regulatory risk with AGAMREE and then absorb the commercial risk because we think that's a hallmark and the strength of the company. So we want to get a deal done. We want the right deal, however. And I think you saw in our press release for Q3 earnings, we -- since the beginning of the year, we assessed more than 100 opportunities. And one of the things that's fundamentally changing in the marketplace is the capital markets. So typically, an opportunity for us would be a company that has enough money to launch, but not sustain. And so with our infrastructure already built, we can come in and really take over, or an ex-U.S. company, Asia, Europe, that is looking for an opportunity to plant the flag in the U.S. that doesn't want to take the commercial risk. But with the capital markets opening up, again, we may be in a situation where we have to broaden the scope of what we're looking at and perhaps go back just a little bit into the pipeline into the Phase III, which is proof of concept is assessed and is positive and looking forward. And we've been talking about this for 2 years. So that's the nature of what we're doing. We've been looking at those opportunities and assessing them as well as the immediately accretive or nearly immediately accretive opportunities.

You mentioned -- and maybe I haven't heard this part before, but a ceiling of $500 million, that would be a peak revenue is sort of like what you're screening for?

Yes. So when we think about what can move the needle for us and what can move the needle for competitors who might be larger. You stay around the $500 million, and that doesn't really necessarily move the needle for some of these companies. So it's a different set of companies that show up at the auction. So when we're there, and we have about $689 million in cash and no funded debt, we're a powerful bidder. We don't want to get into a war of attrition with a much larger player. And as good as our bank is and our balance sheet is and our ability to take on debt, we're not going to compete where we can't win. And some of those larger opportunities just aren't for us right now. That will change over time.

Yes. Well I know there's been like analogies to your business model to Horizon Therapeutics who had a model like this. And there was probably a time when people thought TEPEZZA would be a $500 million peak drug, right? There is an opportunity for FIRDAPSE to eclipse $500 million in peak revenue, right? So is it that maybe $500 million is sort of a conservative base case when you look at assets, but they have the upside potential to exceed that revenue threshold just.

Yes. Great question and great commentary. Yes, so we look at it and we want to -- we think about how we might be able to accelerate that opportunity. So when you look at the opportunities to grow products, really, you're looking at your company, rather, in the life cycle management, take the products that are in line, commercial, how do you get patients on earlier keep them on longer or optimize their dose. Then there's expansion -- and we do that for both AGAMREE and FIRDAPSE. And then there's expansion within the claim. So you look at FIRDAPSE as an example, that expansion for LEMS applies both idiopathic and cancer-associated LEMS. And we have a real focus on maintaining our idiopathic business, but also growing. And then obviously, there's label expansion, too. And we're going to look at that for AGAMREE as well. We think there's opportunity. This is a steroid that works. There are data that's just come out of Europe from Santhera, the GUARDIAN data that look really, really promising and support our work on the SUMMIT trial, which we can talk about. But as the steroid works and it has a favorable profile for long-term steroid use versus standard of care, we're going to look for other rare disease opportunities to apply that molecule. And so that's one of the key initiatives we've got in growing the company. So you put the whole thing together, the last one for the company is business development and looking to actually accelerate growth of the company through incremental products.

When do you think you'll have a handle on that aspect of other rare opportunities for AGAMREE? I imagine with patent and the data exclusivity and factors like that, you can't wait forever to identify those and more visibly kind of outline those?

Right. So the orphan status for AGAMREE will come to an end in 2029. But because of patent restoration, we believe we go out to 2034, so we have time. However, that doesn't mean we're going slow. So we're right now doing a Phase I study and the Phase I study is looking at 2 elements: The first element is what's the dose equivalence between prednisone and EMFLAZA and AGAMREE. So we can give better guidance to practitioners should they ask. And the other one is, what's the immunosuppressive dose? And when you think about the immunosuppressive dose, we look at that from a gene therapy standpoint because steroids are used onboard with gene therapy and you need to immunosuppress those patients prior to giving them gene therapy. But we can't actually lose. So if we find the immunosuppressant dose, there's an opportunity to apply it to gene therapy and then ratchet it down to those doses that are effective and don't cause immunosuppression for those other non-DMD opportunities. If we can't find the immunosuppressive dose, it's an ideal product for long-term use in rare conditions. And so we're really excited. We'll be seeing those data after the first of the year. And once we see the data, we'll be making the decision about where we go. So I would say first half of the year, we'll have a decision.

Okay. And then going back to my initial question, what I didn't hear was that FIRDAPSE IP resolution was like a swing factor at all on the BD prioritization and timing of making a decision?

Coming to a positive resolution on the FIRDAPSE IP is obviously a high priority for us. We're interested in doing it. We -- there were three 1st filers. We've settled with 2 of the 3. There was fourth filer, not a first filer. We settled with that company as well. And there's one descendant left. And when you look at the situation with Teva settling [indiscernible]. Teva is obviously a sophisticated player in this space and -- in the generic space. And so with this settling, gives us further confidence even though our confidence was very, very high in our IP. To your question about whether we're waiting for that, the answer is no. We're looking for that opportunity. We have great cash flow right now. We want to continue to build the company, and we want to look at those opportunities that can really deliver for patients and for the company.

I haven't checked recently, but do you have a trial date teed up for that one outstanding?

We do. So the -- it's Hetero and that the trial date is scheduled for March and the 30-month exclusive -- or the 30 months pause actually ends in May. So we believe that gets the judge enough time if we get to trial. But again, we're going to do the right thing for the company and for the patients and for their shareholders.

In terms of deal type size structure? Is the priority still sort of an exclusive license, maybe something that's manageable on the upfront size of dollars out such that you cannot have to take on leverage? Or is the aperture just, hey, we're going to go with the best opportunity in front of us and if that requires us to take on leverage, we'll do it.

So there's an opportunity to take on leverage. We would want to be sure that it's a slam dunk. So when you look at -- we have almost $700 million. So what could we do on the upfront plus the cash generation we have right now on a quarterly basis. So we would want to really be sure that if we were to take on leverage that this is more than likely an on-market product with a long horizon. You mentioned the FYCOMPA opportunity which was a great opportunity for us because it really diversified our income statement, gave us additional cash and enable us to do the Santhera or AGAMREE deal. If we're going to do something where we think on leverage, it has to be really spot on in -- pretty much a PTS of 100% on the commercial side. So on market with long legs.

And then I think you guys had made some comments about looking a little bit more broadly in orphan space beyond CNS. I guess I would have looked at your business model and said, when you're looking at all these different rare orphan indications, like these deals are probably not predicated on SG&A synergies because sales forces are pretty small. So I guess like the only relevance to me of that statement is just like hey, maybe we have competencies in-house for looking at stuff in the CNS space. But now we feel like perhaps we have greater competency in house to look, I don't know, in another therapeutic area specifically that rare orphan.

Sure. So from a competency standpoint, so as an example, FIRDAPSE and AGAMREE are the fourth and fifth products I've worked on in the rare space in my career. So we feel like we have great competency across the board, not just with me, obviously, but with everybody. And you look at the diverse backgrounds from a therapeutic area standpoint, we've got great skills in-house, and we can do that. I think when it comes to what's going on and how you support the business and how you support the patient, it gets back to that first statement I made about life cycle management for a product, get the patient on earlier, keep the patient on longer and optimize their dose. That infrastructure sits behind the sales organization. Obviously, the specialty pharmacy, the patient hub and the third-party logistic provider or the shipper of the drug. So when we look at that, we believe we're really set up. And that part of the business is applicable to any orphan or rare condition. So we believe that with the expertise we have in-house, plus the expertise in supporting the patient and the provider and the payer, we think we can move well beyond CNS.

In your BD team, team, can you remind me how many people you have looking at transactions? And do you have the, I guess, the scope internally to look at assets coming out of China? Or is the China biotech engine really less focused on some of these nichier orphan drug applications that kind of fall within your sweet spot because it does seem to me like there's a lot of focus on meet better sort of treatments in big, large established categories? So I just wonder how that maybe fits within your scope of transactions that are interesting to you.

So I've worked at a number of companies that are structured a lot like Catalyst is structured. So very focused, not a huge organization. One of the things we do is we take our internal organization of 5 or 6 people who are totally committed to the business development end of it and we leverage external providers who can bring more to the table because as you know, it's episodic, even though we've evaluated 100 or more than 100 since the beginning of the year, the peaks and troughs are there as well. So we want to bring those folks in when we get really far along and get expertise, supplement the expertise that we have. China is not out of our daily wick. We like the opportunity. Any company that's not based here in the U.S. and looking to plant a flag, as I said earlier, we're interested in talking to those folks. So Asia, Europe, et cetera. So we're continuing to, and we do have the bandwidth to do it.

Okay. Well, maybe we'll shift gears to AGAMREE, which has been an important new launch for you guys. And maybe just the latest in terms of how you're sourcing patients between EMFLAZA and prednisone? Has it changed or evolved? Has it exceeded expectation? Where the patient sources are coming from?

Sure. When we initially launched -- or prior to the product, initially launched the product, we expected that we would source mostly from EMFLAZA. What we're finding out is there's an incredible dissatisfaction with the standard of care out there. So we continue to source -- I'm just going to give you the rough numbers and it [ facilitates ] to a percentage point or 2, depending on the month you're in, but 45% from EMFLAZA, 45% from prednisone and about 10% are naive. So that continues from the launch up till now, which we think is an incredible sign that the product has great potential going forward. And there is a generic EMFLAZA on the market, and we're not affected by that. We have approvals in the 90 -- almost 90% range. So the opportunity is really to look for those new patients or keep patients on if you have a superior product profile where patients will benefit. So the sourcing continues to be exactly what it was at launch, which speaks well to the product.

In just rough terms, this market, right, because it is capped by size factors. But I think EMFLAZA achieved peak penetration of around 1/3 of the market, if I recall.

It's hard to tell because nobody reports data here because of our proprietary pharmacies. That's what we believe it was about 1/3 of the market, yes.

Okay. So call it 250-ish sales at getting 1/3 of the market. So said a different way, it could be a $750 million market for steroids assuming gene therapy, adoption didn't somehow diminish the utilization of steroids. Is that a way to think about the ceiling of this marketplace.

I think it's -- there's a couple of ways to think about it. Number one, 95% of patients have been on a steroid and only 70% are on today, and that speaks to the dissatisfaction with the therapy, even for patients who are not ambulatory, the ability to more successfully operate their chair because of improved dexterity or maintained dexterity or the ability to operate a mouse or keyboard is in their window. Both of these are the window on the world. So we think there's an opportunity with a better steroid to actually grow the market albeit it's capped at 11,000 to 13,000 some estimates as high as 15,000 in the U.S. patients. So when you take the conservative estimates at our price, which is roughly equivalent to the price of branded EMFLAZA, we believe that the addressable market is actually above $1 billion. So if we can prove and you look back at the GUARDIAN trial, which I referenced earlier and the SUMMIT -- SUMMIT trial, which we're doing in the U.S., we can prove that those benefits do exist. We think we can get more than our -- than an unfair share of the market.

How important really is SUMMIT to getting to some of these more bullish market outlooks in your mind versus ex SUMMIT, like, I don't know, like do you feel like you still would be on a trajectory to having EMFLAZA like kind of peak sales profile?

It's a great question. And when we look at the GUARDIAN trial, it validates our faith in the SUMMIT trial. So here you have 110 patients over 5 years looking at -- versus standard of care. And you see less vertebral fractures in AGAMREE patients. You see stature, normal stature. So long-term steroids and adolescents can inhibit and you see fewer cataracts. So if you have an older patient population, clearly, they're not going to face growth issues, but you have cataract issues, bone health, et cetera. So I think SUMMIT's pretty important, and the guardian results give us a lot of faith that this is the right path to take. So to answer your question, yes, it's pretty important.

So those updates that we get from Summit are going to be periodic, right, over time and you do more follow-up and so the first update will be some time. Can you remind me is that next year?

We don't -- we haven't said yes. So we're still enrolling. We're looking for 250 patients across about 30 or 35 sites. And we really -- we need to have those patients on for a significant enough period of time to see the benefit of the bone or see the benefit of the cataracts. So we believe there might be other benefits as well, such as behavior. That will see pretty quickly if it's there. So we're looking for that -- so we'll give updates as we continue to successfully enroll patients. And I want to focus that these are, in fact, patients, not subjects. These are patients who are on commercial drug. So they get a significant number of enhanced testing, and they got a significant benefit from participating. So we think it's a pretty important trial and focus a lot of effort there.

Okay. And then how has the payer coverage sort of evolved? Do you feel like going into 2026 that this single generic step edit was going to be the more broadly applied kind of coverage policy type?

I'm sorry, could you repeat the question, Jason? I'm sorry, I had a hard time hearing you.

All right. Just thinking about sort of the payer coverage, right, going into 2026, do you think that, that's going to be primarily this single generic step that's been, I guess, in my mind, the predominant type of policy is step through one generic only, not two?

Yes. So right now, the majority of patients are on a generic -- they're on generic prednisone. And those that are on EMFLAZA are not going to go back. It doesn't make sense for an insurance company to say go back to generic EMFLAZA, if it didn't work. So we think they'll -- there are 2 elements to this. Number one is that we're getting -- almost as I said, 85%, almost 90% of the prescriptions approved. And when we first launched, it was probably about 30 days from the time we submitted the prescription, so it was approved. So we give those patients bridge drug, right, to make sure that they get on therapy as fast as possible. Now it's down to less than 2 weeks. So I would see that continuing to evolve as more payers get more comfortable with the profile of the product and the use of the product.

Okay. And then is there any -- you can speak to more real time in terms of interplay with gene therapy rollout, how that's impacting steroid utilization, if at all?

Yes. So I would say that the market itself -- so remember that steroids are a foundational therapy. It's the drug you get on first before you get on anything else. Patients that are on steroid therapy walk 2, 2.5, sometimes 3 years longer than patients who don't go on do steroids. So we're not competing with gene therapy, but the choppiness of this water because of all the things that have happened, the performance of the product in the face of that choppiness, I think, is outstanding. So we're looking forward to settle out. We would love for -- as everybody would for there to be no more challenges with gene therapy and then sort of get on a steady state. And so we've had, what we call, a queuing effect. So patients that are on a steroid are less likely to change if they're waiting for gene therapy. So it gets -- almost creates a line, if you will. The challenge with this scenario in the marketplace is that we saw the label expand for gene therapy, then we saw it contract. And so there's just a lot of confusion. And as that settles down, it gives us a stronger share of voice in the market because we can actually talk about the benefits of therapy with AGAMREE. So we're hoping it stays steady state.

How are you guys thinking about preannouncing around the time of JPMorgan started the new year for your business, do you feel like you have enough kind of visibility into these components of the business that this would make sense for you guys to sort of preannounce revenue for your business lines?

So we may do it at a high level. I think what we want to do is we want to take a look at the markets and be sure that we have a really good understanding. Obviously, at this point in the year, your forecasting is complete, but you just want to be as appropriately cautious as possible. So last year, we announced that our earnings call for the end of the year earnings call and that's our plan for right now. So we would want to make sure that we have a really good understanding of how the markets are trending when we do, in fact, give guidance.

Okay. Anything else that we haven't hit on with respect to this topic. I don't know if you've actually even sort of shared any of the orphan indication opportunities that are potentially of interest to you or potentially any sort of directional sizing indicators for what those expansionary opportunities could be as AGAMREE follow-on indications, if you can't be that specific at the moment on like maybe what you're looking at?

Yes. Just at a high level, we would look for those rare conditions that require long-term steroid use and have the largest patient populations where a change in steroids is meaningful to the patient or to the provider, hopefully, to both. But we're not in a position right now. We'd really like to see those data from the Phase I to have a better understanding in that way, I think we can go forward with immunity.

I mean, with the pricing paradigm that you have with this, I imagine that does the utilization need to be in sensitive populations like pediatric or I'd imagine like there are very large market opportunities where steroids are used, right? But trying to narrow it down. Is some of this population sensitivity, you probably want to stay in rare orphan, right? You want a sensitive population that you're going in the pricing structure. So I'm just kind of curious if I'm thinking about that the right way?

You are. You are. So rare orphan is where we want to focus and where the patient can gain the best benefit. So as we discussed earlier in this call, older patients won't have the benefit. They don't have the benefit for stature. So if there's an opportunity to provide a pediatric patient with that opportunity to grow like their peers, that's a great opportunity for us. Older patients are going to be worried about bone strength. You just reduced the vertebral fractures for long-term steroid patient. That's critically important cataracts, that's critically important, too. So the ancillary costs that you would experience or maybe avoid if the drug actually does have the profile, we believe it has, I think could create tremendous value in these rare and orphan markets.

Okay. Makes sense. Maybe shifting gears to FIRDAPSE and I actually have just a couple of mechanical questions. As we think about just the different scenarios around IP litigation, I just want to make sure I got this right. So you have a sort of tail terminal patent that covers certain aspects of the composition, whether they do or do not have sort of this impurity that you've identified in your patent. And I believe what I understand historically, it's very difficult, did not have that impurity in the product, right? And that is something that's patented. So is that sort of the anchor patent as you kind of look at this? And what underpins the confidence kind of going into whenever a patent litigation could...

So we're not going to get to too many specifics. So we have 2 patent families here. And for somebody to actually win, they would have to win on every single patent. So any patent they violate or if the defendant is found to be in violation of it, that's a win for us. So our patent estate is robust. And so we believe our patents are robust, and we're going to defend them to the very end. Obviously, we want to do what's right for the business and get back to the business of the business, but not at the price of sacrificing future value. So -- and we believe that the Teva and the Lupin agreements are very fine agreements for all parties. And so we like that structure.

Understood. And you have a BioMarin royalty. That rolls this year if I understand correctly?

So as we talked about in our Q3 -- quarter -- third quarter 10-Q, the BioMarin royalty on FIRDAPSE ends in January of '26, And based on the midpoint guidance, the vast majority of which is U.S., our royalty obligation is about $30 million to $35 million. And all this is in our Q, I believe, footnote 13. And so that reduction in royalty goes straight to pretax income and will contribute to operating leverage. So that's a big win for the company.

Okay. Pavan has got some questions.

Yes. I guess just in terms of like the uptake in FIRDAPSE lens patients, I think you've previously estimated that there are upwards of 900 tumor lens patients, and only 3%, 4% of those are ever diagnosed. So this is the growth segment of the LEMS patient population. Maybe if you can update us on the traction that you're seeing in those thoracic oncology centers and whether the diagnostic code implementation has improved materially to aid in the identification of those patients.

Sure. So when we think about the cancer associated LEMS part of it, remember, there are 2 parts of the business, and it's split about 50-50 patients. There's the idiopathic or non-cancer LEMS and the cancer LEMS. And so the traction we're experiencing right now really goes back to -- goes back actually a couple of years when we were making the change on the NCCN guidelines and recommending change. But the success we've had in this year of streamlining the VGCC test. So there's a test that's very indicative of whether or not a patient would actually have LEMS. So we got that testing centralized and now there's blood pickup in the office where the patient is -- previously the patient ought to go out, come in. So the traction we're getting is building on these first steps. Then we got the NCCN guidelines in July, which is a huge win for patients and a huge win for the company. And now we're working with these large high-control oncology practices to embed the change in NCCN guideline into the care pathway. This is a really critical step. So looking again, high volumes, high control. And then from there, working with these accounts to then help train the physician that when they see a small cell lung cancer patient, they should, in fact, do a VGCC test first. They may partner with the neurologist for a definitive diagnosis or they may feel comfortable doing it themselves. The recommendation is to work with a neurologist. The NCCN guideline recommendation is to work with the neurologist. So the traction we're getting is the receptivity right now from the oncology practices that are saying, "yes, this looks very interesting." We don't anticipate significant impact for the cancer LEMS in the first half of next year because there are many of these practices. It takes a significant amount of effort to get in there and actually help them understand the change in NCCN guidelines and then what they have to do for the change in their care pathways. We have dedicated resources in this field that are looking at this and working with these accounts. And I think the traction right now is quite positive.

And can you remind us like what's the pool of patients that you've identified for treatment with FIRDAPSE And how is the composition of that pool evolved over time in terms of the split of idiopathic versus oncology LEMS patients.

So the pool we keep is about 500, and we use data and machine learning to look for those patients who have gone through a certain series of events in their diagnostic journey. And then we hyper-prioritize to those who were furthest along. And so we're seeing about 50% of our patients in any quarter come from that pool, whether they're idiopathic or they're cancer. Your question is really difficult to answer because on the split, it's typically about -- at any point in time, it's typically about 80-20 with 80% being idiopathic. That's why we think there's such a nice upside here. The reason why it's difficult to answer when they come in is because LEMS is sometimes the first indication that a patient has small cell lung cancer. So they come in with idiopathic lens, but over time, they end up with the diagnosis of small cell lung cancer. So it's not as clean as we would really like. But we are seeing, as an example, the work that we've done in increasing VGCC testing of 9% per quarter quarter-on-quarter, which is really phenomenal. We think that's really exciting. And we're not really that embedded into the care pathways yet. So we think there's a lot of upside here.

Yes. And then I guess like another layer of this is the diagnosis of LEMS with myasthenia gravis. And I think you've noted that about half of your patients have come from this pipeline of pool of patient opportunity. So maybe if you can talk about how the rate of converting these misdiagnosed MG patients to LEMS diagnosis has accelerated over the last 12 months? And how much work is there left to be done here?

So this side of the business, the idiopathic side of the FIRDAPSE business is what we would call a prospecting business. You have to find these patients. They're hard to find. The average physician sees one in their entire career. So it's challenging. So we're following a similar path that we talked about on the oncology side. So obviously, we have this pool of patients we track and through machine learning, we hyper-prioritize. And then there are RAMs, our regional account managers, going and prioritize again. Looking at the opportunity for growth, we think myasthenia gravis and all the great therapies that are out there for myasthenia gravis are excellent. And actually, this is a great investment that we actually don't have to make because there's a lot of DTC out there. And many of these patients will end up with what is called a seronegative myasthenia gravis test. And so we're doing the same thing with the national labs that we did on the cancer side, which is trying to get them to embed reflex testing. So if a patient comes up with seronegative for myasthenia gravis, so there's no -- there are no antibodies there. Reflex test them for VGCC, and we're getting a lot of traction there as well. So we believe that this will become potentially, if successful, less of a prospecting market and more concentrated in those high myasthenia gravis accounts. So that's what we're looking for. And then obviously, to grow the awareness through education -- targeted education with those accounts. And that's our plan on both sides of the business. We think both have great growth potential and so we're going to work both ends of the market.

Yes. I guess hitting on FYCOMPA really quickly. That's sort of an asset that's undergoing generic competition. So maybe if you can talk about the slope of that erosion. I know it's been a little less than initially expected. So is the brand stickiness holding up in 4Q as well? And how you expect that through 2026 onward?

Sure. So it's a little early to tell about the fourth quarter. And let's just go back over and talk about the timeline here. So on the solid dose, there's 2 formulations of FYCOMPA. One is solid dose and the other is suspension -- oral suspension. What we've seen with the solid dose is there were 2 first filers in this market, and they could have come in, in late May. Only one came in and came in, in late June. So we got a nice maintenance of our business there. And the erosion, because only one is there, and the player, again, it goes back to Teva is the most sophisticated player in this market. Teva came in with a really good price, market minus. So they looked at the market and said we're coming in with a 17% discount. There were other products that went generic products that went generic in the epilepsy space around the same time that we did, but they had multiple players coming in. We did not experience that. So there's a lift from that. There is the stickiness that you always see with epilepsy patients. They want to have a drug that they can be sure is going to protect them from seizure. But we are also -- we know that last week, 2 additional generics, solid dose, were approved. They are not yet on the market as far as we can tell. So they're not taking away from our ex-factory sales. And here we are on the 8th of December. So we see if we can finish the year strong, and we took up guidance on this product. However, the oral suspension, we expect a single first filer to come in or to be approved in the middle of December. And prior to the incursion of generics back in June, oral suspension was 15% of our business. So we're seeing a shift, and we expect to see a shift. So product has done really, really well so far. But we all know, successive brands is inversely proportional to the number of generic players and now we're going to be experiencing more generic players. What we're looking for is to be able to cover that loss of sales with growth on our other products. And that's what we're really pointing toward.

And then in terms of like a higher level question with capital allocation. So the Board recently authorized a $200 million share repurchase program. So should investors be thinking about this as a signal that maybe M&A valuations are too high? Or is this just a signal that the balance sheet is really strong and then you have flexibility to do both buybacks and business development deals as you see fit at a given time? And how should we think about how you're thinking about the balance of capital towards buyback versus BD in a given year?

Yes. So excellent question. So we don't like our share price. And my joke is if you ever met a CEO did, you got the wrong CEO. So -- and we think we have the opportunity to add -- contribute value back to shareholders without hurting our opportunities in business development. So on a non-GAAP -- on a GAAP basis, we did 52 and change in the third quarter. And so we believe we can continue to do that. And this share repurchase is over 15 months. So we have a loaded -- we are loaded. We are ready to go on business development. This share repurchase will not affect our ability. Again, we have no funded debt. So if there was an opportunity -- as Jason and I were talking about earlier, if there's an opportunity to leverage on a great deal we would take that opportunity. So we think this is a good way to return some value to shareholders while executing our business.

And then if I can go back to AGAMREE with the label expansion opportunities like, I think this is something that's come up a bunch of times because it has an upside lever to a product right now in terms of The Street's forecast? And just trying to narrow down like what you think are the most appealing or attractive opportunities. Like can you help us think through the framework that you're using for that -- those rare conditions.

So when we think about the opportunity, we want those rare conditions. So it's got to be rare. We want it to be a long term and where there's a high need for steroid? If's it's episodic, it's less interesting to us, if it's continuous. And we have that profile that you see in the GUARDIAN trial where bone strength is there or growth or stature, avoids of cataracts, et cetera, better behavior, we like those opportunities. So again, just focusing on the opportunity to create the greatest value for patients as quickly as possible. And we'll have a better handle on that after the new year to be able to pick the right target.

And then in terms of like the IP outcome that could come post a potential bench trial that's scheduled in March 2026 for FIRDAPSE, like how should we be thinking about the bull-bear scenario here, like assuming a worst-case scenario -- or FIRDAPSE goes LOE earlier than we expected, like how would -- how should investors be thinking about such a scenario and the risk profile of the company in such a scenario?

We really believe in our IP, and we're going to do everything we can to defend it. We think, again, settling with 3 out of the 4 defendants so far, I think it demonstrates a solid position for us. One of the most interesting things about the FIRDAPSE market is we have already faced competition that was significantly price reduced in Ruzurgi. And Ruzurgi out there at half the price of FIRDAPSE. And the interesting thing is when we talked -- we just talked about the value of what's behind the front of the house. So the value is getting the patient on to the drug, keeping them on and optimizing the dose for their benefit, those systems, those -- that infrastructure is so valuable to a company like ours, it can make a huge difference. And Ruzurgi coming out at half the price, we actually didn't feel any significant dent to our business. So we think that we have a pretty good system that can defend us going forward. But again, we have strong belief in our IP and we look forward to resolving that in the most appropriate way possible for the benefit of the company and patients.

Rich, I have a couple of follow-ups. So first, just on, like your rare orphan portfolio, how should we think about pricing power going forward? I know that these are expensive medications. And is there a certain cap 2% to 3%, given, I don't know, with plans, these can be needle moving? Or are they so small? Maybe there's a little more latitude with pricing power. And I know that there's some Medicaid exposure here, right, so there's price penalties. So just maybe help us think through the framework there?

So we look at the opportunity if there is an opportunity to increase price to cover our increased cost or anything like that, we look at that and we measure against what the penalties, Jason, you talked about. And we're not going to do anything egregious that you can look at a company that's trying to drive the top line, but ends up with less on the bottom line. And that's actually quite possible in these markets where you can actually take a price increase that's quite high and end up making less money. We don't like that. So we don't like that, so we don't do that. So we're always going to look for that balance of what we think is the right thing to do based on the services that we provide, the value that the drug provides and the market conditions, whether it's PPI urban or whatever is going on. So we're always going to judge that in a multifactorial way, but the pricing power of old is just not there anymore 10, 15 years ago.

Yes. And then with cancer LEMS, do you -- my understanding in past discussions with you guys, this is not like a buy-and-bill opportunity with these community oncs such that like this could be a money-making endeavor for community oncologists, which could spur faster utilization. I know that some people have asked me about that, but I feel like in the past, you guys have said you don't expect this to be a buy-and-bill product with these oncologists.

So it could be actually. So oncologists -- medical oncologists cover the cost of their practice through the reimbursement around medication, whether it's injected, infused or oral. Many of these larger practices do, in fact, have in-house pharmacies that can distribute. And quite frankly, if these patients are coming in on every 3-week or 4-week basis for their cancer therapy, having that care team centralized in one spot becomes critically important for the outcome. One of the things important for the outcome. One of the things we didn't talk about is we think there's about 900 -- initially 900 new patients on the cancer LEMS side. Those cancer LEMS patients, they have small -- typically small cell lung cancer. A small cell lung cancer patient lives about 8 or 9 months. Nobody knows why, but a patient with small cell lung cancer LEMS lives 17 months. And in our discussions with oncologists, they've said, well, I assume the patient only live 8 months or 9 months. Now I'm seeing them 1.5 years, I think about them differently. And I want the quality of life to be higher. And you know with LEMS, Lambert-Eaton myasthenic syndrome. As the disease progresses, the patients lose the ability to walk, ambulate or certain control of extremities. So if they can improve the physician can improve the quality of life of the patient, that's something that quality of life of the patient, that's something they're interested in. And we do believe that some of the accounts will actually use this -- the opportunity to distribute FIRDAPSE in-house as a way to offset costs of their practice, overhead, malpractice insurance, et cetera.

Yes. Okay. That's helpful to know. I appreciate your time, Rich, as always, and this is really helpful. Thanks for the participation.

Thank you so much. I really appreciate the opportunity, and your time. Thank you.

Thank you.

Thanks very much. Take care.