Catalyst Pharmaceuticals, Inc. ($CPRX)

Okay. Good afternoon, everyone. Thank you for taking the time to join us here. For our next presentation, we're excited to have Catalyst Pharmaceuticals. And joining me from the company to my left is Rich Daly, who's the Chief Executive Officer of the company. For those of you who don't know me, I'm Glen Santangelo. I'm one of the Life Sciences Analysts at Barclays. I cover spec pharma and animal health. We do not cover Catalyst Pharmaceuticals, but it's been interesting to learn a lot about it in the past several weeks. So really looking forward to the presentation. So thank you, Rich, for joining us. Very glad to have you here.

Thanks, Glen.

Maybe a good place for us to start for those who don't know the company, maybe we should just spend a minute or 2 talking about your 3 primary commercial products are in different stages of their life cycle. Maybe just sort of give a high-level overview of the company for a minute or 2, and then we can sort of dive right in.

No problem. So Catalyst Pharmaceuticals is a company focused on rare diseases. And in our rare disease portfolio, it's actually ultra-rare. So we have a muscle activating drug called FIRDAPSE which works in Lambert-Eaton myasthenic syndrome. And then we also have a drug for Duchenne Muscular Dystrophy. It's a steroid, we believe a differentiated steroid called the AGAMREE. And FIRDAPSE has been on the market for about 8 years and consistently grown 15% to 20% every year. So it's actually defined the law of decreasing increases over time, which is just a tremendous story. And then in March of '24, we launched the AGAMREE for Duchenne's and I love the opportunity to talk about this in a little bit, but it looks like it's a differentiated steroid and has a really interesting clinical profile and some data just came out at MDA this week in Orlando that further supports that out of Europe. So we're really excited about it. And finally, we have FYCOMPA, which is a drug for epilepsy. We bought that drug from Eisai a couple of years back, and the drug has performed really well, but we experienced generic incursion in about midyear, but the drug has continued to perform really, really well, although it is declining in revenue as expected.

Okay. Excellent. All right. So maybe why don't we start with some recent results given that we just kind of came off fourth quarter earnings. I mean, 2025, you wrapped up a great year, 20% revenue growth, I think you sort of forecasting even faster growth in 2026, and we'll get to that. We'll dissect the pieces of that in a minute, but maybe you just want to give us a quick overview, 2025 and the momentum you had into 4Q. And maybe was there anything looking back on 2025 that maybe surprised you, maybe either positively or negatively relative to maybe what you would have thought as the year sort of progressed?

Sure, sure. So we entered the year with a lot of expectation for continued success for the company and for the brand, and we saw that. It was a really interesting year. So as I said, FIRDAPSE continues to grow 15% to 20%. It's a very solid performer. So we're really excited about that. And we implemented a couple of things, Glen, in the year on the specialty pharmacy side. So as you know, in the rare disease space, we use specialty pharmacies, which actually helps patients get on the drug sooner, get on the right dose, titrate as appropriate and then remain on it. And we did that in June, 2 things in June and September. And we're seeing the results of that. So patients' desire or leaving the brand has declined. So the performance of the brand has propped up on that. That's on the FIRDAPSE side. And we also initiated a number of programs for cancer-associated LEMS. So LEMS is LEMS, but some of it's not associated with cancer and some of it is. The non-cancer associated is called idiopathic and then there's cancer-associated LEMS. We work with the National Lab to get testing up on a panel. So there's a very simple test called the VGCC test, Voltage-Gated Calcium Channel test, and that's now on National Labs. And we also worked with the NCCN, National Comprehensive Cancer Network to actually get FIRDAPSE into the guidelines for cancer-associated LEMS. And now we're working with the GPOs and the GPOs control -- there are 3 GPOs that control about 80% to 90% of all community-based oncology practices, and they follow pretty strictly the NCCN guidelines. We're really excited about that. On the AGAMREE side, AGAMREE has launched really, really well, and it's sourcing patients from both the generic prednisone that's on the market and EMFLAZA or generic EMFLAZA. About 45%, 45%, 10%, the remaining 10% come from naive patients. The one thing that occurred and the brand weathered this really, really well last year was some of the challenges, the safety challenges on ELEVIDYS. So we knew when ELEVIDYS got its label expanded in the middle of the year that there would be some challenges because patients needed immunosuppressive dose. And so that created sort of a line where there was a delay in patients getting converted to from prednisone or ELEVIDYS -- I'm sorry, prednisone or EMFLAZA to AGAMREE, but the brand weathered that really, really well and came out of the year in a very strong position. And just as I said FYCOMPA experienced generic incursion. But because of some of the work that our Chief Commercial Officer, Jeff Del Carmen did in keeping promotion on the brand all the way through the end of the year, the brand continues to perform well, although it is declining as expected.

All right. So why don't we dig into each of these products individually? Why don't we start with FIRDAPSE. Very strong guidance for 2026. Your $435 million to $450 million in revenues implies 21% to 26% growth, obviously, a big number. You started to touch on some of those key drivers. But maybe could you help us think about sort of the idiopathic LEMS versus maybe the market share gains you hope to assess on the cancer side, which you were just sort of speaking about.

On the idiopathic side, the #1 misdiagnosis is generalized myasthenia gravis. And one of the things we're really excited about for the patients is that all of this effort on DTC for generalized myasthenia gravis, we believe, will benefit us down the line. So as these patients come in, they'll be diagnosed with gMG. A really interesting fact here is that the average physician sees one LEMS patient in their entire career. So it's that rare. So when they see a LEMS patient, they automatically think muscle weakness and the extremities and all that must be gMG. So they'll put them on a gMG therapy. And with all this awareness going on, we think it's going to drive more patients in to be diagnosed. Most of them will be misdiagnosed with gMG, but then those therapies likely won't work. And so they'll be looking for the next thing because actually accelerate they're coming to FIRDAPSE. The average diagnostic journey for LEMS patient is between 4 and 6 years. So you can accelerate that, you can get the patient on. And these patients on the idiopathic side live a normal lifespan. So they're diagnosed typically in their 40s, 50s, but then they'll live a normal lifespan. On the oncology side, the patients are generally -- LEMS is generally associated with small cell lung cancer. And we know that there is no really -- no good outcome there. The average patient without LEMS lives about 9 months if they have small cell lung cancer. However, the average patient with LEMS appears to live about twice as long. It has nothing to do with the product per se, but LEMS is an early indicator of small cell lung cancer. So a patient that gets LEMS generally gets diagnosed earlier in the disease process and thus, they live longer. So the way this works out, in any typical year, there are about 150 idiopathic patients that could be diagnosed, and there are 900 that could be diagnosed on the cancer side. And so working with the large GPOs creates a really great opportunity to help serve those patients. So here's the takeaway. As successful as the brand has been, our penetration on the idiopathic side is about 30% and the penetration on the cancer-associated LEMS for FIRDAPSE is less than 10. So there's tremendous upside in this for the patients and obviously, for the company as well.

But you made the case that the new NCCN, the Comprehensive Cancer Network guidelines may have an impact in terms of how these patients are diagnosed and treated. Do you think that will ultimately increase sort of or lessen the impact from the increased diagnoses, if you will?

Yes. We do think that. So on the idiopathic side, and we have to keep pointing to these -- we think of this as 1 molecule, but 2 brands or 2 distinct markets because they're treated in different areas. So when we think about the opportunity, Oncology Care, I spent 15 years in Oncology. Oncology care has become very, very complex. NCCN guidelines become very important because of the complexity. And so there are care pathways in each of these GPO organizations that say they want to follow the NCCN guidelines. That's always such a focus for us. So we think that can drive behavior amongst the oncologists, yes.

And are you changing sort of your firm's commercial behavior in terms of education and promotion and doing different things to sort of drive these guidelines home and increase the diagnosis rate?

So the idiopathic side is very much a prospecting market. There's high concentration in the oncology side. So we work with the GPOs. They have education programs. They have other opportunities to help the physicians really get in line with the guidelines because these are the preeminent guidelines that are out there, and they want to follow them. So yes, we've changed it. We actually have dedicated -- a very limited dedicated force in the field to work with the GPOs at the very highest levels of the GPOs and really drive that education, drive that adoption of the care pathways.

Can we talk about the intellectual property on this product? I think you had some sort of settlement recently with Teva that may be -- that locked in 2035.

February 2035.

With that agreement with them, but I still think there's another litigant out there, Hetero.

There were 3 first filers. We settled with 2 of the first 3. We settled with Lupin and we settled with Teva. Teva was the first one to settle. And we see Teva, as many people do, is probably among the most sophisticated generic producers in the world. And so we feel really good about that settlement. We have still one remaining, Hetero. Our trial was scheduled for March 23 to start. We thought it would be about a 5-day trial. However, the basic understanding we have of constitutional law is that criminal trials will supersede any other trial and it appears the judge may have a conflict. I want to really emphasize that, may have a conflict with our trial dates because he has a criminal case, he has to hear as well. However, criminal cases can have an opportunity to settle, obviously, if there's some sort of arrangement with the defendant and the state. So there may be an opportunity to stay on track. We're still tracking that. It's actually in our public docket that...

I'm sorry, when was the Teva settlement? And when are the scheduled court dates for Hetero?

The Teva settlement was in January of last year.

January, okay.

And Lupin settled about midyear. And then we're still -- obviously, we're open to conversations with our colleagues at Hetero. But if we have to go to trial, we certainly will go and defend our intellectual property. We're very confident. And I think the settlements support that confidence.

Okay. Maybe can we shift gears to AGAMREE? 68% growth in the fourth quarter. And I think you've been pretty impressed with kind of what you've been able to accomplish to date. When you look at the guidance of $140 million to $150 million, that obviously implies a more modest 20% to 28% growth, maybe not surprised given the law of large numbers. But maybe could you talk about some of the underlying drivers of that growth in the back half of the year and help us assess the durability of those elevated trends in 2026?

So it's a great question, Glen. So when we think about the LEMS market and the lack of concentration, the DMD market, the Duchenne's market is the polar opposite. There are about 100 centers that treat 90-plus percent of the DMD patients. You can imagine, early diagnosis, it's very clear what the patient has. 45 of those centers actually have 80% of the treatment through the use of steroids. And if you use a steroid, patient who uses a steroid early in diagnosis, their average ability to walk increases by 2 to 2.5 years. Steroids is foundation therapy. So it's the thing you're going to start before you start anything else. And then you're going to keep that drug on board because of the extension of the ambulation. So the drivers of this are, again, commercial team under Jeff Del Carmen has done a great job of really penetrating those centers of excellence. We have 100% of the top 45 and about 90 or so percent of the top 100 have used the drug. And now we've gone wide. Now we need to go deep. And so we're using some of the opportunity to talk about the differentiation with the potential differentiation. Again, it's not in our label, but what we saw this week at Muscular Dystrophy Association, we saw the critical issues for a steroid are behavior. Patients on steroids have behavioral issues. They have stunted growth if they're on long term. Their bones are generally weaker. They have higher fractures, they have cataracts and they have cardiovascular disease. Eventually, DMD patients succumb to cardiovascular disease in general. The data that came out this week is very interesting. It was a study, the GUARDIAN study versus standard steroids -- standard of care steroids, and it showed that there are potentially some benefits to AGAMREE that...

Using it as a first-line treatment instead of the corticosteroids.

Well, it is a corticosteroid, just to be really clear. But using it as -- how does it compare on fractures, how does it compare on height and how does it compare on cataracts. So very interesting data, and I encourage you to take a look at it. It shows the data are really compelling.

And you said 80% of the diagnosed cases are in these 100 centers of excellence?

About 90% are in the 100, and the 100 centers are about -- 80% is in the 45 and about 90% is in the 100, yes.

How do your salespeople sort of cover those? I mean, let's make it a little bit easier.

We -- it does. It makes it a lot easier. We have only 12 sales representatives, 12 regional account managers, and they're responsible for those 100 centers. And because of the concentration of the business, we can actually cover those 100 centers and actually go up to about 130 centers with just 12 individuals.

And just to be clear, I mean, the growth that we're seeing, is that from people that run maybe those first-line steroids that are switching over or people starting with AGAMREE as sort of the first-line treatment?

So from the launch...

Or a combination of both?

Actually, it's a little bit of both. From the launch, we source -- we initially thought we were going to source patients from EMFLAZA, which had -- it's hard to tell because there's no publicly reported data on this market. So we thought it was about 35% share. So when the product launched and from the day of the product launch to today, it's been pretty consistent. We source about 45% of the patients from prednisone, 45% from EMFLAZA and 10% state that they're naive to therapy. So we're sourcing from the entire market instead of just 35%. So we are really thrilled to be participating in 100% of the market.

What was the name of that study that you were just referenced?

GUARDIAN, the GUARDIAN study. And just some additional information, it was announced maybe about a month or 2 ago, and the data just came out of...

And what about the SUMMIT study? Because thought the SUMMIT study was also doing something similar sort of evaluating the efficacy benefits over the traditional standard treatment of care.

That's exactly right. And so we look at the -- we're going to put about 250 patients, and these are patients not subjects. This is an open-label trial. So about 250 patients into the clinical trial. It's versus standard of care. And so we're looking at the opportunity to look at behavior, bone health, stature, fractures, cataracts and cardiovascular. So when we started the study, obviously, we didn't have the data from the GUARDIAN trial. But now that we see the data from the GUARDIAN trial, our confidence in the SUMMIT study actually has increased. And so we're really thrilled about it.

And how does that influence your negotiations with managed care and potentially payer coverage and reimbursement?

So this is a really, really salient point. We see coverage for both FIRDAPSE and AGAMREE at about 90% approval. So we're really thrilled with the opportunity to work with the caregivers and the providers to actually get the patients on, but we're not seeing very much pushback from payers.

Okay. Can we shift gears again to FYCOMPA. Haven't spend much time just sort of given where we are post the LOE, but we see the decelerating sales, you guided to, I think, $40 million to $45 million, and that's down from $115 million, right, which is maybe not all that surprising, but is there any potential opportunity for upside relative to that? Or are you doing anything on the commercial side to try to extend the life in any way or?

No. So typically, we all know that what we call a retail product, so FYCOMPA is not a rare -- epilepsy is not a rare disease. So it generally goes through the retail pharmacy. We see about 90% of prescriptions on the brand go away in 3 months, maybe even less time. Epilepsy is different. It's sticky. Patients want to stay on it longer, and we're seeing that. We're experiencing that. And this is -- this $40 million to $45 million is right in line with the performance since the generic incursion about midyear and it continues, and we're really confident. But upside, we've taken all promotion off. And so it's really mostly website and social media that's what we're doing.

Okay. Can we talk about business development and capital allocation for a few minutes. The company has over $700 million in cash. And I think on a recent call, you said you're now willing to look at clinical stage assets in addition to sort of proof of concept or different stages of development and versus just commercial-ready assets is the point I'm trying to make. And so maybe just update us on your latest thinking there. What type of opportunities you're seeing in the market? Should we expect you to start to use a good chunk of that $700 million of cash in 2026?

So we would love to put the money to work. We think that's the best use of cash in the acquisition of products. So our target -- typical target is a product in the rare space. Again, we're agnostic to therapeutic area because we believe the infrastructure we have to support the patient, get the patient on, keep the patient on if it's appropriate, is robust. And if not industry trended among the industry standard. And so we're looking at opportunities that peak out at about $500 million, and we think that keeps us below a certain level where we're competing in a pool where we can win. So that's what we're looking at. And we're seeing a lot of opportunities out there. And the major filters we go through is, number one, has to be differentiated product. Number two, we have to be able to make money because we want things that are closer to the market, even if they are in Phase III. And then we have to align with management if it's licensing on the vision for the product. Those are the main filters we go through. And then as we get into the data, we see there's lots of opportunity out there.

And you recently enacted a share repurchase authorization to $200 million. And I think you guys were active in 4Q. You bought some stock. And so how should we -- and that authorization runs through December of 2026. And so relative to the $700 million, do you think there's an opportunity here to buy back stock and do business development at the same time and maintain some level of flexibility throughout the year?

So we have no debt, no funded debt, and we are generating cash every quarter. So when you think about a program that has about $200 million in potential spend for share repurchase, we don't think this affects our ability to do business development at all. We think we can move forward using the cash for if we need to take on debt.

Okay. We got a couple of few minutes, so I want to ask a couple of financial questions. Turning -- when we think about the guidance, $615 million to $645 million, that's 4.5% to 9.5% revenue growth. Obviously, it's a smaller number than last year, but that's explained by FYCOMPA.

Absolutely. That's right.

Yes. So I mean, could you maybe unpack that guidance a little bit for people and just talk about FIRDAPSE and AGAMREE, the growth expectations offset by FYCOMPA, anything else to sort of read into that number?

We think that -- so on AGAMREE, we can start with that. We think the choppiness of the AGAMREE situation because of what happened on gene therapy in 2025 is we're getting past that now. So we think there's opportunity to grow there. We love this GUARDIAN data. Obviously, we can't promote it, but this is a very, very tight community. The parents are generally the caregivers. The patients are very active in their therapy, and it is a concentrated market. On the FIRDAPSE side, again, we look at the opportunity to accelerate the growth of the brand because of the idiopathic side, the gMG promotion that's out there that surrounds us and also the opportunity to work with these oncology practices to improve patient care. When you have penetration of only 10%, something is missing. And the opportunity is to utilize a very simple blood test to actually get the patient identified and then treated appropriately.

Below the revenue line, could you talk about your spend guidance, right? Because I'm sure you're trying to balance profitability here with investing in these growth assets, but it doesn't seem like you have a need to generate more near-term cash just given how much dry powder and capacity you have on your balance sheet. But how do you think about that spend guidance? And profitability expectations for 2026?

So we haven't given specifics on guidance on SG&A, but relatively flat. I mean we don't have to do much more. We're pretty excited about that. This will be the first full year, though. So you see FYCOMPA going away. This will be the first full year for cancer-associated LEMS focus in our budget. So there's sort of a trade out there. And we obviously look at that, and we think that's positive because of the growth that will generate. On the R&D side, we gave a range mostly because we want to look at SUMMIT and life cycle management opportunities, specifically for AGAMREE. One of the things I love to say when we're talking to investors is the drug works. It's a great steroid. And it could be applicable to other opportunities in rare where you have consistent use of steroids. So we're going to explore that life cycle management. So there's probably a slight tick up there.

Okay. We're just about out of time. So I want to figure out a way to sort of bring this all together and give you an opportunity to deliver the last word. But when I sort of look at the stock, it's had a tremendous sort of 5-year run with maybe the last 12 months, it's been a little bit more range bound. And so when you sort of take a step back, what do you think sort of explains maybe the stock being range bound more so over the last 12 months versus the 4 years sort of prior to that? And when you have investors here, is there anything you think that -- I don't want to say people are missing or maybe should think about differently or you think could be a greater area of focus for them? Like is there anything else that you want to -- any other message you want to deliver to the investors now when you think about bringing it all together?

Sure. Great question. So in the last 12 -- last 2 years, we've outperformed the NASDAQ, which we're pretty proud of. I mean, nice job. And in the last 5 years, significant outperformance, great. I think the thing that we really want to focus on when we talk to investors is the life cycle management opportunities and how to grow AGAMREE beyond. FIRDAPSE, it's like the mailman. It just delivers. It's great. It's a wonderful product, and it will continue to grow. And we think there's opportunity in there as well. So really focusing on the balance between idiopathic and cancer LEMS, but then talking about maximizing and optimizing our opportunities in DMD, but also looking beyond DMD for general use of a steroid, perhaps an improved steroid across the board in rare diseases.

Okay. All right. Well we'll leave it there. We're already out of time. Rich Daly, thank you very much, CEO of Catalyst Pharmaceuticals.

Thank you.