Catalyst Pharmaceuticals, Inc. (CPRX) Q4 2015 Earnings Report, Transcript and Summary

Greetings and welcome to the Catalyst Pharmaceuticals Partners Fourth Quarter 2015 Financial Results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. I would now turn to turn the conference over to your host Alicia Grande, Vice President, CFO and Treasurer. Thank you Ms. Grande, you may now begin.

Good morning and thank you for joining our conference call. To begin, on today's call, we have Pat McEnany, Chairman and Chief Executive Officer and Dr. Steven Miller, Chief Operating Officer and Chief Scientific Officer. Before we begin, let me remind you that we'll be making forward-looking statements involving known and unknown risks and uncertainties, which may cause Catalyst's actual results in future periods to differ materially from forecasted results. A number of factors, including those described in Catalyst's annual report on Form 10-K for fiscal year 2015 and its other filings with the U.S. Securities and Exchange Commission could adversely affect Catalyst. All forward-looking statements are qualified in their entirety by these cautionary statements and Catalyst undertakes no obligation to revise or update this presentation to reflect events or circumstances after the date hereof. At this time, it is my pleasure to turn the call over to Pat McEnany, our CEO.

Thanks Ali. Good morning everyone and thank you for joining us today. I would like to welcome everyone to our fourth quarter and 2015 yearend results and update call. On today's call, I will give you an update on our activities and progress for the last year's fourth quarter and so far this year, including the FDA regulatory status for Firdapse, as well as our pre-commercialization activities and infrastructure preparedness. Steve Miller will then provide an update on our various drug development programs. Following, Ali will give a brief review of our financial results for the quarter and fiscal year. Lastly, we will take your questions. As we communicated last month, Catalyst received a Refusal of File letter from the FDA with respect to our NDA for Firdapse. While we are disappointed at receiving this notice, we also believe that we will shortly understand what is required to resolve any open issues and to re-file the Firdapse NDA. With breakthrough therapy designation and orphan drug status, we believe that we are well positioned to work closely with the FDA. As we have previously stated, the Refusal of File letter does not provide comment on the acceptability of the submitted clinical data and no judgment is made in the letter on the efficacy or safety of Firdapse. We are in communication with the FDA to determine the path forward for the successful and timely resubmission of our application. At this point, we are currently scheduled to meet with the FDA in early April after that meeting and once we have received the formal minutes from that meeting, we expect that we will be in a better position to discuss our regulatory path forward for Firdapse. We continue to believe that it is very important to provide patients with access to an FDA-approved therapy for the symptomatic treatment of LEMS, a therapy that would have approved prescribing information in pharmacovigilance and be manufactured according to good manufacturing practices. To that end, we at Catalyst have invested significant capital in a very comprehensive development program assessing the safety and efficacy of Firdapse. We also are pleased to maintain our commitment to patients living with LEMS and CMS and we continue to enroll new patients in our expanded access program and provide Firdapse at no cost to patients who meet the enrollment criteria. As most of you know February 29th was Rare Disease Day, which was observed around the globe and as well in the United States by the National Organization for Rare Diseases or NORD. A patient advocacy organization committed to the identification, treatment and cure of rare disorders through programs of education, advocacy and research. Catalyst collaborates with NORD as a corporate member and is pleased to support the efforts of the rare disease community to find ways to broaden the awareness of rare diseases and improve access to treatments. Global Genes, one of the leading rare disease patient advocacy organizations in the world that promotes the need of the rare disease community and of watch Catalyst is also a corporate member is another organization that supports patient activities to raise rare disease awareness. Earlier in this quarter, we announced the initiation of an investigative sponsored study of Firdapse in patients with MuSK antibody positive Myasthenia Gravis. If the results from this trial support the safety and efficacy of Firdapse as a treatment for this patient population, we plan to submit an application for orphan drug designation and pursue approval of Firdapse for this additional indication. We recently announced topline results from our Phase 1b study of CPP-115 in normal healthy volunteers. The result showed significant increases in brain levels of the surrogate marker for potential efficacy gamma-aminobutyric acid or GABA. We feel the state is encouraging because it provides evidence that CPP-115 significantly raises brain GABA, a mechanism known to effectively treat epilepsy, infantile spasms, and potentially Tourette's disorder. Last month we announced the hiring of Brian Elsbernd as Senior Vice President of Legal and Compliance. Mr. Elsbernd's primary responsibility will be leading the development, management and monitoring of our corporate strategy philosophy and processes as well as corporate quality. Brian brings extensive experience from the biopharmaceutical industry to our management team as we expand our team to continue to execute our drug development strategies and prepare for the future commercialization of Firdapse. As reported yesterday, we ended the year with approximately $58 million in cash and short-term investments with no debt. In the past, we have stated that we had sufficient cash to get through approval on launch of Firdapse, which we previously expected in mid August. Because of the receipt of the refusal to file letter, we're currently shifting the completion of our commercial launch plan and further conserving cash with a goal of getting through an approval and launch of Firdapse without an additional capital raise. I will now turn the call over to Dr. Steve Miller, who will provide further updates on our pipeline and scientific developments.

Thanks Pat and good morning, everyone. In December we completed submission of the NDA for Firdapse for the treatment of Lambert-Eaton myasthenic syndrome and congenital myasthenic syndrome. Both of these diseases are ultra rare with prevalences in the United States believed to be approximately 3,000 and 1,000 to 1,500 patients respectively. As Pat previously stated, we're constantly scheduled to meet with the FDA in early April to try to resolve any open issues and to resubmit our NDA for Firdapse as soon thereafter as possible. As Pat also previously mentioned the Refusal to File Letter does not comment on the safety and efficacy information provided in our NDA. It is our hope that the issues raised in the letter can be resolved in a relatively short period of time and that our NDA can be resubmitted in the second or third quarter. However until we meet with the FDA and work out a path forward that is acceptable to the agency, we will not be able to layout our future development plans for Firdapse and the timing of our activities. On our pipeline, we recently announced topline results from our Phase 1b double-blind placebo-controlled safety and tolerance study of CPP-115 in normal healthy volunteers. The results showed significant increases in brain levels of the surrogate marker for potential efficacy, Gamma-aminobutyric acid or GABA. The main adverse effect of prolonged elevated brain GABA somnolence, was also observed. While the primary objective of this study was to obtain safety and tolerance data for CPP-115 administered over 14 days, brain GABA levels were measured as a surrogate marker of potential efficacy, since CPP-115 is a second generation GABA aminotransferase inhibitor. Specifically, this study examined GABA levels in both the Parietal-Occipital Cortex a grey matter rich region that approximates brain regions thought to be associated with epilepsy, and which was previously studied for vigabatrin, the Supplementary Motor Area, which is thought to be associated with Tourette's Disorder results of study. The maximum brain GABA increases, in both brain regions, ranged from about 150% to over 200% of baseline levels, as measured by magnetic resonance spectroscopy. We're presently evaluating the full results of this study including additional data from laboratory safety test and pharmacokinetic modeling of the patients in this study and developing a plan to make CPP-115 Phase 2 ready. We hope to commence our next study sometime in 2016 subject to the availability of funding. We are currently conducting a small clinical trial to support any future NDA we file for Firdapse for the treatment of CMS. The trial is a small blinded trial in the pediatric CMS population ages 2 to 17. We are also currently supporting an investigator sponsored adequate and well controlled clinical trial evaluating safety, tolerability and efficacy of Firdapse as a symptomatic treatment for patients with MuSK-Antibody Positive Myasthenia Gravis. The MuSK study is being conducted by a team of researchers led by Renato Mantegazza, MD, Director, Department of Neuroimmunology and Neuromuscular Diseases at the Fondazione Istituto Neurologico Carlo Besta in Milan, Italy, a major referral center for Myasthenia Gravis patients including MuSK antibody patients, Antibody Positive Myasthenia Gravis patients. The study is designed as a one-to-one randomized, double-blind, placebo-controlled, crossover, outpatient study to evaluate the safety, tolerability and potential efficacy of amifampridine in patients diagnosed with MuSK MG. The study is planned to include approximately 20 patients and we anticipate reporting top-line results from the study in about a year. Catalyst is providing study drug and financial support for the study. I will now turn the call over to Ali to review our financial results.

Thanks Steve. Yesterday we reported a GAAP net loss of $20.2 million or $0.25 per basic and diluted share for the 12 months ended December 31, 2015, as compared to a GAAP net loss of $15.5 million or $0.24 per basic and diluted share for the same period in 2014, excluding non-cash gains of 65,000 attributable to the change in fair value of liability-classified warrants, non-GAAP net loss was $20.3 million or $0.25 per basic and diluted share for the year 2015. In comparison, 2014 non-GAAP net loss was $14.5 million or $0.23 per basic and diluted share, which excludes a non-cash loss of $994,000 attributable to the change in fair value of liability-classified warrants. For the fourth quarter of 2015, we reported a GAAP net loss of $5.8 million or $0.07 per basic and diluted share, compared to a GAAP net loss of $3.5 million or $0.05 per basic and diluted share, for the same period in 2014. Excluding non-cash gain of $390,000 for the change in fair value of liability-classified warrants, non-GAAP net loss was $6.2 million or $0.07 per basic and diluted share for the fourth quarter of 2014. In comparison, the non-GAAP net loss for the fourth quarter of 2015 was $4 million or $0.06 per basic and diluted share and excludes non-cash gain of $472,000 attributable to the change in fair value of liability-classified warrants. Research and development expenses were $3.8 million and $11.8 million for the fourth quarter and full year 2015 respectively compared to an R&D spend of $2.4 million and $10.1 million in the fourth quarter and full year of 2014. Research and development expenses for 2015 increased from the prior year primarily due to continued activities related to ongoing studies and trials for Firdapse and CPP-115, the costs of our Firdapse Expanded Access Program and cost associated with the filing of our NDA for Firdapse. We expect that our R&D spend for 2016 will increase, primarily as a result of our continued clinical development efforts for Firdapse, including our recently started clinical trial for CMS in pediatric population, our clinical program for MuSK Myasthenia Gravis and our Expanded Access Program. General and administrative expenses were $2.4 million and $8.6 million for the fourth quarter and full year 2015 respectively compared to $1.6 million and $4.5 million respectively in the fourth quarter and full year 2014. The increase from year-to-year is principally due to increases in headcount and related expenses and pre-commercialization expenses, as we expanded our operations for the potential future commercialization of Firdapse. As a development-stage biopharmaceutical company, Catalyst had no revenues in the year 2015 or 2014 for the full years 2015 and 2014. At December 31, 2015, we had cash, cash equivalents, CVs and short-term investments of approximately $58.4 million and no debt. This includes $34.9 million of net proceeds from our February 2015 offerings in which we sold 11.5 million shares of common stock and the proceeds of warrants and stock option exercises during 2015. Based upon our current financial position and forecast of available cash, we continue to believe that these resources should be sufficient runway for our approval and product launch of Firdapse assuming these occur before the end of first quarter of 2017. More detailed financial information and analysis may be found in the company’s annual report on Form 10-K, which was filed with the Securities and Exchange Commission yesterday March 15, 2016 and can be found on the Investors Relations page of our website at www.catalystpharma.com. Now I’d like to turn the call back to Pat.

Thanks, Ali. Before we answer your questions, I’m going to summarize our major goals and potential milestones looking at the coming months. Firdapse has demonstrated that it provides an important therapeutic benefit to LEMS and CMS patients and potentially for other indications and we remain confident in its potential approval and future launch. We're focused on resolving any open issues we have with the FDA and successfully resubmitting an NDA preferred apps as soon as possible. We know the FDA delay is frustrating, but note that our internal team and outside regulatory counsel have been working around the clock to prepare for upcoming meeting with the FDA. We'll also continue to advance our drug pipeline, build out our management team and progress with commercialization plans for Firdapse albeit at a more measured pace. I continue to be encouraged with advances in rare diseases and Catalyst remains committed to providing education and awareness about LEMS and CMS to patients, physicians and payors. We work closely and support organizations and advocate for patients with rare diseases such the National Organization of Rare Diseases and Global Genes. We must brought awareness and improve access to these very important therapies. With that, I’d like to thank all of you for participating in today’s call and open up to call for questions.

Thank you. At this time we'll be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Charles Duncan with Piper Jaffray. Please proceed with your question.

Hi guys. Thanks for the overview and for taking my question. My first question is regarding the interactions with FDA. I know that you haven’t completed those, but I’m kind of wondering in the upcoming meeting with the FDA, what do you expect the discussion or focus on and also did the information requested in the complete or in the Refusal to File letter include any analysis from your, the Catalyst [farm trials or -- and/or financed academic studies of GAAP] [ph].

Charles, there were no questions with regard to additional analysis of our data requested in the RTF, but as we’ve stated in a previous press release, the FDA has requested additional supporting information and to that point, we expect to gain clarity on several open issues that still remain when we meet with the FDA in early April. So there were as we again previously stated -- there was a question with regard to our intent to include CMS in the initial label. And other than that, we’re really not in a position to provide more specifics about the content of the RTF until we meet with the FDA for a number of reasons, one of them is from a competitive point of view and also sensitivity of dealings with the agency, we need to be cognizant of. So for those reasons, we really don’t want to be more specific until we have our meeting, come out of that meeting with an understanding, we see the formal minutes of the meeting, which we should receive within 30 days of the meeting and then we'll be in a better position to present our path forward and a new timeline.

Okay. That’s helpful Pat. But at this point, do you anticipate any additional clinical or non-clinical studies to be required and if so, if not whatever, what is your best guess as to timing of a refilling approximately?

Charles, we’re not going to comment on requirements, clinical or non-clinical until we meet with the FDA and present our entire plan and our path forward. So I think that’s premature. It’s a good question. I understand it, but we’re not prepared to talk about that today. And so our timeline again is we expect to meet with the FDA in early April, we expect to receive the minutes from that, the formal minutes from that meeting within 30 days of that meeting. We hope that we can turn around the required information in a relatively short period of time. At that point, the FDA we anticipate there will be a new 60-day review of the materials submitted in the NDA and hopefully at that point, we have an acceptance of our NDA for filing.

Okay. And then the last question that I have regarding this is I am kind of wondering what changed if anything because it seemed like with the -- with the Firdapse program it was relatively straightforward, you were requested to conduct the study that you conducted. Is there a different study they asked for or is there new expectation or could it been the CMS or did they get some input from some other company or whatever? What do you think changed that or was it just simply something that you forgot or neglected to supply in the file that or in the NDA that resulted in the refusal to file?

Charles, part of it is administrative, technical if you will and again I can't say what has changed. I know that from the FDA's point of view, our filing was not complete and we anticipate fixing it and providing what the incomplete data that was requested. So to this point, really I think until we meet with them and get further clarity, I just think that's as much color as we can provide at this point.

Okay. That makes sense. Thanks for the added information.

Yes sir. Thank you, Charles.

Thanks Charles.

[Operator Instructions] [Abrupt end]