Catalyst Pharmaceuticals, Inc. (CPRX) Q4 2016 Earnings Report, Transcript and Summary

Greetings and welcome to the Catalyst Pharmaceutical Partners, Inc. Fourth Quarter and Fiscal Year end 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. Ali Grande, Chief Financial Officer with Catalyst. Thank you. You may begin.

Good morning and thank you for joining our conference call. To begin, on today’s call we’ve Pat McEnany, Chairman and Chief Executive Officer; and Dr. Steven Miller, Chief Operating Officer and Chief Scientific Officer. On this call, we will 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 the 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 Chief Executive Officer.

Thanks, Ali, and good morning, everybody. Thank you all for joining the call today. I'd like to welcome everyone to our fourth quarter and year end results call. On today's call, I’ll discuss our 2016 performance and will also report on the status and progress of our current activities. Steve Miller will provide a more detailed status report on our pipeline and next steps for Firdapse. Following, Ali will give you a brief review of our financial results for the quarter. At the conclusion of our prepared remarks, we will open the call for questions. Also joining us on today’s call is Dr. Gary Ingenito, our Chief Medical Officer. Gary will be available to address questions on the clinical and regulatory front. Gary will be an integral part of all of our future conference calls. As we embark on 2017, we do with the excitement and intense focus. This is a year that we expect to achieve many of our clinical and regulatory milestones and move a step closer to launching our first medicine with the completion of our pivotal studies for LEMS and CMS and the planned submission of our NDA for Firdapse. As we’ve previously stated, our new NDA submission will incorporate a substantial body of data that not only will include two Phase 3 clinical trials, and several other clinical safety studies, but many other non-clinical studies totaling more than 65 trials or studies that have been conducted by Catalyst for BioMarin. This will be a robust filing package, especially for an orphan drug program. In December 2016, we are pleased to enroll the first patient into our second Phase 3 clinical trial designated as LMS-003 to evaluate the efficacy and safety of Firdapse, amifampridine phosphate in patients with Lambert-Eaton Myasthenic syndrome. After working with the FDA throughout 2016 to define the regulatory pathway for Firdapse, we received an agreement with the FDA under a special protocol assessment for the protocol design, clinical endpoints, and statistical analysis approach to be taken in the second Phase 3 study. A special protocol assessment is a process by which sponsors ask the FDA to evaluate the protocol of the proposed clinical trial to determine whether it adequately addresses scientific and regulatory requirements for the purpose identified by the sponsor. A SPA agreement indicates concurrence with the adequacy and acceptability of specific critical elements of protocol design endpoints and analysis. Additionally, it provides a binding agreement with FDAs review division that a pivotal trial design conduct and planned analysis adequately addresses the scientific and regulatory objectives in support of a regulatory submission for drug approval. We are encouraged that we are able to work swiftly and efficiently with the FDA and establish a clearly defined development in regulatory pathway for Firdapse in the treatment of LEMS, and expect clinical results and if the trial is successful in NDA submission in the second half of 2017. Additionally, after discussions with the FDA, our clinical trial evaluating Firdapse for the treatment of patients with congenital myasthenic syndrome has been expanded beyond pediatric patients to include adult CMS patients. And the enrollment size has been increased to approximately 20 patients. Further, there are now a total of five clinical trial sites participating in this study. CMS is primarily diagnosed in infancy and childhood, but adult patients who have been diagnosed with other neuromuscular diseases have been found to have CMS. So we are pleased to add this population to our study. Last year we are also pleased to announce that the FDA had granted the Company orphan drug designation for Firdapse for the treatment of myasthenia gravis, MuSK-MG myasthenia gravis, a subpopulation of the myasthenia gravis is focused -- is caused by antibodies to the muscle specific kinase protein. MuSK-MG is a rare disease that is estimated to affect approximately 4,500 patients in the United States. MuSK-MG is an unmet medical need that in some cases can be a life-threatening disorder. Orphan designation provides Catalyst for the number of benefits through development and commercialization. Yesterday we reported topline data from a Phase 2/3 investigator sponsored proof-of-concept clinical trial studying Firdapse as a treatment for patients with MuSK-MG. This trial shows statistically significant results and according to the investigators it showed a large clinical benefit to patients. Dr. Steve Miller will provide more details in a moment. Additionally, last year a case report on the efficacy of CPP-115 in a child with refractory infantile spasms was published in the Journal of Epilepsy & Behavior Case Reports. There is a significant unmet medical need in the area of refractory infantile spasms as parents and children who have infantile spasms have a very difficult choice when it comes to treatment options, weighing both drug related risks and adequate treatment. We continue to develop and assess generic Sabril chemically known as vigabatrin, indicated at the treatment of refractory complex partial seizures and infantile spasms. As of July 21 of last year, the FDA has relaxed the requirements under the REMS program for physicians to prescribe for Sabril. As a result, 2016 revenues for Sabril reported by Lundbeck were $193 million, up 38% from 2015. We believe that our program to develop a generic version of Sabril is a valuable asset to us and we hope to monetize this program this year. We continue to show our commitments to the LEMS patient community and in 2016 we launched our new expanded access program Web site. Our EAP continues to enroll new patients and provide Firdapse at no charge to eligible patients with LEMS and CMS. Expanded Access Programs are not required by regulatory agencies, but our mechanism supported by them for getting investigational treatment to patients who have a life threatening or severely debilitating disease and who cannot be satisfactorily treated with alternative therapy approved by the FDA. This new Web site is designed to make it even easier and transparent for patients to learn about Catalyst's Expanded Access Program and the possibility of getting access to Firdapse at no cost, if they are eligible. We hope that this new Web site enables more patients will LEMS and CMS to understand our new program and learn more about this experimental treatment option for these debilitating diseases. On the finance side, it is important to note that we ended 2016 with a fairly robust balance sheet with approximately $40 million in cash and equivalents and no debt. Based on our current financial condition and forecast of available cash, we believe that we have sufficient funds to support our operations through at least the next 12 months, which should get us based on our current timelines beyond an accepted NDA submission for Firdapse without the need for additional financing. Finally, as we move towards the second half of this year, we will begin to initiate our pre-commercialization activities in preparation for our potential launch of Firdapse in 2018. I will now turn the call over to Dr. Steven Miller, who will provide update on our pipeline and scientific developments.

Thanks, Pat, and good morning, everyone. As Pat previously stated, we announced yesterday the positive results of the investigator sponsored proof-of-concept trial for the symptomatic treatment of MuSK-Myasthenia Gravis, which is a subtype of myasthenia gravis the affects about 4,500 patients in the U.S. Statistical significance was achieved from both of the co-primary endpoints quantitative myasthenia gravis or QMG and myasthenia gravis activities of daily living or MG-ADL with P values of 0.0003 and 0.0006, respectively. Most importantly, a large benefit -- beneficial clinical effect was also observed during treatment with amifampridine phosphate and the treatment was well-tolerated by the patients. Dr. Mantegazza or other key members of his research team are planning on presenting the outcome data from this trial at upcoming medical conferences initially with a possible presentation of a hot topic short talk at the 13th International Conference on myasthenia gravis and related disorders in May, as well as also publishing these results in the near future. They will present the primary endpoint results as well as the results of a number of other secondary clinical endpoints that were also assessed in this clinical trial including the myasthenia gravis composite score, the myasthenia gravis quality-of-life score, the fatigability severity score, the Neurological Institute Carlo Besta Myasthenia Gravis Score and two responder analysis. Statistical significance was reached for most of these secondary endpoints as well, Catalyst provided funding, test drug, and matching placebo for this clinical trial. Additionally, Catalyst funding included the use of a CRO to provide a technical writing, monitoring, statistical services, blinded randomization and oversight of the trial so that it could be conducted as a well-controlled clinical trial suitable for use in regulatory submissions. This form of myasthenia gravis is caused by an antibody to the MuSK protein, which is responsible for maintenance of the neuromuscular junction. Treatment of this form of myasthenia gravis is an unmet medical need, because these patients are often refractory to the treatments commonly used to treat more common form of myasthenia gravis anti-acetylcholine receptor MG. There are currently no approved therapies from MuSK-MG and the symptoms in this form of MG are often more severe and may even be life-threatening. Based on the statistically and clinically significant positive outcome, Catalyst will discuss the design of a large -- larger multicenter clinical trial with the FDA and also discuss the regulatory path forward for pursuing this potential new indication for amifampridine phosphate. In December, Catalyst enrolled the first patient into our second Phase 3 clinical trial of Firdapse with LEMS designated LMS-003. Catalyst continues to enroll subjects into both our Miami and Los Angeles clinical trial sites and we have an enrollment target of about 28 subjects. This clinical trial incorporates the same primary clinical endpoints of Quantitative Myasthenia Gravis Score and subject to global impression score as our previous successful clinical trial designated elements 002. Each subject is being drawn from Catalyst Expanded Access Program and upon enrollment is treated for five days with either amifampridine phosphate or placebo. Additional details regarding the design of this clinical trial can be found on the clinical trials.gov Web site. In October 2016 prior to initiation of this clinical trial, Catalyst received the FDA's concurrence on the clinical trial design through the special protocol assessment process. Catalyst anticipates announcing topline results from this trial in the second half of 2017. Catalyst's clinical trial for symptomatic treatment of patients with CMS using amifampridine phosphate now includes adult CMS patients, enrollment size has been increased to approximately 20, and the number of clinical centers has been increased to five. Congenital Myasthenic Syndromes or CMS are rare neuromuscular disorders comprising a spectrum of genetic defects and is characterized by fatigable weakness of skeletal muscles. Assuming the data from our study is positive, we will work towards including data and information on the benefits of amifampridine phosphate for CMS in any new drug application that we submit for Firdapse. We anticipate announcing topline results from this clinical trial in the second half of 2017. Based on currently available information and assuming our LMS-003 trial is successful, we anticipate submitting an NDA for Firdapse for the symptomatic treatment of LEMS in the latter part of 2017. We also hope to add -- to our labeling for the product the use of Firdapse as a treatment for the symptomatic treatment of CMS with Firdapse provided the clinical trial results from our CMS trial are positive. Based on Catalyst's current expectations that an additional multicenter clinical trial will be needed to support an indication for the symptomatic treatment of MuSK-MG with Firdapse, we expect that this potential new indication will have to be filed as a supplement to any NDA that we file for Firdapse that is approved. Catalyst is continuing to work with academic investigators to continue Phase 1 studies of CPP-115 regarding basic clinical safety, emergency use for refractory infantile spasms, and other potential uses of the drug. Catalyst is also continuing to seek development partner for this drug. Finally, we are continuing our efforts to develop a generic version of Sabril and we hope to be in a position to provide more detail on our progress and development status later in 2017. I will now turn the call over to Ali, for a review of our financial results.

Thanks, Steve. Yesterday we reported a GAAP net loss of $18.1 million or $0.22 per basic and diluted share for the 12 months ended December 31, 2016, which compared to a GAAP net loss of $20.2 million or $0.25 per basic and diluted share for the period -- for the same period in 2015. Excluding non-cash gain of $886,000 attributable to the change in fair value of liability-classified warrants, Non-GAAP1 net loss was $19 million or $0.23 per basic and diluted share for the year 2016. In comparison, 2015 non-GAAP net loss was $20.3 million, or $0.25 per basic and diluted share, which excludes a non-cash gain of $65,000 attributable to the change in fair value of liability-classified warrants. For the first quarter of 2016, we reported a GAAP net loss of $4.2 million, or $0.05 per basic and diluted share compared to a GAAP net loss of $5.8 million or $0.07 per basic and diluted share for the same period in 2015. Excluding non-GAAP gain of $107,000 for the change in fair value of a liability-classified warrants, non-GAAP net loss was $4.3 million or $0.05 per basic and diluted share for the fourth quarter of 2016 in comparison to non-GAAP net loss for the fourth quarter of 2015 was $6.2 million or $0.07 per basic and diluted share and excluded non-cash gains of $300,000 attributable to this change in fair value of liability-classified warrants. Research and development expenses were $2.8 million, and $11.4 million for the fourth quarter and full-year 2016, respectively compared to an R&D spend of $3.8 million and $11.8 million in the fourth quarter and full-year of 2015. Research and development expenses decreased when compared to the same period in 2015, primarily due to our continued activities related to ongoing studies and trials for Firdapse, including the costs of the Expanded Access Program, and the cost of our CPP-115 and generic Sabril programs. We expect that our R&D spend for 2017 will increase as we continue our clinical development efforts for Firdapse, including our second Phase 3 clinical trial for LEMS, our clinical trial for CMS and clinical program for MuSK-MG, our Expanded Access Program and our generic Sabril program. General and administrative expenses were $1.5 million and $7.9 million for the fourth quarter and full-year 2016, respectively, compared to $2.4 million and $8.6 million respectively in the fourth quarter and full-year in 2015. The decrease in general and administrative expenses from prior year was primarily due to our efforts to conserve cash after the receipt of the FDA's "refusal to file letter" for Firdapse, partly offset by increases in pre-commercialization expenses, payroll and benefits, during the first half of 2016, including severance costs related to the reduction-in-force that occurred in May 2016. We expect that G&A costs will remain consistent in future periods as we continue our efforts to conserve cash. As a development stage biopharmaceutical company, Catalyst had no revenues in the fourth quarters or full-years 2016 and 2015. At December 31, 2016, we had cash and investments of approximately $40.4 million and no debt. We try to believe that our existing capital resources will be sufficient to support our planned operations through at least the next 12 months. More detailed information and analysis may be found in the Company's Annual Report on Form 10-K, which was filed yesterday with the Securities and Exchange Commission and can be found on the Investor Relations page of our Web site. Now, I’d like to turn the call back to Pat.

Thanks, Ali. We are encouraged by our recent progress and pleased to have recently initiated our second Phase 3 trial for Firdapse in LEMS patients. We believe we now have the clear path for towards an approval and look forward to updating everyone as the trial progresses and reporting data later this year. With that, I’d like to thank all of you for participating today and open-up the call for questions.

Q - A -

I’d like to thank you for joining us on today’s call. We look forward to keeping you advised on our progress. Thank you.

Ladies and gentlemen, today’s conference has concluded. You may disconnect your lines at this time, and have a wonderful day.