Greetings, and welcome to the Catalyst Pharmaceuticals Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. . Please note this conference is being recorded. I will now turn the conference over to your host, Ali Grande. You may begin.

Good morning everyone and thank you for joining our conference call to discuss Catalyst's second quarter 2022 financial results and corporate highlights. Leading the call today is Patrick McEnany, Chairman and Chief Executive Officer. We are also joined by Dr. Steven Miller, our Chief Operating Officer and Chief Scientific Officer; and Jeffrey Del Carmen, our Chief Commercial Officer. Before we begin, I would like to remind you that in the following comments and in the Q&A session, we will make statements about expected future results, which may be forward-looking statements for purposes of federal securities laws. These statements relate to our current expectations, estimates, and projections, and are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict and may prove not to be accurate, especially in light of the continued effects of COVID-19. Actual results may vary from the expectations contained in our forward-looking statements. These forward-looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our 2021 annual report on Form 10-K. At this time, I'll turn the call over to Pat.

Thanks, Ali. Good morning everyone and thank you for joining us today on our second quarter 2022 financial results and corporate update call. We are very pleased to report that we delivered exceptional financial performance again for the second quarter of 2022, having achieved an all-time high in total FIRDAPSE net revenue of $53 million, representing an increase of 57.7% compared to the same period last year. Net income before income taxes for Q2 of 2022 was $28.2 million, a 77.6% increase compared to $15.9 million for Q2 of 2021. We reported GAAP net income of $21.6 million for Q2 of 2022 or $0.21 per basic share and $0.20 per diluted share. We continue to bolster our cash position as we ended the second quarter of 2022 with $220.8 million in cash and investments and no funded debt. Our second quarter results reinforce the strength of our strategy, and we are maintaining our full year 2022 guidance of total revenues to be between $195 million to $205 million. And as of now, we are guiding to the upper end of that total revenue range. We continue to expect operating expenses of $65 million to $70 million for the full year. Our success is directly attributable to the continued exemplary execution by all of our employees in every functional area. Their continued dedication to ensuring that patients come first and all of our daily activities at Catalyst leads to our successful execution and progress as individuals and as a company. Our competence on our strong cash flow enabled us to opportunistically take advantage of the market conditions by repurchasing 600,000 shares of our common stock in the open market during the second quarter at an average price of $7.26 per share or about $4.4 million. Since the start of our share…

Thanks, Pat, and good morning, everyone. The commercial team delivered another strong quarter, building upon the momentum from Q1. Q2 FIRDAPSE net sales were 53 million, which represents 23.3% growth quarter-over-quarter and 57.7% growth quarter versus the same quarter last year. I'm proud of the flawless execution demonstrated by the entire commercial organization. We were successful in accomplishing our two main commercial objectives in Q2; seamlessly transitioning the remaining adult Ruzurgi LEMS patients of FIRDAPSE without a lapse in therapy and continued significant organic growth through naïve new patient enrollments. While a few more Ruzurgi patients may transition to FIRDAPSE over the next few months, we feel that close to 100% of adult LEMS patients formally on Ruzurgi are now being treated with FIRDAPSE. Payer approval rates were greater than 90% for adult LEMS patients' transition from Ruzurgi. The Catalyst's patient services team did a tremendous job supporting the needs of adult LEMS patients, caregivers, and healthcare professionals during this process to deliver uninterrupted therapy. Our organic growth was also strong, with 36% more naïve new enrollments in Q2 than in Q1. June naïve new enrollments matched March 2022 for the highest monthly total since launch. Additionally, operational excellence maintained favorable access of greater than 90% across all payers, government or private commercial insurers, continued high compliance of greater than 90% and contributed to an annual discontinuation rate of approximately 15%. Patients enrolled in Catalyst Pathways, including those who are covered by Medicare and accessing foundation assistance, have an average co-pay of less than $2 per month. We expect steady organic growth in the second half of 2022, primarily driven from new patient enrollments of already diagnosed LEMS patients not yet on FIRDAPSE as well as a significant number of patients that are unfortunately misdiagnosed or undiagnosed. Leading indicators thus…

Thanks, Jeff. Our clinical and regulatory strategy for FIRDAPSE continues to focus on expanding access to all patients for the treatment of LEMS and enhancing the FIRDAPSE patent estate to maximize its commercial durability. I will begin by discussing key updates around recent events relating to our intellectual property estate for FIRDAPSE. The recent favorable settlement of the patent litigation resolving certain intellectual property disputes demonstrates the robustness of our FIRDAPSE's intellectual property estate and reinforces its exclusivity, which has patent expiry dates to 2034. As part of the settlement agreement, we acquired two patents that will further bolster our intellectual property portfolio for FIRDAPSE. One of these two patents meets the FDA requirements for Orange Book listability and as such, it was filed for listing in the FDA's Orange Book. This will bring the total number of Orange Book listed patents to six and should provide additional intellectual property protection to February 25, 2037. While the other patent is not listable in the Orange Book, it is still a valid patent and that is applicable to products containing amifampridine, and is therefore enforceable. As part of the patent litigation settlement, we acquired the U.S. and Mexico rights to Ruzurgi. The acquisition of this asset aligns with our goals to serve all patients. We continue to supply Ruzurgi to existing IND holders for their patients that were on therapy at the time of the acquisition, and will also offer assistance to transition to investigational amifampridine phosphate or commercial FIRDAPSE, if applicable. And if the patient's doctor feels the transition to these products is in the best medical interest of the patients. This is consistent with our goal of providing a safe and effective therapy for all LEMS patients. During the first quarter of 2022, we filed a U.S. supplemental new…

Thanks, Steve. We're very pleased with our financial results for the second quarter of 2022. Total revenue for the second quarter of 2022, principally from FIRDAPSE product revenue net, was 53.1 million, a 46.1% increase when compared to total revenue of 36.4 million for the second quarter of 2021. Net income before income taxes for the second quarter of 2022 was 28.2 million, a 77.6% increase year-over-year compared to net income before income taxes for the second quarter of 2021 of 15.9 million. We reported GAAP second quarter 2022 net income of 21.6 million or $0.21 per basic and $0.20 per diluted share, an increase of 77.5% year-over-year compared to the second quarter of 2021 GAAP net income of 12.2 million or $0.12 per basic and $0.11 per diluted share. Our effective tax rate for the first half of 2022 on an annualized basis was 23.7% compared to 23% for the first half of 2021. For 2022, we expect that we will continue to benefit from the use of our deferred tax assets, primarily the Florida State's net operating losses and the orphan drug tax credit, although those are subject to certain limitations resulting in a more normalized tax rate. Non-GAAP net income for the second quarter of 2022 was 30.3 million or $0.29 per basic and $0.28 per diluted share, which excludes from GAAP net income of 21.6 million, stock-based compensation expense of 2 million, depreciation of 37,000 and an income tax provision of 6.6 million. This compares to non-GAAP net income for the second quarter of 2021 of 17.4 million or $0.17 per basic and $0.16 per diluted share, which excludes from GAAP net income of 12.2 million, stock-based compensation expense of 1.5 million, depreciation of 31,000 and an income tax revision of 3.7 million. The above represents…

Thanks, Ali. In closing our prepared remarks, I'd like to add that Catalyst is well positioned to deliver sustained performance with an unwavering commitment to the LEMS community and execution of our strategic priorities. We anticipate that 2022 will continue to be a transformative year for the company with increased momentum to diversify and invest in innovative opportunities for rare diseases. We approach these objectives from a position of strength and look forward to enhancing our growth potential and long-term value for our stakeholders. Finally, I'd like to thank all of our valued employees for their continued dedication and commitment to positively impacting patients' lives. Operator, we would now like to open the call for questions.

Thank you. And at this time, we will be conducting a question-and-answer session. . Our first question comes from the line of Charles Duncan with Cantor Fitzgerald. Please proceed with your questions.

Good morning, Pat and team. Congratulations on a really nice quarter. Thank you for taking our questions.

Good morning, Charles. Thank you.

Good morning, Pat. So quickly perhaps for -- I had a couple of questions kind of for each of you. The first is for Jeff on the commercial front. I guess I'm wondering as you think about that guidance range for revenue, what are you most interested in seeing happen to achieve that upper end and possibly raise it? With the new patients, would it be persistence or would it be switches? It seems like the latter is already done, but what are you most keyed in on?

Sure. Thanks for the question, Charles. Good to hear from you. The good thing is all leading indicators and metrics that we've had are pointing to consistent and sustained growth. We are looking at early in Q3 already seeing strong new patient enrollments as well as low discontinuation rates. So that's where -- in order to continue our growth, that's where we're going to get it from. And like I mentioned earlier, we have significant patient leads and we know there are a lot of patients out there that we can still help. And we have those leads and our field force is doing a great job focusing on the treaters for those patients. So we hope to be able to help those patients and those should come in, we were hopeful here in Q3 or Q4. So to answer your question, that's where we see the ability to hit the higher end of our guidance.

Okay. Thank you. And you provided a lot of nice detail in your prepared comments, so I had fewer questions. Moving on to Steve. Steve, you mentioned pediatric LEMS supplemental application, realize it's not a very large market opportunity. But I think from an optics standpoint, it is a good one, a good initiative. I guess the question that I had for you is what kind of information were you able to provide the FDA? And secondarily, you used words cautiously optimistic. I'm wondering if that's just a prudent statement or is there something that you're kind of wondering about in terms of what the FDA -- how the FDA will review the application or see the information in it?

Thank you for the questions, Charles. Let me answer your second question first. It's just a prudent statement. It would be very presumptuous of any of us to make a statement about what we think that the FDA is going to do. We have to respect them to do their job and review the application. So I am unaware of anything that is deficient in the application. We think it's acceptable. But again, that's up to the FDA to decide not us. And can you remind me of the first question, Charles?

Yes, the information that you provided, obviously not granular?

Yes. Obviously, we had an expanded access program for years, either before approval and continued it after approval for patients that wanted to continue to seek treatment. We encouraged them to switch to Ruzurgi because that was the approved product for pediatric LEMS, but some patients didn't. The bottom line is that what we submitted in our application was all of the pediatric safety data that we had, along with the simulation of how adult data translates to pediatric patients. That's exactly the same approach that Jacobus took to get Ruzurgi approved for pediatric patients.

Okay, make sense. And then back to you Pat, one last question regarding business development activities. Appreciate all the color on that and the goal of completing something by the end of the year. I guess my question is, would you anticipate if something happened by the end of the year that that could be accretive to revenue opportunities next year? Would you look to leverage the established commercial infrastructure? And finally, do you have a preference for use of cash or stock in some future transaction?

Yes. Great questions, Charles. Obviously, we would love to think we could leverage our sales force with the same call point. I think that's going to be difficult. We spend a lot of time looking at neuromuscular opportunities. And really, we came up empty. So we, as you know about a year ago, we expanded our therapeutic reach to look into other therapeutic categories other than oncology. But we nevertheless expect that there will be some synergy in terms of back office, market access, patient services, things like that, but not with the field force. And we anticipate that it would be accretive to revenues next year. Again, our focus shifted about six months ago to approved or marketed products. So that's now where we are focused. With regard to cash or stock, I think that we're in a position -- our cash position is strong, continues to grow quarter-by-quarter. We have not tapped into the debt market. We know that there's plenty of debt available if we want to take it on. So I think the needs and the desires of a target come into play and I think we're in equally good position to do a cash deal or a stock deal or a combination. Hope that answers your questions.

Our next question comes from the line of Joe Catanzaro with Piper Sandler. Please proceed with your questions.

Hi, guys. Thanks for taking my questions and congrats on the nice quarter here. Maybe the first one in terms of guidance and in light of what you saw in 2Q where your expectations are for the pace of naïve new patient enrollments in the second half of the year relative to what you saw in the first half? It seems like you saw some good steady growth. Would you expect that to sort of continue at the same pace, accelerate or perhaps temper in the back half of the year? Thanks. And I have a follow up or two.

Thanks, Joe, for the question. I'll turn that over to Jeff.

Yes. And based on the leading indicators, like I mentioned, Joe, we do expect the pace of the growth to continue. New enrollments are very strong. Discontinuation rates remain steady. So we're excited about the growth potential that's still remaining out there.

Okay, got it. And then Jeff -- go ahead, Pat, sorry.

Yes. But just to reiterate what Jeff had said earlier that the organic growth we still anticipate to be in the 15% to 20% range for the year. And so we're confident that there are a number of naïve patients out there that we can help.

Okay. I just wanted to follow up on something I think you said Jeff that about 25% of the naïve new enrollments in the quarter were from tumor LEMS. Just wondering if you have a target number there, that would mean you're sort of capturing as much as that opportunity as possible?

We haven't quite established what the target number is. Our goal for 2022 is to really implement some educational tools out there to help physicians or small cell lung cancer treaters to learn about LEMS and then that there's a treatment out there FIRDAPSE. So that was our whole goal is to learn and to implement those channels or those programs this year and then to see more of the return next year. We're happy to see the initial return here, so the increase. I had mentioned previously that 20% of the new enrollments were about -- about 20% were tumor LEMS patients. Now that we're starting to see about 25%, we're hopeful that that will accelerate next year to potentially 35%-ish, but we haven't really put a final target in place to what we're hoping to see in 2023.

Okay. And last one from me, Steve, you mentioned that one patent you received from Jacobus that you intend to have listed. I'm wondering if maybe you could provide some details around explicitly what that one patent covers.

That patent contains claims for a new and novel previously unknown impurity that appears in all products that contain amifampridine.

Okay, got it. Thanks so much for taking my questions and congrats again on the quarter.

Thank you, Joe.

And our next question comes from the line of Joon Lee with Truist Securities. Please proceed with your questions.

Good morning, guys. This is Les on for Joon. And thank you for taking my questions. I just want to follow up on the patent question. So now after acquiring two additional patents from Jacobus, you now have a potential to have six in the Orange Book and IP protection out to 2037. My question is, are you aware of any potential ANDA filers for a generic version of amifampridine coming this fall? Is there a chance there will be a filer? And essentially, how strong is your IP to prevent any potential filers for a generic being approved? Thank you.

Well, let me answer the second question --

I'll take the first part of that, Les. We anticipate as we've said very nice growth for the product long term. And we would be remiss if we didn't think that generic competition or generic companies would not at some point file an ANDA or paragraph IV. So we're prepared for that. So we don't know of any yet, but we'll be ready. Steve, you want to talk about the strength of the IP?

Sure. There's very little that I can actually say regarding the strength of the patents on advice of counsel. It's generally a bad practice to talk about potential future litigation strategies. Basically, it is very high level. I can just tell you that we believe they're good patents and they are enforceable.

Thank you for that color. Then one more for me on the IND patients that are still on Ruzurgi. When do you expect that to conclude and the patients to transition to FIRDAPSE? Thank you.

Do you want me to take that or you, Pat?

Yes, go ahead, Steve. Please take that.

We're in the midst of transferring all the assets from Jacobus with regard to the purchase of the Ruzurgi assets. Part of those assets include existing inventory of Ruzurgi. We are still evaluating the duration to which we can continue to provide that and what the long-term plans are for the ongoing supply for Ruzurgi to patients who are currently receiving Ruzurgi.

And I'll add to that, Steve, that most of those patients under investigator INDs are not LEMS patients. Most are other neuromuscular conditions like congenital myasthenic syndrome. So it's probably not appropriate to discuss off label use of FIRDAPSE for those patients at this point, Les.

Great. Thank you for that color, guys. I appreciate it.

Thank you.

And we have reached the end of the question-and-answer session. I'll now turn the call back over to Pat McEnany for closing remarks.

Thanks everyone for joining our call. We look forward to our next corporate update. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.