Q4 2019 Earnings Call
Greetings and welcome to the catalyst Pharmaceuticals fourth quarter 29 to financial results Conference call.
Carnival is concerned it listen only mode.
It should have a session will follow the formal presentation.
If anyone could acquire operating systems. Please press star zero order telephone keypad.
[music] harder this conference is being recorded.
[laughter] your host I'll be glad please go ahead.
Good morning, everyone welcome to today's conference call.
Joining me on Sunday School and members of the catalyst management team, including Patrick Mcinerney, Chairman, Chief Executive Officer, Dr., Stephen Miller, Chief Operating Officer, Chief Scientific Officer, and Dan Brown, our chief commercial.
Before we begin I would like to remind you that either.
I mean, the kewaunee session will make same insulet expected future lease. So would you maybe forward looking statements for purposes of sell Securities law.
These statements relate to our current expectations estimates projections are not guarantees of future performance.
They involve risks uncertainties assumptions that are difficult to predict which may be not really after it.
Actual results may vary.
These forward looking statements should be considered only in conjunction with an eagle information contained in our C.
Including the risk factors described.
Report and form 10-K.
At this time I'll turn the call <unk>.
Thank you rally.
And thank everyone for joining us this morning.
2019 was truly a transformative year for catalyst as we transition from what was an R&D company into a U.S. commercial stage pharmaceutical company.
We're pleased starting 2000 and my team, we exceeded our Firdapse launch expectations and our July <unk> two itself more than 190 patients prior to our if their approval never had access to any form of three four gap for him a sound pretty.
As you know Firdapse is FDA approved evidence based therapy. There is now available to treat adult LEMS patients.
And I can now report the patients monthly out of pocket expenses currently averaging one dollar nature per month.
Our catalyst team has executed across all functional areas. So from doesn't us during 2019 and Weve begun 2020 with great momentum.
Recently, we announced the completion of enrollment in our phase three study for anybody positive Muskingum.
And we expect to announce topline results from this very important study during the second quarter. This year.
That's a lot tougher adoption in January of 2019, we've continued to see strong support and encouraging reactions from patients physicians and payers.
Now that the initial phase of our launches over we look forward, you're introducing additional support programs and 2020 to assess both demonstrations and their health care providers.
As you may have seen from our press release yesterday, we reported Firdapse first fourth quarter 2019, net revenues of $30 million and for your 2019 net revenues of 102 million.
As previously announced in January we continue to expect for your 2020, Firdapse net product revenues to be in the range of 135 to 130 $55 million.
On our call. This morning, Dan will provide you with a report on commercial operations and further key performance indicators related to our ongoing lunch or firdapse.
On today's call, we can't overlook the topic that is on everybody's minds, each stage and that is how the current corona virus covered 19th could impact our business.
First and foremost we're concerned for their health and welfare of or employees and their families as well as patients wellbeing and maintaining a continuous uninterrupted supply firdapse for all patients.
We know the concerns that some patients and their position. So today about drug shortage is impossible impact gets a corona virus could possibly have on their availability of continuous drug supply.
Well, let me reassure you.
Catalyst has constructed its supply chain for firdapse to ensure readiness for a wide variety of contingent choose we've also built significant safety stock into our supply chain to manage potential disruptions.
Our a P.I. or active pharmaceutical ingredient is manufactured in the United States by a highly regarded apiay supplier.
And our finished dosage form or Firdapse is ran factored in the United States by one of the largest contract manufacturers in the world, but multiple qualified manufacturing sites around the globe.
Additionally.
We believe in redundancies and should to that extent, we have a second contract manufacturer in the U.S. that has been qualified to supply us with finished dosage form of Firdapse.
We remain highly confident in our ability to supply firdapse uninterrupted. So all current and anticipated patients through the end of this year.
Additionally, we have a manufacturing campaign underway there will be completed within the next two weeks there will provide us with an additional six months supplier firdapse beyond the end of this year.
As of now it is too early to assess the impact of to covert 19 outbreak could have on our ability to enroll new LEMS patients in the catalyst pathways revenue growth and potential delays of clinical data.
As of today, we stand by all of our current guidance.
In addition to the ongoing entre Firdapse for Lambs, we continue to make progress with our clinical programs for other potential indications and our neuromuscular portfolio.
As announced previously we've completed the enrollment of patients for phase three trial. It firdapse for musk antibody positive might affinia gravis or MUSC EMG. There's trial is being conducted under special protocol agreement with the FDA.
We expect to report topline results from this trial in the second quarter of this year.
As are currently no approved treatments for must come Jay we look forward to the potential of treating patients with this rare disease.
We also have our proof of concept trial evaluating firdapse and an estimated three patients which is ongoing in Italy in eastern Europe.
We expect topline results in the second quarter this year.
We will also began proof of concept studies in the coming months for additional neuromuscular conditions to be evaluated, including Kennedy's disease, and hereditary neuropathy with liability to pressure policies.
Steve will provide you with more information on our current clinical program shortly.
As we've stated previously business development has become a focal point of our strategic plan and we have begun a formal process for evaluating additional rare disease opportunities.
Last month, we were pleased to announce the hiring of David Erlanger, a seasoned business development executive as our vice President of business development of catalyst.
David is responsible for all activities related to sourcing potential acquisitions licensing partnering and alliance management.
He will also be providing discipline and structured approach to our evaluation or product or company opportunities.
We've also made great progress it progress and expanding our global footprint for Firdapse.
We have recently submitted our new drug submission or NDS firdapse for lamps in Canada, and I've, just been accepted and granted priority review and we expect to receiving approval of this NDS and the second half of this year.
Currently we are having ongoing discussions with several Canadian pharmaceutical companies as we look for sales and marketing partner in Canada.
We've also completed our feasibility analysis and Japan to better understand what P.M.D.A. will likely requires a regulatory path toward approval.
As part of this analysis, we've consulted with numerous neuromuscular key opinion later leaders in Japan to seek their input in the coming much as we expect to meet with the Japanese authorities to present our plan.
As we made further progress we'll keep you appropriately informed.
As you can see our balance sheet at year end is strong with about $95 million in cash and no funded debt.
Our cash continues to build quarterly which ensures that we were able to fund operations as well as able to fund potential future acquisitions.
Our ability to secure term loans from traditional banking sources remains in place and the objective we require additional cash for acquisitions, we anticipate that therell be no need to go to the equity capital markets.
For cash anytime soon.
Also regarding our lawsuit against the FDA that we filed in June to challenge. The FDA approval of reserve G. On multiple grounds. It is progressing more or less as expected.
Some normal doorways occurring as of now both we and the government have filed all scheduled briefs no. There are few open motions for the core to address before reaching a decision.
At this time, our expected timetable for decision remain sometime in the second or third quarter. This year based on our current activities of course decisions on the pending motions may introduce additional delays depending on the specifics of those decisions.
I'll now turn the call over to Dan brand and our Chief commercial officer to provide you a specifics on our commercial operations and additional key performance indicators on the launch of Firdapse.
Thanks, Pat and good morning, everyone. The first year of our commercial launch for Firdapse one's a productive and successful one is our performance exceeded all expectations for the year. In addition to the launch execution. We are pleased with the feedback that we have received from both patients and their medical providers.
Their support and utilization of Firdapse invalidated the patient need that drove our efforts to complete all safety and efficacy studies, obtaining the necessary regulatory approval and create widespread availability of the medicine for all adult once patients.
Since our launch in January 2019 about 35% of the diagnosed adult patient population have received a firdapse prescription.
The percentage continues to grow we are pleased to see physician viewing firdapse as the standard of care and the like changing medication for patients with lambs disease for which there were no. Prior approved therapies I would like to run through our key performance metrics that we have highlighted on previous calls.
At the end of the fourth quarter 532 patients.
Ascribed firdapse compared to just over 490 patients at the end of the third quarter over 190 of these patients for adult patients and naive to any form of three four DAP and we're pleased to offer these patients medicine for the treatment of this disease, which can truly impact the lives of the patients.
Their families.
We ended the fourth quarter 320 unique writers had prescribed Firdapse. In addition, there were 345 patients active and on insured reimbursed therapy at the end of the fourth quarter.
One of the key areas of importance to US do this commercial launch has been patient satisfaction.
And as of the end of 2019, we had 345 customer satisfaction surveys completed and our average rating remains at 4.8 out of five stars.
In the fourth quarter of 2019, the average co pay across all patients has gone down to just a dollar eight per month per patient for those who take advantage of our assistance programs, 94% of the time Firdapse patients monthly out of pocket was zero.
Patients have been consistently satisfied with the service they received while being prescribed firdapse.
Discontinuation rate for newly enrolled newly enrolled patients was a challenge early in our launch where we saw 90 day discontinuation for newly enrolled patients over 35% in the first three quarters, but that has decreased two under 25% in Q4, a level that is more consistent with our clinical.
Trial experience.
I'm pleased with our efforts to address both higher than expected initial discontinuation rates and where we are now with this metric.
As mentioned in last quarter's call, we did see a relatively larger number of patients who switched to the Jacobus drug in September October and early November then when it was initially made covered commercially available during the summer of 2019.
Switches slowed down to a trickle at the end of November and December most patients to switch to reserve Angie reformer Jacobus investigational study drug patient participants and in recent months, we've seen a few patients return back to Firdapse and catalyst pathways after trying to Jacobus pharmaceutical.
Product, presumably because that you called his product or services, we're not to their satisfaction.
Moving forward, we are focused on finding and helping the diagnosed but MLP Aberdeen untreated adult patients and the physicians who are treating them.
Greater success in the month to month metric of new patient Firdapse enrollments and believe that our expanded commercial efforts are taking hold and continuing with increased momentum in 2020 through the first week in March.
These expanded commercial efforts include an updated and increased number of targets positions.
Broadening and increasing our non personal promotional targeting and spend.
Nearly doubling our field sales force, which has now been fully recruited with our last two higher starting training in the first week of March.
And full utilization of our new partnership with a rare disease inside sales tele detailing agency to generate interest among prescribers and institution providers. We've trained and began outreach efforts with this telesales group and already seen over 15 physician leads and two firdapse prescription enrollment.
As a result of just five weeks of effort with this new partner I've been pleased with the speedy and efficient efforts to that contract train and begin to work with this new one valued partner.
Finally, as you may have seen we recently hired a new senior manager of digital and social media to help us communicate more loudly and effectively across all the good work in programs that we've put in place for patients and the patient community.
She is quickly integrated and started doing good work, we are using the social channels to more quickly update the community on questions concerns were misunderstandings. They may have about our product or services and will share a variety of additional patient videos and stories across both social channels.
We continue to refine our commercialization strategy, which evolve as the lens market opportunity matures, while I'm proud of what we've accomplished in 2019 2020 will be an important year for catalyst as we continue to expand on our resources to help and reach all patients suffered.
And from land those diagnosed and those still on the long arduous and success stressful journey towards obtaining a successful diagnosis board there rare disease.
We are motivated to help shorten their diagnostic journey and find effective treatment as soon as possible and with that I'll hand, the call over to our Chief operating officer, and Chief Scientific Officer, Steve Miller, who will report on the progress in our product development and clinic activities Steve.
Thanks for the commercial update dam and now I'll provide an update on our clinical pipeline to develop firdapse for additional neuromuscular indications catalyst recently announced that we exceeded the enrollment goals for our ongoing phase three multi site international trial in EMEA was KMG, which is being conducted under an FDIC.
Special protocol assessment for spar.
This phase three trial follows our successful proof of concept trial for this indication.
And the FDA approved spar carbonless committed to the FDA, maybe we would enroll at least 60, plus KMG patients and would attempt to enroll at least time acetylcholine receptor mg patient, sometimes called generalized Mg.
Which were requested by the agency to determine if this other type of exhibits any response to treatment with emissary pretty carquest exceeded the enrollment goals for both of these types of by Sunni breakfast the.
The over enrollment was primarily due to patients that were screens and eligible for treatment after enrollment goals for Matt and they wish to participate and which catalyst chose to include for ethical reasons. At this time last activities and the clinical trial holes that are being completed and terminals for anticipates reported top line results in the second quarter. This year.
Carlos remains cautiously optimistic about the outcome of this phase three trial for the symptomatic treatment of EMEA was Kmart suneet drivers with them a fair for me, what lumps and newest KMG is an auto immune disease caused by a single type of antibody for damages and single protein in the neuromuscular junctions and is therefore, a relatively homogeneous disease.
Which is in contrast to be.
Difficult difficulty in treating the heterogeneous CMS population catalyst leaves us homogeneity should result in a response to treatment similar to the previous proof of concept trial in much the same way all of the reported lumps trial outcomes were very similar.
I must tell them Jews in auto immune disease for which there is currently no approved treatment.
Believes are about 3000 to 4800 us patients with our newest KMG in the United States, assuming the trial is successful we look forward through one day potentially being able to provide an FDA approved treatment option for these patients.
Next we have a proof of concept study ongoing and spinal muscular atrophy or us and it's hard for this trial is ongoing and suddenly in eastern Europe and is evaluating the safety tolerability and potential efficacy of I will say operating for the symptomatic treatment of SMB type through an ambulatory patients we plan to enroll approximately 12 pace.
Once in the study and look forward to announcing top line results from this study in the second quarter 2020.
That's somebody has caused by the later, Joe defects to the us and protein and motor morose.
Which should result in a relatively homogeneous disease the different primarily ancillary.
This initial proof of concept study is a crossover design with a one month treatment time in each period and is designed to measure changes and estimated disease symptoms that does not address disease progression.
It's hard three has an estimated prevalence of between 3500 4200 patients and it's important to note that all four types of vessel mayor caused by various Gerard defects to the same gene, resulting in variations severities, which are broadly characterize these estimates hearts one through four if this proof of concept trial is successful.
Catalyst and turns to discuss the design of a multi center phase three clinical trial with the FDA, which we have terms, we address both symptomatic treatment and disease progression. Additionally, due to the common genetic ideology of all four types of SMS. Carlos will also seek to include a broader group of vessel made types and future clinical trial.
Carl.
I would also like to give one last update on our phase three trial for congenital Myasthenic syndromes were CMS. This phase three trial called Crs one was the first ever double blind placebo controlled clinical trial for the symptomatic treatment of genetically confirmed CMS. There are currently estimated to be about 1000 for 1500 us CMS patients.
Representing a spectrum of more than 50 different possible genetic defects. This wide range of genetic defects produces a broad spectrum of clinical presentations over disease and variations of response to therapy and as such as very heterogeneous patient population, but it's difficult to study.
Retreated 16 patients from this multi center to period to treating crossover phase three study and given the sample size impatient genetic and phenotypic variation for trial did not achieve overall statistical significance for the primary endpoint of subject global impression score or the secondary endpoint of muscle function measure.
Carlos has discussed these results would be up.
And all now agree that the data set does not contain adequate everyone's efficacy.
Most patients showing no clinical benefit in a few even stronger worsening in the conversion.
There were some evidence of benefit for some patients. However at the individual patient love a little to no benefit was observed in most.
Such an outcome in this genetically diverse population makes it very difficult to estimate what trial Sars and endpoints would be needed to carry out and successful trial. If at all our recently completed clinical trial took almost four years to recruit and it is reasonable to conclude that are much larger trial is simply not practical for this patient population catalyst will be done what.
Perfect all from which we agreed to participate in this trial.
As of the end of 2019 catalyst as discontinued the development of Firdapse for symptomatic treatment of CMS. The poster will be presented on the trial outcome.
The International conference on neuromuscular diseases and Twentytwenty.
Moving on to market expansion plans for Firdapse catalyst as now submitted a new drug submission or MBS and Canada seeking approval firdapse for the symptomatic treatment of labs. Carlos has also been granted priority review for this drug MBS, which will reduce to review cycle times to six months catalyst expects approval of the somebody us in the second.
For 2020 and has not yet started commercialization activities in Canada. When those activities commenced we will provide an update regarding our commercial plans in China.
Carlos also recently announced an expansion.
Of the marketing territories to include Japan recently, we have begun discussions with the Japanese Ministry of health Labor and welfare or a neutral doping regarding regulatory pathway to seek approval for firdapse in Japan, approximately two years ago. The Japanese government designated the approval of MSR effort as a priority drawn from the initial W.
And they have been actively soliciting companies to develop and file an engineering for this drug.
Update on the regulatory pathway for filing in India, and Japan will be provided once catalyst Mitchell Dover you come to an agreement on what will be required to file that under your age.
Patients have requested a long acting version of Firdapse in order to eliminate the need to plan the daily activities around multiple doses of Florida. We're now actively developing this new product provide updates in the future when the product characteristics have been foreign losses at this stage of development of the development program tablet form.
Relations are being developed and drug movies properties were being studied in order to optimize long acting symptomatic treatment of labs.
Finally, Cardless will also begin proof of concept studies in the near future for additional neuromuscular conditions to be evaluated shows such as Chinese disease, and hereditary neuropathy with liabilities of pressure policies as detail.
These trials are finalized catalyst will provide more details about the trial design disease approvals.
Overall, we are excited about the opportunities to expand the current firdapse label into additional indications as well as an additional countries and to develop a better product for all these patients we will provide any updates on these clinical and regulatory costs as we become available.
I'd also like to comment on the ongoing public health emergency related to covert my team bars.
Previously addressed the robustness of our supply chain to prevent interruptions to the supplier firdapse to patients December Bostons will also ensure and ongoing supplier clinical trial materials for our ongoing clinical trials safety follow ups studies and expanded access program.
Today, we have not encountered any delays and our ability to monitor and conduct trials. However, it is important to note that our clinical trials are being conducted a variety of public and private healthcare institutions in multiple countries, which are outside of our direct control.
It is it is still too early to tell if any of any actions. These institutions take in response to the cobot nights you virus outbreak will affect our ability to report topline results in the second quarter I will now turn the call over to only Brown, our Chief Financial Officer to review our financial results.
Thanks, Steve.
As you heard from my team with revenue comes along just for that our first fraud and continued disciplined expense management.
Okay.
We achieved our first full year operating profit.
Yesterday, we filed our 2019 annual report on form 10-K, and reported GAAP net income of 32 million was 31 cents per basic 30 cents per diluted share for the fiscal year 2019, compared with GAAP net loss 34 million with 30.
Two cents per basic and diluted share for 2018.
But there's nothing to 19 non-GAAP net income excluding 3.8 million of expenses related non cash stock based compensation with $35.7 million were 35 cents basic from 34 cents per diluted share in comparison to 2018 non-GAAP net loss.
Excluding 3.6 million of expenses related non cash stock based compensation with 3.5 million or is there any sense for diluted and basic share.
For the fourth quarter 2019, we reported GAAP net income of 7.9 million for eight cents basic.
Seven cents for them this year compared to our GAAP net loss.
Good morning, 5 million on fighting Ben Basic and then this year, where the same period 2018.
Net product revenue from the launch a fair enough January 2018.
As 100 in 2.3 million.
Fiscal 2000 anything here.
Related cost of sales of 14.8 million.
For the fourth.
For the fourth quarter of 2019 net product revenue from Florida was 30.1 million with related cost of sales no for 4.4 million.
It's important to remember that our gross margin benefited in 2019 from the inventory expense prior to the FDA approval for.
As you will not competing with the same rate due in 2000 endpoint.
During the fourth quarter and year end.
And the year 2018 pedal is had revenues of 500000 from our collaboration with Endo, we generate sabril that begin doing December 2018.
Research and development expenses.
Six point Threemillion 18.8 million for the fourth quarter fiscal years 2019, respectively.
This is 8.4 million, a 19.9 million respectively for the fourth quarter fiscal year 2018.
Research and development expenses from the boarding and year ended December 31st investment a 19 from my sense is been of expenses for medical.
Yeah Fair quality assurance program and expenses from our ongoing for us anymore to outcome studies.
Oh for expanded access program.
Research and development expenses in the comparable period in 2018, primarily consisted of consulting expenses for Mds admission.
<unk> expenses in connection with the exception and approval of our NVH, sorry, thats for the treatment of adults with land.
Expenses from our medical Affairs program and compensation and related personnel costs.
Expand that headcount our headcount to support our clinical trial program.
We think that research and development costs will continue to be substantial.
Does that imply any of the complete our ongoing clinical trials.
And USA empty and estimate exiting and continue our expanded access program and our sustained release formulation program for fair.
Selling general and administrative expenses for the fourth quarter fiscal year, 2019 totaled 11.4 million 36.9 million, respectively, compared to 6.9 million and 15.9 million in the fourth quarter fiscal years 2008.
The increase is primarily due to increased selling expenses.
Cost of commercial system modernization of our Salesforce and supporting personnel.
Launch expenses market access market research expenses and professional fees associated with our losses against the FDA.
We expect selling.
Thank you so youve expenses the increase in 2020, as we continue to build our infrastructure and commercialization program in support of fair enough sales activities and pursue our lawsuit against the FDA.
For the full year 2018, we have a provision for income taxes of 1.5 million for state taxes, based where we don't have available medical trading losses.
On December 31st 2019.
Cash and investments.
4.5 million I know funded debt.
More detailed information and analyze this maybe find the company I want to report on form 10-K, which was filed with the Securities and Exchange Commission yesterday My 16.
Can be found on the Investor Relations page on our website at Www Dot satellite.
Pharma.
No.
The call over to Pat.
Thank you Alex.
Once again I'm very proud of what the catalyst team has delivered across all functional areas in 2090.
We are well positioned to build on this momentum 2020, and there is a great deal to look forward to this year.
I believe that we've laid out a clear strategy to deliver near term and longer term shareholder value by further establishing firdapse as standard of care for adult ones patients expanding the Firdapse label to include other indications global expansion for Firdapse.
Lifecycle management for Firdapse, including a longer acting formulation and continue to look for opportunities to diversify our business beyond firdapse.
Most importantly, we remain extremely focused on patients in our commitment to advance our mission to de lever life changing medications to people living with rare diseases.
This concludes our prepared remarks today with that I'd like to open the call for questions. Operator can we take the first question. Please certainly will now be conducting your question answer session. If you like to replace them to question could you. Please press star one of the telephone keypad confirmation tone.
It is in the question Q.
Repressed start to if you look to LIBOR question.
For participants using speaker equipment may be necessary to pick up a headset before pressing star one.
One moment please.
Thanks for question.
Our first question today's coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.
Good morning.
And team.
First of all thanks for taking our question and secondly, congratulations on a successful transition.
From the development stage to the commercial stage that that's something that doesn't always happen not all companies execute that this well.
Let me, let me ask you Pat or Dan.
A question about current.
I guess the current tone of business.
And the guidance 135 to 155, <unk> I'd like to get some additional information on one or the key drivers.
In that range is a new patients is that persistence for current patients or geographic expansion and and I'm wondering if you could just touch on your field teams deploying then over the course of say the next couple of weeks or months should there be continue.
Challenges with cobot 19th.
Yes. Thank you Charles for the question.
Yesterday, we issued a travel ban.
30 day travel ban for all employees, including our field force and outlet.
Dan address that for you so which.
It's.
We.
Yes.
As as I think most companies will tell you. This is obviously an evolving situation something there were monitoring daily.
Most important thing again is the safety of our employees and and so we are employing a teleworking program.
During remote meetings virtual meetings.
And so our IP department is really.
On top of keeping and community line of communication open with the docs to patients and of course the payers.
So.
To to that extent I think that.
You will see.
Is this involves the situation.
With the current environment evolves I think we will be a little smarter and we will all have more to talk about with regard to how we are reaching all of our.
All of our constituencies.
So is with regard to our guidance of 135 to 155 for this year that does not include any global expansion.
But I'll, let Dan address the metrics and the things over monitoring to make sure that we do get to those levels Charles.
Thanks, Scott. Thanks, Thanks, Pat Thanks for the question Charles Yeah, I mean, you pretty much head at the key drivers are really on new patient starts and those are still the patients that are out there are diagnosed with lens and unfortunately not on this fantastic medication. So we still have.
Some work we have about that as I mentioned in my remarks about 35% of the patients who are diagnosed that have tried firdapse, we need to continue on with that.
So new patient starts is a key metric and then of course, maintaining the patients that we have onboard net that's why it was so important for us to be able to manage that initial 90 day discontinuation that we saw early on.
At the above 35% and get it back under 25%, which is more in line with what what we know from the studies in which is more manageable, especially as new patient starts.
Starting to rise with with the expansion of our Salesforce and an increase in our.
Non personal promotion and other programs like the inside sales. So really those are the two main metrics that are going to be driving everything else seems to be.
Remaining stable with.
Gross to nets and average milligrams.
Per prescription and such so really comes down to those elements.
No no I'm, assuming that that to current roughly 90 or 25%.
Discontinuations really for the most part applies only to new patients.
That's a metric and looking at new enrollments within 90 days what.
Level up and persistence and ultimately what level discontinuation occurs.
Got it and then in Canada.
Seem to me well I guess I'm wondering why do you need a partner you doubled the size of the Salesforce and.
I'm just wondering why is there some legal or regulatory reason you can market in Canada.
Charles its.
Would require a significant investment.
We really don't want to reinvent the wheel and our sales and marketing team and Canada. So wait ideally like to find a Canadian partner ditch already marketing.
Rare disease drugs in ideally even to the neuromuscular community.
As you can imagine the rule of thumb is.
Is 10% proportionate and we we believe that based on prevalence in US we think that they're probably 250 to 300 patients in Canada. So we're really not prepared to make a substantial investment to bring us to market hours.
So the same Canada.
Okay. That's helpful and one last question for Steve perhaps on the must can see trial.
You mentioned that one being [noise].
Cautiously optimistic if you could help us understand that cautiously part that would be useful I think that that's a randomized withdrawal study and I'm. Just wondering if if you could provide us any clarity on the number of patients that were responded versus debt responded first.
Enrolled at least on a bolt on a blinded basis was the basis of you're cautious.
Oh the basis of my cautious is.
Simply it would be presumptuous of me to tell everyone, but it's definitely going to pass when it's still blinds again, no but Ah yes.
The.
The reality is that.
We're optimistic because the proof of concept trial had a very good outcome, it's a homogeneous patient population and we.
Expect to see a similar outcome and.
The current phase three trial and so we remain optimistic about the potential outcome of the trough.
Similar AIDS in the enrolled patients in the two in the phase two versus this one.
Yes.
Well, it's a very similar patient population and the main reason for that is because the disease again as homogeneous it affects people primarily for about the same age in the same gender.
And so.
The patient populations look very similar between the proof of concept trial in this call.
Okay. Thank you I'll hop back in the queue congrats.
Thank you.
Your next question is coming from Jochen zero from Piper Server. Your line is now wise.
Hi, guys. Thanks for taking the questions. So so maybe I'll ask it from the opposite side of the spectrum here with regards to Kobe them and see if whether you guys have seen or expect any impact from co bid on lens follow up but patient follow up visits there you know opportunity to get their prescriptions filled then along those lines I guess.
Now what percent of prescriptions currently are delivered by mail directly to the patient.
Dan would you take that please.
Sure. So so all of all of our prescriptions are delivered directly to patients.
Bye Bye mail buyers specialty pharmacy system, and we've had a lot of focusing on that and in fact, we just we just sent out communications tall patients.
Today to a variety of different means letting them know and give them comfort to need that there is product available and it can be shipped in that can even be shipped out.
In an earlier than normal we can work with insurers to do that so.
Yes that end.
Coated.
Doesnt seem to be disrupted and we are very worried about that for our patients as we know that patients really cat.
Don't want to handle one day without without therapy, it's that important to them. So the area that is still TBD is on the new patient starts and office visits on patients going in and being able to see their physician for a new prescription for new enrollments and where we have ramped up our.
Non personal promotion for awareness and.
And it alerting physicians were still able to take enrollment forms we can take enrollment forms.
On electronically and obtain patient signature is appropriately. So we're showing that everything is still a go but it's just we've we've seen very good results from our expansion efforts all the way through to two last week.
And just like everyone else, we just have to kind of see how things happen in the coming weeks, but our eyes are on the new patient starts.
Okay got it and then just another follow up yet so if you look at some of the metric. The numbers you provided it seems about net net there's about 25 less patients receiving an insurance to reimburse prescription at the end of.
Book, you as compared to Threeq you can you just give us the sense, maybe how that breaks out between discontinuation due to adverse event no benefit switches to the other drugs and whether theres any other reason that are popping up.
For this.
Yeah, I mean, it came to two two different things in Q3 versus Q4 as far as the number of reimbursed patients on drug.
It's primarily that Discontinuations as I've mentioned before we had a kind of a bolus of discontinuations from a 30 patients or from our patients to the Jacobus drug that occurred at the end of September October and November and so.
We also did have at the beginning of the quarter. We were still fighting that initial naive new patient discontinuation that that has gotten more under under hand. So both of those elements impacted Q4 and end up moderated and at the same time in Q4, we had a much reduced.
Number of new patient starts.
So we actually ended up having more discontinuations for those other reasons than we had new patient starts all of these have.
Started seeing trends in a much better direction.
From the reserves you discontinuations to the new new patient start discontinuations as well as new patient starts in Q1. So we're we're optimistic that are that are.
Hanson efforts on the commercial side are helping that new patient enrollments at the same time, but.
Moving down.
Okay, and then maybe one quick one for Stephen and I think this is what maybe Charles was asking but I'll ask you then slightly different way would you be able to say what percent of patients for must Ganji trial.
Were treated during the open label run in that and ultimately entered the double blind randomized portion of this thought of the study.
We haven't given any specific details about the number that were enrolled pursuit of.
Participated in running and then subsequently dropped out rather than being randomized all I'll say right. Now is this large majority continued through the randomization of completion.
Okay got it thanks for taking the questions.
Thanks, Jeff.
Thank you next question is coming from even Gershell from Oppenheimer. Your line is now a lot.
<unk>.
Hey, good morning, Thanks for taking my questions.
Good morning.
No.
Hi, good morning, with regard to MUSC Angie.
Versus laminates, presumably those patients are all cared for by the same.
Types of physicians in other words.
Redouble your marketing efforts, so you get approval.
But there are pretty good leverage or current salesforce for that indication.
Dan.
Yes.
Definitely the MUSC and GE is a nice fit with our existing salesforce and and relationships and targeting in fact, most of our targeting with physicians right. Now are on the use of methanol, which is on medication. It's often used in both lends patients as well.
As most patients so we feel very good that this is.
Very much a fit hand in glove with the new indication.
Okay, I'd say, we should not expect.
Pretty immaterial field force expansion should you get that approval, we don't we don't see any material increase in sales force.
Obviously, we need to create materials and information that would share the key benefits and differentiation of our medication and theres costs, there, but but not in not right now as we see and Salesforce expansion.
Okay, Great and then just a second question on your business development initiatives as you look outside for opportunities.
Just wanted to ask you know it does your focus there lies squarely within neuromuscular.
Our disease is it.
And broader than that is it could there be pediatric just curious kind of.
The scope is as you looked at them for for potential licensing or for other deals for 'em interesting assets. Thanks.
So little and we are.
Definitely want to stay in the rare disease space.
Ideally in the ultra rare space, which is sort of defined as five or 6000.
Patient prevalence.
May be difficult also ideally we'd like to remain a neuromuscular are certainly in neuro.
And.
We were really don't want to.
Be too early we really are looking for assets that.
Our companies that are beyond proof of concept.
So having said that that's sort of our initial criteria, but anything interesting that crosses our plate that looks like.
It might be a fit for us as from a.
The company's perspective, with our with our Salesforce or.
No something that we would be.
Able to successfully market.
So.
I would say to you that's our initial criteria that may change.
Debt, maybe a little too tight.
But certainly.
Where we're we're starting to get very busy on that front and looking at a lot of opportunities.
Okay terrific. Thanks, very much for taking the questions.
Thank you.
Thank you next question is coming from Scott Henry with Roth Capital. Your line is now about it.
Thank you and good morning, a couple of question.
First.
If you get a sense of what kind of share.
Cobis has out there right now and you.
You should that be kind of reaching a steady state or might that share be climbing are decreasing in the near term just trying to get a sense of the the market dynamics.
Dan would you take that.
Sure.
We see the.
We don't we don't have perfect insight to even even people that will discontinue from firdapse, although we try to get a good handle on why they wouldn't be discontinuing as they leave and and with that we think that that has.
Leveled off it's down to a very low critical.
And so that that I think that element.
May continue at a small one to two to three patients per month, perhaps.
But but that that will stay.
Stable, what we don't have any insight to the number of new patients and so yes, we still think that they're somewhere around 50 55 patients. Perhaps total most of those patients were on the initial Jacobus investigational drug program and so our our strong efforts and then all of.
About supporting strong support of existing patients and then communicating and generating awareness among patients and their physicians.
That either Havent had been treated before or havent, even been diagnosed and quickly getting them into all of our programs, which have been shown to have.
Great response, and Great result in satisfaction.
Okay great.
And then looking at the metric.
It would seem like insured patients would would be a pretty good leading indicator I tell a little concerned that that declined in fourth quarter 19, I you know we're.
Two and a half month through the first quarter of 20 to 20 would you expect that that number to to jump up.
Yes, we definitely need and want that to jump up as I mentioned earlier.
In Q4, and it was mainly due to those discontinuations are discontinuations outpaced our new enrollments.
What we do see in Q1 is that the Discontinuations have decreased our new enrollments are increasing and so.
As Pat mentioned, we are reiterating our guidance and we think that we have what does a good balance and.
All these new programs and our new Salesforce, just getting under foot and this inside sales partnership which is already showing good result, we look for that to continue in two to grow.
Okay. Thank you for that color I, just shifting over to the income statement.
Just a couple of questions as as we model this out a first that.
We expect Cogs to pick up I believe you had some early.
Cost of goods sold while it was in development and when that runs out we might see it ticked up in and cost of goods sold any nuances to that in 2020.
Alan would you take that yes, so as I mentioned during the call.
During 2019, we use the.
Prior to that had been manufacturer previous to.
FDA approval enhance being expensed in prior years.
That will not continue at the same rating 2020. So we believe the cost of goods. So will increase but we don't leading the that increase will be.
Thanks.
Scott recall that debt.
And our cost of goods, we included our 14% royalty payments to biomarin into jazz so.
As allied pointed out that was minimal.
Incremental so the 14%.
And so later this year will start to reflect really be.
The trigger or cost of goods, which again is not going to be significant compared to significant change compared to last year's cost of goods. Yes that will include increase as we believe not only the talent that we have manufacturer, but also the yes, we had manufacture previous too.
Yeah.
Okay. Thank you and staying on the income statement would you expect to be a fully taxed entity at least for accounting purposes in 2000 Tony.
Thanks Lenny.
So we expect to use our ano out where found that doesn't play in IP and we also expect to you that I know out for.
Let me start.
No elsewhere.
Taxes on 20 doing 20, Twond does that answer your question.
Well it typically when a company get sustainably profitable they'll take again for those any wells and then they'll report on a fully tax basis I'm not I'm not sure if that will happen for you just yet, but it would seem like you're moving into that.
Yes, so as you know the accounting for deferred tax asset is very specific them. The analysis for the reversal of the allowances is befriend that does look an operation.
740 requires.
That positive evidence a negative evidence you wait and before making a decision to reverse evaluation Alan.
The item is more weight the factual evident such as these losses on positive evidence such as.
For definitely net income in future years.
As you might know Wiley basis is this to me a pretax income tax.
And while we didn't need that three year encompass at 12, 31, nice team and felt that the positive evidence and not outweighed the negative evidence.
This is of the.
Assay Sevenforty analyses, we will continue to monetize those completion enough what are you leases.
I do feel.
That is that it will so so alley, if if if we were to meet our projections of this year.
Most of that income from this year would be sheltered would you agree with that alright, okay.
Okay. Thank you for that color that that's very helpful.
Right.
Final question, when we think about expenses for 2020 do you think.
Its fourth quarter 19, somewhat representative of spending levels, we should think about.
In the following year.
I don't think so Scott we had a number of things hit us in the fourth quarter.
We had an accrual for charitable contributions there actually are going to be utilized in 2020 that.
We didn't expect to hit US also we had.
Litigation expenses that were fairly Sydney significant enter a lawsuit versus an FDA and we also took a hit on the.
The state taxes that we.
Don't expect to have going forward. So I don't think that the expenses in Q4 are representative of what you're going to see.
Going forward for 2020.
Okay, great. Thank you that's helpful.
And congratulations again, that's not a strong here. Thanks for taking my question. Thank.
Thank you.
Thank you we reach of our question and answer session to look to turn the floor back over management for any further closing comments.
Thank you very much for joining us today, we look forward to future calls thank you.
Thank you, but thats inclusive teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.