Q3 2020 Catalyst Pharmaceuticals Inc Earnings Call
Greetings and welcome to catalyst Pharmaceuticals, CPP, our Acs third quarter Twentytwenty results.
At this time, all participants are in listen only mode.
Question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Alicia <unk> Chief Financial Officer.
Good morning, everyone and welcome to today's conference call.
Joining me on today's call and members of the catalyst executive team, including Patrick Mcenany, Chairman and Chief Executive Officer.
Steven Miller, Chief operating Officer, and Chief Scientific Officer.
Gary engine, Needham Chief Medical and regulatory officer.
Yes, you know Carman, Chief commercial officer before.
Before we begin I would like to remind you that the following comments I mean, the kewaunee session. We will make statements about expected future results, which may be forward looking statements for purposes of federal Securities laws.
Same as relates to our current expectations estimates and projections and are not guarantees of future performance.
They involve risks uncertainties and assumptions there its difficult to predict and may not too yes.
Especially in light of the cold at night.
Actual results may vary.
These forward looking statements should be considered only in conjunction with a detailed information contained in our SEC filings.
Moving to the risk factors described in our 2018, well report on form 10-K, and our recently closed where they report and form 10-Q for the quarter ended September 30 2020.
At this time I will turn the call over it.
Thank you Alan.
And thanks, everyone for joining us this morning for our third quarter results and business update call I hope that.
Everyone is staying safe and healthy during these unprecedented in challenging times.
We have a number of items to update you on this morning I'll start with how pleased we are with the third quarter financial results there were cheap.
Despite operating under very difficult conditions, and the COVID-19 environment.
We generated product revenue of $29.2 million and net income from operations of $11.6 million, which included a non cash stock based compensation expense, a $1.5 million, which resulted in approximately 13.
In dollars of cash flow from operations.
Additionally, we ended the quarter with $127.1 million in cash and cash equivalents and no funded debt.
Oh, he will provide you with more [laughter] financial details in a few minutes.
I want to reiterate how proud I am of the team's ongoing effort to demonstrate their steadfast commitment to the patients always sure.
We have shown remarkable resilience and ability to continue to expand the number of patients benefiting from Kurt apps to treat Darwin's condition.
Carbonite team continues to make it difficult for patients who have labs, who have not received a definitive diagnosis from their position because of their inability to schedule and that person appointment or their personal concerns about in person visits.
They're treating physician.
These issues had been an impact on the number of patients are all new catalyst pathways.
As a result, new patient starts in Q2 and Q3 of this year were modest on a relative basis compared to the pre covert period.
I'm pleased to report there were beginning to see a significant improvement in new patient starts on Firdapse during September and October.
I'm not ready to call. This a trend at this point, but we're encouraged by the improvement.
Additionally, <unk>.
They shouldn't 90 day Discontinuations continue to fall and resurgent sections to reserve GE has been minimal if at all.
We stand by our decision at the beginning of this year, so expand our field sales force churn.
To add inside telemarketing support and expand our marketing efforts using non personal promotion.
Having already made those investments we are thrilled by Yesterdays news regarding Pfizer and bio Intechs COVID-19 vaccine demonstrated 90% efficacy in a phase three trial.
This is amazing news for all of US as most experts were predicting that 60% to 70% Africa's she would be a home run for that trial.
Additional vaccine trial results are right around the corner from other companies and Alternatively assays vaccines begin to reach the market.
We are hopeful that the effects of COVID-19 pandemic well begin to resolve.
As we turn the page on 2020, I believe that you will see that we are well positioned the company for future growth Jeff.
Jeff will provide you with more details on our commercial operation shortly.
As you recall on our last earnings call, we announced at our U.S. patent for Firdapse Orient <unk> M. As Pam Kearney had been allowed.
Since then it is issued and has been published and the FDA is Orange book.
You asked Fad number Chen sub 93, 893 methods of address of administering threefour diameter parity will expire on April 7th 2034.
Were pleased that are pending patent has been issued and believe that it will create significant barriers to therapeutically equivalent competition from entering the market for approximately nine years beyond orphan drug exclusivity.
The patent is directed to the use of suitable doses of M. A fair party to treat patients that are slow metabolize or so and let's say a pretty.
Regardless of the therapeutic indication.
We will continue to attempt to add value to catalyst and all of our various stakeholders by further enhancing our intellectual property portfolio.
With regard to our clinical and product development programs as we've previously announced we were deeply disappointed with the topline results of our Musk Mg trial, which did not achieve statistical significance on the primary or secondary endpoints.
We continue to evaluate the data with our clinical experts and should have more to say around year end regarding the future of this program.
Steve will have more to add one of your reports on our R&D activities and other clinical programs.
Well the corporate development side, we continue to evaluate multiple strategic options for accelerating our growth and enhancing shareholder value.
Including acquiring a marketed product for a company with late stage assets as well as other strategic combinations.
No agreements have been entered to date, we expect to have more to say on this topic over the next several quarters.
During Q3, we are pleased to have announced that Firdapse has been approved in Canada and then we have partnered exclusively with Tri Pharmaceuticals, a privately held specialty pharmaceutical company focused on bringing medicines that fulfill clinically significant unmet needs.
To the Canadian market.
Most recently Firdapse was watched by Guy and I'm pleased to announce that adult demonstrations and Canada now have access to firdapse and several have already begun treatment.
We are excited to partner with the experienced team of guys, making firdapse available so ramps patients throughout Canada.
As we previously announced on our last earnings call, we met with pharmaceutical and medical device agency or PMT, a the regulatory agency responsible for approving drugs in Japan.
To discuss the clinical or regulatory requirements for gaming and approval of Firdapse for legislations.
We have now received the official minutes from that meeting, which details our regulatory path forward for approval in Japan.
As a result, we are now in the final stages of discussions with a potential partner in Japan, and we anticipate finalizing such an agreement about year end.
On the litigation front, where we're very disappointed with judge flows decision, so except the magistrates Freeport and recommendation in our lawsuit challenging the FDA decision to approve reserve GE for the treatment of pediatric patients with Lambert Eaton Myasthenic syndrome.
Or lambs [laughter].
Important to note this decision in no way affects catalyst for pathways.
Patient services programs market access for Firdapse or our ongoing marketing efforts for Firdapse, so adult patients, which represent about 99% of the limbs community.
Judge words decision also does not change. The fact that she comes pharmaceuticals is not permitted to market reserve GE to adult LEMS patients in the United States.
Catalyst intends to continue to aggressively take all steps necessary to protect Firdapse is exclusivity under of the orphan Drug Act, which is specifically intended to encourage and ensure the development of drugs for patients with rare diseases.
We've appealed judge films ruling to the 11th Circuit Court of Appeals in Atlanta.
We have also filed a motion seeking to have an appeal heard on an expedited basis, which was granted last week.
Additionally, we have recently filed for lawsuits in federal courts.
For patent infringement on our recently issued patents against because this pharmaceuticals and Panther Rx reserves is exclusive distributor.
It is still in the very early stages and both of these cases can far too soon to be providing any estimate on the timetable for development in these cases.
As to details a lawsuit I refer you to the public filings for those matters, we're confident in the strength of our path.
We'll pursue litigation wherever we each had someone.
Commercially infringing our product.
Lastly on litigation, we have filed suit along with CGI pharmaceuticals, our marketing licensee in Canada.
Against Health, Canada, and Medgenics exclusive distributor in Canada for reserves.
Our complaint charges at Medgenics submission for reserves.
Was granted despite multiple uses of Firdapse is protected data and that submission. This.
This litigation is moving rapidly and we currently anticipate a decision in the first quarter 2021.
At this point I'd like to turn the call over to Jeff Delcarmen, Our Chief commercial officer to provide you with further details on our commercial operations.
Thanks, Pat and good morning, everyone as.
As Pat mentioned, we are very pleased with the third quarter performance of 29.2 billion net sales.
Golfing from our continued success engaging both healthcare providers and patients and is largely virtual setting as anticipated we continue to see signs of recovery during the third quarter in underlying demand trends.
New patient enrollments were significantly above Q2, while we saw the maintenance of strong medication compliance and persistence.
We feel that the bottom for new patient enrollments was observed in the second quarter with a significant uptick in the third quarter as many adult patients diagnosed with lens. We're finally able to visit their health care provider.
As one might expect we are seeing stronger trends in enrollment forms in regions, where offices have higher reopening rates and consequently higher in person patient visit volumes. The 90 day discontinuation rates have remained steady at around 15% and Discontinuations to reserve G.
Continued to be minimal.
I'm extremely pleased with our commercial teams ability to deliver this result, despite the ongoing impact of the COVID-19 pandemic.
Based on early observations in the fourth quarter, we are cautiously optimistic that this strong performance will continue.
Our October new patient enrollments were higher than any month since July of 2019 among.
Among our existing base of patient compliance and adherence remain very high in discontinuation rates remain low in October.
We remain confident in our assessment on the remaining potential adult lands addressable market.
Besides the already diagnosed lens patients not yet on perhaps there.
There are a significant number of patients that are unfortunately missed diagnosed or undiagnosed.
To help shorten the diagnostic Jeremy for these patients house has invested heavily in robust lands educational resources directed towards both patients and healthcare professionals.
Doing so we feel that we will accelerate the potential treatable lens population.
These initiatives gain traction.
Our catalyst halfway station services team continues to do a tremendous job supporting the needs of adult LEMS patients caregivers and healthcare professionals prescription approval rates remain over 90% across all payers government or private commercial insurers.
Our financial and co pay support programs continue in full force patients enrolled and catalyst pathways, including those who are covered by Medicare accessing foundation assistance have an average co pay less than $2 a month.
This further exemplifies our goal of making firdapse affordable and accessible to all adult lens patients.
Well there are while there is still some uncertainty related to covance as we enter the winter season, we are confident the strategies and tactics. We have put in place will successfully positioned the company for growth in the fourth quarter and beyond the combined effort of the expanded field team.
Non personal promotion in inside sales enables efficient coverage of close to 20000 healthcare professionals, that's essentially treat adult them station.
Furthermore, our field team is well equipped with the resources and training to effectively engage with physicians and patients.
Virtually or face to face accommodating the preference of our customers an abiding by local guidelines.
I'll now turn the call over to Dr., Steven Miller, our Chief operating Officer, and Chief Scientific Officer for an update on R&D activities.
Thanks for the commercial update Jeff I'll now provide an update on our clinical pipeline to develop firdapse for additional neuromuscular indications.
Our analysis of the newest carry my Shinier Gravis trial data remains ongoing and we are discussing the results with our newest KMG to opinion leaders during the clinical trial significant clinical improvement was seen during the dose titration period and persisted throughout the safety follow up period of the trial as well.
For more than a year in many cases, however, the randomized portion of the clinical trial did not reach statistical significance and paradoxically in some cases patients that were randomized to continue on M. affair pretty then this withdrawal design trial showed a worsening of their condition and then clinically improved upon entering the safety follow ups.
Period of the trial were placed on open label and the property. This outcome is in contrast to the successful prior proof of concept trial outcome.
[noise], we're conducting an extensive expanded analysis of the trial data a thorough review of all of the clinical results from all periods down to the individual patient level to determine if there are patterns and who responded and who did not and also looking for unusual features and the data of those that had unexpected response.
Just a treatment. These patterns are filed will help us determine how well the drug really works and also determine what types of trial designs, maybe suitable for a new clinical trial. If one is warranted on the basis of this analysis, we anticipate providing an update on our findings by the end of this year.
Oh subjects in our proof of concept studies conducted in Italy in Serbia for the treatment of estimated type three has completed their last visits and we are analyzing the study data we remain on schedule to report topline results for this proof of concept trial. This quarter spinal muscular atrophy is classified into touch one through four.
Type one being the most severe as somebody who is caused by defects in the gene that codes for the summer and protein and motor neurons or somebody types are caused by defects to the same Jim while severity is related to the number of defective copies and type of defect in the summer approaching.
Yes, I am a fan operating results.
US symptomatic improvement in SMB type three it likely would have efficacy in other types as well as somebody type three has an estimated prevalence of between 2900 3600 patients and the total prevalence of all types is about 10000 patients. If this proof of concept study is successful catalyst.
Tens to discuss the desire to have a multi center phase three clinical trial with input from yesterday.
I'll now move onto market expansion plans for Firdapse catalyst as Pat mentioned has partnered with card pharmaceuticals for the Canadian market and for US has been launched in that market.
Catalyst is also continuing its market expansion activities in the territory of Japan. As previously reported we have reached agreement with the Japanese PMDA on a regulatory pathway to seek approval of Firdapse in Japan.
Catalyst will be conducting a small clinical trial in Japanese subjects as Pat mentioned, we are continuing to see sales and marketing partner for Japanese market.
Patients have requested a long acting version of Firdapse in order to eliminate the need to plan their daily activities around multiple doses of Firdapse. We have developed the first group of cabinet long acting formulas and have also completed a pharmacokinetic or PK study of those capital formation.
The PK results from that study will inform the design of future formulations with the ultimate goal of providing patients with an effective medication, but they only need to take once in the morning on once a month.
We have also interviewed numerous physicians and LEMS patients to get input into the design of an optimal product that they feel would be superior to the current firdapse product offer.
List will also be supporting a proof of concept study for the additional neural must.
No most of their condition of hereditary neuropathy with liability to pressure Paulson sport HM two Pete the basis for exporting Firdapse in this disease is related to potassium channel leaders on the legs of the motor Morons Firdapse as a potassium channel blocker that may mitigate the pathological potassium leakage.
For me in a pure Dean has demonstrated benefit in an animal model of HBP, but.
But it would not be suitable for treating this peripheral nerves condition for the same reasons. It is unsuitable for treating labs, which has been elevated seizure risk after necessary therapeutic doses needed to treat a peripheral nervous disease catalysts will provide more details about the trial as the plan is finalized moving.
Moving on to intellectual property has described the recent issuance of Firdapse methods of administering through four Diamond appeared expiring on April seven 2007 for this.
This patent claims the method of treating human patient diagnosed with a three four diamond appeared in sensitive disease by administrators pure.
Purity or souls to slow start related patients, having certainly traditions and reach a little of the map to Jim.
We believe this patent will provide additional protection for the first product franchise and as Pat previously mentioned you have already become defending our intellectual property rights.
This extended period or product protection will become a catalyst to carry a research on new uses and product improvements for Firdapse for years to come catalyst is also working on new inventions for Firdapse that if successful will be described in future products. This patent will also this pattern was also listed in the Asterias Orange book with Us.
Aspiration dated April 720, 34 homes being listed in the Orange book No generic equivalent of Firdapse may be approved by the FDA unless the generic drug application proved that they do not infringe the listed Oren Toby applicant successfully challenges the validity of the listed Pat [noise] should.
Should catalyst succeed and having other patents issued preferred ups. Those patterns will also be listed in the fuse Orange book further strengthening the exclusivity or firdapse as allowed under the Hatch Waxman Act [noise].
Our current supplier firdapse for patients with LEMS and four ongoing clinical trials has not been affected by co that my team. Overall, we are excited about the opportunities to expand the current firdapse label as well as in additional countries and to develop a better product for all these patients we will provide updates on our clinical and regulatory progress as they become a bit.
I will now turn the call over time, we granted our Chief Financial Officer to review our financial results.
Thanks, Steve Yesterday, we filed our third quarter's 2020 form 10-Q and before.
Four to GAAP net income of 43.3 million or 42 cents per basic and 41 cents.
This year compared to GAAP net income or 18.6 million.
31 cents per basic and diluted share in the same period of 2000 and IP.
For the third quarter of 2020, non-GAAP net income excluding 1.5 million of expenses related to non cash stock based compensation was 44.8 million or 43 cents basic and 42 cents diluted share.
In comparison.
Third quarter 2019, non-GAAP net income excluding 817000 up expenses related to noncash stock based compensation was $14.1 million or 14 cents per basic 30 cents per diluted share.
Net product revenue for afraid that was $29.2 million for the third quarter 2020, the related cost of sales of $3.9 million in comparison for the third quarter 2018 net product revenue for it.
With $30.9 million related cost of sales in the quarter at 4.4 million, it's important to remember that our gross margin in both the 2020 and 2019 period continued to benefit from the inventory manufacturing profit an expense prior to the FDA approval.
Research and development expenses were 3.8 million for the third quarter 2020, as compared to $4.6 million with third quarter 2019.
Research and development expenses for the third quarter 2020 decrease when compared to those of the third quarter of 19, primarily due to decreases in expenses.
Medical and regulatory affairs, and quality assurance program expenses for ongoing clinical trials and studies.
Gamescape through as you go to trial on costs.
Our expanded access program, we expect that research and development costs, well continuously substantially in 2020 as the company our ongoing clinical trials and studies, including the estimated three proof of concept continue expanded access program on our long acting formulation program for for you guys.
To move forward with our required clinical study evaluating firdapse for the treatment of announced in Japan and began to evaluate the treatment for other neuromuscular disease.
Again expenses for the third quarter of 2020 totaled 10 million compared to $81 million in the third quarter 2018.
The increase when compared to the same period in 19 is primarily attributable to the expansion of our sales force in the first quarter 2020.
Any related non cash stock based compensation.
Cost of additional supporting personnel and the cost of contracting with a rare disease experience in sales sales agency.
We expect <unk> expenses will continue to be substantially in 2020, we continue to build our infrastructure.
Personalization programs what are the expansion of our sales activity so far yes.
We continue to pursue our losses against the FDA and health, Canada continued to prosecute our cases alleging infringement of our patent.
On September 32020, catalyst had cash and investments of 127.1 million I know fund that that.
More detailed information and analysis may be found in the company's quarterly report on form 10-Q, which was filed with the Securities and Exchange Commission yesterday.
No and they nine and can be found on the Investor Relations page of our website.
W. W. Dot catalyst pharma dotcom now I'll turn the call over to Pat.
Thanks Sally.
I just want to say once more how pleased I am with the operational results, but our team has realized to date during 2020.
We look forward to continuing our effort to assess the adult LEMS patients with their treating physicians.
And find ways burn FDI approved therapy for this to go find ways to an FDA approved therapy for this debilitating disease. We will continue our efforts to study firdapse for other rare neuromuscular conditions that are without an effective therapy as well as advancing our work in in a more.
Patient friendly long acting formulation of Firdapse.
Our recent announcements regarding the issuance of patent and legal challenges show our commitment to protecting firdapse and patience as we continue to invest in firdapse as a potential therapy for other rare nor muscular conditions also were excited to see our global footprint expand.
As we partner with Cai Pharmaceuticals in Canada, and as we continue our efforts to finalize partnering in Japan.
And lastly, we are very committed to bringing in other molecules Andrew our companies under the catalyst umbrella.
And with that we'll open the line for questions operator.
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Our first question today is from Joe Connors Aro of Piper Sandler. Please proceed with your question.
Hey, guys. Thanks for taking my questions here, maybe first Pat you just mentioned the opportunity in Canada, and Japan. Just wondering if you could help us think about the size of those opportunities.
Pricing of Firdapse in those territories, and then maybe just remind us the type and extent of exclusivity you are operating on in Canada potentially in Japan. Thanks.
Sure Joe Thanks for the questions.
So in Canada, we believe that.
The Canadian population, representing about 10% of the U.S. market.
As we we believe based on.
A few studies that we've conducted that there are probably three to 400 lens patients and Canada. So obviously, it's a much smaller opportunity than we have here in the U.S. and as you probably are well aware pricing in Canada is somewhat less than it here is here in the U.S.
So currently.
Hi is negotiating with.
We'll begin negotiations with.
With.
Government or public payers and and.
As well with private payers in the near future. So we expect that the pricing will be less than in the U.S., but not ready to talk about where their pricing is going to be at this point.
The Japan again represents about a 40% market size to us.
We think there are about 1200 LEMS patients in Japan.
There is.
Some epidemiology data that we think supports that opportunity.
We also recognize that pricing in Japan is is much different than in the less they use a sort of a basket approach using.
Other countries.
Several EU countries, Canada, and us to to get to the pricing. So pricing has not been established in Japan at this point.
And it will likely be.
Certainly less than.
US pricing for Firdapse.
Okay got it that's helpful. Thanks, if I could just ask the follow up maybe for Steve in his comments on the Musk Mg trial and that patient.
Patients seem to benefit during the run and then worsened during the randomized period and then improved once again in the open label just wondering if at this point do you have any any thoughts on why you saw that was that is that aspects of the trial design underlying baseline characteristics for some patients just wondering if you have any initial thoughts there.
Yeah.
Oh, there's really not much more detail that I can provide them what I already described.
Basically we observed a significant clinical improvement in the patients during the open label portions of the of the trial, which is consistent with the large clinical improvement that we saw in our first proof of concept trial and the randomization phase of the most current trials is what is inconsistent with all other prior data and the open label portion.
One of the most current trial.
As for the reason Oh, we still aren't sure if the preponderance of the evidence would lead us to believe that it could be trial design related but it's it's not possible to say that for certain at this point in time.
Okay got it thanks, so much for taking my questions.
Thank you Jeff.
The next question is from Charles Duncan of Cantor Fitzgerald. Please proceed with your question.
Hi patent team congrats on a good quarter and thanks for taking my question I had a couple of questions.
For the commercial side than the pipeline in any event the CFO. So quickly in terms of the commercial.
Commercial side.
Like to hear the commentary regarding the new patient adds I guess I'm wondering if you can provide any color maybe remind us as to what it look like in July of 2019 in terms of numbers.
And if you would anticipate with the kind of infection rate to see that much in late or do you believe that and I know you said said this pad that you can't call a trend yet, but do you think that there is sufficient demand to see new patient adds continue to.
Pick up.
Yep. Thank you for that question.
As I mentioned, we are very confident in the ability to.
Enroll new patients moving forward.
October was our strongest month since July of 2019.
And which is a very very good sign for us we feel that there is a significant pent up demand that was sitting there during.
Corona virus early on in the pandemic, where a lot of patients who are not able to visit their health care providers and when we take a look at some data that's out there about the impact that COVID-19, it had on the pharmaceutical market.
Neurologist are about 40% less likely to prescribe a new product for patients via telehealth versus in patient visits. So the biggest part of the enrollment is the opportunity for patients to actually be able to go visit in person.
And their physicians, which is why we feel that once the country's started opening up in the early part of the third quarter that happen and then positions were then able to start patients are more likely to start patients.
On Firdapse, so and we early on in November we're seeing that same trend. So to your question do you see that continuing October was strong November is just as strong. So we're very confident in the short term trend that we're seeing.
Okay, that's helpful and consistent with our diligence in neurology I hear you that it's a challenge, particularly from our interventional type.
Type diagnoses. So wish you luck with that continued trend maybe Pat move over to say Steve in the pipeline.
Steve first of all with regard to Japan appreciate.
Recent question that you're asked on on that in terms of market size, but can you provide us any additional color on timing I know that you may do work with a partner by the end of the year, but what would what would be required to actually get firdapse on a on the market in Japan.
[noise] well.
As I said, we have reached agreement with P.M.D.A., specifically they are requiring us to do a small study in Japanese patients and also collect.
After the randomization period of that study about a year's worth of safety data. So we haven't been specific on on timing, but obviously, it's going to involve the setup of that trial the execution of the trial. The collection of the data and then filing of Japanese underway.
The.
Overall.
Time period.
It was about three years.
Probably.
Okay. That's helpful. And then perhaps if I can ask a follow up on the mask empty analysis here working on any any patient characteristics that you're looking at such as symptom severity metabolism, concomitant meds or genotype or is this perhaps.
Trial design and conduct issue that you're you're investigating well.
Well the answer to your question is all of the above except for genotype.
You know M.U.S. KMG is an auto immune tradition. So there's really no change that are actually involved but naturally we're looking at age gender.
A concomitant medications in particular to see what they were on and and were also comparing that to our past a proof of concept trial as well and so that also adds a little bit of time to the overall analysis, because we have to pool about data together and take a look at it and we're looking at each individual patient looking to see.
How their M.U.S.K. mg symptoms varied from from point to point throughout the trial of each individual patient level looking at means of all the different groups and pulling different groups together to see if we can see any kind of a pattern in terms of who responded and who did and more importantly, why because that will help us answer.
Sure, whether or not we're dealing with something that's trial related or perhaps a response only on certain subgroups of patients or both.
It also will inform us on what kind of future trial design might be needed to ensure.
Ensure that we should get a positive signal if in fact, we decided to proceed with this and doing the trial in the future.
Yeah makes sense phenotype gold silver treximet heavily some as well.
Moving and Pat last question with regard to kind of bigger picture Pat I guess, some as you think about corporate development.
What do you what do you think is the best strategy two or a good strategy to best leverage the core infrastructure in terms of their traction you've gotten with establishing your commercial infrastructure sales or is that really looking to leverage the clinical.
Development capabilities or even even the back office in terms of focused on providing a drug for the orphaned orphan.
Andy indication.
Well, what would you like to do.
Charles where we have been from day, one really focused.
And I'll say day, one was January of this year, we have been focused on opportunities to leverage our sales force for other neuro muscular opportunities.
As you can imagine there are very few of those that that might be available.
And so we.
We have expanded our reach to look at other CNS or neurological type products.
It's.
Clearly late stage phase three.
Or beyond.
We have no interest in early really early opportunities are gone back to the bench.
Those are too expensive and too risky.
And so and Weve begun recently to look at other therapeutic areas. Yeah, we thought that represented opportunities in.
In the rare disease space, where we can really basically replicate what we did for neuromuscular in other words, if we had to put together another sales team for for example, endocrinology, which we don't have sort of a bolt on for us to look.
Other therapeutic areas rare disease it didnt require.
200 man sales force, where we could basically a referee replicate what we've done in neuromuscular to another therapeutic area. So in doing so that's given us an opportunity to expand the universe of of.
Of companies or products that were looking at.
That's perfect I appreciate all the color and I'll hop back in the queue. Thank you.
Thank you.
The next question is from Scott Henry of Roth Capital. Please proceed with your question.
Thank you and good morning.
Good morning.
A couple.
[noise] accounting related questions I eat a with the reversal of the tax allowance.
I would assume you'll be a full taxpayer going forward I know you know forgetting about any changes in the tax rate what would you expect your tax rate to be.
Approximately.
I believe that no one in the coming back no.
You'll see that we've that we put three for $31.3 million of different assets on the books.
[noise] I I think what what I'm asking is you know what would you expect the ongoing tax rate to be 22% and just trying to get a sense of what your tax rate will be going forward.
Yes.
Scott we were estimating now and it's early to say, what we think 22% to 25% is certainly.
The appropriate range for us to be considering.
Okay. Thank you I.
And when we think about 2021 it seems like there was a.
The clinic was it was pretty active in 2020, I do think R&D might dip down a little on.
Sequentially in 2021 from Tony Tony.
[noise] you know.
That's going to depend on the outcome of our analysis for the amnio as KMG.
It would be a similar cost to do another trial. If the decision was made to move forward again, so there might be a little early on 2021, but.
And of course, HM PPD will be running as well and.
There will be some R&D costs, there as well I would expect it to be approximately equivalent to where we were in 2020.
Okay. Thank you and then on the selling side.
Yeah, I I believe you have almost doubled the sales force and your revenues there are kind of the same nowadays it's not your fault. It's obviously COVID-19 factor.
But I guess the question is do you ever consider.
You know paring back expenses until we get to a greater opening or maybe you know freezing hiring yeah. How should we think about selling in the next couple of quarters, you know versus you know two years out or whatever when we think we'll be back to a normal.
Yes, good question Scott.
We we've had a hiring freeze really for the last several quarters. So when we've really not meaningfully added to ft East and that was by design by the way.
But as far as paring back no. We we've we've positioned the company so really accelerate our growth total revenues bye bye basically doubling the sales force bringing in the.
The in house telemarketing support team and the non personal promotion that we're doing we added about $5 million in selling expenses to this year's budget versus last years, and we did that at the beginning of the year and we executed on that flawless.
And so we've we've really got a great team put together.
Despite the fact that you haven't seen an acceleration in revenues. During this coping period is not unusual and I think that frankly.
Holding our own basically has been pretty good in this environment and so we.
We want to be ready, we don't want to.
To have terminated folks that we hired at the beginning the year because of coated we in fact have done the opposite we've gotten the team ready to go and where I think we're already starting to see that with the increased patient starts in September and October.
In November off to a really good start as well. So I don't think we're hitting full stride, we're far from it and I think we're well probably be looking at Q1.
God willing.
In this pandemic is.
More in the rear view mirror than the front windshield. So.
Heavy Hell I hope I've answered your question, but we're pleased with what we did early in the year on the.
On the FCC side for commercial and we stand by that and I think we're already seeing positive benefits from doing so.
Okay. Thank you that's helpful. Pat a final question.
Just with regard to the lens market of Firdapse, Hi are you seeing any changes in pricing or is pricing relatively stable.
Pricing is relatively stable.
Okay, great. Thank you and thanks for taking the question.
Great. Thank you Scott.
There are no additional questions at this time I'd like to turn the call back to Pat Mcenany for closing remarks.
Thank you very much for joining us today, we look forward to future calls, thank you and have a great day.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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