Q1 2022 Catalyst Pharmaceuticals Inc Earnings Call
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Greetings and welcome to the catalyst Pharmaceuticals C. P R.
Oh Twenty-twenty choose so nice results conference call.
At this time, all participants I understand that your message.
A brief question and answer session today's formal presentation.
If anyone should require yes, just joined the conference call from specialty G right.
On your telephone keypad.
As a reminder.
This conference is being recorded.
It is not like tissue to introduce your host Ali Grande Chief of catalyst Pharmaceuticals. Please go ahead ma'am.
Good morning, everyone and thank you for joining our conference call to discuss catalysts first quarter 2022 financial results and corporate highlights.
During the call today is Patrick Mcenany, Chairman and Chief Executive Officer.
We're also joined by either ameliorate quite cheap.
Chief operating officer, and Chief Scientific Officer.
Jefferies El Carmen Alright, Chief commercial officer.
Further for the Q&A session, we'll have that Gary Ingenito, our chief.
Chief Medical and regulatory Officer, Bryan illustrated our chief legal and compliance officer.
Before we begin I would like to remind you that in our presentation. This morning, I mean, the Q&A session. We will make statements about expected future results, which maybe 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 effects of COVID-19.
Actual results may vary from the expectations contained in our forward looking statements. These.
These forward looking statements should be only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our 2021 and we'll report on Form 10-K.
At this time I'll turn the call over to Pat.
Thanks Sally.
Good morning, everyone and thank you for joining us today for catalyst first quarter 2022 financial results and update call.
As you can see we had a remarkable first quarter.
As we delivered record net product revenue of $43 million.
A 42, 5% increase compared to Q1 of 2021.
We ended the quarter with $198 million in cash and short term investments.
Net income before income taxes for Q1 of 2022 was $17 5 million, a 76, 7% increase compared to $9 9 million for Q1 of.
2021.
We reported GAAP net income of $13 $2 million for Q1 of 2022 or 13 cents per basic share and 12 cents per diluted share.
During Q1 of this year, we repurchased 400000 shares of our common stock from the open market at an.
Average price of $6 38.
Since we started the program in March of last year, we have repurchased a total of two 6 million shares at an average price of $5.61.
We continue to make purchases at times, four and feel it is prudent and beneficial to our shareholders.
As a result of the outstanding performance for the quarter. We are reiterating our full year 2022, total revenue guidance of 195 million to $205 million, representing a 38% to 45% increase in total revenues.
<unk> 2021.
We also anticipate our cash Opex that is research and development and SG&A expenses to be between 65 and $70 million for the full year.
I'd like to begin todays discussion with a brief overview of our commercial performance and execution for the quarter.
Our robust growth was attributed in part to the positive outcome from the 11th Circuit decision reaffirming our orphan drug exclusivity for <unk> for the treatment of Lambert Eaton Myasthenic syndrome or limbs.
The removal of reserves from the market in February of this year following or a favorable court ruling was a defining inflection point for additional new patient enrollment growth as those patients previously prescribed <unk>.
Sorry to transition to <unk>, we anticipate the number of those patients to be about 125, almost all of which are adult limitations.
As of the end of April most all of those patients have transitioned to <unk> from their prior treatment.
We anticipate the conversion of the remaining patients should be completed by the end of this quarter we.
We believe the success rate is attributed to the exception of a couple of changes of our patient assistance teams and programs. So we're ready and prepared to help ensure these patients for the seamless transition.
We also continue to achieve high organic new patient growth preferred apps attributed to the successful execution of our commercial plan.
We benefited from the several key initiatives that have been underway, including enhanced awareness and education of patients caregivers healthcare professionals and expanded focus on paraneoplastic patients lens patients and thoracic oncologists.
Treat those current neoplastic patients and access to a diagnostic test to help accelerate the process for a definitive diagnosis.
We're extremely pleased with the performance of our commercial organization as we enter the second quarter with continued momentum we expect to sustain the organic growth rate driven by newly diagnosed patients and the considerable number of patients diagnosed with <unk>, who are not yet on <unk>.
We estimate that there are approximately 3000 limitations in the U S of which based on insurance claims data have four without a diagnosis or are misdiagnosed.
Approximately 1500 patients that have received a definitive diagnosis for limbs. We've only reached slightly over 800 patients, leaving much work to be done to assist the remaining patients towards a definitive diagnosis and to find their way to an FDA approved therapy to treat.
Their limbs condition.
We've also fortified our intellectual property estate with the issuance of three new patents, which are now listed in the Orange book.
These pads are directed to the treatment of patients suffering from limbs and covering all MSA operating metabolized or types within the limbs patient population.
We believe that these new patents will enhance the commercial durability of <unk>, which has U S patent protection.
Till 2034.
During the quarter, we've made considerable progress in our efforts to build a more diversified portfolio that aligns with our growth strategy and revised acquisition criteria.
Our key priority.
On the strategy and business development front remains to broaden and diversify our product portfolio through collaborative partnerships acquisition of commercial stage assets.
Or companies with FDA approved rare disease therapies.
To accomplish these objectives are striped chief strategy officer, Dr. <unk> syndrome is tasked with spearheading a stringent and disciplined approach to evaluating assets for portfolio expansion.
At this time, we're actively engaged in evaluating several potential opportunities to acquire products <unk> companies with drug products in commercial stage.
However, no agreements have been entered into to date.
On April eight 2022, Jacobus Pharmaceuticals filed a petition of red absurd.
But the U S Supreme Court to appeal catalyst favorable decision from the 11th Circuit Court of Appeals.
Now that the petition is filed they are waiting for a decision as to whether the high court will grant the recourse requests for <unk>.
It's the only about 1% of all such petitions typically granted by the court for a review we have been prepared for the prospect of this filing.
This appeal process could take several months during which time resurges status remains not approved in the U S.
We have submitted an S. NDA for pediatric label expansion to the FDA as part of our commitment to provide the very few pediatric lemons patients with access to an approved therapy in the meantime, we continue to make for it apps available so any pediatric Glenn <unk>.
<unk> through our expanded access program at no cost.
In March of 2022, we also received a favorable Canadian Federal court ruling enforcing for preferred apps innovative drug data protection.
This resulted in the setting aside of the approval of <unk> and it has been removed from the market in Canada. The matter has been remanded to the minister of health for Redetermination.
Our other litigation is the patent infringement case against Jacobus and Panther Rx the specialty pharmacy for researching this suite is in the early stages of discovery well.
We will continue to keep you advised as this case progresses.
Our global rare disease day at the end of February we were proud to partner with several national patient organizations to increase awareness about rare diseases, focusing on important health messages about limbs diagnosis treatment and quality of life issues.
The goal included raising awareness of rare diseases, and helping amplify the voices of those patients in need of innovative new therapies.
I'll now turn the call over to Jeff del Carmen, Our Chief Commercial Officer, who will provide you further highlights on our commercial execution.
Thanks, Pat and good morning, everyone.
The commercial team delivered a very strong quarter building upon the momentum from 2021.
Q1, <unk> sales were 43 million, which represents 13% growth quarter over quarter.
In 42% growth quarter versus the same quarter last year.
I'm proud of the flawless execution demonstrated by the entire commercial organization.
Commercially we have two primary objectives since Q1 first and foremost to transition the majority of <unk> patients to further without Alaska therapy second to demonstrate significant organic growth through naive new patient enrollments.
Ivy end of March over 90% of adult <unk> patients, we estimated to have been on reserves had.
I had been successfully transitioned to FERC.
With the remaining balance expected to transition by the end of the second quarter.
Full impact of the transition of the former reserve Chi patients will be realized in the second quarter.
Payer approval rates were greater than 95% for adult <unk> patients transitioning from <unk>.
I am, particularly proud of the catalyst patient services.
Which is doing a tremendous job supporting the needs of adult <unk> patients caregivers and health care professionals. During this process.
Actual organic growth naive new reimbursed patients were <unk>.
18% grater versus Q1 2021.
And 5% grater versus Q4 2020.
In fact March 2022, naive new enrollments.
The highest monthly total since launch.
Additionally, operational excellence 19 favorable access of greater than 90%.
Cross all payers government or private commercial insurers.
Continued high compliance of greater than 90%.
And contributed to a discontinuation rate approximately 5%.
We expect considerable organic growth each quarter in 2022, primarily driven by new patient enrollments of already diagnosed <unk> patients not yet on <unk> in a significant number of patients that are unfortunately, misdiagnosed or underdiagnosed.
April naive new patient enrollments remained strong while discontinuation rates were steady and in line with forecast our marketing strategies continue to generate significant returns on investment.
Approximately 15% of the active adult <unk> patients on <unk> have opted into our patient marketing campaign, which offers resources such as London symptoms tracker lemon.
Vision locator and lens patient journey.
Additionally.
<unk> content to small cell lung cancer Treaters continues to show strong engagement, which will yield more patients with a proper diagnosis of lens and accelerate the opportunity to receive treatment for this disease.
In addition to ringing the opening bell at NASDAQ to celebrate rare disease day analyst launched a lens podcasts on the award winning disease specific educational website lens aware dot com.
To increase awareness and connections in the Lambert Eaton Myasthenic syndrome community.
Furthermore, we partnered with key professional societies like the American Academy of Neurology muscular dystrophy of America to educate their members about lens and furnace at their respective conferences.
Our catalyst pathways patient services did a tremendous job in Q1, not only supporting patients transitioning from <unk>, but also providing financial and educational resources to new and existing adult <unk> patients caregivers and health care professionals.
In closing we are pleased with our performance in Q1 and are excited about the significant opportunity ahead to help all adult <unk> patients. We are confident that the strategies and tactics. We have put in place will deliver sustained organic growth in 2022 and beyond.
I want to thank the entire team at catalyst for their unwavering commitment to the lender community.
I will 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 I will now provide an update on our operational initiatives. Our objectives for 2022 are straightforward, which are to continue to increase the number of adult <unk> patients being treated with further expand the commercial potential for ups and identify synergistic opportunities in the rare disease space are met.
First team continues to make significant progress in engaging with health care providers to provide valuable direct education and content. We also promote and support accredited CME programs designed to increase awareness of <unk> within the prescriber community.
The largest of these CME programs to educate physicians through an online program on how to record box formally diagnose and treat labs and it is currently available to all U S. Physicians through month to date over 6000 health care providers have viewed the months get of course and also April 21 of this year 17 172.
Licensed health care providers have a parent CME credit.
In addition to this Medicaid program on May four catalysts supported a lump session at a large tumor board of oncologists that was hosted by physician education resources. This recorded session is the basis for another program that will provide be providing to physicians free of charge for one year as an enduring CME.
Of course intended primarily for oncologists and promoter to all oncologists in the physician education resources network and in several neurology and oncology publications.
We recently announced the three new patents covering additional patient Amazon metabolized types had been issued by the patent and trademark office, bringing the total number of issued patents protecting Florida franchise.
All three patents are listed in the Fda's Orange book, bringing the total number of patents that lists.
This important milestone now provides broad comprehensive protection for the Florida franchise, regardless of the Nazi metabolized.
We will continue to execute on our key initiatives to strengthen and protect the long term durability of Thermodox, which currently has patent exclusivity protection in the U S until mid 2034.
Our sub licensee partner <unk> pharma continues to progress on its phase III clinical study for <unk> to treat Lambert Eaton Myasthenic syndrome in Japan and.
In December 2021, they initiated the small scale phase III study and enrollment of patients is progressing as planned we expect the enrollment period to be completed by the end of this year or early 2023 catalysts supports Dido study program by supplying clinical trial materials and collaborating in their efforts.
And Theres also providing all needed technical information to file an NDA in Japan.
In alignment with our commitment to provide an approved treatment for all <unk> patients we filed a supplementary NDA submission package for a pediatric lumps label expansion for this.
This submission if approved would expand the use of <unk> to all <unk> patients over the age of six.
As a reminder, the pediatric patient population. This is a very small patient group with a total population in the U S estimated at less than 30 patients. The vast majority of patients that suffer from labs are adult patients for which <unk> is already approved.
If you expand the label indication is granted it will help simplify and improve access to the product for pediatric <unk> patients.
Well. This is an important initiative our development priorities are fully aligned on advancing our objectives to expand our portfolio of rare disease treatments beyond furthers. Our <unk> development program initiatives are focused on those discussed today and to maximize most of our internal resources on strategic expansion initiatives and we are in May.
A substantial part of our teams are very focused on evaluating several products and opportunities we remain highly confident in identifying the right opportunities to maximize our capabilities and resources.
Clinical and operational insights we have gained within our core market provide us with the expertise to drive progress in our current initiatives and pursue additional prospects.
We have good momentum behind our business development activities and contributions to the overall progress with the portfolio. We are building upon two enterprise relationships and making meaningful progress on our strategic partnership initiatives.
We are very well positioned to meet our objectives to foster future growth opportunities for the near and long term and are excited about the path.
I will now turn the call over to Ali Grande, Our Chief Financial Officer to review our financial results.
Thanks, Steve.
Without saying that we are very pleased with our financial results for the first quarter of 2022 alright.
Total net revenue for Q1, 'twenty two principally from fair enough spread revenue was $43 1 million or 42, 7% increase when compared to total revenues of $30 2 million for Q1 'twenty one.
Net income before income taxes for Q1, 'twenty two was $17 5 million.
76, 7% increase over net income before income taxes for Q1, 'twenty one of $9 9 million.
We reported GAAP first quarter 2022, and net income.
Pinpoint $2 million with 32 cents per basic share and 12 cents per diluted share an increase of 72, 8% year over year compared to first quarter 2021, GAAP net income of $7 7 million or seven cents per basic and diluted share.
As a reminder, in the first quarter of the calendar year like many companies in our industry were impacted by the reset of the patient deductibles in the first quarter of 'twenty 'twenty. Two we recorded an increase of $2 1 million in expense relating to our commitment to make China well donation.
501 C three foundations that support limitation.
Patient programs.
GAAP requires such.
Contributions do we expense in the first quarter of 2022, when we committed to make this conciliations.
It will support last patient paradigms for the for 2022 years.
Our effective tax rate for Q1 'twenty two on an annualized basis was 24, 2% compared to 22, 5% for Q1 'twenty one 'twenty.
For 2022, we expect that we will continue to benefit from the use of deferred tax assets primarily related into familiar state net operating losses and the.
Orphan drug credit, although those are subject to certain limitations is something in a more normalized tax rate.
non-GAAP net income for the first quarter of 2022 with $19 4 million or 19.
Basic share and.
And <unk> <unk> per diluted share, which excludes from that yeah. Then income stock based compensation $1 9 million depreciation of 34000, and an income tax provision of $4 2 million.
This compares to non-GAAP net income for the first quarter of 2021 of $11 6 million or 11 cents.
Basic and diluted share.
Which excludes from GAAP net income stock based compensation of $1 6 million.
We see Asia of 97000, and an income tax provision of $2 2 million.
Give us a sense and approximately 67, 9% increase non-GAAP income year over year.
Cost of sales expenses were approximately $5 9 million in Q1, 'twenty, two compared with $4 7 million in Q1 'twenty one.
This represents 22, 9% of total operating cost in both periods.
But Q1 'twenty two cost of sales were 14% of product revenue net and consistent principally in the royalties say reminder, royalties increased by 3% when net products sales exceed $100 million.
So we expect cost of sales to trend higher as the year progresses.
Research and development expenses were $3 4 million in Q1, 'twenty, two compared to $3 million in Q1 'twenty one.
And the expenses decreased slightly as a percentage of total operating expenses.
As a person with Q1 'twenty two I'm, sorry, 215% for Q1 'twenty one.
SG&A expenses for Q1 'twenty two.
$16 4 million compared with $12 7 million in Q1, 'twenty one S.
SG&A expenses increased slightly as a percentage of total operating expenses, 64%, but Q1, 'twenty two compared with 62% with Q1 'twenty one the overall increase in SG&A expenses in Q1 'twenty two was in large part caused by a contributions during the first quarter of 2022.
Two final ones seem to be owed any stations with the contributions will be used over the full year 2022. That's previously noted.
As we reported we ended the quarter with cash and investments of $198 million and no funded debt. We believe this allows us the financial flexibility finite.
R&D programs that support our strategic initiatives with client opportunities, leading to future growth and value creation.
More detailed information and analysis about Q1 'twenty two financial performance may be found in our quarterly report on Form 10-Q, which was filed with the Securities and Exchange Commission yesterday Nathan.
Can be found on the Investor Relations page of our website at Ww the really the catalyst.
Dot com.
And with that I'll turn the call over to Pat.
Thanks Sally.
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 limbs community and execution of our strategic priorities.
We anticipate this 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 all of our stakeholders.
Finally, I'd like to thank all of our valued employees for their continued dedication and commitment to positively impacting patient slides up.
Operator, we'd now like to open the call for questions.
Thank you very much Sir ladies and gentlemen, we will now be conducting a question and answer session.
If you would have asked a question. Please crystal and then one on your telephone keypad.
Information indicate that your line is in the question queue.
If you'd like to remove yourself from the question queue.
You can choose to have a pricing stall and then June .
All participants using speaker speaker.
Speaker equipment, it may be necessary to pick up the handset before pressing the talkies.
The first question comes from Joe Catanzaro of Piper Sandler.
Hey, everybody. Thanks, so much for taking my questions here, maybe the first one from me so with 90% of the former <unk> patients have been transitioned to <unk> I'm wondering if you could say, whether you're 125 patient estimate has proven accurate or is it still a little bit of a moving target and I think you mentioned.
Something about payer decisions for these patients, but what percent of patients were transitioned to free drug.
And when would you expect those patients to become paid reimbursed scripts, thanks, and I have a follow up.
Good morning, Joe Thanks for the question I'll turn that over to Jeff del Carmen.
Sure So Joe to answer your question about the patients being approved.
Greater than 95% of the patients that transition from Missouri, <unk> adult onset patients.
We're approved.
By the payer.
And so they they only were on bridge for a short time and we expect the full impact.
These patients to truly be felt in Q2.
I'll add to that Jeff said, yeah, we're we're pretty comfortable Joe with that number of 125, we think thats pretty accurate would then.
You know 5% either way.
So.
We will stand by that for the moment.
Okay, Great and I think if I heard correctly, you mentioned that March was the highest month for naive new patient enrollments since the launch.
Can you speak to whether you've continued to observe those favorable trends into April it and as the organic growth you're expecting this year driven entirely by improving diagnosis rates or are there other levers that you're looking to Paul.
Yes, Joe and we did continue to see strong enrollment numbers.
April almost matched.
At March.
So very strong numbers and in a lot of things contributing to that.
But another thing is the country.
Is opening up again patients are able to go see these positions.
We have a strong pipeline of patients that we suspect as being diagnosed as lengths. So the vast majority of them are over 500 of these patients that are leads and a lot of times. These patients are just waiting to see their physicians. So we suspect strong continued organic growth.
But it's going to come from these new enrollments is where our organic growth is in 2022.
Okay.
Okay, Great and maybe one just last one an obligatory one on business development.
I'm wondering what you know where you are in the process of some of those diligence that.
That youre that Youre doing that I think Pat you mentioned you were active on a on a couple of potential deals, but maybe you could just give a little bit more commentary on that thanks.
Sure Yeah, our criteria has changed a little bit Joe and that we believe that.
We're more interested today in commercial opportunities.
Perhaps drugs that have that have been approved by the FDA that haven't been launched yet or very early in their launch.
We think that we can add great value.
So those opportunities with our commercial team.
And our experience in launching rare disease drugs.
And so it's hard to be specific we are.
A fairly deep into due diligence on several opportunities.
And I think that's probably as far as I can go in describing where we are in the process.
Okay got it that's helpful. Thanks for taking my questions.
Thank you thanks, Joe.
Yes.
The next question comes from Charles Duncan of Cantor Fitzgerald.
Yes, good morning, Pat and team congratulations on a good good quarter commercially.
I had a few questions on that side of the business, but then also a couple of others.
Just kind of to continue onto some of the past questions. I guess, one do you think about two Q and some of the trends that you see going into it what do you think is going to be the primary contributor in terms of revenue.
Would it be the impact of the research he switches or would it be.
Organic growth in <unk> and if you if you had to project.
Yes.
Thanks, Charles for the question I'll, let Jeff take that question sure. So Charles twofold, really and you mentioned them.
We do expect the full impact of the reserve you transition those patients that transition from reserve I should say.
To be felt in Q2, so that's going to be huge contributor to the increase but also the organic growth that we're seeing from new patient enrollments is very strong as well so those new enrollments that we saw in March he does the revenue.
The impact of those patients will be felt until the second quarter as well and then we're also seeing a strong we saw a strong April and we're seeing a strong start to two so I think it's gonna be.
Two fold those both those things will be contributing strongly to the revenue in Q2.
And then when you consider the prescribers so going beyond the patience.
When you consider past prescribers are reserved chi.
Are you getting feedback from them that would contribute to I think you mentioned about 500 possible patients that you've identified.
And feedback from prescribers that would suggest that they you know call. It pool of patients is expanding as a result of in part as a result of the research he switches.
Yes, I do I do think that that's an accurate statement.
In essence, you're you're eliminating.
A distraction or.
Another.
Product that they can prescribe for lens.
So these physicians we do see.
Some potential there from these physicians those 500 patients are from either Symphony leads.
Leads that we're seeing from claims data our field force that's out there.
So its field intelligence, where they are.
We do think that we will have some tailwind because of because of these prescribers now.
<unk> <unk> lenses only.
Last question on the switches I imagine, it's a little too early to really clean clean many takeaways, but in your discussions with Ah patients and who have done. This switch have you have you gotten any compare and contrast relative to the services that were provided.
Bye.
The CIT co by N and researched in the past relative to your service and not only the drug the responsiveness to the drug but also the broader services of providing access support.
Yeah, and I'll focus on the services that we provide.
And I can tell you Charles I would not.
I don't think there's a better team out there.
A tremendous field force <unk>.
Including our regional account managers, our sales force our patient services team.
With a rare disease experience, we apply significant resources out there because it is our responsibility to make sure that these stations are taken care of that they have all the resources out there and.
They didn't have that if.
If they were on another job and now that they are part catalyst pathways.
They now have access to all these services and resources.
And then in some cases, it's not just product related it's all a go to lemons aware dot com I encourage everybody to go out there and look at the resources provided there. So we do the right thing for the lender community and I think that patients had to come over have told us that and have experienced that very proud of what the team has done.
Last question for Pat or Steve, perhaps regarding the Biz Dev activities.
You kind of alluded to this in the in the previous Questioners question.
But Steve you mentioned substantial progress to expand the portfolio and Pat mentioned engage in several diligence projects and I guess I'm wondering.
If you could provide some additional color on the progress or would you anticipate being able to consummate some type of portfolio expansion effort by the end of by the end of this year.
Yeah, Charles we don't want to be specific about particular opportunities other than to say as I mentioned earlier, we are in fairly deep due diligence on a couple of projects.
That look very promising.
And.
So I think that's about all the color that we can provide at this point.
But we are looking at.
We have shifted away from looking at late later stage later development stage opportunity too to really approved or commercial opportunities.
And the current market environment helped in terms of valuations.
Yes.
So I mean, it's it's finished.
A difficult 12 months in biotech land.
Yeah, you just look at the indexes that are down.
50% or more from a year ago.
The window for financing looks like it's not wide open.
It was a year ago, so I think.
The backdrop is certainly.
Making it more interesting and frankly two to the point, where we're being we've had a few companies actually approach us.
Which.
<unk> is.
It's kind of interesting and I think it speaks to the environment.
Company that may have to go out and do another financing and looking at their stock trading at a 52 low $2 52 week low and knowing that they're probably gonna have to discounted 15% to 20% a number of those emerging biotech companies are looking at what their strategic.
Jack options might be other than go into the market for our follow on offering.
So I would say that the environment is certainly better today than it was a year ago for a buyer.
Also likely speaks to your operational.
Yeah.
<unk> and performance so thanks for taking all my questions.
Thank you Charles.
The next question comes from Joon Lee of Trust Securities.
Good morning, gentlemen.
Good morning. This is less on for Jim and thank you for taking my questions.
First I believe in your prepared remarks, you have identified about.
<unk> pediatric <unk> patients.
Many of those are currently on for that and then.
I can tell you what will be the approval of the supplementary package essentially grant you and I have a follow up.
Yes.
The number of pediatric patients.
We believe.
Really actually less in 'twenty one.
We have a number without being specific we have a number of those pediatric patients that we currently provide the drug 200 expanded access basis at no cost.
So we have as I.
Mentioned in our prepared remarks, we have filed a supplement with the FDA, we're hoping to get the label expansion approved whereby pediatric patients who all those very small number of patients will all have access to an FDA approved therapy.
Without being prescribed off label or through an expanded access program.
Got it thank you for that clarity.
Then second on the in the past you've mentioned around 22% of new enrollments have been from a tumor patients.
Can you provide the latest figure if possible and or perhaps how that number has trended and then also what resources have you applied to target the tumor lens patient population. Thank you.
Sure.
Jeff to answer that.
So we are still tracking around the low twenty's as partners as far as percent of new patient enrollments that are also tumors that are tumor lens patients.
We expect the education that we're putting out there to gain traction this year next year to help increase that percentage.
We're currently doing we're providing significant educational content that is focused on oncologists, so erratic oncologist or any oncologists that treat small cell lung cancer.
Patients and that that education, those educational resources I should say are offered in a variety of platforms. So to help find some of these physicians that do treat these patients so but we're very confident in this.
This strategy and the resources that we're putting out there which will help identify these patients properly diagnose these patients with labs, and then become effectively treated with FERC apps. So we expect that growth later this year as well as next year.
Oh Gosh I'd also like to reiterate something that was sudden my prepared statements about our new CME program that is made available through physician education resources to oncologists.
Very helpful. Thank you for that.
Yeah.
Is there another question.
Yes. Our next question comes from Scott Henry of Roth Capital.
Thank you good morning, and a really strong results a nice job there.
Good morning, Doug.
Yeah.
Couple of questions first.
We've talked about a lot about the organic growth.
Where would you perhaps you want to put a range on that but.
What rate do you think organic growth in terms of volume approximate right now.
Well see.
Scott from from the day that we launched in early 2019, our year to year, we've seen about a 15 for 15% to 20%.
Growth rate organically and that's through the last couple of years being in.
Under pandemic conditions, so I think that we've done a great job in growing organically and as physician practices continue to open.
And diagnose patients get them a definitive guidance.
Diagnosis, we think that that the high end of that range could be R. R.
Our growth factor going forward so.
Jeff anything to add to that fully confident in the 15% to 20% you mentioned, Pat and like you said I.
I think that the biggest impact is the.
The backlog in patient visits.
We're waiting to alleviate here and we should we expect to see that this year and beyond which will help. These patients that are currently diagnosed not yet on therapy.
Become effectively treated by these physicians with <unk>.
Okay, great. Thanks for that color and then shifting over to the income statement.
I I I think you said 65 to 70 million of operating expenses I'm, assuming that is excluding <unk>.
Stock comp.
If that is in fact, the case would you expect Q1 to sort of be representative of the rest of the year I know there were some front end loaded expenses, but if that range excludes stock comp that's probably what we would get you. There just wanted to see if I should expect any trends within the year or if Q1.
<unk> representative.
Yes, Scott.
Non cash comp is something of course, we have every quarter, we have expenses or charges and those again are.
Not cash so those are excluded from our cash opex and.
That opex is defined as research and development and SG&A.
We do have <unk>.
Some seasonal what I'll call seasonal expenses in Q1 that most of our peers have.
As patients are getting reauthorized and having to meet new deductibles.
We our gross to net is obviously affected in Q1.
Also we you know we have a sizable.
<unk> expense for 501 C. III charitable foundation contributions and of course as our sales ramp up.
We have higher contributions and those are estimates based on at the beginning of the year based on what we expect to contribute over the course of the year.
And but we unfortunately, we.
General accounting practices.
Require us to take a full charge in Q1.
And then and that that is rather than amortized over four quarters.
Like you would expect that full contribution for the year is charged in Q1, so that to a certain degree really skews.
Certainly G&A expenses for.
For Q1.
Okay. That's really helpful. Thank you Pat and then I assume R&D should probably stay at these low levels till you acquire something it is that fair.
Yeah.
That's a good assumption.
Okay, and then final question I guess for Alley with regards to the royalty structure.
I recall reading in the K about 7% of Biomarin, another perhaps 7% sub royalties.
You mentioned that it goes up after 100 million per year.
Could you just remind me of what the terms of that work.
So the royalties will go up once we hit 100 million in sales as defined by the contract.
So that's why we expect royalties to increase as we progress in the year.
Okay, and how much is that step up after it and I assume that's a reset every year.
But approximately how much does it does it go up on the se.
Sales over 100 million.
3%.
It will go up an additional 3%.
Okay perfect Alright, thank you for that clarification and thank you for taking my questions.
Thank you Scott just one thing to add that you should be aware of and I think we've talked about it previously you know.
Now that most of our NOL is been used up.
I think that a a going forward tax rate of about close to 25% between federal.
State and local taxes, or we have to pay would be a good for modeling purposes.
Yeah.
Okay. Thank you very much sir.
Ladies and gentlemen, we have reached the end of the question and answer session.
I will hand over back to Mr. Patrick Mckinney for closing remarks.
Okay.
Thanks, everyone for joining our call. We look forward to our next corporate update have a great day.
Thank you.
Thank you. This concludes today's teleconference. You may now disconnect. Your lines. Thank you for your participation.
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