Q2 2023 Catalyst Pharmaceuticals Inc Earnings Call
Hum.
That's fair.
[music].
Hello, and welcome to the catalyst Pharmaceuticals second quarter 2023 financial results conference call and webcast if any once it require operator assistance. Please press star zero on your telephone keypad, a question and answer session will follow the formal presentation. You May press star one at any time can be placed in the question.
Q as a reminder, this conference is being recorded its now my pleasure to turn the call over to your host Chief Financial Officer Ali Grande. Please go ahead Ali.
Good morning, everyone and thank you for joining our conference call to discuss catalysts second quarter 2023 financial results and corporate highlights.
Leading the call today is Patrick Mcenany, Chairman and Chief Executive Officer.
We're also joined by Dr. Steven Miller, Chief operating Officer, and Chief Scientific Officer, and Jeffrey they'll Carman, our chief commercial officer.
Before we begin I want to remind you that you know our remarks this morning and in the Q&A session. We will make statements about expected future results, which may be forward looking statements for purposes of federal Securities laws. These statements relate to our current expectations estimates and projections and do not guarantee future performance they involve risks.
Great movies, and assumptions that are difficult to predict and may prove not to be accurate actual results may vary from the expectations contained in our forward looking statements.
Forward looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our <unk>.
<unk> 22, and our report on Form 10-K at this time I'll turn the call over to Pat.
Thanks Sally.
And welcome everyone to our second quarter 2023 results conference call.
Catalyst outstanding results for the second quarter 2023 reflect <unk> strong organic growth performance.
Meaningful side copper revenue contributions and continued execution excellence.
Our achievements reinforce our confidence for sustained growth and further underscore the exceptional execution capabilities across all functional areas of our business.
At this time I will present key highlights of our quarterly results.
We achieved total revenues of $99.6 million during the quarter, representing 87, 5% growth year over year.
This strong performance reflects bird apps product net revenues of 64.9 million achieving a net revenue increased 22, 3% year over year.
We are confident about the continued growth expectations for <unk> based on our recent initiatives targeting oncologist to treat a subset of lens patients suffering from small cell lung cancer as well as more recent lamps epidemiology data that Jeff will discuss.
Yes.
Total revenues were bolstered by five comp of second quarter net product revenue contribution of $34.6 million. The first full quarter under the catalyst umbrella.
non-GAAP net income for the second quarter was $60.4 million or 57 cents per basic share and 53 cents per diluted share.
This excludes from GAAP net income.
Noncash stock based compensation depreciation amortization of intangible assets and our income tax provision.
The expenses related to the amortization of intangible assets associated with the acquisition aside capa and reserves are approximately eight and a half million dollars for the quarter.
3.3 million of noncash stock based compensation.
GAAP net income for the second quarter was $37.8 million or <unk> 36 cents per basic share and 33 cents per diluted share.
We ended the quarter with cash and cash equivalents of $178.8 million.
Several factors, including continued strong underlying demand for preferred apps from both the autoimmune and small cell lung cancer patients as well as continued diagnosis. It's new lands patients provides us with the confidence to raise our total net revenue.
Your guidance for 2023 are between $380 million to $390 million.
Alan will provide more detailed financial highlights during her discussions in this call.
Part of operational synergies have been strong and we are pleased by the efficiencies and enthusiasm demonstrated by our teams and achieving a successful commercial and medical affairs integration I'm fine copper into our product portfolio.
But the integration nearly complete we are focused on realizing the products full potential.
In July we further diversified catalyst product portfolio with the addition of a moral alone a promising associated anti inflammatory steroid candidate for the treatment of Duchenne muscular dystrophy or D. M D. A devastating rare neuromuscular disease.
<unk>.
As part of the D. M D treatment regimen steroids, such as prednisone or commonly administered in addition to other therapies and are known to have notable side effect burden for more alone has the potential to be an innovative new treatment option to address this important.
Met need.
In clinical studies for more along demonstrated efficacy with a significant reduction in steroid associated side effects and benefits for both health bone health growth in height and behavior, along with reduced cardiovascular and pulmonary risk longer term.
For more alone has been granted orphan drug and fast track designation and assigned a <unk> action date of October 26 2023.
If approved it would serve as a meaningful advancement to the current D. M. D standard of care treatment paradigm and represent a pivotal reflection point for the company's growth potential.
We anticipate the commercial launch in Q1 of 'twenty 'twenty four based on the current timeline.
Lastly, with regard to the more alone.
More details are provided in our third quarter conference call regarding our commercial launch details financial impact and expectations for the near and longer term.
I wanted to take this opportunity to make several accounting point Sunday for moral on program.
We believe that we will take a one time third quarter charge of $75 million for the acquisition of the Blue more alone license is that expenses considered in process R&D.
Because we're more alone it's not said yet F T a approved or commercial.
Also as part of the transaction, we made it an approximate $15 million investment in Santa Clara.
Representing approximately 11% ownership in sent there that investment will be recorded on the balance sheet and mark to the market at the end of each quarter.
Additionally, we anticipate a modest increase in opex in the second half of this year.
As we prepare for the anticipated launch of a more alone in Q1 of next year.
Steve, Jeff and Alley, well have more to say about that but more alone program shortly.
Yes.
Last week, we submitted to supplement.
Supplemental NDA to the F T a C.
Seeking to increase the maximum daily dose occurred apps from 80 to 100 milligrams, we believe that a substantial number of limps patients may benefit from an improved increase dosage and we're confident that this has the potential to address an important need for these patients.
In Japan, our Japanese partner died of heart par pharma continues to make meaningful progress with its ongoing phase III study inferred apps or MSA I'm pretty.
In mid July they reported positive interim phase three results and we now anticipate D. N. A N D. A submission to the P. M D E and Japan by the end of this year.
[noise] upon submitting the NDA preferred absent, Japan, our territorial rights to develop the market, perhaps under the license with served previously Biomarin expand still include key markets in Asia, Australia, South and Central America, we planned.
He is just expansion to accelerate our global growth strategy preferred apps.
First in your targeted markets like China, and South Korea, before evaluating brand new pursuing others.
Initiatives are underway to identify potential partners in these targeted territories as part of our strategic plan.
We look forward to providing further updates on these activities after the NDA submission in Japan.
Yeah.
Clearly we've been very busy on the business development front as I discussed earlier.
We continue to successfully execute our portfolio expansion efforts as well as our continuing efforts to identify additional assets for potential acquisition or in licensing in a rare neurology and epilepsy therapeutic areas and expand the geographical footprint.
All of our existing products.
We are reviewing additional therapies that are commercial stage and our late stage product development.
Yeah.
As Jeff will discuss the recent MRI same thing ever more alone. It's a synergistic addition to our <unk> commercial and medical affairs teams, which will enable catalysts to provide high levels of service to both the D M D physicians and patients and highlights.
Part of our strategy to add new products didn't leverage our expertise capabilities and rare disease infrastructure.
Our investments and the two new assets attained this year aligned with our capital allocation priorities.
Our fiscal discipline has enabled us to fully fund these programs in the entirety, usually available cash reserves.
Our operational and commercial performance continues to fortify our growing cash position, providing a strong foundation to support our future growth initiatives.
We expect to have an event driven second half of the year that started with the closing of the license for more alone in July .
The submission of a supplemental NDA to the FDA last week to increase the maximum daily dose separate apps from 80 to 100 milligrams per day.
And just several months away now from a produce action date of October 26 for more alone.
As well as the NDA submission in Japan by Dido farmer by year end.
As we move forward in the second half of this year and then end and into next year, our business plan is fairly straightforward.
Continue to grow deferred apps and find copper brands.
Defend vigorously all of our intellectual property.
Prepare for a highly successful launch of a more alone.
Geographic expansion of our <unk> footprint.
And to bring in another product or a company ideally and epilepsy program.
This past quarter, we're pleased to announce the appointment of Tomorrow Thompson to catalyst board of directors.
Her knowledge and experience in rare diseases health policy and government affairs, well add valuable insights to our board and strategic planning.
I wanted to take this time to acknowledge and thank our very patient centric and dedicated team here at catalyst for all that they do every day to improve the lives of people suffering with rare neurological conditions.
I'll now turn the call over to Jeff Taylor Carman, our Chief commercial officer, who will update you on our commercial activities.
Thanks, Pat and good morning, everyone. We are very pleased with the Q2 combined net revenue of $99 6 million fueled by first access to all time high $64 9 million revenues and meaningful by comp of revenue contributions of 34.6 million positioning.
Catalyst well to achieve our revised revenue guidance of 380 million to $390 million.
I'd like to begin by discussing our progress with <unk>, the only FDA approved treatment for labs.
Q2, net sales of 64.9 million represents a 22% increase.
Over the same quarter last year, and a 12.8% increase quarter over quarter.
Direct resolved a steady new patient starts and low discontinuation rates.
As a reminder, lens is a chronic condition so patients typically remain on treatment once diagnosed.
Prescription approval rates were greater than 90% across all payers government or private commercial insurers patients enrolled in catalyst pathways, including those who are covered by Medicare and accessing foundation assistance had an average co pay of less than $2 per month.
Sustained organic growth will be driven by several key areas.
First we have a pipeline of greater than 450 patients that are diagnosed.
Not yet on first apps.
Accidently, 50% of new enrollments are generated from these leads we have identified additional sources for potential new lens patients that will enable us to maintain a high level of quality lead.
Seeable future.
Next our lenses education programs have resulted in a significant increase in Bolton calcium channel antibody test, which shortened the diagnostic journey for lens patients and lead to more patients being eligible for treatment with fair to us. It is important to note that we provide these tests at <unk>.
No cost to patients through a partnership with a national laboratory.
Additionally, our focused educational efforts to thoracic oncologists are working.
We continue to see an increase in the number of diagnosed small cell lung cancer patients.
Oncology thought leader liaisons have actively focused on the top 30 thoracic oncology centers to accelerate the diagnosis of small cell lung cancer patients.
Currently we assess that greater than 80% of small cell lung cancer lung patients are undiagnosed, representing a significant opportunity for growth.
We are pleased to report that in the coming weeks the results from a quantitative small cell lung cancer lens market size analysis will be presented at an upcoming leading lung conference, which will provide further insights into the small cell lung cancer lens patient population.
This analysis is part of an initiative to reassess the Atlanta market size, which may increase the overall prevalence about 3000 patients in the U S. We hope to provide an update later in Q3.
Now I would like to provide some highlights of our progress with five copper.
We swiftly executed the seamless integration of buy copper into our newly established epilepsy franchise.
Well, we are still in the early stages by copper commercialization is progressing well and in line with our expectations.
We successfully on boarded and trained 27 five comp a regional account managers.
Equipped with the necessary tools and knowledge to hit the ground running for the first full quarter with catalyst.
We are encouraged by the continued adoption of buy copper as well as the overwhelming support from key opinion leaders and advocacy within the epilepsy community.
Q2, net revenues four five copper with $34 6 million, which adds further confidence toward achieving our full.
Full year 2023 revenue estimate of $130 million.
As I have mentioned, adding five comp of two our portfolio is an ideal strategic fit for our existing commercial infrastructure.
With a 45% overlap and fight copper and productive prescribers in increased share of voice that will benefit both franchises and driving growth.
We will begin to fully leverages overlap later this year.
Let's turn to the moral of promising best in class associated anti inflammatory steroid treatment.
For D M D.
The U S prevalence for D. M. D is estimated to be between 11013 thousand patients corticosteroids are the current standard of care for treating D D.
Ah patients currently being treated for D&B approximately 75% of these patients receive concomitant steroid treatment.
However, steroid treatment is associated with significant side effects.
We believe memorial if approved would offer an advancement.
The current treatment paradigm.
Being an important unmet need.
M D patients and caregivers.
If approved by the <unk> date of October 26, 2023, we expect a commercial launch in the first quarter 2024.
We plan to integrate the law alone into our neuromuscular franchise, where we can leverage the teams demonstrated capabilities commercial expertise and experience, we anticipate minimal sales and marketing personnel expansion with fewer than 10 additional team members required.
If approved but more alone will be supported by our best in class catalyst pathways program.
Ensure that all eligible patients can access the product.
In summary, we are very pleased with Q2 results and confident in achieving our revised 2023 revenue guidance of 380 million to 390 million. Additionally, we will leverage our demonstrated commercial capabilities as we prepare for the expected launch of a more alone.
I want to thank the entire team are catalysts for their unwavering commitment to patients and look forward to a successful second half of 2023.
I will now turn the call over to Dr. Steven Miller, our Chief operating officer, and Chief Scientific officer or update on R&D activities.
Thanks, Jeff.
Our clinical development and regulatory strategy for <unk> continues to focus on expanding access to all Ms patients enhancing preferred apps patent of state to maximize its commercial potential and integrating the newly acquired for copper and for more alone products into catalyst organization.
First I would like to discuss our development efforts to increase the indicated maximum dose afford us from 80 milligrams per day to 100 milligrams per day.
Catalyst has now submitted a supplementary NDA to the FDA for this change to the maximum daily dose while there can be no assurance of acceptance or approval of the SASSA MBA barring any significant issues with the submission catalyst anticipates completion of the agency's review in the first quarter of 2024.
Currently there are a number of lumps patients who are already being treated at 100 milligram daily doses of <unk> after their physician and worked with the pharmacy and insurance providers to justify the higher dose.
Other patients on the current indicated maximum dose of 80 milligrams per day and their physicians.
Expressed a desire to increase the patient's daily doses to 100 milligrams to Akamai optimize therapy.
And this supplement if approved will help those patients based on our type C meeting with the FDA in May of this year, we believe that our submission strategy constitutes an acceptable basis for seeking a 100 milligram maximum daily dosage preferred ups.
Regarding our global expansion, we anticipate a dido pharma our partner in Japan will submit their M. P. A preferred apps to the pharmaceuticals, and medical devices agency or P. M. D. I by the end of 'twenty to 'twenty three we estimate that there are about 1200 to 1300 lumps patients in Japan submit.
Submissions of this type typically take about 10 months to review by the P. M. B, a but there can be no assurance that such a solution will be found approvable within this 10 month period.
As previously reported catalyst acquired U S rights to <expletive> Hopper or PREPA, now, which was the first and only approved alpha receptor antagonists or inhibitor.
<expletive> Hopper is approved I shouldn't.
Anti seizure medications to treat partial onset seizures.
With or without secondarily generalized seizures in people with epilepsy, who are four years of age or older and with other medicines to treat.
Primary generalized tonic clonic seizures in people with epilepsy, who are 12 years of age or older.
As previously reported in March.
An article published in epilepsy showed the prepping all effectively reduces seizures in patients with eight different rare genetic epilepsies in the second quarter researchers published four abstracts highlighting for copper that were subsequently presented both at the 'twenty to 'twenty three I am meeting in Boston this quarter and virtually.
These are where our core presentation sponsored by air Sorry, who continues to hold the rights to <expletive> Hopper in countries and regions outside the U S. The published abstracts detailed the results from four independent clinical studies further documenting the uses of prepping out in both focal and generalized epilepsy across a diverse range of patients including those.
With the history of psychiatric and behavioral events under age patients and patients with seizures linked to Lennox <unk> syndrome or lgs.
Just this month researchers published three papers summarizing studies, the first safety and efficacy.
Oh <expletive> copper in pediatric patients second a study on the use of <unk> copper as an alternative to oral phytophthora and epilepsy patients and third the global pool real World extension study focusing on prep and all efficacy and safety by age group when treating focal and generalized epilepsy.
Taken as a whole all these academic research activity highlights the interest in <unk> unique mechanism of action its potential to treat a variety of rare and refractory epilepsies and the ongoing evolution of the epilepsy field towards precision medicine and identification densification of treatment of a rare epilepsies in an area.
Of great interest to catalyst.
Next I would like to discuss our recent in licensing of a more alone for the treatment of Duchenne muscular dystrophy or D. M. D from sensor for the North American territory.
The more alone is a promising associated anti inflammatory steroid treatment for DMT and clinical studies for moral and demonstrated efficacy with a significant reduction of corticosteroid associated side effects and benefits for bone health growth and behavior offering the potential to address an important unmet medical need in PMT.
Patients, but more alone has received FDA orphan drug.
And fast track designations and has been granted <unk> action date of October 26, 2023. The FDA has also granted a moral alone rare pediatric disease designation.
DMD is a rare genetic disorder occurring in about 600 male newborns each year. The prevalence is about 11000 to 13000 patients that is gradually increasing as the available treatments continue to increase the survival of patients suffering from this tragic disease.
D. M. D is a condition that we can skeletal at heart muscle that quickly gets worse with Todd and this is the most common form of muscular dystrophy. It is an excellent genetic defect to the dystrophin gene and like virtually all excellent diseases almost exclusively affects males. Approximately 30% of the patients are amenable to wanna be approve.
[noise] exon skipping therapies with the other 70%, leaving other treatments like corticosteroids. However, even when the patient is treated with exon skipping treatments continue to need other treatments like corticosteroids at some level. The majority of the empty cases are inherited from their mother, who is the defective gene carrier, but approximately 30% of the cases are due to move.
Spontaneous genetic mutations that happened randomly and are not inherited.
The parent project muscular dystrophy or P. P. M. D reported just this month with an average age of diagnosis is four two years and the average initiation of corticosteroid use is five nine years with 83% of patients taking corticosteroids daily and the remainder taking corticosteroids on a less frequent basis, presumably for safety.
<unk>.
This report was based on a registry of 5400 might be a patient spanning 15 years of treatment. It is anticipated that the moral maybe a safer in routine clinical use and may lead to earlier initiation of therapy closer to the time of diagnosis and more regular use steroid therapy.
Earlier this year Jafar shot at all in a meta analysis of published clinical data for the Moreland hypothesized how memorial and makes it a better safety profile, but other corticosteroids.
But more alone is a first in class steroidal anti inflammatory drug and that it lacks an oxygen functional group at the 11th position of the steroid bring system. This omitted oxygen functionality is one of five molecular interactions sites with the glucocorticoid receptor, thus altering for moral amongst interaction with this receptor type.
This difference sets it apart from all other approved and researched medications in the corticosteroid class in animal models for more alone retains the anti inflammatory properties of steroid medications, but lacks the side effects such as growth retardation bone morbidities and muscular atrophy as a result of this difference for them.
More numerous cortical steroids, such as prednisone and deposit courts Act as agonists of the mineral court a court receptor raising blood pressure and volume via the renin angiotensin system.
Contrast in preclinical models for more alone has the same activity actually approved upload a player are known or spur auto lactone drugs, which are both potent antagonist of a mineralocorticoid receptor thus eliminating mineral court a court side effects in football on therapy.
In summary in summary, Lemoore alone may optimize traditional steroidal anti inflammatory activity, while eliminating most of the glucocorticoid mineralocorticoid side effects due to its unique binding and agonism or antagonism of the various corticosteroid receptors.
Overall memorial it has the potential to be a differentiated treatment for D. M D with a desirable profile in comparison to the current standard of care options addressing an important unmet medical need for DMD patients starting at an early age.
Moving on to our medical information function countless neuromuscular medical science liaisons or M. S cells are continuing to reach out to oncology health care providers to build relationships to provide education about the importance of testing their patients for labs in order to expand the use of <unk> by those patients oncologists at all.
Already treat labs in their practices of film the patients treated preferred that's maintained muscle strength, improving the patients and physicians perception of wellbeing and the patient's ability to maintain functional mobility. All of these domains are critical for the patient's quality of life.
As previously reported travelers is also onboard the new Fi copper omnicell team and their new director all with prior epilepsy experience to support for the Council.
Copper is a mature product for which extensive published information and real world data is available, including the publications and abstracts I previously mentioned.
MSL team will bring this information to health care providers that treat epilepsy and also address any questions that the physicians may have about using for copper. Additionally, catalyst Viscount MSL team tents epilepsy conferences like a yes, and I E C. In order to keep like Hopper in the minds of epilepsy treat or sensei, particularly.
Option for epilepsy treatment.
With the in licensing of a more alone catalyst will be adding four new M. S. L specializing in duchenne muscular dystrophy due to the unique mechanistic features of a moral alone. It has and continues to be an active area of research that will result in an ongoing stream of useful medical information that should be disseminated to doctors so that they can continue to.
Optimizing the treatment of DMD patients.
Future updates will be provided as medical information programs are developed and implemented fourth memorial.
As a service to the physician community catalysts provide support for the development of continuing medical education or CME programs that are part of the formal ongoing education of healthcare providers catalyst has over the past three years provided support for three CME programs for various aspects of the diagnosis treatment and management of lumps.
Over this period of time thousands of health care providers have utilized the CME programs learning modules at hundreds of them are taking semi test each quarter in order to be granted CME credit toward maintenance what their medical licenses in the fourth quarter of 2022, we sponsored a new CME program the targeted oncologist that treat small cell lung.
Cancer due to the correlation between this cancer on associated lumps.
And just over four additional months since the use of this course was last reported almost 100 additional oncology health care providers have taken B C and D test for credit and short these programs are popular with lumps treaters.
And based on the CME tests, taking frequency appear to be a valuable part of their ongoing medical education. At this time I would like to turn the call over to Alicia Grande our CFO .
Thanks, Steve.
We saw terms donnelley's second quarter 'twenty place, we kept us on pace for another year of exceptional financial performance and strong execution.
The business development front, we continue to be busy as we enter into an agreement for their north American license rights. Furthermore, it.
It is important to note that the memorial on transaction did not close until July in the third quarter of 2023.
Our total revenues for the second quarter was 2023 were at $99 6 million and 87, 5% increase when compared to total revenues of $53 1 million for the second quarter of 2022 sorry.
Revenues and then for the second part of 2023 semi lead product fair at ups.
$64 9 million or 22, 3% increase year over year compared to 53 million for the second quarter of 2022.
Revenue for <unk> was 34 6 million for the second quarter 2023.
Net income before taxes for the second quarter of 2023 was $48 5 million 71, 8% increase year over year compared to $28 2 million for the second quarter of 2022.
We reported GAAP net income for the second quarter of 2023 37.8 million 36 cents per basic stayed three cents per diluted share an increase of 74.7% year over year compared to GAAP net income for the second quarter 2022.
One 6 million with 21 cents per basic and 20 cents per diluted share.
non-GAAP net income for the second quarter.
2023 was 61 4 million or 57 cents per basic and <unk> 53 cents per diluted share, which excludes from GAAP net income the income tax provision of $10 8 million amortization of intangible assets related to acquisitions of research M side Kampa.
Of $8 5 million stock based compensation expense $3 three.
3 million and depreciation of 82000.
This compares to non-GAAP net income for the second quarter of 2020 to 30.3 million 29 cents per basic and <unk> 28 cents per diluted share.
<unk>, which excludes from GAAP net income the income tax provision of $6 6 million.
Based compensation of 2 million and depreciation of 37000.
Yeah. Both represents approximately 99, 2% increase of our non-GAAP net income year over year.
Amortization of intangible that flying intangibles acquired in connection with both the fight cancer and their usage of products was approximately $8 5 million for the second quarter of 12.
23.
Did not have any amortization in the comparable at 2022 quarter pause, we hadn't had a boy either product during the second quarter of 2022.
We expect intangible amortization for acquired products to be approximately eight 5 million for the third quarter of 2023.
Subsequent to the second quarter due in July 2023 we closed the North American license acquisition of Marlin and paid approximately $75 million up in closing we believe this demand will be reported as a one time charge to research and development expenses during the third quarter of 2023 and will.
Not impact future intangible amortization, however, it will be significantly it will significantly increase research and development expenses for the third quarter was 2023, making it not comparable to prior periods.
Our effective tax rate for the second quarter of 2023 on an annualized basis was 21, 5% compared to 23, 7% for the second quarter of 2022.
For 2023 the defense to the statutory federal income tax rate of 21% was primarily driven by state income taxes and anticipated ammo permanent differences.
But by the orphan drug tax credit claims.
The effective tax rate is affected by many factors, including the number of stock options exercised in any given period and is likely to fluctuate in future periods.
Cost of sales expenses were approximately 12 million in the second quarter of 2023 compared to $7 6 million in the second quarter of 2022 and consisted primarily of royalties.
As a reminder, royalties afraid ups increased by 3% when when net product sales exceed 100 million in any calendar year 'twenty.
2023 2023 this threshold was met during the second quarter, making related royalties trend up for the second quarter. We expect all afraid of snap product sales for the remaining of the year to be subject to the higher royalty rate.
Cost of sales related to find some thought in 'twenty two and you can see is exclusive of amortization of intangible assets.
Research and development expenses were $4 million in both the second quarters of 'twenty to 'twenty, three and 2022.
As previously discussed we expect a significant increase in R&D expenses in the third quarter of 'twenty to 'twenty to 'twenty three with the one time expense of 75 million related to the acquisition of the North American license rights because I'm one of them you mean July 2023.
Well why don't you sell late stage drug candidate would that be due so date of October 26 2020 feet.
SG&A expenses for the second quarter of 2023 totaled $28 4 million compared to $12 9 million in Q2, 2022.
SG&A expenses increased slightly as a percentage of total operating expenses to 54% for Q2, 'twenty three compared with 53%.
The overall increase of SG&A expenses in the second quarter of 2023 was principally due to expenses related to five compounds such as commercial expenses under the transition services agreement selling expenses and an increase in head count principally for the sales and marketing force hired during May 2020.
Yeah.
As reported we ended the quarter with cash and cash equivalents of 178.8 million. That's a reminder, subsequent to the border during July 'twenty to 'twenty three we used approximately 75 million available cash in connection to the license acquisition of their North American rights for banana and approximately 50.
<unk> million for a strategic investment in common stock of the license twice since theyre in.
In addition, we paid 10 million due under our research your license upon the first anniversary of the transaction also occurring in July 2023.
We believe our current funds continue to allow us the financial flexibility to fund our existing R&D programs meet our potential contractual obligations and support our strategic initiatives and quickly expansion efforts, leading to future growth and value creation.
In the event the FDA approves it tomorrow alone on its <unk> date in the first quarter as we anticipated catalysts will own 36 million in milestones under our agreement with Sinclair.
More detailed information and analysis of our second quarter 2023 financial performance may be found in our quarterly report on Form 10-Q, which is filed with the Securities and Exchange Commission yesterday August nine and Tommy.
And we found on our Investor Relations page on our website at Www Dot catalyst final dot com.
With that I'll turn the call over to Pat.
Thanks Sally.
In closing the first half of 'twenty to 'twenty three there's been a remarkable period of accomplishments for the company demonstrated by our success in executing on our strategic vision.
As we advance into the second half of this year, we're well poised for sustained momentum to capitalize on our expanded product portfolio and have a sound strategy for our company's future.
I want to thank our catalyst team.
Partners and collaborators for their hard work and ongoing commitment to the patient communities I'm proud of our accomplishments are aligned with our core mission to deliver value to patients healthcare providers and shareholders.
At this time I'd like to turn the call over to the operator to open the line for questions.
Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment, it may be necessary to pick up.
Handset before pressing the star one one moment, please while we poll for questions.
First question today is coming from Joel Ken Zaslow from Piper Sandler Your line is now live.
Hey, everybody. Thanks, so much for taking the questions and of course I want to congratulate you pad on all your success, you've had and hope you enjoy a well deserved requirement.
I had two.
Two questions maybe first on <unk>. It seems that the patient pool is holding pretty steady at around 450 patients just wanted to know if that lead pool is coming so.
Lee from Euro V. G. C C testing or are there other sources than if you have the data do you know how that lead pool splits between autoimmune and small cell lung cancer patients and.
And I guess as a follow up I think last quarter, you said around 25% of new enrollments came from tumor lens. So wondering if you could speak to that dynamic into Q, thanks, and I have a follow up.
Thanks, Joe.
And thanks for your kind wishes about retirement.
Yeah, great quarter, good questions, Jeff do you want to take.
The question with regarding to the lead pool sure. So Joe I'm. When you mentioned the 450 working leads where we're getting those leads we've identified new sources and a lot of those are stemming from the increase in the V. G. C. C testing, we partner with National laboratories that they they.
Provide us some leads Ah patients that had positive V. G. C. C antibody tests. So we know the patients that most likely have lens and then that's when our field force goes and tries to help these patients if a third apps is the appropriate treatment for those patients. They work directly with the health care providers. So that's why we do that.
But we continually source new leads and news find new ways to tailor that to maintain that 450, because we know it is very important in an ultra orphan disease to identify the patients as.
As far as the mix goes the vast majority of these leads are the autoimmune or the non small cell lung cancer last patients and but we are seeing an increase in the number of these leads that also had small cell lung cancer and that's what's giving us validate.
<unk> that all the efforts, we're putting out there the educational efforts and resources are paying off because.
Because being able to help these patients get diagnosed I hope that helps Joe.
That's really helpful. Maybe my follow up is on the more alone I just wanted to see if you could contextualize the future potential launch and I guess more specifically, Jeff I think you said there are about 75% of DMD patients that are currently receiving steroids. So just wondering if there are expectations.
You would see patients switching and if so to what extent and what drives that.
And when it takes times as well sure. So Joe will provide more details about the launch are probably on our Q3 conference call, but yeah. You are correct and it's about 70% or so of DMD patients are on steroids as the backbone of treatment for D. M D.
And we do feel like there is a value proposition with the law alone versus what's available in the market.
And and we do feel that some of these patients will like to switch over to Lamar alone when available.
Sure well have a lot more to talk about on our third quarter call. After the Paducah date October 26.
So we're working on our launch details now budgets forecast and I think that all that.
It will be far more informative about our path forward with where more alone on that call.
Okay perfect got it I appreciate you taking my questions. Thanks, so much.
Thanks, Joe.
Thank you. Your next question is coming from Joon Lee from <unk> Securities. Your line is now live.
Hi, Good morning. This is last time for June actually just wanted to Echo Jeff's comments and congrats to you Pat on our retirement well deserved.
Just in regards to our Fi comp are what are your thoughts on the recent script trends and could you provide any sort of update on the sales force transition.
I have a follow up.
Jeff you want to take that sure Hey, Les the transition has been extremely smooth integration is the way. We wanted it was swift and effective now as far as.
The numbers you know, we we forecasted a flat or fight comp versus 2022.
And we've met those expectations.
Great News is in the recent four week Rolling four week data from new prescriptions, we are seeing a stabilization and actually a slight growth for the first time and so we know our efforts are working what we we will continue to analyze how our marketing resources are gaining.
<unk>, but we're very confident they will be effective and the other part is I mentioned it earlier is we're so confident about by comp because of the overwhelming support that we've received from key opinion leaders and also the advocacy out there so.
It's been a great transition and we're confident about the future if I copper.
Yeah.
That's helpful. Thank you and in regards to indicating for the second half of the year and do you have a little bit more visibility now fair. That's a that gives you I.
I guess, what sort of comfort level and to the guidance and then.
What do you think about that gross margin as we exit the year I you know beginning first half was around 88 do you think you can achieve that for the second half.
And then what additional ramp up in SG&A for the the the number of sales force that you identify for you have around the world launch. Thank you.
Yeah I'll take the last one first less we're not ready to talk about the increase in SG&A, yet as I mentioned were putting together the plan.
We've we've we do believe obviously, there's going to be an uptick in opex in the second half of the year as Jeff starts to add a few.
More to as a commercial team and marketing team and a few of the MSL.
Uh huh.
With regard to margins, we expect that our margins well.
They are pretty close to where they are now they've been fairly consistent.
Year to year.
And then.
Your your first point being.
The what we see in the second half and what gives us confidence with regard to the.
So our revised guidance was said.
And we never deviated.
Even in Q1 to talk about the seasonality of most onshore rare disease drugs.
We experienced that but despite that for the first half programs revenues were up 28% year over year.
<unk> 23 versus <unk> 22, so consistent with what we've said all along and remember with the ultra rare disease drugs the growth is not necessarily linear.
Because patients are hard to find patients are hard to get on therapy.
<unk> therapy once they're found and so it is you know, it's a little bit of a saw tooth but.
We're very confident in achieving.
Keeping our guidance and hopefully towards the high end of that guidance for the second half of this year.
Yeah.
Great. Thank you.
Thank you next question is coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.
Yes.
Yes.
Yes.
Great.
Yeah.
You bet.
Yeah.
Yes.
Sure.
Pardon me trumps the operator would you mind picking up your handset.
Yes.
Yeah.
Yeah.
Well.
No its not great Charles.
Okay.
Alright can you hear me now yes. Please proceed.
Okay, Yes, sorry for the technical issue. So congrats on the guidance raise congrats Pat to you and your transition near term transition.
Had a couple of questions first of all with regard to for that I guess I'm wondering Jeff. If you had the one thing that you would like to see.
In terms of the future for <unk> would it be new patients or increased persistence for for Damps, and then I had a question regarding FICO fight comp, but I'll wait for your answer I'm forgetting.
Sure I mean, the persistence is already very high Charles over 90%.
So our focus is really helping more patients get on treatment because we know these patients will benefit from further apps.
So that's that's the primary goal.
Do you have do you have any internal metrics by which you measure that and what your you know kind of goal number is if you if you will not necessarily granularity, but but kind of a percent.
By this time next year.
We do have an internal goal that as you know we have not disclosed how many patients you know in specific patient count.
But yeah, we do have that backhaul and it's really about getting the net new patients. So the discontinuation on an annual rate is also very low at about 80% or I'm, sorry, 20% on an annual basis, 20% discontinuation.
And in making sure ensuring that we get a lot of new enrollments per month. So that's what we look at it as more of a new page net new patients coming in the other thing I wanted to add is you know I mentioned it in your script the revised assessment of the lens prevalence in the U S.
It's gonna be a important part for us and help us grow well into the future helping some of these patients had mentioned it also that greater than 80% of these small cell lung cancer lantus patients are unfortunately on diagnosed with loans. So that is one of our key focus area.
He is is educating these thoracic oncologists that win small cell cancer patients are diagnosed have symptoms similar to London symptoms that they do apparently is plastic panel that includes V GCC antibody tests.
That's what we're excited about but we look forward to sharing more information about the increased prevalent here later this quarter.
Very good sorry, I Miss those prepared remarks, I'm juggling calls quick question on <unk>.
I'm wondering if you could provide some color on the synergies that you're seeing in terms of marketing sales and back office Halfords.
Relative to first apps for that for <unk>.
Yes.
So Charles it's interesting we've had a lot of anecdotes from the field and we're just so incredibly thankful that the collaboration is there between the two sales forces really and I know you mentioned the back office, but when you look at some of the foot fared apps.
We've had so many physicians probably 80 plus percent of our physicians have already prescribed wants that talks about that speaks volumes about the ultra rare part of lens, but there are only 3000 patients out there. So physicians may only see one patient so.
So when you have a fight comp a ramp that's out there speaking to a physician about five Tampa and then it comes up about lens than they they have a question they actually collaborate with their ramp from the first app side and say the physician wants to talk to you about this and we've seen success is where.
ER physicians that we did not have targeted.
That a buy copper Ram went in there.
Connected to two and then a a lot of his patient was put on first apps. So that's just a quick example of how we can leverage this overlap and in the back offices and it's the same thing you know you have speaker programs or you have launches with some offices that.
Why not bring both.
Both the ramp into that appointment. So you know all those things the collaboration the the overlap and the synergies are are are great and what we expected if not more Charles remember with the flat comp our Ram has a volume done on.
Bored with US a couple of months.
Yeah, so they're getting their feet wet.
Catalyst.
I expect in the second half and into next year, well see a lot more cross promotion between the two products and the two teams.
We're excited about the synergistic effect of does this acquisition for us.
Very good doing well by doing good thanks for taking my questions.
Thanks Charles.
Thank you we've reached end of our question and answer session I'd like to turn the floor back over to Pat for any further or closing comments.
Thank you everyone for joining our call today, and we look forward to providing updates on our continued process.
You have a great day.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.
Yeah.