Q3 2023 Catalyst Pharmaceuticals Inc Earnings Call
Hello, and welcome to the catalyst Pharmaceuticals third quarter 2023 financial results conference call and webcast. If they can watch it require operator assistance. Please press star zero on your telephone keypad, a question and answer session will follow the formal presentation. He may be placed in the question queue at any time by pressing star one on your telephone.
Keypad as a reminder, this conference is being recorded its now my pleasure to turn the call over to Chief Financial Officer Ali Grande. Please go ahead Ali.
Good morning, everyone and thank you for joining our conference call to discuss catalysts third quarter 2023 financial results and corporate highlights.
He didn't have culturally as Patrick Mcenany, Chairman and Chief Executive Officer.
We are also joined on today's call.
Kevin Miller, our Chief operating Officer, and Chief Scientific Officer, and Jeffrey That's Harmon, our Chief commercial officer.
Before we begin I would like to remind you that in our remarks. This morning and in 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.
Involve risks uncertainties 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. These forward looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our 'twenty to 'twenty two and our report on Form 10-K at this time was there a nickel or way to bet.
Thanks Sally.
Good morning, and welcome everyone to our third quarter 2023 financial results Conference call.
We are pleased to report another quarter marked by exceptional financial results and the completion of another significant acquisition further shaping the future of the company.
First I'd like to review key financial highlights from the third quarter of 2023.
We achieved total product revenues above 102.6 million, representing a year over year increase of 79, 5% driven by continued revenue growth for our first app shouldn't buy copper franchises.
We reported yet another new all time high net.
Revenue offered apps.
$66 $2 million, reflecting an increase of 15, 8% year over year and year to date through the third quarter <unk> revenues increased by 23, 1% over the same period last year.
This strong performance underscores another quarter of outstanding organic growth for <unk>.
Our overall revenue performance was fortified by Plaid copper net product revenues of $36 $4 million, establishing a favorable five 3% third quarter increased compared to the second quarter of this year underscoring an important contribution to our growth.
<unk> revenue base.
This should serve as a testament to our exceptional execution across all business fronts, and our ability to successfully integrate the acquisition of strategic products.
As a result of our year to date progress we are raising our 2023 total revenue guidance to between $390 million and $395 million.
From our previous guidance of $380 million to $390 million.
non-GAAP net income for the third quarter was $55 $9 million or <unk> 49 cents per share diluted.
Yes, it excludes from GAAP net income.
Noncash stock based compensation depreciation and nonrecurring onetime in process R&D expense of $81 $5 million.
And with the acquisition of the North American license for a game right.
Better known also chemically known as from more alone and the amortization of intangible assets.
GAAP net loss was.
It was $38 million or 29 cents per diluted share, which again includes the nonrecurring onetime expense of $81 $5 million associated with the acquisition of the game relations.
Well. These previously disclosed nonrecurring in process R&D expenses impacted on our overall GAAP earnings per share our performance underscores our fiscal discipline and operational execution.
We ended the quarter with cash or cash equivalents of $121 million and continue to have no funded debt on our balance sheet.
Today, we'll provide you with more financial details during her presentation.
Our recent acquisitions reinforce our confidence that we're on the right path towards realizing our near and longer term strategic and financial goals.
Early in the third quarter, we acquired sent there from Shantha or pharmaceuticals, the license for the North American rights to for more alone.
Again brand name the Gam rate.
Which was pending an FDA approval for the treatment of Duchenne muscular dystrophy or D. M D.
On October 26th of this year, we announced the FDA approval of our Gambari oral solution a novel corticosteroids for the treatment of DMD.
We believe that a gambari may offer the potential to increase the duration of ambulation and mobility in these patients, thereby significantly improving the overall quality of life.
Also providing a more favorable side effect profile compared to other traditional steroid treatments, Steve will have more to say about the January approval and the potential benefits of DMD patients during his presentation.
As most of you know the current standard of care treatment for Dnb involves corticosteroids, which often come with significant side effects. It is estimated that between 11 and 13000 children in the U S are affected by DMD, whereas approximately 70% of the pay.
<unk> currently receiving corticosteroid treatment.
We strongly believe that a gamergate has transformational potential to reshape the treatment period.
For this debilitating rare disease and holds the prospect for future possibilities for other chronic inflammatory conditions.
Again, he has orphan drug and rare pediatric disease designation status for D. M D.
And yet for seven years in the U S market exclusivity as well as a number of issued and pending patents that extend to 2040.
Per our licensing agreement with Sentara the approval of the Gambari trigger.
A $36 million milestone payment yeah when.
Paid this fourth quarter. This year will be recorded as an intangible asset and amortized over its useful life.
Half years.
We are excited about the commercial launch of a gamergate highly synergistic product to our existing neuromuscular franchise, which is planned to occur in the first quarter of 2024 at.
At that time, we will introduce our comprehensive financial assistance program aimed at helping to ensure access and affordability for all DMD patients through our white glove catalysts pad pathways platform.
Jeff will address some of the questions that many of you are asking about the opportunity that <unk> represents for catalyst.
You'll note in the fourth quarter, we anticipate incurring.
And an additional $6 million to $7 million in commercial and other expenses related to the <unk> launch preparations.
Yeah.
Okay.
In the third quarter we.
We announced that the S NDA seeking to increase the daily maximum Joseph offered apps. So 100 milligrams had been accepted for filing.
Then provided a <unk> action date of June four 2024.
This represents a meaningful milestone as we estimate that about 40% of patients currently on treatment are already at or approaching the current maximum daily dose of 80 milligrams.
We also just recently announced the allowance of two new patents to further strengthen deferred apps intellectual property estate, which currently has patent protection until 2037.
Plans are underway to list. These patents in the Fda's Orange book as soon as they are issued bringing the total number of listed patents are preferred apps to eight.
It's the second consecutive full quarter of <unk> compound our belt. We are pleased with its positive growth trend. We attribute this success to our dedicated epilepsy franchise teams, who are actively engaged with health care providers and the advocacy communities.
We expect a continued tailwind for five copper due to its unique status as the only noncompetitive alpha receptor antagonist <unk> epilepsy patients tend to stay with the current treatment regimen once they achieve seizure free status.
Yeah.
Okay.
As we enter the fourth quarter, we expect an NDA submission for <unk> two the P. M D. A in Japan by our partner <unk> pharma before the end of this year.
Each will trigger a $2 million regulatory milestone payment by Dido two catalyst <unk>.
Acceptance of the submission in Japan also triggers an expansion of our territorial rights for <unk> under our amended license agreement will serve.
We are developing plans to pursue opportunities to expand our global footprint through strategic partnerships with our current focus on the Asia Pacific and Latam regions.
Looking at the business development side of the company, where we are focused on pursuing adequately derisked and value added transaction opportunities. We continue to demonstrate progress with the recent closing of the acquisition of the North American rights to <unk> from <unk>.
Tara.
We have advanced our portfolio expansion strategy search and evaluation efforts around two key pillars first focusing on broadening and diversifying our rare neuromuscular and epilepsy product portfolios with sufficiently de risked innovative therapies.
That address critical unmet medical needs and second.
Expanding the geographic footprint of our existing products.
Yeah.
Overall during this quarter, we have gained significant ground in our portfolio expansion efforts. We are currently in the advanced stages of due diligence on additional commercial stage opportunities that could come to fruition over the next few quarters.
After a robust and comprehensive search.
I was very pleased to announce the rich Daly, who is our candidate of choice as my successor as CEO.
As reported rich has over three decades of Biopharma experience with large multinationals as well as smaller more entrepreneurial companies.
Rich's background and core strength is.
So on the commercial side of the business and attribute that is key to our near term and midterm strategic plan here.
He has been on our board of directors for almost nine years and has been an integral part of the team that has helped design our current strategic plan and focus.
Rich and I have been working together closely since the announcement to ensure a smooth transition come January 1st of next year.
Looking ahead to next year, we are fully prepared for a sustained progress.
Fueled by our ability to execute paving the path for further growth with the collective capabilities of our catalyst key.
There is no doubt that we will continue to achieve noteworthy accomplishments and making a lasting impact on the lives of the patients that we serve.
I'll now turn the call over to Jeff del Carmen, Our Chief Commercial officer, who will update us on our commercial activities.
Thanks, Pat and good morning, everyone in the last quarter, our commercial team has achieved outstanding results across the board.
I would like to draw your attention to our exceptional performance in this record breaking quarter.
Continuous strategic efforts, which are paving the way for future successes.
We are delighted to report Q3, combined net revenues of $102 6 million showcasing a substantial year over year growth.
79, 4%.
This remarkable performance was fueled by <unk>, reaching an all time high of $66 2 million.
And the consistent strong contribution from by combo, which generated $36 4 million.
Catalyst is strategic strategically positioned to meet the revised revenue guidance range of $390 million the $395 million.
First let's discuss our progress with <unk>, which has emerged as a pivotal therapeutic option for individuals in the U S were affected by Lambert Eaton Myasthenic syndrome or less.
Q3, net revenues of $66 2 million.
Representing a year over year increase of 15, 8% versus the third quarter last year and year to date through the third quarter start ups revenues increased by 23, 1% over the same period last year, a direct result of steady new patient starts and then Andy.
Discontinuation rate trending below 20%.
Net new patients in Q3 were the highest quarterly total this year.
Prescription approval rates exceeded 90% for all types of payers, including government and private commercial insurers patients enrolled in catalyst pathways, including those with Medicare coverage and accessing foundation assistance.
Experienced an average monthly co pay of less than $2.
We have a strong belief in <unk> long term organic growth prospects first we have a robust pipeline with over 500 patient leads diagnosed with lens, who have not yet started <unk> treatment.
Additionally, we have identified new sources for potential lens patients, ensuring a continuous influx of high quality leads in the foreseeable future.
Next we recently presented an abstract at the World Conference on lung cancer in September that estimated the lens prevalence in the United States could be as large as 5600 individuals a significant increase from the previously estimated prevalence of three.
This estimate is derived from a detailed real world data analysis, specifically focusing on the prevalence of lemons diagnosis among patients with small cell lung cancer.
Currently we assess that greater than 80% of small cell lung cancer lens patients are undiagnosed, representing a significant opportunity for growth.
In the last year, our lens education initiatives have demonstrated their effectiveness. This is evident from the notable rise in voltage gated calcium channel antibody test, which streamlined the diagnostic process for lens patients and consequently.
Expand the pool of eligible candidates preferred that's treatment.
Furthermore, our targeted educational campaigns aimed at thoracic oncologists have successfully contributed to the identification of a higher number of diagnosed small cell lung cancer lemons patients.
Additionally, FDA approval of the company.
N D. A to increase the indicated maximum daily dose of <unk> <unk> from 80 to 100 milligrams may offer significant benefits for some patients as Pat mentioned earlier, we anticipate that it could provide a notable improvement in the daily dosage of third apps for a significant portion.
Of our patient population.
Now I would like to provide some highlights of our progress with Phi comp by comp up commercialization is surpassing our expectations. We have actively collaborated with health care providers, expanding our outreach informing valuable relationships that have significant significantly.
<unk> comp of success.
In Q3, <unk> achieved net revenues of $36 4 million, marking a five 2% increase quarter over quarter. Additionally, we are fostering crucial partnerships with patient advocacy groups to enhance awareness and promote our mission.
Let's turn to our Gambari, a promising novel anti inflammatory corticosteroid that addresses a significant unmet need for more tolerable steroids for patients living with Duchenne muscular dystrophy or DMD. The U S. Prevalence for DMD is estimated to be between 11013 thousand page.
Yes.
Patients currently being treated for DMD approximately 70%.
Of these patients receive concomitant steroid treatment. However, steroid treatment is associated with significant side effects. We believe that a gallery will offer an advancement to the current treatment paradigm addressing an important unmet need for DMD patients and caregivers.
As we have disclosed before we expect the commercial launch in the first quarter 2024, we will integrate our gallery into our neuromuscular franchise, where we can leverage the teams demonstrated capabilities commercial expertise and experience.
We are in the final stages of hiring 10 commercial personnel to support the pending launch mostly in marketing and patient services.
Our existing neuromuscular Salesforce of 16 regional account managers and two area business directors will have responsibility for both <unk> and <unk>.
In addition, our Gambari will be supported by our best in class catalyst pathways program to help ensure that all eligible patients can access the product.
Catalyst intends to price a gambling responsibly to ensure access for all appropriate patients living with DMD.
We have done considerable outreach to key stakeholders since the acquisition was completed in July.
Sam Thera had conducted one round up market in pricing research for a gallery, which was refreshed by catalyst in October of this year in.
In addition, we've had several meetings with DMD community members and key advocates where we received feedback regarding pricing and access lastly, catalyst held an advisory board meeting with approximately 10 key opinion leaders in October.
Based on the feedback from our constituents and analysis of the DMD market.
Wholesale acquisition cost of a gamma ray will be at a slight discount to influenza.
We will implement the same financial programs as we have preferred apps to ensure the average patient out of pocket cost will be less than $2 per month.
More details on the commercial launch will be available in the coming months.
In summary, we are extremely satisfied with our performance in Q3 and remain highly confident in achieving our adjusted 2023 revenue forecast of 390 million to $395 million.
Furthermore, as we gear up for the launch of a gambari.
We will capitalize on our proven commercial expertise.
I extend my heartfelt gratitude to the entire team at catalyst for their dedicated commitment to patients and I'm eagerly anticipating a successful Q4 ahead.
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.
Thank you Jeff.
Our clinical development and regulatory strategy preferred ups continues to focus on expanding access to all <unk> patients enhancing deferred ups patent to stay to maximize its commercial potential and integrating the newly acquired for copper in a gamut products into catalyst organisation and then optimizing the commercial potential of those new assets.
First I would like to discuss our development efforts to increase the indicated maximum dose of first ups from 80 milligrams per day to 100 milligrams per day.
Catalysts submitted a supplementary NDA to the FDA for this change to the maximum daily dose in the second quarter.
Tober, 13th catalysts announced the Fda's acceptance of the San Diego for review with an FDA action date of June 4th of 2024, while there can be no assurance of approval of the SaaS MBA barring any significant issues with the applications with your catalyst anticipates approval of the application.
On or about June 4th of next year.
Currently there are a number of months patients who are already being treated at a daily dose, which referred ups exceeding 80 milligrams. After their physician work with the pharmacy and the insurance providers to justify the higher dose.
Other patients on the current indicated maximum dose of 80 milligrams per day and their physicians have expressed the desire to increase the patients daily dosage above 80 milligrams per day and potentially up to 100 milligrams in order to optimize therapy.
This supplement if approved will help those patients.
Based on our type C meeting with the FDA in May of this year and the recent acceptance of the SMB I, we believe that our submission strategy constitutes unacceptable basis for seeking approval of a 100 milligram maximum daily dose which of photos.
Regarding our global expansion, we continue to anticipate the title pharma our partner in Japan, We will submit the NDA preferred apps to the pharmaceuticals, and medical devices agency or P. M. B a by the end of this year submission 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 submission will be filed.
Provable within this 10 month period.
We previously estimated there are about 1200 to 1300 lumps patients in Japan.
Under our license agreement for <unk> and upon acceptance of the filing of the Sunday I in Japan catalyst with getting the right to pursue other territories in the Asia Pacific and South American regions.
Catalyst recently announced that the company had received notification by the United States patent and trademark office or U S. PTO.
Two additional patents covering first apps rollout. These new patents are for claims associated with the unique and novel previously unknown bioavailability of photographs under fasting and fed conditions of dosing.
These two new patents with an expiring with expiry dates out to mid 2030 to further strengthen our not two family of patents. We expect these patents to be granted within two months preparations are already in motion to include these additional four patents in the FDA Orange book Post Grant.
The total listed patent count to eight.
The addition of this new intellectual property to the affordable product highlights one of our core objectives, which is to reinforce and safeguard the sustained commercial viability referred ups, which currently benefits from patent exclusivity protection in the United States until 2037.
Next I would like to discuss our recent in licensing of a good January for the treatment of Duchenne muscular dystrophy or DMD from sensor for the North American territory and also its recent FDA approval on October 26th of January is a promising novel steroid with a unique chemical structure that may confer improved long term safety.
For this drug.
In clinical studies for more alone or January demonstrated efficacy with improved muscle function similar to that of prednisone, but with a reduction of steroid associated side effects over the 48 months' duration of a trial that showed benefits in bone health growth and behavioral symptoms offering the potential to address an important unmet.
I'll need.
To further characterize the long term safety of <unk> beyond 48 months of catalyst is planning to open a registry in the U S with dnb patients that are initiated on exactly.
<unk> has received FDA orphan drug exclusivity.
DMD is a rare excellent genetic disorder, resulting in progressive muscle degeneration occurring in about 600 mile in newborns each year. The prevalence is about 11000 to 13000 patients and is gradually increasing as advancements in available treatments are expected to continue to increase the survival of patients.
With this devastating disease.
BMT the most common form of muscular dystrophy is a condition that makes the skeletal and heart muscles weaker with time, reducing the lifespan of the effect of male patients.
But genetic defect logs in the dystrophin gene and like virtually all excellent genetic diseases almost exclusively affects males.
Steroids remain the standard of care for DMD patients and as Jeff pointed out 75% of DMD patients receive steroid treatment. In addition, approximately 30% of these patients are amenable to Wanna be approved exon skipping therapies and a minority of patients would also be eligible for the newly approved gene therapy.
However.
Even the patients treated with exon skipping treatments or gene therapy continue to require corticosteroids at some level both during treatment and beyond it is anticipated that a gallery, maybe a safer play for a routine long term clinical use and may lead to earlier initiation of therapy closer to the time of diagnosis and potentially took.
Continue therapy, even after loss of ambulation.
Overall, our jamba has the potential to be a differentiator treatments for DMD with a desirable profile in comparison to the current standard of care options.
Addressing unimportant unmet medical need for DMD patients starting at an early age.
The pivotal clinical trial provided data on treatment efficacy and safety associated with the camry treatment for up to 48 months, which will be augmented by DMD patient registry in the U S for patients that are initiated on a January.
As previously reported catalyst acquired the U S rights to fight copper or PREPA, now, which was the first and only approved Apple receptor antagonist or inhibitor fight copper is approved as an anti seizure medications for treatment.
To treat partial onset seizures with or without secondarily generalized seizures in patients with epilepsy, who have four years of age or older and in conjunction with other medicines.
As an add on therapy to treat primarily general primary generalized tonic clonic seizures in patients with epilepsy, who are 12 years of age or older.
Well, if I copper as a mature epilepsy product. It continues to offer physicians and patients a unique therapeutic option for the management of epilepsy as I discussed in previous quarterly calls for accomplished unique mechanism of action has been a source of great interest to epilepsy, researchers, but continue to study it for the management of a number of types of epilepsy, including several.
Our epilepsy of genetic origin and published papers described <unk> as the best therapeutic choice for a number of rare epilepsy types. It is for these reasons that we expect the use of like copper to continue to grow throughout the remainder of its period of market exclusivity catalyst is also continuing to evaluate potential legal options for extending the exclusivity.
For copper beyond may of 2025.
Moving on to our medical information function catalysts, neuromuscular medical science liaisons or MF cells are continuing to reach out to traditional Ford ups prescribers and oncology health care providers to build relationships and provide education about the importance of testing their patients for mums in order to expand the use of products.
Our colleges that already treat labs and their practices have found that patients treated with <unk> maintained muscle strength and have an improved quality of life.
With the in licensing of a camry and its planned launch in the first quarter of next year catalyst has added four new I myself specializing in duchenne muscular dystrophy.
Two the neuromuscular MSL team due to the unique mechanistic features of the January it has and continues to be an active area of research that has and will continue to result in an ongoing stream of useful medical information that should be disseminated to doctors. So that they can continue to optimize the treatment for the DMD patients.
Combination of the existing data and publications demonstrating the comparative safety of the January relative to its traditional critical steroids will be the top focus of the neuromuscular MSL team of 12 to 24 and beyond these efforts should provide clinicians with the information they need to choose the best Stewart options for their patients.
<unk> also has plans for advisory board activities to educate D. M. D. Treating physicians that were not part of the clinical trials about a jammer future updates will be provided as medical information programs are developed and implemented for a jammer next.
Copper is a mature product for which extensive published information in real world data is available.
Including numerous publications and abstracts for five top of MSL team will continue to disseminate information to epilepsy Treaters and will also address any questions that these physicians may have about using for comp kind of looks like happened I'm a sell team also with tons of epilepsy conferences like Aes and what you see in order to keep the fight hard to keep Mike Harper in La.
Mine, so the epilepsy treaters as a potential treatment option for epilepsy patients.
As a service to the physician community had was provides support for the development of continuing our development of continuing medical education or CME programs that are part of the formal ongoing education of healthcare providers.
<unk> has over the past three years provided support for three CME programs for various aspects of the diagnosis treatment and management of <unk> patients and we are providing.
Providing support for more programs, including new programs. For example over this period of time thousands of health care providers have utilized CME programs learning modules have hundreds of them are taking the semi test each quarter in order to be granted CME credit towards the maintenance of the medical licenses in short. These programs are popular with treaters that use <unk>.
<unk> products and based on the semi test 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 sell to them Kellys third quarter, Duane twenty-three kept us on pace for another year.
Exceptional financial performance and strong execution.
In addition to outstanding results I would also like to highlight the excellent job done by the strategy and business development team at catalyst, which were pivotal to continuing the momentum of our portfolio expansion efforts. As a result, we successfully closed the transaction to acquire the North American commercial rights to a gambling Samsung there have been this quarter.
Yeah.
This acquisition in addition to offering an unexpected and of our portfolio with our pricing as it will also allow us to contain.
Okay mental net positive cash flow for the company.
Value to our shareholders.
While on the topic of a gambling I would like to take a moment to discuss some of the key accounting implications and accounting treatment of this transaction.
2023 at the time of just that infection.
Infection close Agamete was not yet approved for sale by the U S. F D. A.
Sequentially, the upfront payment as well as related transaction costs were expensed in the third quarter as in process research and development or IP R&D neck.
Next I would like to shift to the regulatory milestone payment as a result of the FDA approval of our gallery.
With 26 2000 Twenty's to me.
We will make a $36 million milestone payment to some fair in the fourth quarter of 2023, which will be capitalized in the balance sheet, if any tangible asset and amortized over the estimated useful life of 10 five years of 42 quarters.
I would like to reinforce that'd be up to them. Okay. At the end of October 'twenty, 'twenty, three and as such amortization expense will be pro rated in the portfolio.
And then we will be consistent going forward.
Lastly, information with a gallery transaction catalysts made a strategic equity investment in there.
Part of the acquisition terms the.
Equity investment has a book value of approximately $13 5 million and will be like.
Market value on a portfolio basis, you seem to be a favorable market price when they take a S. A N S quarter on the six Swiss exchange.
Now onto Q3 results.
Total revenues for the third quarter of 2023 were $102 7 million 79 or <unk>.
Increased when compared to total revenues of 52 million for the third quarter of 2022.
Revenue for the third quarter of 2023, some of our lead product first ups was $66 2 million.
At 15, 8% increase year over year basis.
$57 2 million.
For the third quarter 2022.
Revenue met but fair enough with $36 5 million third quarter, 2023, which was a $5 two increase from $34 6 million for the second quarter 2023.
My report.
Uh huh.
In January 2023.
Net loss before income taxes for the third quarter 2023 was 38 million at 246 point to decrease year over year compared to net income before income taxes was $26 million by the third quarter of 2022, we reported a GAAP net loss for the third quarter of 2023.
Okay.
$38 million or 29.
Basic and diluted share a decrease 235, 2% year over year compared to GAAP net income for the third quarter of 2022 of 22.7 million or <unk> 22 cents.
Earnings per basic and <unk> 20.
Diluted share a decrease from net income to net loss. He said I can't attribute it to the one time agave related 81, 5 million IP R&D expense charge in the third quarter of 2023.
non-GAAP net income for the third quarter of 2023, plus 50, $55 9 million or <unk> 52 cents per basic and 49 cents per diluted share which excluded from GAAP.
<unk>, which excludes from GAAP net loss 81, 5 million of IP R&D expense the income tax benefit of $7 3 million amortization of intangible assets related to our acquisitions of research again.
5 million stock based compensation expense of $3 8 million and depreciation of 81000.
This compares to non-GAAP net income for the third quarter of 2020 to 28 6 million or 28 cents per basic and <unk> 26 cents per diluted share, which excludes from GAAP net income the income tax provision of $3 2 million stock based compensation of $2 1 million amortization of impact.
All assets of 518000, and depreciation of 35000, yeah, well represents an approximately 95, 2% increase of the non-GAAP net income year over year.
Yes.
Amortization of intangibles acquired in connection with both the <unk> compound underway. So you bought it was approximately $8 5 million for the third quarter of 2022.
As previously mentioned the any of the political F. 2023 unemployed only basis, we expect to recognize an additional 867000 of amortization expense relating to regulatory milestone payment to be made there due to the timing of the two of them and the recognition of intangible asset amortization in the first quarter of 2023.
Will it be less.
I think it will be pro rated.
We expect amortization for our acquire licenses and intangible assets to be approximately $9 1 million for the fourth quarter, a $9 3 million beginning with the first quarter 'twenty 'twenty four and beyond.
Our effective tax rate for the third quarter of 2023 on an annualized basis was 23, 5%.
Great to 19, 6% for the third quarter 2022.
By 2023 that the face to the statutory federal income tax rate of 21% was primarily driven by state income taxes anticipated a permanent difference.
This upset by equity compensation deductions the effective tax rate is affected any factors, including the number of stock options exercised in any given period and is likely to fluctuate in future periods.
Cost of sale expenses were approximately $14 2 million in the third quarter of 2023 compared to $9 7 million in the third quarter of 2022 and consisted principally of royalties.
Remind everybody else is afraid ups increased by 3% when net product sales exceeded $100 million in any calendar year. In 2023. This threshold is met during the second quarter, making related royalties trend up for the third quarter net product sales for the remaining of the year will be subject to how everybody else.
Theory.
Cause us to sell certified comes back in 2023 if it is exclusive of amortization of intangible assets.
Research and development expenses were 83 7 million in the third quarter of 2023. This compares to $8 3 million in the third quarter 2022.
Obviously, you mentioned the driver behind the increase in research and development expenses relating to the one time Agamete IP R&D.
Charge recorded during the third quarter U S.
SG&A expenses for the third.
2023 totaled $33 6 million compared to $13 7 million excuse me 2022.
The increase in SG&A expenses year over year is principally due to cost related to <unk>, but just commercial expenses under the transition services agreement.
<unk> expenses and an increase in head Count Fame study for the sales and marketing force.
Doing may 2023 but also includes some back office head count.
In addition, there were selling and marketing expenses.
They were setting in marketing related expenses incurred in the third quarter in anticipation of the <unk> approval and subsequent to that.
Finally, we anticipate spending an additional $6 million to $7 million inflammation.
And other expenses related to the Gambia and launch preparations in the fourth quarter.
Oh 2023.
As we reported we ended the quarter with cash and cash equivalents of $121 million in mind that in the fourth quarter of 2023, we will make a 36 million payment to Cynthia infinite Chantilly regulatory milestone and up on the appeal of our family by the way the M D.
We did either client funds continue to allow us the financial flexibility to fund our existing R&D programs.
Actual contractual obligations and support our strategic initiatives.
You bet Amanda for your expansion efforts, leading to long term growth and value creation.
More detailed information on and I think the first third quarter 2020 financial performance may be found in our quarterly report on Form 10-Q, which was filed with the Securities and Exchange Commission yesterday November eight.
Can be found on the Investor Relations page, but website at www Dot catalysts fine lab Dot com.
And with that I'll turn the call over to Pat.
Thanks Shelly.
Operator, we can now open the line for questions.
Thank you will not be conducting a question answer session, if you'd like to be placed in the question queue. Please press star one at this time one moment, please while we poll for questions.
Our first question is coming from Joon Lee from <unk> Securities. Your line is now live.
Hi, Good morning. This is less on for Joe and Thank you for taking my questions first on the <unk> front can you just talk about any partnership developments on Asia Pacific and Latin America, and then second part to that one or did the two new patents that will be included in the Orange book, what impact does that have to be out.
<unk> situation, whereby your paragraph four filers I have a few follow ups.
Well that's your first question was about pursuing other territories.
Once.
We will trigger the submission.
That's in Japan.
Yes, so we think that.
Based on our preliminary research.
Appears to be a great opportunity.
And China South Korea.
A few smaller markets.
In the Asia Pacific region.
And also Brazil represents what we think is probably a fairly robust opportunity.
So that's where our initial thoughts are.
Yeah.
With regard.
Yes.
Steve you want to take that with regard to the patents.
Less the two new patents that were just allowed have claim language.
Directed toward the pharmacokinetics of a fab redeem and slow and fast metabolize yours of them what's happening they represent a significant addition to our family.
Family of patents related to out of subtle transfers metabolism of the drug and we believe it will significantly strengthen the.
But that's family of patents.
Against a challenge and will improve the ability to enforce our intellectual property.
Got it that is helpful. In regards to play comp outperformance what are some of the trading metrics behind that and how do you see that as the year progresses next year.
Jeff you want to take that sure. So that's what we're looking at is it.
<unk> share was around 14, 9% for fight copper versus the branded anti seizure medications.
We think that our strategy to focus on the existing prescribers of high confident those physicians that have prescribed it over the last year or two years.
So just focusing on those physicians and getting those physicians to prescribe for more of their patients and earlier in their treatment.
Protocol, that's been our focus and we feel that's the biggest contributor to our are exceeding our expectations.
So less let me add that.
As a as a fairly mature product.
We continue to expect.
We can grow it by.
By shingle.
Single digit high single digit from year to year, So I hope that.
Helps answer your question.
It does thank you Pat.
One I guess last one for me then on the acquisition front potentiality. There you know it sounds like Youre in advance due diligence process. It appears to be in an epilepsy asset maybe.
Give some more color around that if it is how would that fit in TD of the current sales force with by copper.
And.
Potential acquisition essentially covered by your current cash balance thank you.
Yeah.
So you know what we've made it clear that.
From a strategic plan that our emphasis on.
Our next acquisition really we'd like it's something to be compatible with our epilepsy franchise and we think it is.
As a growing opportunity.
And clearly we've made that point.
There I would not say that there's anything imminent we're in.
Deep diligence from a couple of opportunities we want to be careful.
Bad doing too many acquisitions too quickly we want to make sure that we integrate and we execute well.
With each of these opportunities are we bring in.
Most importantly.
And certainly.
With is as stated our nine month cash position of $121 million, which continues to grow quarter by quarter.
We think we're in a fairly good position to do another tuck in or two but I would not say that anything is.
Imminent today, we hope over the next couple of quarters or we can announce another.
Other acquisition.
Great. Thank you guys congrats on the performance.
Thank you.
Thank you. Your next question today is coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.
Hey, good morning, Pat and team congratulations.
Great.
Quarter, and Pat you know frankly, congratulations and good luck with your career milestone and transition.
Thank you Charles.
Yeah. So thanks for taking our questions I had a couple of questions Femara alone are a gallery and then one on the S. N D E for for gaps.
For Lamar alone I guess I'm wondering if.
Steve or even Jeff could speak to the current market dynamics I guess any.
Any impact of the recent embark results.
Hum.
Do you think going to be the demand for a camry and what do you anticipate in terms of the pace of adoption will will there be switching of patients from current standard of care.
Or will it be primarily targeting new patients. Thank you.
Yeah. Thanks, Charles for the question.
I'll pass to Steve Steve you want to pick this up.
Okay, well, let me answer your first question about the Embarq results and it really speaks to a more general.
A question regarding overall gene therapies, and exon skipping therapies, but the bottom line is that.
With the use of those therapies patients still have a need for taking some kind of corticosteroids.
During the treatment with those alternate treatments as well as afterwards.
Ah Theres variability and how well the patients respond to therapy and.
The Embarq results Oh, you know I don't want to comment on on another company's products. So there's not much I can say about those but the bottom line is that we anticipate that there will continue to be.
Healthy demand for steroid treatments for DMD patients now.
No I apologize could you repeat the other question Charles.
Yes, Steve I'll pass I'll pass that to Jeff Good question always about.
Switching.
Patients switching in some of the dynamics.
Yeah, Hi, Charles the ear the market dynamics for corticosteroids for DMD right now as we mentioned 11013 thousand.
Patients living with DMD in the U S of that those 11013 thousand about 70% are on steroids now when you look at the market share breakdown there, it's about a 60% prednisone marketshare in about a 35% to 40% are on M flaws.
And when you look at the potential patients for our Gam rate.
They will be the switch patients primarily from N Plaza, but also based on feedback that we're hearing are some of these patients that are on prednisone, you will see some patients that are naive to steroids, but that'll be a smaller percentage and over time that may happen, but I think for the initial launch and the patients that are.
Currently on steroids will be looking to switch over.
Okay. That's helpful. And then a quick question on the F D. A.
For the 100 milligram dosage for advance.
Probably hard to speculate, but I am going to ask what do you think the key questions will be from the agency will it be around safety or efficacy.
Steve we have not taken yet.
Sure well that's an interesting question Charles the short answer to your question is if they have any further questions beyond what we've already submitted them and we think that their questions will be relatively sparse based on our type C meeting, but with regard to efficacy. They would want to note is the drug applications at the 100 milligram.
Dose and we have plenty of data to be submitted in the us NDA that demonstrates efficacy at the 100 milligram dose. The second thing that they would want to know is will the will the drug be safe at a higher dose that's 20% higher than the currently labeled dose of 80 milligrams per day and again, we submitted a significant body of evidence that showed that there are.
No safety concerns at a dose of 100 milligrams per day.
And as a result of that Oh, it's unlikely they'll have any really hard questions about that but you can never predict the future I also want to point something out.
Our reserve, which was previously approved by the FDA. It was approved for a 100 milligram dose and so as a result of it.
Some of that data is actually on a Sunday.
For that.
That reason that we also believe that the FDA will be receptive to a 100 milligram dosage application.
That's helped Dave just to put a.
A final point on that and that labor was a pediatric label.
Yes.
Okay got it highlights safety last quick question do you plan to have a presence at the upcoming <unk>.
E F meeting.
I believe it's a early December one for epilepsy.
Jeff.
Hi, Charles we will definitely be there, we're going to have a huge presence.
With our Med affairs team as well as our commercial team.
Okay. Thanks for taking the questions congrats on likely.
Thank you.
Thank you next question is coming from Joel Kittens are off from Piper Sandler Your line is now live.
Hey, guys. Thanks for taking my questions, maybe two quick ones for me first one maybe similar to an earlier question, but I wanted to ask about the strategy to price <unk> at a slight discount to in Florida. Just wanted to see if you could elaborate around some of the reasons to do that the potential benefits you see from that and whether you think that could actually drive more active switching from them.
Plaza onto a <unk>, that's my first one and I'll have one follow up thanks.
Sure Jeff do you want to speak to some of the work that was done to help us arrive at our pricing sure. So Joe will provide a lot more details as we get closer to launch but specific to the pricing and the considerations.
That we took.
We did significant payer outreach as well as you know speaking with advocacy and patience and then also you know like Kols. So that helped us form our decision to price at a very similar at a slight discount to and plaza. So those are that's the specifics behind that but.
Did I answer your question or.
Yeah. That's helpful. I guess that was primarily interested on whether you know that you can see that as a as a key factor in the sort of switching dynamic.
We do anticipate at that price point or a slight discount that there's potential benefits from a payer landscape.
And not necessitating a a further step through and plaza.
And that was all part of the research too.
Okay got it my second question I wanted to ask around the two key pillars you mentioned.
Pat and the potential to expand the geographic footprints of existing product I know you mentioned the opportunity preferred up in Asia Pacific and Latin America, but I'm wondering based on license agreements. If there are any potential opportunities you might see for fly com and <unk> outside of the U S.
Oh, we not for five copper Gerald but for.
For a guy Murray again Murray rather.
Our license does allow some.
Market expansion.
I can't be specific at the moment about that but there are some opportunities.
Our center, we know is is going to market again Murray.
In the.
The five key European markets, and so there are opportunities outside of that for us.
They do have a.
Our partner already in China.
So we are we.
We have a good working relationship with a center in fact next week there'll be here for a joint development Committee meeting and those are topics that are right on the agenda.
Yeah.
Okay, Great I appreciate you guys, taking my questions. Thanks again.
Thanks, Joe.
Thank you next question is coming from Scott Henry from Roth Capital Partners. Your line is allies.
Thank you and good morning.
It's a core competency of catalyst is really been the access program excellent job with catalyst pathways are the question is when you compare the lemons market to the Duchenne market.
You know, how how similar or do you think that will be will it.
What are what are the differences.
When bringing about access between those markets I know there's a it.
It seems a little more competitive in the defense market just any color you would would have on that thank you.
Yeah. Good Okay, Great question, Scott I'll, let Jeff take this Scott I mean, the biggest difference between the two therapeutic.
Oh pudic areas when.
When you look at D. M D not only the competitive landscape that you mentioned.
But really it's it's Medicaid patients.
Patients, it's about 50% or so Medicaid and then the the balance for the most part is commercial.
Whereas the land side.
He had a significant part are those the population is Medicare yet, 45% with Medicare and 35% is commercial so that's the biggest part there but.
But the biggest thing for US is that we want to ensure that there's access for all patients that physicians and families think the patient should be on a gambler you want to make sure that there's there's access for these patients. So we are committed to it.
Chairing that all those patients have an average co pay of $2 per month. So you know we've done a lot of research we have done a lot of strategy planning and that's what our focus will be when we launch.
Okay, great. Thank you for that color.
And then final question and I don't know how much you really want to talk about this now but when you compare in Florida to a gallery yeah are there any key differences that will will make up your marketing message as far as to promote a switch there are just trying to think about the key levers there.
That one would compare the two one.
Okay.
You know Scott we continue to do a lot of work, we have primary research and secondary market research and where we're not.
Not quite ready to open the kimono entirely.
With regard to marketing strategies, and how we will position ourselves against other you know other programs, Jeff you want to add to that Scott. The the thing about the D. M. D space is it's a very defined market and there are about 90, plus that you know I think we.
<unk> calculated now of 103, we profiled centers of excellence or accounts, primarily in about 250 prescribers key prescribers for these boys living with Duchenne and you know what the data has been out there for a long time and the all the stakeholders are pretty much aware of this data.
And some of the benefits of a gambling versus what's on the market. So we stand behind that data and it'll be a collaboration really between commercial and med affairs to ensure that that data is.
<unk> is received by the appropriate stakeholders, but that's been our approach and like Pat mentioned will share more specifics about the commercialization here in the next month or two.
Okay, Great that's helpful.
We understand and congratulations again, Pat great career, but I think you've got a couple more chapters to write but it's been great to watch.
Greg Scott Thank you.
Right.
We reached end of our question and answer session I'd like to turn the floor back over to Pat for any further closing comments.
Thank you.
In conclusion, our dedication to pioneering solutions for rare diseases remains unwavering as we approach 2024 with eagerness, we're well poised to leverage our strengths maximize the potential of our promising product portfolio and enhance the law.
<unk> locations grappling with rare diseases I wanted to thank you for your steadfast support over the years and here's to a future brimming with boundless potential under the stewardship of rich Daly.
Thank you.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.
Yeah.