Q2 2019 Earnings Call
Calling the conference Center. Please hold for the next available conference specialist.
Conference Center with conference.
That will be its a.
Catalyst pharmaceuticals.
Sure Rachel our eighth.
She O. Smith and I P H.
This call is being recorded.
After the tone, please clearly state and spell your company name and then press the pound key to continue.
Okay.
Area <unk> E R E.
Thank you.
Patients with access to.
To support that Weve received has enabled us to work within the limbs community to deliver a meaningful impact on patients lives.
Through not only treatment, but support and education systems as well.
I am, especially humbled by the kind words that we continue to receive from patients and caregivers who were previously in a compassionate use program and have now transitioned to firdapse and evidenced based FDA approved therapy.
Also of the feedback that we've received from adult limbs patients who were previously naive to any form of three four DAP are now being treated with firdapse has been encouraging.
Remember as previously reported only a few hundred patients in the U.S had access to an investigational medicine prior to the FDA approval of Firdapse.
Our efforts and ability to meet the treatment needs evolve the adult patients suffering from Oems has been motivational for us.
We continually monitor patient satisfaction through surveys the measure how pleased patients are with catalyst pathways programs and services as well as the ease and efficiency and getting insurance coverage and received or their monthly shipments of firdapse.
As of the end of July we've had 223 completed survey responses from Firdapse patients and catalyst pathways with an average score of 4.8.
On a scale of one to five.
Further 96% of patients radar programs, a four or a five and 88% of patients responded with a five.
Today, we will discuss the status of the three business priorities that we have previously outlined for the calendar year.
First the continued strong commercial launch of Firdapse for loans.
Second the development of Firdapse for additional indications and our robust pipeline and third the re formulation of a longer acting potentially more convenient and patient friendly formulation of firdapse.
But before that I'd like to address several other business matters, including the lawsuit that catalyst as filed against the FDA.
As we've previously announced we have filed a lawsuit to challenge the approval of Jacobus Pharmaceuticals, new drug application for reserves.
And alternate formulation of Amitiza Aberdeen for the treatment of lens in pediatric patients.
Among other claims we believe that by approving the Jacobus product. The FDA has violated our orphan drug and new chemical Exclusivities that under the orphan drug act have been granted to for Firdapse.
We also believe that the labeling for reserve GE violated multiple provisions of the FDA regulations, resulting in mis branding in violation of the food drug and cosmetic Act.
Additionally, in our complaint we are seeking a court order vacating the approval of reserves.
We filed a complaint on June 12, and we will keep you apprised as developments occur.
Beyond these comments and given the ongoing legal proceedings, we're somewhat limited in what we can discuss.
Also during the second quarter, we announced that we have amended our firdapse license with Biomarin to include Japan.
Our original license was for North America, and has been amended to add Japan and upon achievement of certain milestones in Japan. The license can further be expanded to include most of Asia as well as south and Central America.
Japan represents the second largest economy in the free World and there are currently no approved therapies to treat the lens population in Japan.
On subsequent earnings call, we will provide you a status reports and on milestones and timelines for our efforts to commercialize firdapse in Japan.
Now I'd like to return to the discussion of the commercial launch of Firdapse for loans.
We announced in our press release yesterday afternoon that we recorded $28.8 million in net revenue for the second quarter and an operating profit of $11 million or 11 cents per share basic and 10 cents per diluted share.
On our last earnings call, we announced that we expected by the end of the second quarter to have most of the 300 or so LEMS patients that participated in both early access programs to be transitioned to commercial firdapse without a single lapse in their therapy.
We are pleased to announce that by the end of the second quarter essentially all of those 300 patients are today on Firdapse.
Now that the vast majority of these patients have been transitioned to commercial Firdapse, which was the initial goal we expect new patient enrollments to continue at a steady more measured pace. This was expected trajectory from the start and as typical of a product launched in the ultra rare orphan disease space.
We continue to believe that at this time it would not be appropriate to provide revenue guidance for 2019.
However, I will say that almost halfway through the third quarter, new patient enrollments continue at a steady pace as we expected and revenues are robust alley, we will be providing additional information on this quarter's financial results shortly.
I now would like to walk you through some of the commercial launch key performance indicators that we monitor daily to track our progress on the Firdapse launch.
As of June Thirtyth, we had 437 LEMS patients that had been prescribed for additives by their physician.
409 of those patients who are active on Firdapse and 223 unique prescribers have written at least one prescription.
And the fact that I am most proud of is that as of today 138 adult LEMS patients who prior to our approval on launch did not have access to any form of Amazon tampering are now enrolled in catalyst pathways and most are already being treated with firdapse.
This continues to validate our premise that when we took on the development of Firdapse in 2012 that there was indeed, an unmet medical need for an FDA approved firdapse that could fulfill this need.
We continue to have collaborative discussions with payers regarding reimbursement of Firdapse, we reiterate the one of our principal goals is to ensure that all and that has underscored and capitalize all adult LEMS patients have affordable and easy access to firdapse.
To that end each patient that has enrolled in our catalyst pathways program is assigned a personal patient access layers on for PPA al who is in the field and can meet with the patient and their caregiver or the physician office and work closely with the patient to guide him or her through obtaining coverage for firdapse and to make sure that the patients experience is stress free and efficient as possible.
Dan will provide shortly additional details regarding the progress of our commercial launch.
As I mentioned, our second priority is the development of the remainder of our pipeline with a focus on expanding the use of Firdapse further indications beyond lambs.
We currently have several ongoing trials, including a phase three trial in musk Mg a phase III trial, and CMS or congenital myasthenic syndromes and a proof of concept study and spinal muscular atrophy type three.
We expect to have topline results from the CMS trial and complete enrollment in the Musk Mg trial in the second half of this year.
Further we expect to report topline salt results from the Musk Mg and the estimated three trials in the first half of next year.
Pending positive results from these programs, we would look to supplement our approved Firdapse label for loans to include the additional neuromuscular indications.
We are excited about our robust clinical pipeline and we look forward and providing you with updates on each of these development programs as we progress.
Lastly, our third priority is to develop a longer acting and more patient friendly formulation of Firdapse, Steve will provide you more information on these programs in a few minutes.
As you have heard.
As you've heard.
We have had an incredibly productive quarter for which I'd like to thank our entire catalyst team for making this possible. We are grateful for the efforts of each of our employees striving to bring evidenced based after FDA approved therapies to treat rare neuromuscular diseases.
And most importantly, we were proud to note that our work is helping lynch patients today to enjoy productive lives.
It is the patient that is most important to us and why we exist.
I'll now turn the call over to Dan Brannan, our Chief commercial officer.
Who will provide more details regarding our commercial activities Dan.
Thank you Pat and good morning, everyone.
As Pat mentioned, we have had another strong quarter quarter and we are enthusiastic about the launch progress thus far our teams in the field and the office across sales patient services medical patient advocacy marketing are all working well together and it's a great team effort. Our main goal is to reach and health as many adult patients as possible as they navigate and live but the debilitating disease.
I would like to emphasize how truly debilitating the then.
Patrons find it hard to stand up their arms, they encounter extreme fatigue in leg arm and neck muscles experienced severe bouts of blurred or double vision, all too often forcing them to leave the work workforce or an enjoyable retirement and required the support of a caregiver to help them with even the most mundane daily activity in some of the worst cases people affected by land speak of having to spend their days in the hospital trying to determine the cause and proper diagnosis for their element.
Catalyst is our mission to change the so that all patients suffering with land and their doctors are better able to identify and treat the disease and we believe we are making good progress.
Let me share some of our results comparing the end of Q2 with the end of Q1.
As Pat mentioned at the end of our second quarter. Following FDA approval and launch there were 437 unique adult lemons patients in the US who had been prescribed firdapse.
This compares to 365 on March 30, Onest the end of Q1.
We are pleased to announce that 409 adult patients were active on firdapse treatment at the end of Q2 compared to 338 at the end of Q1.
A majority of those patients in Q1, and Q2 had been patients who were previously in a compassionate youth or expanded access program and receiving Jacobus investigational AMA fascinating rebate or our own AMA fan porting phosphate.
Our initial launch beginning on January 15th of this year focused on transitioning those existing patients and we are proud that those who transitioned to firdapse did so without a delay or lapse in their medication treatment and delivery.
Given the disease severity and immediate impact on mobility without medicine move transition without a lapse and medication was very important to these patients and therefore very important to us.
There are numerous stories and examples of heroics from our specialty pharmacy, and Nova Rx and our field personnel to respond to late notice 24 to 48 hour emergency delivery needs for Firdapse sent to emergency rooms or patients away from their homes.
Im very proud of our efforts to achieve this goal.
And second eight commercial launch began on February 4th and focused on adult patients diagnosed with lemon, but without awareness or access to any investigational drug. It is truly gratifying to hear reports from patients about their response to this life changing medicine.
Our field teams continue to remark how unaware many physicians are about land or the availability of an approved drug that treats the disease, so well in adult.
And we know broad awareness is generated from having an approved drug and the MB to promote and communicate across the nation.
As of the end of Q2, there were 118 patients prescribed firdapse, who were new to amphenol operating or three four DAP. We call. This group naive to three four DAP and we're pleased with the progress helping this group of patients.
At the end of Q1, there were 55 naive to threex debt to before GAAP patients and as we reported last call. This grew to 81 by May nine.
At the end of Q2 that was 118 and as of today as Pat mentioned, there have been 138 unique new naive patients with Firdapse prescription.
At the end of Q2, there have been over 100 general neurologists or other neuro non neuromuscular specialists, who were not previously able to access the compassionate use I indeed, not aware of three four DAP or felt it was too burdensome to obtain before DAP, who have now prescribed firdapse.
Another commercial priority in the Firdapse launch has been insurance reimbursement and affordable patient access to Firdapse.
Thanks to the communication efforts of our market access team and catalyst pathways insurance and patient liaison team.
The coverage for Firdapse has been strong.
About 95% of insured patients have received positive coverage determinations from their insurer.
And all uninsured patients or those denied coverage from their insurer.
Have received free charitable patient assistance medication.
At the end of Q2.
We had over 350 patients on insurer reimbursed medicine, which compares to 246 at the end of Q1.
Out of pocket monthly Copays and payments from patients continues to average around $5.60 per month.
The concerns when we announced our launch plan that patients would be unable to access the medication due to cost have been absolutely unfounded in practice.
Not a single patient has enrolled and catalyst pathways has failed to obtain access to the product.
Finally, we have a regular patient satisfaction survey available online and on the phone for all firdapse patients enrolled and catalyst pathways and as you heard as you heard from Pat We have had over 200 survey responses from different patient where over 95% have rated four or five on the five point scale and 88% rated a five out of five.
So we are pleased with our commercial results in the first six out six months following launch and look to continue that success into the second half of the year.
In the month of July the number of unique patients with Firdapse prescriptions have increased from 437 to 457.
And 19 of those 20 new patients.
Were from the naive or new 234, DAP, a dumb adult LEMS patients.
Who didnt have access to three four DAP previously.
We expect enrollments in this range around 15 patients per month during the next phase of commercialization, which now gets into the tougher work of raising awareness patient identification and diagnosis for an ultra rare disease that is not top of mind with physicians and patients.
Internally, we have an inspirational goal to help 500 or more adult lemons patient access to this life changing medicine by the end of the year.
We are motivated to reach this target, which is almost 20% of the 3000 diagnosed and undiagnosed adult patients. We believe are suffering in the U.S.
Now that the transition of patients from investigational medicine or depth, it's complete.
We have updated our three strategic priorities from a commercial perspective.
First help patients on Firdapse remain on Firdapse with a high level of satisfaction.
Second.
Continue to raise awareness about firdapse two already diagnosed lung patients.
And third improve timely diagnosis of lung patients and ensure that they are seen by a knowledgeable health care provider.
New commercial programs that are in development and crude a no cost antibody test program that catalyst will support and provide two general neurologists and neuromuscular physicians across the country.
Eight find a physician tool to help patients find new and second opinion neuromuscular position to help them in their efforts to reach a conclusive diagnosis.
We have just recently started our digital awareness and education campaign directed to patients and healthcare providers.
We feel that when these programs are fully implemented they will address a number of diagnostic issues that currently delay lemon patients from being properly diagnosed or even sometimes being misdiagnosed.
I'd also like to highlight the benefit and importance of our field based patient access liaison who have been and continue to be instrumental in helping patients with their initial prescription.
And dosing type treatment regimens.
Helping patients understand and navigate their insurance.
And always being there even in person if patients have questions regarding their medication or insurance coverage.
And real quick we will expand our recent programs around the country.
For where London's patients can come together for inpatient meet ups to learn from healthcare experts on the latest research in the disease have questions answered and learn from each other as well as here about nutrition exercise or stress reduction tips and tricks that can help them live more fully with their disease.
We will also continue our educational and awareness efforts by exhibiting and supporting events with important patient organizations and neuro muscular physician societies like the MGM Fe M.D.A. Nord global jeans, and a MDM as well as explore impact of partnering with other groups like the American autonomic society, and rheumatology or immunology specialty groups.
As you hopefully can see we look to build upon the initial success of this launch to find a way for all 3000 or so adult patients suffering from loans to have affordable access to this truly helpful medication and ensure that these patients are satisfied with our programs services and efforts.
As we moved successfully toward that goal, we feel catalyst will be successful and able to study other indications and medicines that will help more and more patients with rare neuromuscular and neurological diseases.
And with that I'll turn it over to Steve.
Thank you then.
As both Dan and power.
Well, we are focused on the commercial launch of Firdapse for adult patients with loans. We also continue to be committed to investing and developing firdapse for additional neuromuscular indications I will briefly summarize our additional programs for firdapse for other indications.
First we have an ongoing phase three multi site international trial ongoing.
Okay.
Okay.
Carlos remains optimistic that this trial will confirm.
The favorable outcomes from the previous investigator sponsored proof of concept trial for this indication.
This trial is being conducted under an FDA approved special protocol assessment.
Carlos expects to complete enrollment will be approximately 60, I mean, it was KMG.
Generalized Mg subjects.
2019.
However, due to the complexity of this international trial and the importance of exactly abiding by our agreement with the agency and the special Protocol assessment. We now expect to report topline results in the first half of 2020.
Pending positive results of this trial, we intend to submit a supplemental Andy.
Potentially.
As KMG tour already approved label for Firdapse.
The current standard of care for Microsemi Agronomists is generally ineffective in EMEA as KMG patients. We look forward to the potential of providing these patients with an effective at approved therapeutic alternative.
Additional details on this trial can be found on clinical trials Dot Gov.
As part of catalyst commitment to patients all patients who participate in the clinical trial for our newest KMG are offered the opportunity to continue treatment with firdapse treat the condition.
If a patient and physician feels the patients benefiting from treatment and we expect to continue such extended treatment until the syndication for Firdapse is approved.
Second we are currently conducting a phase three clinical trial to evaluate firdapse for the treatment of certain types of CMS.
This trial, which includes adult and pediatric subjects is being conducted the trial sites around the United States.
We continue to expect topline results from this trial in the second half of this year.
This has been an important project for catalyst for several years because there are currently no approved therapies for CMS and very few off label alternatives that Unfortunately, we provide limited symptomatic relief for a small portion of the known CMS types.
Additional details of this trial are available in clinical trials.
Pending the outcome of this trial further discussions with the agency, we intend to submit a supplemental NDA to the FDA to potentially at CMS. Two are already approved label for Firdapse. We also continue to support all eligible CMS patients and our expanded access program for Firdapse, if a patient and the physicians feel that treatment with firdapse beneficial.
Finally, we're also conducting a proof of concept clinical study evaluating firdapse as a symptomatic treatment for patients with spinal muscular atrophy.
Three.
Ambulatory subjects. The study is designed as a randomized one to one double blind superior to treatment crossover outpatient proof of concept study to evaluate the safety tolerability and potential efficacy of I am afraid Aberdeen and ambulatory patients diagnosed with us and they tried three.
The study is planned to include approximately 12 patients and we currently expect to report topline results from this study in the first half of 2020.
Additional details of this trial are available in clinical trials start growth.
As with countless other trials in patients with complete this trial will be offered the opportunity to continue treatment for enough to treat the condition for patient and their physician feels for patients benefiting from treatment.
Catalysts original license territory was for North America.
Which included Canada Carlos has received approval of Firdapse for labs in the United States, we have been preparing to file a new drug submission or MBS candidate for the treatment of LEMS Firdapse.
While it is too soon to comment on an anticipated filing date.
For the Canadian market, we will keep you posted as a reference progress in May of this year catalyst announced an agreement with Biomarin.
Japan to our marketing territory.
Carlos has already begun the process of filing for orphan drug designation in Japan, and also on filing a Japanese and again it is too soon to comment on the anticipated data filings for the Japanese market, but we will keep you posted on our progress.
Many patients have also requested a long acting former firdapse and as part of our patient focus we have an ongoing project to develop this new form before.
These kinds of projects are complex and often involve new clinical studies and it is still too early in the development of this new firdapse dosage form to provide any more specific comments other than to say that we are working diligently on this project and we'll keep you informed as we move forward.
In closing catalyst also continues to examine other potential uses for firdapse should any material progress being made in these potential new indications we will provide updates.
Catalyst also accepts grant applications from research that wish to conduct research on other potential uses of Firdapse.
Pending on the nature of the request catalysts may provide investigational drug placebo tablets.
Under funding for this type of investigator sponsored research details of this application process can be found on our website.
I will now turn the call over to Ali Grande Chief Financial Officer to review our financial results.
Thanks, Steve on one of the other seven we filed our quarterly report on Form 10-Q for the second quarter ending June 32019 in which we reported net income of $11 million or 11 cents per basic share and 10 cents per diluted share for the second quarter of 2019 as compared to a net loss of $6 million cents six cents per basic and diluted share for the second quarter of 2018.
For the quarter ended June 32019, net product revenue from the launch of fairness with 20.8 million.
Related cost of sales in the same quarter with 4.3 million.
Research and development expenses were $4.6 million for the second quarter of 2019, as compared with $3.7 million in the second quarter of 2018.
Research and development expenses for the second quarter of 2000, and then Dean primarily consisted of expenses from medical regulatory affairs and quality assurance Berlin, Atlanta expenses from ongoing clinical trials and studies and our expanded access program.
Research and development expenses in the comparable period in 2018.
Ryan consisted of consulting expenses as we've been fairly consistent.
Perfect. Thanks for the treatment of women.
As well as expenses forgets cynical Jonathan studies.
Our expanded access program.
The company expects that the costs related to research and development activities will continue to be substantially.
2019.
As we continue our ongoing clinical trials and studies and USA and CMS and Anthony Thanks Irene.
And I found the necessary for fans.
Selling general and administrative expenses for the second quarter of 2019, total 9 million as compared to 2.6 million in the second quarter 2018.
The increase when compared to the same period in 2018 is primarily due to increases in expenses, including cost of commercial system implementation of our Salesforce and supporting personnel.
Patrick launch expenses market access and market research expenses and professional fees associated with our losses.
The company expects selling general and administrative expenses to increase in 2018, we continue to build our infrastructure and commercialization programs deployed furnace sales activities in 2019 and prosecute our losses.
Against the FDA.
On June 32018, catalyst had cash and investments of 64.9 million and no funded debt.
Although there can be no assurance Mason per annum indolent information, we believe that these resources will be sufficient to support our planned operations.
At least the next 12 months my detailed financial information and analysis may be found in the company's quarter you employ on Form 10-Q , which was filed with the Securities and Exchange Commission on Wednesday August seven 2019.
And can be found on the Investor Relations page of our website at Www Dot Kelly pharma dotcom.
I will now turn the call back to Pat.
Thanks Shelly.
We're very pleased with this quarters results I'd like to thank everyone involved in making this happen, including our patients physicians employees and other catalyst stakeholders.
Together, we are changing the lives every day of patients with rare neuromuscular diseases.
We look forward to building on the strong launch foundation and providing you additional updates from our ongoing trials later this year.
This ends our formal presentation.
I'll now turn the call over to the operator for questions.
Thank you the floor is now open for questions. If you would like to ask a question you may do so by pressing star one on your telephone keypad at this time.
Hey, confirmation tone indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the Q.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key is once again that is star one to register questions at this time.
Our first question is coming from Charles Duncan of Cantor Fitzgerald. Please go ahead.
Hi.
Pat and team thanks for taking my questions and congrats to nice quarter and and the progress.
Had a had a quick question regarding the naive patients starts.
Im wondering if you could characterize better that that source of demand.
How it's coming to you or.
And or.
Did this make the contribution in the second quarter in terms of revenue or would that be.
The naive patients, perhaps make an impact in terms of revenue going forward.
Dan do you want to take that.
Sure. So I think this was a question on last call as well.
The naive patients again this is a group of what we see from the claims data primarily 1500 patients that have already been diagnosed with Lam.
And and so there are many patients out there that.
Perhaps that already been trying to get to three four DAP and just weren't able to get into a study and such and so there wasnt a missile.
Pent up demand and we saw a good number of those patients reaching out to us actually but then also same with their physicians and many new physician where prescribing for these patients and so there was a pent up demand and now we're starting to see that get into as I mentioned, what looks like to be somewhere around the 15 patients per month.
That will come in again, either from patients that are hearing about it or reading about it online from the physicians and our efforts in the field with our sales reps and some of our digital efforts.
In Q2 as I mentioned earlier, there were 55 of these patients in Q1 by the end of Q2 that grew to 115 and and right now we're at 138. So in Q2 and had some meaningful impact as far as revenues are concerned we are seeing in Q2.
A relatively quick turnaround on the patient enrollment forms to getting few P. A's and benefits being delivered in Q2 actually that was under 10 days.
So I think that there was some some.
Revenue recognition from those patients.
Even in Q2, and certainly as we move forward.
Okay. That's helpful and regarding the you mentioned feedback encouraging.
Not a surprise for patients experienced on the drug but with regard to the naive patients.
If you could provide some more color and the feedback that you're getting that B b grade is that initial response in terms of efficacy.
Is that tolerability or overall impact on quality of life.
Gary you want to take that.
Okay.
Sure the.
I think the feedback again for the naive patients has been.
Positive with high levels of satisfaction and the attention that they are receiving I'm personally from the catalyst patient access liaisons to help them one navigate the system as well as to get appropriately titrated on their medication and that's something that I think patients have been reporting that they are not used to having with other medications or companies.
So if I can add to that Charles So it's important for the physician to work with the patients, especially during this initial phase the tightrail option period, where a patient might be experiencing some of the side effects that are typical at this drug like some minor gi issues as well as.
Some tangle input paresthesia.
And so there is some hand holding in.
In consulting that's required with these patients. These naive patients initially and I think that between the docs and our our MSL and Rpls I'd think that they've done a wonderful job, helping the patient get through this.
Initial tightrail question Ed.
Period.
Okay. Thanks, that's a that's a positive Pat thanks for the added color last question for.
Steve perhaps multipart wanted to ask you about the upcoming CMS data would you see a win there being to statistical significance.
Or are you looking for some effect size too.
Transition into the next stage to have those conversations with the agency and possibly file an S. San Diego and then the second part of the question is regarding the mosque empty program seems like that's making progress you said that you were offering continued treatment annex.
Extended treatment for certain patients could you characterize approximately the percentage that have decided to go on to the drug after after the trial.
Sure. Thank you Charles hopefully I'll remember all your questions.
First with regard to CMS.
That's a relatively small trial in a perfect world, we'd like to see statistical significance, but remember there is also multiple gene touched for CMS I think when they are simply to see some signal data from one or more of genetic groups that are captured in our CMS trial.
As I mentioned in the call one of the things that we have to do after the completion of the trials have a discussion with the FDA about the results and and that discussion will be very subject, but you asked about which is.
What does the trial tell us and.
What does that mean for moving forward with the indication and which genetic sub types or hopefully all will be allowed on the label.
So.
Hopefully that answers your question.
With regard to.
The musk trial.
Let me answer your second question first.
And that is about the number of patients that Sci Fi extended treatment. The short answer is virtually all the patients have agreed to continue on therapy. After completion of the randomized portion of the trial.
So clearly those patients.
Field, if the drug is benefiting them in some way and if they decided to continue on the.
Treatment.
Could you do me a favor and repeat the first part of your question with regard to course correct.
To make sure I answered properly.
Yes, definitely that was really yet.
I guess I would add what is kind of the gating factor in terms of the timing of them Mckinsey.
Well as I mentioned on the call. It's got a just a very large complex trial with many sites both in the United States and internationally and.
At the conclusion of enrollment, which we expect.
In this half we will be cycling through all of the sites to clean up all the data clean up all the records and close appropriately closed sites and make sure that all the data is.
Pristine as it should be for any trial and.
Simply because of the large number of sites and the international locations.
Carries into the.
First half of next year.
Okay. Thanks for that.
Okay. Thank you.
Thank you. Our next question is coming from Joe Canton Zaro with Piper Jaffray. Please go ahead.
Hey, guys. Thanks for taking the questions and congrats on the nice quarter I guess I guess my first question.
You've provided a bunch of metrics that provide some insight, but im wondering if you could provide a little bit more color in terms of the refill rate maybe the exact percentage.
Of of rebuilds, you're seeing and then along those lines.
By the numbers you provided it sounds like there were about 25 patients or so who have who initiated treatment, but subsequently.
Discontinued I'm wondering if you could provide some detail around why those patients discontinued treatment.
Sure. This is this is Dan I can I can give some insight to the refill rate.
The refill rate is very strong.
As you would imagine in a highly symptomatic disease, where that where the medicine provides immediate benefit to the patient so actually for our active patients. The refill rate per month is is it about 98% to 100%.
So the active patients are refilling on a regular basis.
The the the second question on on some discontinuation and I think this goes in a little bit with the question that.
Charles asked as well.
We did see in the.
In the study.
For naive patients coming onboard approximately in the neighborhood of 15% discontinuation.
Or the trial did I read that the drug Didnt work well in patients and so we were expecting for naive patients somewhere in the neighborhood of the 15% to 20%.
Discontinuation rate and it's more things and as you would imagine that Pat mentioned in some cases, it's the side effects.
Being on to intolerable and we try to help patients with that there is a narrow therapeutic window for the drugs. We help the patients understand that concept, we help the physicians, but in some cases. It is just truly intolerable for the patients in other cases, the patient feels more benefit and again, we have to wonder whether or not theyre, just not going to be a responder or if its an element of the dosing in the titration and so thats why we spend so much time and effort there, but but the long story short is we do see somewhere in the neighborhood of the 15% to 20%.
Discontinuation from new patients and this is one of the reasons why we do provide the first 30 to 60 days is actually bridge free product, so that patients and payers know.
That they can look for the response before the payers will start paying.
Okay got it that's helpful.
I guess my next question, maybe maybe at a high level can you guys provide any any detail or insight in terms of what you're seeing in the marketplace with regards to reserve Gee are you hearing anything from physicians and patients have you seen any physicians transition your patients off of Firdapse, Ontario reserves. You. Just wondering if you have any any color around that.
We have we have heard very little and seeing very little.
Discontinuations.
From patients in our catalyst pathways.
Or from physicians, thus far.
There are some but but it actually is very very minimal and very little from from what we are hearing and seeing both at the field level with our sales representatives as well as from our catalyst pathways.
And our ongoing patients.
Okay got it Thats helpful. And then maybe just one last question just following up on the Musk Mg timing I just wanted to make sure. It's clear that the change in the timing around topline data is more due to just your expectations of the time, it's going to take to clean up the data and do the analysis.
And then maybe speculating the trial completes enrollment in 2019.
And the primary endpoint is day 10 time point.
Can we expect the data earlier in the first half of 2020 rather than later.
Stacy.
It's conceivable that the data could be earlier in the first half of <unk>.
Next year.
The.
Once the enrollment is complete and as you said the exposure period is relatively short once all the patients have completed the next stage is to make sure that all the data has been entered in the electronic data collection system and that all queries get answered some investigators are quicker about it than others and.
If all the investigators are.
Very responsive to getting data entered and also making sure all crews are closed and all the sites have been checked it could be.
Fairly early in the first half of next year.
If we have delinquent investigators can take longer.
And so it's somewhat of an unknown as to how fast investigators to get it done many of the investigators of other trials going on as well and and computing.
Resources, and so we have to make sure that.
We're out there all the time talking to them and keeping them interested in our trial.
Got it thanks for taking the questions.
Thank you.
Thank you. Our next question is coming from Joon Lee of Suntrust Robinson Humphrey. Please go ahead.
Hey, Thank you for taking our question. This is Frank for June .
Quick question.
So you mentioned that there is about 15, new patient coming from Mt and do some calculation that's about.
90 patients coming in for the second half 19, and down about 180 patients coming for the whole year. So based on the calculation. If you will end up being 500 patient at end of 19 and dance 60 patients by the end of tuck ins that calculation reasonable fair, where it got too conservative in terms of calculating how many patients can be held for that.
Dan Dan, Yes, I think directionally that that you can be comfortable on that it's always difficult.
To to predict on such an ultra rare disease, where there are 15 under diagnosed patients and then we estimate another 1500 that are undiagnosed it it's hard to to determine what the steady state.
Number of new prescriptions and patients coming in but I think that that is what we see right now and and from my experience in working with rare diseases.
This seems to be following that trend.
Great. Thank you and then the second question is found US Sam asked so so so.
Basically in the stem as trial as well as the Mackenzie trial at this and they all have a dose finding and treatment rang in phase.
And so just wondering that.
Matt trial.
What's the screening rate people patient eligible what the screening success rate so that it can be randomized and subsequent treatment.
With the recent study.
We haven't commented on.
The screening success rate in other words, how many patients are screen versus how many ultimately.
Randomized.
I can just in general I can say that it's similar to what we've seen in the past and other nor muscular trials.
Okay, great. Thank you guys and congrats on the strong quarter.
Thank you Jeff.
Thank you. Our next question is coming from Leland Gershell of Oppenheimer. Please go ahead.
Hey, good morning wanted to ask.
A bit more about the the the limbs patients out there who are currently not on therapy.
With regard to accessibility of those patients in terms of.
Then being perhaps an outlying areas seeing general neurologists, obviously, a much perhaps larger population than a more focused group of the the specialists and how you see.
Getting to those patients in terms of what strategies, you're going to use and what expense you might incur.
As you have to perhaps deploy more effort to get to those patients and then I've a follow up.
Sure Dan. So we are continually purchasing claims data that update us on the prescriptions.
We buy prescription data as well.
But the procedures and diagnosis codes of physicians across the country and we still see even on a quarterly update.
New physicians and oftentimes general neurologists using a diagnosis codes for these LEMS patients and Thats. When we had those those leads and essence over to our sales representatives and we have inside sales folks that are calling on these offices as well so we have.
Kind of the traditional.
Purchase and understand the data from a physician level level, and then hand that off to our sales force and and whether Thats, an urban or rural we do see the same.
Where there is a good mix you would think that many of these patients are in the large urban centers, but but actually there are quite a few and in fact.
Oftentimes 50, 50, where they're out.
In outlying areas and so we send our sales reps or or hand, the phone calls to those offices and follow up but in addition, we're also.
Investing quite a bit in digital communications, both to physicians and patients and so thats search terms, where we are providing educational information both about lens as well as firdapse and such and Thats really starting to ramp up.
Now here in the second half of the year.
And Dan let me add to that I think longer term.
The ambassadors program that we have for fellows.
That's an investment that we're making.
A fairly hefty investment over the next couple of years, reaching out to sellers from various institutions and holding meetings around the country to educate them about the disease and about the clinical benefit of Firdapse and they go back to their institutions and they they educate.
Some of their associates and we had one in Dallas in May with 14 Fellows I believe they went back to their various institutions and I think 13 of those have already had meetings at their various institutions with their work there.
But the other fellows.
So.
Yes part of it is longer term educational effort. There we're doing that will pay dividends not immediately probably the longer term to augment what Dan has just said the other efforts. So we are doing.
Okay, that's very helpful.
And then just on the on the sustained release formulation I know you are not giving much of an update here, but but just wondering when we might hear.
On when that might be moving forward and positioned to perhaps.
Running a clinical study could that be sometime in 2020.
Oh I believe at this time, that's a reasonable assumption about when we might start some clinical work, obviously theres formulation work is continuing that needs to be.
A completed and then manufacturing of clinical batches.
Okay, great. Thanks, very much for taking the questions.
Thanks Lynn.
Thank you. Our next question is coming from Scott Henry of Roth Capital. Please go ahead.
Thank you good morning, and a really strong results Pat.
Hi, Thanks, just a couple a couple questions first.
A modeling question it looks like.
Cost of goods sold is running around 15%.
That would seem a little bit low given I think there's about 14% of total royalties being paid any any clarity, what's what's going on there.
Yes.
So most of our launch.
Supply we manufacture before.
The FDA approval, so as well.
Accounting.
Diane we expense that you are on the on prior years, so the cost.
That we were able to capitalize from most most of their launch the price list only labeling and packaging.
We believe that product and start manufacturing new products, Laurie I think peanut sales you will see a more realistic cost of sale. So we expect the cost of sales to increase aside pesticides.
Scott in the past, we've talked about for modeling purposes, including the royalties to use on a conservative basis about 20%.
Okay no. Thank you.
14% of that as royalties.
Perfect. Thank you for that clarity.
And then.
With regards to the FTC lawsuit.
Are there any events, we should be looking for are there any clock is ticking or just trying to get a sense of anything we should look for from a timeline or event structure there.
Yes, we.
We believe that.
Federal agencies and search like us have about 60 days to respond.
There was a clerical.
Glitch that delay will probably delayed by 10 days. So we think that our response will be filed probably sometime around labor day.
So that's that's really all the color we can give at the moment Scott.
Okay, Great that's helpful.
And then the Japan indication I I don't know have you given any color as to kind of the size of that market in in what sort of timeline, we should be thinking about.
To reach that market.
Yeah, we're a little guarded right now our team.
Was there last week and Japan.
Working with our.
Regulatory Japanese regulatory group and our COO.
And so we're going to be a little bit guarded until we can can be.
More precise about timing.
We believe the prevalence based on literature and some of the reports that we've seen and some of the work that had actually been conducted by Biomarin.
Indicate digits.
Somewhere between 800 to maybe.
13, 1400, LEMS patients and that would sort of match up.
As a percentage on a prevalence basis as it relates to the us.
About 40%.
Of of.
Patients, so 1200 or so.
So that's that's all we have at this point Scott on Japan, Okay. There were timeline wise.
Pardon me.
And any comments on how long it could take to get that to to filing or or on the market. No. Like we should have more information on that later in the year. We have several more meetings scheduled in Japan between now and the end of the year and I would say.
You know as we give more clarity will be in a position to provide some guidance and timelines.
Okay great.
That should do it for me. Thank you for taking the questions.
Thanks Scott.
Thank you at this time I'd like to turn the floor back over to management for closing comments.
Thank you operator.
I want to close today by saying how excited we are about the progress that we've made so far in 2019.
We thank you for joining today's call and look forward to providing further updates as the year progresses have a nice day.
Ladies and gentlemen, thank you for your participation. This concludes today's conference you may disconnect. Your lines at this time and have a wonderful day.
[noise].