Nov 10, 2016
Operator
Greetings and welcome to the Catalyst Pharmaceuticals Inc., Third Quarter 2016 Financial Results. At this time, all participants are in a listen-only mode.
A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Ms. Ali Grande, CFO, for Catalyst Pharmaceuticals Inc., thank you.
You may begin.
Alicia Grande
Good morning and thank you for joining our third quarter financial results call. Leading today's call, we have Pat McEnany, our Chairman and Chief Executive Officer, also on the call today is Dr.
Steven Miller, our Chief Operating Officer and Chief Scientific Officer. Before I turning the call over to Pat.
I’d like to remind you that on this call, we will be make forward-looking statements involving known and unknown risks and uncertainties, which may cause Catalyst's actual results in future periods to differ materially from forecasted results. A number of factors, including those described in Catalyst's Annual Report in Form 10-K for the fiscal year 2015 and its other filings with the U.S.
Securities and Exchange Commission could adversely affect Catalyst. All forward-looking statements are qualified in their entirety by these cautionary statements and Catalyst undertakes no obligation to revise or update this presentation to reflect events or circumstances after the date hereof.
At this time, it is my pleasure to turn the call over to Pat McEnany, our Chief Executive Officer.
Patrick McEnany
Thanks, Ali, and good morning, everybody. Thank you for joining us today.
I would like to welcome everyone to our third quarter results call. On today's call, I’ll give you a report on our activities and progress so far this year, including the regulatory status of Firdapse.
Steve Miller will provide a more detailed status report on our pipeline and next steps for Firdapse. Following, Ali will give you a brief review of our financial results for the quarter.
Lastly, we will take your questions. This quarter we are pleased to have reached an agreement with the FDA under Special Protocol Assessment or SPA agreement.
For the protocol design, clinical endpoints, and statically analysis approach to be taken in our upcoming second Phase III study, evaluating Firdapse for the symptomatic treatment of Lambert-Eaton Myasthenic Syndrome. As far as a process by which sponsors ask the FDA to evaluate the protocol of a proposed clinical trial to determine whether it adequately addresses scientific and regulatory requirements for the purpose identified by the sponsor.
This agreement also indicates concurrence with the adequacy and acceptability of special, specific, critical elements of protocol design, end points and analysis. It provides a binding agreement with the FDA’s review division that a pivotal trial design conduct and planned analysis adequately addresses the scientific and regulatory objectives in support of a regulatory submission for drug approval.
Receipt to the SPA agreement is the major regulatory milestone which provides us with clearly defined development and regulatory pathway for Firdapse in the treatment of LEMS. We’d like to thank the FDA for its engagement and guidance in this process.
We are pleased that we have received orphan drug designation by the FDA for Firdapse and the treatment of myasthenia gravis, as this provides us with a number of benefits through development and commercialization. Catalyst is currently supporting an investigator-sponsored, randomized double-blind, placebo-controlled study evaluating Firdapse for the treatment of patients with MuSK-MG.
And we anticipate the investigator reporting topline results from this study during the first half of 2017. If this trial is successful and subject to the availability of funding, we hope to initiate a registration quality trial in the U.S.
evaluating Firdapse for the treatment of patients with MuSK-MG. Additionally, as part of our ongoing commitment to patients, we recently launched our Expanded Access Program website focused on making Firdapse more accessible to the patients who need it.
This new website is designed to make even easier and transparent for patients to learn about Catalyst’s EAP and the possibility of getting access to Firdapse at no cost, if they are eligible. We hope this new website enables more patients with LEMS and CMS to understand our program and learn more about this experimental treatment option for these debilitating diseases.
As a reminder, Expanded Access Programs are not required by regulatory agencies and are a mechanism supported by them for getting investigational treatment to patients who have life threatening or severely debilitating disease and who cannot be satisfactorily treated with an alternative therapy approved by the FDA. We continue to develop our scientific pipeline and recently our case report on the efficacy of CPP-115 and a child with refractory infantile spasms was accepted for publication in The Journal of Epilepsy & Behavior Case Reports.
There is a significant unmet medical need in the area of refractory infantile spasms as parents or children who have infantile spasms have a very difficult choice when it comes to treatment options weighing both drug related risks and adequate treatment. I will now turn the call over to Dr.
Steve Miller who will provide updates on our pipeline and scientific developments.
Steven Miller
Thanks, Pat and good morning everyone. As Pat previously stated we have reached an agreement with the FDA through the Special Protocol Assessment process for our second Phase III trial of Firdapse for the treatment of Lambert-Eaton Myasthenic Syndrome or LEMS.
LEMS is an ultra rare disease with a prevalence in the United States believed to be approximately 3,000 patients. Catalyst will conduct its second Phase III trial designated as lms-003 at two clinical trial sites one on the East Coast of the United States and one on the West Coast of the United States.
This double-blind placebo-controlled withdrawal trial will include approximately 28 subjects and based on the effect, size and variability observed in our previous trial, we believe it is adequately powered. This new trial will have the same co-primary endpoints QMG and SGI as our previous Phase III trial which achieves statistical significance.
Further the FDA has agreed to allow Catalyst to enroll patients from our Expanded Access Program and study subjects in the second trial. And we expect to be able to locate sufficient numbers of subjects to complete our trial on the timeline we have disclosed.
Finally, we anticipate topline results from this trial in the second half of 2017. Based on the current anticipated timelines of our clinical trials and assuming the trials were successful.
We anticipate resubmitting our NDA for Firdapse for the treatment of LEMS in the second half of 2017. The Phase III trial is currently underway evaluating Firdapse for the treatment of Congenital Myasthenic Syndromes or CMS.
CMS is an ultra rare disease with a prevalence in the United States believed to be between 1,000 and 1,500 patients. Earlier this year the protocol for this trial was reviewed by the FDA and based on their recommendations the size of the trial was increased from up to 10 subjects to approximately 20 subjects.
Their recruiting was broadened to allow the inclusion of adult subjects and the statistical analysis plan was changed. During this protocol review by the FDA, we continue to recruit subjects and the trial is now enrolling additional subjects under the revised protocol.
We anticipate topline results from this trial in the second half of 2017. If the outcome of this trial is positive, we plan to include the CMS syndication in our resubmitted NDA or in a supplement to our NDA.
Earlier this year, we announced the initiation of an investigator sponsored study of Firdapse in patients with MuSK antibody positive Myasthenia Gravis. Approximately 5% to 8% of the Myasthenia Gravis patient population is estimated to be MuSK antibody positive.
This small Phase III study is currently underway at the Carlo Besta Neurological Institute in Milan, Italy. And we are anticipating that we see topline data in the first half of 2017 and assuming positive data from this current study and the availability of funding, we will then initiate a registration quality trial in the United States.
In August 2016 Catalyst granted orphan drug designation for the treatment of Myasthenia Gravis for Firdapse. We are also continuing development efforts to prefer NDA submission for generic version of Sabril tablets and powder for oral solution.
Finally, we hope in the future to take the steps needed to make our next generation GABA-AT inhibitor CPP-105 Phase II ready. This will require dose optimization studies, long-term toxicology studies in two species; development and reproductive toxicology studies; and additional ADME studies.
However, at present we are not currently allocating resources to this program in order to focus our resources on the development of Firdapse and on our continuing efforts to develop a generic version of Sabril. I will now turn the call over Ali, to review our financial results.
Alicia Grande
Thank you, Steve. For the quarter ended September 30, 2016 Catalyst reported a GAAP net loss of $40 million or $0.05 per share compared to a GAAP net loss of $4.4 million or $0.05 per share for the same period in 2015.
Excluding non-cash expense of $107,000 attributable to the change in fair value of liability-classified warrants, non-GAAP net loss were $3.8 million or $0.05 per share for the third quarter of 2016. In comparison, non-GAAP net loss for the third quarter of 2015 was $5 million or $0.06 per share, which excludes non-cash gain of $522,000 for the change in fair value of liability-classified warrants.
Research and development expenses for the third quarter of 2016 were $2.5 million compared to $3 million in the third quarter of 2015. R&D expenses for the nine months ended 9/30/16 were $8.5 million compared to $8 million in the same period in 2015.
Research and development expenses for the nine months ended 9/30/16 increased when compared to the same period in 2015 due primarily to consulting fees for regulatory matters, activities related to the Firdapse expanded access program, including manufacturing of related drug, and costs relating to our other ongoing studies and trials. We expect that our R&D spend will continue to be substantial throughout the balance of 2016.
General and administrative expenses for the third quarter of 2016 totaled $1.4 million compared to $2 million in the third quarter of 2015. G&A expenses for the nine months ended September 30, 2016 totaled $6.4 million compared to $6.2 million for the same period in 2015.
The increase in year-to-date G&A is primarily due to increases in pre-commercialization expenses, payroll and benefits expenses during the first half of 2016, including approximately $600,000 for severance costs related to the reduction-in-force that occurred in May 2016, partly offset by our initiatives to conserve cash. We expect G&A expenses during the remainder of 2016 to be consistent with general and administrative expenses during the third quarter of 2016.
As a development-stage by a pharmaceutical company, Catalyst had no revenues either in the third quarter of 2016 or the third quarter of 2015. At September 30, 2016, Catalyst had cash and investments $44.7 million and no debt.
Although there can be no assurance we continue to believe that these resources give up sufficient runway, complete the development of Firdapse and get us to an accepted NDA submission for Firdapse without the need for additional finance. More detailed financial information and analysis may be found in the Quarterly Report on Form 10-Q, which we filed yesterday with the Securities and Exchange Commission and can be found on the Investor Relations page of our website at www.catalystpharma.com.
Now, I would like to turn the call back to Pat.
Patrick McEnany
Thanks, Ali. We are encouraged by our discussions with the FDA and pleased to have received the SPA for our second Phase III trial evaluating Firdapse for the treatment of LEMS.
We are working diligently to complete all required studies efficiently in order to complete our Firdapse NDA resubmission. We expect to advance our pipeline and continue our work with rare disease organizations and facilitate awareness of LEMS and CMS and provide outreach support for the physicians and the patients that they treat.
We will continue to analyze our operational plan to ensure as best as possible that we have sufficient financial resources to complete the additional studies required and get an accepted NDA resubmission for Firdapse without the need for additional financing. With that, I would like to thank all of you for participating today and open up the call for questions.
Operator
Thank you. At this time, we will conduct a question-and-answer session.
[Operator Instructions] Our first question comes from Charles Duncan with Piper Jaffray. Please proceed with your question.
Charles Duncan
Good morning, guys. First of all thanks for taking the question and congratulations on a good quarter of progress with regulatory agency.
Patrick McEnany
Thank you, Charles.
Charles Duncan
You’re welcome. My main question is on the LEMS study.
So I'm wondering if there are any gating steps to getting the two sites up and running. It sounds like the initiation activities are going well, but anything else that needs to be done before you can actually enroll patients?
Steven Miller
Charles there is nothing else that needs to be done on the regulatory side. It is simply a matter of execution.
Each the clinical trial site has IRB’s that need to be - IRB filings that need to be completed, contracts have to be completed with sites and we are well into that process are completed without giving any details. And so things are going well regarding the start-up of those clinical trial sites.
Charles Duncan
And then to my understanding that you will be able to enroll patients from your ongoing AIT in LEMS patients. So I guess I'm wondering if you have any sense of the patient and/or physician interest in enrolling patients in the study.
Patrick McEnany
Well, it's interesting. Dr.
Gary Ingenito, our Chief Medical Officer. Charles for the last two months has been on the road and visited all of the sites where we have physicians that have patients enrolled in our expanded access program.
And the meetings with the physicians have gone extremely well they all understand why we have to do this second Phase III study. And from their point of view they're on Board with it.
And will have discussions with patients and have had discussions already. As you know we have a series of patient organization meetings that we have around the country where we invite patients or we invite doctors to engage their patients to come to these meetings and so we've had a number of these and the patients are very grateful for the program and the opportunity to meet other LEMS patients, and they have come up to our representatives who attend the meeting and said please call me, here is my name, here is my address, email address.
If there’s anything I can do let us know. And so those that have identified themselves, we actually reached out to get their response to doing and participating in this study and overwhelming response to one help get this study completed, so the drug can ultimately get approved and just very enthused about participating.
So we think that getting patients to LA or Miami for this very important study is not going to be difficult. And most importantly the docs all understand and it’s bought into the program.
Charles Duncan
Okay. And would you anticipate 100% of those patients who have been identified or are there going to be other challenges in terms of identifying patients and getting them to trial, where the biggest challenge be logistical or will it be in terms of identifying patients that meet the enrollment criteria.
How do you feel about that process?
Patrick McEnany
I think it's probably more logistics and scheduling, getting a patient and their care giver to come to Miami or LA for say seven or eight days. Finding the patients, we think that with the catch that we have in our Expanded Access Program, we believe that we have more than enough to qualify for participation in this study.
So identifying the patients I don't think as the issue I think working through the logistics and scheduling to get patients here or to take a vacation if you will from work for a week, eight days whatever is more of the issue.
Charles Duncan
Okay. And then final question regarding CMS, it sounds like there is a possibility of pursuing a broader label if that study reach out on time and it was positive in the initial NDA.
Is that the case?
Steven Miller
Yes, Charles that is the case. In previous discussions with the FDA, we have a path forward and acceptable passing results from that trial on a timeline that is sufficient to include all that information into our resubmission of the NDA would enable us to pursue the CMS indication in our filings.
Charles Duncan
Okay. Thanks for taking the question.
Steven Miller
Thank you.
Operator
Our next question comes from Scott Henry with ROTH Capital. Please proceed with your question.
Scott Henry
Thank you, and good morning. Just a couple very quick questions.
First with the Firdapse trial, my understanding is that you do – you actually schedule the patient for this eight-day trial time period. The question is have you scheduled the first patient and when do you expect to actually start that first patient being enrolled?
Patrick McEnany
Scott, we said publicly we expect first patient to happen this quarter and we still believe that at this point.
Scott Henry
Okay. Still confident with that, will happen, great.
And then I guess with regards to the financials just basic modeling question. Should we expect significant uptick in Q4 for R&D?
I mean was flat in Q2 to Q3, but it seems like I’d expected a bigger bounce in Q4, is that likely to happen or may that slide more into 2017?
Patrick McEnany
I think as we have – this quarter we've already started a fairly substantial spend for this study. And so I expect that the next three quarters Scott that you'll see an increase in R&D and not through the roof, but I think a substantial uptick from previous quarters.
Scott Henry
Okay, great. And that’s actually all the questions I had today.
Congratulations again on SPA and look forward to talking to you soon.
Patrick McEnany
Thank you, Scott.
Operator
Our next question comes from Edward Nash with SunTrust. Please proceed with your question.
Yun Zhong
Hi, this is Yun for Edward. Thanks for taking the questions.
About the second Phase III study for LEMS. I was trying to compare their this study with the previous Phase III study.
In the previous Phase III study the period treatment comparing Firdapse and placebo including that dose tapering period was two weeks, but you said around eight days for the study. So is that a different period.
Patrick McEnany
That's correct Yun. What you found in the previous study.
The previous study had a one-week taper followed by one-week treatment where they either were entirely on the active drug or entirely on placebo. The new trial is [first someone] designed, but does not have a taper period.
Our experience with the previous trial has informed us that the taper really was unnecessary safety consideration and that patients can safely be placed either placed on the placebo immediately for treatment or can continue on their test medication. As a result of that the overall duration of this next trial will be shorter.
Yun Zhong
Okay. And about the size, the previous study enroll 38 patients, but the current study you plan to enroll only 28 patients.
So I wonder you know how was the comfort level that you believe that the current study is just efficiently powered?
Patrick McEnany
We actually have a high level of comfort, the previous study as we have described in the publication of the data for that previous study had a number of patients that were dosed within the requirements of the protocol, but they missed last dose immediately prior to the assessments. And as a result of that patients who were on the active arm of the study actually for all practical purposes were on placebo.
As a result of that the effect size at the day-14 endpoint was smaller than it could have been. We in fact did do calculations of the response and the statistical significance not including those patients that did not take their dose immediately prior to the assessment on day-14 and again with the smaller number of patients easily achieved statistical significance.
And it's based on that information that we did the power calculations and which leads us to believe that the approximately 28 patients we will include in this trial is adequate power for the current trial.
Yun Zhong
Okay. And final question about the CMS study.
Is there any difference between pediatric patients and adult patients in terms of the disease severity response to treatment?
Patrick McEnany
Well, obviously there's a dearth of information about the treatment of CMS in 3, 4-diaminopyridine to begin with. The response to the patients actually varies quite a bit and it's not an easy question-to-answer because you have to remember that there's currently 20 genes that have been identified that are contributing factors to Congenital Myasthenic Syndromes and you get different responses to different genetic defects and the onset of the disease also varies in terms of the age of onset depending on what the genetic disease is, although approximately two-thirds of them are children.
So there's no simple answer to your question. The bottom line is that all the evidence we have available to us indicates that both adults and children do respond to 3, 4-diaminopyridine for the majority of genetic defects, but there is some variability in the response.
Yun Zhong
Okay. Thank you for taking the questions.
End of Q&A
Operator
Thank you. At this time, I would like to turn the call back over to management for closing comments.
Patrick McEnany
Thanks again for your participation on the call today. I’d once again like to thank all of our stakeholders for their support in helping Catalyst to deliver on its promise to advance treatments for patients suffering from rare diseases.
We look forward to seeing some of you at upcoming investor conferences and hope to provide more guidance as additional facts become available. We certainly appreciate your patience and promise you will work tirelessly to move forward with our shared vision.
Thank you.
Operator
Thank you. This does conclude today's teleconference.
Thank you for your participation and you may disconnect at this time.