Aug 10, 2017
Operator
Greetings and welcome to the Catalyst Pharmaceuticals Inc. Second Quarter 2017 Financial Results Conference Call.
At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.
[Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms.
Ali Grande, Chief Financial Officer. Thank you, you may begin.
Alicia Grande
Good morning, everyone, and thanks for joining our conference call. On today’s call, we have Pat McEnany, Chairman and Chief Executive Officer; Dr.
Steve Miller, Chief Operating Officer and Chief Scientific Officer; and Dr. Gary Ingenito, Catalyst’s Chief Medical Officer and Head of Regulatory Affairs.
Before we begin, I would like to remind you that in the following comments and in the Q&A session, we will make statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements relate to our current expectations, estimates and projections, and are not guarantees of future performance.
They involve risks, uncertainties and assumptions that are difficult to predict and which may prove not to be accurate. Actual results may vary.
These forward-looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, particularly the Risk Factors in our Annual Report on Form 10-K. At this time, it is my pleasure to turn the call over to Pat McEnany, our Chief Executive Officer.
Patrick McEnany
Thank you, Ali, and good morning, everybody. Thanks for joining us today and welcome to our second quarter 2017 results call.
We will look forward today to providing you with a report on our recent activities and progress. Steve Miller will provide a status report on our pipeline and Ali will review our financial results for the second quarter.
We will than take your questions at the end of the call. During the second quarter, we continue to work towards completing enrollment of our clinical trials evaluating Firdapse to treat patients suffering from Lambert-Eaton Myasthenic Syndrome or LEMS and Congenital Myasthenic Syndrome CMS.
We remain focused on submitting an NDA for Firdapse by yearend as well as developing a plan to pursue a path forward for Firdapse as a potential therapy for patients suffering from MuSK antibody positive Myasthenic Gravis or MuSK MG. Last quarter we received positive top line results for the use of Firdapse as a potential treatment for MuSK MG which was very encouraging, as there is currently no FDA approved therapy for this non-muscular disease.
We are also pleased to see that a poster highlighting the results of this Phase 2B study for Firdapse and the treatment of MuSK MG was presented at the 13th international conference on Myasthenic Gravis and related disorders in New York in May. As a result, we are now in discussions with the FDA regarding the design of a registration trial.
We remain focused on our second Phase 3 trial to begin at December of 2016, known as LMS 003. Which is evaluating the safety and efficacy of Firdapse in patients with LEMS.
This trial is progressing and we are looking forward to completing this trial during the second half of this year. Assuming positive results we plan to resubmit our NDA for Firdapse later this year.
In May we were honored to receive the 2017 Beacon Award for Contribution in Life Sciences and Healthcare category. This award was given to us by the Beacon Council which is an economic development organization focused on the development of the economy in Miami-Dade County, Florida.
We are very grateful to have received this award and to be recognized for our progress and supporting innovation in rare disease treatments. In June, we were pleased that our stock was added to the Russell 3000 Index.
The Russell Index remains in place for one year and is largely used by investors as a standard benchmark for active investment strategies. Our addition to this index strengthens our presence in the investment community and validates our most recent strategies and objectives as a company.
We continue to develop a generic equivalent of Sabril or vigabatrin. Sabril is indicated for the treatment of infantile spasms and refractory complex partial seizers.
As previously reported, we are continuing our efforts to seek a partner to further the development and commercialization of generic Sabril, although no agreements have been entered into to-date, we are hopeful that we can bring these efforts to a successful conclusion during the second half of this year. Similarly, we are exploring alternatives in assessing our options for our CPP-115 program as we look to continue the development of our drug candidate for the treatment of refractory infantile spasms and possibly to Tourette’s Disorder.
We will of course keep you advised on our efforts as these matters progress. As we move closer towards receiving top-line results from Firdapse clinical trials and a potential NDA to the FDA we expect to begin in the near future to re-initiate our pre-commercialization activities for a potential Firdapse launch later in 2018.
We will now hear from Steve Miller, our Chief Operating Officer and Chief Scientific Officer, who’ll provide more information about our development pipeline.
Steve Miller
Thanks, Pat, and good morning, everyone. As Pat mentioned, we are continuing to enroll subjects in our second Phase 3 trial of amifampridine phosphate for the symptomatic treatment of LEMS and are nearing completion of enrollment.
We reiterate our expectation that we will complete this trial in the second half of 2017. We’re also making progress enrolling patients in our CMS trial evaluating amifampridine phosphate for the symptomatic treatment of CMS.
Due to the rarity of this condition enrollment in the CMS clinical trial has proceeded slower than we originally expected and we now anticipate completion of this trial in the first half of 2018. We do not expect to delay in the completion of enrollment for the CMS clinical trial to delay the resubmission of our NDA for Firdapse for the treatment of LEMS.
We also anticipate submitting an NDA that we file for Firdapse information regarding certain forms of CMS that are mechanistically similar to LEMS. While this approach has been discussed with the FDA there could be no assurance that the information provided will be sufficient to justify the granting of an indication for CMS on this basis.
Our expanded access program continues to provide access to amifampridine phosphate tablets free of charge for patients who have no other treatment options and for which the patients’ treating physician feels this could improve their disease condition. The program is currently designed only for patients diagnosed with LEMS, CMS or downbeat nystagmus.
As a reminder, last quarter we announced the positive results of a catalyst supported investigator sponsored clinical trial of amifampridine phosphate for the treatment of myasthenia gravis patients diagnosed with the MuSK antibody subtype of this disease. Patients diagnosed with MuSK MG constitute approximately 5% to 8% of the overall Myasthenia Gravis population and we estimate that there are about 3,000 to 4,800 patients in the United States with this type of Myasthenia Gravis.
The patients in this trial tolerated amifampridine phosphate very well and exhibited significant clinical benefit from the treatment. In spite of the small sample of only seven patients' statistical significance was reached for all endpoint measures.
The results of this proof of concept trial were presented in a poster at 13th International Conference on myasthenia gravis and related disorders in New York City on May 15 by Dr. Silvia Bonanno and we anticipate that the full results of this clinical study will be published in the first half of 2018.
These results are particularly promising because there are currently no generally recognized effective treatments for MuSK MG. We look forward to further pursuing this indication and hopefully providing some much-needed release to this population of patients.
Catalyst is currently in discussions with the FDA on the design of an appropriate trial for this indication. And subject to availability of funding we anticipate initiating a multi-center Phase 2 trial in the second half of 2017.
I will now turn the call over to Ali, to review our financial results.
Alicia Grande
Thanks Steve. All reference to share [ph] in this call refers to basic and diluted shares.
For the quarter ended June 30, 2017, Catalyst reported a GAAP net loss of $3.9 million, or $0.05 per share, compared to a GAAP net loss of $4.6 million, or $0.06 per share, for the same period in 2016. Excluding a non-cash gain of $210,000 attributable to a change in fair value of liability-classified warrants, non-GAAP net loss was $4.1 million, or $0.05 per share for the second quarter of 2017.
In comparison, non-GAAP net loss for the second quarter of 2016 was $4.7 million, or $0.06 per share, which excludes non-cash gain of $163,000 for the change in fair value of liability-classified warrants. Research and development expenses were $2.5 million, for both the second quarter of 2017 and 2016.
We expect that our R&D spend will continue to be substantial throughout the balance of 2017 and in 2018. General and administrative expenses for the second quarter of 2017 totaled $1.7 million compared to $2.3 million in the second quarter of 2016.
We expect G&A expenses excluding pre-commercialization expenses to remain consistent through the balance of 2017. We also expect pre-commercialization expenses which are reported as part of G&A to increase in the second half of 2017 as we began to prepare for a potential 2018 launch of Firdapse.
As a development stage biopharmaceutical company, Catalyst had no revenue in either the second quarter of 2017 or 2016. During the quarter ended June 30, 2017 Catalyst received proceeds from excessive [ph] of warrants of approximately $1.8 million.
At June 30, Catalyst had cash and cash equivalents and investments of $35.1 million and no debt. Although there can be no assurance, we believe that these three sources will be sufficient to support our plant operations through at least the next 12 months.
More detailed financial information and analysis may be found on the company’s quarterly report on Form 10-Q which was filed with the Securities and Exchange Commission yesterday August 9, 2017 and can be found on the Investor Relations page of our website at www.catalystpharma.com. I will now turn the call back to Pat.
Patrick McEnany
Thanks Ali. We are very excited about all of the progress that we have made on our Firdapse trials for LEMS and CMS.
And look forward to completing enrollment and focusing on the path towards FDA approval of Firdapse. We look forward to sharing additional updates on our products and on the status of our development programs for all of our products over the coming quarters.
This will be the end of our formal portion of the meeting. And we will turn it over to Donna for questions.
Thank you. The floor is now open for questions.
[Operator Instructions]. Our first question is coming from Charles Duncan of Piper Jaffray.
Please go ahead.
Charles Duncan
Yes, so good morning. Thanks for taking my questions and also congratulations on the progress in the quarter.
So, I wondering Pat, I wanted to ask you a question about LMS-003. I believe there were a couple of minor differences; it seems minor differences between LMS-002 and 003.
And one of them, I just wanted to get clarification on. And then is that in addition to enrolling patients from your expanded access program for 003, you also had a primary endpoint assessment at day four versus in 002 was day 14, and I’d guess I'd like to hear your perspective if that changes the probability of success for 003?
Patrick McEnany
Sure, great question Charles. I will turn that over to Steve Miller.
Steve Miller
Thank you, Charles, and thank you Pat. The first trial LMS-002 had a primary endpoint at day 14 which you pointed out but also had a secondary endpoint of SGI and QMG at day seven.
Furthermore, the LMS-002 trial had a dose taper for those patients that were randomized to placebo. If you will previously recall the LMS-002 trial was a discontinuation design where all patients entered the trial on the test medication, half of those patients during the randomization period continued on the test medication and the other half of those patients were randomized to placebo.
Well because of the dose taper, what that means is that even though there was a measurement at day seven, the actual period of time for those patients who were randomized to placebo that were actually on no medication or a sub-therapeutic amount of the medication was perhaps only three or four days. And we observed a very robust clinical response at day seven in the LMS-002 trial and achieved very robust P values for those endpoints as well.
Therefore, we feel very confident that an exposure period of four days in the LMS-003 trial will be achievable and we remain optimistic that we will achieve statistical significance at the completion of this trial.
Charles Duncan
And you feel good about the quality of patients. I mean it would seem that since most of the mark coming from the extended access that would be a non-issue for this trial?
Patrick McEnany
We also feel confident about the patient population, everyone in our expanded access program entered the extended access program because of the confirmed diagnosis with Lambert-Eaton Myasthenic Syndrome and has been under treatment for in some cases several years with Firdapse and remains on a test medication because the medication is providing significant clinical benefit to that. Therefore, we believe that the patient population that we are drawing the LMS-003 patients from is a patient population that has confirmed Lambert-Eaton myasthenic syndrome and has shown benefit from LMS-003.
And therefore, we expect to see a robust clinical signal.
Charles Duncan
And post the trial, do the patients have the opportunity to go back on the EAP and if so, have they done so?
Steve Miller
All of the patients have reentered the expanded access program. In fact, the logistics that how does study works is patients travel to the clinical trial site for LMS-003 with their expanded access medication that is turned over to the site investigator for the period of treatment in LMS-003, and then their expanded access medication is returned to them at the conclusion of LMS-003.
So, they technically are essentially not leaving the expanded access program, but simply taking a short hiatus from it while they participate in LMS-003
Charles Duncan
Okay and also there, just hoping over to the CMS trial, you mentioned the delay in terms of enrollment, I am wondering if you have any thoughts on why that is happening and if it can be reconciled. And secondarily, when you consider the design of the Phase 3 for CMS versus that of LEMS, are there any differences that are notable that you'd like to point out that may impact the probability success in CMS versus LEMS?
Steve Miller
Sure, well let me answer your second question first. The design of the CMS trial is a crossover design.
We anticipated due to the rarity of CMS that there would be more difficulty in recruiting patients for the CMS clinical trial and so we used a crossover design in order to maximize the power of the study. The study is designed to recruit about 20 patients which is a smaller number than our pre-event of the LMS-002 and LMS-003 trials.
But because of the crossover design we believe that we will be adequately powered to achieve statistical significance for the primary end points of this CMS clinical trial. With regard to the recruiting of patients, due to the rarity the condition, it's harder to find those patients but there is also other logistical concerns which are that as a crossover design trial the patients have to conduct more site visits over a longer period of time and as a result of that it becomes increasingly difficult to get patients who want to participate in such a trial simply for logistical reasons.
Also, CMS -- the CMS trial has more clinical trial sites and the difficulty -- there is some addict difficulty in traveling to these sites again because of the increased number of subject visits. So, all of those conditions combined with the fact that CMS is more rare than LEMS have resulted in a recruiting period that’s longer than we previously anticipated for that trial.
Charles Duncan
But [indiscernible] reconcile or do you have confidence that you’ll be able to achieve the enrollment goals now [indiscernible]?
Steve Miller
We do have confidence based on how many patients have already been enrolled in the trial but we will achieve our enrollment goals in the first half of 2018.
Charles Duncan
Okay and one more I am just intrigued with regard to the regulatory strategy on CMS. It sounds like in the initial NDA on LEMS, you will be providing some information that suggests CMS is very similar to LEMS at least in certain types of patients, and therefore seeking a broader label than just LEMS.
But with the CMS Phase 3 later reading out, would you see that as a major amendment, have you discussed this with the agency and what has been their feedback on that?
Patrick McEnany
We haven’t discussed how the CMS trial will be submitted to the FDA on a post approval -- after the approval of the original NDA. The reason for that is simply because it’s only recently been decided by us based on the current enrollment rates that this trial would complete after we’ve submitted the NDA.
However, we have had more than one discussion with the agency regarding a submission strategy that involves a sub group of CMS genetic defects that are mechanistically similar to LEMS. And I will remind you that LEMS is a condition in which there is a failure to release adequate amounts of acetylcholine at the neuromuscular junction, and that inadequate release is due to the fact that there is an antibody that attacks the voltage-gated calcium channels that initiate the biochemical cascade that ultimately results in the release of acetylcholine.
There are certain genetic subtypes of CMS that also are result in inadequate of acetylcholine at the neuromuscular junction and those genetic defects are defects that affect the same biochemical machinery that’s triggered by the calcium, lack of calcium influence in the LEMS condition. And therefore, that is how the diseases are mechanistically similar.
And so, we have had discussions with the agency about pointing out the mechanistic similarity between several CMS genetic conditions and LEMS, and that is the approach that we intend to take in our initial NDA filing.
Charles Duncan
Okay, and final question, I apologize for all the questions. But regarding the MuSK-MG Phase 3 trial that you are hoping to commence in the second half this year, wondering if you have any color that you could provide on the design or size or timelines or even the class of that trial?
And then the eight ranging is sample of this study that you, the investigator sponsored study that you mentioned versus this eight range in the patient population that is diagnosed or suspected of MuSK-MG? Thanks.
Patrick McEnany
I will answer your second question first again. The MuSK-MG population study for our study will be adults.
As a reminder, MuSK-MG is an autoimmune condition and autoimmune conditions typically develop later in life. So, the vast majority of patients with MuSK-MG are adults.
Although it is not impossible that there could be children and adolescents also have the conditions that would be relatively there. With regard to the design of the study, there’s really nothing we can say about the design of the study right now.
We are in discussions with the agency and we anticipate both announcing agreement on the design as well as initiating a multi-centered Phase 3 trial in the second half of this year.
Operator
Thank you. our next question is coming from Edward Nash of SunTrust Robinson Humphrey.
Please go ahead.
Unidentified Analyst
Hi, this is [indiscernible] from SunTrust, sorry for Edward and thanks for taking the questions. So, first question is on CMS and I think the study was expanded to enroll and additional 10 adult patients, so I was wondering going through the efficacy analysis we will be pulling both pediatric patients and adult patients for the board analysis?
Patrick McEnany
I'll let Gary go ahead and answer your question, about the modifications to the CMS trial as well as how we will be analyzing the overall patient population.
Gary Ingenito
Yes, we have expanded the study to the adult population realizing the fact that a genetic defect while presenting at childhood or showing at that point persist through the entire life, so it's really the same disease carrying through. So, we would be pooling the results for analysis but also do a sub analysis which would look at adults versus children.
Patrick McEnany
Just add one additional comments what Gary just pointed out, the primary end point for the study is the motor function measure and that end point was selected in part because it is one of a very small number of muscular function end points that accommodates both children and adults.
Unidentified Analyst
Okay and the second question is a follow up question on the MuSK antibody positive MG. Sorry to ask that but do you have any internal expectations as to what kind of design you would like to have and if the FDA, if they don’t agree with that, so what kind of design might they ask for it?
Steve Miller
Well I don’t -- I just simply can’t comment on any specific design preferences or any progress on conversations with the agency regarding the overall design. The MuSK MG population is only a small subset of the Myasthenia Gravis population, so one thing I can say is that we certainly would be seeking a design that focuses on the MuSK Myasthenia Gravis population.
But again, I can’t comment on exactly where we will end up with the agency in that regard.
Patrick McEnany
We expect that by the end of this quarter we should be in a position to talk more definitively about the design of this study and give a lot more color with regard to timeline, size and all of the logistics surrounding that study. So, with little patience, we’ll have a lot more information out there.
Unidentified Analyst
Okay and my last question is on [indiscernible] I think about two years ago you hosted a physician symposium which was very well attended and I wondered during the past two years have you done any additional market research and have you seen any changes in terms of the perception, physician perception awareness?
Patrick McEnany
Well we did [indiscernible] and patient efficacy is out there with the physician community as well as our RMS sales and so I don’t know that there is anything new to add at this point or any new findings over the last couple of years. We’re in the process of reinitiating of our pre-commercialization activities andwe will get out there and start to refresh the primary and the secondary market research.
And we will be doing that of course in advance of as we prepare to launch the product. So, I don’t think we have anything new to add or any new findings at this point.
But we will certainly as we do we will make them available to the public.
Operator
[Operator Instructions]. Our next question is coming from Scott Henry of ROTH Capital Partners.
Please go ahead.
Scott Henry
Thank you and good morning. Just a couple of questions.
First, and I don’t know if you want to give this much granularity. But I wanted to ask, you’ve mentioned expectations to file the NDA in the second half of ‘17, would you expect an acceptance decision in 2017 as well, just trying to gauge the timing?
Patrick McEnany
Yes, Scott, I am not sure that we can be that granular at this point. The FDA has 60 days to review it and accept it for filing.
So, I am not sure that we at this point can be more definitive. But certainly, as we get closer, we will be in a position to update the status of that.
Scott Henry
Okay. Certainly, fair enough.
And the next question with regards to the CMS data, based on your prior discussions with the FDA, do you expect that they would want to see that data before making a decision on the LEMS indication or are they comfortable strictly with the LEMS data?
Patrick McEnany
Steve?
Steve Miller
Can you repeat the question, Scott, I am not sure I understand it?
Scott Henry
The question is if the FDA would want to wait to see the CMS data before making a decision on the LEMS?
Steve Miller
Oh, no, I don’t believe so. You know we are doing two well controlled clinical trials for LEMS.
And so, the LEMS indication will be approvable in and of itself, at least that’s our expectation. With regard to the CMS, we will be using the LEMS clinical data along with a mechanistic argument that I have previously mentioned.
And so, as I said earlier in our prepared statement that there is no assurance that the FDA will ultimately decide to be informational, [mechanistic] information provided along with the link to the LEMS clinical data would be sufficient to justify an indication for a subset of CMS genetic defects. But we remain optimistic that it will.
So, in short, the answer to your question is that we have two well controlled trials for LEMS and the NDA itself of course is approvable. We anticipate approval for the LEMS indication.
The CMS indication it is less certain.
Patrick McEnany
Scott, this is Pat. In addition to that we will have a pre-NDA meeting with the FDA and we will get complete clarity on that to assure us that there is no conflict there.
So, you can bet we’ll know exactly what needs to be filed and what doesn’t need to be filed to have the NDA accepted for review and approved.
Scott Henry
Okay. And I guess a related question, is there a time point in the review of the NDA where it becomes too late to submit that CMS data in the hopes of getting that included in the label.
Is there a time where it's just too far along to bring something in that later, or how do you think about that?
Steve Miller
Well let me just point out the logistics of an NDA. First the NDA can’t be amended by the applicant unilaterally, basically any additional information that goes into the NDA has to be requested by the agency.
Now we can prime the pump so to speak by mentioning that there is clinical data that will be available in x number of months after filling and the FDA may request that data. So, to the degree that the timing of the completion of our CMS trial and the timing of the NDAs submission permit we may or may not mention that there is CMS data from a clinical trial that’s available which would trigger that the FDA had asked.
But the bottom line is the agency has to ask for it. There is something called a 120-day update in an NDA but typically that’s usually just safety information that’s submitted to the agency part of approval.
Scott Henry
And then just the final question on the financials. Spending in Q2 particularly R&D how would you expect that to trend in the remainder of the year?
Patrick McEnany
Scott, I think that it would be fairly consistent between $2.5 million and $3 million a quarter. Assume that we initiate the Phase 3 study for MuSK MG, you will start to see that ramp up a little bit in the fourth quarter likely.
And so, we believe that will be a fairly static number with the -- plus the addition of the MuSK MG cost which at this point we don’t know what that’s going to be, we have got a ballpark but nothing definitive until we know exactly what the design and the logistics are going to be for that trial.
Operator
Thank you. our next question is coming from Charles Duncan of Piper Jaffray.
Please go ahead.
Charles Duncan
Hi guys, thanks for taking the follow up, just quick one regarding the NDA and the CMC [ph] section. I am wondering if -- we have seen what the expanded access program you have, you have drug on board, having manufactured and QC is validated et cetera, but could you update that process and if you are set on the CMC and then also regarding your form of the candidate versus others that are out there, have you done any additional analytical work to validate them?
Steve Miller
Well with regard to the overall CMC, we definitely are prepared for it not only have we made numerous batches as you pointed out for both the clinical trials supply as well as the medication for the expanded access program but while the original refused to file certainly was very disappointing, it has actually enabled us to collect a large amount of stability data at our current U.S. manufacturers which would have been combined -- which is going to be combined with all the stability information that was provided by [indiscernible] when we licensed it.
So, the bottom line is that we have numerous exhibit batches for both the API and the product at our intended US facilities, plenty of stability data and we don’t anticipate any significant issues with regard to CMC. Now can you remind me, what was your second question?
Charles Duncan
That’s helpful Steve, that actually probably answers it. But in terms of the stability of your form of the candidate versus others that may be out there, wondering if you’ve done any additional work in terms of stability or other analytical work?
Steve Miller
Well naturally our product is on long-term stability and it has -- it’s stable at room temperature for multiple years and therefore has very good shelf life and will be easy to managing the distribution chain as well as very easy for patients to use. What you are referring to is the fact that the free base form of this drug has very poor stability to degree of matter [indiscernible] and it should the free base form ever be commercialized, it would have to be distributed in the cold chain as a refrigerated drug, although we don’t anticipate that happening.
And patients who do use the free base form of this drug do actually have to keep the drug in the refrigerator. We have not gained access to any of that free base form of the drug and have not been able to analyze the drug and determine what the degradation products are.
But it clearly does lose potency and it just doesn’t evaporate, it turns into something that shouldn’t be there in the product.
Operator
At this time, we have no questions. Do you have any additional or closing comments?
Patrick McEnany
Yes, thank you. I would like to thank everybody again for the participation on the call today.
I would like to thank all of our stakeholders for their support and helping Catalyst deliver on its promise of advancing treatment for patients suffering from rare unmet needs. We look forward to seeing you at upcoming investor conferences and provide more guidance as additional facts become available.
We certainly appreciate your patience and promise you that we will work tirelessly to move forward with all of our shared values. Thank you.
Operator
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.