Hello, and welcome to the Catalyst Pharmaceutical Second Quarter 2023 Financial Results Conference Call and Webcast. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Chief Financial Officer, Ali Grande. Please go ahead, Ali.

Good morning, everyone, and thank you for joining our conference call to discuss Catalyst’s second quarter 2023 financial results and corporate highlights. Leading the call today is Patrick McEnany, Chairman and Chief Executive Officer. We are also joined by Dr. Steven Miller, our Chief Operating Officer and Chief Scientific Officer, and Jeffrey Del Carmen, our Chief Commercial Officer. Before we begin, I want to remind you that in our remarks this morning and in the Q&A session, we will make statements about expected future results which may be forward-looking statements for purposes of federal securities laws. These statements relate to our current expectations, estimates and projections and do not guarantee future performance. They involve risks, uncertainties and assumptions that are difficult to predict and may prove not to be accurate. Actual results may vary from the expectations contained in our forward-looking statements. The forward-looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our 2022 annual report on Form 10-K. At this time, I’ll turn the call over to Pat.

Thanks, Ali, and welcome everyone to our second quarter 2023 results conference call. Catalyst’s outstanding results for the second quarter of 2023 reflect FIRDAPSE strong organic growth performance, meaningful FYCOMPA revenue contributions and continued execution excellence. Our achievements reinforce our confidence versus same growth and further underscore the exceptional execution capabilities across all functional areas of our business. At this time, I'll present key highlights of our quarterly results. We achieved total revenues of $99.6 million during the quarter, representing 87.5% growth year-over-year. The strong performance reflects FIRDAPSE product net revenues of $64.9 million, achieving a net revenue increase of 22.3% year-over-year. We are confident about the continued growth expectations for FIRDAPSE based on our recent initiatives targeting oncologists to treat the subset of LEMS patients suffering from small cell lung cancer, as well as more recent LEMS epidemiology data that Jeff will discuss. Total revenues were bolstered by FYCOMPA second quarter net product revenue contribution of $34.6 million, the first full quarter under the Catalyst umbrella. Non-GAAP net income for the second quarter was $60.4 million or $0.57 per basic share and $0.53 per diluted share. This excludes from GAAP net income non-cash stock-based compensation, depreciation, amortization of intangible assets, and our income tax provision. The expenses related to the amortization of the intangible assets associated with the acquisition of FYCOMPA and Ruzurgi or approximately $8.5 million for the quarter $3.3 million in non-cash stock-based compensation. GAAP net income for the second quarter was $37.8 million or $0.36 per basic share and $0.33 per diluted share. We ended the quarter with cash and cash equivalents of $178.8 million. Several factors, including continued strong underlying demand for FIRDAPSE from both autoimmune and small cell lung cancer LEMS patients, as well as continued diagnosis of new LEMS patients provides us with…

Thanks Pat and good morning everyone. We are very pleased with Q2 combined net revenue of $99.6 million fueled by FIRDAPSE all time high $64.9 million revenues and meaningful FYCOMPA revenue contributions of $34.6 million, positioning Catalyst well to achieve our revised revenue guidance of $380 million to $390 million. I'd like to begin by discussing our progress with FIRDAPSE, the only FDA approved treatment for LEMS. Q2 net sales of $64.9 million, represents a 22% increase quarter-over-quarter the same quarter last year and a 12.8% increase quarter-over-quarter, a direct result of steady new patient starts and low discontinuation rates. As a reminder, LEMS is a chronic condition, so patients typically remain on treatment once diagnosed. Prescription approval rates were greater than 90% across all payers, government or private commercial insurers. Patients enrolled in Catalyst pathways, including those who are covered by medicare and accessing foundation assistance had an average co-pay of less than $2 per month. Sustained organic growth will be driven by several key areas. First, we have a pipeline of greater than 450 patients that are diagnosed with LEMS, but not yet on FIRDAPSE, approximately 50% of new enrollments are generated from these leads. We have identified additional sources for potential new LEMS patients that will enable us to maintain a high level of quality [Technical Difficulty] for the foreseeable future. Next, our LEMS education programs have resulted in a significant increase in both voltage gated calcium channel antibody test, which shorten the diagnostic journey for LEMS patients and lead to more patients being eligible for treatment with FIRDAPSE. It is important to note that we provide these tests at no cost to patients through a partnership with the National Laboratory. Additionally, our focused educational efforts to the thoracic oncologists are working. We continue to see an…

Thanks, Jeff. Our clinical development and regulatory strategy for FIRDAPSE continues to focus on expanding access to all LEMS patients, enhancing the FIRDAPSE patent to state to maximize its commercial potential and integrating the newly acquired FYCOMPA and Vamorolone products into Catalyst organization. First, I would like to discuss our development efforts to increase the indicated maximum dose of FIRDAPSE from 80 milligrams per day to 100 milligrams per day. Catalyst has now submitted a supplementary NDA to the FDA for this change to the maximum daily dose. While there can be no assurance of acceptance or approval of this sNDA buying any significant issues with the submission, Catalyst anticipates completion of the agency's review in the first quarter of 2024. Currently, there are a number of LEMS patients, who are already being treated at 100 milligram daily dosage of FIRDAPSE after their physician worked with the pharmacy and insurance providers to justify the higher dose. Other patients on the current indicated maximum dose of 80 milligrams per day and their physicians have expressed a desire to increase the patient's daily doses to 100 milligrams to optimize therapy. And this supplement, if approved, will help those patients. Based on our Type C meeting with the FDA in May of this year, we believe that our submission strategy constitutes an acceptable basis for seeking a 100 milligram maximum daily dosage for FIRDAPSE. Regarding our global expansion, we anticipate that DyDo Pharma our partner in Japan, will submit their NDA for FIRDAPSE to the pharmaceuticals and medical devices agency or PMDA by the end of 2023. We estimate that there are about 1,200 to 1,300 LEMS patients in Japan. Submissions of this type typically take about 10 months to review by the PMDA, but there can be no assurance that such a…

Thanks, Steve. The results from Catalyst second quarter of 2023, kept us on pace for another year of exceptional financial performance and strong execution. On the business development front, we continue to be busy as we enter into an agreement for their North American license rights for Vamorolone. It is important to note that the Vamorolone transaction did not close until July in third quarter of 2023. Our total revenues for the second quarter of 2023 were $99.6 million, an 87.5% increase when compared to total revenues of $3.1 million for the second quarter of 2023. Product revenues net for the second quarter of 2023 from our lead product FIRDAPSE was $64.9 million, a 22.3% increase year-over-year, compared $53 million for the second quarter of 2022. Product revenue net for FYCOMPA was $34.6 million for the second quarter of 2023. Net income before taxes for the second quarter of 2023 was $48.5 million, a 71.8% increase year-over-year, compared to $28.2 million for the second quarter of 2022. We reported GAAP net income for the second quarter of 2023 of $37.8 million or $0.36 per basic and $0.33 per diluted share, an increase of 74.7% year-over-year, compared GAAP net income for the second quarter of 2022, $21.6 million or $0.21 per basic and $0.20 per diluted share. Non-GAAP net income for the second quarter of 2023 was $60.4 million or $0.57 per basic and $0.53 per diluted share, which excludes from GAAP net income, the income tax provision of $10.8 million, amortization of intangible assets related to our acquisitions of Ruzurgi and FYCOMPA of $8.5 million, stock based compensation expense of $3.3 million and depreciation of $82,000. This compares to non-GAAP net income for the second quarter of 2022 $30.3 million or $0.29 per basic and $0.28 per diluted share, which…

Thanks, Ali. In closing, the first-half of 2023 has been a remarkable period of accomplishments for the company, demonstrated by our success in executing on our strategic vision. As we advance into the second-half of this year, we are well poised for sustained momentum to capitalize on our expanded product portfolio and have a sound strategy for our company’s future. I want to thank our Catalyst team, partners and collaborators for their hard work and ongoing commitment to the patient communities. I'm proud of our accomplishments that align with our core mission to deliver value to patients, healthcare providers, and shareholders. At this time I’d like to turn the call over to the operator to open the line for questions.

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Joe Catanzaro from Piper Sandler. Your line is now live.

Hey, everybody. Thanks so much for taking the questions and of course, I want to congratulate you, Pat, on all your success you've had and hope you enjoy a well-deserved requirement -- retirement. I had, two questions maybe first on FIRDAPSE, it seems that the patient lead pool is holding pretty steady at around 450 patients. Just want to know if that lead pool is coming solely from your VGCC testing or are there other sources? Then if you have the data, do you know how that lead pool splits between autoimmune and small cell lung cancer patients? And I guess as a follow-up, I think last quarter you said around 25% of new enrollments came from Tumor LEMS, so wondering if you could speak to that dynamic in 2Q. Thanks and I have a follow-up.

Thanks, Joe. And thanks for your kind wishes about retirement. Yes, great quarter. Good questions. Jeff, you want to take the question with regarding to the lead pool?

Sure. So, Joe, when you mentioned the 450 working leads, where we are getting those leads, we have identified new sources and a lot of those are stemming from the increase in the VGCC testing. We partner with National Laboratories that they provide us some leads of patients that had positive VGCC antibody tests. So, we know the patients that most likely have LEMS. And then that's when our field force goes and tries to help these patients if FIRDAPSE is the appropriate treatment for those patients. They work directly with the healthcare providers. So that's where we do that, but we continually source new leads and new -- find new ways to maintain that 450, because we know it's very important in ultra orphan disease to identify the patients. As far as the mix goes, the vast majority of these leads are the autoimmune or the non-small cell lung cancer LEMS patients. And but we are seeing an increase in the number of these leads that also have small cell lung cancer. And that's what's giving us validation that all the efforts we're putting out there, the educational efforts and the resources are paying off, because we're able to help these patients get diagnosed. I hope that helps, Joe.

That's really helpful. Maybe my follow-up is on Vamorolone, I just wanted to see if you could contextualize a future potential launch. And I guess more specifically, Jeff, I think you said there are about 75% of DMD patients that are currently receiving steroids. So just wondering if there are expectations that you would see patients switching and if so, to what extent and what drives that? Thanks.

Jeff, do you want to take that as well?

Sure. So, Joe, we'll provide more details about the launch probably on our Q3 conference call. But yes, you're correct, and it's about 70% or so of DMD patients are on steroids as the backbone of treatment for DMD. And we do feel like there is a value proposition with Vamorolone versus what's available in the market. And we do feel that some of these patients will like to switch over to Vamorolone when available.

Joe, we'll have a lot more to talk about on our third quarter call after the PDUFA date, October 26th. So, we're working on our launch details now, budgets, forecast. And I think that'll -- it will be far more informative about our path forward with Vamorolone on that call.

Okay, perfect. Got it. Appreciate you taking my questions. Thanks so much.

Thanks, Joe.

Thank you. Next question is coming from Jun Lee from Truist Securities. Your line is now live.

Good morning. This is Les on for Jun. Actually just wanted to echo Joe's comments and congrats to you Pat on the retirement we'll deserve. So just in regards to FYCOMPA, what are your thoughts on the recent script trends? And could you provide any sort of update on the salesforce transition? I have a follow-up.

Jeff, do you want to take that?

Sure. Hey, Les. The transition has been extremely smooth. Integration is the way we wanted it, it was swift and effective. Now as far as the numbers, we forecasted a flat for FYCOMPA versus 2022. And we've met those expectations. Great news is in the recent four week -- rolling four week data from new prescriptions, we are seeing a stabilization and actually a slight growth for the first time. And so we know our efforts are working what we will continue to analyze how our marketing resources are gaining traction, but we are very confident they will be effective. And the other part, as I mentioned it earlier, we are so confident about FYCOMPA, because of the overwhelming support that we’ve received from key opinion leaders and also the advocacy out there. So, it's been a great transition and we're confident about the future of FYCOMPA.

That's helpful. Thank you. And in regards to a cadence for the second-half of the year, you have a little bit more visibility now in FIRDAPSE that gives you, I guess, some sort of comfort level into the guidance. And what do you think about the gross margins as we exit the year beginning first-half was around 88. Do you think you can achieve that for the second-half? And then what's the additional ramp up in SG&A for the number of sales force that you identified for the Vamorolone launch? Thank you.

Yes, I'll take the last one first, Les. We're not ready to talk about the increase in SG&A yet. As I mentioned, we're putting together the plan, we do believe obviously there's going to be an uptick in OpEx in the second-half of the year. As Jeff starts to add a few more to as our commercial team and marketing team and a few of the MSLs. With regard to margins, we expect that our margins will stay pretty close to where they are now. They've been fairly consistent year-to-year. And then, your first point being the -- what we see in the second-half and what gives us confidence with regard to the -- to our revised guidance was that, and we never deviated even in Q1 to talk about the seasonality of most ultra rare disease drugs. And, we experienced that, but despite that, for the first-half FIRDAPSE revenues were up 28% year-over-year ‘23 versus ‘22. So, consistent with what we've said all along. And remember, with ultra rare disease drugs, the growth is not necessarily linear, because patients are hard to find, patients are hard to get on therapy much they are found, and so it's a little bit of a sawtooth, but, we're very confident in achieving our guidance and hopefully towards the high-end of that guidance for the second-half of this year.

Great. Thank you.

Thank you. Next question is coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.

Yes. good morning. Good morning, team. First of all congrats on the guidance raise and for you [Technical Difficulty] congrats on the decision regarding the near-term transition.

Pardon me, Charles, this is the operator, would you mind picking up your handset?

Yes. Can you hear me now?

Well. It’s, you know, it’s not great, Charles.

Sorry, can you hear me now?

Yes, please proceed.

Okay, thanks. Sorry for the technical issue. So congrats on the guidance raise. Congrats Pat to you and your transition, near-term transition. I had a couple of questions. First of all, with regard to FIRDAPSE, I guess I'm wondering, Jeff, if you had one thing that you would like to see in terms of the future for FIRDAPSE, would it be new patients or increased persistence for FIRDAPSE? And then I had a question regarding FYCOMPA, but I'll wait for your answer on FIRDAPSE.

Sure. I mean, the persistence is already very high, Charles, over 90%. So, our focus is really helping more patients get on treatment, because we know these patients will benefit from FIRDAPSE. So that's the primary goal.

Do you have any internal metrics by which you measure that and what your goal number is, if you will not necessarily granularity, but kind of a percent by this time next year?

We do have an internal goal that as you know, we have not disclosed how many patients on specific patient count. But yes, we do have that goal and it's really about getting the net new patients. So the discontinuation on an annual rate is also very low, about 80% or I'm sorry 20% on an annual basis, 20% discontinuation, and making sure ensuring that we get a lot of new enrolments per month. So that's what we look at, it’s more of a new patient -- net new patients coming in. The other thing I wanted to add is, you know, I mentioned it in the script the revised assessment of the LEMS prevalence in the U.S., it’s going to be an important part for us and help us grow well into the future, helping some of these patients. I mentioned it also that greater than 80% of these small cell lung cancer LEMS patients are unfortunately undiagnosed with LEMS. So that is one of our key focus areas is educating these thoracic oncologist that when small cell lung cancer patients are diagnosed have symptoms similar to LEMS symptoms, that they do appear paraneoplastic that includes VGCC antibody test. That's what we're excited about, but we look forward to sharing more information about the increased prevalence here later this quarter.

Very good. Sorry, I missed those prepared remarks. I'm juggling calls. Quick question on FYCOMPA. I'm wondering if you could provide some color on the synergies that you're seeing in terms of marketing sales and back office efforts relative to FIRDAPSE for that for FYCOMPA? Thanks.

Jeff?

So Charles, it's interesting. We've had a lot of anecdotes from the field and we're just so incredibly thankful that the collaborate is there between the two salesforce is really, and I know you mentioned the back office, but when you look at some of the FIRDAPSE, we've had so many physicians probably 80%-plus of our physicians have only prescribed once. That talks about that speaks volumes about the ultra-rare part of LEMS that there are only 3,000 patients out there. So physicians may only see one patient. So, when you have a FYCOMPA REMS that's out there speaking to a physician about FYCOMPA and then it comes up about LEMS. Then they have a question, they actually collaborate with the REMS from the FIRDAPSE side and say the physician wants to talk to you about this and we've seen successes where physicians that we did not have targeted that a FYCOMPA REMS went in there connected the two and then a LEMS patient was put on FIRDAPSE. So that's just a quick example of how we can leverage this overlap. And in the back office, it's the same thing. You have speaker programs or you have lunches with some offices that why not bring both the REMS into that appointment. So, all those things, the collaboration, the overlap and the synergies are great and what we expected, if not more.

Charles, remember, the FYCOMPA REMS have only been on board with us a couple of months, so they're getting their feet wet with Catalyst. And I expect in the second-half and into next year, we'll see a lot more cross promotion between the two products and the two teams. We're excited about the synergistic effect of this acquisition for us.

Very good. Doing well by doing good. Thanks for taking my question.

Thanks, Charles.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over to Pat for any further or closing comments.

Thank you everyone for joining our call today, and we look forward to providing updates on our continued process. Thank you. Have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.