All right, great. Welcome, everyone. I'm Tiago Fauth. I'm one of the biotech analysts here at Wells Fargo, and we have the Catalyst team today for our fireside chat. We can kick things off. I usually like to give you guys a couple of minutes to just run through the business, some of the key drivers, what folks are paying attention to these days, and then we'll jump into some more specific questions.
Sure. So I'm Rich Daly, the President and CEO, and Steve Miller.
I'm Steve Miller, Chief Operating Officer and Chief Scientific Officer.
We're really pleased to be here today, so thanks for the opportunity. Key drivers for our business, obviously, we have three products, Firdapse for Lambert-Eaton myasthenic syndrome, Agamree for Duchenne muscular dystrophy, and Fycompa for epilepsy. Our key drivers really are to, we really like to say we like to drive our business through, key execution of our business, optimizing the sales of the products that we have and the lifecycle management. We're looking forward to building our business through business development. We have a key strategic initiative to build our business, to buy and build, and then really looking to continue to build the business through that and really look for opportunities to partner outside the U.S. so that we can leverage the portfolio that we have.
Got it. Perfect. And again, Firdapse seems to take a lot of the space. That's the main, commercial driver here. Let's start with the, probably the shortest part of our discussion, IP and litigation. So, again, there's a lot of concerns about the tail value of the franchise, right? So how should investors think about the IP state, the ongoing, process that you have going in parallel with some of the filers? Where do you stand on that, Steve?
We currently have Paragraph IV filers who have filed for Firdapse, and there is ongoing litigation. There's not a lot I can say about the litigation, but I think it's important for the investment community to know that we are working diligently to bring all of those cases to as quick a resolution as possible in a manner that is as positive for the company as possible. We do recognize that it's something that investors look at and aren't sure what the outcome will be and gives them pause from time to time.
Got it. And what's currently your base case in terms of protection? So you know, Orange Book have a 2037, right? Is that correct?
Yes.
Yeah.
The Orange Book patent protection for Firdapse goes to February of 2037 , and the Orange Book patent protection for Agamree goes to July of 2040 .
Got it. Perfect. So no real update there. We're just gonna have to wait and see, but so far, so good, I guess, is how I characterize it. Is that fair? All right. But let's actually talk about the product now. So, again, the product has been performing relatively well, like, very well, actually. You talk about high teens growth rates. So far in the last two quarters. Yeah, but what, let's break down some of the main drivers here. What's the product? What's the end market? What has driven that sort of growth rates in the last few quarters?
Sure. So, Lambert-Eaton myasthenic syndrome is a prospecting market, so we have to go and find the patients. The average physician will see one patient in their entire career. So there's 50/50 split in the market between non-tumor LEMS, so patients who have LEMS, Lambert-Eaton myasthenic syndrome, not associated with the tumor, and 50% of the patients have LEMS associated with tumor, typically small cell lung cancer. So what we do on the non-tumor LEMS side is we look for patients. We build a pipeline of patients. When we see surrogates in the market that identify a potential misdiagnosis of LEMS, we look for prescriptions that might be associated with a misdiagnosis of LEMS.
We then send a sales representative, a regional account manager, to that physician to begin to build a relationship with that physician, because, again, physician sees one patient on average in their entire career, so we help educate the physician on what LEMS might be, help them move that patient along in their patient journey. The average time for a non-tumor LEMS patient from first symptom to diagnosis and treatment is 18 months, and these patients will live a normal lifespan. On the tumor LEMS side, these patients typically are diagnosed with small cell lung cancer, and they will move through the system, through their patient journey very quickly. A small cell lung cancer patient typically lives seven months. A patient with small cell lung cancer and LEMS lives 17 months.
No one knows why, but they live more than twice as long, but they don't get treated for their LEMS. So helping them get treated for this muscle weakness, which is quite debilitating, is a prime element for us. So we're really working on two elements within the business to really grow the business.
Got it. And if we think about the most recent performance, let's call it last year, how do you break down price versus volume? And we're also thinking about pace of new patient adds here. You've told me about the pipeline of patients that you have identified. Can you walk me through the dynamic on conversion of those patients?
Sure. So price versus volume, about 10% is volume of patients, about 5% is price. And we use this pipeline of patients that we see in the marketplace, and about 50% of each quarter, and thus each year's new patients, come from this previous identified patients who may have LEMS and may be moving through the system. And we as we cultivate the physician and help the physician understand what LEMS is, we bring them, the patient on board, and 50% are de novo. We haven't identified them before, and they come into the system as a newly diagnosed patient, and we say: "Oh, this is a new patient for LEMS." And we have a proprietary pharmacy that manages all of these patients and proprietary services that manage the... As many companies do in the orphan space.
Got it. And again, you recently also had the higher dose formulation.
Yes.
Approved. So, I'm curious, what's the breakdown of patients that were previously at the highest labeled dose or close to that, that might actually see some incremental usage based on the higher dose being available now?
Previously, we had 40% of the patients who were on the maximum labeled dose of 80 mg per day.
40%, okay.
I'm sorry?
40%, all right.
Yeah, 40%. And we expect some portion of those will actually increase their dose. In addition to that, neurologists are a conservative group of physicians, and so there are some patients on lower doses who may have been there simply because the physician didn't want to be giving them the maximum dose. And as a result of the increase from 80 mg- 100 mg per day in the maximum daily dosage, we're expecting to see an increase in the average dose across the entire patient population of somewhere between 5% and 10% over the next three or four quarters.
Got it. Okay, so you have some visibility of at least 50% of new patient adds, at least based on your pipeline. Historically, you might have some uplift from h igher doses across the board. You already said that you were expecting numbers to perhaps come at the higher half of the guidance. Is that the language? I forgot the exact language on the press release. But, I'm curious how to think about 2024 numbers overall, based on. It seems like a lot of positive drivers for the remainder of the year and into 2025.
In the overall business, you're saying?
Yeah, or for Firdapse. Yeah, because I do wanna discuss the other ones more.
Okay.
Yeah.
We confirmed. We're confirming our guidance for Firdapse for the balance of the year. We feel pretty confident that the year is gonna come in strong for us.
Got it. Perfect. You did mention relative to your patient mix, so it's about 80-20, is that correct, between non-tumor and tumor right now?
That's correct, yeah, about 80-20.
Okay. And how much upside could there be from the tumor opportunity? I'm curious, what's the patient journey, right? You alluded to a little bit of that.
Sure.
But how can you actually increase that size of the pie?
When we think about the total population, as you said, the tumor LEMS patient lives 17 months. When you think about that size of that patient population, because at any point in time, the tumor LEMS patient population diagnosed, previously diagnosed, is about 3,000 people. We say there's about 3,000 to 6,000 people. The upside there, I think, is pretty significant, and their journey is very short. From initial symptom to diagnosis is four months. While they don't live as long, a non-tumor LEMS patient lives a normal lifespan. They're typically diagnosed in their 50s, 60s.
50s, 60s.
50s and 60s. A tumor LEMS patient is diagnosed younger, but they don't live as long. So they can live about a year or so with the disease, but there's a constant churn of patients in that pool, which is equal in size to the non-tumor LEMS patients. So we think there's a good opportunity to help patients live a better quality of life. They're statistically significantly sicker than patients in the non-tumor LEMS side, and they progress faster, as you can imagine, with obviously as a cancer-diagnosed patient. So we believe there's an opportunity to really help those patients.
Again, it's a rare disease, so I guess, how familiar is our oncologist to actually treat this disease in terms of identifying the neurological issues and kind of making that connection?
This is a really great question. They're not that familiar, but thankfully, there is a simple blood test, a voltage-gated calcium channel test for it. It's a simple blood test. It's got a code, a diagnostic code, and it's reimbursed. The simple blood test is 100% specific for tumor LEMS patients. It's an amazing opportunity to help patients live a better life while they are battling their cancer. You know, we think there's upside here. We think there's a pathway to improving the quality of care for these tumor LEMS patients.
Got it. No, perfect. So again, just trying to piece that apart. So formulation, higher average dose, you have some opportunities to grow on the tumor LEMS side of things. What about a global expansion? Like, again, that's something that you've been talking about potentially in a few key regions. What's the progress there, and what's the status?
Great. So Steve, do you wanna talk about global expansion a little bit?
Sure. For the global expansion for Firdapse, it's approved in Canada. It was approved in 2020 , and it is expected to be approved late Q3, early Q4 in Japan as well.
Right, and so the acceptance of the filing in Japan actually expanded our remit for Firdapse globally. So now we have rights for Firdapse in the rest of APAC and LATAM. So we are working to expand our relationships in those regions, and we expect to be able to develop and have alliances in those regions to expand our footprint globally as well there.
Got it. But again, to your point, that sounds like it's gonna be more of a partnership model.
Yes
Instead of going at it alone.
Yeah.
Okay.
I think with a portfolio the size of our portfolio, the best and most capital efficient thing we can do is work for partnerships as opposed to building infrastructure with a portfolio of our size. It's the best thing we can do.
Got it. I think that makes sense. Anything we missed on the Firdapse debate?
I think you covered it.
Okay.
Starting off with IP is always a good way to start.
There you go. Let's pivot to Agamree then, because again, it seems like that's gonna be an interesting growth driver going forward. Again, you have generic availability of... You have Emflaza and Emflaza generics. So let's start with the product profile, kind of where it fits, how we could differentiate, and then we'll talk more about the actual launch dynamic.
Sure.
Differentiation?
Agamree is a, has been described as a dissociative steroid, dissociated in regard to the side effects relative to the efficacy of the product. Like the other corticosteroids, it's been shown to have efficacy equivalent to prednisone, but the, clinical trials have shown that it's got a more benign side effects profile. The duration of the trials were able to show that there's a reduction in the psychological side effects that are associated with corticosteroids, which are most often anxiety and aggression, that's seen in patients. They, on face value, might seem as a relatively minor side effect, but consider the fact that who you're treating are actually small children, and the aggression and anxiety can make them very hard to manage at home.
And more importantly, it makes them very hard to manage in a classroom in terms of getting an education, and affects not only the child in terms of their education, but all the students around them. And so that's a really actually important side effect that needs to be controlled. Now, the other side effects that we believe, through animal model testing, will be borne out in human beings when we've collected enough data over a longer period of time for people, is that it should have better bone health, better growth and stature, and better cardiovascular health as well. One last point I wanted to add.
We actually have started out, now that the product's approved, a phase IV study, where we will be collecting data over many years and periodically making the findings from that study available to show the longer term benefits of Agamree relative to other corticosteroids.
Got it. And again, as you're building out that database, but I'm curious right now, what's the... What would make a prescriber choose to opt to prescribe Agamree versus some alternatives, right? You mentioned some behavioral issues, and I think that might be, you can probably see some benefit on that sooner rather than later, probably anecdotally for parents and patients. Like, but what are some of those dynamics where you can actually drive better uptake of the drug, given that you're still generating some more data around that?
So one of the things that we're seeing in the marketplace, which is really interesting, is that physicians are telling us that so the promise of the product is that the patients will have better behavior. These are young boys and men who are on steroids for long term, and aggression can be a problem. So if the young man can have a better behavioral experience, as Steve talked about, not only in the classroom but at home, some of these young men are, because of their behavioral issues, because of the steroids, are getting weekend dosing. So their dosing is not ideal. If we can get better dosing, then I think the patient can have a better experience. It's what we refer to as a problem of the toos, and that's T-O-O.
Because of the profile of steroids, they their doses. They start too late, their dose is too low, and they stop too soon. So they're getting less than ideal therapy. And because they will behave better, they get seven-day therapy, not just weekend therapy. And as Steve said, the people around them have a better experience of them and whatever environment they're in, and we think that they can actually experience a longer and better therapy earlier and the right dose and longer so. We think this is a really important thing. And what the doctors are telling us and the caregivers, the parents are telling us is they're seeing better behavior right away.
We don't know about bone health yet, and we certainly don't know about growth, because it's too early, but again, that's what the same study is for, is to take a look at that.
Got it. And perhaps I should have started talking more about that, but just again, I wouldn't expect there to be necessarily a ton of overlap on the call points. And kind of, how did you develop your expertise on this market? Can you talk more about the commercial prep? Again, there, there's a lot of brand loyalty generally for some of the diseases, especially on the pediatric.
Sure.
Side. So for Agamree, can you walk us through the prep work that went into that?
So this is probably the most foundational question in all of orphan diseases. We entered this market working very closely with our partner, Santhera, but also we approached it with a great deal of humility because every orphan market is different. When you work with the LEMS market, there were no patient advocacy groups in LEMS. Contrast that with the Duchenne's market, where the patient advocacy groups are organized, and they're strong. We went into this market with incredible humility, and we went to these patient advocacy groups saying: How can we be of assistance? How can we help? What's our best position to take in this market? What can you teach us? Whereas we helped form the LEMS patient advocacy groups and then stepped away, that was not appropriate in the Duchenne's market.
So we went in to learn in the Duchenne's market, and I think that's what we really. In my previous experience in Orphan, you go in asking a lot of questions and offering to help. So the opportunity is really one where you go in with sort of a beginner's mind every single time. So I think that's what we did, and we really went to school with the patient advocates and the physicians to understand what was best and really worked with our partner, Santhera, on that.
Got it. And I guess one of the noteworthy things you've mentioned in the past is the actual mix of patients, right?
Yes.
So you're not only getting Emflaza switch. Like, can you talk about the mix and what's kind of driving potential prescription on both backgrounds? So again, just generics and in Emflaza, like, why, why would a physician promote that switch?
When we initially did the forecast for the market, we thought that it would be a cannibalization opportunity for strictly Emflaza patients. When we got approval for the product in December of 2023, we started an enrollment prior to launching the product, and we said, we asked patients, "Enroll, and tell us what product you're on, and then we'll get you queued up for when we launch." What we saw was almost an even split between Emflaza and generic prednisone, which surprised us. Almost a 45, 45, and naive split. This is patient-reported, so we have to be really thoughtful about this before the launch.
So instead of playing in 35% of the market, which is where Emflaza was, we think about 30, 35% of the market, now we're playing in 100% of the market, which is incredibly encouraging for us. And we think it's because of the potential profile that the drug has: behavior, growth, bone health, and then potentially cardiac issues, as Steve mentioned as well. Again, things that need to be borne out over time. Post-launch, this profile continues through, and we are enrolling patients and obviously asking them when they enroll at the pharmacy, our proprietary pharmacy, "What drug are you currently on?" And this split continues.
So we think that the promise of a drug that has potential to offer benefits that may not be found in the marketplace right now is what's really drawing patients in, encouraging caregivers to tell their children, their boys, "Hey, you might wanna try this," and the physicians as well, "This may be an opportunity for you to try something" that, again, has potential to offer benefits.
Got it. And again, thinking about the commercial opportunity here, the TAM itself is really large. I guess some folks would argue that Emflaza peak sales is a reasonable comp, but from what you're saying, there seems to be potential upside relative to that, based on the initial patient capture. What's the right way to think about the peak sales opportunity for Agamree?
I think that. I think you're thinking about it the right way. I think there's upside here. We haven't quantified it yet because I think there's an anomaly in the market. When you have, you're enrolling these patients, and one of the reasons why we updated guidance was you're enrolling patients prior to the launch of the product, and you see this uptick in the second quarter, the first full quarter of launch, and we updated guidance because what we didn't want people to do was straight line it off of that bolus of patients that came in, in the second quarter.
Yep.
So we gave updated guidance to say, "Hey, look, we expect there to be this. We expect a new trend to come off of this." You can't take three months of patients enrolling and then the three months of patients who are now coming into the market and say, "That's your. That's the base of what you're gonna do for the next two quarters." That would not really be fair. So that's why we gave guidance. So I think we need to see how the next two quarters play out, and then probably the quarter after that, before we can say, "Hey, this is really what the potential for this product is.
Got it.
It's a little hidden in there somewhere.
Fair enough.
Okay.
That's absolutely fair. Fycompa, again, that might be kind of a relatively short discussion because it felt like it was more of a financial transaction than anything else, but yeah, can you give us a little bit of background on what happened? Again, what are some potential upside drivers that folks might have been missing right now? I know it's hard to envision how that's gonna play out, but again, what could make the revenue tail of that product look a little bit better than perhaps the market is giving you value for?
That's a tough question. So it's a stable product. We like the purchase. We like the talent that came with the product as well. So, this is a market that's 95% generic, is an intense medical sell. And so not only do we like the product and the revenue diversity that came with it for us, 'cause it was our second product after Firdapse, but the talent that came with it is a group of people we can repurpose, and they're excited to be with us. They're thrilled to be with us. So we like that. As we go and approach generic incursion, there are strategies we can employ to make the curve as soft as possible. There's no doubt we're going to lose share. That's what happens everywhere.
But unlike typical retail products, where you can lose 90% of your share in eight weeks, like we see all the time, epilepsy products are different. They have a softer curve, and so we expect it to be a softer curve, and there are some strategies we can employ, which we're currently weighing, that can help us actually lift the curve a little bit and give us a stronger tail, as you mentioned. But there's not much we can do between now and generic incursion that's actually gonna change the curve. The product is ten years old. It is what it's gonna be. And the best we can hope for is for, you know, minor lift, you know, post-generic incursion through some of the strategies we've employed to partner with PBMs, et cetera, to help ourselves.
To keep, actually, keep focus on the product so that we don't miss the opportunity between now and generic incursion to optimize our sales.
Got it. No, fair enough. And let's talk about the overall strategy of the company, right? So we started with FIRDAPSE cash flows, started to diversify that revenue base. Yeah, strategically, how you're thinking about BD revenue diversification, what are some key areas of interest or expertise that you think you can have an edge versus competitors?
We are an orphan company. We are currently focused in the CNS space. We believe that our infrastructure supports orphan, not CNS orphan, but orphan. We believe that that infrastructure is quite expensive to build, and that expertise takes time to build up. We think we've proven our ability to not only launch products, but to maintain products and launch products simultaneously. We believe that the success of the Agamree and the ongoing success of Firdapse proves the model, and our approach works. We believe that we have the opportunity to continue to build our portfolio, so we are continuing to look for orphan products that we can build out. We are constantly assessing opportunities in the marketplace.
We'd be looking for products that are in the $100 million- $150 million- $200 million peak revenue right now, and we will be pivoting as we build out that diversity of income. We'll be pivoting to larger opportunities to come. Again, I give these as examples. I want to be sure that these are just examples, but we would look at opportunities in metabolic, ophthalmology, dermatology. We could go any number, but they're just examples. We believe we can service those markets in the rare orphan space just as well as we do in the CNS space. We want that diversity to come, not just in, on the top line, but also through the therapeutic areas, because we can build, I think, a very dynamic company that way.
Perfect. And again, I guess based on your current cash position or, yeah, how should we think about that and leverage for it to potentially finance some of those BD decisions? I'm curious about the capital allocation strategy, given the relatively stable Firdapse business, a growing Agamree business, plus the willingness to diversify the pipeline.
Sure. So, I have this standard joke I tell all the time. Steve's tired of hearing it. Poor Melissa in the back is tired of hearing it. But, you know, we didn't. When I was on the board, I served on the board for nine years, we didn't have an aversion to debt. We had. It was anaphylaxis. We just wanted nothing to do with debt. And so we now have a position where I think we have this diversity of income, which is fantastic, and it gives us. It enables us to actually think about debt in a different way. We're willing to take that on for the right opportunity.
Steve's work on solving the IP, once we solve that, and we have a longer tail and a longer runway for Firdapse, I think that gives us probably flexibility with. We'll see some flexibility with the price, a positive flexibility, I would imagine, and I think that gives us leverage there, too, so we're really excited about what can happen in the future, and so our capital allocation will really be toward building up and improving our profile from a financial standpoint. We believe we are really a very well-disciplined company when it comes to finance and capital allocation, and we expect to continue to do that.
Got it, and again, we went through a lot of, a lot of topics fairly quickly. Just one last question for me. Just overall, what is currently underappreciated? What do you think is gonna get folks to assign more value to the Firdapse side of the business? Like, anything else that folks might be missing on the Catalyst story into 2025 ?
I would say that we'll continue. We have evaluated a number of potential growth opportunities, and we've shown success with the ones we've already executed on, and I think that we'll continue to do so, and so we will continue to grow through acquisition and continue to diversify the company.
I think that Agamree is a great product. I think it has great potential, and there's a lot of excitement around it. I think that Firdapse has great potential as well. And so when I think about the dual opportunity there, I think there's a lot of opportunity in our current portfolio, but we must continue to build the portfolio, and I think we have the right team to do it, and I think it's a very exciting time.
Perfect. That feels like a good closing line. So we can probably leave it at that, but I appreciate you guys making.
Thank you. Thanks for the opportunity.
Great.
Thanks. We really appreciate the opportunity. Thanks.