Ladies and gentlemen, the program is about to begin. At this time, it is my pleasure to turn the program over to Jason.
Good day, everybody, and thanks for joining us at the next company presenter at the BofA CNS Day event. And I'm pleased to be introducing Catalyst Pharma and CEO Richard Daly and Chief Operating Officer and Chief Scientific Officer, Steve Miller. So gentlemen, thanks for joining us, and, you know, I imagine we'll have a pretty lively discussion on things ranging from BD to the AGAMREE launch, to all things with your core business for FIRDAPSE for LEMS as well. So maybe as a starting point, you know, I think strategy BD is a good place to start. You know, since I've been following Catalyst, BD's always been kind of a critical component of the story.
Assets that you've brought on board, you've been able to do it and do it in a way that hasn't put leverage on the company. And so that's, you know, I guess the... then the question becomes, you know, the ability to scale that model and to continue to bring in assets that could accelerate the growth profile, diversify the business, and all those things. So maybe for starters, why neurological disorders and neuromuscular disorders as a therapeutic area of focus? Is this an area you feel like, "Hey, we've got the in-house expertise, and so we really wanna leverage that?" Is it just a, an attractive category for therapeutic opportunities, and you see just an opportunity to scale there? Maybe if you could just sort of level set on first your TA focus, and then we can go, drill down into that.
Well, Jason, thanks very much for having us. We really appreciate the opportunity to be with you with you today, so thanks. Yeah, the CNS area is very attractive, and when we entered it with with FIRDAPSE, we were very excited to be in it, and we have internal expertise on it. As you know, we purchased the drug, we got the drug in-house. We are a buy- and- build company, and we developed the drug. We brought it in-house, developed the drug, took it to the FDA, and got it on the market, and it was a very, very successful launch and continues to be a very successful product. We like the CNS space. Drug's been on the market for five years, and in that time, the CNS space has changed pretty significantly.
If you look at a lot of the forecasts about what's happening in the CNS space, a lot of the opportunity in CNS is gonna come from movement disorders, and a lot of larger companies are really looking at that opportunity to be a player in that space, and that's great for, I think, for patients. For us, we think we need to actually look a little bit more broadly to be able to compete, for a company our size, to stay in the orphan space and look for opportunities and continue to build our company. We like CNS, we have internal expertise, but we believe our infrastructure and the way we go to market and the execution story that we have, we believe we can compete across the board in the orphan space.
We continue to look for opportunities, not only in CNS, but also in areas that are adjacent to CNS in the orphan space.
Got it. Okay. Talk about the deal landscape right now. Do you feel like it's asset rich? Do you think that there's... how's the temperature on seller willingness to part ways with assets? You know, when we just did a recent M&A analysis, and some of the trends seem to be that, you know, we're seeing more privates getting sold. Maybe that's a function of a more challenging IPO market for some of those companies. So just kinda curious what you're seeing and if it's a healthy environment for somebody that's on the prowl for quality assets.
We think, and we believe it is a healthy environment, especially as we increase our aperture for these opportunities. At any point in time, we're engaged in a number of discussions, multiple discussions with folks. Whether or not the seller has a realistic view of the value of their asset and whether it fits with us, those are things that we always gauge, and we're looking for those opportunities all the time, and so having a discussion about where it fits, what's the appropriate price point, those kinds of things, that's always ongoing, and quite frankly, that's resonant in any market at any point in time, but we are seeing opportunities out there, and we're gonna continue to be... we're gonna continue to discriminate and make sure that these opportunities fit us, and we can do the best for our partner when we go forward.
Mm-hmm, and how important is it to do another deal in, say, the next 12 months or so?
When we look at our success with FIRDAPSE and the success we've had bringing that product to market, and it was 15%-20% growth year- over- year, continuing five years in, we're really happy with that execution. We look at FYCOMPA, and FYCOMPA was essentially a transaction, a financial transaction for us in the epilepsy space. It gave us diversity of income. We liked that. We integrated that very quickly. We digested that deal very quickly, brought a lot of good talent with it as well, from the sales side and the execution side. And then we look at the AGAMREE launch, and we see that, again, execution. So we believe we've digested these opportunities and integrated them into the organization in a really solid way and a very, very quick way.
And so we believe we can bring another product on, but I think it gets down to fit. How well it can fit, and, you know, does it help us get where we wanna go? Is it immediately accretive? Is it nearly immediately accretive, and does it fit where we wanna go?
Okay. And I guess for investors thinking about the business model, I know at different times, maybe it was, you know, past management regime talking about, like, Horizon Therapeutics as a company that maybe is a template to look at. Do you feel like deal activity is a source of synergies for you as a company, or is it just more a mechanism for growth, feeding the pipeline, than it is necessarily like a synergy play?
It's, I think it's a growth opportunity. We run a really lean shop. Steve can speak to this as the Chief Operating Officer as well. We run a really lean shop, and we think that we can bring value to these new opportunities, and not necessarily from an acquisition standpoint, but from a partnership standpoint, but open to acquisitions as well. Looking for that best opportunity, what fits right now. We wanna work our way, in thinking about the Horizon opportunity or the Horizon model, work our way back in that pipeline. We wanna give you the opportunity to value the future and be able to put a PTS on our future as well, and so that we can really get that multiple that really makes a lot of sense for our business and essentially what Horizon did as well.
So we really think that we can do that, going forward. So we're really confident in our future.
Yep. Okay. In terms of you know, the next step in the evolution of the company and the ability to source in drugs with even larger peak sales potential, I don't know if you think that that may involve leverage. And in thinking just about the company's, you know, just dry powder and capacity to do the deal, how would you frame that for investors?
You know we have no debt right now. We're bringing in close to $40 million a quarter in the bottom line. We feel really comfortable. We have almost $400 million on the balance sheet to put to work. So the combination of the opportunity to look at deal size, we think we're, you know, we're really comfortable doing one deal or multiple deals to really bring balance to our income statement and strength to the company to go forward and do incremental deals as we go forward. We could do upwards of $600 million, $700 million, $800 million in total deal size, you know, with multiple deals as well. So we feel really comfortable in that range right now, and then obviously, as we bring more income in, we'd be looking for, you know, even greater opportunity going forward.
Okay. Maybe shifting gears to the AGAMREE launch, which is a big area of focus, I think, with investors. And anything you could share as it pertains to early launch observations, how it's gone relative to expectations. Is Emflaza still a good launch comp when we think about patient accruals and just sort of a revenue trajectory? So I'll leave that with you guys.
Yeah. So Steve can speak to the product profile and how it's playing out in the marketplace, but I think Emflaza is a good launch surrogate for us. The key difference between our launch and Emflaza's launch, besides product profile, is when Emflaza launched, there was no countervailing voice in the market. Emflaza launched into essentially a green field. They launched with prednisone as the only competitor, and there was no voice going against them. We're launching into a market where we not only have prednisone, Emflaza, but also generic Emflaza. And when we frame it up that way, this launch is going extremely well. And to your point, I think from a patient accretion or patient accrual standpoint, I think the Emflaza launch is a very good surrogate for us going forward.
You used the term counter voice, so is PTC active still in sort of promoting Emflaza, even though there's the generic available? I know that there's some— you hear some things about stickiness of the brand and maybe that market's not genericizing that efficiently. So I'm just curious if there's something going on that's unique there, or are you really the only brand and the only voice in the DMD steroid space?
Our understanding is they're out there, and they're promoting the product. Yeah, so they're there.
Got it. And the current mix of patients, I think with, I guess it sounds like there, there's a pretty healthy mix of both, right? Emflaza and, and prednisone, if you can maybe speak to that dynamic and, yeah, maybe we'll go from there.
We have a proprietary pharmacy where we source all of our patients through a single point, and so we have a great deal of insight into the patients. Obviously, it's in a HIPAA-compliant way, which is fantastic, so we get this great data-rich environment. And so we've seen since we started enrolling patients three months prior to the launch of the product. We started enrolling December 1st of last year, launched on March 13th. We started seeing this split and how the patient mix was coming in, where are the patients sourcing from? And when we launched, or prior to launch, we thought we would source most of our patients from Emflaza, which we believe has about 30%, 35% of the market. Turns out we're getting about half of our patients from Emflaza and half of our patients from prednisone.
So instead of playing in that 35% of the market, we're actually playing in a 100% of the market, which is tremendous. I think that speaks to tremendous upside opportunity in the long run. That not only happened prior to the launch as we were loading the patients into the queue, but it continues today. We're really excited that this is an ongoing opportunity for the brand.
Okay. And I know since we last spoke on 2Q update, it sounded like the payer landscape was largely single generic step edit. Here we are in the fall when companies typically have a better line of sight into 2025. Is it still the operating assumption that most plans will be more of a single generic step edit for AGAMREE?
Great question. So when you look at the shape of this market, 11,000, 13,000 boys and young men have this, had this condition, and 90% of them have been treated at some point in time. So they've experienced prednisone. They've likely experienced Emflaza. They're not gonna go back and experience generic Emflaza. So by the time they get to us, they've already stepped through two things. So we're not experiencing any significant pushback because these young boys and men have experienced the drugs that are available to them already. So we don't expect any significant change going forward.
And so the way that these policies, I haven't looked at a specific policy, but it's more of a lifetime thing, right? Like, you've been on prednisone two years ago, three years ago, that constitutes a step through. It's not in the calendar year, such that like when everything resets Jan 1, you have to trial a specific generic option.
You know, I think it can vary by plan, but it would be unusual that a physician would allow that to happen, in my experience, that they would say that this young man has been on this product before. It didn't work for him. We're gonna step him through. Remember, there are about a hundred centers of excellence and about 250 physicians, and generally, these young men stay with their physician for a long, long time. So the physician knows, they're intimate with these young men and their treatment history. So it's really good, easy for them to defend their decision to the insurance carrier.
Got it. Okay. And, you know, I guess the recent broadening of the label for gene therapy, just curious at all. I mean, typically when we talk to doctors, they say that the availability of gene therapy is not really going to impact how they use steroids at all, but figured I would just ask, given that you guys are out there, you're monitoring the space a lot more closely.
Steve, do you want to take that one?
Sure. Thank you, Jason. Yeah, the comment you just made about what the doctors are saying, that's exactly what we hear in the field also, that steroids remain the backbone of therapy for these patients. And our expectation is that with the use of the gene therapy, that they'll be using whatever the background steroid is that they continue to use. These gene therapies also require an immunosuppressive dose of steroids, and typically, if a patient is on AGAMREE, what a physician would do is leave them on AGAMREE and add additional prednisone to take them up to an immunosuppressive dose for a period of time.
Okay. In terms of where we're at, you know, year one of the launch story and sort of how that evolves in time, is there additional data generation that's critical to the adoption story? Or do you feel like you have the information largely on hand to educate providers, and so really it's just about familiarity, blocking and tackling, you know, getting in front of doctors, making them aware of the AGAMREE value proposition at this point?
We believe that the product is significantly differentiated from competitors, and there are four essential things that will differentiate the product. One is behavior, and the physician can see that right away. So there's a certain tendency of these young men to develop aggressive tendencies on steroids, and you can see the behavior improvement of these young men almost immediately, according to what we're getting back from the physician. But Steve can speak to the other three benefits that will take time in the summit study that we put in place to track the benefits here that we expect to see over time. Steve?
Yes. As Rich mentioned, we have this long-term study going on. It's targeted for about five years, could actually go longer. We'll be analyzing that data approximately once a year, but we'll be looking at it on a blinded basis continuously. Obviously, you give up alpha every time you do an analysis, so you want to limit how many times you do the analysis. But having said that, we'll be looking at the data periodically, hoping at the very least, to publish additional beneficial data about the drug and perhaps update the label for the product as well. With regard to the other benefits that are seen, there's already information in the literature about bone growth improvement using vamorolone to treat DMD relative to prednisone, and we expect to see bone density improvements and cardiovascular improvements as well.
There's a number of endpoints that are being monitored in the summit study, where we will gather that data and over a period of time, have something more material to say about the cardiovascular safety relative to other steroids, for example.
Yeah. Ultimately, how those data play into the launch, I imagine that there... you know, even if you look at the Emflaza launch, like there just are always gonna be, I guess, legacy doctors who hold out and use prednisone for really long times and maybe have prescribing tendencies that are more difficult to shake or change, if you will. So is this something that you feel like helps with some of those doctors who are maybe a little bit more, "stuck in their ways," or how would you think about the data potentially being leveraged?
Well, I would think that the data would be very helpful for the more traditional doctors who just say, "I'm gonna use prednisone. That's what I've always used." Our medical science liaisons will be out there actively informing the doctors about what's in [AGAMREE]. One of the nice things that is that benefits these patients is that it's a very small community of physicians who treats these patients, and a number of them participating in the clinical trial, and those doctors talk to other doctors, or they're in institutions where there's other DMD doctors, and they talk to each other about the treatment of patients. The bottom line is, during the clinical trial and the safety follow-up phase that followed it, doctors actually had the opportunity to observe clearly the improvement in behavior because that shows up right away.
But there was even some patients who were on the AGAMREE long enough for doctors to see a notable difference in growth relative to what they normally see for corticosteroid treatment. So there's already a number of doctors that are enthused about using the product and—
Yeah, so Steve-
—will be good at it.
... on that point, Jason, by the end of the second quarter, 80% of the centers of excellence had written a prescription, and 140 of the 250 target physicians had written a prescription. So we're seeing tremendous depth here and breadth. So we're really excited about the uptake, and there are gonna be some physicians who say, "Hey, listen, I'm not really that interested," or, "Let me see more data." But our focus right now is on increasing the breadth, y ou know, expanding and then going deeper into these institutions. But we've had, we're having tremendous success so far, so we're really excited about the success of the product.
Yep. It within that 80%, 'cause I know you, you know, leading into your second quarter update, I think you'd mentioned that a certain proportion had written at least one script. Can you share anything more as it pertains to sort of the depth that you're seeing? Is it clustered in a smaller subset, or is it pretty evenly distributed, and it's more about just sort of you know, broadening the impact within that 80%? Or is there... like in any disease area, right, there tends to be a top 20% that really can drive a lot of the business.
Yeah. Right now, it's more along the lines of a Pareto. If you think, you're getting the early adopters, which is classic in my experience in the launches I've done. You're getting the classic high rapid adopters, early adopters in, and they're having influence over the other physicians with whom they work, and we're seeing that, this spread, and it continues over time. So we're really happy with where we're going with this.
Got it. Okay. So what else? Can you maybe just discuss your peak sales outlook and some of the assumptions that are embedded in that for AGAMREE?
Well, so we haven't given any guidance on peak, but one of the things that we I think is really important to talk about is, right now we're getting generally older young men. They are, you know, patients at this point in time, and so we expect over time, and this is a good thing, and so I just wanna phrase it in position as such, that we expect over time, as physicians get more comfortable and we get earlier get the later adopters in here into the queue, we'll expect that we'll get younger patients, and this is a drug that's dosed by weight. So we'll get more patients, they'll be lighter, and the average price of the product will likely come down, but that's good, because those patients will generally be on for a longer period of time.
So we're seeing a higher price at this point in time, but it will come down over time. Not by much, but it will come down slightly, but we'll have a greater pool of patients on for a longer period of time. So we're excited about this, and we're getting great insurance coverage. 89%, almost 90% of the patients are paid for at this point in time, and they're getting their insurance approved in less than 30 days. So they're getting... we're getting a really rapid turnaround. So we're excited about where we're going with the product.
You make an interesting point about, I guess, younger, maybe patients with less, who weigh less, but staying on drug for a long period of time. You know, one trend that's happened in the DMD space, I believe, is that doctors have kept patients on steroids longer than they might have otherwise, right? So I think maybe historically, if the patient had become non-ambulatory, it might have been a decision point to maybe take the patient off, but now, I think the realization that, like, that you can derive improvements on upper limbs and things like that, even if the patient is non-ambulatory.
So, I guess, thinking about just the space more broadly and how maybe treatment rates have evolved and, you know, maybe how you think about like durations of therapy. These are concepts I imagine that are fluid. T hat you're still monitoring data to better understand, but it does seem like there are some moving parts that maybe are worth a discussion that, like, could be beneficial to the revenue story of AGAMREE.
I think this is another great point. 90% of patients in this— in DMD have been on a steroid at some point in time, but only 70% are on today, which says there's a gap. What is that gap? The gap is that generally, we call it the problem of the too's, T-O-O. Physicians start too late, they dose too low, and they stop too soon because of the behavior, the bone growth, and the bone density, and some of the cardiovascular issues. Those are all the things that Steve talked about. If you can address those issues, there's an opportunity for the patient to start sooner, get the right dose, and stay on longer.
Especially when a patient, as you pointed out, Jason, if a patient becomes non-ambulatory, the patients and the physicians and the caregivers we talk to talk about the window that the patient has, this young man has, as he becomes non-ambulatory. It's the ability to control the wheelchair and the ability to control the mouse, 'cause the view of the world then becomes: How do I move about the world, and how do I interact with the world? The ability to use your hands becomes critical to success. And so keeping that patient on steroids and maintaining as much movement capability as possible is foundational to success for that young man.
So we see this as a great opportunity to use SUMMIT, the SUMMIT study, to bear out that the drug is making a difference, and you can start earlier, keep him on the right dose, and keep him on longer.
Right. And I guess, mindful that you haven't guided to peak sales, and I should have known that or recalled that, but I believe that there was some commentary that, maybe a peak penetration at levels of Emflaza, which were 30%-40%, maybe is a reasonable base case. I don't know if that's something that's evolving or something that, you know, has the potential for upside as you see a greater ability to play in both the prednisone segment and the Emflaza segment.
When you think about the situation where I think AGAMREE has the opportunity to foundationally change the marketplace. Only 70% of patients are treated, so I think there's upside there. I think we have a better profile. When we say what's the market share in an expanded space, we could end up with less market share, but bigger opportunity. We could end up with more market share 'cause we have a better drug. We haven't guided even on market share, but I do think that the uptake in the first couple of years of launch, i think the uptake is probably pretty good. I think the Emflaza model is probably a pretty good one for us.
Mm-hmm. To the point about weight and weight base, you know, and perhaps on a revenue per patient basis, your point is maybe that's a little lighter in the early years of the launch. If, you know, over time, as these boys grow, I'm trying to get a sense of like what perhaps revenue per patient could look like on your therapy, say, versus Emflaza, you know, during pre-generic levels, and if there's sort of a benefit, right, in terms of kinda overall net pricing per patient and how you'd sort of frame... I realize it's probably a complicated question with a lot of moving parts. But, you know, if you were, say, today, where you sit versus, you know, perhaps more broadly penetrated into the market, you know, does that change in a meaningful way?
I think in the first couple of years, I think it's probably pretty similar, because I think that the benefit that Emflaza brought to the market, the perceived benefit they brought to the market versus prednisone, I think they had a good uptake, a solid uptake. You got those patients that were looking for something different, those patients who were frustrated. So you probably got the patients who were older and thus heavier, who had experienced a lot of prednisone challenges, and then it works its way backwards. I think that's a natural order and the natural cadence of the market, if you will. I think we'll probably... you can, again, probably look at Emflaza as a good surrogate for this.
Okay. With Emflaza, I believe that was a drug that effectively saw a lot of discounting and rebating, a gross to net, a spread that widened later in the product's life cycle. Is there something inherent in this marketplace with sort of the payer mix as you get bigger and more successful, that where there's a greater toll, if you will, that drives that gross to net expansion? Or do you feel like sort of where you operate in years one through three is a good operating assumption for, like, the long run?
I don't know of anything at this point in time that would change. The patient population is very stable. It's about a 50/50 split between Medicaid and commercial. I think you'd have to make a choice based on the competitive set to want to do that. I don't see it changing all that much in years one- three and then beyond.
Okay. And maybe last question on AGAMREE, unless there's anything else that we feel like we've missed and you wanna touch on. But you know, one of the assumptions I feel like in the Catalyst Pharma valuation model that there's a lot of sensitivity around is how you model different exclusivity runways, right? So and we can get to that with FIRDAPSE, but with the AGAMREE, you have at a minimum seven-year orphan exclusivity. And so that's great. Maybe how you think about this asset and its runway, and sort of what you'd say is your anchor patent and where that gets you?
Steve?
Sure. Well, you mentioned the exclusivity. Obviously, there's orphan drug exclusivity for that product. Effectively, it will take us to early 2031 , because when it's combined with Paragraph IV filings and lawsuits in the states, and I won't go into a lot of the complexities unless you'd like me to, but the bottom line is that the earliest entry based on that, theoretically, would be early 2031 . However, there's also patents. There are three indication patents, one of which will be extended into June of 2034 . There also are two polymorph patents that will give protection to July of 2040 , and a cardiovascular safety patent that provides protection until 2034 .
I see, so the IP can maybe add three, four years to the with the regulatory issue.
Theoretically, with the polymorph patents, it could add up to 10.
Polymorph runs to 2040?
2040, correct.
Okay. In that polymorph, I imagine-
It's polymorph form—
Is it like a stability? Is the rationale for the patentability?
It's a particular crystal form of the drug. It's polymorph form 1. There actually are several polymorphs, but the drug is fairly unique. It has a tendency to undergo change in the solid state to the form 1 polymorph while sitting on the shelf. So as a result of that, polymorph patents can sometimes not be particularly useful if someone can make an alternate polymorph. But when the other polymorphs spontaneously transition back to the form 1 polymorph, you actually have a patent that could be much more [powerful] for protection.
Okay. So it sounds like things are going well with the AGAMREE launch overall, you know, that momentum that you're seeing. Anything else that you guys would flag on AGAMREE?
Very happy with the launch. Very happy.
Okay. Well, maybe shifting gears to FIRDAPSE, your largest product.