Greetings, and welcome to the Catalyst Pharmaceuticals' Fourth Quarter and Fiscal Year 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. 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. Please go ahead.

Good morning everyone and thank you for joining our conference call of Catalyst's fourth quarter and full year 2020 financial results and corporate highlights. Speaking on today’s call we have Patrick McEnany, Chairman and Chief Executive Officer; Dr. Steven Miller, Chief Operating Officer and Chief Scientific Officer; and Jeffrey Del Carmen, Chief Commercial Officer. During the Q&A, we will also have Dr. Gary Ingenito, Chief Medical and Regulatory Officer.

Thank you, Ali, and thanks everyone for joining us this morning for our fourth quarter and year end 2020 results and business update call. I hope that everyone is staying safe and healthy during these difficult times. This past year has been an extremely challenging year for Catalyst, especially for our commercial organization. So with that backdrop, we are very pleased with the financial results that were included in our press release yesterday. Despite operating under very difficult conditions in the COVID-19 environment, we generated net revenue of $119.1 million and net income from operations of $41.3 million, which included a non-cash stock-based compensation expense of $6.3 million. This resulted in almost $46 million of additional cash and investments on the balance sheet at the end of the year compared to the end of 2019. Additionally, we ended the year with $140.3 million in cash and investments and no funded debt. Ali will provide you more financial details in a few minutes. I know that I say this often, but I just want to say once again how proud I am of the team's ongoing effort to demonstrate their steadfast commitment to the patients that we serve. We have shown a remarkable resilience and ability to continue to expand the number of patients benefiting from Firdapse to treat their LEMS condition. COVID-19 continues to make it somewhat challenging for patients who have LEMS who have not received a definitive diagnosis from their physician because of the difficulty of scheduling an in-person appointment or their personal concerns about in-person visits with their treating physician. Last year, COVID-19 had a material impact on a number of the new patient starts that we have projected for 2020. New patient starts in Q2 and Q3 of the past year were modest on a relative basis compared to the pre-COVID period. I'm pleased to report that we have seen a significant increase in new patient starts from Firdapse during the last few months and we are continuing to see improvement in most all of our commercial metrics. We believe that you will see that we are well positioned in the company for future growth. Jeff will provide you with more details on our commercial operation shortly.

Thanks, Pat, and good morning, everyone. I will now walk through 2020 Firdapse performance in more detail. We are very pleased with the full year U.S. net sales of $118.7 million, which represents a 16% growth year-over-year. Specifically, Q4 was a very strong quarter, delivering $30.8 million in U.S. net sales, our best net revenue quarter since Q3 2019, despite the resurgence of COVID-19. I want to take this opportunity to thank the entire Catalyst team for their outstanding performance in 2020, a true testament to our ability to be agile while maintaining our commitment to the LEMS community. Growth in 2020 was driven primarily by recovery in new patient enrollments in Q3 and Q4, continued favorable reimbursement dynamics, and a stabilization of compliance and persistence rates. In October, new naïve to 3,4-DAP patient enrollments were higher than any other month since May 2019. In Q4, new enrollments outpaced Q3 by 30%. The 90-day discontinuation rates are less than 15% and discontinuations to RESURG continued to be minimal and relatively flat since Q1 2020. We expect continued growth in 2021 versus same quarters last year, as we build upon the momentum generated in Q4 and the COVID-19 vaccination rate continues to increase, allowing for more in-person patient visits. While the combined effort of our rare disease experienced team, non-personal promotion and inside sales enables efficient coverage for close to 20,000 healthcare professionals that potentially treat adult LEMS patients, more in-person sales representative visits will lead to an increase in new patient enrollments. Based on early observations, new patient enrollments will achieve new highs as the impact of the pandemic subsides. In fact, we are proud to say that over 700 patients have now received the Firdapse prescription. Discontinuations in January were 65% lower than January of 2020.

Thanks for the commercial update, Jeff. I'll now provide an update on our clinical pipeline to develop Firdapse for additional indications. Catalyst previously announced that our multi-center Phase 3 trial for the symptomatic treatment of MuSK-Myasthenia Gravis or MuSK-MG with Firdapse did not achieve statistical significance for the primary and secondary endpoints. We had concluded our detailed analysis of potential reasons why this trial did not meet statistical significance on attendance. Also, as reported previously, marked persistent clinical improvement was observed in patients and by investigators during the initial dose-titration period during the safety follow-up study of this trial.

Thanks, Steve. As Pat mentioned, we are very pleased with our 2020 year results. Despite the difficulties from the COVID-19 pandemic, we remain steady in our performance. Our continued revenue growth and prudent expense management allowed us to be cash flow positive in every quarter in 2020. We believe our cash position is sufficient to achieve self-sustainability without the need for any future dilutive financing. Yesterday, we filed our 2020 Form 10-K with the SEC and reported our detailed fourth quarter and full year financial results in a press release. Let me highlight a few of those results now. For 2020, we achieved total revenue of $119.1 million compared to $102.3 million for 2019, which represents a 16% year-over-year increase. We reported GAAP net income of $75 million for 2020 or $0.72 per basic and $0.71 per diluted share compared to a GAAP net income of $31.9 million or $0.31 per basic and $0.30 per diluted share in 2020. Net income for 2020 includes $33.1 million or $0.32 per basic and $0.31 per diluted share of tax benefit from recording the deferred tax asset, including the reversal of the valuation allowance in the third quarter of 2020. Our 2020 non-GAAP net income, excluding $6.3 million of expenses related to our non-cash stock-based compensation, was $81.2 million or $0.78 per basic and $0.76 per diluted share. In comparison, 2019 non-GAAP net income, excluding $3.8 million of expenses related to non-cash stock-based compensation, was $35.7 million or $0.35 per basic and $0.34 per diluted share. Cost of sales of $17 million for the year 2020 and $14.8 million for the year 2019 remains consistent at 14% as anticipated. As a reminder, our cost of products in 2020 and 2019 benefited from inventory expense prior to FDA approval of Firdapse. Research and development expenses were $16.5 million for 2020, down from $18.8 million for 2019. The approximately 4% decrease in research and development expenses year-over-year is primarily due to increases in expenses for medical, regulatory affairs, and quality assurance programs, reduced expenses from our ongoing Firdapse clinical trials and studies as we closed out the MuSK-MG and SMA Type 3 trials. We expect that research and development costs will continue to be substantial in 2021 as we began a proof-of-concept study for HNPP, continuing our expanded access programs, our long-acting formulation program for Firdapse, continue our regulatory path to seek approval of Firdapse for the treatment of LEMS in Japan and begin to evaluate Firdapse as a treatment for other neuromuscular diseases. SG&A expenses for 2020 totaled $44.2 million compared to $36.9 million in 2019. The 20% increase year-over-year is primarily attributable to the expansion of our sales force in the first quarter of 2020. The cost of contracting with our rare disease experienced in sales agencies increased, including litigation, investor relations and additional G&A supporting personnel to support our expanding operations. We expect that SG&A expenses will continue to be substantial in 2021 as we continue our efforts to increase revenues from Firdapse and take steps to expand our business. On December 31, 2020, Catalyst had cash and investments of $140.3 million and no funded debt. More detailed information and analysis may be found in the company's annual report on Form 10-K, which was filed with the Securities and Exchange Commission yesterday and can be found on the Investor Relations page of our website. And with that, I'll turn the call over to Pat.

Thanks, Ali. I'd like to close our prepared remarks today by providing you with an overview of our corporate objectives for 2021. First and foremost, emphasis continues on the strong commercial launch of Firdapse for LEMS patients, which represents the cornerstone of our business. As we begin to move back to more normalized times post-pandemic, we anticipate a more accelerated rate of growth in revenue as the year progresses. We believe that our work has just begun as we believe there are many more LEMS patients who have not yet been diagnosed or have been misdiagnosed that can be effectively treated with Firdapse. Next, we have an aggressive initiative to build through acquisition or in-licensing a portfolio of additional potential therapies to treat rare unmet medical needs. This will include bringing on board a Chief Product Development Officer to lead the strategy development, portfolio management, and execution of a plan. This executive search is currently underway. Third, we will continue to protect and prosecute our patent and statutory exclusivities for Firdapse and any other assets that we may acquire. We will continue to file additional patent applications as we develop new intellectual property surrounding our assets. Next, we are continuing our development efforts for Firdapse by commencing soon a proof-of-concept study for HNPP and meeting with the FDA in the second quarter to discuss our findings from the MuSK-MG trial and determining if there is a reasonable regulatory path forward for this life-threatening disorder. Also, we will continue to work at a good pace for developing our long-acting formulation of Firdapse. Lastly, we will manage our company for growth and to build shareholder value while continuing to operate with fiscal discipline. I just want to say once more how pleased we are with the operational results that our team delivered during 2020. We look forward to continuing our efforts to assist adult LEMS patients and their treating physicians to find ways to gain access to an FDA approved therapy for this disease. We believe that 2021 will be a transformative year for the company with multiple ongoing development programs and a strategy to build our clinical and commercial portfolio. This expansion plan along with the continued global commercial execution of Firdapse means Catalyst is well-positioned for strong success in 2021 and beyond. I’ll now turn the call over to the operator so that we may take your questions.

Thank you. The floor is now open for questions. Our first question is coming from Joe Catanzaro of Piper Sandler. Please go ahead.

Hi, guys. Thanks so much for taking my questions here. On your Q3 call, you mentioned that in October and November, the new patient enrollment starts were the highest you've seen since July of 2019 but weren't quite ready to call it a trend. It seems like based on your comments now that maybe that was in fact a trend and I'm wondering if you could speak a little bit more to that and whether you have any expectations to issue guidance at some point in 2021?

Joe, thanks for the question. Let me first address guidance. We'd like to see another quarter or two as the country starts to open again and physicians are actually seeing patients in person before we give guidance. So we're not prepared today. I think that another quarter or two, we should be prepared to provide guidance at that time. The first part of your question I'll let Jeff address in terms of trends that we are now seeing versus our forecast back in Q3.

Sure. Thanks for the question, Joe, and you're right. In Q3 and Q4, specifically October and November, very strong new enrollments. As you know, there was a little bit of a resurgence of the pandemic in November and December, which kind of slowed that trend a little bit. But thankfully, we're seeing the country open up a little bit. And in Q1 so far, we are tracking to have our best new enrollment order since Q2 of 2019, and that's from new naïve patients, which is very significant. So the team is doing a fantastic job. The other thing I wanted to add in there is, Ali mentioned it too, we have an 80% expansion of our sales force that happened right before the pandemic. We have yet to fully realize that expansion and see the true potential. We know we will see that and patients will be able to see their physicians. So all those things combined, we expect significant growth in new enrollments in 2021.

Great, thanks. And if I could just ask one follow up. So it sounds like your 90-day discontinuation rates have held largely steady. I'm wondering if you've seen any impact from the pandemic to those numbers. And if you expect that number to potentially maybe also improve as things open up and patients begin to start seeing their physicians in person?

It's a good question, Joe. And in response to that, the 90-day discontinuation rate is very strong, at this point less than 15%. We don't see the pandemic impacting it. Could we see that continuing to be stable, maybe decreasing a little bit? Right now in Q1, I can say that our discontinuations are also tracking to be the best quarter that we've had since the second quarter of launch. So we are seeing some positive upside there too.

Okay. Perfect. Thanks so much for taking my questions.

Thanks, Joe.

Thank you. Our next question is coming from Charles Duncan of Cantor Fitzgerald. Please go ahead.

Yes. Good morning, Pat and team. Thanks for taking our question and congrats on a nice quarter. I had one commercial question and then maybe a couple of pipeline questions. With regard to the commercial question, I think Jeff mentioned tumor LEMS patients being relatively underrepresented in your patient population, if you will, that are taking Firdapse. And so I guess are there any specific endeavors or initiatives that you are pursuing to identify more tumor LEMS patients? It would seem to be, in some ways, to be an easier putt to accomplish with that. And could we see more tumor LEMS patients taking the drug going forward?

Charles, good morning. Thanks for the question. I'll turn that over to Jeff to address.

So, Charles, you're absolutely right, significant opportunity with the tumor LEMS patients. From data that we've seen, up to 50% to 60% of LEMS patients have tumor LEMS. So we want to address the fact that those patients are underrepresented in our current patient population out of our Catalyst Pathways. We are doing advisory boards, working groups, and market research to better understand the needs there and how we can identify those patients. We can use claims data to identify those patients and we are doing so. We purchased the claims data and we will continue to do so on a quarterly basis. So that will help provide us leads. Now the number one key here is we want to provide information to focused oncologists that are treating, for instance, small cell lung cancer. Small cell lung cancer has the highest rate of tumor LEMS among small cell lung cancer patients. So we will focus on those treaters and provide educational materials to those oncologists. Then we will direct those physicians either to refer out to neurologists or neuromuscular specialists or give those physicians an opportunity to diagnose on their own and also prescribe. So that's our approach. Additionally, we will expand that out to other tumor types that are associated with LEMS over the course of the third and fourth quarters of this year and then also into 2022.

Okay, that's helpful. I appreciate the additional color on that. Now turning to the pipeline, I guess question for Steve. With regard to MuSK-MG, has the FDA meeting actually been scheduled or is that a hope to see in the second quarter? And then with regard to the observations that you made, I appreciate all the color on this. I would have expected the randomized withdrawal protocol that you have with MuSK-MG to be relatively high power. So can you provide us any color on the symptom variability that you alluded to and what drives that? Is that something that you can identify upfront and perhaps deal with a longer screening period, or what can you do to reduce the impact of potentially confounding variable on the outcome of this study going forward?

Okay. Well, that's a whole bunch of questions, Charles. Let me try to answer and hopefully I'll remember them all. With regard to the meeting, we can't provide any more detail than we've already provided, but I can assure you the meeting will happen as we said. And second, with regard to the variability contribution, the exposure period during the randomization phase in the trial was a very short period of time. It involved the collection of just one data point at the beginning and one data point at the end. The answer to resolving the variability is really deceptively simple. It's just collect more data and average out the effects within patient variability that we observe. And that's essentially what the plan is. We will collect lots of data through telemedicine.

Okay. So you are not anticipating an additional trial. I thought you referred to an additional trial. Are you saying more observations within a new trial?

Correct. We are going to be presenting to the FDA a new trial design, and part of that design includes the collection of more data.

I got it. Okay. And then with regard to HNPP, I appreciate the outline on that opportunity. Can you tell us anything about the design of the trial that you would like to run as a proof-of-concept trial for HNPP? Would you be starting that in the second half of this year?

Yes. As I said, we anticipate starting in the third quarter. I can't provide any details on the trial design at this time because we're still completing the design with the investigator who's an expert in HNPP.

Okay. Last question for Ali with regard to cash flow positive, congrats on that great stuff. But when you think about the current cash, do you believe that it is sufficient to fund not only the commercial efforts but also perhaps two additional trials; one in MuSK-MG and HNPP in the second half of this year? Is cash good there or would you perhaps raise additional funds to finance the pipeline?

Charles, this is Pat. I'll take that question. We ended, as Ali pointed out, last year with $140 million in cash. We're generating somewhere between $10 million to $15 million a quarter right now and I expect that will increase as the year goes on. So I think that we are well positioned. Our balance sheet is solid. We've got the cash on hand to conduct these studies that we talked about today, and actually we believe that we have enough cash to entertain looking at other opportunities, which we're currently doing. With the balance sheet we currently have, and the cash we're generating on a quarterly basis, as well as debt that has been available to us for quite some time that we've not had to avail ourselves, thank God. But for the right asset and the right opportunity, we would certainly take on some debt. So I hope I've answered your question, but I think we're in good shape with the balance sheet and our corporate objectives for this year.

Yes, that addresses it. Thanks for the added information, Pat and team. Congrats on a good quarter.

Thank you, Charles.

Thank you. Our next question is coming from Joon Lee of Truist Securities. Please go ahead.

Yes. Good morning. This is actually Les on for Joon. Thank you for taking my questions. First on the – I just want to get an update on the partnership search in Japan and also an update on the commercialization efforts in Canada. What would you be expecting in the near term in revenue contribution there? Thank you.

Sure. As we said in our press release and our 10-K, we are in discussions with a partner for Japan. These discussions have been ongoing for quite some time as we negotiate terms. We hope to have something to say with regard to a partnership next quarter, in Q2. We are optimistic that once that definitive agreement is signed, our partner will be moving quickly to get the drug registered in Japan. With regard to Canada, we view that opportunity as representing about 10% of the U.S. market, just based on population for the most part. We're hoping that that can wind up being a meaningful contributor to our P&L going forward. We've had a bit of a roadblock there, as you know, with Health Canada's decision to approve RESURG 10 days after our approval, which is currently in litigation and that case was litigated in early December, and we are hoping for a decision any day now. So the outcome of that trial could certainly make a big difference in the Canadian market.

That is helpful. Can you also discuss pricing strategy against the efforts in Japan and Canada versus the U.S. market?

Yes, we're not prepared to talk about pricing yet for Canada and Japan. Both of those markets, as you know, their pricing is different and typically based on international baskets. So we expect that the price in Canada will be lower than the U.S. price and certainly the price in Japan will be lower.

Great, thank you.

Thank you.

Thank you. Our next question is coming from Scott Henry of ROTH Capital. Please go ahead.

Thank you. Good morning and congratulations on the positive momentum.

Thanks, Scott.

But I have a couple of questions. First, which is a little different, I came across an international patent which was for 3,4-DAP to treat sexual dysfunction. Can you talk about what you may have seen to motivate that patent filing?

Sure, Scott. Thanks for the question. I'll turn that over to Steve.

Well, Scott, that’s an interesting question. There are only a few things I can say about it right now. As Firdapse was launched, our pharmacovigilance program detected a few unexpected cases of improvement in resolution of sexual dysfunction issues, primarily in female patients. Based on these reports, we filed a patent for the treatment of sexual dysfunction with Firdapse and that patent application was published on February 11 of this year, and it's obviously the patent you ran across recently. Catalyst is consulting with experts in evaluating the potential value and probability of clinical and commercial success for the patent and possible development pathways for this as a potential new indication for Firdapse. If we decide to explore this potential indication further, we'll update the investment community at that time.

Great. Thanks for the color on that, Steve. I did have a couple other questions. First, from a modeling standpoint, how has pricing been on a sequential basis? Should we assume stability as far as revenue per patient, or just curious are there any changes with that?

Scott, price is stable. And we've had a price increase that is basically in line with our peers that are selling rare disease drugs, and certainly right in line with inflation.

Okay. Speaking of inflation, obviously, you're generating a lot of cash and you have a lot of cash on the balance sheet, which some would say is a depreciating asset or at least the purchasing power is. Would you consider taking -- as we look at other companies, would you consider investing in your own company perhaps through a share buyback, at least with a small portion of that?

Scott, I would say that everything is on the table as we look around to make investments and to acquire potential therapies and/or companies. We do believe that our stock price market cap is extremely low based on our financial results, and the opportunities that are in front of us. So, I would say we wouldn't take that off the table as a consideration at this point.

Okay, great. Pat, final question just the collaboration revenue line, it showed up in third quarter and fourth quarter. How should we think about that number going forward, at least prior to Canada and Japan coming in?

Scott, the collaboration revenue from third quarter and fourth quarter is related to Canada.

Okay. So we should expect that to continue then at similar levels. I don't know if there's some timing related there, perhaps initial shipments or any color on that.

I think the resolution of the court case will have a lot to do with that number going forward, Scott.

Okay, great. Thank you for taking the questions.

Great. Thank you.

Ladies and gentlemen, that concludes today's question-and-answer session. I would like to turn the floor back over to management for closing comments.

Thank you for joining us today and I look forward to future calls. Have a great day.

Ladies and gentlemen, thank you for your participation and interest in Catalyst Pharmaceuticals. You may log off the webcast or disconnect your phone lines at this time, and have a wonderful day.