Earnings Call Transcript
CATALYST PHARMACEUTICALS, INC. (CPRX)
Earnings Call Transcript - CPRX Q4 2021
Operator, Operator
Greetings, and welcome to the Catalyst Pharmaceuticals Fourth Quarter and Full Year 2021 Results 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. I would now like to turn the conference over to your host, Ali Grande, Chief Financial Officer for Catalyst Pharmaceuticals. Thank you. You may begin.
Alicia Grande, CFO
Good morning everyone and thank you for joining our conference call to discuss Catalyst's fourth quarter and full year 2021 financial results and corporate highlights. Leading the call today, we have Patrick McEnany, Chairman and Chief Executive Officer. We are also joined by Mr. Steven Miller, Chief Operating Officer and Chief Scientific Officer; and Jeffrey Del Carmen, Chief Commercial Officer. For the Q&A session, we'll also have Dr. Gary Ingenito, Chief Medical and Regulatory Officer. Before we begin, I would like to remind you that in the following comments and in the Q&A session, we will make statements about expected future results which may be forward-looking statements for purposes of federal securities laws. These statements relate to our current expectations, estimates and projections, and are not guarantees of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and may prove not to be accurate, especially in light of the effects of COVID-19. Actual results may vary from the expectations contained in our forward-looking. These 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 2021 Annual Report on Form 10-K. At this time, I'll turn the call over to Pat.
Patrick McEnany, CEO
Thanks, Ali. Good morning everyone and thank you for joining us today for Catalyst's fourth quarter and full year 2021 financial results and update call. 2021 was an extraordinary year for Catalyst as we attained several significant milestones and achieved strong financial performance, creating a substantial foundation to sustain our growth plans as we diligently pursue opportunities to diversify our commercial and development portfolio. To date in 2022, we have continued to execute our business plan and operate the budget. Let's start with our commercial performance in the fourth quarter of 2021, where we achieved FIRDAPSE net product revenues of $38 million, a 24% revenue increase versus the fourth quarter of 2020. Growth during the fourth quarter was driven by continued strong FIRDAPSE performance, despite not yet getting back to optimal pre-pandemic conditions. Our full year 2021 total revenues were $141 million, representing an 18% increase year-over-year compared to $119 million in total revenues for 2020. Net income before income taxes for Q4 of 2021 was $12.8 million, a 47% increase compared to $8.7 million for Q4 of 2020. We reported GAAP net income of $9 million for Q4 of 2021, or $0.09 per basic and diluted share. We ended the year 2021 with $191 million in cash and short-term investments. We continue to judiciously repurchase shares of our common stock from the open market. During 2021, we repurchased 2.2 million shares at an average price of $5.47 per share for a total purchase price of $12.1 million. We have guided full year 2022 total revenues to be between 195 million and 205 million, representing a 38% to 45% increase in total revenues compared to 2021. We also anticipate our cash OpEx to be between $65 million and $70 million for the full year. Ali will provide you with more details during her financial report. Our 2022 guidance assumptions reflect the positive outcome from the U.S. Courts reaffirming the orphan drug exclusivity for FIRDAPSE for the treatment of adult patients with Lambert-Eaton myasthenic syndrome. As we reported last month, the U.S. District Court ruled in the U.S. approval of Ruzurgi for the treatment of pediatric LEMS patients violated U.S. orphan drug exclusivity for FIRDAPSE. As a result, the U.S. approval previously granted for Ruzurgi for pediatric patients has now been rescinded by the FDA. The reaffirmation of FIRDAPSE market exclusivity is a significant milestone, enabling us to advance treatment within the LEMS community, where FIRDAPSE has already been prescribed by 647 unique physicians to approximately 25% of the estimated 3,000 LEMS patients. Importantly, this outcome represents a pivotal point for additional new patient enrollment growth, as those patients on Ruzurgi to transition to FIRDAPSE. We estimate the number of patients recently on Ruzurgi to be about 125 patients, a significant majority of whom are adult LEMS patients, and we've already seen many of those patients transition to FIRDAPSE during this quarter, which aligns with our revenue forecast for the year. The transition of Ruzurgi patients to FIRDAPSE is proceeding seamlessly, thanks to our patient-first approach and our established Catalyst Pathways access programs, which are there to assist all patients seeking access to FIRDAPSE for LEMS treatment. Similarly, we announced last week a victory in the Federal Court of Canada in a lawsuit by Catalyst and KYE Pharmaceuticals to require Health Canada to enforce the data protection for FIRDAPSE as an innovative drug. In that case, the judge agreed with our positions on the applicability of the data protection provisions and that Health Canada's approval of Ruzurgi did not comply with them. Ruzurgi has been removed from the market in Canada and the matter remanded to the Minister of Health for redetermination, consistent with the judge's decision. Our other significant litigation is our pending patent suit against Jacobus and PANTHERx, Jacobus' sole specialty pharmacy for Ruzurgi. This suit is now in discovery and we'll continue to keep you advised as this case progresses. We entered 2022 with significant momentum and with a continued focus on sustained product growth as well as to the rare disease community we serve. We have enhanced our efforts to drive awareness and education to both patients and providers with an expanded focus on paraneoplastic patients. Extending out to thoracic oncologists provides an important potential for reaching new LEMS patients, as approximately 50% of LEMS patients have some form of cancer, most typically small cell lung cancer. We also expect to see continued growth with newly diagnosed LEMS patients who are not yet on FIRDAPSE as well as acceleration in the process for definitive LEMS diagnosis. We have also made important advances in strengthening our intellectual property portfolio for FIRDAPSE, with the recent issuance of three new U.S. patents. These patents are directed to the treatment of patients suffering from LEMS and cover all amifampridine metabolizer types within the LEMS patient population. This milestone further fortifies our intellectual property estate and we believe this provides us with lasting commercial durability for FIRDAPSE, which has U.S. patent protection until 2034. All of these newly issued patents will be listed in the FDA's Orange Book within the next few weeks, which will bring the total number of patents listed to five. We will continue to execute our key initiatives to further strengthen and protect the long-term durability for FIRDAPSE. Steve will provide more details later in this call. We're also pleased with the progress being made by our sub-licensee partner DyDo Pharma. In December 2021, DyDo initiated a small Phase 3 registration study in Japan to evaluate the efficacy and safety of FIRDAPSE for the treatment of LEMS. Initiation of this trial marked an important milestone towards expanding our global footprint. Currently, there are no approved treatments for LEMS in Japan and we believe FIRDAPSE can provide a meaningful new therapy option to those living with this disease. Assuming the trial is successful, we expect FIRDAPSE to be granted 10 years for market exclusivity upon approval in that market. Our goal to expand our portfolio and pipeline with differentiated products to treat rare diseases, which currently are without any approved therapy, remains a strategic priority for this year. We have a robust and enhanced process in place in identifying potential assets to pursue and have made considerable progress on this front. Our teams are actively engaged in extensive due diligence and we are encouraged about projects currently in review. We remain confident in our ability to advance on these initiatives this year. As part of our ongoing effort to help raise awareness and amplify the voices of patients with rare disease in need of approved therapies, we recently teamed up with the leading patient advocacy groups and our partners in NASDAQ for participating in the opening bell ceremony on February 28 to honor global Rare Disease Day 2022. We thank all of our partners for coming together and allowing us to show our support for the rare disease community. As a result of the many accomplishments, Catalyst was named on Forbes 2022 America's Best Small Companies published list, ranking 65 out of more than 1,000 companies screened. It is an honor to be recognized by Forbes as one of the country's Best Small Companies as well as acknowledgment and the value we are creating. By saying that, we are excited about the path ahead of us. We continue to execute across all near and long-term priorities to drive substantial growth. We believe that we're well positioned to build upon our success. We're optimistic about the future. Now I will turn the call over to Jeff Del Carmen, our Chief Commercial Officer who will provide further highlights on our commercial execution.
Jeff Del Carmen, CCO
Thanks, Pat, and good morning, everyone. The Catalyst commercial team performed extremely well over the course of 2021. We are very pleased with a full year of FIRDAPSE's net sales of 138 million, representing a 16% growth year-over-year. In Q4 2021, net FIRDAPSE sales were 38.3 million, a 7% growth versus Q3 2021, despite challenges presented by the continued resurgence of the pandemic. I want to take this opportunity to thank the entire Catalyst team for their flawless execution in 2021, a true testament to our ability to remain agile while maintaining our commitment to the LEMS community. The foundation of the FIRDAPSE business continues to be solid. Operational excellence drove new patient starts, maintained favorable access, continued high compliance and lower discontinuations. Naive new enrollments in 2021 were 15% greater year-over-year, while discontinuations were 20% less year-over-year. Q4 discontinuations were only 5%, which is the lowest discontinuation rate since the commercial launch in 2019 and 37% fewer than Q4 2020. We expect considerable growth in 2022 and beyond. The current FIRDAPSE market penetration is approximately 25% of the total adult LEMS population. Organically, growth will be driven from new patient enrollments of already diagnosed adult LEMS patients not yet on FIRDAPSE as well as the significant number of LEMS patients who are unfortunately misdiagnosed or undiagnosed. Additionally, we expect our non-personal promotion in other educational efforts to small cell lung cancer treaters about LEMS and FIRDAPSE will yield more adult patients with a proper diagnosis of LEMS and accelerate the opportunity to receive treatment for this disease. Early indicators thus far in Q1 show that we are building upon the momentum for 2021. Q1 growth in patients on therapy is on pace to exceed the entire year of 2021. Reimbursed patient discontinuation rates are also tracking to match the Q4 discontinuation rate of 5%. We continue to collaborate with advocacy groups such as NORD, Global Genes, Muscular Dystrophy Association, Myasthenia Gravis Foundation of America, Conquer MG, and Myasthenia Gravis Association as part of the ongoing effort of the biopharma industry and patient advocacy groups to call attention to the need for collaboration to encourage research and development of orphan drugs and bring new treatments to market for rare diseases that affect small patient populations. In addition to ringing the opening bell at NASDAQ to celebrate Rare Disease Day, Catalyst has launched a LEMS Aware Podcast to increase awareness of and connections in the LEMS community. Furthermore, we partner with key professional societies like the American Association of Neuromuscular & Electrodiagnostic Medicine and the American Academy of Neurology to educate their members about LEMS and FIRDAPSE at their respective conferences. Our Catalyst Pathways patient services team did a tremendous job in 2021, supporting the needs of adult LEMS patients, caregivers, and healthcare professionals. Catalyst Pathways has numerous types of financial assistance programs to help patients with their out-of-pocket costs. Patients enrolled in Catalyst Pathways, including those who are covered by Medicare and accessing Foundation Assistance, have an average co-pay of less than $2 per month. Prescription approval rates remain over 90% across all payers, government, or private commercial insurers. Catalyst Pathways patient services team also connects patients to community and advocacy resources, such as patient support groups. All of these resources are crucial as we effectively and compassionately transition patients from Ruzurgi. In closing, we are very optimistic about the growth potential for FIRDAPSE. We will continue to generate new patient enrollments through precise commercial execution and the seamless transition of Ruzurgi patients. Catalyst is committed to serving the LEMS community and is passionate about ensuring access for all LEMS patients. I'll now turn the call over to Dr. Steven Miller, our Chief Operating Officer and Chief Scientific Officer for an update on R&D activities.
Steven Miller, COO and CSO
Thanks for the commercial update, Jeff. I'll now provide an update on the important progress we are making on our clinical and product development efforts. Catalyst continues to work on improvements to the FIRDAPSE franchise to address the needs of all patients. Our Medical Affairs Department continues to make valuable progress in increasing healthcare provider awareness of LEMS through our Medical Affairs programs, and a credited Continuing Medical Education, or CME, course about LEMS is available through Medscape. To date, over 5,000 mostly healthcare provider workers have viewed the course and as of February 17, 1,700 licensed healthcare providers have obtained CME credit. We have also provided a grant to Physician Education Resource to host a LEMS session at a live tumor board of oncologists to expand our support for CME programs. This live program will be recorded and provided as an enduring adult LEMS CME course, intended primarily for oncologists for one year. Physician education resources will make this program available to all oncologists in their database along with posting ads for it in several neurology and oncology publications. CME courses provide a non-biased educational opportunity for doctors that support gaining knowledge and clinical updates in particular therapeutic areas. And Catalyst-sponsored CME courses have been a very successful method of educating physicians about LEMS. In alignment with our commitment to provide treatment for all LEMS patients, we are now completing a supplementary NDA submission package for the treatment of pediatric LEMS with FIRDAPSE. We anticipate filing this supplement with the FDA this quarter. Catalyst has all the required data, including all necessary safety data to finally complete submission for this label expansion. The preparation of this supplement is a high priority for Catalyst as we remain committed to advancing our efforts to expand the use of FIRDAPSE so that we may be able to provide all LEMS patients with an approved treatment option. We have made significant progress on developing an intellectual property estate to extend the market exclusivity of FIRDAPSE. We recently announced the three new patents covering additional patient amifampridine metabolizer types had been allowed, and I'm pleased to report that they have now been issued by the U.S. Patent and Trademark Office. One of the three patents was issued on March 8, and the other two patents were issued two days ago, bringing the total number of issued patents protecting the FIRDAPSE franchise to five. The claims in these new patents, combined with our previously issued patents, claimed the treatment of all relevant amifampridine metabolizer types within the LEMS patient population. One of the three new patents is already listed in the FDA's Orange Book and the last two will be listed by the end of the quarter, bringing the total number of patents listed in the FDA's Orange Book to five patents. As a reminder, the first two patents were listed in the Orange Book shortly after their issuance in 2021 and 2020, respectively. This is an important milestone as our patent portfolio now provides broad comprehensive protection for the FIRDAPSE franchise regardless of the NAT2 metabolizer type. We are pleased with the progress we are making on the intellectual property front and we will continue to execute our key initiatives to strengthen and protect the long-term durability of FIRDAPSE which currently has patent exclusivity protection in the U.S. for mid-2034. In addition to the U.S., FIRDAPSE currently has data exclusivity in Canada until July of 2028. And in Japan, we expect FIRDAPSE will be granted 10 years of market exclusivity upon approval in that market. As previously reported, Catalyst has been developing a long-acting version of FIRDAPSE and our development efforts were progressing well. Over the course of the past several quarters, we conducted an in-depth evaluation of how the new formulation would be used by doctors and patients. In doing so, it was determined that transitioning patients to the long-acting dosing regimen would be a much more involved process than anticipated for doctors to accommodate and manage due to the wide variability and metabolism of amifampridine by N-Acetyl Transferase, type 2 or NAT2 in patients and also due to the great differences in drug release characteristics between the two formulations. Additionally, it was determined that titration and dosing of the new formulation would differ substantially from the current version of FIRDAPSE and such differences could lead to complexities on how best to treat and titrate patients and could even be a risk for medication dosing errors. Therefore, adding FIRDAPSE LA to the available treatment options would not be the most beneficial path for treatment delivery and for achieving optimum patient care compared to using only the currently approved FIRDAPSE formulation. In alignment with our commitment to our patient-first approach and to do what we believe is best for patients and healthcare providers, we have decided to suspend further development of the long-acting version of FIRDAPSE. We will continue to be open to further development opportunities in the future whenever such development is in the best interest of patients. Now, I would like to provide an update on our ongoing global expansion initiative. As we previously announced in June, we partnered with DyDo Pharma for the development and commercialization of FIRDAPSE for the treatment of Lambert-Eaton myasthenic syndrome in Japan. Currently, there are no approved therapies for LEMS in Japan and we believe FIRDAPSE has the potential to be a novel therapy to address this important unmet need. DyDo has made great strides in initiating development activities, including consulting with the Japanese Pharmaceuticals and Medical Devices Agency to confirm the clinical study parameters and requirements to obtain regulatory approval. As a result of their efforts, DyDo initiated the required clinical study in December of last year and anticipates this to be a small-scale Phase 3 clinical trial. Catalyst continues to support DyDo in the execution of the clinical trial by supplying clinical trial materials as well as collaborating with DyDo in its efforts to obtain the required documentation for the Japanese regulatory authorities. We will continue to execute on our key initiatives to enhance the market exclusivity of FIRDAPSE and expand the FIRDAPSE market geographically. During this quarter, we also advanced our objectives to expand our portfolio of rare disease treatments beyond FIRDAPSE. As Pat mentioned, we continue to actively evaluate new products or other kinds of transactions to expand both Catalyst product offerings and/or our research and development pipeline. Our teams, including the product development team, are actively and vigorously engaging in the process as we look for worthwhile prospects where we can utilize our expertise, resources, and know-how to expand our programs and drive growth. We have an improved process enabling a very efficient approach to identifying and assessing opportunities, and are very pleased with the progress we are making as we remain committed to advancing our initiatives to expand our portfolio of rare disease treatments. We remain enthusiastic about the path ahead and confident in our ability to identify the right opportunities to maximize our capabilities and resources. I will now turn the call over to Ali Grande, our Chief Financial Officer to review our financial results.
Alicia Grande, CFO
Thank you, Steve. We are very pleased with our financial results for the fourth quarter and full year 2021. As reported, we ended the year with cash and investments of slightly more than 191 million and no funded debt. We believe this allows us the financial flexibility to advance our existing R&D programs and to support our strategic initiatives by acquiring earlier stage opportunities and innovative technologies, leading to future growth and value creation. Our total net revenues for 2021 were 141 million, an 18% increase when compared to total revenues of 180 million for 2020. Further, despite the continued challenges of COVID-19, total FIRDAPSE product revenue net was 138 million for 2021, a 60% increase over the net product revenue of 119 million for 2020. Net income before income taxes for 2021 was 53 million, an almost 26% increase over net income before income taxes for 2020 of 32 million. We reported GAAP net income for 2021 of 39 million, or $0.38 per basic and $0.37 per diluted share. For the year 2020, we reported GAAP net income of 75 million, or $0.72 for basic and $0.71 per diluted share. It is important to remember that these figures are not comparative. 2020 benefited from approximately 33 million of income tax benefit, principally from the reporting of a one-time non-cash deferred tax asset of almost 32 million upon the reversal of our valuation allowance in the third quarter of 2020. Our effective tax rate for 2021 on an annualized basis was 25%, while in 2020 we benefited from the use of our federal net operating losses and the related valuation allowance. In 2021 and future periods, we expect that we will benefit from the use of our deferred tax assets primarily relating to Florida state net operating losses and the orphan drug credit, although those are subject to certain limitations resulting in a more normalized tax rate. Because of the significant effect of the one-time reporting of our deferred tax assets in 2020, we view these as the non-GAAP measures we presented in yesterday's press release provide a more useful comparison of our results of operations for 2021 versus 2020. Non-GAAP net income for 2021 was 59 million, or $0.57 for basic and $0.55 per diluted share, which excludes from GAAP net income stock-based compensation expense of 6 million, depreciation of 192,000, and an income tax provision of 32 million. This compares to non-GAAP net income for 2020 of 48 million or $0.47 per basic and $0.45 per diluted share, which excludes from GAAP net income stock-based compensation of 6 million, depreciation of 92,000, and an income tax benefit of 33 million. The above represents an approximately 22% increase of non-GAAP income year-over-year. Cost of sales expenses were approximately 22 million in 2021 compared to 17 million in 2020. This represents 25% of total operating costs in 2021 compared to 22% for 2020. Cost of sales principally royalties, which increased by 3% when net sales exceed 100 million in any calendar year as defined by the available license agreements. We expect higher overall royalties as a percentage of product sales, as their income increases over 100 million per year each year as per our forecast. Research and development expenses in 2020 and 2021 were comparable at 17 million for 2021 and 16 million for 2020. And the expenses decreased slightly as a percentage of total operating expenses 90% for 2021 compared to 21% for 2020. SG&A expenses for 2021 totaled 50 million compared to 44 million in 2020. SG&A expenses decreased slightly as a percentage of total operating expenses to 56% for 2021 compared to 57% for 2020. However, the overall increase in SG&A expenses in 2021 was basically due to increased legal costs and increased contributions to 501(c)(3) organizations. More detailed information and analysis of our 2021 financial performance may be found in our annual report on Form 10-K, which was filed with the Securities and Exchange Commission yesterday, March 16, and can be found on the Investor Relations page of our website at www.catalystpharma.com. And with that, I will turn the call back over to Pat.
Patrick McEnany, CEO
Thanks, Ali. We believe that we are well positioned to build upon our success and are optimistic about the company's future, as we diligently pursue opportunities to diversify our commercial and development portfolio that aligns with our core mission to deliver value to patients, healthcare providers, and shareholders. Finally, I'd like to thank all of our employees for their continued dedication and commitment to positively impacting patients' lives. Operator, we would now like to open the call for questions.
Operator, Operator
Thank you. At this time, we'll be conducting a question-and-answer session. Our first question comes from the line of Joe Catanzaro with Piper Sandler. Please proceed with your question.
Joseph Catanzaro, Analyst
Hi, guys. Thanks for taking my question and congrats on all the progress here. Pat, I think you mentioned that a significant amount of Ruzurgi patients have already transitioned to FIRDAPSE. I'm just wondering if you'd be able to maybe more specifically say how many of the estimated 125 have done so. And is it fair to say that the growth observed in 1Q that I think Jeff mentioned is being driven by this transition? Thanks. And I have a follow up or two.
Patrick McEnany, CEO
Sure. Joe, we really don't want to be specific. But I can tell you that many of those patients have already transitioned. And we expect the transition to be completed by the end of April. And so we're very pleased with how seamless this process has been. And I think we owe a lot to our specialty pharmacy AnovoRx, who's really done a great job and was ready and willing and able to take on this task. As far as growth going forward, Jeff, do you want to take that?
Jeff Del Carmen, CCO
Sure. I can just tell you the transitions did account for a significant part of that growth. But I will also say that in March, what we've observed the truly naive patients, so those patients that have never been on FIRDAPSE or Ruzurgi that have been enrolled and then prescribed, that number is tracking to be our best month ever. So that's what we've seen in March. So we are excited about our organic growth as well.
Joseph Catanzaro, Analyst
Okay, got it. That's really helpful. Maybe as a follow up, I'm wondering what data points inform your estimated number of patients that were on Ruzurgi and how you've gone about identifying them, and whether it's possible that maybe there's more patients than you've estimated.
Patrick McEnany, CEO
Yes. Joe, you might be right. We don't know for a fact. We know the number of patients that were on FIRDAPSE that went to Ruzurgi once it was approved, based on some of the docs who had been involved with the company for quite some time. So we know what we lost. And we assume that there was some growth on the Ruzurgi side over the last couple of years. So we've got some pretty good data points that I think support 125 plus or minus 10%. But I think that's as specific as we can be on that subject.
Joseph Catanzaro, Analyst
Okay, got it. And maybe if I could just squeeze one last one in. I'm wondering if there would be a point where in the absence of any business development, you would consider alternative ways to return capital to shareholders, like potentially a special dividend. Thanks.
Patrick McEnany, CEO
Yes, good question. I don't think that's on the plate of special dividend. We've continued to buy our shares back judiciously, as we can be. We spent $12 million last year buying shares back. We continue the program. So that's our way of, I guess, returning money to shareholders without paying a special dividend. So I do believe strongly that we will have a transaction completed sometime this year.
Operator, Operator
Thank you. Our next question comes from the line of Charles Duncan with Cantor Fitzgerald. Please proceed with your question.
Charles Duncan, Analyst
Yes. Good morning, Pat and team. Let me add my congratulations on the commercial progress this last year. Had a few questions for you. Wanted to ask you or Jeff a little bit more about the market dynamics? I guess I'm wondering, as you think about the switch patients versus new patient adds, where would you think the bulk of the growth could come from this year? And then also, if you go beyond, I think it was 647 prescribers, what is your goal in terms of the number of prescribers by year end just kind of roughly? Would you grow that by 5%, 10%? What do you think about that?
Patrick McEnany, CEO
Charles, I think the number of prescribers is difficult to predict. If you look at the numbers, it's easy to see that a lot of those prescribers only have one patient or maybe two or three patients. And so we do believe that our educational programs are very important in helping get to a proper diagnosis and a prescription for a LEMS patient. And so we have a strong effort to increase that number. But to use that, that's not really an internal metric or goal that we look at. We really look at patient counts and things like that. So it's a good question, but we don't have an answer to that. And I can't give you a number that is a target for this year for prescribers. That number is growing nicely, and it seems to correlate to our spend for education to HCPs. And as you know, we've got a CME program that educates docs, and we've had I think 1,500 docs avail themselves of that program and actually earn their credit, and over 5,000 folks that have actually been to the program and study the program itself. So I think there's a correlation there between our education and the number of docs that we will see as prescribers for FIRDAPSE.
Jeff Del Carmen, CCO
Just to address your other question there about patients organic versus transition. We've demonstrated the ability to grow organically about 10% to 15% every year organically, and we expect to do the same this year. But I also will say that we do see some tailwinds that will be helping with the hopefully the opening of the country back up again because of the pandemic. You've seen in March, we're seeing some good new enrollments of these truly naive patients. We expect to see strong enrollments of these patients for the rest of the year. So we do anticipate significant growth from those patients too.
Charles Duncan, Analyst
Okay, that's helpful. A quick question on asset acquisitions that could occur perhaps this year, I guess I'm wondering if you can provide some additional color on how you think that would leverage your existing infrastructure, either sales or back office. And if you can provide some color on really the focus areas, maybe therapeutic focus areas for those asset acquisitions that you can anticipate being able to complete this year? And then I had one follow up for Ali.
Patrick McEnany, CEO
Initially, we aimed to utilize our sales force to identify a product that aligned with our previous focus on neuromuscular sales. This was a strategy we pursued for two years. We've mentioned it before, but over the last 18 months, we extended a few reasonable offers, though the counteroffers were quite excessive. We explored other opportunities in the neuro or neuromuscular fields but found nothing suitable, prompting us to broaden our focus to various therapeutic areas outside of oncology. Our current aim is to find projects related to rare diseases that have progressed beyond proof of concept, ideally targeting approved or marketed products for acquisition. While I’m uncertain about the leverage from the sales team perspective, I believe we are well positioned on the back office side in terms of market access, patient access, and advocacy to take on new projects. Additionally, we can leverage operational aspects such as financing, accounting, and our medical science liaison team within medical affairs. Thus, there are synergies to explore with most acquisitions.
Charles Duncan, Analyst
Thank you for the guidance on revenue and OpEx. I'm curious about your thoughts on OpEx this year, particularly with the reduction in legal costs. Can you provide some insights on how this impacts the bottom line, especially compared to last year? I believe it was just a couple of pennies, but what are your projections for this year?
Patrick McEnany, CEO
Charles, I'll address that and Ali can add in. Last year, we faced a few challenges. Operating expenses were slightly above our budget, primarily due to increased litigation costs related to our actions against the FDA and Health Canada, as well as our patent litigation with Jacobus. This litigation proved to be far more expensive than anticipated, partly due to some unexpected appeals. We believe the extra budget spent was justified given the outcomes. We also increased our charitable contributions to foundations that assist LEMS patients, which totaled about $1.3 million over budget. To our knowledge, we were the only ones providing foundation assistance for LEMS patients, so these donations helped all patients needing support, regardless of the specific treatment they were using. This included around $1 million in additional litigation expenses and $1.3 million in increased charitable donations. Additionally, our cost of goods sold increased as a percentage due to inflationary pressures we experienced in the supply chain during the latter part of the year and some costs related to scaling up our batch sizes for commercial production, totaling about $2 million. It's important to note that our cost of goods also includes royalties, which are 14% for sales up to $100 million and an additional 3% for sales exceeding that amount. Consequently, these three factors led to a rise in our cost of goods sold by approximately 1.7% over 2020, moving from 14.2% to 15.9%. In total, these combined costs exceeded $4 million, which contributed to the earnings per share miss for the year. Looking ahead, we've indicated that cash operating expenses, which exclude non-cash compensation and depreciation, will range between $65 million and $70 million this year.
Charles Duncan, Analyst
It seems that some of the factors contributing to last year's expenses may lessen this year. Of course, aside from the inflationary pressures, it's difficult to provide specific guidance. However, the other factors are worth considering.
Patrick McEnany, CEO
Yes. I think we will find out by the end of this year that those investments that we made last year, they got us over budget, had a great ROI for the year.
Operator, Operator
Thank you. Our next question comes from the line of Scott Henry with ROTH Capital Partners. Please proceed with your question.
Scott Henry, Analyst
Thank you and good morning. And let me start with a Happy St. Patrick's Day. Pat, it sounds like you may be one that celebrates that holiday.
Patrick McEnany, CEO
Thank you, Scott.
Scott Henry, Analyst
Before I start addressing the questions, I just want to mention that the on-hold music has definitely improved. Now, I have a couple of follow-up questions. First, regarding the cost of goods sold percentage at 15.9, when considering 2022, should we expect it to fall between 16% and 17%? Is that how those trends are likely to develop, or could some of the one-time costs counterbalance that? I'm trying to get a better understanding since I know there are increases in revenue projections.
Patrick McEnany, CEO
In terms of royalties, I’m not ready to provide specific guidance on that. However, if we consider that 15.9% as a high estimate, it could be a reasonable position to adopt from a conservative standpoint.
Scott Henry, Analyst
Okay, fair enough. And then the other thing that sort of jumped out at me when you looked through the 10-K and you separate selling costs versus G&A. It looked like the selling costs were higher in Q4. Any driver to that? Should I think about that going forward?
Patrick McEnany, CEO
Jeff, do you want to take that? So there were areas that we thought that we could make further investments in Q4, Scott, that some of the new programs that we've initiated. You want to take that, Jeff?
Jeff Del Carmen, CCO
Sure. So to add to what Pat was saying, what we like to do is, we look at ROI on some of the initiatives that we're doing. And if there are some initiatives that just are not playing out the way we thought, then we'll reallocate. What we also did in Q4 was we initiated the non-personal promotion to oncologists. And that also ramped up some of the selling expenses there. So in anticipation of the new year coming, we like to put some of these new resources in place so that we can get traction early in the year. So that's why we saw the increase in selling expenses.
Scott Henry, Analyst
Okay, great. And then thinking about 2022 and kind of the quarterly progression throughout the year, should we sort of expect a bolus in the beginning of that step up in patients and then gradual growth thereafter, or will it be more steady growth quarter-to-quarter?
Jeff Del Carmen, CCO
Well, I think it's a fair question. And we're hoping that the pandemic is subsiding here and the countries opening up. So what we're seeing is that we're seeing a strong March because of the countries opening up again. And we do anticipate from there steady new enrollments similar to what we're seeing in March.
Patrick McEnany, CEO
So, Scott, you might be talking about the group of patients transitioning to FIRDAPSE. We expect that transition to be finished by the end of April. Therefore, I believe you'll notice an increase in the first quarter. You'll also continue to see what we refer to as organic growth. These are the naive patients, meaning they haven't previously used FIRDAPSE or Ruzurgi. Keep in mind that it takes some time to get these transitioning patients onto a reimbursed drug. I anticipate you'll see consistent growth quarter-to-quarter this year from our commercial team.
Scott Henry, Analyst
Okay, great. And then a final bigger picture, more strategic question, Pat. You had mentioned as you look to acquire other technologies that perhaps some of the prices out there are not favorable for what you'd want to pay. Sometimes when prices are high, sometimes it's better to be a seller than a buyer. Is that something you think about in your equation, perhaps being a seller as opposed to being acquirer?
Patrick McEnany, CEO
Scott, no, we don't think about that often. But as a public company, obviously, if there was incoming interest on the buy side, we as a public company and the Board of Directors have to consider what would be a fair offer. But it is not one of our initiatives for this year.
Operator, Operator
Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. McEnany for any final comments.
Patrick McEnany, CEO
Thank you. Thanks everyone for joining our call. We look forward to our next corporate update. Have a great day.
Operator, Operator
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.