Catalyst Pharmaceuticals(CPRX) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's analysis, market risk, and internal controls Item 1. Financial Statements This section presents Catalyst Pharmaceuticals' unaudited consolidated financial statements and detailed notes for the period Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity Consolidated Balance Sheets Highlights | Balance Sheet Highlights (in thousands) | June 30, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $375,693 | $137,636 | | Total current assets | $474,429 | $219,329 | | Total assets | $706,360 | $470,114 | | Liabilities & Equity | | | | Total current liabilities | $92,318 | $76,063 | | Total liabilities | $97,705 | $82,233 | | Total stockholders' equity | $608,655 | $387,881 | | Total liabilities and stockholders' equity | $706,360 | $470,114 | - Total assets increased significantly to $706.4 million from $470.1 million, primarily driven by a substantial rise in cash and cash equivalents, which grew to $375.7 million from $137.6 million[5] Consolidated Statements of Operations and Comprehensive Income This section outlines the company's financial performance, including revenues, expenses, and net income Consolidated Statements of Operations and Comprehensive Income Highlights | Income Statement Highlights (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total revenues | $122,710 | $99,582 | | Operating income | $54,246 | $46,699 | | Net income | $40,794 | $37,762 | | Diluted EPS | $0.33 | $0.33 | Consolidated Statements of Operations and Comprehensive Income Highlights | Income Statement Highlights (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total revenues | $221,219 | $184,948 | | Operating income | $81,372 | $82,308 | | Net income | $64,069 | $67,330 | | Diluted EPS | $0.52 | $0.59 | - For the three months ended June 30, 2024, total revenues grew 23.2% YoY to $122.7 million, and net income increased to $40.8 million from $37.8 million For the six-month period, revenues grew 19.6% YoY to $221.2 million, while net income slightly decreased to $64.1 million from $67.3 million[8] Consolidated Statements of Cash Flows This section details the company's cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights | Cash Flow Highlights (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $96,060 | $42,824 | | Net cash provided by (used in) investing activities | $(209) | $(162,367) | | Net cash provided by (used in) financing activities | $142,206 | $(65) | | Net increase (decrease) in cash | $238,057 | $(119,608) | | Cash and cash equivalents – end of period | $375,693 | $178,787 | - Cash from operations more than doubled to $96.1 million for the first six months of 2024 compared to $42.8 million in the prior year period Financing activities provided $142.2 million, primarily from a common stock issuance of $141.0 million, a significant change from the prior year[14] Notes to Unaudited Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited consolidated financial statements - The company is a commercial-stage biopharmaceutical firm marketing three products: FIRDAPSE®, FYCOMPA®, and AGAMREE® AGAMREE® was commercially launched in the U.S. on March 13, 2024, for the treatment of Duchenne muscular dystrophy (DMD)[16] - In January 2024, the company completed a public offering of 10 million shares of common stock, raising net proceeds of approximately $140.7 million to potentially acquire new products and for general corporate purposes[16][78] Net Product Revenue by Product (in thousands) | Net Product Revenue by Product (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | FIRDAPSE® | $77,372 | $64,898 | | FYCOMPA® | $36,535 | $34,579 | | AGAMREE®* | $8,746 | $— | | Total | $122,653 | $99,477 | *AGAMREE® launched commercially on March 13, 2024. - The company is involved in Paragraph IV patent litigation against four generic drug manufacturers that filed ANDAs for FIRDAPSE® Lawsuits were filed in March and November 2023, triggering a statutory stay One lawsuit was settled in July 2024[63][83] - Subsequent to the quarter's end, in July 2024, the company paid the final $10 million installment for its 2022 acquisition of RUZURGI® and entered into an agreement with KYE Pharmaceuticals for the exclusive Canadian commercial rights to AGAMREE®[83] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business, financial condition, and operational results, highlighting product performance and liquidity Overview This section provides a general business overview, highlighting key products and strategic initiatives - The company's business is centered on commercializing three products: FIRDAPSE® for LEMS, FYCOMPA® for epilepsy, and AGAMREE® for Duchenne muscular dystrophy (DMD)[86] - The FDA approved an increased maximum daily dosage for FIRDAPSE® from 80 mg to 100 mg on May 30, 2024, offering greater treatment flexibility[87] - AGAMREE® was commercially launched in the U.S. on March 13, 2024, for the treatment of DMD in patients aged two years and older The company added approximately 10 commercial team members to support the launch[86][92] - The company is actively pursuing business development to expand its rare neurology product portfolio through potential partnerships, licensing, and asset acquisitions[94] Results of Operations This section analyzes the company's financial performance, focusing on revenue, costs, and profitability Revenue Analysis (in millions) | Revenue Analysis (in millions) | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | FIRDAPSE® Net Sales | $77.4 | $64.9 | 19.2% | | FYCOMPA® Net Sales | $36.5 | $34.6 | 5.5% | | AGAMREE® Net Sales | $8.7 | $0.0 | N/A | | Total Revenue | $122.7 | $99.6 | 23.2% | - Selling, General and Administrative (SG&A) expenses increased by 43.4% to $40.7 million in Q2 2024 from $28.4 million in Q2 2023 The increase was primarily due to higher employee compensation from increased headcount, commercialization expenses for the AGAMREE® launch, and increased stock-based compensation[109][110] - Research and Development (R&D) expenses decreased by 24.5% to $3.0 million in Q2 2024, primarily due to costs in 2023 related to closing out sites for the MuSK-MG clinical trial[107][108] - Amortization of intangible assets increased to $9.3 million in Q2 2024 from $8.5 million in Q2 2023, reflecting the amortization of assets related to FYCOMPA®, RUZURGI®, and the capitalized milestone payment for AGAMREE®[106] Liquidity and Capital Resources This section assesses the company's ability to meet obligations and fund operations through its cash and capital - As of June 30, 2024, the company had cash and cash equivalents of $375.7 million and working capital of $382.1 million, up from $137.6 million and $143.3 million, respectively, at year-end 2023[114] - Net cash from operating activities for the first six months of 2024 was $96.1 million, a significant increase from $42.8 million in the same period of 2023[115] - In January 2024, the company raised approximately $140.7 million in net proceeds from a public offering of 10 million shares of common stock[114] - The company believes its current cash position is sufficient to support operations for at least the next 12 months[114] Item 3. Quantitative and Qualitative Disclosure About Market Risk The company's primary market risk exposure is related to interest rate fluctuations on its cash and cash equivalents These funds are invested in highly liquid money market funds and U.S. Treasuries, with the main objective being capital preservation - The company's market risk is limited to interest rate risk on its cash and cash equivalents The investment policy prioritizes liquidity and preservation of principal over yield[126] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2024 There were no material changes to the company's internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[127] - No changes in internal controls occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[127] PART II. OTHER INFORMATION This section covers legal proceedings, risk factor updates, and equity security sales and repurchases Item 1. Legal Proceedings The company is engaged in Paragraph IV patent litigation against generic drug manufacturers that have filed ANDAs seeking to market generic versions of FIRDAPSE® Lawsuits have been filed, triggering a statutory stay on FDA approval One of these lawsuits was settled in July 2024 Similar litigation regarding FYCOMPA® was settled in June 2024 - The company is litigating against three generic drug manufacturers challenging its FIRDAPSE® patents A fourth lawsuit was settled on July 30, 2024, with the filer acknowledging patent validity and agreeing not to commercialize its product until patent expiration or other specified conditions are met[129] - In June 2024, the company settled a lawsuit with a generic manufacturer for both the oral suspension and tablet formulations of FYCOMPA® The settlement prevents the commercialization of the generic products until at least December 15, 2025[129] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - The company refers investors to the risk factors section of its 2023 Annual Report on Form 10-K for a description of significant factors that could impact its business[131] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any of its common stock during the three months ended June 30, 2024 Approximately $21 million remains available under the current share repurchase program, but the company is prioritizing cash for business development activities - No shares were repurchased during the three months ended June 30, 2024 The company is currently retaining cash for business development rather than executing share repurchases[132][133]