Catalyst Pharmaceuticals(CPRX) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company presents its unaudited consolidated financial statements for Q1 2020, including key statements and notes Consolidated Balance Sheets Total assets grew to $117.9 million while liabilities decreased, boosting stockholders' equity to $99.7 million Consolidated Balance Sheet Highlights | | March 31, 2020 (unaudited) | December 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $116,943,553 | $111,363,623 | | Total Assets | $117,879,651 | $112,376,230 | | Total Current Liabilities | $17,635,513 | $24,098,742 | | Total Liabilities | $18,203,934 | $24,746,274 | | Total Stockholders' Equity | $99,675,717 | $87,629,956 | Consolidated Statements of Operations and Comprehensive Income (Loss) The company achieved a net income of $10.4 million in Q1 2020, a significant turnaround from a loss in Q1 2019 Q1 Statement of Operations | | For the Three Months Ended March 31, 2020 | For the Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Product revenue, net | $29,136,472 | $12,448,438 | | Total operating costs and expenses | $18,436,725 | $13,436,207 | | Operating income (loss) | $10,699,747 | $(987,769) | | Net income (loss) | $10,426,015 | $(644,503) | | Diluted net income (loss) per share | $0.10 | $(0.01) | Consolidated Statements of Cash Flows Net cash from operations turned positive at $7.2 million, increasing total cash and equivalents to $101.8 million Q1 Cash Flow Summary | | For the Three Months Ended March 31, 2020 | For the Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7,213,078 | $(8,016,429) | | Net cash provided by (used in) investing activities | $5,000,000 | $10,449,393 | | Net cash provided by (used in) financing activities | $26,149 | $89,350 | | Net increase (decrease) in cash and cash equivalents | $12,239,227 | $2,522,314 | | Cash and cash equivalents—end of period | $101,750,937 | $19,081,714 | Notes to Unaudited Consolidated Financial Statements Notes detail accounting policies, revenue recognition for Firdapse®, legal matters, and collaborative agreements - The company is a biopharmaceutical firm focused on rare neuromuscular and neurological diseases, with its first product, Firdapse®, launched in January 2019 for Lambert-Eaton Myasthenic Syndrome (LEMS)[19][20] - Revenue is recognized when the customer obtains control of Firdapse®, with net revenue recorded after deducting variable considerations like rebates and discounts[36][37][43] - The company filed a lawsuit against the FDA in June 2019, challenging the approval of a competitor drug, Ruzurgi®, for violating its Orphan Drug Exclusivity[89] - The company has a license agreement for Firdapse®, paying tiered royalties of 7-10% on net sales in North America and Japan[91][92] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2020 performance, Firdapse® commercialization, trial progress, and pandemic impacts Overview The company details Firdapse® commercialization, COVID-19 impacts on trials, and competitive legal challenges - The COVID-19 pandemic has delayed the diagnosis of new LEMS patients and pushed back top-line results for the MuSK-MG and SMA Type 3 trials[111][114] - The company faces competition from Jacobus Pharmaceuticals' Ruzurgi®, which is believed to be prescribed off-label to adults at a lower price[88][123] - A lawsuit was filed against the FDA in June 2019 challenging the approval of Ruzurgi®, with a decision expected later in the year[124][125] - The company is expanding its commercial territory for Firdapse® to Japan and has submitted an NDS in Canada with priority review status[134][135] Results of Operations Firdapse® revenue more than doubled to $29.1 million, driving net income despite increased operating expenses Q1 2020 vs Q1 2019 Performance | Metric | Q1 2020 | Q1 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue (Firdapse®) | $29,136,472 | $12,448,438 | +134.1% | | Cost of Sales | $4,200,000 | $1,700,000 | +147.1% | | R&D Expenses | $4,222,811 | $3,307,959 | +27.7% | | SG&A Expenses | $10,063,048 | $8,416,460 | +19.6% | | Net Income (Loss) | $10,426,015 | $(644,503) | N/A | - Non-GAAP net income for Q1 2020 was $11.9 million ($0.11 per diluted share), excluding $1.5 million in non-cash stock-based compensation[169] Liquidity and Capital Resources The company maintains a strong liquidity position with $101.8 million in cash and investments, sufficient for operations - The company held cash, cash equivalents, and investments of approximately $101.8 million at the end of Q1 2020[170] - Net cash provided by operating activities was $7.2 million in Q1 2020, a significant improvement from the $8.0 million used in Q1 2019[179] - The company has contractual obligations including royalty payments on Firdapse® sales and purchase commitments of about $950,000 per year[185] - $92.5 million remains available for future sales under the company's 2017 Shelf Registration Statement[178] Quantitative and Qualitative Disclosure About Market Risk Market risk exposure is primarily limited to interest rate fluctuations on cash and short-term investments - The company's market risk is confined to interest rate fluctuations affecting its cash and investments, held in highly liquid funds and U.S. Treasuries[193] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in the quarter - The principal executive and financial officers concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective[196] - No changes in internal controls that could materially affect financial reporting occurred during the three months ended March 31, 2020[196] PART II. OTHER INFORMATION Legal Proceedings The company details its ongoing lawsuit against the FDA regarding the approval of a competitor drug, Ruzurgi® - In June 2019, the company sued the FDA, challenging the approval of Ruzurgi® on the grounds that it violated the company's statutory rights[198] - The lawsuit seeks an order to vacate the FDA's approval of Ruzurgi®, with a decision expected later in 2020[198][199] Risk Factors Investors are referred to the 2019 Annual Report for a comprehensive discussion of business risk factors - The company refers readers to its 2019 Annual Report on Form 10-K for a comprehensive description of significant risk factors affecting the business[201] Exhibits This section lists all exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications - Filed exhibits include Sarbanes-Oxley Act certifications (Sections 302 and 906) and XBRL financial data files[203]