Catalyst Pharmaceuticals(CPRX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Unaudited consolidated financial statements and notes for Catalyst Pharmaceuticals, Inc. for periods ended June 30, 2025, and December 31, 2024 Consolidated Balance Sheets Total assets and stockholders' equity increased from December 2024 to June 2025, driven by higher cash and retained earnings Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (unaudited, in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------- | :------------------------------- | | Cash and cash equivalents | $652,800 | $517,553 | | Total current assets | $758,739 | $623,609 | | Total assets | $971,915 | $851,411 | | Total current liabilities | $113,007 | $120,678 | | Total liabilities | $115,888 | $123,779 | | Total stockholders' equity | $856,027 | $727,632 | Consolidated Statements of Operations and Comprehensive Income Total revenues and net income grew significantly for Q2 and H1 2025 compared to 2024, primarily driven by product revenue Consolidated Statements of Operations and Comprehensive Income (in thousands) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Total revenues | $146,563 | $122,710 | $287,984 | $221,219 | | Operating income | $66,298 | $54,246 | $129,665 | $81,372 | | Net income | $52,108 | $40,794 | $108,845 | $64,069 | | Basic EPS | $0.43 | $0.35 | $0.89 | $0.55 | | Diluted EPS | $0.41 | $0.33 | $0.86 | $0.52 | - Product revenue, net, increased by $23,887 thousand (19.5%) for the three months and $66,846 thousand (30.2%) for the six months ended June 30, 2025, compared to the same periods in 2024[12] Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity significantly increased from December 2024 to June 2025, driven by net income and stock-based compensation, partially offset by other comprehensive losses Consolidated Statements of Changes in Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2024 (in thousands) | Balance at June 30, 2025 (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------ | | Common Stock (Shares) | 120,879 | 122,386 | | Common Stock (Amount) | $121 | $122 | | Additional Paid-in Capital | $442,286 | $461,868 | | Retained Earnings | $285,161 | $394,006 | | Accumulated Other Comprehensive Income (Loss) | $64 | $31 | | Total Stockholders' Equity | $727,632 | $856,027 | - Net income contributed $52,108 thousand to retained earnings for the three months ended June 30, 2025, and $56,737 thousand for the period from December 31, 2024, to March 31, 2025[15] - Stock-based compensation added $7,597 thousand for the three months ended June 30, 2025, and $5,850 thousand for the period from December 31, 2024, to March 31, 2025, to additional paid-in capital[15] Consolidated Statements of Cash Flows Substantial cash generated from operating activities led to a significant increase in cash and cash equivalents for H1 2025 compared to the prior year Cash Flow Activity (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $131,341 | $96,060 | | Net cash used in investing activities | $(26) | $(209) | | Net cash provided by financing activities | $3,932 | $142,206 | | Net increase in cash and cash equivalents | $135,247 | $238,057 | | Cash and cash equivalents – end of period | $652,800 | $375,693 | - Net cash provided by operating activities increased by $35,281 thousand (36.7%) for the six months ended June 30, 2025, driven by higher net income and non-cash adjustments[17][252] - Financing activities in 2024 included $141,000 thousand from the issuance of common stock, which was not present in 2025[17][254] Notes to Unaudited Consolidated Financial Statements Detailed notes provide essential context for the consolidated financial statements, covering organization, accounting policies, assets, liabilities, agreements, and legal proceedings Note 1. Organization and Description of Business Catalyst Pharmaceuticals is a commercial-stage biopharmaceutical company focused on rare diseases, marketing FIRDAPSE®, AGAMREE®, and FYCOMPA®, with plans for portfolio expansion - Catalyst Pharmaceuticals markets three commercial-stage drug products: FIRDAPSE® (amifampridine), AGAMREE® (vamorolone), and FYCOMPA® (perampanel)[19] - FIRDAPSE®'s label was expanded in 2024 to include pediatric patients and an increased maximum daily dose, becoming commercially available in Japan in January 2025[20] - AGAMREE® was approved by the FDA in October 2023 for Duchenne muscular dystrophy (DMD) and commercially launched in the U.S. in March 2024[22] - A public offering of 10 million shares in January 2024 raised approximately $140.7 million in net proceeds for new product acquisitions and general corporate purposes[26] Note 2. Basis of Presentation and Significant Accounting Policies Outlines accounting principles, including U.S. GAAP compliance, consolidation, estimates, and specific policies for assets, liabilities, revenue, expenses, and recent accounting standard updates - Product revenue is recognized when customers obtain control of products, recorded net of variable consideration like discounts, rebates, and returns[49][53] Net Product Revenue by Product (in thousands) | Product | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | FIRDAPSE® | $84,845 | $77,372 | $168,576 | $144,214 | | FYCOMPA® | $34,332 | $36,535 | $69,959 | $66,960 | | AGAMREE®* | $27,363 | $8,746 | $49,405 | $9,920 | | Total | $146,540 | $122,653 | $287,940 | $221,094 | *AGAMREE® net product revenue for the six months ended June 30, 2024 is for the period between March 13, 2024 (date of commercial launch) and June 30, 2024. - The company operates in one reportable segment: the development and commercialization of drug products, with the CEO reviewing consolidated financial information[83] - ASU 2024-03, requiring more detailed expense disaggregation disclosures, is effective for fiscal years beginning after December 15, 2026, and the company is evaluating its impact[86] Note 3. Investments Investments primarily comprise available-for-sale U.S. Treasuries and an equity investment in Santhera, with gains/losses recognized in AOCI or other income Available-for-sale Investments (in thousands) | Security Type | Estimated Fair Value (June 30, 2025, in thousands) | Amortized Cost (June 30, 2025, in thousands) | Estimated Fair Value (Dec 31, 2024, in thousands) | Amortized Cost (Dec 31, 2024, in thousands) | | :-------------------------- | :------------------------------------------------- | :------------------------------------------- | :------------------------------------------------- | :------------------------------------------- | | U.S. Treasuries | $407,687 | $407,646 | $329,457 | $329,373 | Net Gains (Losses) on Equity Securities (in thousands) | Period | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net gains (losses) on equity securities | $(2,952) | $(2,262) | $(308) | $(3,406) | Note 4. Accumulated Other Comprehensive Income (Loss) AOCI primarily reflects unrealized gains/losses on available-for-sale securities, shifting from a gain at December 2024 to a smaller gain at June 2025 due to current period losses Changes in Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric | Balance at March 31, 2025 (in thousands) | Other comprehensive gain (loss) before reclassifications (in thousands) | Balance at June 30, 2025 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------------------------ | :-------------------------------------- | | Total Accumulated Other Comprehensive Income (Loss) | $(17) | $48 | $31 | - The balance of accumulated other comprehensive income (loss) was $64 thousand at December 31, 2024, and $31 thousand at June 30, 2025[92] Note 5. Inventory, Net Net inventory slightly decreased from December 2024 to June 2025, with work-in-process increasing while raw materials and finished goods decreased, and write-offs recorded Inventory, Net (in thousands) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------- | :--------------------------- | :------------------------------- | | Raw materials | $5,186 | $6,518 | | Work-in-process | $5,345 | $3,445 | | Finished goods | $8,119 | $9,578 | | Total inventory, net | $18,650 | $19,541 | - Inventory write-offs were approximately $0.5 million as of June 30, 2025, expected to be reimbursed by the contract manufacturer[93] - An inventory reserve of approximately $0.2 million was recorded during the three and six months ended June 30, 2025, related to slow-moving FYCOMPA® inventory[93] Note 6. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets remained stable, with increases in prepaid tax and manufacturing costs offset by decreases in commercialization and co-pay assistance programs Prepaid Expenses and Other Current Assets (in thousands) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------- | | Prepaid manufacturing costs | $463 | $206 | | Prepaid tax | $10,215 | $7,959 | | Prepaid commercialization expenses | $4,198 | $4,957 | | Prepaid co-pay assistance program | $755 | $1,561 | | Total prepaid expenses and other current assets | $21,426 | $21,039 | Note 7. Operating Leases The company holds an operating lease for its corporate office with a 5.8-year remaining term, recognizing lease liabilities and right-of-use assets based on future payments Operating Lease Information (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------- | | Operating lease right-of-use assets, net | $2,084 | $2,230 | | Total operating lease liabilities | $2,991 | $3,188 | | Weighted average remaining lease term | 5.8 years | 6.3 years | | Weighted average discount rate | 4.51% | 4.51% | - Total remaining lease payments as of June 30, 2025, are $3,420 thousand, with $270 thousand due in the remaining six months of 2025[96] Note 8. Property and Equipment, Net Net property and equipment decreased from December 2024 to June 2025, primarily due to accumulated depreciation Property and Equipment, Net (in thousands) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :--------------------------- | :------------------------------- | | Furniture and equipment | $1,076 | $1,050 | | Leasehold improvements | $991 | $991 | | Software | $433 | $433 | | Less: Accumulated depreciation | $(1,351) | $(1,120) | | Total property and equipment, net | $1,149 | $1,354 | Note 9. License and Acquired Intangibles, Net Net license and acquired intangibles decreased from December 2024 to June 2025 due to ongoing amortization of RUZURGI®, FYCOMPA®, and AGAMREE® assets Intangible Assets, Net (in thousands) | Intangible Asset | Net Carrying Value (June 30, 2025, in thousands) | Net Carrying Value (Dec 31, 2024, in thousands) | | :-------------------------------- | :----------------------------------------------- | :---------------------------------------------- | | RUZURGI® | $26,670 | $27,830 | | FYCOMPA® | $81,027 | $96,842 | | AGAMREE® | $30,286 | $32,000 | | Total | $137,983 | $156,672 | - Amortization expense for FYCOMPA® was approximately $7.9 million for both the three and six months ended June 30, 2025, and 2024, respectively, recorded in cost of sales[99] - The weighted average amortization period remaining for intangible assets was 4.9 years at June 30, 2025[100] Note 10. Accrued Expenses and Other Liabilities Total accrued expenses and other liabilities increased from December 2024 to June 2025, driven by higher gross-to-net revenue liabilities, partially offset by lower professional and license fees Accrued Expenses and Other Liabilities (in thousands) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------- | | Accrued professional fees | $8,315 | $11,011 | | Accrued license fees | $22,742 | $30,991 | | Accrued gross-to-net revenue liabilities | $62,736 | $44,939 | | Current accrued expenses and other liabilities | $107,479 | $104,085 | | Total accrued expenses and other liabilities | $110,360 | $107,186 | Note 11. Collaborative and Licensing Arrangements Details collaborative and licensing agreements with KYE Pharmaceuticals for FIRDAPSE® and AGAMREE® in Canada, and DyDo Pharma for FIRDAPSE® in Japan, involving payments and royalty sharing - In July 2024, the company entered a license agreement with KYE for exclusive Canadian commercial rights to AGAMREE®[105] - DyDo Pharma launched FIRDAPSE® in Japan in January 2025 following MHLW approval in September 2024[112] - Revenue from the DyDo arrangement for the six months ended June 30, 2025, was $1.1 million, included in product revenue, net[113] Note 12. Commitments and Contingencies Details the Jacobus settlement, ongoing FIRDAPSE® patent litigation against Hetero and Lupin, settlements with Teva and Inventia, and a $5.4 million purchase commitment - The company settled FIRDAPSE® patent litigation with Inventia in July 2024, preventing Inventia's commercialization until February 2037 or another ANDA product entry[118] - A settlement with Teva in January 2025 prevents them from marketing a generic FIRDAPSE® version in the U.S. before February 25, 2035[120] - FIRDAPSE® patent litigation against Hetero and Lupin (for the 2037 patent) remains ongoing, with a Markman hearing scheduled for October 7, 2025[122] - A FYCOMPA® patent litigation settlement in June 2024 prevents a Paragraph IV filer from commercializing generic FYCOMPA® oral suspension and tablets until at least December 15, 2025[124] Note 13. Agreements Outlines key license and acquisition agreements for FIRDAPSE®, RUZURGI®, FYCOMPA®, and AGAMREE®, detailing payment terms, royalties, accounting treatment, and manufacturing agreements - The FIRDAPSE® license agreement with BioMarin (now SERB S.A.) includes tiered royalties on net sales in North America and Japan, with territory expansion in 2019 and 2023[128] - The RUZURGI® license agreement with Jacobus involves $30 million in cash payments and tiered annual royalties (1.5% for 2022-2025, 2.5% thereafter) on U.S. amifampridine net sales, with minimum annual royalties[129][130][121] - The FYCOMPA® acquisition from Eisai involved a $160 million upfront cash payment and future tiered royalty payments after patent protection expires, accounted for as an asset acquisition[134][135][138] - The AGAMREE® license from Santhera included a $75 million initial cash payment, a $36 million regulatory milestone payment in Q4 2023, and potential future sales-based milestones and royalties, alongside a strategic equity investment in Santhera[139][140][143] Note 14. Income Taxes The effective income tax rate for H1 2025 was 22.6%, influenced by state income taxes, investment fluctuations, and equity compensation deductions, with future fluctuations expected - The effective income tax rate was 22.6% for the six months ended June 30, 2025, compared to 24.5% for the same period in 2024[145] - The company is evaluating the impact of the recently passed OBBBA legislation on corporate taxation but does not expect a material impact on its effective tax rate[146] Note 15. Stockholders' Equity Details authorized and outstanding common/preferred stock, the expiration of the share repurchase program, and the $140.7 million raised in January 2024 under the 2023 shelf registration - As of June 30, 2025, 122,385,569 shares of common stock were issued and outstanding[148] - The $40 million share repurchase program expired in March 2025, with no shares repurchased during the three and six months ended June 30, 2025, and 2024[149] - A public offering in January 2024 raised approximately $140.7 million in net proceeds from the sale of 10 million common shares under the 2023 Shelf Registration Statement[150] Note 16. Stock Compensation Stock-based compensation expense increased for Q2 and H1 2025 but remained stable for H1, primarily due to stock options, restricted stock unit grants, and executive retirement charges Stock-Based Compensation Expense (in thousands) | Category | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Research and development | $904 | $403 | $1,329 | $912 | | Selling, general and administrative | $6,693 | $4,005 | $12,118 | $11,744 | | Total stock-based compensation | $7,597 | $4,408 | $13,447 | $12,656 | - As of June 30, 2025, approximately $36.7 million of unrecognized compensation expense for non-vested stock option awards is expected to be recognized over 2.5 years[156] - Approximately $7.1 million of unrecognized compensation expense related to non-vested restricted stock units is expected to be recognized over 2.7 years[158] Note 17. Subsequent Events Subsequent events include Daniel J. Curran, MD's board appointment on August 1, 2025, and NCCN guideline updates for Small Cell Lung Cancer to include LEMS and amifampridine - Daniel J. Curran, MD, was appointed to the Board of Directors on August 1, 2025[159] - NCCN Clinical Practice Guidelines for Small Cell Lung Cancer now include LEMS, amifampridine, and specific antibody tests, as announced on August 6, 2025[160] Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis of financial condition and results of operations, covering business overview, product developments, accounting policies, estimates, revenues, expenses, and liquidity Overview Catalyst Pharmaceuticals, a commercial-stage biopharmaceutical company, markets FIRDAPSE®, AGAMREE®, and FYCOMPA®, with strategic field force splits, portfolio expansion, and ongoing patent litigation - The company split its commercial and medical field-based forces into two units for FIRDAPSE® and AGAMREE® effective April 1, 2025, to improve product focus[164][186] - FIRDAPSE® received FDA approval for an expanded age range (pediatric patients six and older) in September 2022 and an increased maximum daily dose (from 80 mg to 100 mg) in May 2024[165] - AGAMREE® was commercially launched in the U.S. on March 13, 2024, for Duchenne muscular dystrophy (DMD) patients aged two years and older[185] - Patent protection for FYCOMPA® tablets expired on May 23, 2025, and for the oral suspension, it is expected to expire on December 15, 2025, leading to generic competition[202] - Daniel J. Curran, MD, was appointed to the Board of Directors on August 1, 2025, bringing over 25 years of pharmaceutical experience[205] Basis of Presentation Reiterates key financial statement components, including revenue recognition, cost of sales, R&D, SG&A, intangible asset amortization, stock-based compensation, and income taxes, emphasizing their impact on financial performance - Revenues are primarily generated from product sales of FIRDAPSE®, AGAMREE®, and FYCOMPA®, with immaterial contributions from Canadian and Japanese collaboration agreements in 2025[207][209] - Cost of sales includes third-party manufacturing, freight, royalties, and milestone payments, with royalties based on net revenue as defined in license agreements[210][231] - Research and development expenses are expensed as incurred and are expected to be principally attributable to FIRDAPSE® and AGAMREE® development[211][212] - Selling, general and administrative expenses are substantial due to commercialization efforts for all three products, with FYCOMPA® expenses expected to decline post-patent expiration[214] Critical Accounting Policies and Estimates Critical accounting policies and estimates, requiring significant management judgment, include revenue recognition, intangible asset valuation, stock-based compensation, and deferred tax asset valuation allowance, with no material changes reported - Key critical accounting policies and estimates include revenue recognition, valuation of intangible assets, stock-based compensation, and valuation allowance for deferred tax assets[220] - Management continually evaluates judgments, estimates, and assumptions based on underlying agreements, expected development, historical experience, and other reasonable factors[220] Results of Operations Significant revenue growth for Q2 and H1 2025, driven by AGAMREE® and FIRDAPSE® sales, led to substantial net income increase, while operating expenses rose due to commercialization and stock-based compensation Revenues Total revenues significantly increased for Q2 and H1 2025, driven by AGAMREE® launch and FIRDAPSE® sales, partially offset by a slight decrease in FYCOMPA® revenue in the three-month period Total Revenues (in millions) | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :---------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Total revenues | $146.6 | $122.7 | $288.0 | $221.2 | | Net product revenues | $146.5 | $122.7 | $287.9 | $221.1 | - FIRDAPSE® net product revenue increased by 9.7% ($7.5 million) for the three months and 16.9% ($24.4 million) for the six months ended June 30, 2025, driven by sales volume increases[225][228] - AGAMREE® net product revenue grew substantially to $27.4 million for the three months and $49.4 million for the six months ended June 30, 2025, from $8.7 million and $9.9 million respectively in 2024, following its commercial launch[226][228] - FYCOMPA® net product revenue decreased by 6.0% ($2.2 million) for the three months but increased by 4.5% ($3.0 million) for the six months ended June 30, 2025, with future decreases expected due to patent expiration[227][228][229] Cost of Sales Cost of sales increased for Q2 and H1 2025, primarily due to higher royalty payments tied to increased net product revenues, particularly for AGAMREE® Cost of Sales (in millions) | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :---------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Cost of sales | $20.6 | $15.4 | $38.5 | $27.9 | - Cost of sales increased by $5.2 million (33.8%) for the three months and $10.6 million (38.0%) for the six months ended June 30, 2025, compared to the same periods in 2024[12][231] - Royalties payable under license agreements for FIRDAPSE® and AGAMREE® were the principal components of cost of sales[231] Amortization of Intangible Assets Amortization expense for intangible assets remained consistent, reflecting straight-line amortization of FYCOMPA®, RUZURGI®, and AGAMREE® product rights over their estimated useful lives Amortization of Intangible Assets (in millions) | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Amortization of intangible assets | $9.3 | $9.3 | $18.7 | $18.7 | - Intangible assets for FYCOMPA® are amortized over 5 years, RUZURGI® over 14.5 years, and AGAMREE® over 10.5 years[232] Research and Development Expenses R&D expenses increased for Q2 and H1 2025, driven by higher employee compensation, clinical trial expenses, and a charge related to a former executive's retirement Research and Development Expenses (in thousands) | Category | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Salary and benefit expense | $1,668 | $1,356 | $2,780 | $2,099 | | Employee stock-based compensation expense | $904 | $403 | $1,329 | $912 | | Research and clinical trial expense | $1,697 | $857 | $3,787 | $1,995 | | Total research and development expenses | $4,358 | $2,985 | $8,245 | $5,566 | - Research and development expenses increased by 46.0% ($1.373 million) for the three months and 48.1% ($2.679 million) for the six months ended June 30, 2025[234] - The increase in stock-based compensation expense includes a charge related to the retirement of a former executive officer in Q2 2025[234] Selling, General and Administrative Expenses SG&A expenses increased for Q2 and H1 2025, driven by higher selling expenses from increased headcount and compensation, and stock-based compensation, partially offset by lower general and administrative expenses Selling, General and Administrative Expenses (in thousands) | Category | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Selling | $28,284 | $26,247 | $58,185 | $51,568 | | General and administrative | $10,972 | $10,478 | $22,557 | $24,356 | | Employee stock-based compensation | $6,693 | $4,005 | $12,118 | $11,744 | | Total SG&A expenses | $45,949 | $40,730 | $92,860 | $87,668 | - Total SG&A expenses increased by 12.8% ($5.219 million) for the three months and 5.9% ($5.192 million) for the six months ended June 30, 2025[236][237] - The increase in selling expenses was primarily due to annual merit increases and increased headcount from FYCOMPA® and AGAMREE® acquisitions[237] Stock-Based Compensation Total stock-based compensation increased for Q2 2025 but remained stable for H1, primarily due to stock options, restricted stock unit grants, and executive retirement charges Total Stock-Based Compensation (in millions) | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Total stock-based compensation | $7.6 | $4.4 | $13.4 | $12.7 | - The 2025 and 2024 periods include charges related to the retirement of three former executive officers[239] Other Income, Net Other income, net, significantly increased for Q2 and H1 2025, driven by higher interest income from invested cash, partially offset by net losses on equity securities Other Income, Net (in thousands) | Category | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Interest income, net | $5,947 | $3,804 | $11,222 | $6,911 | | Net gains (losses) on equity securities | $(2,952) | $(2,262) | $(308) | $(3,406) | | Total other income, net | $2,995 | $1,542 | $10,914 | $3,505 | - The increase in other income, net, was primarily due to higher invested balances, despite a decrease in the share price of the investment in Santhera[240] Income Taxes The effective income tax rate for H1 2025 was 22.6%, influenced by state income taxes, investment fluctuations, and equity compensation deductions, with future fluctuations expected - The effective income tax rate was approximately 22.6% for the six months ended June 30, 2025, compared to 24.5% for the same period in 2024[242] - Differences from the statutory federal income tax rate of 21% are driven by state income taxes, investment value fluctuations, and equity compensation deductions[242] Net Income Net income and diluted earnings per share increased substantially for Q2 and H1 2025, reflecting strong financial performance Net Income and EPS | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $52.1 million | $40.8 million | $108.8 million | $64.1 million | | Basic EPS | $0.43 | $0.35 | $0.89 | $0.55 | | Diluted EPS | $0.41 | $0.33 | $0.86 | $0.52 | Liquidity and Capital Resources Strong liquidity with significant cash from product sales and securities offerings; sufficient funds for 12 months, but future funding may be needed for acquisitions and development, potentially causing dilution Cash and Working Capital (in millions) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :---------------- | :-------------------------- | :------------------------------ | | Cash and cash equivalents | $652.8 | $517.6 | | Working capital | $645.7 | $502.9 | - The company believes it has sufficient funds to support operations for at least the next 12 months, absent the use of cash for potential business development opportunities[247] - Future funding requirements depend on factors such as acquisition costs, clinical trial expenses, regulatory approvals, product sales, competition, intellectual property enforcement, and the extent of new product acquisitions[249][250] Cash Flows Net cash from operating activities significantly increased for H1 2025 due to higher net income; investing was minimal, and financing decreased without prior year's large stock issuance Cash Flow Summary (in millions) | Cash Flow Activity | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net cash provided by operating activities | $131.3 | $96.1 | | Net cash used in investing activities | $(0.026) | $(0.2) | | Net cash provided by financing activities | $3.9 | $142.2 | - Net cash provided by operating activities increased by $35.2 million (36.7%) for the six months ended June 30, 2025, primarily due to net income of $108.8 million[252] - Financing activities in 2024 included $141.0 million from the issuance of common stock, which was not a factor in 2025[254] Contractual Obligations and Arrangements Details contractual obligations, including tiered royalty payments for FIRDAPSE®, RUZURGI®, FYCOMPA®, and AGAMREE®, Jacobus settlement cash payments, and a significant purchase commitment - Royalties payable under FIRDAPSE® license agreements totaled approximately $13.8 million for the three months and $25.4 million for the six months ended June 30, 2025[256] - Payments to Jacobus for RUZURGI® include $30 million in cash (paid in installments through July 2024) and annual royalties of 1.5% (2022-2025) to 2.5% (2026 onwards) on U.S. amifampridine net sales, with minimum annual royalties[258] - Royalties payable for AGAMREE® totaled approximately $3.2 million for the three months and $5.7 million for the six months ended June 30, 2025[260] - The company has a purchase commitment of approximately $5.4 million with a contract manufacturing organization, expected to be fulfilled within the next twelve months[264] Off-Balance Sheet Arrangements The company does not have any off-balance sheet arrangements as defined by SEC rules Caution Concerning Forward-Looking Statements Highlights inherent uncertainties in forward-looking statements, emphasizing that actual results may differ due to risks like commercialization success, regulatory compliance, market estimates, competition, intellectual property, and healthcare policy changes - Factors affecting future success include the ability to successfully market FIRDAPSE®, AGAMREE®, and FYCOMPA®, attract and retain qualified personnel, and accurately estimate market size and patient adherence[263][265] - Risks involve generic competition for FYCOMPA®, potential impairment of intangible assets, payor coverage and reimbursement policies, and the outcome of patent litigation for FIRDAPSE® and AGAMREE®[265][266] - External factors such as tariffs on pharmaceutical imports, potential Most Favored Nation (MFN) pricing policies, and general economic conditions could adversely affect the business[266] PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS Details ongoing Paragraph IV patent litigation for FIRDAPSE® against Hetero and Lupin, noting outcome uncertainty and potential generic market entry; other litigation is not material - Ongoing Paragraph IV patent litigation for FIRDAPSE® against Hetero and Lupin (for the 2037 patent) continues, with the outcome uncertain regarding generic market entry before February 25, 2035[274] Item 1A. RISK FACTORS Highlights specific risks, including potential tariffs on pharmaceutical imports and Most Favored Nation (MFN) pricing policies, which could adversely affect the company's financial condition and results of operations - A U.S. Department of Commerce probe into pharmaceutical imports could lead to tariffs, increasing costs and potentially delaying clinical trials and manufacturing, as the company sources ingredients and supplies from foreign manufacturers[277][278] - The potential implementation of Most Favored Nation (MFN) pricing for drug products in the U.S. could adversely affect the company's financial condition and results of operations[279][280] Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The $40 million share repurchase program expired in March 2025, with no shares repurchased during the three and six months ended June 30, 2025, and 2024 - No shares were repurchased under the $40 million share repurchase program during the three and six months ended June 30, 2025, and 2024, and the program expired in March 2025[281] Item 3. DEFAULTS UPON SENIOR SECURITIES No defaults upon senior securities were reported Item 4. MINE SAFETY DISCLOSURE This item is not applicable to the company Item 5. OTHER INFORMATION No other information was reported under this item Item 6. EXHIBITS Lists exhibits filed with Form 10-Q, including a license agreement amendment, Sarbanes-Oxley Act certifications, and XBRL documents - Exhibits include Amendment No. 1 to License and Collaboration Agreement with Santhera Pharmaceuticals, certifications of principal executive and financial officers under Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL documents[286] SIGNATURES The report is signed by Michael W. Kalb, Executive Vice President and Chief Financial Officer of Catalyst Pharmaceuticals, Inc., on August 6, 2025 - The report was signed by Michael W. Kalb, Executive Vice President and Chief Financial Officer, on August 6, 2025[289]