Catalyst Pharmaceuticals(US:CPRX)2021-11-08 16:00Business Focus and Development - The company is focusing on developing and commercializing novel medicines for rare diseases, particularly in the neuromuscular and neurological space, with plans to invest more heavily in research and development [111]. - The company is exploring opportunities to acquire or in-license drug products in development, although no definitive agreements have been made to date [112]. - The company is developing a long-acting formulation of amifampridine phosphate, with promising candidate formulations evaluated in a pharmacokinetic study [128]. - The company is pursuing additional patent applications for Firdapse® to enhance intellectual property protection, although there is no assurance that additional patents will be granted [140]. - The company is exploring the potential for Firdapse® to be approved for other neuromuscular diseases and is assessing the market for a long-acting version of amifampridine phosphate [193]. Product Information - Firdapse® was approved by the FDA on November 28, 2018, and launched in January 2019, with a dedicated sales force of approximately 30 personnel [118]. - The company has sufficient inventory of Firdapse® to meet current and foreseeable patient needs for at least the next 12 months, with no material disruptions in production reported [117]. - The FDA approved a New Drug Application for Ruzurgi® for pediatric LEMS patients, but the company is actively working to ensure adult patients can transition to Firdapse® [126][127]. - The company has entered into a license agreement with KYE Pharmaceuticals for the Canadian rights to Firdapse®, which includes milestone payments and a sharing of net sales [132]. - The company has entered into a license agreement with DyDo Pharma, Inc. for the Japanese rights of Firdapse®, where DyDo will be responsible for all clinical, regulatory, marketing, and commercialization activities in Japan [138]. - The company has received orphan drug designation in Japan for Firdapse® for the treatment of LEMS, which may facilitate the commercialization process [137]. Financial Performance - For the three and nine months ended September 30, 2021, net revenue from Firdapse® product sales was approximately $35.9 million and $99.7 million, respectively, compared to $29.2 million and $87.9 million for the same periods in 2020, representing an increase of 23% and 13% year-over-year [162]. - Cost of sales for the three and nine months ended September 30, 2021, was approximately $5.3 million and $14.5 million, respectively, compared to $3.9 million and $12.2 million for the same periods in 2020, indicating a year-over-year increase of 36% and 19% [163]. - The company earned approximately $0 and $2.7 million in revenue under its licensing agreement with DyDo for the three and nine months ended September 30, 2021, respectively [149]. - The company recognized approximately $4.9 million and $13.3 million in royalties for the three and nine months ended September 30, 2021, respectively, included in cost of sales [188]. - The company has a license agreement requiring royalties of 7% on net sales up to $100 million and 10% on net sales exceeding $100 million for Firdapse® in North America [188]. Expenses and Income - Research and development expenses for Q3 2021 were approximately $4.5 million, representing 20% of total operating costs, compared to $3.7 million and 21% in Q3 2020 [164]. - For the nine months ended September 30, 2021, research and development expenses totaled approximately $11.9 million, a decrease of 3.0% from $12.3 million in the same period of 2020 [164]. - Selling, general and administrative expenses for Q3 2021 were approximately $12.2 million, representing 55% of total operating costs, compared to $10.0 million and 57% in Q3 2020 [168]. - For the nine months ended September 30, 2021, selling, general and administrative expenses increased to approximately $36.4 million, up 17.9% from $30.9 million in the same period of 2020 [168]. - Net income for Q3 2021 was approximately $10.3 million, down from $43.3 million in Q3 2020, with earnings per share of $0.10 compared to $0.42 in the prior year [175]. Cash and Liquidity - As of September 30, 2021, the company had cash and investments of approximately $174.8 million and no funded debt, indicating a strong liquidity position [145]. - Cash and cash equivalents and investments totaled approximately $174.8 million as of September 30, 2021, an increase from $140.3 million at December 31, 2020 [176]. - Net cash provided by operating activities for the nine months ended September 30, 2021 was $41.2 million, compared to $31.9 million in the same period of 2020 [185]. - Net cash used in investing activities for the nine months ended September 30, 2021 was $11.0 million, primarily for purchases of investments [186]. - The company emphasizes liquidity and preservation of principal in its investment activities, with exposure to interest rate risk confined to cash and short-term investments [196]. Legal and Regulatory Matters - The company is currently involved in ongoing legal proceedings regarding the marketing authorization of Ruzurgi® in Canada, with no assurance of the outcome [135]. - The company has filed lawsuits against Jacobus and PantherRx for patent infringement related to Ruzurgi®, with the lawsuits consolidated in a single action in the U.S. District Court for New Jersey [141]. - The company faces uncertainties regarding the successful commercialization of Firdapse® and the development of additional indications, influenced by factors such as COVID-19 and market dynamics [191]. Operational Commitments - The company has an employment agreement with the CEO requiring base salary payments of approximately $630,000 in 2021 [188]. - The company has a purchase commitment with a contract manufacturing organization for approximately $500,000 per year, expiring in December 2023 [188]. - The company operates in leased office space with an annual rent of approximately $0.5 million, following an expansion from 7,800 square feet to 10,700 square feet [188]. - The company currently has no debt or finance leases, maintaining an operating lease for office facilities [189]. - The company has no off-balance sheet arrangements as defined by SEC rules [189].