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Greetings and welcome to the Catalyst Pharmaceuticals Fourth Quarter and Full Year 2022 Financial Results Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce one of your host, Ali Grande, Chief Financial Officer. Please go ahead.

Good morning, everyone and thank you for joining our conference call to discuss Catalyst's fourth quarter and full year 2022 financial results and corporate highlights. Leading the call today is Patrick McEnany, Chairman and Chief Executive Officer. We are also joined by Dr. Steven Miller, our Chief Operating Officer and Chief Scientific Officer; and Jeffry Del Carmen, our Chief Commercial Officer. For the Q&A session, we will also have Dr. Gary Ingenito, our 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 our 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. Actual results may vary from the expectations contained in our forward-looking statements. 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 2022 Annual Report and Form 10-Q. At this time, I will turn the floor over to Pat.

Thanks, Ali and welcome everyone to our fourth quarter and full year 2022 results conference call. I'm pleased today to highlight the progress we've made across our business throughout 2022 and now into the start of 2023. As we did in yesterday's press release, let me highlight several key points. 2022 was a pivotal year for Catalyst as we delivered exceptional financial performance exceeding our 2022 total net revenue guidance projections driven by consecutive quarterly revenue growth and fiscal discipline. The robust results capped an important year of transformation as we successfully executed our strategic initiatives across all segments of the business. This included attaining a favorable resolution of the capital litigation relating to the RU

Ladies and gentlemen, please hold while we reconnect our speakers.

Okay. Our full year 2022 total net revenues were $214 million representing a 52% year-over-year increase compared to $141 million in total net revenue for 2021. Fourth quarter total net revenues were $61 million, a 59% increase compared to $38 million in 2021. We reported GAAP net income of $83 million for the full year of 2022 or $0.80 per basic share and $0.75 per diluted share, a 110% increase compared to $39 million or $0.38 per basic share and $0.37 per diluted share in 2021. Further non-GAAP net income for the full year 2022 was $114 million or $1.10 per basic share and $1.02 per diluted share, a 93% increase compared to $59 million or $0.57 per basic share and $0.55 per diluted share for the full year 2021. Additionally, we ended 2022 with $298 million in cash and cash equivalents. With another year of expected growth in front of us, we have recently provided the market with our forecast of full year 2023 total net revenues of between $375 million and $385 million, representing a 75% to 80% increase in total net revenue compared to 2022. We have also forecasted FIRDAPSE’s 2023 net revenues to be between $245 million and $255 million. And based on 11 months of sales projections, we expect FYCOMPA 2023 net revenues to be approximately $130 million, having closed the acquisition of FYCOMPA in late January of this year. Additionally, we continue to expect that FYCOMPA will be accretive to our EBITDA and EPS for this year. Ali will provide further financial highlights and details during her remarks. During the quarter, current quarter, our focused and diligent process to pursue value-added transaction opportunities has come to fruition with the successful acquisition of the U.S. rights to FYCOMPA from Eisai Company Limited. We are extremely pleased to have delivered on this important objective for 2022. FYCOMPA not only broadens our commercial product portfolio with the first and only noncompetitive AMPA receptor antagonist for epilepsy, but also adds a growing revenue base, further augmenting our already strong revenue and earnings growth of FIRDAPSE. More importantly, the addition of FYCOMPA serves as a complementary growth driver and a strategic market adjacency within neuroscience that establishes a potential gateway to expand into rare epileptic diseases. We are already working closely and collaboratively with the Eisai FYCOMPA U.S. leadership and expect to complete the full transaction of FYCOMPA -- transition of FYCOMPA activities by midyear 2023, and we look forward to the future onboarding into the Catalyst family, many of the Eisai employees who have been responsible for the success of FYCOMPA epilepsy program to date. During this quarter, although we did not enter into any new contracts to acquire additional products, we continue to make significant strides in our efforts to identify acquisition opportunities that align with our overarching growth strategy to build a diversified patient-centric portfolio. Our key priority on the strategy and business development front remains our intention to broaden and diversify our product portfolio through collaborative partnerships and acquisitions of commercial stage assets and/or companies. Currently, we are in advanced stages of due diligence on several commercial stage products and/or companies and strongly believe that a transformational expansion of our portfolio that offers the potential to further implement our near and long-term growth strategy could occur in 2023. We remain optimistic about FIRDAPSE's long-term growth prospects. During 2022, we made significant advancements related to FIRDAPSE's intellectual property estate, which included the affirmation of the token drug market exclusivity. Additionally, we were granted three new patents and ended the year with six FDA Orange Book listed patents that go out to 2037, which we believe supports the product's long-term durability. We remain confident about the strength of FIRDAPSE's intellectual property estate, supported by the successful outcomes achieved in 2022. That said, we are limited to what we can say at this point about ongoing cut litigation other than to say that we intend to vigorously depend and prosecute any infringers of our intellectual property related to FIRDAPSE. We will, of course, provide regular updates in our disclosures filed with the SEC, which will be available on the company's website. Having ended the year with several significant achievements that aided the company's growth, we were pleased to be recognized for these accomplishments. These included being recognized as one of Forbes 2023 America's Best Small Companies for the second consecutive year, inclusion in Fortune's 2022 top 100 small companies, and being honored as Florida's 2022 Company of the Year as well as being added to the S&P Small Cap 600 Index. These recognitions represent the culmination of our Catalyst team's patient-centric attitude, work ethic and commitment to excellence. In closing, the Catalyst team's accomplishments underscore the significant advancements in our evolution to becoming a leading innovative rare disease biopharmaceutical company. We expect these achievements coupled with our expanded capabilities and disciplined approach to capital allocation, to drive sustainable growth and enhance value as part of our long-term vision. I'll now turn the call over to Jeff Del Carmen, our Chief Commercial Officer, who will provide an update on our commercial activities.

Thanks, Pat and good morning, everyone. 2022 was a very successful year for Catalyst as well as the LEMS community. First, we are very proud to announce that over 1,000 unique patients have now received the FIRDAPSE enrollment from launch to date, which is a tremendous milestone for LEMS patients in the United States. We are very pleased with the full year FIRDAPSE net sales of $214 million, representing a 52% increase year-over-year, driven by consecutive quarterly FIRDAPSE net product sales growth. In Q4, net FIRDAPSE sales were $61 million, a 6% growth quarter-over-quarter. These achievements demonstrate the strength of our commercial strategy and capabilities, giving confidence for continued organic growth. The foundation of the FIRDAPSE business is solid. Operational excellence drove new patient starts, maintained favorable prescription approval rates of greater than 90% across all payers, government or private commercial insurers; continued high compliance of 90%; and lower discontinuations. Naive new enrollments in 2022, not including LEMS patients that transition from RU

Thanks, Jeff. Our clinical development and regulatory strategy for FIRDAPSE continues to focus on expanding access to all LEMS patients, enhancing the FIRDAPSE patent to state to maximize its commercial potential and to integrate the newly acquired FYCOMPA product into Catalyst's systems. First, I would like to discuss our development efforts to increase the indicated maximum dose of FIRDAPSE from 80 milligrams per day to 100 milligrams per day. We anticipate meeting with the FDA to outline our strategy in the second quarter, and assuming a positive outcome of that meeting plan to file a supplemental NDA in the third quarter of this year, seeking to increase the indicated maximum daily dosage of FIRDAPSE to 100 milligrams per day. A number of LEMS patients are already being treated at 100 milligrams daily dosage of FIRDAPSE after their physician worked with the pharmacy and insurance providers to justify the higher dose. Other patients on the current indicated maximum dose of 80 milligrams per day and their physicians have expressed a need to increase the indicated daily dosage to 100 milligrams to optimize therapy and this planned supplement, if approved, will help those patients. The previously acquired RU

Thanks, Steve. We are very pleased with our financial results for the fourth quarter and full year 2022 and remain steady in our performance. We reported GAAP net income for 2022 of $83.1 million or $0.80 per basic and $0.75 per diluted share, a 110% increase year-over-year, compared to 2022 -- GAAP net income of $39.5 million or $0. 30 per basic -- $0.37 per diluted share. Total net revenue for 2022, principally from FIRDAPSE's first revenue net was $214.2 million, a 52% increase year-over-year when compared to total net revenue of $140.8 million for 2021. For the year 2022, our effective tax rate was 21% compared to 25% for the year 2021. The decrease in the effective tax rate for 2022 is due to an increase in stock option exercises during the year due to an increase in our stock price. We expect that our FX -- will fluctuate in future periods and remain higher in future periods than was for the year 2022. Non-GAAP net income for 2022 was $113.1 million or $1.10 per basic and $1.02 per diluted share, which excludes GAAP net income of $83.1 million, stock based compensation expense of $7.9 million, depreciation of $141,000, amortization of $1.1 million, and an income tax provision of $21.6 million. This compares to non-GAAP net income for 2021 of $58.9 million or $0.57 per basic and $0.55 per diluted share, which excludes from GAAP net income of $39.5 million, stock-based compensation expense of $6.1 million, depreciation of $192,000 and an income tax provision of $13.2 million. The above represents an approximately 93% year-over-year increase of non-GAAP net income. Cost of sales of $34.4 million for 2022 increased when compared to $21.9 million for 2021. For both years, 2022 and 2021, cost of sales was approximately 16% of product revenue net and consisted principally of royalties due to our FIRDAPSE licenses. Research and development expenses were $19.8 million in 2022 compared to $16.9 million in 2021, an increase of $2.9 million in R&D was principally related to the acquisition of $4.1 million of RU

Thanks, Ali. We entered 2023 focused on growing and diversifying our revenues, strengthening our position within the neuroscience space with our site set on further expansion, and serving our patient communities. We have all the elements in place for another strong year. We are well positioned to drive sustainable growth that aligns with our core mission to deliver value to our patients, health care providers, and shareholders. Finally, I thank all of our employees for their continued dedication and commitment to positively impacting patients' lives. At this time, I'd like to turn the call over to the operator to open the line for questions.

Thank you. [Operator Instructions]. Our first question comes from Joe Catanzaro with Piper Sandler.

Hey guys, thanks for taking the questions. And congrats on the nice quarter. Maybe just two quick ones for me around FIRDAPSE. So you said with -- there's about 1,000 unique patients since launch and that's obviously over a period of about four years. But wondering what you could say that number suggests about the penetration into what you see as a total LEMS opportunity? And then a follow-up, Steve, I think you said there are some patients already on the 100 mg dose. Can you say what percent do you think that is and then what are your expectations around what percent of patients currently on 80 mgs that would step up to 100 mg, if that label is updated in the future? Thanks.

Jeff, do you want to take the first question, please, and then I'll turn it over to Steve.

Sure. Hi Joe. The question about penetration of the total population, we feel the penetration is around 25% right now. Significant opportunity remaining because if you look at the total population of about 3,000 patients and unfortunately some of these patients passed away and the new patients are diagnosed. So while there's about 25% penetration, like I mentioned, very optimistic and confident about the continued growth sustainability.

Steve, do you want to take the 100 milligram?

Yes. Joe, we haven't actually publicly disclosed the number of patients on the 100 milligram dose because it requires the physicians to work independently at Catalyst to get authorization to move to that dose. It's not a very large number, but it's -- there are some patients who are on the 100-milligram daily dose. With regard to the number of 80-milligram patients, I really don't want to speculate on that. All I can say to you is that about 40% of the patients are on 80. We believe a portion will move to 100. And there are some patients on 60 who may move to 80 as well.

Okay, got it. That’s helpful. Thanks for taking my questions.

Thank you. Our next question comes from Charles Duncan with Cantor Fitzgerald.

Hi, this is Pete Stavropoulos on for Charles. Hi patent team, congratulations on all the progress for the quarter. I just have a couple of questions that relates to FYCOMPA. The first is, can you discuss your strategy for reinvigorating the brand and how can -- or will Catalyst leverage the company's current infrastructure for the FYCOMPA franchise?

Great, thank you. Jeff, do you want to take the reinvigorating the brand?

Sure. I think first and foremost, our priority is to fully integrate the epilepsy franchise with the FYCOMPA personnel. That's what we hope to do by midyear. When we take over the sales and marketing on May 1st, we are going to focus on applying the resources to the physicians that are currently prescribing FYCOMPA, the ones that are prescribing new to brand. There are about 6,700 targets that we'll be focusing all of our resources towards, and that's how we've surpassed our sales force. So hopefully, that gives you a little bit of a beat behind how we're going to do this. We'll be more prepared to share our business approach during our next conference call -- earnings call in May.

Yes, and as Jeff had pointed out, there's about a 45% overlap between the comp points for FIRDAPSE and FYCOMPA, and we don't want to confuse things out of the gate. But when the transition is completed, we expect in the second half of the year that basically the reps for FYCOMPA and FIRDAPSE will actually carry both products.

Great and thanks.

I just want to add one comment about the medical sales liaisons as well. I mentioned during earlier part of the call that we are adding up to six medical sales liaisons, who will be doing a lot of efforts to educate the physician community on FYCOMPA, particularly the safe use of FYCOMPA.

Alright, thanks. Second question I have is what's the potential for developing FYCOMPA in rare epilepsy indications?

Yes. We are not -- this is Pat. Thanks for the question. We're really not prepared to talk about that at this point. We're, right now, just getting our arms around the program and the full opportunity to look at rare epilepsies. There was a paper published recently, which Steve referred to, in Epilepsia, which is available online. I suggest that you take a look at that. But I think we'll have a lot more to say when we have our first quarter call in May with regard to the other opportunities that -- where FYCOMPA can be successfully used as a treatment of rare diseases.

One thing I also want to add to that, FYCOMPA has a very broad label for the treatment of epilepsies, and many of the rare epilepsies fall into that category. In other words, the patients exhibit the epilepsy characteristics that are consistent with the product label. So our MSL team will be educating the physicians on which specific types of genetic epilepsies that fall within the product label can be successfully treated with FYCOMPA.

Alright, thank you. Thank you for taking our questions.

Thank you. Our next question comes from Joon Lee with Truist Securities.

Good morning. This is Les on for Joon. Thank you for taking my questions. First question is for Jeff. Could you quantify how many antibody tests were provided and utilized by physicians perhaps in 4Q and how has that trended? And then specifically in the small lung cancer patient population, what drivers would push for that additional testing?

Les, thanks for the question. I'll turn that over to Steve.

We haven't actually provided any specific numbers of patients who are treated with the antibody test. However, it is increasing significantly. We have visibility to how the test is being utilized, we buy that data from the test providers. And it has been increasing significantly.

And I'll add to that, too. What we did see starting in the fourth quarter of 2021, you did see a significant increase in the number of BGCC testing done, and then you saw that number carry through 2022. So we're seeing consistent high levels of the BGCC tests that are done when compared to previous years. As far as the small cell patients, our approach is to be working with the top small cell academic institutions and to put that in the protocol, so that when a small cell lung cancer patient gets diagnosed that there's a paraneoplastic panel that's done, which includes the BGCC antibodies. So that's our approach and more of a top-down approach.

That is helpful, thank you for that. Perhaps with Steve, it appears the reasoning on the 100 milligram dose is primarily from patient feedback. Other than safety, what data do you plan to present to the regulators and essentially, what does the higher dose impact your pricing strategy?

I'll let Jeff and Pat address anything about pricing. But with regard to the strategy, I'll just remind you that when RU

And Les, with regard to pricing, remember it is dose related, and our typical patient is on about 6 -- a typical adult patient is on about 60 milligrams per day, more or less. And our net price after gross to net discounts and rebates and what have you, for that patient is around $375,000. So you could extrapolate from there with regard to what the pricing might be.

Great, that's very helpful. And then last one for the team, I guess, on the regulatory process in Japan, just kind of go over that, if you could. And of all goes well, how soon can DyDo enter the market in Japan and what's the strategy for the periphery countries? Thank you.

Well -- yes, I'm limited by what I can say because our partners don't disclose a lot to the public markets. I'll just generally go over the process that happens in Japan. As I said during the call, they're collecting safety data from their ongoing safety follow-up phase. Upon completion and collection of all that data, the next step is to file the NDA in Japan, which I mentioned will be in 2024. As an orphan drug, the typical review cycle time in Japan for an orphan drug NDA is about six to eight months, so I would anticipate that if their cycle time is an average that they should be approved towards the end of 2024, providing of course, their NDA is acceptable for the Japanese authorities.

Thank you.

Thank you. Our next question comes from Scott Henry with ROTH Capital Partners.

Thank you and good morning. Congratulations on a strong year. A couple of questions. And I know you don't want to disclose a lot, but with regards to the three patent filings, do you know if there's a -- or is there a first filer among those three?

Steve, do you want to take that?

Sure. The short answer to your question is, yes, that's public information. It's on the FDA's website. The answer is that all three of them are first filers. In other words, they're all tied for first.

Okay, great. Thank you for that clarification. A couple of other questions, with the shift from the 80 milligram to the 100 milligram dose, would you expect to see some revenue creep upward per patient, I mean, often, higher doses generates higher revenue per patient, just want to make sure that is correct?

Scott, I'll turn that over to Jeff.

Yes, Scott. So we do anticipate the average daily dose will increase for our patients. I've mentioned it before, our average daily dose is about 61 milligrams right now. And we do have feedback from health care providers and patients asking for -- that they feel they would benefit -- the patient would benefit from -- of being able to go above 80, if that was within the label. So with that, we anticipate our average daily dose to creep up over time significantly.

Okay, thank you. And then FYCOMPA, I believe, $130 million in revenues in 2023 guidance. As far as trajectory, should we just kind of allocate that over 11 months or is there any trends we should expect there?

Well, we're in the process of the transition, Scott, and we expect the full integration to be completed by midyear. And so I would expect that the run rate will, by quarter, sequentially increase over the course of this year, the first year of our ownership. Remember, it's a pretty mature product that's been in the market for 9 to 10 years and got a very established base, and we're looking to get the integration completed and then grow the product.

Okay, thanks for that color. And then Pat, if I break out the FYCOMPA revenue from your overall guidance, you get to $245 million to $255 million, if I did my math correctly for FIRDAPSE. Q4 was $60 million, and it sounds like Q1 is better than Q4. So it seems like -- I guess, the question is, would you say you're perhaps being conservative or are you expecting more of a flattening, it sounds like it's just being conservative?

For FIRDAPSE, you're talking about, Scott?

Correct.

Yes, I think that the trend will be typical as it has been. Remember, last year's first quarter was impacted with the resolution of the 11th Circuit Court when the approval for RU

Okay, great. And then just finally, just a couple clerical questions. First, the cash is significant. I guess, I don't want to get into the business of predicting interest rates. But it sounds like you're probably generating around 4% on that for the interest income line, is that a reasonable assumption? And staying on the income statement as well, as far as taxes, will you be -- will you start to pay taxes at this point, that tax asset, how much more cover do you have there?

Your first question, Scott, was about where we've invested our remaining cash, and it's -- we've been very conservative and typically been a 90-day T-bills. And you're right, it's what a difference a year makes. This time last year, we were getting about seven basis points on our investable cash. Today, I would say, our blended yield right now on our 90-day T-bills is somewhere between 4% and 5%. So it's -- you're right, it's going to be hard to predict going forward. But that big quarter is in a pretty good spot right now because I do believe that we're going to generate a lot of cash this year, again, with FIRDAPSE and FYCOMPA. Ali, maybe you can address the tax issue.

Yes, regarding the tax issue, as we mentioned, our effective tax rate for 2022 was 21%. However, we fully utilized our federal net operating losses and state net operating losses. So we do expect a more normalized 23% to 25% rate in future periods.

Yes. I would say that starting midyear last year, Scott, we were guiding that we anticipated a more normalized 25% tax rate going forward, and that's going to vary according to -- based on some of the state taxes that we pay and also option exercise is kind of back…

Which for 2022 really better rate, but we can anticipate that will be the same for future years.

Okay, great. Thank you for taking the questions.

Thank you Scott.

Thank you. It appears we have no further questions at this time. With that, I would now like to turn the floor back over to Patrick McEnany for closing comments.

Thanks everyone for joining our call. We look forward to our next corporate update and have a great day. Thank you.