Edited minutes of the conference call or presentation on the CPRX result from November 13 to 7:30 p.m. (GMT)

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Coral Gables, January 3, 2020 (Thomson StreetEvents) – Transcript published by Catalyst Pharmaceuticals Inc conference call or result presentation Wednesday, November 13, 2019 at 1:30 p.m. GMT

Catalyst Pharmaceuticals, Inc. – Vice President, Treasurer and CFO

* Daniel J. Brennan

Catalyst Pharmaceuticals, Inc. – Commercial director

* Patrick J. McEnany

Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President and CEO

* Steven R. Miller

Catalyst Pharmaceuticals, Inc. – COO and Chief Scientific Officer

Oppenheimer & Co. Inc., Research Department – MD & Senior Analyst

ROTH Capital Partners, LLC, Research Department – MD, Senior Research Analyst and Head of Pharmaceutical Research

Best regards. Welcome to Catalyst Pharmaceuticals CPRX third quarter 2019 conference call. (Instruction manual) Please note that this conference will be recorded. I am now handing the conference over to your host, Ali Grande, Chief Financial Officer. Please continue.

Alicia Grande, Catalyst Pharmaceuticals, Inc. – Vice President, Treasurer and CFO [2]

Good morning everyone and thank you for participating in today's conference call. My call today is joined by members of the Catalyst management team, including Pat McEnany, Chairman and Chief Executive Officer; Dr. Steven Miller, Chief Operating Officer and Chief Scientific Officer; and Dan Brennan, our chief commercial officer.

Before we begin, I would like to remind you that in the comments that follow and in the Q&A session, we will make statements about expected future results, which may be forward-looking statements within the meaning of the federal securities laws. These statements relate to our current expectations, estimates and forecasts and are not a guarantee of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and may prove incorrect. Actual results may vary. These forward-looking statements should only be considered in conjunction with the detailed information in our SEC filings, including the risk factors described in our Annual Report on Form 10-K.

At that point, I will forward the call to Pat.

Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President and CEO [3]

Thank you, Ali, and good morning everyone, and thank you for coming to us today. Well, it's been an exciting third quarter and nine months of 2016 for Catalyst and we've made a lot of progress that we can keep you up to date with in our various workflows.

First, let me make a few comments about our commercial launch of Firdapse. We are still very enthusiastic about the strong progress of our market launch in the third quarter of 2019. We continue to see encouraging trends in a variety of key figures as well as a very positive response from treating doctors, payers and especially patients.

As we discussed in the early days of our launch, the breadth and depth of the prescription continued to exceed expectations, underscoring the previously unmet need for firdapse in this largely underserved patient population. Now that three full quarters of performance have been completed, we are growing increasingly confident in Firdapse's long-term potential. Patient starts and dropouts are developing positively, and Dan will address key performance indicators that we measure more closely every day.

Overall, we got off to a good start and our optimism grows so that Firdapse can help not only patients with Lambert-Eaton myasthenia syndrome or LEMS, but also other extremely rare neuromuscular diseases.

At the current time of launch, we are now able to provide sales forecasts of around $ 100 million for 2019 as a whole and a range of sales forecasts of $ 135 to 155 million for the 2020 calendar year. We will have more experiences next year collect and try to tighten the forecast range for 2020.

As we plan the expected growth for next year, we will continue to invest to increase commercial resources to achieve our stated goal for 2020. To this end, we are expected to hire up to 10 additional regional customer advisors to complement our current 10-region manager account, and we expect to build a team of 7 to 10 sales representatives within contracts that address the targets approximately 9,000 neurological and neuromuscular healthcare providers who may treat an adult LEMS patient who may benefit from Firdapse.

Given the increasing number of patients treated with Firdapse, I am pleased to announce that in 2020 we will expand our contributions to independent, qualified 501 (c) (3) charitable foundations that support LEMS patients , We're increasing this in dollars and in the number of charitable foundations we support from 3 to 4. While we're doing everything we can to support the adult LEMS patients enrolled in our Catalyst Pathways programs, these are contributions it also addresses needs and patients who cannot support – whom we cannot support directly. It is one of the many things we are working on to support the LEMS community.

Last month we attended and exhibited at the American Association of Neuromuscular & Electrodiagnostic Medicine Annual Meeting in Austin, Texas. This is always an important place for us to get in contact with doctors, scientists and representatives of efficacy research. As it was our first year as a commercial company, it was most important to convey to the neuromuscular doctors our very positive messages about the clinical benefits of Firdapse for adult LEMS patients, Catalyst Pathways, our patient support program and our various education programs for doctors and neuromuscular fellows.

At this meeting we hosted a lunch at the symposium. More than 170 doctors took part. I could add that it was just standing room. Dr. Perry Shieh, a well-known UCLA neuromuscular specialist, presented a program titled: Why LEMS justifies more accurate clinical insight and frequent misdiagnosis in adults [Why LEMS in Adults Warrants a Closer Look: Clinical Insights and Common Misdiagnoses], During the symposium, we presented our new free LEMS antibody test program for patients with suspected LEMS. This program enables doctors to order LEMS antibody tests without worrying about covering the cost, as Catalyst ensures that there is no patient in the bag for this test. We hope that this will help shorten the otherwise long road to accurate diagnosis for LEMS patients and quickly eliminate LEMS as a possible diagnosis for others.

As you know, we recently announced the key results of our CMS-001 clinical trial. We are disappointed that we have achieved no statistical significance for the primary or secondary endpoint in this small 16-patient study. However, we observed that some patients showed clear signs of improvement.

Congenital myasthenic syndrome (CMS) is a very complicated, extremely rare neuromuscular disorder that affects an estimated 1,000 to 1,500 patients in the United States. We are expected to meet with the FDA before the end of this year to discuss our findings from the study and our next steps. We have been praised by a number of neuromuscular specialists for attempting to conduct a study on this very small, complex patient population while providing FDA-approved therapy for the treatment of CMS patients.

Our MuSK-MG study continues to be registered. We expect enrollment to be completed by the end of this year and the key findings from this study will be available in the first half of 2020. In the last quarter we launched several new locations for this study in 2 European countries. We also aim to finalize and announce the key results of the small proof-of-concept study on type 3 spinal muscular atrophy in the first half of 2020. Steve will provide you with more information about these programs shortly.

As already mentioned, one of our strategic priorities is to expand our business worldwide. In recent weeks, we have submitted an application for a new drug (NDS) to Health Canada and received a priority review. Assuming that our submission is accepted, this means a 6-month review of our application. We are also in the process of evaluating our commercial plan for Canada, options, working with the Canadian company, or working with an effective and efficient Catalyst team.

In addition, in recent months we have met with Japanese regulators, including the Ministry of Health, Labor and Social Affairs, and the Medicines and Medical Device Agency (PMDA) to discuss our existing data and understand what additional data may be available need to file new drug application for Firdapse in Japan.

We also recently applied for orphan drug designation, which would allow us a 9-month priority review, 10 years of generic exclusivity, and certain tax credits. We expect to meet with PMDA in the first quarter of next year to hopefully complete a plan to register Firdapse in Japan. We did market research there and it is the second largest economy in the free world. We believe that Japan can be very strategic for us and offers a promising opportunity to expand our global presence. We have started the process of evaluating and evaluating late-stage external drug development programs, as well as potential drug acquisitions that we believe will provide a clear path to value, as they impact the unmet medical needs of patients with rare debilitating diseases Suffer .

As reported yesterday, we ended the third quarter with approximately $ 81.6 million in cash and investments and no funded debt. Our cash and cash equivalents continue to grow quarterly and in the short term we see no need to sell our common stock. In addition, we believe that if we provide a promising acquisition or product opportunity, we will have access to alternative forms of non-dilutive financing, such as conventional bank lenders' term loans.

Finally, a few words about our lawsuit against the FDA. We filed this lawsuit in June and it challenges the FDA's decision to approve Ruzurgi for pediatric LEMS patients for four different reasons, which I will not go into in detail here. The process is progressing as expected and the current briefing schedule stipulates that all submissions will be made by the end of January.

As you understand, we are trying very hard to bring this case before the judge and make a decision. However, at the moment this is the best schedule I can provide you with. And there is most likely always the possibility of additional delays. We will keep you up to date in this area.

This was another very solid quarter and 9 months of execution and performance by the Catalyst team. We are extremely pleased with the number of naive patients we continue to add to Catalyst Pathways. This again shows that Catalyst must have made the necessary investments to provide the LEMS community with an FDA-approved, evidence-based drug. I will now forward the call to Dan Brennan, our chief commercial officer, to provide you with more details on our launch of Firdapse.

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Commercial Director [4]

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Thank you, Pat, and good morning everyone. We are very excited to launch Firdapse here in the United States for adults with LEMS. All key figures continue to show a convincing and successful implementation of a market for orphan drugs. We have now closed three quarters with commercial availability beginning on January 15th. And whether the metric is the total number of patients, the percentage of patients treated with Firdapse, the satisfaction of doctors and patients, insurance coverage or the affordability of patients, this is a product launch that starts successfully helping many patients in one very rare, very debilitating condition.

In the first 9 months after launch, almost 30% of adult LEMS patients diagnosed received a Firdapse prescription. This is a very high hurdle and a rare result for a new drug. This is also a good indication that the wide availability of Firdapse improves the standard of care in LEMS and is recognized as such by doctors, patients and payers. If we continue this level of commitment and acceptance to support LEMS patients, we will continue to assert ourselves as one of the more successful orphan drug launches.

Some important highlights that I want to share. By the end of the third quarter, over 490 patients had been prescribed Firdapse since its launch, of which over 50 started therapy in the third quarter alone. Over 170 of these patients had never been treated with 3,4-DAP before and, in our opinion, were naive to therapy. If you consider patients who originally switched from Catalyst's expanded access program, there are now more than 250 patients on Firdapse who would not have had access to 3,4-DAP without Catalyst Pharmaceuticals and our efforts.

Over 275 authors have prescribed Firdapse, and by the end of the third quarter, over 370 patients were receiving reimbursement from the insurer. And we understand that there may be concerns about the recent and unforeseen entry into the LEMS market, and many have asked about the possible use of another amifampridine product, Ruzurgi, in adult LEMS patients. I would like to point out some important differentiated points that have to be taken into account.

First, Ruzurgi is not indicated or approved for use in adult LEMS patients. Second, Ruzurgi needs cooling in the supply chain to prevent spoilage, and Firdapse doesn't need cooling. Third, patient support programs for Ruzurgi are limited compared to Firdapse. Finally, as a company, we believe that any interest in a rare disease category, and in particular in this LEMS market, must be well-targeted and patient-focused for a product like this that requires important safety and dose information to consider ,

Insurers and doctors should make sure that patients are using an unapproved drug, and we believe that insurers and doctors are generally not inclined to do so. For this reason, we carefully take care of insurers and doctors to ensure that they understand Firdapse and its correct and safe use. However, we saw some patients we believe were involved in the Jacobus Compassion Study and left the Firdapse to try the commercially available Jacobus product.

In August and early September we saw a small group of commercially insured patients depart, and in September and October we switched another small group of Medicare insured patients. However, it is important to note that we have noticed some slowdown in the past 3 weeks.

We believe that most patients and doctors are fully satisfied with the support they have received here at Catalyst with Firdapse. As previously mentioned, patient satisfaction remains high. Over 280 customer satisfaction surveys have been conducted and our average rating is still 4.8 out of 5 stars.

Our insurance approval rates and – I'm sorry – our insurance approval rates for commercial and government insured patients are over 95%, with most prior approvals being approved within 7 to 14 days. In addition, the average monthly co-payment for all patients in September was $ 1.66 per patient.

For all of these reasons, we believe that only a relatively small group of over 490 Firdapse patients have tried the pediatric LEMS-approved product. I should also point out that there are other crashes for normal and expected reasons, e.g. B. lack of response, side effects and some patients who unfortunately have cancer. The dropout rates for these reasons, however, still correspond to the numbers observed in the clinical studies of approximately 20 to 25% of the patients.

After we reached our initial starting goals by the end of the third quarter, interviewing over 200 adult LEMS patients from the Jacobus 3,4-DAP study, transferring patients from our expanded access program, and receiving enrollment from everyone counted Expected Naive Patients After Firdapse welcomed this with great satisfaction, we are now moving to the next phase of our market launch by implementing and initiating various new trading strategies and activities to maintain our momentum. the availability; extensive patient care; and the affordability of firdapse for adult LEMS patients, including general neurologist awareness beyond the expert neuromuscular population.

We have had very productive discussions in recent medical sessions, including the AANEM meeting, the Fall AAN conference, the American Autonomic Society meeting, and various other regional and local meetings of neuromuscular experts and general neurology doctors. In addition, as Pat mentioned, we launched our free LEMS antibody testing program for doctors who suspect their patient has LEMS, so there is no need to hesitate or submit and wait for insurance approval to perform this diagnostic test. We are preparing a web doctor search tool that we can use to help patients looking for doctors who have experience in the treatment of LEMS to identify the doctors around them. This includes an increase in our non-personal advertising and sales promotion for doctors and patients, especially for digital communication.

We are also seriously preparing and working to help patients with the upcoming re-authorization of the insurance, which takes place at the end and end of each calendar year. Finally, our largest and most complex commercial expansion involves expanding and realigning our sales team and internal sales contract group to over 9,000 neurologists we know to treat LEMS or LEMS-like symptoms. This emerges from our current target list of around 2,500 neurologists. We believe that all of these efforts will help to continue the success in identifying and treating new adult LEMS patients with a high level of patient and doctor satisfaction.

In summary, I can say that we passed the important milestone of 500 prescribed Firdapse patients a few weeks ago, which is an impressive 33% of the diagnosed LEMS population in adults. I am very excited about the idea of ​​helping the next 500 adult LEMS patients. I am also excited about the future of our company as we prepare for the prospect of helping adult LEMS patients in Canada and Japan and possibly other patients with MuSK antibody positive myasthenia gravis, CMS and SMA type 3 in the coming years Come.

And with that, I transfer the call to our Chief Scientific Officer. Steve Miller, who will report on the progress of our clinical activities. Steve?

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Steven R. Miller, Catalyst Pharmaceuticals, Inc. – COO and Chief Scientific Officer [5]

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Thanks for the commercial update, Dan. And now I'm going to provide an update to our clinical pipeline to develop firdapse for additional neuromuscular indications. First of all, I would like to talk about the news about our phase III study for congenital myasthenic syndromes (CMS). Called CMS-001, this phase III trial was the first double-blind, placebo-controlled clinical trial for the symptomatic treatment of genetically confirmed CMS that is currently estimated to number approximately 1,000 to 1,500 US CMS patients and has a spectrum greater than 100%. represents 50 different possible genetic defects. This wide range of genetic defects creates a wide range of clinical representations of the disease and variations in response to therapy.

We treated 16 patients during this period for the phase III crossover study. Given the sample size, the study did not achieve overall statistical significance for the primary endpoint of the subject's global impression score or the secondary endpoint for measuring muscle function. Since this study was a crossover study, all subjects received both placebo and amifampridine. Each patient was thus his own control, so that the individual reactions to the treatment could be assessed. Some of the patients showed a positive response to treatment in the study.

It took almost four years to recruit this clinical trial for various reasons. First, CMS is a very rare condition with only a few hundred patients diagnosed at the time. To facilitate diagnosis in the past 4 years, Catalyst has provided free genetic testing for every patient who needs it through our network of doctors for EAP and clinical trials. And despite the outcome of this study, Catalyst will continue to provide this service to patients for the foreseeable future.

Second, many of the patients are children and many parents are reluctant to allow their child to participate in a clinical trial where there is a possibility that their child may be treated with placebo.

Third, due to the pediatric nature of the disease and its complexity, patients and their doctors often understandably hesitated to hire a new doctor at one of the existing clinical trial sites. And it's unfortunate that more doctors treating CMS were unwilling to be clinical trial centers, so their patients could be included in the CMS-001 study.

Finally, clinical trials require a time that many families cannot afford given the existing burden of looking after a patient with this disease. Catalyst thanks all families who have agreed that their child will participate in this study.

Although we were disappointed with the statistical outcome of the clinical trial, we are still encouraged by the response of some individual patients to the treatment. We continue to analyze the entire data set and are expected to meet with the FDA by the end of the year to discuss the results, observed responses to treatment, and possible next steps. We will provide updates as they become available.

Although the outcome of the study was complex, we believe the data provide valuable clinical information for this patient population and their physicians. We are also conducting an ongoing international Phase III trial with multiple sites in MuSK-MG that is being conducted as part of an FDA Special Protocol Assessment (SPA). This phase III study will continue after our successful proof-of-concept study for this indication. We expect to publish the key results of this study in the first half of 2020.

As already described, the CMS study was very variable due to the numerous genetic defects, which led to a very heterogeneous patient population and a different response to treatment. However, like LEMS, MuSK-MG is caused by a single antibody to a single protein in the neuromuscular junction, resulting in a more homogeneous patient population that should have a consistent response to treatment between patients, locations, and across studies. Not least because of the success of our previous proof-of-concept study, we remain cautiously optimistic about the outcome of this ongoing Phase III study for MuSK-MG.

MuSK-MG is an autoimmune disorder for which there is currently no approved treatment, and we believe there are approximately 3,000 to 4,800 US patients with MuSK-MG. Provided this trial is successful, we look forward to being able to offer an FDA-approved treatment option for these patients one day.

We recently carried out a proof-of-concept study for the treatment of spinal atrophy or SMA type 3. This study is being conducted in Italy and Eastern Europe and is evaluating the safety, tolerability and potential effectiveness of amifampridine in outpatients diagnosed with type 3 SMA. We plan to enroll approximately 12 patients in this study and look forward to the key findings from this study to be announced in the first half of 2020.

SMA is caused by related genetic defects of the SMN protein in motor neurons, which should lead to a relatively homogeneous disease that differs mainly in severity.

In Canada, Catalyst has now submitted a New Drug Submission (NDS) to apply for approval of Firdapse for the symptomatic treatment of LEMS. Catalyst has also been given priority review for this NDS, which should reduce the review cycle time to 6 months.

With the cycle time for the priority check plus the required review time to accept 35 days, Catalyst expects to receive a response to Health Canada’s review of NDS in approximately 7 months, assuming the NDS are accepted for submission and review this month. Catalyst has not started marketing activities in Canada yet. When these activities begin, we will provide an update to our trading plans in Canada.

Catalyst recently announced plans to expand sales to Japan. We recently had talks with the Japanese Ministry of Health, Labor and Social Affairs (MHLW) to get Firdapse approved in Japan. About two years ago, the Japanese government approved Firdapse as a primary drug for MHLW, and they actively asked companies to develop and submit an NDA for the drug. Once Catalyst and MHLW have reached agreement on what will be required to file this NDA in Japan, an update of the approval process for filing an NDA in Japan will be released.

Catalyst continues to offer CMS patients access to Firdapse through our extended access program (EAP). If necessary, we also support EAP patients and their doctors in carrying out genetic tests to get an accurate CMS diagnosis. This accurate diagnosis and confirmation of the genetic subtype helps doctors adjust the treatment strategy to optimize the treatment of every CMS patient.

Assuming a successful outcome from the MuSK-MG Phase III clinical trial, we are also planning to include symptomatic treatment of MuSK-MG in our EAP and are working carefully with the many IRBs involved in the EAP to add this new treatment protocol ,

Finally, patients have requested a long-acting version of Firdapse to avoid having to schedule multiple daily doses of Firdapse. Wir arbeiten derzeit aktiv an der Entwicklung dieses neuen Produkts und werden in Zukunft Aktualisierungen bereitstellen, sobald die Produkteigenschaften abgeschlossen sind. In dieser Phase des Entwicklungsprogramms werden Kandidatenformulierungen entwickelt und ihre Wirkstofffreisetzungseigenschaften untersucht, um die lang anhaltende symptomatische Behandlung von LEMS zu optimieren.

Insgesamt freuen wir uns über die Möglichkeiten, das derzeitige Firdapse-Label auf weitere Indikationen sowie in weiteren Ländern auszuweiten, um ein besseres Produkt für all diese Patienten zu entwickeln. Wir werden alle Aktualisierungen zu diesen klinischen und behördlichen Pfaden bereitstellen, sobald sie verfügbar sind. Ich werde jetzt Ali Grande, unseren Finanzvorstand, anrufen, um unsere Finanzergebnisse zu überprüfen.

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Alicia Grande, Catalyst Pharmaceuticals, Inc. – Vizepräsidentin, Schatzmeisterin und CFO [6]

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Danke, Steve. Gestern, am 12. November, haben wir unseren Quartalsbericht für das am 30. September 2019 endende dritte Quartal in Form 10-Q eingereicht, in dem wir für das dritte Quartal 2019 einen Nettogewinn von 13,6 Mio. USD oder 0,13 USD je Aktie (unverwässert und verwässert) ausgewiesen haben Dies entspricht einem Nettoverlust von 7,8 Mio. USD oder 0,08 USD pro Aktie (unverwässert und verwässert) für das dritte Quartal 2018.

Für das am 30. September 2019 endende Quartal beläuft sich der Nettoumsatz mit Produkten aus der Einführung von Firdapse auf 30,9 Millionen US-Dollar und die damit verbundenen Umsatzkosten für das gleiche Quartal auf 4,4 Millionen US-Dollar. Die Forschungs- und Entwicklungskosten beliefen sich im dritten Quartal 2019 auf 4,6 Mio. USD gegenüber 4,5 Mio. USD im dritten Quartal 2018. Die Forschungs- und Entwicklungskosten im dritten Quartal 2019 bestanden hauptsächlich aus Aufwendungen für medizinische, behördliche und Qualitätssicherungsprogramme sowie Aufwendungen aus unseren laufenden klinischen Studien und Studien von Firdapse und unserem erweiterten Zugangsprogramm.

Die Forschungs- und Entwicklungskosten im Vergleichszeitraum des Jahres 2018 bestanden hauptsächlich aus Beratungskosten, als wir uns darauf vorbereiteten, unseren NDA für Firdapse für die Behandlung von LEMS einzureichen, sowie Aufwendungen für unsere klinischen Firdapse-Studien und Studien zu unserem erweiterten Zugangsprogramm.

Das Unternehmen geht davon aus, dass die Kosten für Forschungs- und Entwicklungstätigkeiten 2019 und 2020 weiterhin erheblich sein werden, da wir unsere laufenden klinischen Studien und Studien in MuSK-MG, SMA Typ 3 und unserem erweiterten Zugangsprogramm für Firdapse fortsetzen.

Die allgemeinen Verwaltungskosten beliefen sich im dritten Quartal 2019 auf 8,1 Mio. USD gegenüber 3,6 Mio. USD im dritten Quartal 2018. Der Anstieg gegenüber dem Vergleichszeitraum 2018 ist hauptsächlich auf die gestiegenen Vertriebskosten einschließlich der Kosten für die Implementierung des kommerziellen Systems von zurückzuführen unsere Vertriebsmitarbeiter und Supportmitarbeiter, Produkteinführungskosten, Marktzugangs- und Marktforschungskosten sowie die mit unserer Klage gegen die FDA verbundenen Honorare. Das Unternehmen geht davon aus, dass die Vertriebs-, allgemeinen und Verwaltungskosten im Jahr 2019 und bis 2020 steigen werden, da wir weiterhin unsere Infrastruktur sowie kommerzielle und Patientenprogramme zur Unterstützung der Firdapse-Vertriebsaktivitäten aufbauen und unsere Klage gegen die FDA fortsetzen werden.

Am 30. September 2019 verfügte Catalyst über Barmittel und Investitionen in Höhe von 81,6 Mio. USD und über keine finanzierten Schulden. Obwohl auf der Grundlage der derzeit verfügbaren Informationen keine Zusicherung gegeben werden kann, sind wir der Ansicht, dass diese Ressourcen ausreichen, um unsere geplanten Operationen für mindestens die nächsten 12 Monate zu unterstützen. Detaillierte Finanzinformationen und -analysen finden Sie im Quartalsbericht des Unternehmens auf Formblatt 10-Q, das am Dienstag, 12. November 2019, bei der US-Börsenaufsichtsbehörde Securities and Exchange Commission eingereicht wurde www.catalystpharma.com. Ich rufe jetzt wieder Pat an.

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Mitbegründer, Vorsitzender, Präsident und CEO [7]

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Vielen Dank, Ali. Wie immer möchte ich mich bei allen bedanken, die den Erfolg für die LEMS-Community ermöglicht haben, einschließlich unserer Patienten, Ärzte, Mitarbeiter und anderer Catalyst-Stakeholder. Our mission remains to better the lives of people with neuromuscular disease, and we look forward to providing you updates on each of our clinical and commercial programs in the near future. This ends our formal presentation. I'll now turn the call over to the operator for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Charles Duncan of Cantor Fitzgerald.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division – Senior Analyst [2]

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Pat and team, congrats on the progress in the quarter and the performance. And I really appreciate all the granularity on the launch metrics, that's helpful to understand this market. I had a couple of questions that are kind of commercial-oriented and then one that is related to the pipeline. And so I'll really start with the commercial question, and that is that when you consider the guidance, what really are some of the drivers or key inputs for the guidance? And then if you could touch on the LEMS market dynamics, you said a few things in your prepared remarks, but I'm wondering if you could provide a little bit more color on maybe the competitive front and new patient identification.

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [3]

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Thank you, Charles, for your question. Dan, do you want to address the commercial metrics and our guidance with Charles?

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [4]

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Yes. I mean as far as the guidance for the remainder of this year, for next year, in general, Charles, where are you going?

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division – Senior Analyst [5]

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Yes. Really, it's next year because that's the nice surprise to see. I'm a little bit surprised that you're able to provide that at this time.

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [6]

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Yes. I think — I mean the key elements and there's a couple of elements going on. One is, I mean we had a fantastic launch and really transitioned patients over. I think we've been describing this in Q1 and Q2 calls that when you have such a good launch of new enrollments, it becomes harder to get into that next phase. And so we do see that the new enrollments are going to be in the more moderate 15. And I think with these additional programs that we're putting in place with our expansion in the sales force, and a new target list of additional physicians that we can call on with inside sales and folks in the field, that it will probably be in the 15 to 20 patients per month.

And then the thing that we kind of got a little spoiled about in the first and second quarter is when you have a rapid launch of all these transitioning patients, none of them discontinue. And it's not until you start getting the patients that are naive to treatment that you start seeing these things, like I mentioned, about — there are some patients — not all patients respond. Some patients have intolerable or experienced intolerable side effects, and so you get somewhere in the neighborhood of 20% to 25% discontinuations.

And then as I mentioned, a small trickle of patients that are going over to the pediatric LEMS-approved product. You have to subtract out patients that have those discontinuations. So you get into a more moderate growth rate versus what you see in quarters 1, 2 and 3. I hope that helps.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division – Senior Analyst [7]

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Yes.

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [8]

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Charles, your other question about a little more color around the competition, I think Dan addressed it head-on. We anticipated that we would lose some small amount of patients, which we've seen. And typically, they've been when your commercial insurance kicked in or when they were able to get Medicare coverage. And there were 2, what I'll call, small boluses for each of those. And those patients, for the most part, we believe, have converted and they launched their product in July. I suspect anybody who wanted to go back to the product that they were taking under the Jacobus compassionate use program, have for the most part, made that transition already.

And so we're feeling more comfortable as we move ahead, and we think that with our broad offerings of patient support and services, it's — we're in a better position to — going forward to retain these patients.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division – Senior Analyst [9]

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Okay. That seems like it should be the case. And then with regard to adding the sales reps, I wasn't clear, were you adding 10? And then what is the 7 to 10 additional folks that you're adding? What — can you just give us a sense of the expansion?

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [10]

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Yes. I'll let Dan take that question, Charles.

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [11]

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So we've purchased some additional prescribing data on physicians that use medications that are often used with LEMS patients or patients that are experiencing and displaying LEMS symptoms. And by doing that, we've been able to find 9,000 neurologists, which is much higher than this existing list of 2,500 that we've seen, that have seen a diagnosed LEMS patient. So they're using a medication that is often used when this physician is seeing these types of patients.

So we are going to, in essence, reach into — with our sales force, field face-to-face interactions with patients that go all the way up to about 2,500 to 3,000 of them with the field force. And then we're going to supplement that with an inside sales group that we train, and they make phone calls to these offices to understand, "Hey, has one of these types of patients come by the office?" And once we get, in essence, a lead, a confirmed lead from the inside sales, they will then hand that over to the regional account manager who will go out and visit that area.

It's just a more effective and efficient way of covering more ground including these patients who will go to some of these lower decile physicians more infrequently, but they still go there and this is the type of work you need to do when you're in a — an orphan and especially in ultra-orphan disease area to catch the right timing of when that patient is in, for example, a general neurologist office in Peoria, Illinois when you don't have a regional account manager right near there.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division – Senior Analyst [12]

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Okay. That's helpful. A lot of groundwork on that to be done, it seems. But then perhaps, if I could transition to the pipeline question that I had for Steve. I appreciate all the commentary on MuSK-MG relative to CMS in terms of the patient heterogeneity as well as symptom presentation. But I'm wondering if you could provide actual information regarding number or kind of general trends in terms of enrollment in that MuSK-MG.

And then in the second half of next year, if the data are positive out of the MuSK-MG study, would you anticipate an sNDA? Or would you anticipate perhaps a second Phase III would be kicked off by year-end next year?

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Steven R. Miller, Catalyst Pharmaceuticals, Inc. – COO & Chief Scientific Officer [13]

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Okay, Charles. With regard to your first question, I can't provide any specific guidance on the number of patients currently enrolled in the trial. I will say that the enrollment is going well if we're scheduled to complete enrollment by the end of the year.

With regard to the plans upon successful completion of the current ongoing trial, keep in mind that this is, for all practical purposes, our second trial. And in the prior meeting with the agency, they have indicated that the 2 trials, the proof-of-concept trial, combined with a successful Phase III trial, would be sufficient to file an sNDA for the indication. And therefore, we anticipate assembling and filing an sNDA after the successful completion of this clinical trial to seek approval for the MuSK-MG indication.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division – Senior Analyst [14]

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Okay. And just remind me, maybe, of the number of patients targeted to be enrolled in that trial and whether they all have to pass an antibody test.

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Steven R. Miller, Catalyst Pharmaceuticals, Inc. – COO & Chief Scientific Officer [15]

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The patients do have to pass an antibody test to be eligible for enrollment, and we are targeting 60 MuSK-MG patients. Also as a reminder, this patient is enrolling 10 to 20 acetylcholine receptor patients as well, but there is no hypothesis testing for that group. The FDA simply requested that we enroll some acetylcholine receptor MG patients and tabulate the data so that they can determine whether or not there's any effect on those patients as well.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division – Senior Analyst [16]

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Congrats on the progress in the quarter.

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Operator [17]

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The next question is from Joe Catanzaro of Piper Jaffray.

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Joseph Michael Catanzaro, Piper Jaffray Companies, Research Division – VP & Senior Biotech Analyst [18]

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Just a couple of quick ones for me, maybe the first around guidance, more so the 2019 guidance. If we look at that, it suggests that 4Q is going to be a down quarter. What's driving that? Is that simply patients transitioning off of Firdapse to Ruzurgi? And what gives you confidence that that trend is going to reverse heading into 2020?

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [19]

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Well, I'll let Dan get into a little bit of the details on that, Joe. But really, we put the guidance out at approximately $100 million to be a conservative guidance and without giving a range. And maybe we should have given a range for this, that would have illustrated that we're not so certain that that assumption is correct, that our revenues for the quarter are going to be down. But Dan, maybe you want to address that as well.

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [20]

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Yes. No, I think it's partially just — again, that great and rapid success we had in the first 3 quarters may get into and start settling into a more stable — once we get the enrollments past this transition plus the discontinuations. I mean you mentioned that you also have to subtract out any discontinuations for normal reasons as well as we still do see a trickle of continued discontinuations going to the pediatric LEMS-approved product. And so when you have a quick ramp in a small market, there's going to be a period of adjustment in the early launch period, and this is what we're seeing. So it's going to flatten out.

And quite honestly, the better success you have in that initial ramp, the more severe the flattening is. And so that's what we see in Q4. And we do think that some of the discontinuations that we had with the early naive patients, we studied to try to understand what was happening, and it was initially much higher and we got it now with understanding better messaging and setting better expectations with physicians and patients and providing very good guidance on the initial dosing period.

What was originally a 40% discontinuation has now gotten down to lower than 30%, which is more in line with what we saw in our study. So that's continuing, and we believe that by next year, we'll have that honed where both on the discontinuation end, that will be into a normal cadence. And then on the enrollments, with all those programs that we mentioned and the expansion, we see that stabilizing and growing.

And the last point I'll just say is that, and Pat mentioned this, there still is a range around that $100 million number. We want to make sure that we don't surprise anyone on the low side, and Q4 is always challenging. There's less selling days with the holidays and such, and the weather actually is getting a bit colder. And there's a bit of a seasonal effect with patients in the symptoms of LEMS. And so we dial all these things and to try to make sure that we're giving you the best guidance with no surprises on the low side.

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Joseph Michael Catanzaro, Piper Jaffray Companies, Research Division – VP & Senior Biotech Analyst [21]

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Okay. I have it. And forgive me, you may have said this in your prepared remarks. But previously, you've provided numbers on patients on Firdapse at the end of the quarter. I think it was 337 at the end of 1Q and 409 at the end of 2Q. Can you say what it was at the end of 3Q?

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [22]

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Yes. So at the end of the second quarter, we had 409 patients on active therapy, and that includes all patients getting free drug, so in our Patient Assistance Program, our Bridge Program. And actually, overall, that had flattened out. And at the end of the third quarter, it's at about the same rate, above 410 or so patients.

And so we saw a growth in the number of our patients getting reimbursed, which reflects just really good work by our payer team and our team at Catalyst Pathways helping patients that were previously getting kind of just bridged and waiting for an insurance coverage transitioned over and on to paid therapy. But that also reflects, again, the — not only the addition, new enrollments, but the subtracting out of anyone that had discontinued.

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Joseph Michael Catanzaro, Piper Jaffray Companies, Research Division – VP & Senior Biotech Analyst [23]

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Okay. I have it. And then maybe just last one for me here. So you mentioned the small group of patients that transitioned off of Firdapse on to Ruzurgi. Can you provide some numbers around that? And maybe in general, what's the percentage you're seeing of patients doing that? And do you expect that to continue to slow down? What's the driver of that?

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [24]

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Yes. Well, it's really hard to know exactly how many patients have switched to Ruzurgi because they really don't call up and just say, "I'm going to switch to another drug". But because we have such good communication with many and most of these patients and their physicians, we do try to capture that information and understand the different reasons why a patient is discontinuing. So we believe that at the end of Q3, there were about 20 patients that had made this transition to the other drug. And as we mentioned, or as I mentioned, most of them seem to be the patients that were on the Jacobus compassionate use study originally. And then right now, currently, we see that about 30 but very few in the past 2 to 3 weeks.

And so we continue to work with these patients as best we can, all patients throughout the journey. And if they're ever showing any signs of discontent for any reason, we're addressing that. And if they say that they're going to leave to another medication, we just make sure that they know that they can return to Catalyst Pathways and Firdapse at any time and they will be able to pick up where they left off. And we do expect that some of these patients will come back when they realize that it's no better or actually worse without Firdapse and Catalyst working on their behalf.

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Operator [25]

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The next question is from Leland Gershell of Oppenheimer.

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Leland James Gershell, Oppenheimer & Co. Inc., Research Division – MD & Senior Analyst [26]

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And also congratulations on the great progress and for sharing all the detail. Question on the commercial for Firdapse. Pat, you had previously defined kind of the 1,500 who were diagnosed or somehow in the system versus another 1,500 who may not be. Would it be fair to say that the additional 10 reps you would bringing on into the new year will be focusing on that second 1,500 group? And kind of as a part of that, if you could characterize any patients you brought into Firdapse who were in that second group as the launch has proceeded so far. And then I have a follow-up.

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [27]

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I'm happy to take that again, Pat.

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [28]

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Yes. Yes, Dan.

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [29]

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So the additional representatives that come on board, all representatives still have basically a couple of different areas of opportunity. With 500 patients or so now being prescribed Firdapse, we do believe that there are still about 1,000 patients that are already diagnosed with LEMS that are not yet treated and are talking with physicians or they're not — the physician hasn't yet found the urgency to ask those patients to come back in and to try Firdapse. And so there still is some work to be done.

But that said, once you get past 30%, 33% of a diagnosed market, it does become challenging. But we do see that, that still is a target. In addition, there are about what we believe is 1,500 undiagnosed patients or misdiagnosed. And the additional head count, both in the field and inside sales, are going to be asking questions of those offices: do you see patients experiencing these types of symptoms? Have you considered LEMS? Here, we have this no-cost antibody test, why not test to see if you're — if this hunch is correct? Rather than, in some cases, physicians are just thinking to themselves, "Well, it's probably not LEMS. That's so rare, I'm sure it's not LEMS". We're trying to take some of those barriers or those hesitations off the table, both with our field force, our programs like the antibody test as well as the inside sales people calling up the offices, asking them if they're seeing patients like this.

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Leland James Gershell, Oppenheimer & Co. Inc., Research Division – MD & Senior Analyst [30]

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Okay. That's helpful. And also a commercial question. With regard to the dosing of Firdapse, wondering if you can comment if you've seen — I know there's a standard dose that the drug is to be taken, but if you've seen any variability or flexibility that's been used by patients kind of on a one-off basis to manage their symptoms as effectively as possible with Firdapse.

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [31]

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Yes. There's quite a bit of variability overall, but the initial expectations of the average dose across all patients being around 60 milligrams has held pretty firm. And it's moved around a little bit where the initial patients that came on board were on the higher end of that transitioning over from kind of longer-term maintenance. And as we brought in some of the new patients, the new naive patients, they were at the lower dose, obviously, as they started titration.

But the drug itself has a narrow therapeutic window, and I'm not quite sure that many of the patients previously on the Jacobus study, or even Jacobus, realized how there is metabolism difference between some patients that are fast metabolizers and slow metabolizers, and some patients do very well at 30, 40, 50 milligrams a day whereas others, the fast metabolizers, will require at the high end of the range at 80 milligrams. And that's where, again, you have to be very careful with patients and some of the side effects and dosing. You have to explain that to physicians and such.

But overall, the population of patients that have come over with a prescription for us and that have stayed on, the average dose across all is about 60 milligrams, slightly, slightly less.

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Operator [32]

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The next question is from Scott Henry of ROTH Capital.

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Scott Robert Henry, ROTH Capital Partners, LLC, Research Division – MD, Senior Research Analyst & Head of Pharmaceuticals Research [33]

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Just got a couple of questions. Has the price — pricing environment changed at all since Ruzurgi made it to the market? Or are you seeing general stability in net pricing?

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [34]

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The pricing hasn't changed at all, Scott. We priced this at what we thought was a fair value. And we did a lot of work, as you know, to decide on where it should be priced based on all the patient services we provide and all the additional studies that we're conducting for other indications. And so the pricing, despite the entry of the other company, has been very stable for us.

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Scott Robert Henry, ROTH Capital Partners, LLC, Research Division – MD, Senior Research Analyst & Head of Pharmaceuticals Research [35]

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Okay. Big. Another question with regards to Ruzurgi. Do you have any sense of what kind of market share that product is getting? I know you — there was talk about 20 switches in Q3. But how do you think it's doing among new patients? Just — and you may not know, but I thought I would see if you would have any color on that.

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [36]

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Well, I'll give you my thoughts, and then Dan probably has some as well. The, I think for the most part, naive patients or those that are not 3,4-DAP experienced, are really not aware of the work that we're doing in physician offices, in our patient education as well as physician education. So there's a lot of work going on. And so I think with regard to naive patients, it's like Dan pointed out, they're a little more difficult to find. There's more work that's required by the field sales force or the regional account managers to find the docs who are treating patients with rare neuromuscular disease to find out if, in fact, they have any LEMS patients.

So I don't think that we can tell you their impact as a percentage of market share. I think as Dan pointed out and we've talked about previously, that the number of patients is not large, and it's been somewhat of a trickle, if you will. And again, the product by the end of the year, will have been out there for about 6 months. So I think anybody that was already experienced on 3,4-DAP and wanted to go back, if they were in the compassionate use program, would have done so by the end of the year. So I think maybe as we go forward, we'll be in a better position as we gain more experience to be able to talk in terms of market share. But I think for the most part, that's all I can provide at this point. Dan, do you have any color on that?

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Daniel J. Brennan, Catalyst Pharmaceuticals, Inc. – Chief Commercial Officer [37]

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Yes. I mean I think there's a couple of other elements. I mean it's interesting. We do hear from many of these patients that were on the Jacobus 3,4-DAP that they actually say, "Well, I actually think the drug is working much better for me with Firdapse." And then vice versa. Obviously, the people that have left are thinking, "Well, I kind of remember that my old 3,4-DAP was working a bit better". And that's why I think that we'll see some of those patients come back ultimately because it seems to be all over the place.

And the reason why I bring that up is that the physicians that are treating a new patient, and we don't have data on this, I mean you kind of alluded to this. It's hard for us to tell. We don't have data. But these physicians that are treating the new patients, they don't necessarily like writing something off label. It makes it a little bit easier for them when they have a patient who's in their office saying, "But it was working for me for 1.5 years". And they're like, "Okay. Well, this actually makes some sense". But on new patients, I don't think that they're getting many new patients, and I think that's appropriate. And I think that that's in line with what the payers and the physicians are most comfortable with, which is prescribing a drug that's on label that's been studied, that's been reviewed by the FDA and such.

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Scott Robert Henry, ROTH Capital Partners, LLC, Research Division – MD, Senior Research Analyst & Head of Pharmaceuticals Research [38]

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Okay. Big. Another question, just with regards to the CMS data, do you expect to present that anytime in the near future? Or how can we get a closer look at that data.

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [39]

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Steve?

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Steven R. Miller, Catalyst Pharmaceuticals, Inc. – COO & Chief Scientific Officer [40]

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Well, basically, we'll have to speak to the principal investigator. I would anticipate that we would present the data at an appropriate forum at some time. We also plan on publishing the data. And so we certainly wouldn't want to impact the ability to publish in a high-impact journal as well. So all of those factors will have to be taken into account. But I would anticipate that sometime next year that the data will be made publicly available.

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Scott Robert Henry, ROTH Capital Partners, LLC, Research Division – MD, Senior Research Analyst & Head of Pharmaceuticals Research [41]

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Okay. Big. Final question, just an accounting question. As you continue to be profitable on a quarterly basis, at some point, you'll fully tax the number. When would you expect us to see a more fully taxed EPS number, just for modeling purposes?

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [42]

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Scott, we have hired a separate firm to do an analysis of our NOLs and to look at our tax credits and orphan credits. And so that's hard for us to say right now. Certainly, it's not going to impact this year. Perhaps, sometime next year. And as we get our arms around the work that's being conducted right now to analyze our NOLs and our R&D expenditures, as soon as we have that, we'll provide that to The Street.

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Operator [43]

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We have reached the end of the question-and-answer session, and I will now turn the call over to Patrick McEnany, Chairman and CEO, for closing remarks.

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Patrick J. McEnany, Catalyst Pharmaceuticals, Inc. – Co-Founder, Chairman, President & CEO [44]

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Thank you very much. Again, thanks for joining us on today's call. We look forward to providing you with further updates as they occur.

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Operator [45]

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Thank you very much. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.