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What changed in CATALYST PHARMACEUTICALS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CATALYST PHARMACEUTICALS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+503 added−648 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-15)

Top changes in CATALYST PHARMACEUTICALS, INC.'s 2023 10-K

503 paragraphs added · 648 removed · 291 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

191 edited+130 added−324 removed243 unchanged
Biggest changeFactors affecting competition generally In general, our ability to compete depends in large part upon: ● our ability to complete clinical development and obtain regulatory approvals for our drug candidates; ● the demonstrated efficacy, safety and reliability of our drug candidates; ● the timing and scope of regulatory approvals; ● product acceptance by physicians and other health care providers; ● the willingness of payors to reimburse for our product; ● protection of our proprietary rights and the level of generic competition; ● the speed at which we develop drug candidates; ● our ability to supply commercial quantities of a product to the market; ● our ability to obtain reimbursement from private and/or public insurance entities for product use in approved indications; ● our ability to recruit and retain skilled employees; and ● the availability of capital resources to fund our development and commercialization activities, including the availability of funding from the federal government. 19 Table of Contents Index to Financial Statements Business Development Following our recent acquisition of the U.S. rights to FYCOMPA ® , we are continuing to work to broaden and diversify our product portfolio through acquisitions of early and/or late-stage products or companies or technology platforms in rare disease therapeutic categories outside of neuromuscular diseases.
Biggest changeThe status of clinical development is unknown for many of these compounds, but as other companies continue to pursue development and approval of products for the treatment of DMD, their products may or may not prove to be safer and/or more efficacious than AGAMREE ® . 21 Table of Contents Index to Financial Statements Factors affecting competition generally In general, our ability to compete depends in large part upon: • our ability to complete clinical development and obtain regulatory approvals for our drug candidates; • the demonstrated efficacy, safety and reliability of our drug candidates; • the timing and scope of regulatory approvals; • product acceptance by physicians and other health care providers; • the willingness of payors to cover and reimburse for our product; • protection of our proprietary rights and the level of generic competition; • the speed at which we develop drug candidates; • our ability to supply commercial quantities of a product to the market; • our ability to obtain reimbursement from private and/or public insurance entities for product use in approved indications; • our ability to recruit and retain skilled employees; and • the availability of capital resources to fund our development and commercialization activities, including the availability of funding from the federal government.
Under the License Agreement, we make the following royalty payments on our net sales of FIRDAPSE ® : ● Royalties to the licensor for seven years from the first commercial sale of FIRDAPSE ® equal to 7% of net sales (as defined in the License Agreement) in North America for any calendar year for sales up to $100 million, and 10% of net sales in North America in any calendar year in excess of $100 million; and ● Royalties to the third-party licensor of the rights sublicensed to us for seven years from the first commercial sale of FIRDAPSE ® equal to 7% of net sales (as defined in the License Agreement between BioMarin and the third-party licensor) in any calendar year for the duration of any pending or issued patents or regulatory exclusivity within a territory and 3.5% of net sales in any calendar year in territories without pending or issued patents or regulatory exclusivity.
Under the FIRDAPSE ® License Agreement, we make the following royalty payments on our net sales of FIRDAPSE ® : • Royalties to the licensor for seven years from the first commercial sale of FIRDAPSE ® equal to 7% of net sales (as defined in the FIRDAPSE ® License Agreement) in North America for any calendar year for sales up to $100 million, and 10% of net sales in North America in any calendar year in excess of $100 million; and • Royalties to the third-party licensor of the rights sublicensed to us for seven years from the first commercial sale of FIRDAPSE ® equal to 7% of net sales (as defined in the FIRDAPSE ® License Agreement between BioMarin and the third-party licensor) in any calendar year for the duration of any pending or issued patents or regulatory exclusivity within a territory and 3.5% of net sales in any calendar year in territories without pending or issued patents or regulatory exclusivity.
On May 29, 2019, we entered into an amendment to our License Agreement. Under the amendment, we expanded our commercial territory for FIRDAPSE ® , which originally was comprised of North America, to include Japan.
On May 29, 2019, we entered into an amendment to our FIRDAPSE ® License Agreement. Under the amendment, we expanded our commercial territory for FIRDAPSE ® , which originally was comprised of North America, to include Japan.
FYCOMPA ® Under our Supply Agreement with Eisai, Eisai has agreed to manufacture and supply to us to manufacture finished bulk FYCOMPA ® tablets for us for a seven year period that will run through at least the end of 2029.
FYCOMPA ® Under our Supply Agreement with Eisai, Eisai has agreed to manufacture and supply to us finished bulk FYCOMPA ® tablets for a seven year period that will run through at least the end of 2029.
Compounders may also copy commercially available products if they do not do so in “regular or inordinate amounts.” In January 2018, FDA published a Final Guidance document titled, “Compounded Drug Products That Are Essentially Copies of a Commercially Available Drug Product Under Section 503A of the Federal Food, Drug, and Cosmetic Act.” This Final Guidance sets forth FDA’s enforcement policy concerning those compounders that make essentially copies of commercially available drug products.
Section 503A compounders may also copy commercially available products if they do not do so in “regular or inordinate amounts.” In January 2018, FDA published a Final Guidance document titled, “Compounded Drug Products That Are Essentially Copies of a Commercially Available Drug Product Under Section 503A of the Federal Food, Drug, and Cosmetic Act.” This Final Guidance sets forth FDA’s enforcement policy concerning those compounders that make essentially copies of commercially available drug products.
While the FDA has been aggressively enforcing Section 503A since its re-enactment, compounders may still compound “near copies” (but not “essentially copies”) of approved drug products, under Section 503A, so long as the prescriber makes a change to the compounded formulation that produces for that patient a significant difference between the commercially available drug and the compounded version.
While the FDA has been enforcing Section 503A since its re-enactment, compounders may still compound “near copies” (but not “essentially copies”) of approved drug products, under Section 503A, so long as the prescriber makes a change to the compounded formulation that produces for that patient a significant difference between the commercially available drug and the compounded version.
Regulatory Matters Government Regulation and Product Approval Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, record-keeping, promotion, storage, advertising, distribution, marketing and export and import of products such as those we are developing.
Regulatory Matters Government Regulation and Product Approval Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, record-keeping, promotion, storage, advertising, sale, distribution, marketing and export and import of products such as those we are developing.
Clinical Trials Supporting FYCOMPA ® Partial Onset Seizures The efficacy of FYCOMPA ® in partial-onset seizures, with or without secondary generalization, was studied in patients who were not adequately controlled with 1 to 3 concomitant AEDs in 3 randomized, double-blind, placebo-controlled, multicenter trials (Studies 1, 2, and 3) in adult and pediatric patients (12 years of age and older).
Clinical Trials Supporting the Approval of FYCOMPA ® Partial Onset Seizures The efficacy of FYCOMPA ® in partial-onset seizures, with or without secondary generalization, was studied in patients who were not adequately controlled with 1 to 3 concomitant AEDs in 3 randomized, double-blind, placebo-controlled, multicenter trials (Studies 1, 2, and 3) in adult and pediatric patients (12 years of age and older).
Finally, we agreed to pay Eisai royalty payments after patent protection for FYCOMPA ® expires, which royalty payments will be reduced upon generic equivalents to FYCOMPA ® entering the market. In conjunction with the closing of the asset purchase, we entered into two additional agreements with Eisai; a Transition Services Agreement and a Supply Agreement.
Finally, we agreed to pay Eisai royalty payments after patent protection for FYCOMPA ® expires, which royalty payments will be reduced upon generic equivalents to FYCOMPA ® entering the market. In conjunction with the closing of the asset purchase, we entered into two additional agreements with Eisai; a Transition Services Agreement (TSA) and a Supply Agreement.
In January 2023, we received Paragraph IV Certification Notice Letters from three generic drug manufacturers advising us that they had each submitted an Abbreviated New Drug Application (ANDA) to the FDA seeking authorization from the FDA to manufacture, use or sell a generic version of FIRDAPSE ® in the United States.
In January 2023, we received Paragraph IV Certification Notice Letters from three generic drug manufacturers advising that they had each submitted an Abbreviated New Drug Application (ANDA) to the FDA seeking authorization from the FDA to manufacture, use or sell a generic version of FIRDAPSE ® in the United States.
These patents are now listed in the Orange Book for FIRDAPSE ® . As part of our transaction with Jacobus Pharmaceuticals, Catalyst also acquired two patents. One of these patents, 10,626,088 issued by the USPTO on April 21, 2020, was suitable for listing in the Orange Book and has now been listed in further support of FIRDAPSE ® .
As part of our transaction with Jacobus Pharmaceuticals, Catalyst also acquired two patents. One of these patents, 10,626,088 issued by the USPTO on April 21, 2020, was suitable for listing in the Orange Book and has now been listed in further support of FIRDAPSE ® .
Further, we continue to make available at no-cost a LEMS voltage gated calcium channel antibody testing program for use by physicians who suspect that one of their patients may have LEMS and wish to reach a definitive diagnosis.
Further, we continue to make available at no-cost a LEMS voltage gated calcium channel antibody diagnostic testing program for use by physicians who suspect that one of their patients may have LEMS and wish to reach a definitive diagnosis.
A co-pay assistance program designed to keep out-of-pocket costs to not more than $10.00 per month (currently less than $2.00 per month) is available for all LEMS patients with commercial coverage who are prescribed FIRDAPSE ® .
A co-pay assistance program designed to keep out-of-pocket costs to not more than $10 per month (currently less than $2 per month) is available for all LEMS patients with commercial coverage who are prescribed FIRDAPSE ® .
There can be no assurance that we will continue to be successful in commercializing FIRDAPSE ® , that our commercialization of FYCOMPA ® will be successful, or that we will continue to be profitable and cash flow positive.
There can be no assurance that we will continue to be successful in commercializing FIRDAPSE ® and FYCOMPA ® , that our commercialization of AGAMREE ® will be successful, or that we will continue to be profitable and cash flow positive.
Further, the FDA required us to perform a second carcinogenicity study of amifampridine phosphate in mice, which we has been completed and the FDA has advised us is acceptable.
Further, the FDA required us to perform a second carcinogenicity study of amifampridine phosphate in mice, which has been completed and the FDA has advised us is acceptable.
Our FIRDAPSE ® co-pay assistance program is not available to patients enrolled in state or federal healthcare programs, including Medicare, Medicaid, VA, DoD, or TRICARE. However, we are donating, and committing to continue to donate, money to qualified, independent charitable foundations dedicated to providing assistance to any U.S. LEMS patients in financial need.
Our FIRDAPSE ® co-pay assistance program is not available to patients enrolled in state or federal healthcare programs, including Medicare, Medicaid, VA, DoD, or TRICARE. Separately, we are donating, and committing to continue to donate, money to qualified, independent charitable foundations dedicated to providing assistance to any U.S. LEMS patients in financial need.
We sell FIRDAPSE ® through a field force experienced in neurologic, central nervous system or rare disease products consisting at this time of approximately 27 field personnel, including sales (Regional Account Managers), thought leader liaisons, patient assistance and insurance navigation support (Patient Access Liaisons), and payor reimbursement (National Account Managers).
We sell FIRDAPSE ® through a field force experienced in neurologic, central nervous system or rare disease products consisting at this time of approximately 35 field personnel, including sales (Regional Account Managers), thought leader liaisons, patient assistance and insurance navigation support (Patient Access Liaisons), and payor reimbursement (National Account Managers).
Further, we work closely with several rare disease advocacy organizations (including Global Genes, the National Organization for Rare Disorders (NORD), and the Myasthenia Gravis Foundation of America) to help increase awareness and the level of support for patients living with LEMS and other neuromuscular diseases, and to provide education for the physicians who treat these rare diseases and the patients they treat.
Further, we work closely with several rare disease advocacy organizations (including the National Organization for Rare Disorders (NORD) and the Myasthenia Gravis Foundation of America) to help increase awareness and the level of support for patients living with LEMS and other neuromuscular diseases, and to provide education for the physicians who treat these rare diseases and the patients they treat.
Patients were titrated over 4 weeks up to a dose of 8 mg per day or the highest tolerated dose and treated for an additional 13 weeks on the last dose level achieved at the end of the titration period. The total treatment period was 17 weeks. Study drug was given once per day.
Patients were titrated over four weeks up to a dose of 8 mg per day or the highest tolerated dose and treated for an additional 13 weeks on the last dose level achieved at the end of the titration period. The total treatment period was 17 weeks. Study drug was given once per day.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: completion of pre-clinical laboratory tests, animal studies and formulation studies according to the FDA’s good laboratory practice (GLP) regulations; ● submission of an investigational new drug application (IND) which must become effective before human clinical trials may begin and which must include approval by an institutional review board, or IRB, at each clinical site before the trials are initiated; ● performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use conducted in compliance with federal regulations and good clinical practice (GCP), an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors; ● submission to, and acceptance by, the FDA of an NDA; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current good manufacturing practice (cGMP) regulations to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● potential FDA audit of the non-clinical and clinical trial sites that generated the data in support of the NDA; and ● FDA review and approval of the NDA.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: completion of pre-clinical laboratory tests, animal studies and formulation studies according to the FDA’s good laboratory practice (GLP) regulations; 22 Table of Contents Index to Financial Statements • submission of an investigational new drug application (IND) which must become effective before human clinical trials may begin and which must include approval by an institutional review board, or IRB, at each clinical site before the trials are initiated; • performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use conducted in compliance with federal regulations and good clinical practice (GCP), an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors; • submission to, and acceptance by, the FDA of an NDA; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current good manufacturing practice (cGMP) regulations to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • potential FDA audit of the non-clinical and clinical trial sites that generated the data in support of the NDA; and • FDA review and approval of the NDA.
The formula for determining the discounted price is defined by statute and is based on the AMP and the unit rebate amount as calculated under the Medicaid drug rebate program, discussed above. Manufacturers are required to report pricing information to the Health Resources and Services Administration (“HRSA”) on a quarterly basis.
The formula for determining the discounted price is defined by statute and is based on the AMP and the unit rebate amount as calculated under the Medicaid drug rebate program, discussed above. Manufacturers are required to report pricing information to the Health Resources and Services Administration (HRSA) on a quarterly basis.
On June 3, 2021, we announced a positive decision in this proceeding that quashed the NOC previously issued for RUZURGI ® and remanded the matter to the Minister of Health to redetermine its decision to grant marketing authorization to RUZURGI ® in spite of FIRDAPSE ® ’s data protection rights.
On June 3, 2021, we announced a positive decision in this proceeding that quashed the NOC previously issued for RUZURGI ® and remanded the matter to the Minister of Health to redetermine its decision to grant marketing authorization to RUZURGI ® despite FIRDAPSE ® ’s data protection rights.
There have been, and we expect there will continue to be, legislative and regulatory proposals to change the healthcare system in ways that could significantly affect our business, including the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act”) and the Inflation Reduction Act of 2022 (IRA).
There have been, and we expect there will continue to be, legislative and regulatory proposals to change the healthcare system in ways that could significantly affect our business, including the Patient Protection and Affordable Care Act of 2010 (Affordable Care Act) and the Inflation Reduction Act of 2022 (IRA).
Diversity, Equity and Inclusion Our goal is a diverse and inclusive workforce – not because it is the right thing to do but because we believe that such a workforce is key to our long-term success. Approximately 56% of our employees are female.
Diversity, Equity and Inclusion Our goal is a diverse and inclusive workforce – not because it is the right thing to do but because we believe that such a workforce is key to our long-term success. Approximately 57% of our employees are female.
Safety data from clinical data published over the last 30 years in patients with LEMS or other neurological disorders treated with amifampridine show that amifampridine is well tolerated at doses up to 80 mg per day.
Safety data from clinical data published over the last 30 years in patients with LEMS or other neurological disorders treated with amifampridine show that amifampridine is well tolerated at doses up to 100 mg per day.
Pharmaceutical pricing and reimbursement In both United States and foreign markets, our ability to commercialize our products successfully, and to attract commercialization partners for our products, depends in significant part on the availability of adequate financial coverage and reimbursement from third-party payors, including, in the United States, governmental payors such as Medicare and Medicaid, managed care organizations, private commercial health insurers and PBMs.
Pharmaceutical pricing and reimbursement In both United States and foreign markets, our ability to commercialize our products successfully, and to attract commercialization partners for our products, depends in significant part on the availability of adequate financial coverage and reimbursement from third-party payors, including, in the United States, governmental payors such as Medicare and Medicaid, managed care organizations, private commercial health insurers and pharmacy benefit managers (PBMs).
During this period of exclusivity, FDA cannot approve an ANDA for a generic drug that includes the change. An ANDA may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed.
During this period of exclusivity, FDA cannot approve an ANDA for a generic drug that includes the change. An ANDA may be submitted one year before NCE exclusivity expires if a Paragraph IV notification is filed.
Eligible patients on a stable dose of 1 to 3 AEDs experiencing at least 3 primary generalized tonic-clonic seizures during the 8-week baseline period were randomized to either FYCOMPA ® or placebo. Efficacy was analyzed in 162 patients (FYCOMPA ® N=81, placebo N=81) who received medication and at least one post-treatment seizure assessment.
Eligible patients on a stable dose of one to three AEDs experiencing at least three primary generalized tonic-clonic seizures during the 8-week baseline period were randomized to either FYCOMPA ® or placebo. Efficacy was analyzed in 162 patients (FYCOMPA ® N=81, placebo N=81) who received medication and at least one post-treatment seizure assessment.
Pursuant to the Asset Purchase Agreement entered into with Eisai for FYCOMPA ® , we purchased Eisai’s regulatory approvals and documentation, product records, intellectual property, inventory, and other matters relating to the U.S. rights for FYCOMPA ® , in exchange for an up-front cash payment of $160 million; and royalty payments on net sales post-expiration of the patents for FYCOMPA ® , which royalty payments will be reduced upon generic equivalents to FYCOMPA ® entering the market.
Pursuant to the Eisai APA entered into with Eisai for FYCOMPA ® , we purchased Eisai’s regulatory approvals and documentation, product records, intellectual property, inventory, and other matters relating to the U.S. rights for FYCOMPA ® , in exchange for an up-front cash payment of $160 million; and royalty payments on net sales post-expiration of the patents for FYCOMPA ® , which royalty payments will be reduced upon generic equivalents to FYCOMPA ® entering the market.
Further, the contractors selected would have to be inspected by the FDA and found to be in substantial compliance with federal regulations in order for an application for one of our drug candidates to be approved, and there can be no assurance that the contractors we select would pass such an inspection. 17 Table of Contents Index to Financial Statements FIRDAPSE ® We have entered into agreements with a supplier of the active pharmaceutical ingredient (API) contained in FIRDAPSE ® for future requirements and we have contracted with third-party contract manufacturers who are manufacturing FIRDAPSE ® tablets for us.
Further, the contractors selected would have to be inspected by the FDA and found to be in substantial compliance with federal regulations in order for an application for one of our drug candidates to be approved, and there can be no assurance that the contractors we select would pass such an inspection. 19 Table of Contents Index to Financial Statements FIRDAPSE ® We have entered into agreements with a supplier of the active pharmaceutical ingredient (API) contained in FIRDAPSE ® for future requirements and we have contracted with third-party contract manufacturers who manufacture FIRDAPSE ® tablets for us.
However, refunds are due whether or not the manufacturer has entered into such an agreement. 30 Table of Contents Index to Financial Statements Branded Pharmaceutical Fee A branded pharmaceutical fee is imposed on manufacturers and importers of branded prescription drugs, generally drugs approved under NDAs.
However, refunds are due whether or not the manufacturer has entered into such an agreement. 33 Table of Contents Index to Financial Statements Branded Pharmaceutical Fee A branded pharmaceutical fee is imposed on manufacturers and importers of branded prescription drugs, generally drugs approved under NDAs or BLAs.
The notice letters each allege that our six patents listed in the FDA Orange Book covering FIRDAPSE ® are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the proposed product described in these ANDA submissions.
The notice letters each allege that our six patents listed in the FDA Orange Book in connection with FIRDAPSE ® are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the proposed product described in these ANDA submissions.
Beginning in 2025, the Inflation Reduction Act of 2022 (IRA) eliminates the coverage gap under Medicare Part D by significantly lowering the enrollee maximum out-of-pocket cost and requiring manufacturers to subsidize, through a newly established manufacturer discount program, 10% of Part D enrollees’ prescription costs for brand drugs below the out-of-pocket maximum, and 20% once the out-of-pocket maximum has been reached.
Beginning in 2025, the IRA eliminates the coverage gap under Medicare Part D by significantly lowering the enrollee maximum out-of-pocket cost and requiring manufacturers to subsidize, through a newly established manufacturer discount program, 10% of Part D enrollees’ prescription costs for brand drugs below the out-of-pocket maximum, and 20% once the out-of-pocket maximum has been reached.
A cornerstone of our strategy is our continuing development of Catalyst Pathways ® , our personalized treatment support program, and our development of the patient assistance programs that are required to further our goal that no LEMS patient be denied access to FIRDAPSE ® for financial reasons within existing legal restrictions. ● Begin to commercialize FYCOMPA ® .
A cornerstone of our U.S. strategy is our continuing development of Catalyst Pathways ® , our personalized treatment support program, and our development of the patient assistance programs that are required to further our goal that no LEMS patient be denied access to FIRDAPSE ® for financial reasons within existing legal restrictions. • Continue to commercialize FYCOMPA ® .
Finally, we are continuing to expand our digital and social media activities to introduce our product and services to potential patients and their healthcare providers.
Finally, we are continuing to expand our digital and social media activities to introduce our products and services to potential patients and their healthcare providers.
We also at that time had a field-based force of six medical science liaisons who help educate the medical communities and patients about LEMS and about our company’s ongoing clinical trial activities.
We also at that time had a field-based force of seven medical science liaisons who help educate the medical communities about LEMS and about our company’s ongoing clinical trial activities.
FIRDAPSE ® On November 28, 2018, we received approval from the FDA for our new drug application, or NDA, for FIRDAPSE ® Tablets 10 mg for the treatment of adult patients (ages 17 and above) with Lambert-Eaton myasthenic syndrome, or LEMS, and in January 2019, we launched FIRDAPSE ® in the United States.
FIRDAPSE ® On November 28, 2018, we received approval from the FDA for our new drug application, or NDA, for FIRDAPSE ® Tablets 10 mg for the treatment of adult patients (ages 17 and above) with LEMS, and in January 2019, we launched FIRDAPSE ® in the United States.
In conjunction with the Asset Purchase Agreement, at the closing of our purchase on January 24, 2023 we entered into two additional agreements with Eisai: ● A Transition Services Agreement under which a U.S. subsidiary of Eisai is providing us with certain services for certain periods, including but not limited to, FDA Post-Marketing study requirements for FYCOMPA ® and Transitional Services pursuant to which Eisai’s U.S. subsidiary is assisting us with the transition of commercial, market asset, finance, medical information, and supply issues; and 13 Table of Contents Index to Financial Statements ● A Supply Agreement under which Eisai has agreed to manufacture FYCOMPA ® for us for at least seven years at prices to be updated on a yearly basis.
In conjunction with the Eisai APA, at the closing of our purchase on January 24, 2023 we entered into two additional agreements with Eisai: • A TSA under which a U.S. subsidiary of Eisai is providing us with certain services for certain periods, including but not limited to, FDA Post-Marketing study requirements for FYCOMPA ® and Transitional Services pursuant to which Eisai’s U.S. subsidiary is assisting us with the transition of commercial, market asset, finance, medical information, and supply issues; and • A Supply Agreement under which Eisai has agreed to manufacture FYCOMPA ® for us for at least seven years at prices to be updated on a yearly basis.
In addition, several states now require prescription drug companies to report expenses relating to the marketing and promotion of drug products, to report gifts and payments to individual physicians in these states and to report certain pricing information, including price increases. Other states prohibit various other marketing-related activities.
In addition, several states now require prescription drug companies to report expenses relating to the marketing and promotion of drug products, to report gifts and payments to individual physicians in these states or to report certain pricing information, including price increases and the price of newly launched drugs. Other states prohibit various other marketing-related activities.
To date, the rebate amount for a drug has been capped at 100% of the AMP; however, effective January 1, 2024, this cap will be eliminated, which means that a manufacturer could pay a rebate amount on a unit of the drug that is greater than the average price the manufacturer receives for the drug.
The rebate amount for a drug has been capped at 100% of the AMP; however, effective January 1, 2024, this cap is eliminated, which means that a manufacturer could pay a rebate amount on a unit of the drug that is greater than the average price the manufacturer receives for the drug.
On December 18, 2018, we entered into a definitive agreement with Endo International plc’s subsidiary, Endo Ventures Limited (Endo), for the further development and commercialization of generic Sabril ® tablets through Endo’s United States Generic Pharmaceuticals segment, Par Pharmaceutical (Par). Pursuant to the agreement, in December 2018, we received an up-front payment of $500,000.
On December 18, 2018, we entered into a definitive agreement with Endo International plc’s subsidiary, Endo Ventures Limited (Endo), for the further development and commercialization of generic Sabril ® tablets through Endo’s United States Generic Pharmaceuticals segment, Par Pharmaceutical (Par). Pursuant to the agreement, in December 2018, we received an up-front payment of $0.5 million.
The other patent, 9,783,497 issued by the PTO on October 10, 2017, is not considered listable under the Orange Book, but, to the extent that it is necessary, Catalyst intends to enforce that patent against infringement as it would any of the Orange Book patents.
The other patent, 9,783,497 issued by the USPTO on October 10, 2017, is not considered listable in the Orange Book, but, to the extent that it is necessary, Catalyst intends to enforce that patent against infringement as it would any of the Orange Book patents.
Failure to promptly conduct Phase 4 clinical trials where necessary could result in withdrawal of approval for products approved under accelerated approval regulations. While Phase 1, Phase 2, and Phase 3 tests are generally required for approval of an NDA, certain drugs may not require one or more steps in the process depending on other testing and the situation involved.
Failure to promptly conduct Phase 4 clinical trials where necessary could result in withdrawal of approval for products approved under accelerated approval regulations. 23 Table of Contents Index to Financial Statements While Phase 1, Phase 2, and Phase 3 tests are generally required for approval of an NDA, certain drugs may not require one or more steps in the process depending on other testing and the situation involved.
At the leadership level (employees at manager and above) approximately 69% are female, and two of seven members of our C-suite are female. Communication and Engagement We focus on engagement with our employees as we believe an engaged workforce is key to our success and to the success and wellbeing of our employees.
At the leadership level (employees at manager and above) approximately 58% are female, and one of seven members of our C-suite is female. Communication and Engagement We focus on engagement with our employees as we believe an engaged workforce is key to our success and to the success and wellbeing of our employees.
We also make available a no-cost LEMS voltage gated calcium channel (VGCC) antibody testing program for physicians who suspect their patient may have LEMS and wish to reach a definitive diagnosis. We are supporting the distribution of FIRDAPSE ® through “Catalyst Pathways” ® , our personalized treatment support program.
Finally, we make available a no-cost LEMS voltage gated calcium channel (VGCC) antibody testing program for physicians who suspect their patient may have LEMS and wish to reach a definitive diagnosis. We are supporting the distribution of FIRDAPSE ® through “Catalyst Pathways ® ”, our personalized treatment support program.
The law also requires manufacturers to offer deeply discounted FSS contract pricing for purchases of their covered drugs by the Department of Veterans Affairs, the Department of Defense (DoD), the Coast Guard, and the Public Health Service (including the Indian Health Service) in order for federal funding to be available for reimbursement or purchase of the manufacturer’s drugs under certain federal programs.
The law also requires manufacturers to offer deeply discounted FSS contract pricing for purchases of their covered drugs by the VA, DoD, the Coast Guard, and the Public Health Service (including the Indian Health Service) in order for federal funding to be available for reimbursement or purchase of the manufacturer’s drugs under certain federal programs.
The “Catalyst Pathways” ® program is also the access point for our Patient Assistance Program, which provides longer-term free medication for those who are uninsured or functionally uninsured with respect to FIRDAPSE ® because they may be unable to obtain coverage from their payer despite having health insurance.
The “Catalyst Pathways ® ” program is also the access point for our Patient Assistance Program, which provides longer-term free medication for those who are uninsured or functionally uninsured with respect to FIRDAPSE ® because they may be unable to obtain coverage from their payor despite having health insurance.
Even with the availability of such studies, our products may be considered less safe, less effective or less cost-effective than alternative products, and third-party payors may not provide coverage and reimbursement for our drug candidates, in whole or in part. Political, economic and regulatory influences are subjecting the health care industry in the United States to fundamental changes.
Even with the availability of such studies, our products may be considered less safe, less effective or less cost-effective than alternative products, and third-party payors may not provide coverage and reimbursement for our drug candidates, in whole or in part. 27 Table of Contents Index to Financial Statements Political, economic and regulatory influences are subjecting the health care industry in the United States to fundamental changes.
Section 503B outsourcing facilities may also only compound from bulk substances if the product is on FDA’s drug shortage list, or the substance is on FDA’s Section 503B list of bulk substances that may be used in compounding (i.e., the Section 503B bulk substances list 1).
Section 503B outsourcing facilities may also only compound from bulk substances if the product is on FDA’s drug shortage list, or the substance is on FDA’s Section 503B interim and final 2013 list of bulk substances that may be used in compounding (i.e., the Section 503B bulk substances list 1).
“Catalyst Pathways” ® is a single source for personalized treatment support, education and guidance through the challenging dosing and titration regimen to an effective therapeutic dose.
“Catalyst Pathways ® ” is a single source for personalized treatment support, education and guidance through the challenging dosing and titration regimen to an effective therapeutic dose.
Third-Party Reimbursement in the United States Sales of pharmaceutical products depend in significant part on the availability of coverage and adequate reimbursement by third party payors, such as state and federal governments, including Medicare and Medicaid, managed care providers, private commercial insurance plans and pharmacy benefit management (PBM) plans.
Third-Party Reimbursement in the United States Sales of pharmaceutical products depend in significant part on the availability of coverage and adequate reimbursement by third-party payors, such as state and federal governments, including Medicare and Medicaid, managed care providers, private commercial insurance plans and PBMs.
Epilepsy disrupts this rhythmic electrical impulse pattern. Instead, there are bursts of electrical energy — like an unpredictable lightning storm — between cells in one or more areas of your brain. This electrical disruption causes changes in awareness (including loss of consciousness), sensations, emotions and muscle movements. In the U.S., about 3.4 million people have epilepsy.
Instead, there are bursts of electrical energy — like an unpredictable lightning storm — between cells in one or more areas of your brain. This electrical disruption causes changes in awareness (including loss of consciousness), sensations, emotions and muscle movements. In the U.S., about 3.47 million people have epilepsy.
A drug may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for the previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was 23 Table of Contents Index to Financial Statements conducted/sponsored by the applicant.
A drug may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for the previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted/sponsored by the applicant.
These cost containment measures could include: ● public transparency on qualifying price increases and/or discounting to better inform purchasers; ● additional controls on government-funded reimbursement for drugs; ● controls on healthcare providers; 25 Table of Contents Index to Financial Statements ● challenges to the pricing of drugs or limits or prohibitions on reimbursement for specific products through other means; ● reform of drug importation laws; ● entering into contractual agreements with payors; and ● expansion of use of managed-care systems in which healthcare providers contract to provide comprehensive healthcare for a fixed cost per person.
These cost containment measures could include: • public transparency on qualifying prices of newly launched drugs, price increases and/or discounting to better inform purchasers; • additional controls on government-funded reimbursement for drugs; • controls on healthcare providers; • challenges to the pricing of drugs or limits or prohibitions on reimbursement for specific products through other means; • reform of drug importation laws; • entering into contractual agreements with payors; and • expansion of use of managed-care systems in which healthcare providers contract to provide comprehensive healthcare for a fixed cost per person.
Physicians can diagnose which side of the brain is affected by observing which side of the body experiences symptoms, since the left brain controls the right side of the body and the right brain controls the left. 12 Table of Contents Index to Financial Statements ● Sensory: A simple focal seizure may cause sensory symptoms affecting the senses, such as: hearing problems, hallucinations and olfactory or other distortions. ● Autonomic: A simple focal seizure with autonomic symptoms affects the part of the brain responsible for involuntary functions.
Physicians can diagnose which side of the brain is affected by observing which side of the body experiences symptoms, since the left brain controls the right side of the body and the right brain controls the left. • Sensory: A simple focal seizure may cause sensory symptoms affecting the senses, such as: hearing problems, hallucinations and olfactory or other distortions. • Autonomic: A simple focal seizure with autonomic symptoms affects the part of the brain responsible for involuntary functions.
We intend to vigorously protect and defend our intellectual property for FIRDAPSE ® and, although there can be no assurance, we believe that our patent estate will protect FIRDAPSE ® from generic competition for the life of our patents.
We intend to vigorously protect and defend our intellectual property for FIRDAPSE ® and, although there can be no assurance, we believe that our patent estate will protect FIRDAPSE ® from generic competition.
For eligible patients with commercial coverage, a co-pay assistance program designed to keep out-of-pocket costs to $10 or less per month (currently less than $2.00 per month) is available for all LEMS patients prescribed FIRDAPSE ® .
For eligible patients with commercial coverage who are prescribed FIRDAPSE ® for LEMS, a co-pay assistance program is available, which is designed to keep out-of-pocket costs to $10 or less per month (currently less than $2 per month).
We believe that we remain in compliance with our obligations under the License Agreement. License Agreement with Jacobus In May 2019, the FDA approved an NDA for RUZURGI ® , Jacobus Pharmaceuticals’ version of amifampridine (3,4-DAP), for the treatment of pediatric LEMS patients (ages 6 to under 17).
We believe that we remain in compliance with our obligations under the FIRDAPSE ® License Agreement. License Agreement with Jacobus Pharmaceutical Company, Inc. (Jacobus) In May 2019, the FDA approved an NDA for RUZURGI ® , Jacobus’ version of amifampridine (3,4-DAP), for the treatment of pediatric LEMS patients (ages 6 to under 17).
Generic drug product labels would necessarily have to do this, and we intend to take all appropriate actions to protect our intellectual property. 10 Table of Contents Index to Financial Statements In April 2021, the USPTO also allowed Patent No. 11,060,128 (the ’128 patent) to our licensor and thereby to us, and this second patent issued on July 13, 2021.
Generic drug product labels would necessarily have to do this, and we intend to take all appropriate actions to protect our intellectual property. In April 2021, the USPTO also allowed Patent No. 11,060,128 (the ’128 patent) to our licensor and thereby to us, and this second patent issued on July 13, 2021.
Alternatively, if the NDA applicant or relevant patent holder does not file a patent infringement lawsuit within the specified 45 day period, the FDA may approve the Section 505(b)(2) application at any time. ANDAs Generic drugs may enter the market after the approval of an ANDA.
Alternatively, if the NDA applicant or relevant patent holder does not file a patent infringement lawsuit within the specified 45 day period, the FDA may approve the Section 505(b)(2) application at any time. 26 Table of Contents Index to Financial Statements ANDAs Generic drugs may enter the market after the approval of an ANDA.
We also utilized field force Patient Access Liaisons who work with the patients and provider offices to help navigate the insurance landscape, as well as National Account Managers who work directly with the payors to ensure comprehensive coverage for FIRDAPSE ® across the 8 Table of Contents Index to Financial Statements commercial and governmental plans in the United States.
We also utilized field force Patient Access Liaisons who work with the patients and provider offices to help navigate the insurance landscape, as well as National Account Managers who work directly with the payors to ensure comprehensive coverage for FIRDAPSE ® across the commercial and governmental plans in the United States.
The medicinal product 26 Table of Contents Index to Financial Statements considered should be of significant benefit to those affected by the condition. Benefits of being granted Orphan Medicinal Product Designation are significant, including eight years of data exclusivity, two years of marketing exclusivity and a potential one-year extension of both.
The medicinal product considered should be of significant benefit to those affected by the condition. Benefits of being granted Orphan Medicinal Product Designation are significant, including eight years of data exclusivity, two years of marketing exclusivity and a potential one-year extension of both.
The IND automatically becomes effective 30 days after receipt by the FDA, 20 Table of Contents Index to Financial Statements unless the FDA, within the 30–day time period, raises concerns or questions about the conduct of the trial. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30–day time period, raises concerns or questions about the conduct of the trial. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
As with the Medicaid drug rebate program, federal law provides for civil monetary penalties for failing to provide required information, late submission of required information, and false 29 Table of Contents Index to Financial Statements information. Medicare Part D provides prescription drug benefits for seniors and people with disabilities.
As with the Medicaid drug rebate program, federal law provides for civil monetary penalties for failing to provide required information, late submission of required information, and false information. Medicare Part D provides prescription drug benefits for seniors and people with disabilities.
Under the amendment, we will pay royalties on net sales in Japan of a similar percentage to the royalties that we are currently paying under our original License Agreement for North America. In January 2020, we were advised that BioMarin had sold certain rights under the License Agreement to SERB SA.
Under the amendment, we will pay royalties on net sales in Japan of a similar percentage to the royalties that we are currently paying under our original FIRDAPSE ® License Agreement for North America. In January 2020, we were advised that BioMarin had transferred substantially all of its rights under the FIRDAPSE ® License Agreement to SERB SA.
The FYCOMPA ® instant savings card program is not available to patients enrolled in state or federal healthcare programs, including Medicare, Medigap, VA, DoD, or TRICARE. Acquisition of FYCOMPA ® On December 17, 2022, we entered into an Asset Purchase Agreement with Eisai, pursuant to which we acquired the U.S. rights to FYCOMPA ® .
The FYCOMPA ® Instant Savings Card Program is not available to patients enrolled in state or federal healthcare programs, including Medicare, Medicaid, VA, DoD, or TRICARE. 15 Table of Contents Index to Financial Statements Acquisition of FYCOMPA ® On December 17, 2022, we entered into an Asset Purchase Agreement (Eisai APA) with Eisai, pursuant to which we acquired the U.S. rights to FYCOMPA ® .
The submission of an NDA is also subject to the payment of a substantial application fee (for FDA fiscal year 2023 this fee is $3,242,026), although a waiver of such fee may be obtained under certain limited circumstances, including when the drug that is subject of the application has received Orphan Drug Designation for the indication sought.
The submission of an NDA is also subject to the payment of a substantial application fee (for FDA fiscal year 2024 this fee is $4,048,695), although a waiver of such fee may be obtained under certain limited circumstances, including when the drug that is subject of the application has received Orphan Drug Designation for the indication sought.
In connection with the settlement with Jacobus, we agreed to pay the following consideration to Jacobus: ● $30 million of cash, of which $10 million was paid at the closing of the settlement on July 11, 2022 and the balance of which will be paid over the next two years, on the first and second anniversary of closing; ● An annual royalty on our net sales (as defined in the License and Asset Purchase Agreement between Catalyst and Jacobus) of amifampridine products in the United States equal to: (a) for calendar years 2022 through 2025, 1.5% (with a minimum annual royalty of $3.0 million per year), and (b) for calendar years 2026 through the expiration of the last to expire of Catalyst’s FIRDAPSE ® patents in the United States, 2.5% (with a minimum annual royalty of $5 million per year); provided, however, that the royalty rate may be reduced and the minimum annual royalty may be eliminated under certain circumstances; and ● If Catalyst were to receive a priority review voucher for FIRDAPSE ® or RUZURGI ® in the future, 50% of the consideration paid by a third party to acquire that voucher will be paid to Jacobus.
We will be obligated to pay the remaining balance on the second anniversary of closing; • An annual royalty on our net sales (as defined in the License and Asset Purchase Agreement between Catalyst and Jacobus) of amifampridine products in the United States equal to: (a) for calendar years 2022 through 2025, 1.5% (with a minimum annual royalty of $3.0 million per year), and (b) for calendar years 2026 through the expiration of the last to expire of Catalyst’s FIRDAPSE ® patents in the United States, 2.5% (with a minimum annual royalty of $5 million per year); provided, however, that the royalty rate may be reduced and the minimum annual royalty may be eliminated under certain circumstances; and • If Catalyst were to receive a priority review voucher for FIRDAPSE ® or RUZURGI ® in the future, 50% of the consideration paid by a third-party to acquire that voucher will be paid to Jacobus.
In addition, “Catalyst Pathways” ® is the gateway for our free bridge medication for patients during transitioning from investigational product while they are waiting for a coverage determination or, later on, for patients whose access is threatened by the bureaucratic complications arising from a change of insurer.
In addition, “Catalyst Pathways ® ” is the gateway for our free bridge medication for patients while they are waiting for a coverage determination or, later on, for patients whose access is threatened by the bureaucratic complications arising from a change of insurer.
The FDA may request additional information rather than file an NDA. In this event, the NDA must be resubmitted with the additional information. The resubmitted application also is subject to 21 Table of Contents Index to Financial Statements review before the FDA files it. Once the submission is filed, the FDA begins an in-depth substantive review.
The FDA may request additional information rather than file an NDA. In this event, the NDA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA files it. Once the submission is filed, the FDA begins an in-depth substantive review.
Further, the sponsor of an approved NDA is subject to an annual program fee, which for FDA fiscal year 2023 is $393,333 per prescription drug product. User fees typically increase annually.
Further, the sponsor of an approved NDA is subject to an annual program fee, which for FDA fiscal year 2024 is $416,734 per prescription drug product. User fees typically increase annually.
We believe that by using specialty pharmacies in this way, the difficult 3 Table of Contents Index to Financial Statements task of navigating the health care system is far better for the patient needing treatment for their rare disease and the health care community in general.
We believe that by using specialty pharmacies in this way, the difficult task of navigating the health care system is far better for the patient needing treatment for their rare disease and the health care community in general.
The case was fully briefed in early 2021, and oral argument was held in March 2021. On September 30, 2021, a three-judge panel of 11 th Circuit judges issued a unanimous decision overturning the District Court’s decision.
The case was fully briefed in early 2021, and oral argument was held in March 2021. 9 Table of Contents Index to Financial Statements On September 30, 2021, a three-judge panel of 11 th Circuit judges issued a unanimous decision overturning the District Court’s decision.
If the applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired. A certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called a Paragraph IV certification.
If the applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired. 25 Table of Contents Index to Financial Statements A certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called a Paragraph IV certification.
FDORA enables the FDA to initiate 27 Table of Contents Index to Financial Statements enforcement action for the failure to conduct with due diligence a required post-approval study, including a failure to meet any required conditions specified by the FDA or to submit timely reports.
FDORA enables the FDA to initiate enforcement action for the failure to conduct with due diligence a required post-approval study, including a failure to meet any required conditions specified by the FDA or to submit timely reports.
The results of the first trial published in 2016 in Muscle & Nerve (Muscle Nerve, 2016, 53(5):717-725). The results of the second trial were published in March 2019 in the Journal of Clinical Neuromuscular Disease (J. Clin Neuromusc Dis 2019; 20:111-119). In March 2018, we submitted an NDA seeking approval of FIRDAPSE ® for the treatment of LEMS.
The results of the second trial were published in March 2019 in the Journal of Clinical Neuromuscular Disease (J. Clin Neuromusc Dis 2019; 20:111-119). In March 2018, we submitted an NDA seeking approval of FIRDAPSE ® for the treatment of LEMS.
Through this expansion of our sales team, we are working to expand our sales efforts beyond the neuromuscular specialists who regularly treat LEMS patients to reach roughly 9,000 neurology and neuromuscular healthcare providers that might be treating an adult LEMS patient who can benefit from FIRDAPSE ® .
Through this expansion of our sales team, we were working to expand our sales efforts beyond the neuromuscular specialists who regularly treat LEMS patients to reach roughly 9,000 neurology and neuromuscular healthcare providers that might be treating an adult LEMS patient who can benefit from FIRDAPSE ® . However, we terminated the inside sales agency effective January 1, 2024.
Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or sNDA before the change can be implemented.
Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or sNDA before the change can be implemented.
FIRDAPSE ® Product Overview FIRDAPSE ® is Catalyst’s registered trade name in the United States for amifampridine phosphate tablets. Amifampridine is the WHO (World Health Organization) registered INN (International Nonproprietary Name) and United States Adopted Name (USAN) for the chemical entity, 3,4-diaminopyridine, often abbreviated as 3,4-DAP or DAP.
FIRDAPSE ® Product Overview FIRDAPSE ® is the registered trade name in the United States for amifampridine phosphate tablets and it is licensed to us by SERB, S.A. Amifampridine is the WHO (World Health Organization) registered INN (International Nonproprietary Name) and United States Adopted Name (USAN) for the chemical entity, 3,4-diaminopyridine, often abbreviated as 3,4-DAP or DAP.
Under the FDCA, as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, we had 45 days from receipt of the notice letters to commence patent infringement lawsuits against these generic drug manufacturers in a federal district court to trigger a stay precluding FDA from approving any ANDA until May 2026 or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first, and in that regard, after conducting the necessary due diligence, we filed lawsuits on March 1, 2023 in the U.S.
Under the FDCA, as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, we had 45 days from receipt of the notice letters to determine if there were grounds to bring a lawsuit and, if so, to commence patent infringement lawsuits against these generic drug manufacturers in a federal district court, which would trigger a statutory stay precluding the FDA from final approval of the subject ANDAs until May 2026 or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first, and in that regard, after conducting the necessary due diligence, we filed lawsuits on March 1, 2023 in the U.S.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeUnder the Federal Food, Drug, and Cosmetic Act, as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, we had 45 days from receipt of the notice letters to commence patent infringement lawsuits against these generic drug manufacturers in a federal district court to trigger a stay precluding FDA from approving any ANDA until May 2026 or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first, and in that regard, after conducting the necessary due diligence, we filed lawsuits on March 1, 2023 in the U.S.
Biggest changeUnder the FDCA, as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, we had 45 days from receipt of the notice letters to determine if there were grounds to bring a lawsuit and, if so, to commence patent infringement lawsuits against these generic drug manufacturers in a federal district court, which would trigger a statutory stay precluding the FDA from final approval of the subject ANDAs until May 2026 or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first.
Item 3. Legal Proceedings Paragraph IV Patent Litigation In January 2023, we received Paragraph IV Certification Notice Letters from three generic drug manufacturers advising us that they had each submitted an Abbreviated New Drug Application (ANDA) to the FDA seeking authorization from the FDA to manufacture, use or sell a generic version of FIRDAPSE ® in the United States.
Item 3. Legal Proceedings Paragraph IV Patent Litigation In January 2023, we received Paragraph IV Certification Notice Letters from three generic drug manufacturers advising that they had each submitted an Abbreviated New Drug Application (ANDA) to the FDA seeking authorization from the FDA to manufacture, use or sell a generic version of FIRDAPSE ® in the United States.
Other than as set forth above, we believe that there is no litigation pending at this time that could have, individually or in the aggregate, a material adverse effect on our results of operations, financial condition or cash flows. Item 4. Mine Safety Disclosure Not applicable. 50 Table of Contents Index to Financial Statements PART II
Other than as set forth above, we believe that there is no litigation pending at this time that could have, individually or in the aggregate, a material adverse effect on our results of operations, financial condition or cash flows. Item 4. Mine Safety Disclosure Not applicable. 55 Table of Contents Index to Financial Statements PART II
The notice letters each allege that our six patents listed in the FDA Orange Book covering FIRDAPSE ® are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the proposed product described in these ANDA submissions.
The notice letters each alleged that the six patents listed in the FDA Orange Book in connection with FIRDAPSE ® are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the proposed product described in these ANDA submissions.
We intend to vigorously protect and defend our intellectual property for FIRDAPSE ® and, although there can be no assurance, we believe that our patents will protect FIRDAPSE ® from generic competition for the life of our patents.
We intend to vigorously protect and defend our intellectual property for FIRDAPSE ® and, although there can be no assurance, we believe that our patent estate will protect FIRDAPSE ® from generic competition.
Federal District Court for the District of New Jersey against each of the three generic drug manufacturers who notified us of their ANDA filings.
In that regard, after conducting the necessary due diligence, we filed lawsuits on March 1, 2023 in the U.S. District Court for the District of New Jersey against each of the three generic drug manufacturers who notified us of their ANDA submissions, thus triggering the stay.
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Canadian Litigation On March 11, 2022, we announced that we had received a favorable decision from the Canadian court setting aside, for the second time, the decision of Health Canada approving RUZURGI ® for the treatment of LEMS patients.
Added
Further, in October 2023, we received a Paragraph IV Certification Notice Letter from a fourth generic drug manufacturer, and we filed a similar lawsuit against the manufacturer in November 2023.
Removed
In its ruling, the court determined that the Minister of Health’s approach to evaluating whether FIRDAPSE ® ’s data deserved protection based on FIRDAPSE ® ’s status as an innovative drug, which protects by regulation the use of such data as part of a submission seeking an NOC for eight years from approval of the innovative drug, was legally flawed and not supported by the evidence.
Added
On February 20, 2023, we received a Paragraph IV Certification Notice Letter from a company that appears to have filed the first ANDA for the oral suspension formulation for FYCOMPA ® .
Removed
The Minister of Health appealed that decision, and, in January 2023, the Canadian Appellate Court overturned the trial court’s decision. Thereafter, the Minister of Health reissued an NOC for RUZURGI ® in Canada and, as a result, RUZURGI ® is once again available for sale in Canada.
Added
The same company sent a similar letter to us later in February with a similar certification for the tablet formulation for FYCOMPA ® , the fourth such certification for this formulation.
Removed
While there can be no assurance, we do not believe that the reissuance of an NOC for RUZURGI ® in Canada will have a material adverse effect on our results of operations. 49 Table of Contents Index to Financial Statements Other Litigation From time to time we may become involved in legal proceedings arising in the ordinary course of business.
Added
Both of these letters were Paragraph IV certifications of non-infringement, non-validity, and unenforceability to the ‘497 patent for FYCOMPA ® but each application, like the previous Paragraph IV notices from ANDA filers, for FYCOMPA ® tablets does not challenge the ‘571 patent.
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Accordingly, the FDA may not approved any ANDA prior to expiration of the ‘571 patent, including patent term extension. Similar to the actions with the FIRDAPSE ® Paragraph IV Certifications described above, after due diligence we filed lawsuits on April 5, 2023 in the U.S.
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District Court for the District of New Jersey against the drug manufacturer who notified us of their ANDA submissions for both FYCOMPA ® formulations, thus triggering the 30 month stay for each application. Other Litigation From time to time we may become involved in legal proceedings arising in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe currently intend to retain all available funds and any future earnings to support operations, finance the growth and development of our business, and repurchase up to $21 million of our common stock. We do not intend to pay cash dividends on our common stock for the foreseeable future.
Biggest changeWe currently intend to retain all available funds and any future earnings to support operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our Board of Directors.
As of March 13, 2023, there were 32 holders of record of our common stock, which includes custodians who hold our securities for the benefit of others. Dividend Policy We have never declared or paid any cash dividends on our capital stock.
As of February 26, 2024, there were 17 holders of record of our common stock, which includes custodians who hold our securities for the benefit of others. Dividend Policy We have never declared or paid any cash dividends on our capital stock.
Equity Compensation Plan Information Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants, and rights Number of securities remaining available for equity compensation plans Equity compensation plans approved by security holders (1) 12,309,108 $ 4.93 2,691,791 (2) Equity compensation plans not approved by security holders — — — Total 12,309,108 $ 4.93 2,691,791 (1) Includes our 2014 Stock Incentive Plan and our 2018 Stock Incentive Plan (2) Remaining shares are only under our 2018 Stock Incentive Plan Sales of Unregistered Securities None.
Equity Compensation Plan Information Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants, and rights Number of securities remaining available for equity compensation plans Equity compensation plans approved by security holders (1) 14,177,488 $ 7.73 1,801,949 (2) Equity compensation plans not approved by security holders — — — Total 14,177,488 $ 7.73 1,801,949 (1) Includes our 2014 Stock Incentive Plan and our 2018 Stock Incentive Plan (2) Remaining shares are only under our 2018 Stock Incentive Plan Sales of Unregistered Securities None.
Any future determination related to our dividend policy will be made at the discretion of our Board of Directors. Securities Authorized for Issuance under Equity Compensation Plans The following table presents information as of December 31, 2022 with respect to compensation plans under which shares of our common stock may be issued.
Securities Authorized for Issuance under Equity Compensation Plans The following table presents information as of December 31, 2023 with respect to compensation plans under which shares of our common stock may be issued.
At present, we are not purchasing shares under our share repurchase program, but rather we are retaining cash for use in our business development activities.
At present, we are not purchasing shares under our share repurchase program, but rather we are retaining cash for use in our business development activities. During the fiscal year ended December 31, 2023, we did not repurchase any of our common stock.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2017 to 12/31/2022. 12/17 12/18 12/19 12/20 12/21 12/22 Catalyst Pharmaceuticals, Inc. 100.00 49.10 95.91 85.42 173.15 475.70 NASDAQ Composite 100.00 97.16 132.81 192.47 235.15 158.65 Russell MicroCap 100.00 86.92 106.42 128.72 153.61 119.88 NASDAQ Biotechnology 100.00 91.14 114.02 144.15 144.18 129.59 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 51 Table of Contents Index to Financial Statements Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “CPRX.” The closing sale price for the common stock on March 13, 2023 was $14.63.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2018 to 12/31/2023. 12/18 12/19 12/20 12/21 12/22 12/23 Catalyst Pharmaceuticals, Inc. 100.00 195.31 173.96 352.60 968.75 875.52 NASDAQ Composite 100.00 136.69 198.10 242.03 163.28 236.17 Russell MicroCap 100.00 122.43 148.10 176.73 137.93 150.80 NASDAQ Biotechnology 100.00 125.11 158.17 158.20 142.19 148.72 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 56 Table of Contents Index to Financial Statements Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “CPRX.” The closing sale price for the common stock on February 26, 2024 was $14.18.
Removed
The following table presents information regarding repurchases by us of our common stock under the Share Repurchase Program during the three months ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Dollar Value of Shares that May Yet Be Purchased (in thousands ) October 1 – October 31, 2022 — $ — — $ 21,003 November 1 – November 30, 2022 — $ — — $ 21,003 December 1 – December 31, 2022 — $ — — $ 21,003 Total — — 52 Table of Contents Index to Financial Statements Item 6.
Added
Approximately $21 million remains available under the Share Repurchase Program as of December 31, 2023. 57 Table of Contents Index to Financial Statements Item 6. Selected Financial Data Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

88 edited+75 added−28 removed50 unchanged
Biggest changeFactors that will affect our success include the uncertainty of: ● The impact of the COVID-19 pandemic on our business or on the economy generally; ● Whether we will be able to continue to successfully market FIRDAPSE ® and now successfully market FYCOMPA ® while maintaining full compliance with applicable federal and state laws, rules and regulations; ● Whether our estimates of the size of the market for FIRDAPSE ® for the treatment of Lambert-Eaton Myasthenic Syndrome (LEMS) will prove to be accurate; ● Whether we will be able to locate LEMS patients who are undiagnosed or are misdiagnosed with other diseases; ● Whether patients will discontinue from the use of FIRDAPSE ® and FYCOMPA ® at rates that are higher than historically experienced or are higher than we project; ● Whether the daily dose of FIRDAPSE ® taken by patients changes over time and affects our results of operations; ● Whether new FIRDAPSE ® patients and FYCOMPA ® patients can be successfully titrated to stable therapy; ● Whether we can continue to market FIRDAPSE ® and now market FYCOMPA ® on a profitable and cash flow positive basis; ● Whether we can successfully integrate the team that we are hiring to market FYCOMPA ® into our current business structure; ● Whether the acquisition of FYCOMPA ® will prove to be accretive to EBITDA and EPS in 2023; ● Whether any revenue or earnings guidance that we provide to the public market will turn out to be accurate; ● Whether payors will reimburse for our products at the price that we charge for our products; ● The ability of our third-party suppliers and contract manufacturers to maintain compliance with current Good Manufacturing Practices (cGMP); ● The ability of those third parties that distribute our products to maintain compliance with applicable law; ● Our ability to maintain compliance with applicable rules relating to our patient assistance programs for FIRDAPSE ® and FYCOMPA ® ; ● Our ability to maintain compliance with the applicable rules that relate to our contributions to 501(c)(3) organizations that support LEMS patients; ● The scope of our intellectual property and the outcome of any challenges to our intellectual property, and, conversely, whether any third-party intellectual property presents unanticipated obstacles for FIRDAPSE ® or FYCOMPA ® ; 63 Table of Contents Index to Financial Statements ● Our ability to obtain a favorable decision on our pending request for reconsideration for an extension of the expiration date of patent protection for one of our patents listed in the Orange Book for FYCOMPA ® ; ● Whether there will be a post-closing review by antitrust regulators of our previous acquisition transactions, and the outcome of any such reviews if they occur; ● Whether we will be able to acquire additional drug products under development, complete the research and development required to commercialize such products, and thereafter, if such products are approved for commercialization, successfully market such products; ● Whether our patents will be sufficient to prevent generic competition for FIRDAPSE ® after our orphan drug exclusivity for FIRDAPSE ® expires; ● Whether we will be successful in our litigation to enforce our patents against the Paragraph IV challengers who have filed relating to FIRDAPSE ® ; ● The impact on our profits and cash flow of adverse changes in reimbursement and coverage policies from government and private payors such as Medicare, Medicaid, insurance companies, health maintenance organizations and other plan administrators, or the impact of pricing pressures enacted by industry organizations, the federal government or the government of any state, including as a result of increased scrutiny over pharmaceutical pricing or otherwise; ● Changes in the healthcare industry and the effect of political pressure from and actions by the President, Congress and/or medical professionals seeking to reduce prescription drug costs, and changes to the healthcare industry occasioned by any future changes in laws relating to the pricing of drug products, including changes made in the Inflation Reduction Act of 2022, or changes in the healthcare industry generally; ● The state of the economy generally and its impact on our business; ● The potential impact of future healthcare reform in the United States, including the Inflation Reduction Act of 2022, and measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our product; ● The scope, rate of progress and expense of our clinical trials and studies, pre-clinical studies, proof-of-concept studies, and our other drug development activities, and whether our trials and studies will be successful; ● Our ability to complete any clinical trials and studies that we may undertake on a timely basis and within the budgets we establish for such trials and studies; ● Whether FIRDAPSE ® can be successfully commercialized in Canada on a profitable basis through KYE Pharmaceuticals, our collaboration partner in Canada; ● The impact on sales of FIRDAPSE ® in the United States if an amifampridine product is purchased in Canada for use in the United States; ● Whether our collaboration partner in Japan, DyDo, will successfully complete the clinical trial in Japan that will be required to seek approval to commercialize FIRDAPSE ® in Japan; ● Whether DyDo will be able to obtain approval to commercialize FIRDAPSE ® in Japan; and ● Whether our version of vigabatrin tablets will ever be approved by the FDA and successfully marketed by Endo, whether we will earn milestone payments or royalties on sales of our version of generic vigabatrin tablets, and whether Endo’s bankruptcy filing will impact these issues.
Biggest changeFood and Drug Administration (FDA); • Whether the daily dose of FIRDAPSE ® taken by patients changes over time and affects our results of operations; • Whether we will be able to locate LEMS patients who are undiagnosed or are misdiagnosed with other diseases; • Whether patients will discontinue from the use of FIRDAPSE ® and FYCOMPA ® at rates that are higher than historically experienced or are higher than we project; • Whether new FIRDAPSE ® patients and new FYCOMPA ® patients can be successfully titrated to stable therapy; • Whether we can continue to market FIRDAPSE ® and FYCOMPA ® on a profitable and cash flow positive basis; • Whether we will successfully launch AGAMREE ® in the first quarter of 2024 as we currently plan; • Whether we will be able to successfully commercialize AGAMREE ® in the territory; • Whether we will be able to demonstrate, to the satisfaction of the FDA and third-party payors, whether AGAMREE ® offers advantages compared to corticosteroids or competitor’s products; • Whether the acquisition of AGAMREE ® will prove to be accretive to EBITDA and EPS in 2024 and beyond; • Whether any revenue or earnings guidance that we provide to the public market will turn out to be accurate; • Whether payors will provide coverage and reimburse for our products at the price that we charge for our products; • The ability of our third-party suppliers and contract manufacturers to supply sufficient product to meet our customers’ needs in future periods; 71 Table of Contents Index to Financial Statements • The ability of our third-party suppliers and contract manufacturers to maintain compliance with current Good Manufacturing Practices (cGMP); • The ability of those third parties that distribute our products to maintain compliance with applicable law; • Our ability to maintain compliance with applicable rules relating to our patient assistance programs for our products; • Our ability to maintain compliance with the applicable rules that relate to our contributions to 501(c)(3) organizations that support patients in financial need; • The scope of our intellectual property and the outcome of any challenges to our intellectual property, and, conversely, whether any third-party intellectual property presents unanticipated obstacles for FIRDAPSE ® , FYCOMPA ® , or AGAMREE ® ; • Whether there will be a post-closing review by antitrust regulators of our previous acquisition transactions, and the outcome of any such reviews if they occur; • Whether we will be able to acquire additional drug products under development, complete development required to commercialize such products, and thereafter, if such products are approved for commercialization, successfully market such products; • Whether our patents will be sufficient to prevent generic competition for FIRDAPSE ® and AGAMREE ® after our orphan drug exclusivity for each product expires; • Whether we will be successful in our litigation to enforce our patents against the Paragraph IV challengers who have filed Abbreviated New Drug Applications (ANDAs) seeking to introduce generic versions of FIRDAPSE ® and FYCOMPA ® ; • The impact on our profits and cash flow of adverse changes in reimbursement and coverage policies or regulations from government and private payors such as Medicare, Medicaid, insurance companies, health maintenance organizations and other plan administrators, or the impact of pricing pressures enacted by industry organizations, the federal government or the government of any state, including as a result of increased scrutiny over pharmaceutical pricing or otherwise; • Changes in the healthcare industry and the effect of political pressure from and actions by the President, Congress and/or medical professionals seeking to reduce prescription drug costs, and changes to the healthcare industry occasioned by any future changes in laws relating to the pricing of drug products, including changes made in the Inflation Reduction Act of 2022, or changes in the healthcare industry generally; • Whether we and Santhera Pharmaceuticals can successfully develop additional indications for AGAMREE ® and obtain the ability to commercialize the product for these additional indications; • The state of the economy generally and its impact on our business; • The scope, rate of progress and expense of our clinical trials and studies, pre-clinical studies, proof-of-concept studies, and our other drug development activities, and whether our trials and studies will be successful; • Our ability to complete any clinical trials and studies that we may undertake on a timely basis and within the budgets we establish for such trials and studies; • Whether FIRDAPSE ® can be successfully commercialized in Canada on a profitable basis through KYE Pharmaceuticals, our collaboration partner in Canada; • The impact on sales of FIRDAPSE ® in the United States if an amifampridine product is purchased in Canada for use in the United States; • Whether DyDo will be able to obtain approval to commercialize FIRDAPSE ® in Japan; and • Whether our plans to expand the reach of FIRDAPSE ® and AGAMREE ® into other global regions will be successful. 72 Table of Contents Index to Financial Statements Our current plans and objectives are based on assumptions relating to the continued commercialization of FIRDAPSE ® and FYCOMPA ® , the commercialization of AGAMREE ® and on our plans to seek to acquire or in-license additional products.
We currently pay the following royalties under our license agreement: • Royalties to our licensor for seven years from the first commercial sale of FIRDAPSE ® equal to 7% of net sales (as defined in the License Agreement) in North America for any calendar year for sales up to $100 million, and 10% of net sales in North America in any calendar year in excess of $100 million; and • Royalties to the third-party licensor of the rights sublicensed to us from the first commercial sale of FIRDAPSE ® equal to 7% of net sales (as defined in the License Agreement between BioMarin and the third-party licensor) in any calendar year for the duration of regulatory exclusivity within a territory and 3.5% for territories in any calendar year in territories without regulatory exclusivity.
We currently pay the following royalties under our license agreement: • Royalties to our licensor for seven years from the first commercial sale of FIRDAPSE ® equal to 7% of net sales (as defined in the FIRDAPSE ® License Agreement) in North America for any calendar year for sales up to $100 million, and 10% of net sales in North America in any calendar year in excess of $100 million; and • Royalties to the third-party licensor of the rights sublicensed to us from the first commercial sale of FIRDAPSE ® equal to 7% of net sales (as defined in the FIRDAPSE ® License Agreement between BioMarin and the third-party licensor) in any calendar year for the duration of regulatory exclusivity within a territory and 3.5% for territories in any calendar year in territories without regulatory exclusivity.
Our analyses also contemplated application of the constraint in accordance with the guidance, under which it determined a material reversal of revenue would not occur in a future period for the estimates as of December 31, 2022 and 2021 and, therefore, the transaction price was not reduced further during the years ended December 31, 2022 and 2021.
Our analyses also contemplated application of the constraint in accordance with the guidance, under which it determined a material reversal of revenue would not occur in a future period for the estimates as of December 31, 2023, 2022 and 2021 and, therefore, the transaction price was not reduced further during the years ended December 31, 2023, 2022 and 2021.
In January 2023, we received three Paragraph IV Certification Notice Letters from three generic drug manufacturers advising us that they had each submitted an Abbreviated New Drug Application (ANDA) to the FDA seeking authorization from the FDA to manufacture, use or sell a generic version of FIRDAPSE ® in the United States.
In January 2023, we received Paragraph IV Certification Notice Letters from three generic drug manufacturers advising that they had each submitted an Abbreviated New Drug Application (ANDA) to the FDA seeking authorization from the FDA to manufacture, use or sell a generic version of FIRDAPSE ® in the United States.
Further, we continue to make available at no-cost a LEMS voltage gated calcium channel antibody testing program for use by physicians who suspect that one of their patients may have LEMS and wish to reach a definitive diagnosis.
Further, we continue to make available at no-cost a LEMS voltage gated calcium channel antibody diagnostic testing program for use by physicians who suspect that one of their patients may have LEMS and wish to reach a definitive diagnosis.
A co-pay assistance program designed to keep out-of-pocket costs to not more than $10.00 per month (currently less than $2.00 per month) is available for all LEMS patients with commercial coverage who are prescribed FIRDAPSE ® .
A co-pay assistance program designed to keep out-of-pocket costs to not more than $10 per month (currently less than $2 per month) is available for all LEMS patients with commercial coverage who are prescribed FIRDAPSE ® .
There can be no assurance that we will continue to be successful in commercializing FIRDAPSE ® , that our commercialization of FYCOMPA ® will be successful, or that we will continue to be profitable and cash flow positive.
There can be no assurance that we will continue to be successful in commercializing FIRDAPSE ® and FYCOMPA ® , that our commercialization of AGAMREE ® will be successful, or that we will continue to be profitable and cash flow positive.
Our FIRDAPSE ® co-pay assistance program is not available to patients enrolled in state or federal healthcare programs, including Medicare, Medicaid, VA, DoD, or TRICARE. However, we are donating, and committing to continue to donate, money to qualified, independent charitable foundations dedicated to providing assistance to any U.S. LEMS patients in financial need.
Our FIRDAPSE ® co-pay assistance program is not available to patients enrolled in state or federal healthcare programs, including Medicare, Medicaid, VA, DoD, or TRICARE. Separately, we are donating, and committing to continue to donate, money to qualified, independent charitable foundations dedicated to providing assistance to any U.S. LEMS patients in financial need.
In the future, we may require additional working capital to support our operations depending on our future success with FIRDAPSE ® sales, or the products we acquire and continue to develop and whether our results continue to be profitable and cash flow positive.
In the future, we may require additional working capital to support our operations depending on our future success with FIRDAPSE ® , FYCOMPA ® and AGAMREE ® sales, or the products we acquire and continue to develop and whether our results continue to be profitable and cash flow positive.
Finally, we agreed to pay Eisai royalty payments after patent protection for FYCOMPA ® expires, which royalty payments will be reduced upon generic equivalents to FYCOMPA ® entering the market. In conjunction with the closing of the asset purchase, we entered into two additional agreements with Eisai; a Transition Services Agreement and a Supply Agreement.
Finally, we agreed to pay Eisai royalty payments after patent protection for FYCOMPA ® expires, which royalty payments will be reduced upon generic equivalents to FYCOMPA ® entering the market. In conjunction with the closing of the asset purchase, we entered into two additional agreements with Eisai; a TSA and a Supply Agreement.
The major components of research and development costs include preclinical study costs, clinical manufacturing costs, clinical study and trial expenses, insurance coverage for clinical trials, consulting, and other third-party costs, salaries and employee benefits, stock-based compensation expense, supplies and materials, and allocations of various overhead costs related to our product development efforts.
The major components of research and development costs include acquired IPR&D, preclinical study costs, clinical manufacturing costs, clinical study and trial expenses, insurance coverage for clinical trials, consulting, and other third-party costs, salaries and employee benefits, stock-based compensation expense, supplies and materials, and allocations of various overhead costs related to our product development efforts.
Further, if DyDo is successful in obtaining the right to commercialize FIRDAPSE ® in Japan, we will pay royalties to our licensor on net sales in Japan equal to a similar percentage to the royalties that we are currently paying under our original license agreement for North America. • Payments due to Jacobus.
Further, if DyDo is successful in obtaining the right to commercialize FIRDAPSE ® in Japan, we will pay royalties to our licensor on net sales in Japan equal to a similar percentage to the royalties that we are currently paying for non-U.S. sales under our original FIRDAPSE ® License Agreement for North America. • Payments due to Jacobus.
There can be no assurance as to the amount of any such funding that will be required for these purposes or whether any such funding will be available to us when it is required.
There can be no assurance as to the amount of any such funding that will be required for these purposes or whether any such funding will be available to us if and when it is required.
FYCOMPA ® is used to treat certain types of focal onset seizures (seizures that involve only one part of the brain) in adults and children 4 years of age and older.
FYCOMPA ® is used to treat certain types of focal onset seizures (seizures that involve only one part of the brain) in adults and children four years of age and older.
This section provides information about key accounting estimates and policies that we followed in preparing our consolidated financial statements for the 2022 fiscal year. • Critical Accounting Policies and Estimates .
This section provides information about key accounting estimates and policies that we followed in preparing our consolidated financial statements for the 2023 fiscal year. • Critical Accounting Policies and Estimates .
Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” in the consolidated financial statements included in this report for further details on revenue recognition. Valuation of Intangible Assets. We have acquired and continue to acquire significant intangible assets that we record at fair value at the acquisition date.
Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” in the consolidated financial statements included in this report for further details on revenue recognition. 64 Table of Contents Index to Financial Statements Valuation of Intangible Assets. We have acquired and continue to acquire significant intangible assets that we record at fair value at the acquisition date.
Finally, we are continuing to expand our digital and social media activities to introduce our product and services to potential patients and their healthcare providers.
Finally, we are continuing to expand our digital and social media activities to introduce our products and services to potential patients and their healthcare providers.
FIRDAPSE ® On November 28, 2018, we received approval from the FDA for our new drug application, or NDA, for FIRDAPSE ® Tablets 10 mg for the treatment of adult patients (ages 17 and above) with Lambert-Eaton myasthenic syndrome, or LEMS, and in January 2019, we launched FIRDAPSE ® in the United States.
FIRDAPSE ® On November 28, 2018, we received approval from the FDA for our new drug application, or NDA, for FIRDAPSE ® Tablets 10 mg for the treatment of adult patients (ages 17 and above) with LEMS, and in January 2019, we launched FIRDAPSE ® in the United States.
The preparation of these consolidated financial statements requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue and expenses during the reporting periods.
The preparation of these consolidated financial statements requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue and expenses during the reporting periods. We continually evaluate our judgments, estimates and assumptions.
In that regard, our future funding requirements will depend on many factors, including: • the scope, rate of progress and cost of our clinical trials and other product development activities; • the cost of diligence in seeking a potential acquisition and of the completion of such acquisition, if an acquisition so occurs; • future clinical trial results; • the terms and timing of any collaborative, licensing and other arrangements that we may establish; • the cost and timing of regulatory approvals; • the cost and delays in product development as a result of any changes in regulatory oversight applicable to our products; • the level of revenues that we report from sales of FIRDAPSE® and FYCOMPA®; • the effect of competition and market developments; • the cost of filing and potentially prosecuting, defending and enforcing any patent claims and other intellectual property rights; and • the extent to which we acquire or invest in other products.
In that regard, our future funding requirements will depend on many factors, including: • the cost of diligence in seeking potential acquisitions and of the completion of such acquisitions, if any future acquisitions occur; • future clinical trial results; • the scope, rate of progress and cost of our clinical trials and other product development activities; • the terms and timing of any collaborative, licensing and other arrangements that we may establish; • the cost and timing of regulatory approvals; • the cost and delays in product development as a result of any changes in regulatory oversight applicable to our products; • the amount of net revenues that we report from sales of FIRDAPSE ® , FYCOMPA ® and AGAMREE ® ; • the effect of competition and market developments; • the cost of filing and potentially prosecuting, defending and enforcing any patent claims and other intellectual property rights; and • the extent to which we acquire or invest in other products.
Royalties are payable on the terms set forth below in Liquidity and Capital Resources - Contractual Obligations and Arrangements , and increase by 3% when net sales (as defined in the applicable license agreement) exceed $100 million in any calendar year. Research and Development Expenses.
For FIRDAPSE ® , royalties are payable on the terms set forth below in Liquidity and Capital Resources— Contractual Obligations and Arrangements , and increase by 3% when net sales (as defined in the applicable license agreement) exceed $100 million in any calendar year.
We intend to vigorously protect and defend our intellectual property for FIRDAPSE ® and, although there can be no assurance, we believe that our patent estate will protect FIRDAPSE ® from generic competition for the life of our patents.
We intend to vigorously protect and defend our intellectual property for FIRDAPSE ® and, although there can be no assurance, we believe that our patent estate will protect FIRDAPSE ® from generic competition.
To date, all of our research and development resources have been devoted to the development of FIRDAPSE ® , CPP-109 (our version of vigabatrin), and formerly CPP-115, and until we acquire or license new products we currently expect that our future development costs will be attributable principally to the continued development of FIRDAPSE ® .
Prior to January 2023, all of our research and development resources have been devoted to the development of FIRDAPSE ® , CPP-109 (our version of vigabatrin), and formerly CPP-115, and until we acquire or license new products we currently expect that our future development costs will be attributable principally to the continued development of FIRDAPSE ® , FYCOMPA ® and AGAMREE ® .
In connection with its recent settlement with Jacobus, Catalyst has agreed to pay the following consideration to Jacobus: • $30 million of cash, of which $10 million was paid at the closing of the settlement on July 11, 2022 and the balance of which will be paid over the next two years, on the first and second anniversary of closing; • An annual royalty on Catalyst’s net sales (as defined in the License and Asset Purchase Agreement between Catalyst and Jacobus) of amifampridine products in the United States equal to: (a) for calendar years 2022 through 2025, 1.5% (with a minimum annual royalty of $3.0 million per year), and (b) for calendar years 2026 through the expiration of the last to expire of Catalyst’s FIRDAPSE ® patents in the United States, 2.5% (with a minimum annual royalty of $5 million per year); provided, however , that the royalty rate may be reduced and the minimum annual royalty may be eliminated under certain circumstances; and • If Catalyst were to receive a priority review voucher for FIRDAPSE ® or RUZURGI ® in the future, 50% of the consideration paid by a third party to acquire that voucher will be paid to Jacobus.
In connection with our July 2022 settlement with Jacobus, we agreed to pay the following consideration to Jacobus: • $30 million of cash, of which $10 million was paid at the closing of the settlement on July 11, 2022, $10 million was paid on the first anniversary of closing and the remaining $10 million will be paid on the second anniversary of closing; • An annual royalty on Catalyst’s net sales (as defined in the License and Asset Purchase Agreement between Catalyst and Jacobus) of amifampridine products in the United States equal to: (a) for calendar years 2022 through 2025, 1.5% (with a minimum annual royalty of $3.0 million per year), and (b) for calendar years 2026 through the expiration of the last to expire of Catalyst’s FIRDAPSE ® patents in the United States, 2.5% (with a minimum annual royalty of $5 million per year); provided, however , that the royalty rate may be reduced and the minimum annual royalty may be eliminated under certain circumstances; and 69 Table of Contents Index to Financial Statements • If Catalyst were to receive a priority review voucher for FIRDAPSE ® or RUZURGI ® in the future, 50% of the consideration paid by a third-party to acquire that voucher will be paid to Jacobus.
Net cash provided by investing activities during the year ended December 31, 2022 was $9.2 million and consisted primarily of proceeds from the sale of available-for-sale securities of $19.2 million, offset partially by payment in connection with license agreement of $10.0 million.
Net cash provided by investing activities during the year ended December 31, 2022 was $9.2 million and consisted primarily of proceeds from the sale of available-for-sale securities of $19.2 million, offset partially by payments in connection with asset acquisitions of $10.0 million.
We also work with several rare disease advocacy organizations (including Global Genes and the National Organization for Rare Disorders) to help increase awareness and level of support for patients living with LEMS and to provide education for the physicians who treat these rare diseases and the patients they treat.
We also work with several rare disease advocacy organizations (including the Myasthenia Gravis Foundation of America and the National Organization for Rare Disorders) to help increase awareness and level of support for patients living with LEMS and to provide education for the physicians who treat these rare diseases and the patients they treat.
Total stock-based compensation for the years ended December 31, 2022 and 2021 was $7.9 million and $6.1 million, respectively. In 2022 and 2021, grants were principally for stock options relating to year-end bonus awards and grants to new employees. Other Income, Net.
Stock-Based Compensation. Total stock-based compensation for the years ended December 31, 2023 and 2022 was $14.3 million and $7.9 million, respectively. In 2023 and 2022, grants were principally for stock options relating to year-end bonus awards and grants to new employees. Other Income, Net.
For the year ended December 31, 2022, we recognized an aggregate of approximately $32.1 million of royalties payable under these license agreements, which is included in cost of sales in the accompanying consolidated statements of operations and comprehensive income.
For the year ended December 31, 2023, we recognized an aggregate of approximately $39.5 million of royalties payable under these license agreements, which is included in cost of sales in the accompanying consolidated statements of operations and comprehensive income.
Factors that might cause such differences include, but are not limited to, those discussed in the section entitled “Item 1A – Risk Factors.” The continued successful commercialization of FIRDAPSE ® and FYCOMPA ® are highly uncertain.
Factors that might cause such differences include, but are not limited to, those discussed in the section entitled “Item 1A – Risk Factors.” The continued successful commercialization of FIRDAPSE ® (amifampridine), FYCOMPA ® (perampanel) CIII, and the successful launch and commercialization of AGAMREE ® (vamorolone) are highly uncertain.
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. 64 Table of Contents Index to Financial Statements
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Additionally, we had state net operating loss carry-forwards of approximately $0, $28 million and $42 million, respectively, available to reduce future Florida taxable income for the years ended December 31, 2022, 2021 and 2020.
Additionally, we had state net operating loss carry-forwards of approximately $0, $0 and $28 million, respectively, available to reduce future Florida taxable income for the years ended December 31, 2023, 2022 and 2021. Recently Issued Accounting Standards.
We expect our revenues from the KYE collaboration agreement to fluctuate in future periods based on our collaborator’s ability to sell FIRDAPSE ® in Canada. For the fiscal year ended December 31, 2022, we did not generate revenues under our collaborative agreement with Endo.
We expect our revenues from the KYE collaboration agreement to fluctuate in future periods based on our collaborator’s ability to sell FIRDAPSE ® in Canada. 62 Table of Contents Index to Financial Statements For the fiscal year ended December 31, 2023, we did not generate revenues under our collaborative agreement with Endo.
(“Eisai”) for the acquisition of the United States rights to FYCOMPA ® (perampanel) CIII, a prescription medication used alone or with other medicines to treat focal onset seizures with or without secondarily generalized seizures in people with epilepsy aged four and older and with other medicines to treat primary generalized tonic-clonic seizures in people with epilepsy aged 12 and older.
FYCOMPA ® (perampanel) CIII is a prescription medication used alone or with other medicines to treat focal onset seizures with or without secondarily generalized seizures in people with epilepsy aged four and older and with other medicines to treat primary generalized tonic-clonic seizures in people with epilepsy aged 12 and older.
This inside sales agency allows our sales efforts to not only reach the neuromuscular specialists who regularly treat LEMS patients, but also the roughly 9,000 neurology and neuromuscular healthcare providers that may be treating a LEMS patient who can benefit from FIRDAPSE ® .
This inside sales agency allowed our sales efforts to not only reach the neuromuscular specialists who regularly treat LEMS patients, but also the roughly 9,000 neurology and neuromuscular healthcare providers that may be treating a LEMS patient who can benefit from FIRDAPSE ® . However, effective January 1, 2024 we have terminated that arrangement.
Research and development expenses for the years ended December 31, 2022 and 2021 were approximately $19.8 million and $16.9 million, respectively, and represented approximately 18% and 19% of total operating costs and expenses, respectively.
Research and development expenses for the years ended December 31, 2023 and 2022 were approximately $93.2 million and $19.8 million, respectively, and represented approximately 30% and 18% of total operating costs and expenses, respectively.
This was partially offset by increases of $3.8 million in 61 Table of Contents Index to Financial Statements accounts receivable, net and $0.8 million in prepaid expenses and other current assets and deposits and a decrease of $0.3 million in operating lease liability.
This was partially offset by increases of $3.8 million in accounts receivable, net and $0.8 million in prepaid expenses and other current assets and a decrease of $0.3 million in operating lease liability.
Considering the significant uncertainties inherent in the forward-looking statements we have made herein, which reflect our views only as of the date of this report, you should not place undue reliance upon such statements.
Although we believe that our assumptions are reasonable, any of our assumptions could prove inaccurate. Considering the significant uncertainties inherent in the forward-looking statements we have made herein, which reflect our views only as of the date of this report, you should not place undue reliance upon such statements.
Net cash used in financing activities during the year ended December 31, 2021 was $8.1 million, consisting primarily of repurchases of common stock, partially offset by proceeds from the exercise of options to purchase shares of common stock. Contractual Obligations and Arrangements.
Net cash provided by financing activities during the year ended December 31, 2022 was $1.7 million, consisting primarily of proceeds from the exercise of stock options, partially offset by repurchases of common stock. Contractual Obligations and Arrangements.
We also agreed to pay Eisai an additional cash payment of $25 million if a requested patent extension for FYCOMPA ® is approved by the U.S. Patent and Trademark Office (USPTO).
We also agreed to pay Eisai an additional cash payment of $25 million if a requested patent extension for FYCOMPA ® until June 8, 2026 was approved by the U.S. Patent and Trademark Office (USPTO), which did not occur.
The notice letters each allege that our six patents listed in the FDA Orange Book covering FIRDAPSE ® are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the proposed product described in these ANDA submissions.
The notice letters each alleged that the six patents listed in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) in connection with FIRDAPSE ® are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the proposed product described in these ANDA submissions.
Under the Transition Services Agreement, a U.S. subsidiary of Eisai is providing us with certain transitional services, and under the Supply Agreement, Eisai has agreed to manufacture FYCOMPA ® for us for at least seven years at prices listed in the Supply Agreement (to be updated on a yearly basis).
Under the TSA, a U.S. subsidiary of Eisai provided us with certain transitional services, and under the Supply Agreement, Eisai agreed to manufacture FYCOMPA ® for us for at least seven years at prices listed in the Supply Agreement (to be updated on a yearly basis). As of December 31, 2023, the transition services under the TSA have been completed.
We do not have any off-balance sheet arrangements as such term is defined in rules promulgated by the SEC. Caution Concerning Forward-Looking Statements This report contains “forward-looking statements”, as that term is defined in the Private Securities Litigation Reform Act of 1995. These include statements regarding our expectations, beliefs, plans or objectives for future operations and anticipated results of operations.
Caution Concerning Forward-Looking Statements This report contains “forward-looking statements”, as that term is defined in the Private Securities Litigation Reform Act of 1995. These include statements regarding our expectations, beliefs, plans or objectives for future operations and anticipated results of operations.
Our net income was approximately $83.1 million in the year ended December 31, 2022 ($0.80 per basic and $0.75 per diluted share) as compared to $39.5 million in the year ended December 31, 2021 ($0.38 per basic and $0.37 per diluted share).
Net Income. Our net income was approximately $71.4 million in the year ended December 31, 2023 ($0.67 per basic and $0.63 per diluted share) as compared to $83.1 million in the year ended December 31, 2022 ($0.80 per basic and $0.75 per diluted share).
We expect that selling, general and administrative expenses will continue to be substantial in future periods as we continue our efforts to increase our revenues from FIRDAPSE ® , begin our efforts to market FYCOMPA ® , and take steps to continue to expand our business. Stock-Based Compensation.
We expect that selling, general and administrative expenses will continue to be substantial in future periods as we continue our efforts to increase our revenues from FIRDAPSE ® , continue our efforts to market FYCOMPA ® , take steps to prepare for the commercial launch of AGAMREE ® in 2024, and take steps to continue to expand our business.
We also have a field-based force of six medical science liaisons who are helping educate the medical communities and patients about LEMS and our programs supporting patients and access to FIRDAPSE ® . Additionally, we have contracted with an experienced inside sales agency that works to generate leads through telemarketing to targeted physicians.
We also have a field-based force of 10 medical science liaisons who are helping educate the medical community about scientific literature concerning LEMS and FIRDAPSE ® . Additionally, for the last few years we have contracted with an experienced inside sales agency that works to generate leads through telemarketing to targeted physicians.
We expect our revenues from the Endo collaborative agreement to fluctuate in future periods based on our collaborator’s ability to meet various regulatory milestones set forth in such agreement. For the fiscal year ended December 31, 2022, we generated revenues of approximately $0.5 million from our agreement with DyDo Pharma.
For the fiscal year ended December 31, 2023, we generated $1.9 million in revenues from our collaborative agreement with DyDo. We expect our revenue from the DyDo license agreement to fluctuate in future periods based on DyDo’s ability to meet various regulatory milestones set forth in such agreement. Cost of Sales.
Under the Federal Food, Drug, and Cosmetic Act (FDCA), as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, we had 45 days from receipt of the notice letters to commence patent infringement lawsuits against these generic drug manufacturers in a federal district court to trigger a stay precluding FDA from approving any ANDA until May 2026 or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first, and in that regard, after conducting the necessary due diligence, we filed lawsuits on March 1, 2023 in the U.S.
Under the Federal Food, Drug and Cosmetic Act (FDCA), as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, we had 45 days from receipt of the notice letters to determine if there were grounds to bring a lawsuit and, if so, to commence patent infringement lawsuits against these generic drug manufacturers in a federal district court, which would trigger a statutory stay precluding the FDA from final approval of the subject ANDA until May 2026 or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first.
The effective tax rate is affected by many factors, including the number of stock options exercised in any period, and our effective tax rate is likely to fluctuate in future periods (and may be higher in future periods than it was in 2022). Net Income.
Our effective tax rate is affected by many factors, including the number of stock options exercised in any period, and our effective tax rate is likely to fluctuate in future periods (and may be higher in future periods than it was in the 2023 fiscal year). 67 Table of Contents Index to Financial Statements We had no uncertain tax positions as of December 31, 2023 and 2022.
Following the closing of the acquisition, we are currently marketing FYCOMPA ® in the U.S. through Eisai under the Transition Services Agreement as we build our FYCOMPA ® marketing and sales team, and we expect to take over the marketing program in May 2023.
Initially, following the closing of the acquisition, we began to market FYCOMPA ® in the U.S. through Eisai under the TSA as we built our FYCOMPA ® marketing and sales team, and in May 2023, we took over the marketing program for FYCOMPA ® .
We reported other income, net in all periods, primarily relating to our investment of our cash and cash equivalents and investments of $2.9 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively, which includes realized losses from the sale of available-for-sale securities of $0.8 million and $0 million, respectively.
We reported other income, net in all periods, primarily relating to interest on our investment of our cash and cash equivalents of $7.7 million and $2.9 million for the fiscal years ended December 31, 2023 and 2022, respectively.
Selling, general and administrative expenses for the years ended December 31, 2022 and 2021 were approximately $58.2 million and $49.6 million, respectively, and represented approximately 52% and 56% of total operating costs and expenses for the years ended December 31, 2022, and 2021, respectively.
Selling, general and administrative expenses for the years ended December 31, 2023 and 2022 were approximately $133.7 million and $57.1 million, respectively, and represented approximately 43% and 51% of total operating costs and expenses for the years ended December 31, 2023, and 2022, respectively.
It works by decreasing abnormal electrical activity in the brain. Pursuant to the Asset Purchase Agreement, which closed on January 24, 2023, we purchased Eisai’s regulatory approvals and documentation, product records, intellectual property, inventory, and other matters relating to the U.S. rights for FYCOMPA ® , in exchange for an upfront payment of $160 million in cash.
In connection with the acquisition, we purchased Eisai’s regulatory approvals and documentation, product records, intellectual property, inventory, and other matters relating to the U.S. rights for FYCOMPA ® , in exchange for an upfront payment of $160 million in cash.
The increase of approximately $75.9 million was due to increases in sales volumes of approximately 49% (which included patients who were transferred to FIRDAPSE ® in the first and second quarter of 2022 when RUZURGI ® was removed from the market) and net price increases.
The increase of approximately $182.6 million in net product revenues when comparing the fiscal year ended December 31, 2023 and 2022 was primarily due to the acquisition of FYCOMPA ® during January 2023, and related product sales, and increases in FIRDAPSE ® sales volumes of approximately 12% (which included patients who were transferred to FIRDAPSE ® in the first and second quarter of 2022 when RUZURGI ® was removed from the market) and net price increases.
Through the program, eligible commercially insured patients could pay as little as $10 for their FYCOMPA ® co-pay (with a maximum savings of $1,300 per year). Eligible cash-paying patients receive up to $60 towards each prescription, up to a maximum of $720 per year.
We are supporting patients using FYCOMPA ® through an Instant Savings Card Program. Through the program, eligible commercially insured patients could pay as little as $10 for their FYCOMPA ® co-pay (with a maximum savings of $1,300 per year).
We believe that by using specialty pharmacies in this way, the difficult task of navigating the health care system is far better for the patient needing treatment for their rare disease and the health care community in general. 54 Table of Contents Index to Financial Statements In order to help LEMS patients afford their medication, we, like other pharmaceutical companies which are marketing drugs for ultra-orphan conditions, have developed an array of financial assistance programs that are available to reduce patient co-pays and deductibles to a nominal affordable amount.
In order to help patients with LEMS afford their medication, we, like other pharmaceutical companies which are marketing drugs for ultra-orphan conditions, have developed an array of financial assistance programs that are available to reduce patient co-pays and deductibles to a nominal affordable amount.
Research and development expenses for the years ended December 31, 2022 and 2021 were as follows (in thousands): For the year ended December 31, Change 2022 2021 $ % Research and development expenses $ 18,060 $ 15,325 2,735 17.8 Employee stock-based compensation 1,729 1,611 118 7.3 Total research and development expenses $ 19,789 $ 16,936 2,853 16.8 Research and development expenses increased approximately $2.9 million during year ended December 31, 2022 when compared to the same period in 2021.
Research and development expenses for the years ended December 31, 2023 and 2022 were as follows (in thousands): For the year ended December 31, Change 2023 2022 $ % Research and development expenses $ 10,156 $ 18,060 (7,904 ) (43.8 ) Acquired in-process research and development 81,513 — 81,513 — Employee stock-based compensation 1,481 1,729 (248 ) (14.3 ) Total research and development expenses $ 93,150 $ 19,789 73,361 370.7 Research and development expenses increased approximately $73.4 million during year ended December 31, 2023 when compared to the same period in 2022.
Our effective income tax rate is the ratio of income tax expense (benefit) over our income before income taxes. We incurred operating losses from inception through the three-month period ended March 31, 2019. As of December 31, 2022, 2021 and 2020, respectively, we had federal net operating loss carry-forwards of approximately $0, $0 and $3 million.
Our effective income tax rate is the ratio of income tax expense over our income before income taxes. As of December 31, 2023, 2022 and 2021, we had no federal net operating loss carry-forwards.
Our flagship U.S. commercial product is FIRDAPSE ® (amifampridine) Tablets 10 mg. approved for the treatment of Lambert-Eaton myasthenic syndrome, or LEMS, for adults and for children ages six and up. On December 17, 2022, we entered into an agreement with Eisai Inc.
Our flagship U.S. commercial product is FIRDAPSE ® (amifampridine) Tablets 10 mg approved for the treatment of Lambert-Eaton myasthenic syndrome, or LEMS, for adults and for children ages six and up. Further, on January 24, 2023, we closed our acquisition of FYCOMPA ® and are now also marketing that product in the United States.
Cost of sales was approximately $34.4 million for the year ended December 31, 2022, compared to $21.9 million for the year ended December 31, 2021. Cost of sales in both periods consisted principally of royalty payments, which are based on net revenue as defined in the applicable license agreement.
Cost of sales in both periods consisted principally of royalty payments, which are based on net revenue as defined in the applicable license agreements.
We sell FIRDAPSE ® through a field force experienced in neurologic, central nervous system or rare disease products consisting at this time of approximately 27 field personnel, including sales (Regional Account Managers), thought leader liaisons, patient assistance and insurance navigation support (Patient Access Liaisons), and payor reimbursement (National Account Managers).
Further, on September 29, 2022, the FDA approved our supplemental NDA (sNDA) to expand the indicated age range for FIRDAPSE ® Tablets 10 mg to include pediatric patients, six years of age and older for the treatment of LEMS. 58 Table of Contents Index to Financial Statements We sell FIRDAPSE ® through a field force experienced in neurologic, central nervous system or rare disease products consisting at this time of approximately 35 field personnel, including sales (Regional Account Managers), thought leader liaisons, patient assistance and insurance navigation support (Patient Access Liaisons), and payor reimbursement (National Account Managers).
If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and development programs, which could have an adverse effect on our business.
If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and development programs, which could have an adverse effect on our business. 68 Table of Contents Index to Financial Statements On September 8, 2023, we filed a shelf registration statement with the SEC to sell up to $500 million of common stock, preferred stock, warrants to purchase common stock, debt securities and units consisting of one or more of such securities (the 2023 Shelf Registration Statement).
During the year ended December 31, 2021, net cash provided by operating activities was primarily attributable to our net income of $39.5 million, a decrease of $4.0 million in prepaid expenses and other current assets and deposits, increases of $5.5 million in accrued expenses and other liabilities, $0.9 million in operating lease liability, $9.3 million in deferred taxes and of $6.6 million of non-cash expenses.
During the year ended December 31, 2023, net cash provided by operating activities was primarily attributable to our net income of $71.4 million, increases of $10.8 million in accounts payable and $5.8 million in accrued expenses and other liabilities, $81.5 million in acquired IPR&D and $45.8 million in non-cash expenses.
This was partially offset by increases of $0.6 million in accounts receivable, net and $3.2 million in inventory and a decrease of $1.5 million in accounts payable.
This was partially offset by increases of $43.1 million in accounts receivable, net, $4.7 million in inventory and $5.8 million prepaid expenses and other current assets, a decrease of $0.3 million in operating lease liability and $17.8 million in deferred taxes.
For the years ended December 31, 2022 and 2021, the assumptions used were an estimated annual volatility of 69.2% and 70.0%, expected holding periods of primarily four and a half years, and risk-free interest rates of 1.27% to 4.07% and 0.34% to 1.18%, respectively. 58 Table of Contents Index to Financial Statements Valuation Allowance for Deferred Tax Assets.
For the years ended December 31, 2023 and 2022, the assumptions used were an estimated annual volatility of 68.0% to 71.0% and 68.4% to 69.5%, expected holding periods of 4.5 to 5.2 years and 4.5 years, and risk-free interest rates of 3.55% to 4.92% and 1.27% to 4.07%, respectively. Results of Operations Years Ended December 31, 2023 and 2022 Revenues.
This section discusses how certain forward-looking statements made throughout this MD&A and in other sections of this report are based on management’s present expectations about future events and are inherently susceptible to uncertainty and changes in circumstance. 53 Table of Contents Index to Financial Statements Overview We are a commercial-stage patient centric biopharmaceutical company focused on in-licensing, developing and commercializing novel high-quality medicines for patients living with rare diseases and diseases that are difficult to treat.
This section discusses how certain forward-looking statements made throughout this MD&A and in other sections of this report are based on management’s present expectations about future events and are inherently susceptible to uncertainty and changes in circumstance.
We received approval from Health Canada on July 31, 2020, for FIRDAPSE ® for the symptomatic treatment of LEMS and as of December 31, 2020, we had launched FIRDAPSE ® in Canada. During the fiscal year ended December 31, 2022, revenues generated under our collaboration agreement with KYE Pharmaceuticals were immaterial.
We expect these revenues to fluctuate in future periods based on our sales of FIRDAPSE ® and FYCOMPA ® . We received approval from Health Canada on July 31, 2020, for FIRDAPSE ® for the symptomatic treatment of LEMS and as of December 31, 2020, our sub-licensee KYE Pharmaceuticals launched FIRDAPSE ® in Canada.
The increase in other income, net for the year ended December 31, 2022 of approximately $2.6 million when compared to the same period in 2021 is primarily due to higher yields on investments as well as higher invested balances. Other income, net, consists primarily of interest and dividend income. Income Taxes.
The increase in other income, net for the fiscal year ended December 31, 2023 of approximately $4.8 million when compared to the same period in 2022 is primarily due to higher yields on investments offset by $2.0 million of accretion expense related to payments arising from our acquisition of RUZURGI ® .
We expect that research and development expenses will continue to be substantial in 2023 and beyond as we execute on our strategic initiative to acquire or in-license innovative technology platforms and/or earlier stage programs in rare disease categories outside of neuromuscular diseases. 59 Table of Contents Index to Financial Statements Selling, General and Administrative Expenses.
We expect that research and development expenses will continue to be significant in 2024 and beyond as we execute on our strategic initiative and portfolio expansion efforts, with a keen focus on products to treat rare and difficult to treat diseases. 66 Table of Contents Index to Financial Statements Selling, General and Administrative Expenses.
Our general and administrative expenses consist primarily of salaries and personnel expenses for accounting, corporate, compliance, and administrative functions. Other costs include administrative facility costs, regulatory fees, insurance, and professional fees for legal including litigation cost, information technology, accounting, and consulting services. Stock-Based Compensation.
Other costs include administrative facility costs, regulatory fees, insurance, and professional fees for legal including litigation cost, IT, accounting, and consulting services. Amortization of Intangible Assets.
As a result, we reduced the valuation allowance accordingly. Results of Operations Years Ended December 31, 2022 and 2021 Revenues. For the year ended December 31, 2022, we recognized $213.9 million in net revenue from product sales of FIRDAPSE ® primarily in the U.S. compared to $138.0 million for the year ended December 31, 2021.
For the fiscal year ended December 31, 2023, we recognized total revenues of $398.2 million which included $396.5 million in net revenue from product sales primarily in the U.S. compared to $214.2 million in total revenues, which included $213.9 million in net revenues from product sales for the fiscal year ended December 31, 2022.
Net cash used in investing activities was $11.0 million for the year ended December 31, 2021, consisting primarily of purchases of investments. Net cash provided by financing activities during the year ended December 31, 2022 was $1.7 million, consisting primarily of proceeds from the exercise of options to purchase shares of common stock, partially offset by repurchases of common stock.
Net cash used in financing activities during the year ended December 31, 2023 was $10.9 million, consisting primarily of payment of liabilities arising from asset acquisition of $12.7 million, partially offset by proceeds from the exercise of stock options of $2.8 million.
We have entered into a purchase commitment with a contract manufacturing organization for approximately $0.5 million per year. The agreement expires in December 2023. • Lease for office space . We operate our business in leased office space in Coral Gables, Florida. We entered into an agreement in May 2020 that amended our lease for office facilities.
We also have entered into the following contractual arrangements: • Purchase commitment . We have entered into a purchase commitment with a contract manufacturing organization for approximately $0.5 million per year. The agreement expires in December 2024. 70 Table of Contents Index to Financial Statements • Lease for office space .
Differences in the effective tax and the statutory federal income tax rate of 21% are driven by state income taxes and anticipated annual permanent differences, and offset by the orphan drug credit claimed.
Our effective income tax rate was 24.4% and 20.7% for fiscal years ended December 31, 2023 and 2022, respectively. Differences in our effective tax and the statutory federal income tax rate of 21% are driven by state income taxes and anticipated annual permanent differences offset by equity compensation deductions.
District Court for the District of New Jersey against each of the three generic drug manufacturers who notified us of their ANDA submissions.
In that regard, after conducting the necessary due diligence, we filed lawsuits on March 1, 2023 in the U.S. District Court for the District of New Jersey against each of the three generic drug manufacturers who notified us of their ANDA submissions, thus triggering the stay.
Based on forecasts of available cash, we believe that we have sufficient resources to support our currently anticipated operations for at least the next 12 months from the date of this report. There can be no assurance that we will remain profitable or that we will be able to obtain any additional funding that we may require in the future.
Further, as of such date, substantially all such funds were invested in money market accounts and U.S. Treasuries. Based on forecasts of available cash, we believe that we have sufficient resources to support our currently anticipated operations for at least the next 12 months from the date of this report.
Cost of sales may also include period costs related to certain inventory manufacturing services, inventory adjustments charges, unabsorbed manufacturing and overhead costs, and manufacturing variances. 56 Table of Contents Index to Financial Statements Research and Development Expenses. Our research and development expenses consist of costs incurred for company-sponsored research and development activities, as well as support for selected investigator-sponsored research.
Cost of sales consists of third-party manufacturing costs, freight, royalties, and indirect overhead costs associated with sales of our products. Cost of sales may also include period costs related to certain inventory manufacturing services, inventory adjustments charges, unabsorbed manufacturing and overhead costs and manufacturing variances. Research and Development Expenses.
Selling, general and administrative expenses for the years ended December 31, 2022 and 2021 were as follows (in thousands): For the year ended December 31, Change 2022 2021 $ % Selling $ 29,469 $ 26,151 3,318 12.7 General and administrative 22,536 19,015 3,521 18.5 Employee stock-based compensation 6,178 4,462 1,716 38.5 Total selling, general and administrative expenses $ 58,183 $ 49,628 8,555 17.2 For the year ended December 31, 2022, selling, general and administrative expenses increased approximately $8.6 million when compared to the same period in 2021.
Selling, general and administrative expenses for the years ended December 31, 2023 and 2022 were as follows (in thousands): For the year ended December 31, Change 2023 2022 $ % Selling $ 86,689 $ 29,469 57,220 194.2 General and administrative 34,252 21,438 12,814 59.8 Employee stock-based compensation 12,769 6,178 6,591 106.7 Total selling, general and administrative expenses $ 133,710 $ 57,085 76,625 134.2 For the year ended December 31, 2023, selling, general and administrative expenses increased approximately $76.6 million when compared to the same period in 2022.
At December 31, 2022, substantially all of our cash and cash equivalents were deposited with one financial institution, and such balances were in excess of federally insured limits. Further, as of such date, substantially all such funds were invested in money market accounts, short-term interest bearing obligations and U.S. Treasuries.
At December 31, 2022, we had cash and cash equivalents aggregating $298.4 million and working capital of $263.2 million. At December 31, 2023, substantially all of our cash and cash equivalents were deposited with one financial institution, and such balances were in excess of federally insured limits.
Further, there can be no assurance that if we need additional funding in the future, whether such funding will be available to us on acceptable terms. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” below for further information on our liquidity and cash flow. Basis of Presentation Revenues.
Further, there can be no assurance that if we need additional funding in the future, whether such funding will be available to us on acceptable terms. Basis of Presentation Revenues. During the fiscal year ended December 31, 2023, we generated revenues from product sales of FIRDAPSE ® primarily in the U.S. and FYCOMPA ® in the U.S.
In that regard, we currently expect to hire approximately 34 sales and marketing personnel to support FYCOMPA ® , many of whom previously worked in Eisai’s U.S. sales division marketing FYCOMPA ® .
In that regard, we have hired approximately 35 sales and marketing personnel to support FYCOMPA ® , most of whom previously worked in Eisai’s U.S. sales division marketing FYCOMPA ® . We have also hired seven medical science liaisons to help us educate the medical community who treat epilepsy about scientific literature regarding epilepsy and FYCOMPA ® .

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