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What changed in CATALYST PHARMACEUTICALS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CATALYST PHARMACEUTICALS, INC.'s 2023 and 2024 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 2024 report.

+681 added−719 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in CATALYST PHARMACEUTICALS, INC.'s 2024 10-K

681 paragraphs added · 719 removed · 473 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

236 edited+84 added−158 removed170 unchanged
Biggest changeAdditionally, we will hold the North American rights to any future approved indications for AGAMREE ® . 5 Table of Contents Index to Financial Statements Concurrent with the closing of the AGAMREE ® License Agreement, we made a strategic investment into Santhera in which we acquired 1,414,688 of Santhera’s post-reverse split ordinary shares (representing approximately 11.26% of Santhera’s outstanding ordinary shares following the transaction) at an investment price of CHF 9.477 per share (corresponding to a mutually agreed volume weighted average price prior to signing), with the approximately $15.7 million USD in equity investment proceeds, inclusive of the approximately $13.5 million USD fair value of the investment in Santhera and approximately $2.2 million USD of transaction costs included in acquired in-process research and development, to be used by Santhera for Phase IV studies of AGAMREE ® in DMD and future development of additional indications for AGAMREE ® .
Biggest changeConcurrent with the closing of the AGAMREE® License Agreement, we made a strategic investment into Santhera in which we acquired 1,414,688 of Santhera’s ordinary shares (representing approximately 11.26% of Santhera’s outstanding ordinary shares immediately following the transaction) at an investment price of CHF 9.477 per share, with the approximately $15.7 million USD in equity investment proceeds to be used by Santhera for Phase IV studies of AGAMREE® in DMD and future development of additional indications for AGAMREE®.
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.
Further, on September 29, 2022, the FDA approved our supplemental NDA (sNDA) to expand the indicated age range for FIRDAPSE® Tablets 10 mg for the treatment of LEMS to include pediatric patients six years of age and older.
These events were typically mild or moderate in severity, and transient, seldom requiring dose reduction or withdrawal from treatment. Lambert-Eaton Myasthenic Syndrome (LEMS) Lambert-Eaton Myasthenic Syndrome (LEMS) is a rare autoimmune neuromuscular disorder characterized primarily by muscle weakness of the limbs.
These events were typically mild or moderate in severity, and transient, seldom requiring dose reduction or withdrawal from treatment. Lambert-Eaton myasthenic syndrome (LEMS) LEMS is a rare autoimmune neuromuscular disorder characterized primarily by muscle weakness of the limbs.
License Agreements for FIRDAPSE ® License Agreement with BioMarin On October 26, 2012, we licensed the exclusive North American rights to FIRDAPSE ® pursuant to a License Agreement (the FIRDAPSE ® License Agreement) between us and BioMarin Pharmaceutical Inc. (BioMarin).
License Agreements for FIRDAPSE® License Agreement with BioMarin On October 26, 2012, we licensed the exclusive North American rights to FIRDAPSE® pursuant to a License Agreement (the License Agreement) between us and BioMarin Pharmaceutical Inc. (BioMarin).
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.
FYCOMPA® Under our Supply Agreement with Eisai, Eisai has agreed to manufacture and supply to us finished bulk FYCOMPA® tablets for us for a seven-year period that will run through at least the end of 2029.
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).
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).
Innovator products are also subject to an additional rebate that is based on the amount, if any, by which the product’s current AMP has increased over the baseline AMP, which is the AMP for the first full quarter after launch, adjusted for inflation.
Innovator products are also subject to an additional inflation rebate that is based on the amount, if any, by which the product’s current AMP has increased over the baseline AMP, which is the AMP for the first full quarter after launch, adjusted for inflation.
We monitor our compensation programs closely and review them at least annually to provide what we consider to be a very competitive mix of compensation and health, welfare and retirement benefits for all our employees. Our compensation package for all employees includes market-competitive base salaries, annual performance bonuses and stock option grants.
We monitor our compensation programs closely and review them at least annually to provide what we consider to be a very competitive mix of compensation and health, welfare and retirement benefits for all our employees. Our compensation package includes market-competitive base salaries, annual performance bonuses and stock option grants.
Any cost containment measures, including those listed above, or other healthcare system reforms that are adopted may have a material adverse effect on our business prospects. Further, the pricing of pharmaceutical products generally, and particularly the pricing of orphan drugs, has recently received scrutiny from the press, and from members of Congress in both parties.
Any cost containment measures, including those listed above, or other healthcare system reforms that are adopted may have a material adverse effect on our business prospects. Further, the pricing of pharmaceutical products generally, and particularly the pricing of orphan drugs, has received scrutiny from the press, and from members of Congress in both parties.
LEMS generally affects the extremities, especially the legs. As LEMS most affects the parts of limbs closest to the trunk, difficulties with climbing stairs or rising from a sitting position are commonly reported. Physical exercise and high temperatures tend to worsen the symptoms. Other symptoms often seen include weakness of the muscles of the mouth, throat, and eyes.
LEMS generally affects individuals' extremities, especially the legs. As LEMS most affects the parts of limbs closest to the trunk, difficulties with climbing stairs or rising from a sitting position are commonly reported. Physical exercise and high temperatures tend to worsen the symptoms. Other symptoms often seen include weakness of the muscles of the mouth, throat, and eyes.
Particularly given the rarity of LEMS, our experience has been that securing coverage and appropriate reimbursement from third-party payors requires targeted education and highly skilled insurance navigation experts that have experience with rare disease launches and medical exception processes at insurance companies to provide patient coverage for important rare disease therapies.
Particularly given the rarity of LEMS and DMD, our experience has been that securing coverage and appropriate reimbursement from third party payors requires targeted education and highly skilled insurance navigation experts that have experience with rare disease launches and medical exception processes at insurance companies to provide patient coverage for important rare disease therapies.
Available Information We make available free of charge on or through our Internet website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).
Available Information We make available free of charge on or through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).
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).
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).
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). The transition services provided under the TSA ended on December 31, 2023.
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), and under the TSA, a U.S. subsidiary of Eisai provided us with certain transitional services (which transition services ended on December 31, 2023).
Acquisition of AGAMREE ® On June 19, 2023, we entered into the AGAMREE ® License Agreement and the Investment Agreement with Santhera. Under the AGAMREE ® License Agreement, we contracted to obtain an exclusive North America license, manufacturing and supply agreement for Santhera’s investigational product candidate, AGAMREE ® (vamorolone), a novel corticosteroid for the treatment of DMD.
Acquisition of AGAMREE® On June 19, 2023, we entered into a License and Collaboration Agreement (License Agreement) and an Investment Agreement (Investment Agreement) with Santhera. Under the License Agreement, we contracted to obtain an exclusive North America license, manufacturing and supply agreement for Santhera’s investigational product candidate, AGAMREE® (vamorolone), a novel corticosteroid for the treatment of DMD.
In addition, Title II of the Federal Drug Quality and Security Act of 2013, known as the Drug Supply Chain Security Act (DSCSA), has imposed new “track and trace” requirements on the distribution of prescription drug products by manufacturers, distributors, and other entities in the drug supply chain.
In addition, Title II of the Federal Drug Quality and Security Act of 2013, known as the Drug Supply Chain Security Act (DSCSA), has imposed “track and trace” requirements on the distribution of prescription drug products by manufacturers, distributors, and other entities in the drug supply chain.
For innovator products, that is, drugs that are marketed under approved NDAs, the basic rebate amount is the greater of 23.1% of the average manufacturer price (AMP) for the quarter or the difference between such AMP and the best price for that same quarter.
For innovator products, that is, drugs that are marketed under approved NDAs, the basic rebate amount is generally the greater of 23.1% of the average manufacturer price (AMP) for the quarter or the difference between such AMP and the best price for that same quarter.
For non-innovator products, generally generic drugs marketed under approved ANDAs, the basic rebate amount is 13% of the AMP for the quarter. Non-innovator products are also subject to an additional rebate.
For non-innovator products, generally generic drugs marketed under approved ANDAs, the basic rebate amount is 13% of the AMP for the quarter. Non-innovator products are also subject to an additional inflation rebate.
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.
We also 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, a Transition Services Agreement (TSA) and a Supply Agreement.
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.
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; ● 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.
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.
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.
FSS pricing to those four federal agencies for covered drugs must be no more than the Federal Ceiling Price (FCP), which is at least 24% below the Non-Federal Average Manufacturer Price (Non-FAMP) for the prior year. The Non-FAMP is the average price for covered drugs sold to wholesalers or other middlemen, net of any price reductions.
FSS pricing to those four federal agencies for covered drugs must be no more than the Federal Ceiling Price (FCP), which is at least 24% below the Non-Federal Average Manufacturer Price (Non-FAMP) for the prior government fiscal year. The Non-FAMP is the average price for covered drugs sold to wholesalers or other middlemen, net of any price reductions.
If a product which has been granted Orphan Drug Designation subsequently receives the first FDA approval for the indication for which it has such designation, the product is entitled to an orphan drug exclusivity period, which means the FDA may not approve any other application to market the same drug for the same disease or condition for a period of seven years, except in limited circumstances, such as where an alternative product demonstrates clinical superiority to the product with orphan exclusivity.
If a product which has been granted Orphan Drug Designation 25 Table of Contents subsequently receives the first FDA approval for the indication for which it has such designation, the product is entitled to an orphan drug exclusivity period, which means the FDA may not approve any other application to market the same drug for the same disease or condition for a period of seven years, except in limited circumstances, such as where an alternative product demonstrates clinical superiority to the product with orphan exclusivity.
It also includes distributing the drug through a very small group of exclusive specialty pharmacies (primarily AnovoRx), which is consistent with the way that most drug products for ultra-orphan diseases are distributed and dispensed to patients.
The program also includes distributing the drug through a very small group of exclusive specialty pharmacies (primarily AnovoRx), which is consistent with the way that most drug products for ultra-orphan diseases are distributed and dispensed to patients.
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.
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.
Further, when we acquired the U.S. rights to RUZURGI ® , we agreed to continue to supply RUZURGI ® to these patients with neuromuscular conditions other than LEMS who are without access to an approved drug and were being treated with RUZURGI ® under investigator-sponsored INDs at the time of our settlement with Jacobus.
Further, when we acquired the U.S. rights to RUZURGI® in July 2022, we agreed to continue to supply RUZURGI® to these patients with neuromuscular conditions other than LEMS who are without access to an approved drug and were being treated with RUZURGI® under investigator-sponsored INDs at the time of our settlement with Jacobus.
Study participants receiving vamorolone, 2 mg/kg per day, and vamorolone, 6 mg/kg per day, showed improvements in multiple functional endpoints over the 24-week treatment period as compared to placebo. The statistical thresholds for the primary outcome and several secondary outcomes for vamorolone treatment were met, and vamorolone demonstrated efficacy across both dose ranges.
Study participants receiving vamorolone, 2 mg/kg per day, and vamorolone, 6 mg/kg per day, showed improvements in multiple functional endpoints over the 24-week treatment period as compared to placebo. The statistical thresholds for the primary outcome and first 4 secondary outcomes for vamorolone treatment were met, and vamorolone demonstrated efficacy across both dose ranges.
Finally, Jacobus agreed that until the later of (i) the expiration of the royalty term or (ii) December 31, 2034, Jacobus and its affiliates, will not, directly or indirectly, research, develop, manufacture, commercialize, distribute, use or otherwise exploit any product competitive to FIRDAPSE ® or RUZURGI ® in the territory, and Laura Jacobus, the sole shareholder of Jacobus, and two of Jacobus’ other officers, also signed individual non-competition agreements containing the same terms.
Finally, Jacobus agreed that until the later of (i) the expiration of the royalty term or (ii) December 31, 2034, Jacobus and its affiliates, will not, directly or indirectly, research, develop, manufacture, commercialize, distribute, use or otherwise exploit any product competitive to FIRDAPSE® or RUZURGI® in the U.S. and Mexico, and Laura Jacobus, the sole shareholder of Jacobus, and two of Jacobus’ other officers, also signed individual non-competition agreements containing the same terms.
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.
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.
In addition, there are many companies who have announced plans for pre-clinical candidates and clinical development for the treatment of DMD, including gene transfer or gene editing therapies.
In addition, there are many companies which have announced plans for pre-clinical candidates and clinical development for the treatment of DMD, including gene transfer and/or gene editing therapies.
Required Post-Approval Studies As part of the approval of our NDA for FIRDAPSE ® for LEMS, the FDA required us to conduct a clinical trial to evaluate the effect of hepatic impairment on the exposure of amifampridine after oral administration of FIRDAPSE ® relative to that in subjects with normal hepatic function.
Required Post-Approval Studies As part of the approval of our NDA for FIRDAPSE® for LEMS, the FDA required us to conduct two studies. The first was a clinical trial to evaluate the effect of hepatic impairment on the exposure of amifampridine after oral administration of FIRDAPSE® relative to that in subjects with normal hepatic function.
Under the Orphan Drug Act of 1983 (ODA), the FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.
Under the Orphan Drug Act of 1983 (ODA), the FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the U.S., or more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making available in the U.S. a drug for this type of disease or condition will be recovered from sales in the U.S. for that drug.
Catalyst Pathways ® is a single source for personalized treatment support, education and guidance through the challenging dosing and titration regimen required to reach 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.
Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.
Recently, 27 Table of Contents several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.
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 process required by the FDA before a drug may be marketed in the U.S. 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 19 Table of Contents (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 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 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.
To date, the rebate amount for a drug has been capped at 100% of the AMP; however, effective January 1, 2024, this cap was 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 accuracy of a manufacturer’s reported Non-FAMPs, FCPs, or FSS contract prices may be audited by the government. Among the remedies available to the government for inaccuracies is recoupment of any overcharges to the four specified federal agencies based on those inaccuracies.
The accuracy of a manufacturer’s reported Non-FAMPs, FCPs, or FSS contract prices may be audited by the government. Among the remedies available to the government for inaccuracies is recoupment of any overcharges to the four specified federal 29 Table of Contents agencies based on those inaccuracies.
DMD symptom onset is in early childhood, usually between the ages of 2 and 3. The disease primarily affects boys, but in rare cases can affect girls. For girls who are carriers, about 2.5 to 20 percent may have mild symptoms. In the United States, the incidence of DMD is estimated to be about 1 in 3,600 live male births.
DMD symptom onset is in early childhood, usually between the ages of 2 and 3. The disease primarily affects boys, but in rare cases can affect girls. For girls who are carriers, about 2.5 to 20 percent may have mild symptoms. In the U.S., the incidence of DMD is estimated to be about 1 in 3,600 live male births.
FYCOMPA ® is a Schedule III drug (DEA Controlled Substance Code 2261), which means that the DEA has determined that (i) it has a potential for abuse less than the drugs or other substances in Schedules I and II, (ii) it has a currently accepted medical use in treatment in the United States, and (iii) abuse may lead to moderate or low physical dependence or high psychological dependence.
FYCOMPA® is a Schedule III drug (DEA Controlled Substance Code 2261), which means that the DEA has determined that (i) it has a potential for abuse less than the drugs or other substances in Schedules I and II, (ii) it has a currently accepted medical use in treatment in the U.S., and (iii) abuse may lead to moderate or low physical dependence or high psychological dependence.
AGAMREE ® ’s unique mode of action is based on differential effects on glucocorticoid and mineralocorticoid receptors and modifying further downstream activity. As such, it is considered a novel corticosteroid with dissociative properties in maintaining efficacy that we hope has the potential to demonstrate comparable efficacy to corticosteroids, with the potential for a better-tolerated side effect profile.
AGAMREE®’s unique mode of action is based on differential effects on glucocorticoid and mineralocorticoid receptors and modifying further downstream activity. As such, it is considered a novel corticosteroid that we hope has the potential to demonstrate comparable efficacy to corticosteroids, with the potential for a better-tolerated side effect profile.
The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local, and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable United States requirements at any time during the product development process, approval process, or after approval, may subject an applicant to administrative or judicial sanctions.
The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local, and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process, or after approval, may subject an applicant to administrative or judicial sanctions.
New chemical entity exclusivity provides a five-year period of marketing exclusivity for all indications and in the absence of an Orange Book listed patent, precludes a generic from submitting an ANDA until that five-year period has expired.
New chemical entity exclusivity provides a five-year period of marketing exclusivity for all indications and in the absence of an Orange Book listed 12 Table of Contents patent, precludes a generic from submitting an ANDA until that five-year period has expired.
The testing and approval process requires substantial time, effort and financial resources, and the receipt and timing of any approval is uncertain. United States Drug Development Process Once a pharmaceutical candidate is identified for development it enters the pre-clinical testing stage. Pre-clinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies.
The testing and approval process requires substantial time, effort and financial resources, and the receipt and timing of any approval is uncertain. U.S. Drug Development Process Once a pharmaceutical candidate is identified for development it enters the pre-clinical testing stage. Pre-clinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies.
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.
Failure to promptly conduct Phase 4 clinical trials where necessary could result in withdrawal of approval for products approved under accelerated approval regulations. 20 Table of Contents 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.
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.
We believe that by 3 Table of Contents 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.
In addition to retroactive rebates, if a manufacturer were found to have knowingly submitted false information to the government, federal law provides for civil monetary penalties for failing to provide required information, late submission of required information, and false information.
In addition to retroactive rebates, if a 28 Table of Contents manufacturer were found to have knowingly submitted false information to the government, federal law provides for civil monetary penalties for failing to provide required information, late submission of required information, and false information.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life. United States Review and Approval Process FDA approval of an NDA is required before marketing of the product may begin in the United States.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life. U.S. Review and Approval Process FDA approval of an NDA is required before marketing of the product may begin in the U.S.
We also use non-personal promotion to reach the 20,000 neurologists who are potential LEMS treaters and the 16,000 oncologists who might be treating a LEMS patient with small cell lung cancer.
Additionally, we use non-personal promotion to reach the 20,000 neurologists who are potential LEMS treaters and the 16,000 oncologists who might be treating a LEMS patient who also has small cell lung cancer.
Intellectual property and regulatory exclusivity protections for FIRDAPSE ® The bulk of our patent rights related to FIRDAPSE ® are derived from our license agreement with BioMarin, which was transferred to SERB in 2020.
Intellectual property and regulatory exclusivity protections for FIRDAPSE® The bulk of our patent rights related to FIRDAPSE® are derived from our license agreement with BioMarin, which was transferred to SERB in 2020. In August 2020, the U.S.
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 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 provided 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 assisted 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 August 2020, the United States Patent and Trademark Office (USPTO) allowed Patent No. 10,793,893 (the ’893 patent) to our licensor and thereby to us, and the patent issued on October 6, 2020. The patent is directed to the use of suitable doses of amifampridine to treat patients, regardless of the therapeutic indication, that are slow metabolizers of amifampridine.
Patent and Trademark Office (USPTO) allowed Patent No. 10,793,893 (the ’893 patent) to our licensor and thereby to us, and the patent issued on October 6, 2020. The patent is directed to the use of suitable doses of amifampridine to treat patients, regardless of the therapeutic indication, that are slow metabolizers of amifampridine.
Recessive inheritance means that when there are two copies of the responsible gene, both copies must have a pathogenic variant or mutation in order for a person to have the condition. Since males only have one X chromosome, any mutation in the dystrophin gene on that chromosome is expected to cause DMD.
Recessive inheritance means that when there are two copies of the responsible gene, both copies must have a pathogenic variant or mutation in order for a person to have the condition. Since males only have one X chromosome, any mutation on that chromosome will cause DMD.
Further, when necessary, we provide patients with access to therapy at no charge while those patients are awaiting coverage decisions. Orphan Drug Exclusivity Some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs.
Further, when necessary, we provide patients with access to therapy at no charge while those patients are awaiting coverage decisions. Orphan Drug Exclusivity Some jurisdictions, including the U.S. and Europe, may designate drugs for relatively small patient populations as orphan drugs.
AGAMREE ® Product Overview AGAMREE ® is a structurally unique steroidal anti-inflammatory drug to treat children and adolescents living with DMD.
AGAMREE® Product Overview AGAMREE® is a structurally unique steroidal anti-inflammatory drug to treat children and adults living with DMD.
We will support the distribution of AGAMREE ® through our Catalyst Pathways ® patient services program to ensure that patients have access to a dedicated, personalized support team that assists families through the AGAMREE ® patient journey, from answering questions to coordinating financial assistance programs for eligible patients.
We are further supporting the distribution of AGAMREE® through our Catalyst Pathways® patient services program to ensure that patients have access to a dedicated, personalized support team that assists families through the AGAMREE® patient journey, from answering questions to coordinating financial assistance programs for eligible patients.
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.
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.
The DSCSA requires product identifiers (i.e., serialization) on prescription drug products in order to eventually establish an electronic interoperable prescription product to system to identify and trace certain prescription drugs distributed in the United States and preempts existing state drug pedigree laws and regulations on this topic.
The DSCSA requires product identifiers (i.e., serialization) on prescription drug products in order to eventually establish an electronic interoperable prescription product to system to identify and trace certain prescription drugs distributed in the U.S. and preempts existing state drug pedigree laws and regulations on this topic.
These are generally drugs, such as injectable products, that are administered “incident to” a physician service and are not generally self-administered. The pricing information submitted by manufacturers is the basis for reimbursement to physicians and suppliers for drugs covered under Medicare Part B.
These are generally drugs, such as injectable products, that are administered “incident to” a physician service and are not generally self-administered. The pricing information submitted by manufacturers is the basis for reimbursement to physicians and hospital outpatient departments for drugs covered under Medicare Part B.
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.
Regulatory Matters Government Regulation and Product Approval Government authorities in the U.S., 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.
Our drugs must be approved by the FDA through the NDA process before they may be legally marketed in the United States. In the United States, drugs are subject to rigorous regulation by the FDA under the FDCA and implementing regulations, as well as other federal and state statutes.
Our drugs must be approved by the FDA through the NDA process before they may be legally marketed in the U.S. In the U.S., drugs are subject to rigorous regulation by the FDA under the FDCA and implementing regulations, as well as other federal and state statutes.
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.
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.
DMD causes muscle weakness that worsens over time, and common symptoms include: • Progressive muscle weakness and atrophy that begins in the legs and pelvis, occurring less severely in the arms, neck, and other areas of the body. • Calf muscle hypertrophy (increase in muscle size). 18 Table of Contents Index to Financial Statements • Difficulty climbing up stairs. • Difficulty walking that gets worse over time. • Frequent falls. • Waddling gait (walk). • Toe walking. • Fatigue.
DMD causes muscle weakness that worsens over time, and common symptoms include: • Progressive muscle weakness and atrophy that begins in the legs and pelvis, occurring less severely in the arms, neck, and other areas of the body. • Calf muscle hypertrophy (increase in muscle size). • Difficulty climbing up stairs. • Difficulty walking that gets worse over time. • Frequent falls. 16 Table of Contents • Waddling gait (walk). • Toe walking. • Fatigue.
Any drug product containing amifampridine with a label that states the patented dosing regimens and doses in the Dosing and Administration section prior to April 7, 2034, the expiration date of the patent, could possibly infringe this patent.
Any drug product containing amifampridine with a label that states the patented dosing regimens and doses in the Dosing and Administration section prior to May 26, 2034, the expiration date of the patent, could possibly infringe this patent.
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.
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® 14 Table of Contents 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.
In the United States, Orphan Drug Designation must be requested before submitting an application for marketing approval. An Orphan Drug Designation does not shorten the duration of the regulatory review and approval process. The grant of an Orphan Drug Designation request does not alter the standard regulatory requirements and process for obtaining marketing approval.
In the U.S., Orphan Drug Designation must be requested before submitting an application for marketing approval. An Orphan Drug Designation does not shorten the duration of the regulatory review and approval process. The grant of an Orphan Drug Designation request does not alter the standard regulatory requirements and process for obtaining marketing approval.
Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Any distribution of prescription drug products and pharmaceutical samples must comply with the United States Prescription Drug Marketing Act (PDMA), a part of the FDCA.
Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Any distribution of prescription drug products and pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act (PDMA), a part of the FDCA.
We are dedicated to making a meaningful impact on the lives of those suffering from rare diseases, and we believe in putting patients first in everything we do. Specifically, we intend to: • Continue to commercialize FIRDAPSE ® for the treatment of LEMS and improve disease awareness .
We are dedicated to making a meaningful impact on the lives of those suffering from rare diseases, and we believe in putting patients first in everything we do. Specifically, we intend to: • Continue to commercialize FIRDAPSE® for the treatment of LEMS and improve disease awareness. We are currently commercializing FIRDAPSE® in the U.S. and Canada.
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.
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.
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.
Alternatively, if the NDA applicant or relevant patent holder does not file 23 Table of Contents 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.
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.
The notice letters each alleged that the six patents protecting FIRDAPSE® that are listed in the 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.
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.
FIRDAPSE® On November 28, 2018, we received approval from the FDA for our new drug application, (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 U.S.
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.
The submission of an NDA is also subject to the payment of a substantial application fee (for FDA fiscal year 2025 this fee is $4,310,002), 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.
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).
Pharmaceutical pricing and reimbursement In both the U.S. 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 U.S., governmental payors such as Medicare and Medicaid, managed care organizations, private commercial health insurers and PBMs.
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.
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. 22 Table of Contents 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.
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.
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. 9 Table of Contents On May 29, 2019, we entered into an amendment to the License Agreement.
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.
Under the Federal Food, Drug, and Cosmetic Act (FDCA), as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, 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 in all cases (but not earlier than the expiration of orphan drug exclusivity on November 28, 2025).
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).
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 anticipate that in the United States, Congress, state legislatures, and private sector entities will continue to consider and may adopt healthcare policies intended to curb rising healthcare costs.
We anticipate that in the U.S., Congress, state legislatures, and private sector entities will continue to consider and may adopt healthcare policies intended to curb rising healthcare costs.
FIRDAPSE ® contains the phosphate salt of amifampridine, hence the name “amifampridine phosphate.” We will refer to our drug by its trade name in the United States (FIRDAPSE ® ), by the INN/USAN (amifampridine), or by the specific salt in our product (amifampridine phosphate), throughout this report.
FIRDAPSE® contains the phosphate salt of amifampridine, hence the name “amifampridine phosphate.” We will refer to our drug by its trade name in the U.S. (FIRDAPSE®), by the INN and USAN (amifampridine), or by the specific salt in our product (amifampridine phosphate), throughout this report.
FYCOMPA ® is a controlled substance and is approved with a box warning label. 4 Table of Contents Index to Financial Statements 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.
FYCOMPA® is a controlled substance and is approved with a box warning label. 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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to the Development of Additional Drug Products and Indications • Failure can occur at any stage of our drug development efforts. • We rely on third parties to conduct our pre-clinical studies and clinical studies and trials, and if they do not perform their obligations to us we may not be able to obtain approval for additional indications. • We will need to continue to develop and maintain distribution and production capabilities or relationships to be successful. • We could be impacted by the viability of our suppliers. • We may encounter difficulties in managing our growth, which would adversely affect our results of operations. • Pressure on drug product third-party payor coverage, reimbursement and pricing may impair our ability to be reimbursed at prices or on terms sufficient to provide a viable financial outcome. • Our internal computer systems, or those of our contract research organizations and other key vendors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs. • Our employees, sales agents and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
Biggest changeTo the extent that our drug products are not commercially successful, our business, financial condition and results of operations will be materially harmed. ● Our drug products may fail to receive the degree of market acceptance by physicians, patients, third party payers or others in the medical community necessary for commercial success, which would negatively impact our business. ● Our strategy of seeking to acquire or in-license innovative technical platforms or earlier stage drug development programs outside of the neuromuscular disease space may not be successful. ● Because the target patient populations for FIRDAPSE® and AGAMREE® are small, we must achieve significant market share and obtain relatively high per-patient prices for our products to achieve meaningful gross margins. ● Because of risks associated with taking FYCOMPA®, potential patients may be reluctant to start treatment with FYCOMPA® or may discontinue use. 31 Table of Contents Risks Related to the Development of Additional Drug Products and Indications ● Failure can occur at any stage of our drug development efforts. ● We rely on third parties to conduct our pre-clinical studies and clinical studies and trials, and if they do not perform their obligations to us we may not be able to obtain approval for additional indications. ● We will need to continue to develop and maintain distribution and production capabilities or relationships to be successful. ● We could be impacted by the viability of our suppliers. ● We are dependent on our licensing partners for supplies of FYCOMPA® and AGAMREE®. ● We may encounter difficulties in managing our growth, which would adversely affect our results of operations. ● Pressure on drug product third party payor coverage, reimbursement and pricing may impair our ability to be reimbursed at prices or on terms sufficient to provide a viable financial outcome. ● Our internal computer systems, or those of our contract research organizations and other key vendors or consultants, may fail or suffer security breaches, which could result in a material disruption of our business and/or our product development programs. ● Our employees, sales agents and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. ● We may face significant delays in our clinical studies and trials due to an inability to recruit patients for our clinical studies and trials or to retain patients in the clinical studies and trials we may perform.
We face a risk of product liability claims and may not be able to obtain adequate insurance. Our business exposes us to potential liability risks that may arise from the clinical testing, manufacture, and/or sale of our pharmaceutical products.
We face a risk of product liability claims and may not be able to obtain adequate insurance. Our business exposes us to potential risks that may arise from the clinical testing, manufacture, and/or sale of our pharmaceutical products.
Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act; • HIPAA, which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • HIPAA, as amended by HITECH, which impose obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; • the federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of covered drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to CMS information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, certain types of advanced care practice nurses and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members, with the information made publicly available on a searchable website; • the U.S.
Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act; ● HIPAA, which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ● HIPAA, as amended by HITECH, which impose obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; ● the federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of covered drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to CMS information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, certain types of advanced care practice nurses and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members, with the information made publicly available on a searchable website; 43 Table of Contents ● the U.S.
These cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower than anticipated product revenues. If the prices for our products decrease or if governmental and other third-party payors do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer.
Cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower than anticipated product revenues. If the prices for our products decrease or if governmental and other third party payors do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer.
To accomplish these new priorities, we are employing a disciplined approach to evaluating assets and we believe that this strategic expansion will better position our company to build out a broader more diversified portfolio of drug candidates, which should add greater value to our company over the near and long-term.
To accomplish these priorities, we are employing a disciplined approach to evaluating assets and we believe that this strategic expansion will better position our company to build out a broader more diversified portfolio of drug candidates, which should add greater value to our company over the near-term and the long-term.
If we fail to obtain or subsequently maintain orphan drug exclusivity or regulatory exclusivity for FIRDAPSE ® and any other orphan drug candidates we may acquire or in-license, our competitors may sell products to treat the same conditions at greatly reduced prices, and our revenues would be significantly adversely affected.
If we fail to obtain or subsequently maintain orphan drug exclusivity or regulatory exclusivity for FIRDAPSE®, AGAMREE®, and any other orphan drug candidates we may acquire or in-license, our competitors may sell products to treat the same conditions at greatly reduced prices, and our revenues would be significantly adversely affected.
We are increasingly dependent on information technology (IT) systems and infrastructure, including mobile technologies, to operate our business. In the ordinary course of our business, we collect, process, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information.
We are increasingly dependent on information technology systems and infrastructure, including mobile technologies, to operate our business. In the ordinary course of our business, we collect, process, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information.
There can be no assurance that we will be successful in achieving a sufficient degree of market penetration and/or obtaining or maintaining high per-patient prices for FIRDAPSE ® for diseases with small patient populations.
There can be no assurance that we will be successful in achieving a sufficient degree of market penetration and/or obtaining or maintaining high per-patient prices for FIRDAPSE® and AGAMREE® for diseases with small patient populations.
Failure to comply with these requirements could result in an enforcement action against us, including warning letters, the seizure of products, suspension or withdrawal of approvals, shutting down of production, and criminal prosecution. Any of these third-party suppliers or contract manufacturers will also be subject to inspections by the FDA, DEA, state and other regulatory agencies.
Failure to comply with these requirements could result in an enforcement action against us, including warning letters, the seizure of products, suspension or withdrawal of approvals, shutting down of production, and criminal prosecution. Any of these third party suppliers or contract manufacturers will also be subject to inspections by the FDA and other regulatory agencies.
Further, even if we obtain significant market share for FIRDAPSE ® , because the potential target populations are very small, we may not be able to maintain profitability despite obtaining such significant market share. Additionally, patients who discontinue therapy or do not fill prescriptions are not easily replaced by new patients, given the limited patient population.
Further, even if we obtain significant market share for FIRDAPSE® and AGAMREE®, because the potential target populations are very small, we may not be able to maintain profitability despite obtaining such significant market share. Additionally, patients who discontinue therapy or do not fill prescriptions are not easily replaced by new patients, given the limited patient population.
There can be no assurance that the designation and/or exclusivity provisions currently in the law may not be changed in the future and the impact of any such changes (if made) on us. For example, the United States Congress could pass, and the President could sign, legislation to effectively overturn the decision of the U.S.
There can be no assurance that the designation and/or exclusivity provisions currently in the law may not be changed in the future and the impact of any such changes (if made) on us. For example, the U.S. Congress could pass, and the President could sign, legislation to effectively overturn the decision of the U.S.
We may experience numerous unforeseen events during, or as a result of, testing that could delay or prevent us from obtaining regulatory approval for, or commercializing our drug candidates, including but not limited to: • regulators or Institutional Review Boards (IRBs) may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; • conditions may be imposed upon us by the FDA regarding the scope or design of our clinical trials, or we may be required to resubmit our clinical trial protocols to IRBs for review due to changes in the regulatory environment; • the number of subjects required for our clinical trials may be larger, patient enrollment may take longer, or patients may drop out of our clinical trials at a higher rate than we anticipate; • we may have to suspend or terminate one or more of our clinical trials if we, regulators, or IRBs determine that the participants are being subjected to unreasonable health risks; • our third-party contractors, clinical investigators or contractual collaborators may fail to comply with regulatory requirements or fail to meet their contractual obligations to us in a timely manner; • the FDA may not accept clinical data from trials that are conducted at clinical sites in countries where the standard of care is potentially different from the United States; • our tests may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional testing; and • the costs of our pre-clinical and/or clinical trials may be greater than we anticipate.
We may experience numerous unforeseen events during, or as a result of, testing that could delay or prevent us from obtaining regulatory approval for, or commercializing our drug candidates, including but not limited to: ● regulators or Institutional Review Boards (IRBs) may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; 35 Table of Contents ● conditions may be imposed upon us by the FDA regarding the scope or design of our clinical trials, or we may be required to resubmit our clinical trial protocols to IRBs for review due to changes in the regulatory environment; ● the number of subjects required for our clinical trials may be larger, patient enrollment may take longer, or patients may drop out of our clinical trials at a higher rate than we anticipate; ● we may have to suspend or terminate one or more of our clinical trials if we, regulators, or IRBs determine that the participants are being subjected to unreasonable health risks; ● our third party contractors, clinical investigators or contractual collaborators may fail to comply with regulatory requirements or fail to meet their contractual obligations to us in a timely manner; ● the FDA may not accept clinical data from trials that are conducted at clinical sites in countries where the standard of care is potentially different from the U.S.; ● our tests may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional testing; and ● the costs of our pre-clinical and/or clinical trials may be greater than we anticipate.
Our drug products may fail to receive the degree of market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success, which would negatively impact our business . Our drug products may fail to gain sufficient market acceptance by physicians, patients, third-party payors, or others in the medical community.
Our drug products may fail to receive the degree of market acceptance by physicians, patients, third party payers or others in the medical community necessary for commercial success, which would negatively impact our business . Our drug products may fail to gain sufficient market acceptance by physicians, patients, third party payers, or others in the medical community.
We do not currently have the ability to independently conduct pre-clinical studies or clinical studies and trials, and we typically rely on third parties, such as third-party contract research and governmental organizations, medical institutions and clinical investigators (including academic clinical investigators), to conduct studies and trials for us.
We do not have the ability to independently conduct pre-clinical studies or clinical studies and trials, and we rely on third parties, such as third party contract research and governmental organizations, medical institutions and clinical investigators (including academic clinical investigators), to conduct studies and trials for us.
It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations.
It is possible that government authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations.
An inability to promptly obtain coverage and adequate payment rates from both government-funded and private payors for any of our product candidates for which we obtain marketing approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.
An inability to promptly obtain coverage and adequate 37 Table of Contents payment rates from both government-funded and private payors for any of our product candidates for which we obtain marketing approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.
In that regard, in January 2023, the FDA reported that while it is complying with the 11 th Circuit decision in Catalyst’s favor with respect to FIRDAPSE ® , going forward the FDA intends to continue to apply its regulations tying the scope of orphan drug exclusivity to the uses or indications for which a drug is approved with respect to other orphan drugs.
In that regard, in January 2023, the FDA reported that while it is complying with the 11 th Circuit decision in Catalyst’s favor with respect to FIRDAPSE®, going forward the FDA intends to continue to apply its regulations tying the scope of orphan 42 Table of Contents drug exclusivity to the uses or indications for which a drug is approved with respect to other orphan drugs.
Enacted and future legislation or judicial action may increase the difficulty and cost for us to commercialize FIRDAPSE ® or any other drug candidates we may acquire or license and affect the prices we may obtain.
Enacted and future legislation or judicial action may increase the difficulty and cost for us to commercialize FIRDAPSE®, FYCOMPA®, AGAMREE®, or any other drug candidates we may acquire or license and affect the prices we may obtain.
We will not be affected by the FDA’s newly announced position, as the FDA’s announcement confirms the FDA’s previous decision to set aside the approval of RUZURGI ® as a result of the 11 th Circuit’s decision.
We will not be affected by the FDA’s position, as the FDA’s announcement confirms the FDA’s previous decision to set aside the approval of RUZURGI® as a result of the 11 th Circuit’s decision.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 45 Table of Contents Index to Financial Statements • the federal criminal and civil false claims and civil monetary penalties laws, including the federal False Claims Act, which can be imposed through civil whistleblower or qui tam actions against individuals or entities, prohibits, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ● the federal criminal and civil false claims and civil monetary penalties laws, including the federal False Claims Act, which can be imposed through civil whistleblower or qui tam actions against individuals or entities, prohibits, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
Our success in managing our growth will depend in part on the ability of our executive officers to continue to implement and improve our operational, management, information and financial control systems, and to expand, train and manage our employee base, and particularly to expand, train and manage a specially-trained sales force to market our products.
Our success in managing our growth will depend in part on the ability of our executive officers to continue to implement and improve our operational, management, information and financial control systems, and to expand, train and manage our employee base, and particularly to expand, train and manage a specially-trained field-based force to market our products.
Item 1A. Risk Factors Risk Factors Summary We are providing the following summary of the risk factors contained in our Form 10-K to enhance the readability and accessibility of our risk factor disclosures.
Item 1A. R isk Factors Risk Factors Summary We are providing the following summary of the risk factors contained in our Form 10-K to enhance the readability and accessibility of our risk factor disclosures.
Manufacturers, and in certain situations their suppliers, are required to comply with current NDA commitments and current good manufacturing practices (cGMP) requirements enforced by the FDA, and similar requirements of other countries. The failure by a manufacturer to comply with these requirements could affect its ability to provide us with product.
Manufacturers, and in certain situations their suppliers, are required to comply with current NDA commitments and cGMP requirements enforced by the FDA, and similar requirements of other countries. The failure by a manufacturer to comply with these requirements could affect its ability to provide us with product.
Significant disruptions of our IT systems or breaches of data security could have a material adverse effect on our business, financial condition and results of operations. We are highly dependent on our small number of key personnel and advisors. We are highly dependent on our executive officers and key employees, and on our Board of Directors.
Significant disruptions of our information technology systems or breaches of data security could have a material adverse effect on our business, financial condition and results of operations. We are highly dependent on our small number of key personnel and advisors. We are highly dependent on our executive officers and key employees, and on our Board of Directors.
Changes to the ODA or successful legal challenges to the FDA’s interpretation of the ODA may affect our ability to obtain or subsequently maintain orphan drug exclusivity or affect the scope of orphan drug exclusivity for our products.
Changes to the Orphan Drug Act or successful legal challenges to the FDA’s interpretation of the Orphan Drug Act may affect our ability to obtain or subsequently maintain orphan drug exclusivity or affect the scope of orphan drug exclusivity for our products.
Legislative and regulatory proposals have been made to expand post-approval requirements, restrict sales and promotional activities for pharmaceutical products, and with respect to orphan drug designation and exclusivity. In addition, increased scrutiny by the United States Congress of the FDA’s approval process may subject us to more stringent product labeling and post-marketing testing and other requirements.
Legislative and regulatory proposals have been made to expand post-approval requirements, restrict sales and promotional activities for pharmaceutical products, and with respect to orphan drug designation and exclusivity. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may subject us to more stringent product labeling and post-marketing testing and other requirements.
Despite the time, expense and resources invested by us in the approval process, we may not be able to demonstrate that our drug candidate is safe and effective for such indications, in which event we would not receive the regulatory approval required to market it. 42 Table of Contents Index to Financial Statements If our pre-clinical studies or our clinical studies and trials are unsuccessful or significantly delayed, our ability to commercialize our products will be impaired.
Despite the time, expense and resources invested by us in the approval process, we may not be able to demonstrate that our drug candidate is safe and effective for such indications, in which event we would not receive the regulatory approval required to market it. 39 Table of Contents If our pre-clinical studies or our clinical studies and trials are unsuccessful or significantly delayed, our ability to commercialize our products will be impaired.
Court of Appeals for the 11 th Circuit overturning the FDA’s approval of RUZURGI ® , and such legislation, if passed and signed into law, could retroactively affect the outcome of the 11 th Circuit decision. Notwithstanding, since we now hold the U.S. rights to RUZURGI ® , these legislative efforts will have no effect on our FIRDAPSE ® business.
Court of Appeals for the 11th Circuit overturning the FDA’s approval of RUZURGI®, and such legislation, if passed and signed into law, could retroactively affect the outcome of the 11th Circuit’s decision. Notwithstanding, since we now hold the U.S. rights to RUZURGI®, these legislative efforts will have no effect on our FIRDAPSE® business.
The orphan drug exclusivity contained in the ODA has been the subject of recent scrutiny from the press, from some members of Congress and from some in the medical community. Furthermore, the FDA’s interpretations of the ODA have been successfully challenged in court and future court decisions could continue that trend.
The orphan drug exclusivity contained in the Orphan Drug Act has been the subject of scrutiny from the press, from some members of Congress and from some in the medical community. Furthermore, the FDA’s interpretations of the Orphan Drug Act have been successfully challenged in court and future court decisions could continue that trend.
There can be no assurance that the exclusivity granted in the ODA to orphan drugs approved by the FDA will not be modified in the future, and as to how any such change might affect our products, if approved.
There can be no assurance that the exclusivity granted in the Orphan Drug Act to orphan drugs approved by the FDA will not be modified in the future, and as to how any such change might affect our products, if approved.
There can be no assurance that the exclusivity granted in the ODA to orphan drugs approved by the FDA will not be modified in the future, and as to how any such change might affect our products, if approved.
There can be no assurance that the exclusivity granted in the Orphan Drug Act to orphan drugs approved by the FDA will not be modified in the future, and as to how any such change might affect our products, if approved.
The type and magnitude of the testing required for regulatory approval varies depending on the drug candidate and the disease or condition for which it is being developed. In addition, in the United States we must show that the facilities used to manufacture our drug candidates are in compliance with cGMP requirements.
The type and magnitude of the testing required for regulatory approval varies depending on the drug candidate and the disease or condition for which it is being developed. In addition, in the U.S. we must show that the facilities used to manufacture our drug candidates are in compliance with cGMP requirements.
The orphan drug exclusivity contained in the ODA has been the subject of recent scrutiny from the press, from some members of Congress and from some in the medical community.
The orphan drug exclusivity contained in the Orphan Drug Act has been the subject of recent scrutiny from the press, from some members of Congress and from some in the medical community.
We may need to raise additional capital in the future in order to fund our business (particularly to fund potential company or product acquisitions that are intended to expand our product offerings). If necessary, we would likely raise additional funds in the future through public or private equity offerings, debt financings, corporate collaborations, or other means.
We may need to raise additional capital in the future in order to fund our business (particularly to fund potential company or product acquisitions that are intended to expand our product offerings). If necessary, we would likely raise additional funds in 47 Table of Contents the future through public or private equity offerings, debt financings, corporate collaborations, or other means.
Any reliance on suppliers may involve several risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability and quality. Any unanticipated disruption to future contract manufacture caused by problems at suppliers could delay shipment of products, increase our cost of sales and result in lost sales.
Any reliance on suppliers may involve several risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability and 36 Table of Contents quality. Any unanticipated disruption to future contract manufacture caused by problems at suppliers could delay shipment of products, increase our cost of goods sold and result in lost sales.
Even absent patient injury, we may be subject to product recalls, product seizures or withdrawals, delays or failures in testing or delivery, cost overruns, or other problems that could seriously harm our business or profitability. Our drug products are subject to continuing regulatory review.
Even absent patient injury, we may be subject to product 40 Table of Contents recalls, product seizures or withdrawals, delays or failures in testing or delivery, cost overruns, or other problems that could seriously harm our business or profitability. Our drug products are subject to continuing regulatory review.
In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the U.S. For example, many countries restrict the patentability of methods of treatment of the human body.
In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the U.S. For example, many countries restrict the 45 Table of Contents patentability of methods of treatment of the human body.
The success of this strategy depends partly upon our ability to identify, select and acquire or in-license promising product candidates and technologies. 37 Table of Contents Index to Financial Statements In addition, acquisitions and in-licenses may entail numerous operational, financial and legal risks, including: • exposure to known and unknown liabilities, including possible intellectual property infringement claims, violations of laws, tax liabilities and commercial disputes; • incurrence of substantial debt, dilutive issuances of securities or depletion of cash to pay for acquisitions; • higher than expected acquisition and integration costs; • difficulty in combining the operations and personnel of any acquired businesses with our operations and personnel; • inability to maintain uniform standards, controls, procedures and policies; • restructuring charges related to eliminating redundancies or disposing of assets as part of any such combination; • large write-offs and difficulties in assessing the relative percentages of in-process research and development expense that can be immediately written off as compared to the amount that must be amortized over the appropriate life of the asset; • increased amortization expenses or, in the event that we write down the value of acquired assets, impairment losses; • potential failure of the due diligence process to identify significant problems, liabilities or other shortcomings or challenges of an acquired or licensed product candidate or technology, including problems, liabilities or other shortcomings or challenges with respect to intellectual property, product quality, revenue recognition or other accounting practices, partner disputes or issues and other legal and financial contingencies and known and unknown liabilities; and • entry into therapeutic modalities, indications or markets in which we have no or limited direct prior development or commercial experience and where competitors in such markets have stronger market positions.
In addition, acquisitions and in-licenses may entail numerous operational, financial and legal risks, including: ● exposure to known and unknown liabilities, including possible intellectual property infringement claims, violations of laws, tax liabilities and commercial disputes; ● incurrence of substantial debt, dilutive issuances of securities or depletion of cash to pay for acquisitions; ● higher than expected acquisition and integration costs; ● difficulty in combining the operations and personnel of any acquired businesses with our operations and personnel; ● inability to maintain uniform standards, controls, procedures and policies; ● restructuring charges related to eliminating redundancies or disposing of assets as part of any such combination; 34 Table of Contents ● large write-offs and difficulties in assessing the relative percentages of in-process research and development expense that can be immediately written off as compared to the amount that must be amortized over the appropriate life of the asset; ● increased amortization expenses or, in the event that we write down the value of acquired assets, impairment losses; ● potential failure of the due diligence process to identify significant problems, liabilities or other shortcomings or challenges of an acquired or licensed product candidate or technology, including problems, liabilities or other shortcomings or challenges with respect to intellectual property, product quality, revenue recognition or other accounting practices, partner disputes or issues and other legal and financial contingencies and known and unknown liabilities; and ● entry into therapeutic modalities, indications or markets in which we have no or limited direct prior development or commercial experience and where competitors in such markets have stronger market positions.
Further, the net reimbursement for drug products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.
Further, the net reimbursement for drug products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the U.S.
Several healthcare reform proposals recently culminated in the enactment of the IRA, which will eliminate, beginning in 2025, 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.
Healthcare reform proposals culminated in the enactment of the IRA, which eliminates, beginning in 2025, 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 limit, and 20% once the out-of-pocket limit has been reached.
In the United States, there have been a number of court cases, legislative and regulatory changes, and other potential changes relating to the healthcare system that restrict or regulate post-approval activities, which may affect our ability to profitably sell FIRDAPSE ® or any other drug candidates for which we obtain marketing approval.
In the U.S., there have been a number of court cases, legislative and regulatory changes, and other potential changes relating to the healthcare system that restrict or regulate post-approval activities, which may affect our ability to profitably sell FIRDAPSE®, AGAMREE®, or any other drug candidates for which we obtain marketing approval.
The ability for us to generate net product revenues from our drug products will depend on the size of the markets, the numbers of competitors in such markets and numerous other factors, including: • successfully establishing and maintaining effective sales, marketing, and distribution systems in jurisdictions in which our drug products are approved for sale; • successfully establishing and maintaining commercial third-party manufacturers and having adequate commercial quantities of our drug products manufactured at acceptable cost and quality levels, including maintaining current good manufacturing practice (cGMP) and quality systems regulation standards required by various regulatory agencies; • broad acceptance of our drug products by physicians, patients and the healthcare community; • the acceptance of pricing and placement of our drug products on payors’ formularies and the associated tiers; 36 Table of Contents Index to Financial Statements • effectively competing with other approved or used medicines and future compounds in development; • continued demonstration of safety and efficacy of our drug products in comparison to competing products; and • obtaining, maintaining, enforcing, and defending intellectual property rights and claims.
The ability for us to generate net product revenues from our drug products will depend on the size of the markets, the numbers of competitors in such markets and numerous other factors, including: ● successfully establishing and maintaining effective sales, marketing, and distribution systems in jurisdictions in which our drug products are approved for sale; ● successfully establishing and maintaining commercial third party manufacturers and having adequate commercial quantities of our drug products manufactured at acceptable cost and quality levels, including maintaining cGMP and quality systems regulation standards required by various regulatory agencies; ● broad acceptance of our drug products by physicians, patients and the healthcare community; ● the acceptance of pricing and placement of our drug products on payers’ formularies and the associated tiers; ● effectively competing with other approved or used medicines and future compounds in development; ● continued demonstration of safety and efficacy of our drug products in comparison to competing products; and ● obtaining, maintaining, enforcing, and defending intellectual property rights and claims.
The pricing of pharmaceutical products, in general, and of specialty drugs, in particular, has been a topic of concern in the United States Congress, where hearings have been held on the topic, and several bills have been introduced proposing a variety of actions to restrain the prices of drugs.
The pricing of pharmaceutical products, in general, and of specialty drugs, in particular, has been a topic of concern in the U.S. Congress, where hearings have been held on the topic, and several bills have been introduced proposing a variety of actions to restrain the prices of drugs.
Risks Related to Government Regulation The regulatory approval process is lengthy, and we may not be able to obtain all of the regulatory approvals required to manufacture and commercialize our drug products in which we are licensed to them.
The regulatory approval process is lengthy, and we may not be able to obtain all of the regulatory approvals required to manufacture and commercialize our drug products in which we are licensed to them.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 47 Table of Contents Index to Financial Statements Our success will depend significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Our success will depend significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.
It is also possible that global health concerns such as the COVID-19 pandemic could disproportionately impact the hospitals and clinical sites in which we conduct any of our clinical trials, which could have a material adverse effect on our business and our results of operation and financial condition.
It is also possible that global health concerns could disproportionately impact the hospitals and clinical sites in which we conduct any of our clinical trials, which could have a material adverse effect on our business and our results of operation and financial condition.
Our strategy of seeking to acquire or in-license innovative technical platforms or earlier stage drug development programs outside of the neuromuscular disease space may not be successful. We continue to seek to broaden and diversify our product portfolio through acquisitions of both early and late-stage products or companies or technology platforms in rare disease therapeutic categories outside of neuromuscular diseases.
Our strategy of seeking to acquire or in-license innovative technical platforms or earlier stage drug development programs may not be successful. We continue to seek to broaden and diversify our product portfolio through acquisitions of both early and late-stage products or companies or technology platforms in orphan, rare disease therapeutic categories.
Also, without strong patent protection, competitors may sell a generic version upon the expiration of orphan exclusivity if our patent position is not upheld. 44 Table of Contents Index to Financial Statements Even if we obtain orphan drug designation for our future drug candidates, we may not fulfill the criteria for exclusivity or we may not be the first to obtain marketing approval for any orphan indication.
Also, without strong patent protection, competitors may sell a generic version upon the expiration of orphan exclusivity if our patent position is not upheld. Even if we obtain orphan drug designation for our future drug candidates, we may not fulfill the criteria for exclusivity or we may not be the first to obtain marketing approval for any orphan indication.
In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user fee waivers.
In the U.S., orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user fee waivers.
Our reliance on third-parties does not relieve us of these obligations and requirements, and we may fail to obtain regulatory approval for any additional indications if these requirements are not met. 39 Table of Contents Index to Financial Statements We will need to continue to develop and maintain distribution and production capabilities or relationships to be successful.
Our reliance on third parties does not relieve us of these obligations and requirements, and we may fail to obtain regulatory approval for any additional indications if these requirements are not met. We will need to continue to develop and maintain distribution and production capabilities or relationships to be successful.
We received approval for FIRDAPSE ® for the treatment of Lambert-Eaton Myasthenic Syndrome (LEMS) from the FDA in November 2018; in January 2023, we completed our acquisition of FYCOMPA ® for the treatment of (i) partial-onset seizures with or without secondary generalized seizures in people with epilepsy four years of age and older, and (ii) for the treatment of primary generalized tonic-clonic seizures in people with epilepsy twelve years of age and older from Eisai; and in October 2023, we received approval for AGAMREE ® for the treatment of Duchenne Muscular Dystrophy (DMD).
We received approval for FIRDAPSE® for the treatment of LEMS from the FDA in November 2018; in January 2023, we completed our acquisition of FYCOMPA® for the treatment of (i) partial-onset seizures with or without secondary generalized seizures in people with epilepsy four years of age and older, and (ii) for the treatment of primary generalized tonic-clonic seizures in people with epilepsy twelve years of age and older from Eisai; and in October 2023, we received approval for AGAMREE® for the treatment of DMD.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. While we have implemented security measures to protect our data security and IT systems, such measures may not prevent such events.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or 48 Table of Contents enhance our protective measures or to investigate and remediate any information security vulnerabilities. While we have implemented security measures to protect our data security and information technology systems, such measures may not prevent such events.
Because the target patient population for several of our products are small, we must achieve significant market share and obtain relatively high per-patient prices for those products to achieve meaningful gross margins. Our products target diseases with a small patient population.
Because the target patient population for certain of our products is small, we must achieve significant market share and obtain relatively high per-patient prices for our products to achieve meaningful gross margins. Our products target diseases with a small patient population.
Delays in feedback from the FDA may affect our ability to quickly update or adjust the conditions of use reflected in our label. We cannot predict whether other legislative changes will be adopted or how such changes would affect the pharmaceutical industry generally and specifically the commercialization of FIRDAPSE ® and any other products we develop.
Delays in feedback from the FDA may affect our ability to quickly update or adjust our label in the interest of patient adherence and tolerability. We cannot predict whether other legislative changes will be adopted or how such changes would affect the pharmaceutical industry generally and specifically the commercialization of FIRDAPSE® and any other products we develop.
Risks Related to our Intellectual Property • If we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets. • Whether we will be successful in our litigation to enforce our patents against Paragraph IV challengers who have filed relating to FIRDAPSE ® and FYCOMPA ® . • There is a risk that our patents may not protect our products from generic competition. • Our success will depend significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. • We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.
Risks Related to our Intellectual Property ● If we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets. ● There is a risk that our patents may not protect our products from generic competition. ● Our success will depend significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. ● We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.
Due to small patient populations, we believe that we would need to have significant market penetration to achieve meaningful revenues and identifying patients and targeting the prescriber base are key to achieving significant market penetration.
Due to small patient populations for certain of our products, we believe that we would need to have significant market penetration to achieve meaningful revenues and identifying patients and targeting the prescriber base are key to achieving significant market penetration.
If we fail to comply with continuing United States and applicable foreign regulations, we could lose those approvals, and our business would be severely harmed.
If we fail to comply with continuing U.S. and applicable foreign regulations, we could lose those approvals, and our business would be severely harmed.
We rely, and intend to continue to rely, on third-party suppliers and contract manufacturers to provide us with materials for our clinical trials and commercial-scale production of our products. These suppliers and manufacturers must continuously adhere to cGMP, DEA, and state regulations for controlled substances, as well as any applicable corresponding manufacturing regulations outside of the United States.
We rely, and intend to continue to rely, on third party suppliers and contract manufacturers to provide us with materials for our clinical trials and commercial-scale production of our products. These suppliers and manufacturers must continuously adhere to cGMP as well as any applicable corresponding manufacturing regulations outside of the U.S.
Some of the factors that may cause the market price of our common stock to fluctuate include: • developments concerning our clinical studies and trials and our pre-clinical studies; • status of regulatory requirements for approval of our drug candidates; • adverse publicity regarding the pricing our drug products; • announcements of product development successes and failures by us or our competitors; • new products introduced or announced by us or our competitors; • adverse changes in the abilities of our third-party manufacturers to provide drug or product in a timely manner or to meet FDA requirements; • challenges to our intellectual property which could affect our products, such as the currently pending litigation involving Paragraph IV challenges to FIRDAPSE ® and FYCOMPA ® ; • changes in reimbursement levels; • changes in financial estimates by securities analysts; • actual or unanticipated variations in operating results; • changes in laws regarding FDA approval; • expiration or termination of licenses (particularly our FIRDAPSE ® License Agreement), research contracts, or other collaboration agreements; • conditions or trends in the regulatory climate and the biotechnology and pharmaceutical industries; • intellectual property, product liability or other litigation against us; • changes in the market valuations of similar companies; • changes in pharmaceutical company regulations or reimbursements for pharmaceutical products as a result of healthcare reform or other legislation; • changes in economic conditions; and • sales of shares of our common stock, particularly sales by our officers, directors and significant stockholders, or the perception that such sales may occur. 51 Table of Contents Index to Financial Statements In addition, equity markets in general, and the market for emerging pharmaceutical and life sciences companies in particular, have experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies traded in those markets.
Some of the factors that may cause the market price of our common stock to fluctuate include: ● developments concerning our clinical studies and trials and our pre-clinical studies; ● status of regulatory requirements for approval of our drug candidates; ● adverse publicity regarding the pricing our drug products; ● announcements of product development successes and failures by us or our competitors; ● new products introduced or announced by us or our competitors; ● adverse changes in the abilities of our third party manufacturers to provide drug or product in a timely manner or to meet FDA requirements; ● challenges to our intellectual property which could affect our products, such as the currently pending litigation involving Paragraph IV challenges to FIRDAPSE®; ● changes in reimbursement levels; ● changes in financial estimates by securities analysts; ● actual or unanticipated variations in operating results; ● changes in laws regarding FDA approval; ● expiration or termination of licenses (particularly our License Agreement for FIRDAPSE®), research contracts, or other collaboration agreements; ● conditions or trends in the regulatory climate and the biotechnology and pharmaceutical industries; ● intellectual property, product liability or other litigation against us; ● changes in the market valuations of similar companies; ● changes in pharmaceutical company regulations or reimbursements for pharmaceutical products as a result of healthcare reform or other legislation; ● changes in economic conditions; and ● sales of shares of our common stock, particularly sales by our officers, directors and significant stockholders, or the perception that such sales may occur.
In either case, such a license may not be available on commercially reasonable terms or at all.
In either case, such a license may not be available on 46 Table of Contents commercially reasonable terms or at all.
We are dependent on our licensing partners for supplies of FYCOMPA ® and AGAMREE ® Through our agreements with Eisai for FYCOMPA ® and Santhera for AGAMREE ® , we have agreed to purchase our supplies of each product through such companies.
Through our agreements with Eisai for FYCOMPA® and Santhera for AGAMREE®, we have agreed to purchase our supplies of each product through such companies.
We source FIRDAPSE ® from more than one supplier, and we have entered into contracts with our suppliers that contractually obligate them to meet our requirements. However, if our suppliers cannot or will not meet our requirements (for whatever reason), our business could be adversely impacted.
We source FIRDAPSE® from more than one supplier, and we have entered into contracts with our suppliers that contractually obligate them to meet our requirements. However, if our suppliers cannot or will not meet our requirements (for whatever reason), our business could be adversely impacted. We are dependent on our licensing partners for supplies of FYCOMPA® and AGAMREE®.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured the product ourselves, including: • reliance on the third-party for regulatory compliance and quality assurance; • reliance on the continued financial viability of the third parties; • limitations on supply availability resulting from capacity and scheduling constraints of the third parties; • impact on our reputation in the marketplace if manufacturers of our products fail to meet the demands of our customers; • the possible breach of the manufacturing agreement by the third-party because of factors beyond our control; and • the possible termination or nonrenewal of the agreement by the third-party, based on its own business priorities, at a time that is costly or inconvenient for us. 43 Table of Contents Index to Financial Statements If any of our contract manufacturers fail to achieve and maintain appropriate manufacturing standards, patients using our products could be injured or die, resulting in product liability claims.
Reliance on third party manufacturers entails risks to which we would not be subject if we manufactured the product ourselves, including: ● reliance on the third party for regulatory compliance and quality assurance; ● reliance on the continued financial viability of the third parties; ● limitations on supply availability resulting from capacity and scheduling constraints of the third parties; ● impact on our reputation in the marketplace if manufacturers of our products fail to meet the demands of our customers; ● the possible breach of the manufacturing agreement by the third party because of factors beyond our control; and ● the possible termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us.
If we fail to comply with continuing United States and applicable foreign regulations, we could lose those approvals, and our business would be severely harmed. • Enacted and future legislation or judicial action may increase the difficulty and cost for us to market our approved products or commercialize any other drug candidates we may acquire or license and affect the prices we may obtain. 35 Table of Contents Index to Financial Statements • If we fail to obtain or subsequently maintain orphan drug exclusivity or regulatory exclusivity for FIRDAPSE ® and any other orphan drug candidates we may acquire or license, our competitors may sell products to treat the same conditions at greatly reduced prices, and our revenues would be significantly adversely affected. • Changes to the ODA or successful legal challenges to the FDA’s interpretation of the ODA may affect our ability to obtain or subsequently maintain orphan drug exclusivity or may affect the scope orphan drug exclusivity for our products. • Our operations and relationships with healthcare providers, healthcare organizations, customers and third-party payors are subject to applicable anti-bribery, anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose us to, among other things, enforcement actions, criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.
If we fail to comply with continuing U.S. and applicable foreign regulations, we could lose those approvals, and our business would be severely harmed. ● Enacted and future legislation or judicial action may increase the difficulty and cost for us to market our approved products or commercialize any other drug candidates we may acquire or license and affect the prices we may obtain. ● If we fail to obtain or subsequently maintain orphan drug exclusivity or regulatory exclusivity for FIRDAPSE®, AGAMREE®, and any other orphan drug candidates we may acquire or license, our competitors may sell products to treat the same conditions at greatly reduced prices, and our revenues would be significantly adversely affected. ● If the FDA or comparable foreign regulatory authorities approve generic versions of any of our products, or such authorities do not grant our products sufficient periods of exclusivity before approving generic versions of our products, the sales of our products could be adversely affected. ● Changes to the Orphan Drug Act or successful legal challenges to the FDA’s interpretation of the Orphan Drug Act may affect our ability to obtain or subsequently maintain orphan drug exclusivity or may affect the scope orphan drug exclusivity for our products. ● Our operations and relationships with healthcare providers, healthcare organizations, customers and third party payors are subject to applicable anti-bribery, anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose us to, among other things, enforcement actions, criminal sanctions, 32 Table of Contents civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings. ● We are subject to environmental, health, and safety laws and regulations, which could increase our costs or restrict our operations.
If either company were unable to supply sufficient supplies of drug product, our business would be adversely impacted, whether we would be required to work with these companies to resume supplies or whether we would be required to search for a sufficient third-party supplier. We may encounter difficulties in managing our growth, which would adversely affect our results of operations.
If either company were unable to supply sufficient supplies of drug product, our business would be adversely impacted, whether we would be required to work with these companies to resume supplies or whether we would be required to search for a sufficient third party supplier.
However, if we do not obtain orphan drug exclusivity for our drug candidates or we cannot maintain orphan exclusivity for our drug candidates, our competitors may then sell the same drug to treat the same condition and our revenues will be reduced.
For eligible drugs, we plan to rely on the orphan exclusivity period to maintain a competitive position. However, if we do not obtain orphan drug exclusivity for our drug candidates or we cannot maintain orphan exclusivity for our drug candidates, our competitors may then sell the same drug to treat the same condition and our revenues will be reduced.
In other countries where FIRDAPSE ® , FYCOMPA ® , AGAMREE ® , or any other product we may acquire or license may be marketed, we will also be subject to regulatory requirements governing human clinical studies, trials and marketing approval for drugs.
In other countries where FIRDAPSE®, FYCOMPA®, AGAMREE®, or any other product we may acquire or license may be marketed, we will also be subject to regulatory requirements governing human clinical studies, trials and marketing approval for drugs. The requirements governing the conduct of clinical studies, trials, product licensing, pricing and reimbursement varies widely from country to country.
We invest a significant amount of effort and financial resources in the commercialization of these drug products in the U.S.
We invest a significant amount of effort and financial resources in the commercialization of these drug products in the U.S., and, in the case of FIRDAPSE®, Canada and now Japan and in the case of AGAMREE®, Canada.
Risks Related to Government Regulation • The regulatory approval process is lengthy, and we may not be able to obtain all of the regulatory approvals required to manufacture and commercialize our drug products in which we are licensed to them. • If our pre-clinical studies or our clinical studies and trials are unsuccessful or significantly delayed, our ability to commercialize our products will be impaired. • We may face significant delays in our clinical studies and trials due to an inability to recruit patients for our clinical studies and trials or to retain patients in the clinical studies and trials we may perform. • If our third-party suppliers or contract manufacturers do not maintain appropriate standards of manufacturing in accordance with cGMP and other manufacturing regulations, our development and commercialization activities could suffer significant interruptions or delays. • Our drug products are subject to continuing regulatory review.
Risks Related to Government Regulation ● The healthcare industry is highly regulated, subject to stringent regulatory standards and other applicable laws, and we may be the subject of unexpected changes in interpretation or enforcement, any of which may adversely impact our business. ● The regulatory approval process is lengthy, and we may not be able to obtain all of the regulatory approvals required to manufacture and commercialize our drug products in which we are licensed to them. ● If our pre-clinical studies or our clinical studies and trials are unsuccessful or significantly delayed, our ability to commercialize our products will be impaired. ● If our third party suppliers or contract manufacturers do not maintain appropriate standards of manufacturing in accordance with cGMP and other manufacturing regulations, our development and commercialization activities could suffer significant interruptions or delays. ● Our drug products are subject to continuing regulatory review.
If any of our third-party suppliers or contract manufacturers fail to comply with cGMP or other applicable manufacturing regulations and requirements related to registration, security, recordkeeping and reporting of controlled substances, our ability to develop, commercialize, manufacture and distribute our products could suffer significant interruptions and delays.
If any of our third party suppliers or contract manufacturers fail to comply with cGMP or other applicable manufacturing regulations, our ability to develop and commercialize our products could suffer significant interruptions and delays.
In recent years, cybersecurity threats have become a greater risk and focus for companies. In particular, ransomware attacks, where a hacker locks and threatens to delete or disclose the victim’s data unless a ransom is paid, has become a major risk.
In particular, ransomware attacks, where a hacker locks and threatens to delete or disclose the victim’s data unless a ransom is paid, has become a major risk.
In clinical trials, dizziness, somnolence, vertigo, aggression, anger, loss of coordination, blurred vision, irritability, and slurred speech were the side effects that most commonly led people to leave the trial.
In clinical trials, dizziness, somnolence, vertigo, aggression, anger, loss of coordination, blurred vision, irritability, and slurred speech were the side effects that most commonly led people to leave the trial. Use of FYCOMPA® is also contraindicated in women who are pregnant or breastfeeding.
It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such information. The size and complexity of our IT systems, and those of third-party vendors with whom we contract, and the volume of data we retain, make such systems potentially vulnerable to breakdown, malicious intrusion, security breaches, ransomware, phishing, and other cyber-attacks.
The size and complexity of our information technology systems, and those of third party vendors with whom we contract, and the volume of data we retain, make such systems potentially vulnerable to breakdown, malicious intrusion, security breaches, ransomware, phishing, and other cyber-attacks.
We encourage our stockholders to carefully review the full risk factors contained in this Form 10-K in their entirety for additional information regarding the risks and uncertainties that could cause our actual results to vary materially from our recent results or from our anticipated future results. 34 Table of Contents Index to Financial Statements Risks Related to the Marketing of Approved Products • Our success depends on the successful commercialization of our products.
We encourage our stockholders to carefully review the full risk factors contained in this Form 10-K in their entirety for additional information regarding the risks and uncertainties that could cause our actual results to vary materially from our recent results or from our anticipated future results.
Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability to sell our product candidates profitably.
The healthcare industry is acutely focused on cost containment, both in the U.S. and elsewhere. Government authorities and third party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability to sell our product candidates profitably.
Whether or not we are ultimately successful in any adverse litigation, such litigation could consume substantial amounts of our financial and managerial resources, all of which could have a material adverse effect on our business, financial condition, results of operations, prospects and stock price. 50 Table of Contents Index to Financial Statements Business or economic disruptions or global health concerns could seriously harm our development efforts and increase our costs and expenses.
Whether or not we are ultimately successful in any adverse litigation, such litigation could consume substantial amounts of our financial and managerial resources, all of which could have a material adverse effect on our business, financial condition, results of operations, prospects and stock price.
Because the extent and scope of patent protection for some of our drug products may be particularly limited, orphan drug designation – and ultimately, orphan drug exclusivity – is especially important for our products that are eligible for orphan drug designation. For eligible drugs, we plan to rely on the orphan exclusivity period to maintain a competitive position.
Because the extent and scope of patent protection for some of our drug products may be particularly limited, orphan drug designation – and ultimately, orphan drug exclusivity – is especially important for our products that are eligible for orphan drug 41 Table of Contents designation.
For the patents and patent applications that we have licensed, we may have limited or no right to participate in the defense of any licensed patents against challenge by a third-party.
We cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution. For the patents and patent applications that we have licensed, we may have limited or no right to participate in the defense of any licensed patents against challenge by a third party.
The degree of market acceptance of our drug products is dependent on a number of factors, including but not limited to: • the efficacy and potential advantages compared to alternative treatments, including the convenience and ease, or duration of administration; • the prevalence and severity of any side effects; • the acceptability of the price of our drug products relative to other treatments; • the content of the approved product labels and our ability to make compelling product claims; • the effectiveness and adequacy of our and our collaboration partner’s sales and marketing efforts; • the patients’ out-of-pocket costs in relation to alternative treatments; • the breadth and cost of distribution support; • the effectiveness of our patient assistance and support programs; • the availability of third-party payor coverage and adequate reimbursement; and • any restrictions on the use of our drug products together with other medications.
The degree of market acceptance of our drug products is dependent on a number of factors, including but not limited to: ● the efficacy and potential advantages compared to alternative treatments, including the convenience and ease, or duration of administration; 33 Table of Contents ● the competition pressure from other products can be particularly pronounced at launch when having to establish market share against older, more established products; ● a separate competitive pressure also occurs at loss of exclusivity when drug products like ours to face significant price erosion and loss of market share upon the launch of generic alternatives – with the effect typically being more severe the greater the number of generic entrants; ● the prevalence and severity of any side effects; ● the acceptability of the price of our drug products relative to other treatments; ● the content of the approved product labels and our ability to make compelling product claims; ● the effectiveness and adequacy of our and our collaboration partner’s sales and marketing efforts; ● the patients’ out-of-pocket costs in relation to alternative treatments; ● the breadth and cost of distribution support; ● the effectiveness of our patient assistance and support programs; ● the availability of third party payer coverage and adequate reimbursement; and ● any restrictions on the use of our drug products together with other medications.
Future sales of our common stock may cause our stock price to decline. As of February 26, 2024, we had 117,863,258 shares of our common stock outstanding, of which 7,296,124 shares were held by our executive officers and directors.
Future sales of our common stock may cause our stock price to decline. As of February 24, 2025, we had 121,449,655 shares of our common stock outstanding, of which 7,642,725 shares were held by our executive officers and directors.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our Chief Legal and Compliance Officer (CLCO), our Chief Operating Officer (COO), and our IT personnel. In their time with our company, our CLCO and our COO have become increasingly involved in investigating, responding to, and mitigating cybersecurity incidents and intrusion attempts.
Biggest changeIn their time with our company, our CLCO and our COO have become increasingly involved in investigating, responding to, and mitigating cybersecurity incidents and intrusion attempts. Their in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies.
Engage Third-parties on Risk Management Recognizing the complexity and evolving nature of cybersecurity threats, we engage with a range of external experts in evaluating and testing our risk management systems. These partnerships enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices.
Engage Third Parties on Risk Management Recognizing the complexity and evolving nature of cybersecurity threats, we engage with a range of external experts in evaluating and testing our risk management systems. These partnerships enable us to leverage specialized knowledge and 51 Table of Contents insights, ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices.
Item 1C. Cybersecurity Risk management and strategy We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.
Item 1C. Cybe rsecurity Risk management and strategy We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.
This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework. Board of Directors Oversight The Board of Directors as a group is responsible for oversight of cybersecurity risks and bears the primary responsibility for oversight of this domain.
This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework. 52 Table of Contents Board of Directors Oversight The Board of Directors as a group is responsible for oversight of cybersecurity risks and bears the primary responsibility for oversight of this domain.
Their in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies. Our CLCO and our COO oversee our governance programs, test our compliance with standards, remediate known risks, and oversee or lead our employee training program. The CLCO and the COO regularly inform our CEO and CFO of all aspects related to cybersecurity risks and incidents.
Our CLCO and our COO oversee our governance programs, test our compliance with standards, remediate known risks, and oversee or lead our employee training program. The CLCO and the COO regularly inform our CEO and CFO of all aspects related to cybersecurity risks and incidents.
The Board of Directors is composed of board members with diverse expertise including, risk management, technology, and finance, equipping them to oversee cybersecurity risks effectively.
The Board has delegated to the Audit Committee the primary responsibility of overseeing risk management relating to cybersecurity. The Board of Directors is composed of board members with diverse expertise including, risk management, technology, and finance, equipping them to oversee cybersecurity risks effectively.
The Board has established robust oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the significance of these threats to our operational integrity and stakeholder confidence.
The Board has established robust oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the significance of these threats to our operational integrity and stakeholder confidence. Risk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our CLCO, our COO, and our IT personnel.
Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing. 53 Table of Contents Index to Financial Statements Governance The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
This approach is designed to mitigate risks related to data breaches or other security incidents originating from third parties. Risks from Cybersecurity Threats We have not encountered, to date, cybersecurity challenges that have materially impaired our operations or financial standing. Governance The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
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This approach is designed to mitigate risks related to data breaches or other security incidents originating from third-parties.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOther 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
Biggest changeOther Litigation From time to time we may become involved in legal proceedings arising in the ordinary course of business. 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.
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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.
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Item 3. L egal Proceedings Paragraph IV Patent Litigation For a description of currently ongoing Paragraph IV litigation related to FIRDAPSE®, see “Item 1. Business – Overview – FIRDAPSE®.” The outcome of patent litigation with Paragraph IV challengers is always uncertain and there can be no assurance as to whether we will prevail in this litigation.
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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.
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Item 4. Mi ne Safety Disclosure Not applicable. 53 Table of Contents PA RT II
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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.
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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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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.
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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.
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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 ® .
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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.
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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 changeEquity 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.
Biggest changeEquity 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) 13,076,789 $ 10.76 2,254,102 (2) Equity compensation plans not approved by security holders — — — Total 13,076,789 $ 10.76 2,254,102 (1) Includes our 2014 Stock Incentive Plan and our 2018 Stock Incentive Plan (2) Remaining shares are only under our 2018 Stock Incentive Plan
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.
Securities Authorized for Issuance under Equity Compensation Plans The following table presents information as of December 31, 2024 with respect to compensation plans under which shares of our common stock may be issued.
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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Performance Graph The graph below matches Catalyst Pharmaceuticals, Inc.’s cumulative 5-Year total shareholder return on common stock with the cumulative total returns of the NASDAQ Composite index, the Russell MicroCap index, and the NASDAQ Biotechnology index.
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Item 5. Ma rket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of the Company's common stock are traded on the Nasdaq Capital Market under the symbol "CPRX". There were 17 holders of record of the Company's common stock as of February 24, 2025.
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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.
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Dividends The Company has never paid dividends on its common stock and does not anticipate that it will do so in the foreseeable future. Recent Sales of Unregistered Securities None. Repurchases of Equity Securities None.
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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.
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Performance Graph The following performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
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We 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.
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The graph compares the cumulative 5-year total return to stockholders on the Company’s common stock relative to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Biotechnology Index. The Company selected the Nasdaq Biotechnology Index because it believes the index reflects the market conditions within the industry in which the Company primarily operates.
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Issuer Purchases of Equity Securities In March 2021, our Board of Directors approved a share repurchase program that authorizes the repurchase of up to $40 million of our common stock, pursuant to a repurchase program under Rule 10b-18 of the Securities Act (the “ Share Repurchase Program ”). The Share Repurchase Program commenced on March 22, 2021.
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The comparison of total return on investment, defined as the change in year-end stock price plus reinvested dividends, for each of the periods assumes that $100 was invested on January 1, 2020, in each of the Company’s common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index, with investment weighted on the basis of market capitalization. 54 Table of Contents 12/19 12/20 12/21 12/22 12/23 12/24 Catalyst Pharmaceuticals, Inc. 100.00 89.07 180.53 496.00 448.27 556.53 NASDAQ Composite 100.00 144.92 177.06 119.45 172.77 223.87 Russell MicroCap 100.00 120.96 144.35 112.66 123.17 140.05 NASDAQ Biotechnology 100.00 126.42 126.45 113.65 118.87 118.20 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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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.
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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

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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.
Biggest changeFactors that will affect our success include the uncertainty of: • Whether we will be able to continue to successfully market and sell FIRDAPSE®, FYCOMPA®, and AGAMREE® while maintaining full compliance with applicable federal and state laws, rules and regulations; • Whether we will be able to continue to attract and retain the qualified personnel necessary to run our business; • Whether our estimates of the size of the market for FIRDAPSE® for the treatment of LEMS will prove to be accurate; • Whether the daily dose of FIRDAPSE® taken by patients changes over time and affects our results of operations; • Whether we will continue to be able to locate LEMS patients who are undiagnosed or are misdiagnosed with another disease; • Whether patients will discontinue from the use of our products at rates that are higher than historically experienced or are higher than we project; 69 Table of Contents • Whether new FIRDAPSE®, FYCOMPA®, and AGAMREE® patients can be successfully titrated to stable therapy; • Whether we can continue to market our products on a profitable and cash flow positive basis; • Whether we will be able to demonstrate, to the satisfaction of the FDA and third party payors, whether AGAMREE® offers advantages compared to other corticosteroids or competitor’s products; • Whether DMD patients transitioning to current or future gene therapy treatments will delay initiating use of AGAMREE® while waiting for access to such gene therapy, or stop their AGAMREE® therapy during the course of their gene therapy treatment; • Whether we will be able to continue to successfully commercialize FYCOMPA® after its patents expire starting in May 2025 and generic competition for FYCOMPA® enters the market; • Whether any revenue or earnings guidance that we provide to the public market will turn out to be accurate; • Whether payors will continue to 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 continue to supply sufficient product to meet our customers’ needs in a timely manner; • 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 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 we will be successful in our litigation to enforce our patents against the Paragraph IV challengers who have filed ANDAs seeking to introduce generic versions of FIRDAPSE®; • Whether our patents will be sufficient to prevent generic competition for FIRDAPSE® and AGAMREE® after our orphan drug exclusivity for each product expires; • 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, changes (if any) to be made by the current President and/or the current Congressional administrations, changes to the review and approval process at the FDA, or changes in the healthcare industry generally; • Whether we and Santhera can successfully develop additional indications for AGAMREE® and obtain the ability to commercialize the product for these additional indications; 70 Table of Contents • The state of the economy generally and its impact on our business; • The scope, rate of progress and expense of future clinical trials and studies, pre-clinical studies, proof-of-concept studies, and our other drug development activities, and whether any trials and studies we undertake 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, our collaboration partner in Canada; • Whether AGAMREE® will be approved by Health Canada for commercialization in Canada and whether, if the product is approved, KYE can successfully commercialize it in Canada; • Whether KYE will successfully file an application seeking to commercialize AGAMREE® in Canada during the first quarter of 2025 or at all; • Now that FIRDAPSE® has been approved for commercialization in Japan and launched, whether DyDo will be successful in commercializing the product in Japan; • The impact on sales of FIRDAPSE® in the U.S. if an amifampridine product is purchased in Canada for use in the U.S.; • Whether our plans to expand the reach of FIRDAPSE® and AGAMREE® into other global regions will be successful; • System failures or security or data breaches due to cyber-attacks, or cyber intrusions, including ransomware, phishing attacks and other malicious intrusions whether it occurs directly to us or indirectly through third parties; and • Our ability to enhance our systems, processes and procedures to appropriately support the growing complexity and scale of our business.
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.
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.
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.
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 may acquire and continue to develop and whether our results continue to be profitable and cash flow positive.
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.
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 AGAMREE® (vamorolone) are highly uncertain.
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.
In that regard, our future funding requirements will depend on many factors, including: 66 Table of Contents • 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.
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.
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, 2024, 2023 and 2022 and, therefore, the transaction price was not reduced further during the years ended December 31, 2024, 2023 and 2022.
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.
We also work with several rare disease advocacy organizations (including the Myasthenia Gravis Foundation of America, the National Organization for Rare Disorders, and the LEMS Family Association) 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 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.
We expect these revenues to fluctuate in future periods based on our sales of FIRDAPSE®, FYCOMPA®, and AGAMREE®. 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 launched FIRDAPSE® in Canada.
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.
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, $17.8 million in deferred taxes and $1.3 million in non-cash expenses.
It also includes distributing the drug through a very small group of exclusive specialty pharmacies (primarily AnovoRx), which is consistent with the way that most drug products for ultra-orphan diseases are distributed and dispensed to patients.
The program also includes distributing the drug through a very small group of exclusive specialty pharmacies (primarily AnovoRx), which is consistent with the way that most drug products for ultra-orphan diseases are distributed and dispensed to patients.
In connection with our recent acquisition from Santhera: • At closing we paid a $75 million initial cash payment. • In the fourth quarter of 2023, following regulatory approval of Santhera’s NDA by the FDA, we paid a regulatory milestone payment of $36 million.
In connection with our recent acquisition from Santhera: • At closing we paid a $75 million initial cash payment. • In the fourth quarter of 2023, following regulatory approval of Santhera’s NDA for AGAMREE® by the FDA, we paid a regulatory milestone payment of $36 million.
Amortization of intangible assets consists of the amortization of the FYCOMPA ® rights, which are amortized using the straight-line method over its estimated useful life of 5 years, and the RUZURGI ® rights, which are amortized using the straight-line method over its estimated useful life of 14.5 years.
Amortization of intangible assets consists of the amortization of the FYCOMPA® rights, which are amortized using the straight-line method over its estimated useful life of 5 years, the RUZURGI® rights, which are amortized using the straight-line method over its estimated useful life of 14.5 years and the AGAMREE® rights, which are amortized using the straight-line method over its estimated useful life of 10.5 years.
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 .
This section provides information about key accounting estimates and policies that we followed in preparing our consolidated financial statements for the 2024 fiscal year. • Critical Accounting Policies and Estimates .
AGAMREE ® ’s unique mode of action is based on differential effects on glucocorticoid and mineralocorticoid receptors and modifying further downstream activity. As such, it is considered a novel corticosteroid with dissociative properties in maintaining efficacy that we hope has the potential to demonstrate comparable efficacy to corticosteroids, with the potential for a better-tolerated side effect profile.
AGAMREE®’s unique mode of action is based on differential effects on glucocorticoid and mineralocorticoid receptors and modifying further downstream activity. As such, it is considered a novel corticosteroid that we hope has the potential to demonstrate comparable efficacy to corticosteroids, with the potential for a better-tolerated side effect profile.
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.
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.
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.
We also 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, a Transition Services Agreement (TSA) and a Supply Agreement.
We also use non-personal promotion to reach the 20,000 neurologists who are potential LEMS treaters and the 16,000 oncologists who might be treating a LEMS patient with small cell lung cancer.
Additionally, we use non-personal promotion to reach the 20,000 neurologists who are potential LEMS treaters and the 16,000 oncologists who might be treating a LEMS patient who also has small cell lung cancer.
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.
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. Contractual Obligations and Arrangements.
We are also obligated to pay additional regulatory milestone payments upon regulatory approval by the FDA in the U.S. of an NDA for the product for the first, second, and third additional indications in the amounts of $50 million, $45 million, and $45 million, respectively. • We are obligated to pay sales-based milestone payments if the applicable amount of net sales of all products in the territory in a single calendar year reach one of more of the net sales threshold levels set forth in the AGAMREE ® License Agreement. • Until January 1, 2026, we are obligated to purchase all of the requirements for product solely from Santhera, and Santhera is required to manufacture, supply, and sell product to us at an agreed upon supply price. • Simultaneously, we made a strategic equity investment into Santhera by acquiring 1,414,688 of Santhera’s post reverse-split ordinary shares (representing approximately 11.26% of Santhera’s outstanding ordinary shares following the transaction) at an investment price of CHF 9.477 per share (corresponding to a mutually agreed volume-weighted average price prior to signing), with the approximately $15.7 million USD in equity investment proceeds, inclusive of the approximately $13.5 million USD fair value of the investment in Santhera and approximately $2.2 million USD of transaction costs included in acquired in-process research and development, to be used by Santhera for Phase IV studies in DMD and further development of additional indications for AGAMREE ® .
We are also obligated to pay additional regulatory 68 Table of Contents milestone payments upon regulatory approval by the FDA in the U.S. of an NDA for the product for the first, second, and third additional indications in the amounts of $50 million, $45 million, and $45 million, respectively. • We are obligated to pay royalties and/or sales-based milestone payments if the applicable amount of net sales of all products in the territory in a single calendar year fall within the range of one or more of the net sales threshold levels set forth in the AGAMREE® License Agreement. • Until January 1, 2026, we are obligated to purchase all of the requirements for product solely from Santhera, and Santhera is required to manufacture, supply, and sell product to us at an agreed upon supply price. • Simultaneously with entering into the license agreement, we made a strategic equity investment into Santhera by acquiring 1,414,688 of Santhera’s ordinary shares (representing approximately 11.26% of Santhera’s outstanding ordinary shares immediately following the transaction) at an investment price of CHF 9.477 per share (corresponding to a mutually agreed volume-weighted average price prior to signing), with the approximately $15.7 million USD in equity investment proceeds, inclusive of the approximately $13.5 million USD fair value of the investment in Santhera and approximately $2.2 million USD of transaction costs included in acquired in-process research and development, to be used by Santhera for Phase IV studies in DMD and further development of additional indications for AGAMREE®.
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.
FIRDAPSE® On November 28, 2018, we received approval from the FDA for our new drug application, (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 U.S.
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.
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), and under the TSA, a U.S. subsidiary of Eisai provided us with certain transitional services (which transition services ended on December 31, 2023).
We anticipate paying significant portions of a study or trial’s cost before they begin and incurring additional expenditures as the study or trial progresses and reaches certain milestones. Selling, General and Administrative Expenses.
We anticipate paying significant portions of a study or trial’s cost before they begin and incurring additional expenditures as the study or trial progresses and reaches certain milestones.
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.
Cost of Sales Cost of sales consists of third party manufacturing costs, freight, royalties, milestone payments, 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.
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.
Our effective income tax rate was approximately 24.2% and 24.4% for fiscal years ended December 31, 2024 and 2023, respectively. Differences in our effective tax and the statutory federal income tax of 21% are driven by state income taxes and anticipated annual permanent differences offset by equity compensation deductions.
In addition to the rights to commercialize the product in North America, the AGAMREE ® License Agreement provides us with the right of first negotiation for AGAMREE ® in Europe and Japan should Santhera pursue partnership opportunities in those territories. Additionally, we will hold the North American rights to any future approved indications for AGAMREE ® .
In addition to the rights to commercialize the product in North America, the AGAMREE® License Agreement provides us with the right of first negotiation for AGAMREE® in Japan should Santhera pursue partnership opportunities in that territory. Additionally, we will hold the North American rights to any future approved indications for AGAMREE®.
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.
For the years ended December 31, 2024 and 2023, we recognized an aggregate of approximately $47.3 million and $39.5 million, respectively, of royalties payable under these license agreements, which is included in cost of sales in the accompanying consolidated statements of operations and comprehensive income.
Further, upon acceptance of the Japan NDA by the PMDA, which occurred on December 18, 2023, our license for FIRDAPSE ® automatically expanded to include other key markets in Asia and Latin America, and we are currently initiating plans to seek opportunities to expand FIRDAPSE ® ’s global footprint through strategic partnerships (with the current focus on the Asia Pacific and Latin American regions).
Upon acceptance of the Japan NDA by the PMDA in December 2023, our license for FIRDAPSE® automatically expanded to include other key markets in Asia and Latin America, and we are currently seeking opportunities to expand FIRDAPSE®’s global footprint through strategic partnerships (with the current focus on the Asia Pacific and Latin American regions).
Based on our current financial condition and forecasts of available cash, we believe that we have sufficient funds to support our operations for at least the next 12 months.
Based on our current financial condition, including our profitability, cash flows generated from operations and forecasts of available cash, we believe that we have sufficient funds to support our operations for at least the next 12 months.
In its recommendation for approval, CHMP acknowledged that there was a positive benefit-risk profile of AGAMREE ® in such patient population, including certain safety benefits of AGAMREE ® compared to standard of care corticosteroids in the treatment of DMD. On October 26, 2023, the U.S.
In its recommendation for approval, CHMP acknowledged that there was a positive benefit-risk profile of AGAMREE® in such patient population, including certain safety benefits of AGAMREE® compared to standard of care corticosteroids in the treatment of DMD.
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.
Further, 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.
We operate our business in leased office space in Coral Gables, Florida. We lease approximately 10,700 square feet of office space and we pay annual rent of approximately $0.5 million. Off-Balance Sheet Arrangements. We do not have any off-balance sheet arrangements as such term is defined in rules promulgated by the SEC.
We lease approximately 10,700 square feet of office space and we pay annual rent of approximately $0.5 million. Off-Balance Sheet Arrangements. We do not have any off-balance sheet arrangements as such term is defined in rules promulgated by the SEC.
Years Ended December 31, 2022 and 2021 The information comparing results of operations for the year ended 2022 compared to 2021 was included in our Annual Report on Form 10-K for 2022 filed with the SEC on March 15, 2023.
Years Ended December 31, 2023 and 2022 The information comparing results of operations for the year ended 2023 compared to 2022 was included in our Annual Report on Form 10-K for 2023 filed with the SEC on February 28, 2024.
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.
Under the Federal Food, Drug, and Cosmetic Act (FDCA), as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, 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 in all cases (but not earlier 57 Table of Contents than the expiration of orphan drug exclusivity on November 28, 2025).
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.
The notice letters each alleged that the six patents protecting FIRDAPSE® that are listed in the 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 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.
We currently pay the following royalties under our license agreement: 67 Table of Contents • 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 (since transferred to SERB) and the third party licensor) in any calendar year for the duration of regulatory exclusivity within a territory and 3.5% for of net sales in any territory in which we do not enjoy regulatory exclusivity.
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.
Our FIRDAPSE® co-pay assistance program is not available to patients enrolled in state or federal healthcare programs, including Medicare, Medicaid, Department of Veterans Affairs (VA), Department of Defense (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.
Liquidity and Capital Resources Since our inception, we have financed our operations primarily through multiple offerings of our securities and revenues from product sales. At December 31, 2023 we had cash and cash equivalents aggregating $137.6 million and working capital of $143.3 million.
Liquidity and Capital Resources Since our inception, we have financed our operations primarily through revenues from product sales and multiple offerings of our securities. At December 31, 2024 we had cash and cash equivalents aggregating $517.6 million and working capital of $502.9 million.
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.
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 than it was in the 2024 fiscal year). We had no material uncertain tax positions as of December 31, 2024 and 2023. Net Income.
Amortization of intangible assets was approximately $32.6 million for the fiscal year ended December 31, 2023 compared to $1.1 million for fiscal year ended December 31, 2022.
Amortization of intangible assets was approximately $37.4 million for the fiscal year ended December 31, 2024 compared to $32.6 million for fiscal year ended December 31, 2023.
During 2019, we actively committed funds to developing our commercialization program for FIRDAPSE ® and we have continued to incur substantial commercialization expenses, including sales, marketing, patient services, patient advocacy and other commercialization related expenses as we have continued our sales program for FIRDAPSE ® .
Selling, General and Administrative Expenses During 2019, we began to commit funds to developing our commercialization program for FIRDAPSE® and we have continued to incur substantial commercialization expenses, including sales, marketing, patient services, patient advocacy and other commercialization related expenses as we have continued our sales program for FIRDAPSE®.
This section provides a general description of our business and information about our business that we believe is important in understanding our financial condition and results of operations. • Basis of Presentation .
The discussion and analysis is organized as follows: • Overview . This section provides a general description of our business and information about our business that we believe is important in understanding our financial condition and results of operations. • Basis of Presentation .
In that regard, we are currently exploring clinically differentiated and adequately de-risked opportunities, with a keen focus on products to treat rare (orphan) central nervous system (CNS) and adjacent rare (orphan) diseases. These prospects include evaluating companies with existing commercial drug products or drugs in development, for potential partnerships, licensing, geographical expansion opportunities with our existing products, and/or asset acquisitions.
In that regard, we are currently exploring clinically differentiated and adequately de-risked opportunities, with a keen focus on orphan, rare disease products across therapeutic areas. These prospects include evaluating companies with existing commercial drug products or drugs in development, for potential partnerships, licensing, geographical expansion opportunities with our existing products, and/or asset acquisitions.
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.
Income Taxes Our effective income tax rate is the ratio of income tax expense over our income before income taxes. As of December 31 2024, 2023, and 2022, we had no federal net operating loss carry-forwards. Additionally, we had no state net operating loss carry-forwards in any such year.
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.
For the years ended December 31, 2024 and 2023, the assumptions used were an estimated annual volatility of 54.1% to 61.5% and 68.0% to 71.0%, expected holding periods of 4.5 to 5.0 years and 4.5 to 5.2 years, and risk-free interest rates of 3.70% to 4.70% and 3.55% to 4.92%, respectively. 63 Table of Contents Results of Operations Years Ended December 31, 2024 and 2023 Revenues.
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.
Selling, general and administrative expenses for the years ended December 31, 2024 and 2023 were approximately $177.7 million and $133.7 million, respectively, and represented approximately 60% and 43% of total operating costs and expenses for the years ended December 31, 2024, and 2023, respectively.
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).
Our net income was approximately $163.9 million in the year ended December 31, 2024 ($1.38 per basic and $1.31 per diluted share) as compared to approximately $71.4 million in the year ended December 31, 2023 ($0.67 per basic and $0.63 per diluted share).
For the year ended December 31, 2023, we recognized an aggregate of approximately $3.7 million of royalties payable to Jacobus. We have entered into the following contractual arrangements with respect to sales of FYCOMPA ® : • Payments due under our asset purchase agreement for FYCOMPA ® . In connection with our asset purchase agreement with Eisai Co., Ltd.
For the years ended December 31, 2024 and 2023, we recognized an aggregate of approximately $4.4 million and $3.7 million, respectively, of royalties payable to Jacobus. We have entered into the following contractual arrangements with respect to sales of FYCOMPA®: • Payments due under our asset purchase agreement for FYCOMPA®.
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.
FYCOMPA® is a controlled substance and is approved with a box warning label. 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.
Net cash provided by operating activities was $143.6 million and $116.0 million, respectively, for the years ended December 31, 2023 and 2022.
Net cash provided by operating activities was $239.8 million and $143.6 million, respectively, for the years ended December 31, 2024 and 2023.
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.
There can be no assurance that we will continue to be successful in commercializing FIRDAPSE® and AGAMREE®, that our projections about the commercialization of FYCOMPA® after the expiration of its patents will be correct, or that we will continue to be profitable and cash flow positive.
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.
For the fiscal year ended December 31, 2024, we recognized total revenues of approximately $491.7 million, which included approximately $489.3 million in net revenue from product sales primarily in the U.S., compared to approximately $398.2 million in total revenues, which included approximately $396.5 million in net revenues from product sales primarily in the U.S., for the fiscal year ended December 31, 2023.
Current standard treatment for DMD involves corticosteroids, which often come with significant side effects. It is estimated that between 11,000 and 13,000 patients in the U.S. are affected by DMD, with approximately 70% of patients currently receiving a corticosteroid treatment. Steroids are expected to remain the backbone of therapy for DMD patients and dosed concomitantly with other therapies.
It is estimated that between 11,000 and 13,000 patients in the U.S. are affected by DMD, with approximately 70% of patients currently receiving a corticosteroid treatment. Steroids are expected to remain the foundation of therapy for DMD patients and dosed concomitantly with other therapies.
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.
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 $10 million was paid on the second anniversary of closing; and • 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 U.S. 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 U.S., 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.
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.
Other Income, Net. 65 Table of Contents We reported other income, net in all periods, primarily relating to interest on our investment of our cash and cash equivalents of approximately $21.1 million and $7.7 million for the fiscal years ended December 31, 2024 and 2023, respectively.
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.
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, $14.3 million in stock-based compensation and $32.9 million in amortization of intangible assets and depreciation.
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.
Research and development expenses for the years ended December 31, 2024 and 2023 were approximately $12.6 million and $93.2 million, respectively, and represented approximately 4% and 30% of total operating costs and expenses, respectively.
AGAMREE ® On June 19, 2023, we entered into the AGAMREE ® License Agreement and the Investment Agreement with Santhera. Under the AGAMREE ® License Agreement, we contracted to obtain an exclusive North America license, manufacturing and supply agreement for Santhera’s investigational product candidate, AGAMREE ® (vamorolone), a novel corticosteroid for the treatment of DMD.
Under the AGAMREE® License Agreement, we contracted to obtain an exclusive North America license, manufacturing and supply agreement for Santhera’s investigational product candidate, AGAMREE® (vamorolone), a novel corticosteroid for the treatment of DMD. Under the Investment Agreement, we agreed to make a strategic investment into Santhera. Both transactions closed on July 18, 2023.
Concurrent with the closing of the AGAMREE ® License Agreement, we made a strategic investment into Santhera in which we acquired 1,414,688 of Santhera’s post-reverse split ordinary shares (representing approximately 11.26% of Santhera’s outstanding ordinary shares following the transaction) at an investment price of CHF 9.477 per share (corresponding to a mutually agreed volume weighted average price prior to signing), with the approximately $15.7 million USD in equity investment proceeds, inclusive of the approximately $13.5 million USD fair value of the investment in Santhera and approximately $2.2 million USD of transaction costs included in acquired in-process research and development, to be used by Santhera for Phase IV studies of AGAMREE ® in DMD and future development of additional indications for AGAMREE ® .
Concurrent with the closing of the AGAMREE® License Agreement, we made a strategic investment into Santhera in which we acquired 1,414,688 of Santhera’s ordinary shares (representing approximately 11.26% of Santhera’s outstanding ordinary shares immediately following the transaction) at an investment price of CHF 9.477 per share, with the approximately $15.7 million USD in equity investment proceeds to be used by Santhera for Phase IV studies of AGAMREE® in DMD and future development of additional indications for AGAMREE®.
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.
This was partially offset by increases of $12.0 million in accounts receivable, net, $3.9 million in inventory and $8.5 million prepaid expenses and other current assets, a decrease of $0.4 million in operating lease liability, $9.4 million in deferred taxes and $5.6 million in non-cash expenses.
The amounts of assets and liabilities reported in our consolidated balance sheets and the amounts reported in our consolidated statements of comprehensive income are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, valuation of intangible assets, leases, preclinical study and clinical trial expenses, stock-based compensation and valuation allowance for deferred tax assets.
Actual results may differ from these estimates. 62 Table of Contents The amounts of assets and liabilities reported in our consolidated balance sheets and the amounts reported in our consolidated statements of comprehensive income are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, valuation of intangible assets, stock-based compensation and valuation allowance for deferred tax assets.
The 2023 Shelf Registration Statement (file no. 333-274427) became effective upon filing. On January 9, 2024, we completed a public offering of 10 million shares of our common stock under the 2023 Shelf Registration Statement, raising net proceeds of approximately $140.1 million. Cash Flows.
On January 9, 2024, we completed a public offering of 10 million shares of our common stock under the 2023 Shelf Registration Statement, raising net proceeds of approximately $140.7 million.
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.
At December 31, 2023, we had cash and cash equivalents aggregating $137.6 million and working capital of $143.3 million. At December 31, 2024, substantially all of our cash and cash equivalents were deposited with two financial institutions, and such balances were in excess of federally insured limits.
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 expect to continue to market the product following the loss of patent exclusivity. We are supporting patients using FYCOMPA® through an Instant Savings Card Program. Through the program, eligible commercially insured patients could pay as little as $5 for their FYCOMPA® co-pay (with a maximum savings of $2,500 per year).
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 this manufacturer in November 2023 in the U.S. District Court for the District of New Jersey.
Finally, in October 2023, we received a Paragraph IV Certification Notice Letter from a fourth generic drug manufacturer (Inventia Life Science Pty Ltd (Inventia)), and we filed a similar lawsuit against that manufacturer in November 2023 in the U.S. District Court for the District of New Jersey. On July 30, 2024, we settled this patent litigation with Inventia for FIRDAPSE®.
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.
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. 56 Table of Contents When we launched AGAMREE®, in March 2024, we utilized the FIRDAPSE® commercial and medical field-based forces to market AGAMREE® as well.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction our consolidated financial statements and related notes appearing elsewhere in this report.
Item 7. Managem ent’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition and results of operations should be read together with the Consolidated Financial Statements and related notes included elsewhere in this Annual Report on Form 10-K.
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 .
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 2025. • Lease for office space . We operate our business in leased office space in Coral Gables, Florida.
Under the Investment Agreement, we agreed to make a strategic investment into Santhera. Both transactions closed on July 18, 2023. Under the AGAMREE ® License Agreement, upon closing, we made a $75 million payment to Santhera in return for the exclusive North American license for AGAMREE ® .
Under the AGAMREE® License Agreement, upon closing we made a $75 million payment to Santhera in return for the exclusive North American license for AGAMREE®.
Amortization of intangible assets consists of the amortization of the FYCOMPA ® product rights, which are amortized using the straight-line method over its estimated useful life of 5 years, and the RUZURGI ® product rights, which are amortized using the straight-line method over its estimated useful life of 14.5 years.
Amortization of Intangible Assets Amortization of intangible assets consists of the amortization of the FYCOMPA® product rights, which are amortized using the straight-line method over its estimated useful life of 5 years, the RUZURGI® product rights, which are amortized using the straight-line method over its estimated useful life of 14.5 years, and the milestone payment made to Santhera relating to the approval of AGAMREE® in the U.S. in October 2023, which is amortized using the straight-line method over its estimated useful life of 10.5 years.
FIRDAPSE ® net sales were approximately $258.4 million for the fiscal year ended December 31, 2023 and FYCOMPA ® net sales were approximately $138.1 million for the period between January 24, 2023 (date of acquisition) and December 31, 2023. All net revenue from product sales during the fiscal year ended December 31, 2022 were from sales of FIRDAPSE ® .
FYCOMPA® net sales were approximately $137.3 million for the fiscal year ended December 31, 2024, compared to approximately $138.1 million for the period between January 24, 2023 (date of acquisition) and December 31, 2023.
The components of other income, net were as follows (in thousands): For the year ended December 31, 2023 2022 Interest income (expense), net $ 4,675 $ 3,550 Dividend income — 93 Realized gains (losses) from the sale of available-for-sale securities — (762 ) Net gains (losses) recognized during the period on equity securities 3,024 — Total other income, net $ 7,699 $ 2,881 Income Taxes.
The components of other income, net were as follows (in thousands): For the year ended December 31, 2024 2023 Interest income, net $ 16,064 $ 4,675 Net gains recognized during the period on equity securities 5,075 3,024 Total other income, net $ 21,139 $ 7,699 Income Taxes.
The increase was primarily due to the milestone achieved as a result of DyDo submitting a Japan NDA for FIRDAPSE ® to the PMDA on December 18, 2023. Cost of Sales. Cost of sales was approximately $52.0 million for the fiscal year ended December 31, 2023, compared to $34.4 million for the fiscal year ended December 31, 2022.
For the fiscal year ended December 31, 2023, such revenue consisted of the $1.4 million payment achieved as a result of DyDo submitting a Japan NDA for FIRDAPSE® to the PMDA on December 18, 2023. Cost of Sales.
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. Patent protection for FYCOMPA ® is primarily from two patents listed in the Orange Book. The first, U.S. patent no. 6,949,571 (the ‘571 patent) will expire May 23, 2025, including patent term extension.
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. Patent protection for FYCOMPA® tablets and oral solution is primarily derived from two patents listed in the FDA’s Orange Book.
We continue to employ a disciplined, comprehensive, and exhaustive approach to identifying and evaluating opportunities that we believe will add significant value to our company over the near, mid, and long term. However, no additional definitive agreements have been entered into to date, and there can be no assurance that these initiatives will be successful.
We continue to employ a disciplined, comprehensive, and exhaustive approach to identifying and evaluating opportunities that we believe will add significant value to our company over the near, mid, and long term.
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.
Net cash provided by financing activities during the year ended December 31, 2024 was $140.7 million, consisting primarily of proceeds from the issuance of common stock.
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.
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, IT, accounting, and consulting services.
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.
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. 61 Table of Contents Prior to January 2023, all of our research and development resources had been devoted to the development of FIRDAPSE®, 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®, and AGAMREE®.
For discussion of recently issued accounting standards, please see Note 2, “Basis of Presentation and Significant Accounting Policies,” in the consolidated financial statements included in this report. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
We will support the distribution of AGAMREE ® through our Catalyst Pathways ® patient services program to ensure that patients have access to a dedicated, personalized support team that assists families through the AGAMREE ® patient journey, from answering questions to coordinating financial assistance programs for eligible patients. 61 Table of Contents Index to Financial Statements We have established a joint steering committee with Santhera that will oversee the lifecycle management and development of AGAMREE ® for additional indications beyond DMD.
We are further supporting the distribution of AGAMREE® through our Catalyst Pathways® patient services program to ensure that patients have access to a dedicated, personalized support team that assists families through the AGAMREE® patient journey, from answering questions to coordinating financial assistance programs for eligible patients.
Net revenues from product sales of FIRDAPSE ® increased by 20.8% from 2022 to 2023. Product revenue for FYCOMPA ® in 2024 will be affected by differences in variable consideration (gross-to-net) compared to 2023, when revenues were booked under Eisai’s cost arrangements with distributors and government authorities.
FYCOMPA® net sales for the fiscal year ended December 31, 2024 were affected by differences in variable consideration (gross-to-net) compared to the 2023 period when revenues were booked under Eisai’s more favorable cost arrangements with distributors and government authorities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not use derivative financial instruments in our investment portfolio. Our cash and investments policy emphasizes liquidity and preservation of principal over other portfolio considerations. Item 8. Financial Statements and Supplementary Data See the list of financial statements filed with this report under Item 15 below. Item 9.
Biggest changeWe also seek to maximize income from our investments without assuming significant risk. We do not use derivative financial instruments in our investment portfolio. Our cash and investments policy emphasizes liquidity and preservation of principal over other portfolio considerations. Item 8.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market risk represents the risk of changes in the value of market risk-sensitive instruments caused by fluctuations in interest rates, foreign exchange rates and commodity prices. Changes in these factors could cause fluctuations in our results of operations and cash flows.
Item 7A. Quanti tative and Qualitative Disclosures About Market Risk Market risk represents the risk of changes in the value of market risk-sensitive instruments caused by fluctuations in interest rates, foreign exchange rates and commodity prices. Changes in these factors could cause fluctuations in our results of operations and cash flows.
Our exposure to interest rate risk is currently confined to our cash and short-term investments that are from time to time invested in highly liquid money market funds and U.S. Treasuries. The primary objective of our investment activities is to preserve our capital to fund operations. We also seek to maximize income from our investments without assuming significant risk.
Our exposure to interest rate risk is currently confined to our cash and cash equivalents that are from time to time invested in highly liquid money market funds and U.S. Treasuries. The primary objective of our investment activities is to preserve our capital to fund acquisitions and operations.
Removed
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Added
Fin ancial Statements and Supplementary Data See the list of financial statements filed with this report under Item 15 below. Item 9. Ch anges in and Disagreements with Accountants on Accounting and Financial Disclosure None.

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