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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Catalyst Pharmaceuticals Inc | NASDAQ:CPRX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.05 | 0.31% | 16.27 | 16.00 | 16.50 | 16.595 | 16.11 | 16.31 | 1,006,785 | 01:00:00 |
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
76-0837053
|
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer
Identification No.)
|
|
355 Alhambra Circle
Suite 1250
Coral Gables, Florida
|
33134
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of Each Class
|
Ticker
Symbol
|
Name of Exchange
on Which Registered
|
||
Common Stock, par value $0.001 per share
|
CPRX
|
NASDAQ Capital Market
|
Large accelerated filer | ☐ | Accelerated Filer | ☒ | |||
Non-accelerated
filer
|
☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
Item 1.
|
|
FINANCIAL STATEMENTS
|
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3
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4
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5
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6
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7
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Item 2.
|
|
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23
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Item 3.
|
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35
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Item 4.
|
|
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36
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|
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PART II. OTHER INFORMATION
|
|
||||
Item 1.
|
|
|
|
36
|
|
|
Item 1A.
|
|
|
|
36
|
|
|
Item 2.
|
|
|
|
37
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Item 3.
|
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37
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Item 4.
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37
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Item 5.
|
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37
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Item 6.
|
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37
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|
|
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|
38
|
|
June 30,
2020 |
December 31,
2019 |
|||||||
(unaudited) | ||||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 115,052,248 | $ | 89,511,710 | ||||
Short-term investments
|
— | 5,007,050 | ||||||
Accounts receivable, net
|
6,762,262 | 10,536,997 | ||||||
Inventory
|
1,827,924 | 1,956,792 | ||||||
Prepaid expenses and other current assets
|
7,521,253 | 4,351,074 | ||||||
|
|
|
|
|||||
Total current assets
|
131,163,687 | 111,363,623 | ||||||
Operating lease
right-of-use
|
71,711 | 793,252 | ||||||
Property and equipment, net
|
167,514 | 210,467 | ||||||
Deposits
|
8,888 | 8,888 | ||||||
|
|
|
|
|||||
Total assets
|
$ | 131,411,800 | $ | 112,376,230 | ||||
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 5,804,778 | $ | 4,117,447 | ||||
Accrued expenses and other liabilities
|
14,405,597 | 19,981,295 | ||||||
|
|
|
|
|||||
Total current liabilities
|
20,210,375 | 24,098,742 | ||||||
Operating lease liability, net of current portion
|
— | 647,532 | ||||||
|
|
|
|
|||||
Total liabilities
|
20,210,375 | 24,746,274 | ||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $0.001 par value, 5,000,000 shares authorized: none issued and outstanding at June 30, 2020 and December 31, 2019
|
— | — | ||||||
Common stock, $0.001 par value, 150,000,000 shares authorized; 103,422,032 shares and 103,397,033 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
|
103,422 | 103,397 | ||||||
Additional
paid-in
capital
|
219,581,816 | 216,205,678 | ||||||
Accumulated deficit
|
(108,482,622 | ) | (128,688,624 | ) | ||||
Accumulated other comprehensive income (loss)
|
(1,191 | ) | 9,505 | |||||
|
|
|
|
|||||
Total stockholders’ equity
|
111,201,425 | 87,629,956 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity
|
$ | 131,411,800 | $ | 112,376,230 | ||||
|
|
|
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Product revenue, net
|
$ | 29,604,764 | $ | 28,837,900 | $ | 58,741,236 | $ | 41,286,338 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating costs and expenses:
|
||||||||||||||||
Cost of sales
|
4,139,873 | 4,261,625 | 8,290,739 | 5,973,413 | ||||||||||||
Research and development
|
4,349,643 | 4,629,364 | 8,572,454 | 7,937,323 | ||||||||||||
Selling, general and administrative
|
10,833,358 | 8,987,722 | 20,896,406 | 17,404,182 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating costs and expenses
|
19,322,874 | 17,878,711 | 37,759,599 | 31,314,918 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income
(loss)
|
10,281,890 | 10,959,189 | 20,981,637 | 9,971,420 | ||||||||||||
Other income, net
|
111,269 | 450,410 | 447,502 | 793,676 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
(loss)
before income taxes
|
10,393,159 | 11,409,599 | 21,429,139 | 10,765,096 | ||||||||||||
Provision for income taxes
|
613,172 | 449,651 | 1,223,137 | 449,651 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
(loss)
|
$ | 9,779,987 | $ | 10,959,948 | $ | 20,206,002 | $ | 10,315,445 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
(loss)
per share:
|
||||||||||||||||
Basic
|
$ | 0.09 | $ | 0.11 | $ | 0.20 | $ | 0.10 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted
|
$ | 0.09 | $ | 0.10 | $ | 0.19 | $ | 0.10 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average shares outstanding:
|
||||||||||||||||
Basic
|
103,414,523 | 102,869,202 | 103,410,881 | 102,808,897 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted
|
106,730,423 | 105,928,970 | 106,433,862 | 105,098,930 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$ | 9,779,987 | $ | 10,959,948 | $ | 20,206,002 | $ | 10,315,445 | ||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on
available-for-sale
|
(84,942 | ) | 28,446 | (10,696 | ) | 42,006 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income
(loss)
|
$ | 9,695,045 | $ | 10,988,394 | $ | 20,195,306 | $ | 10,357,451 | ||||||||
|
|
|
|
|
|
|
|
Preferred
|
Common Stock
|
Additional
Paid-in
|
Accumulated
|
Accumulated
Other
Comprehensive
|
||||||||||||||||||||||||
Stock
|
Shares
|
Amount
|
Capital
|
Deficit
|
Gain (Loss)
|
Total
|
||||||||||||||||||||||
Balance at December 31, 2019
|
$ | — | 103,397,033 | $ | 103,397 | $ | 216,205,678 | $ | (128,688,624 | ) | $ | 9,505 | $ | 87,629,956 | ||||||||||||||
Issuance of stock options for services
|
— | — | — | 1,383,672 | — | — | 1,383,672 | |||||||||||||||||||||
Exercise of stock options for common stock
|
— | 11,666 | 12 | 26,137 | — | — | 26,149 | |||||||||||||||||||||
Amortization of restricted stock for services
|
— | — | — | 135,679 | — | — | 135,679 | |||||||||||||||||||||
Other comprehensive gain (loss)
|
— | — | — | — | — | 74,246 | 74,246 | |||||||||||||||||||||
Net income
(loss)
|
— | — | — | — | 10,426,015 | — | 10,426,015 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2020
|
|
— | 103,408,699 |
|
103,409 |
|
217,751,166 |
|
(118,262,609 | ) |
|
83,751 |
|
99,675,717 | ||||||||||||||
Issuance of stock options for services
|
— | — | — | 1,627,105 | — | — | 1,627,105 | |||||||||||||||||||||
Exercise of stock options for common stock
|
— | 13,333 | 13 | 36,188 | — | — | 36,201 | |||||||||||||||||||||
Amortization of restricted stock for services
|
— | — | — |
167,357
|
— | — | 167,357 | |||||||||||||||||||||
Other comprehensive gain (loss)
|
— | — | — | — | — | (84,942 | ) | (84,942 | ) | |||||||||||||||||||
Net
income (loss)
|
— | — | — | — | 9,779,987 | — | 9,779,987 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2020
|
$ | — | 103,422,032 | $ | 103,422 | $ | 219,581,816 | $ | (108,482,622 | ) | $ | (1,191 | ) | $ | 111,201,425 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
|
Common Stock
|
Additional
Paid-in
|
Accumulated
|
Accumulated
Other
Comprehensive
|
||||||||||||||||||||||||
Stock
|
Shares
|
Amount
|
Capital
|
Deficit
|
Gain (Loss)
|
Total
|
||||||||||||||||||||||
Balance at December 31, 2018
|
$
|
— | 102,739,257 |
$
|
102,739 |
$
|
211,265,279 |
$
|
(160,563,961 | ) |
$
|
(20,248 | ) |
$
|
50,783,809 | |||||||||||||
Issuance of stock options for services
|
— | — | — | 933,411 | — | — | 933,411 | |||||||||||||||||||||
Exercise of stock options for common stock
|
— | 65,000 | 65 | 89,285 | — | — | 89,350 | |||||||||||||||||||||
Other comprehensive gain (loss)
|
— | — | — | — | — | 13,560 | 13,560 | |||||||||||||||||||||
Net income (loss)
|
— | — | — | — | (644,503 | ) | — | (644,503 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2019
|
|
— | 102,804,257 |
|
102,804 |
|
212,287,975 |
|
(161,208,464 | ) |
|
(6,688 | ) |
|
51,175,627 | |||||||||||||
Issuance of stock options for services
|
— | — | — | 924,996 | — | — | 924,996 | |||||||||||||||||||||
Exercise of stock options for common stock
|
— | 125,000 | 125 | 192,425 | — | — | 192,550 | |||||||||||||||||||||
Other comprehensive gain (loss)
|
— | — | — | — | — | 28,446 | 28,446 | |||||||||||||||||||||
Net
income (loss)
|
— | — | — | — | 10,959,948 | — | 10,959,948 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2019
|
$ | — | 102,929,257 | $ | 102,929 | $ | 213,405,396 | $ | (150,248,516 | ) | $ | 21,758 | $ | 63,281,567 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
June 30, |
||||||||
2020
|
2019
|
|||||||
Operating Activities:
|
||||||||
Net income
(loss)
|
$ | 20,206,002 | $ | 10,315,445 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
42,953 | 20,186 | ||||||
Amortization of
right-of-use
|
721,541 | 120,051 | ||||||
Stock-based compensation
|
3,313,813 | 1,858,407 | ||||||
Change in accrued interest and accretion of discount on investments
|
(3,646 | ) | (77,547 | ) | ||||
(Increase) decrease in:
|
||||||||
Accounts receivable, net
|
3,774,735 | (10,376,427 | ) | |||||
Inventory
|
128,868 | (213,867 | ) | |||||
Prepaid expenses and other current assets and deposits
|
(3,170,179 | ) | 161,178 | |||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
1,687,331 | 991,359 | ||||||
Accrued expenses and other liabilities
|
(5,473,075 | ) | 3,393,753 | |||||
Operating lease liability
|
(750,155 | ) | (135,123 | ) | ||||
|
|
|
|
|||||
Net cash provided by (used in) operating activities
|
20,478,188 | 6,057,415 | ||||||
Investing Activities:
|
||||||||
Purchases of property and equipment
|
— | (19,370 | ) | |||||
Purchases of investments
|
— | (29,772,428 | ) | |||||
Proceeds from maturities and sales of investments
|
5,000,000 | 30,310,595 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities
|
5,000,000 | 518,797 | ||||||
Financing Activities:
|
||||||||
Proceeds from exercise of stock options
|
62,350 | 281,900 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities
|
62,350 | 281,900 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
25,540,538 | 6,858,112 | ||||||
Cash and cash equivalents—beginning of period
|
89,511,710 | 16,559,400 | ||||||
|
|
|
|
|||||
Cash and cash equivalents—end of period
|
$ | 115,052,248 | $ | 23,417,512 | ||||
|
|
|
|
|||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for income taxes
|
$ | 49,500 | $ | — | ||||
Non-cash
investing and financing activities:
|
||||||||
Unrealized gain (loss) on
available-for-sale
|
$ | (10,696 | ) | $ | 42,006 |
1.
|
Organization and Description of Business.
|
2.
|
Basis of Presentation and Significant Accounting Policies.
|
a.
|
INTERIM FINANCIAL STATEMENTS.
10-Q
was derived from the audited financial statements and does not include all disclosures required by U.S. GAAP.
|
2.
|
Basis of Presentation and Significant Accounting Policies (continued).
|
b.
|
PRINCIPLES OF CONSOLIDATION
|
c.
|
USE OF ESTIMATES.
|
d.
|
CASH AND CASH EQUIVALENTS.
|
e.
|
INVESTMENTS
|
2.
|
Basis of Presentation and Significant Accounting Policies (continued).
|
f.
|
ACCOUNTS RECEIVABLE, NET.
|
g.
|
INVENTORY.
first-in-first-out
-
in
-
process and finished goods. Costs to be capitalized as inventories primarily include third party manufacturing costs and other overhead costs. The Company began capitalizing inventories post FDA approval of Firdapse
®
on November 28, 2018 as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to the FDA approval of Firdapse
®
were recorded as research and development expenses in prior years’ consolidated statements of operations and comprehensive income (loss). If information becomes available that suggests that inventories may not be realizable, the Company may be required to expense a portion or all of the previously capitalized inventories. As of June 30, 2020 and December 31, 2019, inventory consisted mainly of
work-in-process
|
h.
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS.
pre-clinical
studies, clinical trials and studies, regulatory affairs and consulting. Prepaid manufacturing consists of advances for the Company’s drug manufacturing activities. Such advances are recorded as expense as the related goods are received or the related services are performed.
|
i.
|
FAIR VALUE OF FINANCIAL INSTRUMENTS.
|
j.
|
FAIR VALUE MEASUREMENTS.
|
2.
|
Basis of Presentation and Significant Accounting Policies (continued).
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
Balances as of
June 30, 2020 |
Quoted Prices in
Active Markets for Identical Assets/Liabilities (Level 1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
|||||||||||||
Cash and cash equivalents:
|
||||||||||||||||
Money market funds
|
$ | 19,628,370 | $ | 19,628,370 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasuries
|
$ | 84,990,900 | $ | — | $ | 84,990,900 | $ | — | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Balances as of
December 31, 2019 |
Quoted Prices in
Active Markets for Identical Assets/Liabilities (Level 1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
|||||||||||||
Cash and cash equivalents:
|
||||||||||||||||
Money market funds
|
$ | 23,963,617 | $ | 23,963,617 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasuries
|
$ | 59,932,200 | $ | — | $ | 59,932,200 | $ | — | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Short-term investments:
|
||||||||||||||||
U.S. Treasuries
|
$ | 5,007,050 | $ | — | $ | 5,007,050 | $ | — | ||||||||
|
|
|
|
|
|
|
|
k.
|
OPERATING LEASES.
right-of-use
non-lease
components, which are generally accounted for separately.
|
l.
|
REVENUE RECOGNITION.
®
in November 2018. Subsequent to receiving FDA approval, the Company entered into an arrangement with one distributor (the “Customer”), who is the exclusive distributor of Firdapse
®
in the United States. The Customer subsequently resells Firdapse
®
to a small group of exclusive specialty pharmacies (“SPs”) whose dispensing activities for patients with specific payors may result in government-mandated or privately negotiated rebate obligations for the Company with respect to the purchase of Firdapse
®
.
|
2.
|
Basis of Presentation and Significant Accounting Policies (continued).
|
2.
|
Basis of Presentation and Significant Accounting Policies (continued).
|
2.
|
Basis of Presentation and Significant Accounting Policies (continued).
|
m.
|
RESEARCH AND DEVELOPMENT.
|
n.
|
STOCK-BASED COMPENSATION.
|
2.
|
Basis of Presentation and Significant Accounting Policies (
continued
).
|
o.
|
CONCENTRATION OF RISK.
Company
to concentration of credit risk are cash equivalents (i.e., money market funds), investments and accounts receivable, net. The Company places its cash and cash equivalents with high-credit quality financial institutions. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in these accounts.
|
p.
|
ROYALTIES.
|
q.
|
INCOME TAXES.
|
2.
|
Basis of Presentation and Significant Accounting Policies (continued).
|
r.
|
COMPREHENSIVE INCOME (LOSS).
available-for-sale
|
s.
|
NET INCOME (LOSS) PER COMMON SHARE.
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Basic weighted average common shares outstanding
|
103,414,523 | 102,869,202 | 103,410,881 | 102,808,897 | ||||||||||||
Effect of dilutive securities
|
3,315,900 | 3,059,768 | 3,022,981 | 2,290,033 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Dilutive weighted average common shares outstanding
|
106,730,423 | 105,928,970 | 106,433,862 | 105,098,930 | ||||||||||||
|
|
|
|
|
|
|
|
t.
|
RECLASSIFICATIONS.
|
u.
|
RECENTLY ISSUED ACCOUNTING STANDARDS.
2018-18,
Collaborative Arrangements (Topic 808), which amends ASC 808 to clarify when transactions between participants in a collaborative arrangement under ASC 808 are within the scope of the FASB’s new revenue standard, ASU
2014-09
(codified in ASC 606). The amendments require the application of ASC 606 existing guidance to determine the units of account that are distinct in a collaborative arrangement for purposes of identifying transactions with customers. If a unit of account within the collaborative arrangement is distinct and is with a customer, an entity shall apply the guidance in Topic 606 to that unit of account. In a transaction between collaborative participants, an entity is precluded by ASU
2018-18
from presenting a transaction together with “revenue from contracts with customers” unless the unit of account is within the scope of ASC 606 and the entity applies the guidance in ASC 606 to such unit of account. The Company adopted the new standard on January 1, 2020. The Company has a collaboration agreement with Endo Ventures Limited (Endo). See Note 7 (Collaborative Arrangement). However, these amendments did not have an impact on the Company’s consolidated financial statements, as Endo does not meet the definition of a customer.
|
2.
|
Basis of Presentation and Significant Accounting Policies (continued).
|
3.
|
Investments.
|
Estimated
Fair Value |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Amortized
Cost |
|||||||||||||
At June 30, 2020:
|
||||||||||||||||
U.S. Treasuries – Cash equivalents
|
$ | 84,990,900 | $ | — | $ | (1,191 | ) | $ | 84,992,091 | |||||||
|
|
|
|
|
|
|
|
|||||||||
At December 31, 2019:
|
||||||||||||||||
U.S. Treasuries – Cash equivalents
|
$ | 59,932,200 | $ | 2,042 | $ | — | $ | 59,930,158 | ||||||||
U.S. Treasuries – ST
|
5,007,050 | 7,463 | — | 4,999,587 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
$ | 64,939,250 | $ | 9,505 | $ | — | $ | 64,929,745 | ||||||||
|
|
|
|
|
|
|
|
June 30, 2020
|
||||
Due in one year or less
|
$ | 84,990,900 | ||
|
|
4.
|
Prepaid Expenses and Other Current Assets.
|
June 30, 2020
|
December 31, 2019
|
|||||||
Prepaid manufacturing costs
|
$ | 5,499,746 | $ | 1,526,013 | ||||
Prepaid insurance
|
622,350 | 1,263,129 | ||||||
Prepaid subscription fees
|
429,155 | 501,251 | ||||||
Prepaid research fees
|
458,937 | 481,057 | ||||||
Prepaid commercialization expenses
|
218,651 | 62,959 | ||||||
Other
|
292,414 | 516,665 | ||||||
|
|
|
|
|||||
Total prepaid expenses and other current assets
|
$ | 7,521,253 | $ | 4,351,074 | ||||
|
|
|
|
5.
|
Operating Leases.
|
For the Three Months
Ended June 30, 2020 |
For the Six Months
Ended June 30, 2020
|
|||||||
Operating lease cost
|
$ | 65,434 | $ |
|
June 30, 2020
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||
Operating cash flows
|
$ | 168,122 | ||
Right-of-use
|
||||
Operating leases
|
$ | 19,255 |
June 30, 2020
|
||||
Operating lease
right-of-use
|
$ | 71,711 | ||
|
|
|||
Other current liabilities
|
$ | 197,896 | ||
Operating lease liabilities, net of current portion
|
— | |||
|
|
|||
Total operating lease liabilities
|
$ | 197,896 | ||
|
|
|||
Weighted average remaining lease term
|
0.6 years | |||
Weighted average discount rate
|
3.68% |
2020 (remaining six months)
|
$ |
|
||
2021
|
28,860 | |||
2022
|
— | |||
|
|
|||
Total lease payments
|
200,343 | |||
Less imputed interest
|
(2,447 | ) | ||
|
|
|||
Total
|
$ | 197,896 | ||
|
|
6.
|
Accrued Expenses and Other Liabilities.
|
June 30, 2020
|
December 31, 2019
|
|||||||
Accrued preclinical and clinical trial expenses
|
$ | 651,692 | $ | 1,183,513 | ||||
Accrued professional fees
|
2,464,197 | 1,241,526 | ||||||
Accrued compensation and benefits
|
2,212,733 | 3,064,645 | ||||||
Accrued license fees
|
5,866,161 | 8,751,991 | ||||||
Accrued purchases
|
216,967 | 1,313,310 | ||||||
Accrued contributions
|
660,000 | 1,535,000 | ||||||
Operating lease liability
|
197,896 | 300,518 | ||||||
Accrued variable consideration
|
1,023,537 | 884,764 | ||||||
Accrued income tax
|
1,081,912 | 1,533,696 | ||||||
Other
|
30,502 | 172,332 | ||||||
|
|
|
|
|||||
Current accrued expenses and other liabilities
|
14,405,597 | 19,981,295 | ||||||
|
|
|
|
|||||
Lease
liability—non-current
|
— | 647,532 | ||||||
|
|
|
|
|||||
Non-current
accrued expenses and other liabilities
|
— | 647,532 | ||||||
|
|
|
|
|||||
Total accrued expenses and other liabilities
|
$ | 14,405,597 | $ | 20,628,827 | ||||
|
|
|
|
7.
|
Collaborative Arrangement.
|
8.
|
Commitments and Contingencies.
|
8.
|
Commitments and Contingencies (continued).
|
9.
|
Agreements.
|
a.
|
LICENSE AGREEMENT WITH BIOMARIN (FIRDAPSE
®
)
®
. Under the license agreement, the Company pays: (i) 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 (ii) royalties to the third-party licensor of the rights sublicensed to the Company 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.
|
b.
|
AGREEMENTS FOR DRUG MANUFACTURING, DEVELOPMENT, PRECLINICAL AND CLINICAL STUDIES.
|
10.
|
Income Taxes.
|
11.
|
Stockholders’ Equity.
|
12.
|
Stock Compensation.
|
|
|
|
|
|
|
|
||||||||||
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Research and development
|
$ | 421,220 | $ | 273,212 | $ | 839,273 | $ | 560,933 | ||||||||
Selling, general and administrative
|
1,373,242 | 651,784 | 2,474,540 | 1,297,474 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total stock-based compensation
|
$ | 1,794,462 | $ | 924,996 | $ | 3,313,813 | $ | 1,858,407 | ||||||||
|
|
|
|
|
|
|
|
13.
|
Subsequent Events.
|
• |
Overview.
|
• |
Basis of Presentation.
the
|
• |
Critical Accounting Policies and Estimates.
|
• |
Results of Operations.
six-month
periods ended June 30, 2020 as compared to the same
periods
|
• |
Liquidity and Capital Resources.
off-balance
sheet arrangements and our outstanding commitments, if any.
|
• |
Caution Concerning Forward-Looking Statements.
|
Three months ended
June 30, |
Change
|
|||||||||||||||
2020
|
2019
|
$
|
%
|
|||||||||||||
Research and development expenses
|
$ | 3,928,423 | $ | 4,356,152 | (427,729 | ) | (9.8 | ) | ||||||||
Employee stock-based compensation
|
421,220 | 273,212 | 148,008 | 54.2 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total research and development expenses
|
$ | 4,349,643 | $ | 4,629,364 | (279,721 | ) | (6.0 | ) | ||||||||
|
|
|
|
|
|
|
|
Six months ended
June 30, |
Change
|
|||||||||||||||
2020
|
2019
|
$
|
%
|
|||||||||||||
Research and development expenses
|
$ | 7,733,181 | $ | 7,376,390 | 356,791 | 4.8 | ||||||||||
Employee stock-based compensation
|
839,273 | 560,933 | 278,340 | 49.6 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total research and development expenses
|
$ | 8,572,454 | $ | 7,937,323 | 635,131 | 8.0 | ||||||||||
|
|
|
|
|
|
|
|
• |
increases in headcount, medical and regulatory affairs and quality assurance expenses and expenses from our ongoing clinical trials evaluating Firdapse
®
for the treatment of
MuSK-MG,
and our
proof-of-concept
®
for the treatment of SMA Type 3; and
|
• |
increases in employee stock-based compensation which is
non-cash
and relates to the expense of stock options awards to certain employees, due to increase in headcount.
|
Three months ended
June 30, |
Change
|
|||||||||||||||
2020
|
2019
|
$
|
%
|
|||||||||||||
Selling
|
$ | 5,621,780 | $ | 4,881,137 | 740,643 | 15.2 | ||||||||||
General and administrative
|
3,838,336 | 3,454,801 | 383,535 | 11.1 | ||||||||||||
Employee stock-based compensation
|
1,373,242 | 651,784 | 721,458 | 110.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total selling, general and administrative expenses
|
$ | 10,833,358 | $ | 8,987,722 | 1,845,636 | 20.5 | ||||||||||
|
|
|
|
|
|
|
|
Six months ended
June 30, |
Change
|
|||||||||||||||
2020
|
2019
|
$
|
%
|
|||||||||||||
Selling
|
$ | 11,425,925 | $ | 9,985,045 | 1,440,880 | 14.4 | ||||||||||
General and administrative
|
6,995,941 | 6,121,663 | 874,278 | 14.3 | ||||||||||||
Employee stock-based compensation
|
2,474,540 | 1,297,474 | 1,177,066 | 90.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total selling, general and administrative expenses
|
$ | 20,896,406 | $ | 17,404,182 | 3,492,224 | 20.1 | ||||||||||
|
|
|
|
|
|
|
|
• |
increases in selling (commercialization) expenses, which consist primarily of the costs of our expansion of the sales force and the cost of contracting with a rare-disease experience inside sales agency;
|
• |
increases in general and administrative expenses, which are primarily due to the expansion of our operations and headcount to support our ongoing efforts to expand our net revenues from sales of Firdapse
®
; and
|
• |
increases in employee stock-based compensation which is
non-cash
and relates to the expense of stock options awards to certain employees and directors due to increase in headcount.
|
• |
the scope, rate of progress and cost of our clinical trials and other product development activities;
|
• |
future clinical trial results;
|
• |
the terms and timing of any collaborative, licensing and other arrangements that we may establish;
|
• |
the cost and timing of regulatory approvals;
|
• |
the cost and delays in product development as a result of any changes in regulatory oversight applicable to our products;
|
• |
the level of revenues that we report from sales of Firdapse
®
;
|
• |
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.
|
• |
Payments under our license agreement
®
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 (ii) 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 three and
six-months
ended June 30, 2020, we recognized approximately $3.9 million and $7.8 million, respectively, of royalties, which is included in cost of sales in the accompanying consolidated statement of operations.
|
• |
Purchase commitments
|
• |
Employment agreements
|
• |
Lease for office space
|
• |
The impact of the recent outbreak of a novel strain of coronavirus on our business or on the economy generally;
|
• |
Whether we will be able to continue successfully market Firdapse
®
while maintaining full compliance with applicable federal and state laws, rules and regulations;
|
• |
Whether our estimates of the size of the market for Firdapse
®
for the treatment of Lambert-Eaton Myasthenic Syndrome (“LEMS”) will turn out to be accurate;
|
• |
Whether we will be able to locate LEMS patients who are undiagnosed or are misdiagnosed with other diseases;
|
• |
Whether patients will discontinue from the use of our drug at rates that are higher than historically experienced or are higher than we project;
|
• |
If the average daily dose taken by patients changes over time, it could affect our results of operations;
|
• |
Whether Firdapse
®
patients can be successfully titrated to stable therapy;
|
• |
Whether we can continue to market Firdapse
®
on a profitable and cash flow positive basis;
|
• |
Whether any revenue guidance that we provide to the public market will turn out to be accurate;
|
• |
Whether payors will continue to reimburse for our product at the price that we charge for the product;
|
• |
The ability of our third-party suppliers and contract manufacturers to maintain compliance with current Good Manufacturing Practices (cGMP);
|
• |
The ability of our distributor and the specialty pharmacies that distribute our product to maintain compliance with applicable law;
|
• |
Our ability to maintain compliance with applicable rules relating to our patient assistance programs and our contributions to 501(c)(3) organizations that support LEMS patients;
|
• |
The scope of our intellectual property and the outcome of any future challenges or opposition to our intellectual property, and, conversely, whether any third-party intellectual property presents unanticipated obstacles for Firdapse
®
;
|
• |
The effect on our business and future results of operations arising from the approval by the FDA of Ruzurgi
®
for the treatment of pediatric LEMS patients (ages 6 to under 17);
|
• |
Whether our suit against the United States FDA seeking to vacate the FDA’s approval of Ruzurgi
®
will be successful;
|
• |
Whether we can continue to compete successfully if the approval of Ruzurgi
®
is not overturned and Ruzurgi
®
continues to be prescribed for
off-label
use by adult LEMS patients;
|
• |
Whether, because of the lower price of Ruzurgi
®
, payors will require that patients try
off-label
Ruzurgi
®
first before they approve Firdapse
®
as a treatment for adult LEMS patients;
|
• |
The impact on Firdapse
®
of adverse changes in potential reimbursement and coverage policies from government and private payors such as Medicare, Medicaid, insurance companies, health maintenance organizations and other plan administrators, or the impact of pricing pressures enacted by industry organization, the federal government or the government of any state, including as a result of increased scrutiny over pharmaceutical pricing or otherwise;
|
• |
The impact on our business and results of operations of public statements by politicians and a vocal group of LEMS patients and doctors who object to our pricing of Firdapse
®
;
|
• |
Changes in the healthcare industry and the effect of political pressure from and actions by President Trump, Congress and/or medical professionals seeking to reduce prescription drug costs;
|
• |
The state of the economy generally and its impact on our business;
|
• |
Changes to the healthcare industry occasioned by any future repeal and replacement of the Affordable Care Act, in laws relating to the pricing of drug products, or changes in the healthcare industry generally;
|
• |
The scope, rate of progress and expense of our clinical trials and studies,
pre-clinical
studies,
proof-of-concept
|
• |
Our ability to complete our trials and studies on a timely basis and within the budgets we establish for such trials and studies;
|
• |
Whether the recent coronavirus outbreak will further affect the timing of our currently ongoing clinical trials;
|
• |
Whether the trial that we are currently undertaking to evaluate Firdapse
®
for the treatment of Spinal Muscular Atrophy (SMA) Type 3, or any other trials that we may undertake in the future, will be successful;
|
• |
Whether Firdapse
®
will ever be approved for the treatment of
MuSK-MG,
SMA Type 3, or any other neuromuscular disease;
|
• |
Whether we can successfully commercialize Firdapse
®
in Canada on a profitable basis;
|
• |
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 we will be able to successfully complete the clinical trial in Japan that will be required to seek approval to commercialize Firdapse
®
in Japan;
|
• |
Whether we will be able to obtain approval to commercialize Firdapse
®
in Japan;
|
• |
Whether we can successfully develop, obtain approval of and successfully market a sustained release version of Firdapse
®
;
|
• |
Whether our efforts to grow our business beyond Firdapse
®
through acquisitions of companies or
in-licensing
of product opportunities in the neuromuscular or neurology therapeutic areas will be successful;
|
• |
Whether we will have sufficient capital to finance any such acquisitions;
|
• |
Whether our version of generic vigabatrin tablets will ever be approved by the FDA;
|
• |
Even if our version of vigabatrin tablets is approved for commercialization, whether Endo Ventures/Par Pharmaceutical (our collaborator in this venture) will be successful in marketing the product; and
|
• |
Whether we will earn milestone payments on the first commercial sale of vigabatrin tablets and royalties on sales of generic vigabatrin tablets.
|
a.
|
We have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of June 30, 2020, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act, was recorded, processed, summarized or reported within the time periods specified in the rules and regulations of the SEC, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports was accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
|
b.
|
During the three months ended June 30, 2020, there were no changes in our internal controls or in other factors that could have a material effect, or are reasonably likely to have a material effect, on our internal control over financial reporting.
|
31.1 | Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Principal Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, has been formatted in Inline XBRL. |
Catalyst Pharmaceuticals, Inc.
|
||
By: | /s/ Alicia Grande | |
Alicia Grande | ||
Vice President, Treasurer and Chief Financial Officer |
1 Year Catalyst Pharmaceuticals Chart |
1 Month Catalyst Pharmaceuticals Chart |
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