Form 10-K

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-K

[Mark One]

For the Fiscal Year Ended December 31, 2020

Commission File

No. 001-33057

CATALYST PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

355 Alhambra Circle, Suite 801 Coral Gables, Florida 33134

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (305)

420-3200

Securities Registered Pursuant to Section 12(b) of the Act.

Title of Each Class Ticker Symbol Name of Exchange on Which Registered

Common Stock, par value $0.001 per share CPRX NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act.: None

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if registrant is not required to file reports pursuant to Rule 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule

12b-2

of the Exchange Act:

Large accelerated filer ☐ Accelerated filer ☒

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☒

As of June 30, 2020, the last business day of the Registrant’s most recently completed second quarter, the aggregate market value of all voting, and

non-voting

common equity held by

non-affiliates

was $444,887,344.

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 103,824,973 shares of common stock, $0.001 par value per share, were outstanding as of March

, 2021.

Part III incorporates certain information by reference from the registrant’s definitive proxy statement for the 2021 annual meeting of stockholders. The proxy statement with respect to the 2021 annual meeting of stockholders will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2020.

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Page

PART I 1

Item 1. Business 4

Item 1A. Risk Factors 26

Item 1B. Unresolved Staff Comments 46

Item 2. Properties 46

Item 3. Legal Proceedings 46

Item 4. Mine Safety Disclosure 47

Item 6. Selected Financial Data 49

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 65

Item 8. Financial Statements and Supplementary Data 65

Item 9A. Controls and Procedures 65

Item 9B. Other Information 66

PART III 67

Item 10. Directors and Executive Officers of the Registrant 67

Item 11. Executive Compensation 67

Item 12. Security Ownership of Certain Beneficial Owners and Management 67

Item 13. Certain Relationships and Related Transactions 67

Item 14. Principal Accounting Fees and Services 67

Item 15. Exhibits and Financial Statement Schedules 68

EXHIBITS FILED WITH FORM 10-K

EX 4.5 Description of the Company’s Capital Stock

EX 23.1 Consent of Independent Registered Public Accounting Firm

EX 31.1 Section 302 Certification of CEO

EX 31.2 Section 302 Certification of CFO

EX 32.1 Section 906 Certification of CEO

EX 32.2 Section 906 Certification of CFO

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PART I

You are urged to read this Annual Report on Form

10-K

(“Form

10-K”)

in its entirety. This Form

10-K

contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the projected results discussed in these forward-looking statements. Factors that may cause such a difference include, but are not limited to, those discussed below and in Item 1A, “Risk Factors.”

“We,” “our,” “ours,” “us,” “Catalyst,” or the “Company,” when used herein, refers to Catalyst Pharmaceuticals, Inc., a Delaware corporation, and its wholly-owned subsidiary, Catalyst Pharmaceuticals Ireland, Ltd., a corporation organized in the Republic of Ireland.

Forward-Looking Statements

This Annual Report on Form

10-K

contains “forward-looking statements”, as that term is defined in the Private Securities Litigation Reform Act of 1995. These include statements regarding our expectations, beliefs, plans or objectives for future operations and anticipated results of operations. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, “believes”, “anticipates”, “proposes”, “plans”, “expects”, “intends”, “may”, and other similar expressions are intended to identify forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or other achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the section entitled “Item 1A – Risk Factors” and those discussed in the section entitled “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Caution Concerning Forward-Looking Statements.”

The continued successful commercialization of Firdapse

and the development of additional indications for Firdapse

is highly uncertain. Factors that will affect our success include the uncertainty of:

• Whether Firdapse® patients can be successfully titrated to stable therapy;

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• The state of the economy generally and its impact on our business;

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• Whether we will have sufficient capital to finance any such acquisitions;

Our current plans and objectives are based on assumptions relating to the continued commercialization of Firdapse

and the development of additional indications for Firdapse

. Although we believe that our assumptions are reasonable, any of our assumptions could prove inaccurate. In light of the significant uncertainties inherent in the forward-looking statements we have made herein, which reflect our views only as of the date of this report, you should not place undue reliance upon such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 1. Business

Overview

We are a biopharmaceutical company focused on developing and commercializing innovative therapies for people with rare, debilitating, chronic diseases. We are currently focusing our efforts on products that treat diseases in the neuromuscular and neurological space, but we recently decided to expand our strategic focus to include acquiring or

in-licensing

innovative technology platforms and earlier stage programs in other rare disease therapeutic categories outside of these spaces. 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.

Impact of the

COVID-19

pandemic on our business

The

COVID-19

pandemic has resulted, and is expected to continue to result, in significant economic disruption, and has adversely affected and will likely continue to adversely affect our business. We are actively monitoring the situation and are taking those actions that may be required by federal, state or local authorities or that we determine are in the best interests of our patients, investigators, employees and stockholders.

In March 2020, in light of worsening conditions as a result of the pandemic, we implemented a number of safety related initiatives among our employees, including a travel ban and a work from home policy for all employees. This included our customer-facing employees, who began working remotely and utilizing telephone and

web-based

technologies to provide support to patients and their healthcare providers. We believe that because many healthcare providers have delayed seeing new patients because of the pandemic, there has been a delay in the diagnosis of new LEMS patients and their initiating therapy, which has slowed our efforts to locate new patients who could benefit from our therapy. However, we believe that as more healthcare providers resume seeing new patients on a regular basis, that this aspect of the

COVID-19

pandemic on our business will lessen.

Our Firdapse

supply chain remains robust and thus far we have observed no disruptions in the production of Firdapse

. We reiterate that we are committed to providing patients with the ability to obtain an uninterrupted supply of Firdapse

, and we believe that we have an adequate supply of Firdapse

to address patients’ needs for the foreseeable future. Further, we are advised by our U.S. manufacturing partners that they have implemented contingency plans to remain in operation. We are committed to meeting our patients’ needs for Firdapse

and believe that our supply chain will continue to remain solid and uninterrupted through the

COVID-19

outbreak and beyond.

Until such time as the

COVID-19

pandemic is over, it will likely adversely impact the timetable of our ongoing and contemplated clinical trials and studies, and increase the costs of such trials and studies, consistent with the impact that the

COVID-19

pandemic has had on many biopharmaceutical companies.

Strategic Plan for 2021 and Beyond

Our Board of Directors recently approved an expansion in our company’s strategic focus to include acquiring or

in-licensing

innovative technology platforms and earlier stage programs in other therapeutic categories outside of neuromuscular diseases. To accomplish these new priorities, we are prepared to invest more heavily in research and development, including acquiring earlier stage opportunities and innovative technology. We believe that this strategic expansion will better position our company to build out a broader more diversified portfolio of drug candidates that we believe will add greater value to our company over the near and long-term. However, there can be no assurance that whatever product candidates or technology platforms we acquire, if any, will be successfully developed.

To spearhead this investment, we have commenced a national search for a key executive to manage this more progressive strategy. This person will likely be an M.D. or Ph.D. with at least

15-20

years of relevant pharmaceutical experience and experience in developing innovative drug technology. This person will be responsible for portfolio expansion planning and developing medicines from discovery through marketing authorizations, as well as strategic leadership across all R&D activities including, direct oversight of science and clinical research.

Firdapse

In October 2012, we licensed the North American rights to Firdapse

, a proprietary form of amifampridine phosphate, or chemically known as

3,4-diaminopyridine

phosphate. When we acquired the rights to the product, it had already been granted orphan drug designation by the Food and Drug Administration (FDA) for the treatment of patients with LEMS, a rare and sometimes fatal autoimmune disease characterized by muscle weakness. Additionally, in August 2013, we were granted “breakthrough therapy designation” by the FDA for Firdapse

for the treatment of LEMS. Further, the FDA has granted Orphan Drug Designation for Firdapse

for the treatment of Myasthenia Gravis (MG).

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On November 28, 2018, we received approval from the FDA for Firdapse

10 mg tablets for the treatment of adult LEMS patients (ages 17 and above). In January 2019, we launched Firdapse

in the United States, selling through a field force experienced in neurologic, central nervous system or rare disease products consisting at the time of approximately 20 field personnel, including sales (Regional Account Managers), patient assistance and insurance navigation support (Patient Access Liaisons), and payor reimbursement (National Account Managers). We also have a field-based force of six medical science liaisons who are helping educate the medical communities and patients about LEMS and about our ongoing clinical trial activities evaluating Firdapse

for other ultra-orphan, neuromuscular diseases. Finally, we are working with several rare disease advocacy organizations (including Global Genes, the National Organization for Rare Disorders (NORD), and the Myasthenia Gravis Foundation of America) to help increase awareness and level of support for patients living with LEMS, Anti-MuSK antibody positive myasthenia gravis, or

MuSK-MG,

and other neurological diseases, and to provide education for the physicians who treat these rare diseases and the patients they treat.

In early 2020, we expanded our field sales group by almost one hundred percent and contracted with an experienced inside sales agency generating leads through telemarketing to targeted physicians. We made these changes to expand our sales efforts beyond the neuromuscular specialists who regularly treat LEMS patients to reach the roughly 9,000 neurology and neuromuscular healthcare providers that may be treating an adult LEMS patient who can benefit from Firdapse

. We also continue to make available at

no-cost

a LEMS voltage gated calcium channel (VGCC) antibody testing program for use by physicians who suspect that one of their patients may have LEMS and wish to reach a definitive diagnosis. Further, we are continuing to expand our digital and social media activities in order to introduce our product and services to potential patients and their healthcare providers.

We are supporting the distribution of Firdapse

through “Catalyst Pathways”

, our personalized treatment support program. “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. 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 pharmaceutical products for ultra-orphan diseases are distributed and dispensed to patients. 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.

In order to help adult LEMS patients afford their medication, we, like other pharmaceutical companies which are marketing drugs for ultra-orphan conditions, have developed an array of financial assistance programs that are available to reduce patient

co-pays

and deductibles to a nominal affordable amount. For eligible patients with commercial coverage, a

co-pay

assistance program designed to keep

out-of-pocket

costs to not more than $10.00 per month is available for all LEMS patients prescribed Firdapse

. We are also 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. Subject to compliance with regulatory requirements, our goal is that no LEMS patient is ever denied access to their medication for financial reasons.

In May 2019, the FDA approved a New Drug Application (NDA) for Ruzurgi

, another version of amifampridine

(3,4-DAP),

for the treatment of pediatric LEMS patients (ages 6 to under 17). While the NDA for Ruzurgi

only covers pediatric patients, we believe that Ruzurgi

is regularly being prescribed off label to adult LEMS patients. We believe that under applicable law, Jacobus is not permitted to market its amifampridine product to adult LEMS patients in the United States, and we are continuing to aggressively take all steps available to us to protect Firdapse’s

exclusivity under the Orphan Drug Act. There can be no assurance, however, that we will be able to stop the

off-label

prescribing of Ruzurgi

to adult LEMS patients. If Jacobus is able to successfully sell Ruzurgi

off-label

to additional adult LEMS patients, it could have a material adverse effect on our business, financial condition and results of operations.

We also believe that the FDA’s approval of Ruzurgi

violated our statutory rights and was in multiple other respects arbitrary, capricious and contrary to law. As a result, in June 2019 we filed suit against the FDA and several related parties challenging this approval and related drug labeling. Our complaint, which was filed in the federal district court for the Southern District of Florida, alleged that the FDA’s approval of Ruzurgi

violated multiple provisions of FDA regulations regarding labeling, resulting in misbranding in violation of the Federal Food, Drug, and Cosmetic Act (FDCA); violated our statutory rights to Orphan Drug Exclusivity and New Chemical Entity Exclusivity under the FDCA; and was in multiple other respects arbitrary, capricious, and contrary to law, in violation of the Administrative Procedure Act. Among other remedies, the suit sought an order setting aside the FDA’s approval of Ruzurgi

On July 30, 2020, the Magistrate Judge considering our lawsuit against the FDA filed a Report and Recommendation in which she recommended to the District Judge handling the case that she grant the FDA’s and Jacobus’ motions for summary judgment and deny our motion for summary judgment. On September 29, 2020, the District Judge adopted the Report and Recommendation of the Magistrate Judge, granted the FDA’s and Jacobus’ motions for summary judgment, and dismissed our case.

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We believe that the District Judge’s decision is incorrect as a matter of law and contrary to the plain language of the Orphan Drug Act. We believe that if the District Judge’s decision to grant summary judgment is correct on the law, it means that the FDA has the authority to effectively eliminate the benefits of exclusivity under the Orphan Drug Act, which we believe will chill the incentive for drug companies to spend the millions of dollars necessary to develop an orphan drug. As a result, we have appealed the decision to the Eleventh Circuit Court of Appeals. There can be no assurance of the result of such proceeding.

We are currently developing a long-acting formulation of amifampridine phosphate. A number of candidate formulations have been prepared, and three of the most promising formulations were evaluated in a pharmacokinetic (PK) study completed during the fourth quarter of 2020. The results of this first PK study will be used to inform the design and refinement of future product formulations and additional PK work to be conducted in 2021. We have also completed a number of advisory board meetings with both patients and doctors in order to establish the optimum target characteristics of the long-acting formulation of amifampridine phosphate that are desired by the LEMS patient community and treating physicians. There can be no assurance that we will be able to successfully develop a long-acting formulation of amifampridine phosphate, that any such formulation will be approved by the FDA for marketing, or that any such formulation will be commercially viable.

On August 10, 2020, we announced the

top-line

results from our Phase 3 clinical trial

(MSK-002)

evaluating Firdapse

for the treatment of adults with

MuSK-MG.

MSK-002

trial did not achieve statistical significance on its primary endpoint or its secondary endpoint. However, we have recently concluded a detailed analysis of the data from this trial in an effort to understand why the

MuSK-MG

Phase 3 trial did not meet statistical significance on its endpoints, even though clinical improvement was observed by patients and investigators during the initial dose-titration period of the trial and in our previous

proof-of-concept

trial. We found in our analysis that there was a large degree of symptom variability during the double-blind withdrawal period. We believe that sources of such variability can be addressed in a redesigned study that may better demonstrate the efficacy of our drug for the treatment of

MuSK-MG.

We plan to present our hypotheses and a revised protocol to the FDA with respect to the

MuSK-MG

indication for discussion during the first half of 2021. However, there can be no assurance that the FDA will either grant a meeting, agree with our protocol design or, even if the study is successful, accept the results of a single study of a different trial design as sufficient evidence for approval of the

MuSK-MG

indication. While we prepare for the meeting with FDA, we also plan to evaluate new clinical trial sites and discuss the new trial design with investigators. After meeting with the FDA, we will determine whether or not to proceed with a new trial that incorporates the new trial design.

Our exploratory study,

SMA-001

(A Randomized Placebo Controlled Crossover Study to Evaluate the Safety and Efficacy of Amifampridine Phosphate in Ambulatory Patients with Spinal Muscular Atrophy (SMA) Type 3, met the primary endpoint of a statistically significant difference for the Hammersmith Functional Motor Scale Expanded (HFMSE). Clinically, however, the effect was modest. The secondary endpoints were not statistically significant, although several individual quality of life measures demonstrated a nominally positive statistically significant change. Key opinion leaders with whom we have spoken believed that Firdapse

needed to show a large clinically significant change if there was the possibility to affect disease progression through retrograde signaling from enhanced neuromuscular junction function. After considering all of these factors, we have concluded that the modest results exhibited in this study are unlikely to result in a sufficient modification of disease progression, and, particularly in light of the fact that there are now three approved disease modifying medications for SMA Type 3, we have decided not to pursue the SMA Type 3 indication further.

We intend to conduct a

proof-of-concept

study evaluating Firdapse

as a treatment for Hereditary Neuropathy with Liability to Pressure Palsies (HNPP). The scientific basis for considering this indication is that leakage of neuron potassium channels is observed in HNPP. Since Firdapse

is a potassium channel blocker, it may mitigate the pathological effects of the potassium channel leakage in HNPP patients. There can be no assurance that this

proof-of-concept

study will be successful.

There can be no assurance that clinical trials of Firdapse

that we undertake in the future will be successful. Further, there can be no assurance that we will ever be granted the right to commercialize Firdapse

for any additional indications.

Our NDS filing for Firdapse

for the symptomatic treatment of LEMS was approved by Health Canada on July 31, 2020. In August 2020, we entered into a license agreement with KYE Pharmaceuticals (KYE), pursuant to which we licensed the Canadian rights for Firdapse

for the treatment of LEMS to KYE. Pursuant to the license agreement, KYE is obligated to pay us an

up-front

payment based on approval and product supply, data protection milestones based on achievements of sales and regulatory milestones, and a sharing of defined net sales upon commercialization.

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On August 10, 2020, Health Canada issued a Notice of Compliance (NOC) to Medunik for Ruzurgi

for the treatment of LEMS. We have since initiated a legal proceeding in Canada seeking judicial review of Health Canada’s decision to issue the NOC for Ruzurgi

as incorrect and unreasonable under Canadian law. Data protection, per Health Canada regulations, is supposed to prevent Health Canada from issuing a NOC to a drug that directly or indirectly references an innovative drug’s data, for eight years from the date of the innovative drug’s approval. The Ruzurgi

Product Monograph clearly references pivotal nonclinical carcinogenicity and reproductive toxicity data for amifampridine phosphate developed by us. As such, we believe that our data was relied upon to establish the nonclinical safety profile of Ruzurgi

needed to meet the standards of the Canadian Food and Drugs Act. There can be no assurance of the results of this proceeding.

In May 2019, we entered into an amendment to our license agreement for Firdapse

. Under the amendment, we have expanded our commercial territory for Firdapse

, which originally was comprised of North America, to include Japan. Additionally, we have an option to further expand our territory under the license agreement to include most of Asia, as well as Central and South America, upon the achievement of certain milestones in Japan. Under the amendment, we will pay royalties on net sales in Japan of a similar percentage to the royalties that we are currently paying under our original license agreement for North America.

We have met with Japanese regulatory authorities and believe that we have reached an agreement with them as to the scope of the clinical trial that we will be required to undertake in Japan before we will be permitted to submit an application to the Japanese regulatory authorities to seek to commercialize Firdapse

for the treatment of LEMS in Japan. We also have applied for orphan drug designation in Japan for the symptomatic treatment of LEMS. There can be no assurance that we will successfully obtain the right to commercialize Firdapse

in Japan or obtain orphan drug designation.

All of our patent rights for Firdapse

are derived from our license agreement. In August 2020, the United States Patent and Trademark Office (USPTO) allowed Patent No. 10,798,893 (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. 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. Generic drug product labels would necessarily have to do this, and we intend to take all appropriate actions to protect our intellectual property.

In that regard, in October 2020, we filed a lawsuit in the U.S. District Court for New Jersey against Jacobus and a lawsuit in the U.S. District Court for the Western District of Pennsylvania against the specialty pharmacy marketing Ruzurgi

, PantherRx Rare LLC (PantherRx), for infringement of the ‘893 Patent. The suits have since been combined in the U.S. District Court for New Jersey. The lawsuit arises from Jacobus’ and PantherRx’s sales and marketing of Ruzurgi

(amifampridine, 10 mg). The lawsuit alleges that the Ruzurgi

product infringes the ‘893 patent when administered in accordance with its product labeling. The lawsuit seeks damages and injunctive relief to prevent further marketing of Ruzurgi

in violation of our patent rights.

We are also pursuing additional patent applications for Firdapse

in an effort to further protect our drug product. There can be no assurance that any additional patents will be issued which provide additional intellectual property protection for our drug product.

There can be no assurance that we do not or will not infringe on patents held by third parties or that third parties in the future will not claim that we have infringed on their patents. In the event that our products or technologies infringe or violate the patent or other proprietary rights of third parties, there is a possibility we may be prevented from pursuing product development, manufacturing or commercialization of our products that utilize such technologies until the underlying patent dispute is resolved. For example, there may be patents or patent applications held by others that contain claims that our products or operations might be determined to infringe or that may be broader than we believe them to be. Given the complexities and uncertainties of patent laws, there can be no assurance as to the impact that future patent claims against us may have on our business, financial condition, results of operations, or prospects.

Generic Sabril

In December 2018, we entered into a definitive agreement with Endo International plc’s subsidiary, Endo Ventures Limited (“Endo”), for the further development and commercialization of generic Sabril

tablets through Endo’s United States Generic Pharmaceuticals segment, Par Pharmaceutical. Pursuant to the agreement, in December 2018, we received an

up-front

payment of $500,000. We will be entitled to receive a milestone payment of $2.0 million on the commercial launch of the product. Further, we will receive a sharing of defined net profits upon commercialization and we are obligated to share the costs of certain development expenses.

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There can be no assurance that our collaboration with Endo for the development of generic Sabril

(vigabatrin) tablets will be successful and that if an abbreviated new drug application (ANDA) is approved for vigabatrin tablets in the future, that it will be profitable to us.

Capital Resources

At December 31, 2020, we had cash and investments of approximately $140.3 million. 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. There can be no assurance that we will continue to be successful in commercializing Firdapse

or will continue to be profitable. Further, there can be no assurance that if we need additional funding in the future, whether such funding will be available to us. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” below for further information on our liquidity and cash flow.

Our Strategy

Our goal is to develop and commercialize novel prescription drugs targeting rare (orphan) neuromuscular and neurological diseases and disorders. 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:

Firdapse

Product Overview

Firdapse

is Catalyst’s registered trade name in the United States for amifampridine phosphate tablets. Amifampridine is the WHO (World Health Organization) registered INN (International Nonproprietary Name) and United States Adopted Name (USAN) for the chemical entity,

3,4-diaminopyridine,

often abbreviated as

3,4-DAP

or DAP. Firdapse

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

Form 10-K.

Amifampridine has been recommended as the first-line symptomatic treatment for LEMS by the European Federation of Neurological Societies (now known as the European Academy of Neurology). In December 2009, amifampridine phosphate received marketing approval from the European Commission (with the trade name Firdapse

) for the symptomatic treatment of patients with LEMS. Safety data from clinical data published over the last 30 years in patients with LEMS or other neurological disorders treated with amifampridine show that amifampridine is well tolerated at doses up to 80 mg per day. Among the 1,279 patients or healthy subjects assessed in the literature, the most frequently reported adverse events (AEs) were perioral and peripheral paresthesias (unusual sensations like pins and needles), and gastrointestinal disorders (abdominal pain, nausea, diarrhea, and epigastralgia (pain around the upper part of the stomach)). These events were typically mild or moderate in severity, and transient, seldom requiring dose reduction or withdrawal from treatment.

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Lambert-Eaton Myasthenic Syndrome (LEMS)

Lambert-Eaton Myasthenic Syndrome, or LEMS, is a rare autoimmune neuromuscular disorder characterized primarily by muscle weakness of the limbs. The disease is caused by an autoimmune reaction where antibodies are formed against voltage-gated calcium channels on nerve endings, which damages the channels. These calcium channels are responsible for the transport of charged calcium atoms that activate the biochemical machinery responsible for releasing acetylcholine. Acetylcholine is the neurotransmitter responsible for causing muscles to contract and the failure to release enough of this neurotransmitter results in muscle weakness in LEMS patients. Additionally, LEMS is often associated with an underlying malignancy, most commonly small-cell lung cancer (SCLC), and in some individuals, LEMS is the first symptom of such malignancy.

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. Individuals affected with LEMS also may have a disruption of the autonomic nervous system, including dry mouth, constipation, blurred vision, impaired sweating, and/or hypotension.

LEMS is managed by treating the symptoms or treating the underlying autoimmune attack on voltage gated calcium channels. Unapproved treatments include steroids, azathioprine and intravenous immunoglobulin, which work by suppressing the immune system; and pyridostigmine and amifampridine, which enhance neuromuscular transmission. Plasma exchange has also been used to attempt to remove antibodies from the body. Firdapse

is a symptomatic treatment and does not alter the underlying autoimmune condition. As a voltage gated potassium blocker, Firdapse

prevents charged potassium atoms from leaving the nerve cells, which prolongs the period of depolarization. This allows more charged calcium atoms to enter the nerves, which enables the nerves to release acetylcholine and causes muscles to contract and to restore lost muscle strength in LEMS patients.

Based on currently available information, we estimate that there are approximately 3,000 LEMS patients in the United States, approximately 1,500 of which are presently diagnosed and identified and approximately 1,500 of which we believe are undiagnosed or misdiagnosed. However, until awareness of the disease is increased, it is unlikely that the total number of LEMS patients in the United States can be determined with better certainty (as is typical of rare diseases), and the actual number of patients in the United States with LEMS may be higher or lower than our estimate.

Some of the factors that affect the size of the population with a rare disease such as LEMS include the number of patients actually diagnosed with the disease, the number of patients who are misdiagnosed with other diseases, and the number of patients who are simply undiagnosed. Additionally, while there is an antibody test that positively identifies patients with LEMS, the test is not particularly well known or utilized at this time by many neurologists. Further, many LEMS patients who have small cell lung cancer (SCLC) are not being treated for LEMS because many oncology medical professionals who treat SCLC patients are generally unfamiliar with how to diagnose and treat LEMS. All of these factors affect the ultimate number of patients who will benefit from treatment with Firdapse

Firdapse

is the only FDA approved, evidence-based therapy for the treatment of LEMS in adults.

Anti-MuSK antibody positive myasthenia gravis

(MuSK-MG)

Myasthenia Gravis, or MG, is a chronic autoimmune neuromuscular disorder that is characterized by fluctuating weakness of the voluntary muscle groups. The prevalence of MG in the United States is estimated to be about 20/100,000 population (equating to an estimate of approximately 64,000 patients in the United States). However, according to the Myasthenia Gravis Foundation of America, MG is probably under diagnosed and the prevalence may be higher. For example, patients with

MuSK-MG

may have focal or regional weakness and muscle atrophy that are more suggestive of motor neuron or muscle membrane (myopathy) disease. MG occurs in all races, both genders, and at any age. MG is not thought to be directly inherited (although it occasionally occurs in more than one member of the same family), nor is it contagious.

The voluntary muscles of the entire body are controlled by nerve impulses that arise in the brain. These nerve impulses travel down the nerves to the place where the nerves meet the muscle fibers. Nerve fibers do not actually connect with muscle fibers. There is a space between the nerve ending and muscle fiber; this space is called the neuromuscular junction. When the nerve impulse originating in the brain arrives at the nerve ending, it releases a chemical called acetylcholine. Acetylcholine travels across the space to the muscle fiber side of the neuromuscular junction where it attaches to many receptor sites. The muscle contracts when enough of the receptor sites have been activated by the acetylcholine. In MG, there can be as much as an 80% reduction in the number of these receptor sites. The reduction in the number of receptor sites is caused by an antibody that destroys or blocks the receptor site. Antibodies are proteins that play an important role in the immune system. They are normally directed at foreign proteins called antigens that attack the body. Such foreign proteins include bacteria and viruses. Antibodies help the body to protect itself from these foreign proteins. For reasons not well understood, the immune system of the person with MG makes antibodies against the receptor sites of the neuromuscular junction. Abnormal antibodies can be measured in the blood of many people with MG. The antibodies destroy the receptor sites more rapidly than the body can replace them. Muscle weakness occurs when acetylcholine cannot activate enough receptor sites at the neuromuscular junction.

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About 15% of MG patients test negative for the acetylcholine receptor antibody. These patients have seronegative (SN) MG. Approximately

40-50%

of these patients with SNMG test positive for antibodies against muscle-specific receptor tyrosine kinase (MuSK), a surface membrane component essential in the development of the neuromuscular junction. These patients are identified as having

MuSK-MG.

Anti-MuSK antibodies identify a clinically distinguishable, more severe form of MG. The disease is characterized by a prominent weakness of the neck,

oro-bulbar

and sometimes respiratory musculature. Although many patients with

MuSK-MG

are presently treated with standard MG treatments such as anticholinesterase inhibitors or immunosuppressants, such patients do not generally respond adequately to these treatments.

Based on currently available information, we estimate that there are between 3,000 and 4,800

MuSK-MG

patients in the United States. There is currently no drug therapy approved by the FDA for the treatment of

MuSK-MG.

Hereditary Neuropathy with Liability to Pressure Palsies

Hereditary Neuropathy with liability to Pressure Palsies (HNPP) is a disorder that affects peripheral nerves. These nerves connect the brain and spinal cord to muscles and sensory cells that detect touch, pain, and temperature. In people with this disorder, the peripheral nerves are unusually sensitive to pressure, such as the pressure that occurs when carrying heavy grocery bags, leaning on an elbow, or sitting without changing position, particularly with crossed legs. These activities would not normally cause sensation problems in people without the disorder.

Hereditary neuropathy with liability to pressure palsies is characterized by recurrent episodes of numbness, tingling, and loss of muscle function (palsy) in the region associated with the affected nerve, usually an arm, hand, leg, or foot. An episode can last from several minutes to several months, but recovery is usually complete. Repeated incidents, however, can cause permanent muscle weakness or loss of sensation. This disorder is also associated with pain in the limbs, especially the hands.

A pressure palsy episode results from pressure on a single nerve, and any peripheral nerve can be affected. Although episodes often recur, they can affect different nerves. The most common problem sites involve nerves in the wrists, elbows, and knees. The fingers, shoulders, hands, feet, and scalp can also be affected. Many people with this disorder experience carpal tunnel syndrome, which occurs when a nerve in the wrist (the median nerve) is involved. Carpal tunnel syndrome is characterized by numbness, tingling, and weakness in the hand and fingers. An episode in the hand may affect fine motor activities such as writing, opening jars, and fastening buttons. An episode of nerve compression in the knee can lead to a condition called foot drop, which makes walking, climbing stairs, or driving difficult or impossible.

The symptoms of HNPP usually begin during adolescence or early adulthood but may develop anytime from childhood to late adulthood. Symptoms vary in severity; many people never realize they have the disorder, while some people experience prolonged disability. HNPP does not affect life expectancy. Based on currently available data, we estimate the prevalence of HNPP in the United States to be between 2,300 and 5,200 patients.

There is currently no standard medical treatment for HNPP. Management generally involves strategies to avoid or modify positions (such as leaning on the elbows) and activities that cause symptoms, and using splints or pads on the wrists or arms to avoid pressure on the nerves. An ankle-foot orthosis may be needed permanently for those with a residual foot drop. Management of pain may include

over-the-counter

pain medicines and/or prescription drugs used for peripheral neuropathy.

License Agreement for Firdapse

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”). Under the License Agreement, we make the following royalty payments on our net sales of Firdapse

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On May 29, 2019, we entered into an amendment to our License Agreement. Under the amendment, we expanded our commercial territory for Firdapse

, which originally was comprised of North America, to include Japan. Additionally, we have an option to further expand our territory under the License Agreement to include most of Asia, as well as Central and South America, upon the achievement of certain milestones in Japan. Under the amendment, we will pay royalties on net sales in Japan of a similar percentage to the royalties that we are currently paying under our original License Agreement for North America.

In January 2020, we were advised that BioMarin had sold certain rights under the License Agreement to SERB SA.

We believe that we remain in compliance with our obligations under the License Agreement.

Clinical trials supporting our NDA for Firdapse

for LEMS and approval of our NDA

We conducted two successful Phase 3 double-blind, placebo controlled clinical trials evaluating Firdapse

for the treatment of LEMS. The results of the first trial published in 2016 in

Muscle

& Nerve

(

Muscle Nerve, 2016,

53(5):717-725

). The results of the second trial were published in March 2019 in the Journal of Clinical Neuromuscular Disease (

J. Clin Neuromusc Dis 2019;

20:111-119

In March 2018, we submitted an NDA seeking approval of Firdapse

for the treatment of LEMS. Our NDA was accepted for filing in May 2018 and, on November 28, 2018, the FDA granted approval of Firdapse

for the treatment of LEMS in adult patients.

Required Post-Approval Studies

As part of the approval of our NDA for Firdapse

for LEMS, the FDA is requiring 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. We have submitted the final protocol and begun screening patients for this trial. We have also established a pregnancy surveillance program to collect and analyze information for a minimum of ten (10) years on pregnancy complications and birth outcomes related to Firdapse

. Finally, the FDA required us to perform a second carcinogenicity study of amifampridine phosphate in mice, which we expect to complete on a timely basis.

Expanded access program

We continue to operate an expanded access program (EAP) that is currently making Firdapse

available to certain patients diagnosed with CMS or Downbeat Nystagmus (DN). While we are no longer seeking an indication for Firdapse

for the treatment of CMS and have closed enrollment in the EAP to new CMS and DN patients, we are currently providing Firdapse

to those patients who were previously enrolled in our EAP.

Prior to the approval of our NDA for Firdapse

for LEMS, adult LEMS patients were also eligible to participate in our EAP program. We have since migrated the adult LEMS patients previously in our EAP to Catalyst Pathways

and to commercial Firdapse

Sales, Marketing and Distribution

Launch of Firdapse

in January 2019

In January 2019, we launched Firdapse

in the United States through a field force of approximately 20 personnel who are experienced in neurologic, central nervous system or rare diseases in sales, patient support and payer reimbursement. The sales representatives (Regional Account Managers) who were part of the field force targeted approximately 1,250 physicians who are either neuromuscular specialists or general neurologists with a known adult LEMS patient or specific training in neuromuscular diseases. We also utilized field force Patient Access Liaisons who work with the patients and provider offices to help navigate the insurance landscape, as well as National Account Managers who work directly with the payors to ensure comprehensive coverage for Firdapse

across the commercial and governmental plans in the United States. We also have a field-based force of six medical science liaisons who help educate the medical communities and patients about LEMS and about our company’s ongoing clinical trial activities. Further, we work closely with several rare disease advocacy organizations (including Global Genes, the National Organization for Rare Disorders (NORD), and the Myasthenia Gravis Foundation of America) to help increase awareness and the level of support for patients living with LEMS, MuSK antibody positive myasthenia gravis, and other neuromuscular diseases that may be treatable with Firdapse

, and to provide education for the physicians who treat these rare diseases and the patients they treat.

In early 2020, we expanded our field sales group by almost one hundred percent and established a partnership with an experienced inside sales agency generating leads through telemarketing to targeted physicians. Through this expansion of our sales team, we are working to expand our sales efforts beyond the neuromuscular specialists who regularly treat LEMS patients to reach roughly 9,000 neurology and neuromuscular healthcare providers that might be treating an adult LEMS patient who can benefit from Firdapse

. We also make available a

no-cost

LEMS voltage gated calcium channel (VGCC) antibody testing program for physicians who suspect their patient may have LEMS and wish to reach a definitive diagnosis.

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We are supporting the distribution of Firdapse

through “Catalyst Pathways”

, our personalized treatment support program. “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. 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 pharmaceutical products for ultra-orphan diseases are distributed and dispensed to patients. 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.

In addition, “Catalyst Pathways”

is the gateway for our free bridge medication for patients during transitioning from investigational product while they are waiting for a coverage determination or, later on, for patients whose access is threatened by the bureaucratic complications arising from a change of insurer. 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.

We are continuing efforts on the longer, slower process to identify patients and their physicians who have diagnosed LEMS, but have not had access, awareness or understanding of this treatment for their rare disease. These patients often do not see their physician frequently, have many questions about changing treatment(s), and may not perceive the need to change to a new therapy. Further, we have begun to focus our commercial efforts to locate misdiagnosed and undiagnosed LEMS patients and provide educational and sales activities to help improve the diagnosis, understanding of the treatment, and information on the prescribing process. We plan to continue to support LEMS and rare disease patient organizational groups’ efforts to generate awareness and educate patients and physicians on the diagnosis of LEMS, the impact of the disease, and the support services and treatments available.

Access to Firdapse

In order to help patients afford their medication, we, like other pharmaceutical companies who are marketing drugs for ultra-orphan conditions, have developed an array of financial assistance programs that are available to reduce patient

co-pays

and deductibles to a nominal affordable amount. For eligible patients with commercial coverage, a

co-pay

assistance program designed to keep

out-of-pocket

costs to $10 or less per month is available for all LEMS patients prescribed Firdapse

. We are also donating, and committing to continue to donate, money to qualified, independent charitable foundations dedicated to providing assistance to LEMS patients in financial need. Our goal is to ensure that no LEMS patient is ever denied access to their medication for financial reasons.

To date, Firdapse has been widely covered and reimbursed by private and public payors for the indicated small population of adult LEMS patients.

FDA approval of Ruzurgi

for pediatric LEMS patients (ages 6 to under 17)

In May 2019, the FDA approved an NDA for Ruzurgi

, Jacobus Pharmaceuticals’ version of amifampridine

(3,4-DAP),

for the treatment of pediatric LEMS patients (ages 6 to under 17). We believe that the vast majority of Ruzurgi

sales are to adult LEMS patients who are being prescribed the drug off label. If Jacobus is able to successfully sell Ruzurgi

off-label

to additional adult LEMS patients, it could have a material adverse effect on our business, financial condition and results of operations.

We believe that the FDA’s approval of Ruzurgi

violated our statutory rights and was in multiple other respects arbitrary, capricious and contrary to law. As a result, in June 2019 we filed suit against the FDA and several related parties challenging this approval and related drug labeling. Jacobus later intervened in the case. Our complaint, which was filed in the federal district court for the Southern District of Florida, alleged that the FDA’s approval of Ruzurgi

violated multiple provisions of FDA regulations regarding labeling, resulting in misbranding in violation of the Federal Food, Drug, and Cosmetic Act (FDCA); violated our statutory rights to Orphan Drug Exclusivity and New Chemical Entity Exclusivity under the FDCA; and was in multiple other respects arbitrary, capricious, and contrary to law, in violation of the Administrative Procedure Act. Among other remedies, the suit seeks an order vacating the FDA’s approval of Ruzurgi

On July 30, 2020, the Magistrate Judge considering this lawsuit filed a Report and Recommendation in which she recommended to the District Judge handling the case that she grant the FDA’s and Jacobus’ motions for summary judgment and deny our motion for summary judgment. On September 29, 2020, the District Judge adopted the Report and Recommendation of the Magistrate Judge, granted the FDA’s and Jacobus’ motions for summary judgment, and dismissed our case.

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Third-Party Reimbursement

Sales of pharmaceutical products depend in significant part on the availability of coverage and adequate reimbursement by third party payors, such as state and federal governments, including Medicare and Medicaid, managed care providers, private commercial insurance plans and pharmacy benefit management (PBM) plans. Decisions regarding the extent of coverage and the amount of reimbursement to be provided for Firdapse

are expected to be made on a

plan-by-plan,

and in some cases, on a

patient-by-patient

basis. 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. To that end, we have engaged a dedicated team of field-based market access account managers and reimbursement experts as well as a patient service center staffed with experienced personnel focused on ensuring that clinically-qualified patients have access to our product.

There can be no assurance, however, as to whether payors will continue to cover our product, and if so, at what level of reimbursement. Further, there can be no assurance as to whether payors will in the future require that patients try Ruzurgi

before they are treated with Firdapse

. In that regard, we have advised payors that we will provide free medication to support titration and confirm patient therapeutic benefit. Further, when necessary, we provide patients with access to therapy at no charge while those patients are awaiting coverage decisions.

Our efforts to develop Firdapse

as a treatment for additional neuromuscular indications

The current status of our clinical trials evaluating Firdapse

for additional indications is as follows:

MuSK-MG

studies

In February 2016, we initiated an investigator-sponsored, randomized, double-blind, placebo-controlled, crossover

proof-of-concept

clinical trial evaluating the safety, tolerability and potential efficacy of Firdapse

as a symptomatic treatment for patients with

MuSK-MG.

Seven patients participated in this

proof-of-concept

trial. On March 15, 2017, we reported

top-line

results from this trial. Both of the

co-primary

efficacy endpoints of change from baseline (CFB) in total Quantitative Myasthenia Gravis (QMG) score (p=0.0003) and CFB in total Myasthenia Gravis Activities of Daily Living

(MG-ADL)

score (p=0.0006) were statistically and clinically significant in this trial. Several secondary efficacy measures also achieved statistical significance. Amifampridine phosphate was well tolerated in this population of patients.

The results of this study were published in SAGE Open Medicine and can be accessed at

https://journals.sagepub.com/doi/pdf/10.1177/2050312118819013

Subsequently, we engaged in a Phase 3 clinical trial

(MSK-002)

evaluating Firdapse

for the treatment of adults with

MuSK-MG.

Our trial was a multi-site, international (United States, Italy and Serbia), double-blind, placebo-controlled, clinical trial being conducted under a Special Protocol Assessment (SPA) with the FDA. The trial enrolled more than 60 MuSK antibody positive patients. It also enrolled more than 10 generalized myasthenia gravis patients who were assessed with the same clinical endpoints. However, achieving statistical significance in this subgroup of patients was not required.

On August 10, 2020, we announced the

top-line

results from our Phase 3 clinical trial

(MSK-002)

evaluating Firdapse

for the treatment of adults with

MuSK-MG.

Unfortunately, the

MSK-002

trial did not achieve statistical significance on its primary endpoint or its secondary endpoint, even though clinical improvement was observed by patients and investigators during the initial dose-titration period of the trial and in the company’s previous

proof-of-concept

trial. However, we have recently concluded a detailed analysis of the data from this trial in an effort to understand why the

MuSK-MG

Phase 3 trial did not meet statistical significance on its endpoints. We found in our analysis that there was a large degree of symptom variability during the double-blind withdrawal period. We believe that sources of such variability can be addressed in a redesigned study that may better demonstrate the efficacy of our drug for the treatment of

MuSK-MG.

With respect to the

MuSK-MG

indication, we plan to present our hypotheses and a revised protocol to the FDA for discussion during the first half of 2021. However, there can be no assurance that the FDA will either grant a meeting, agree with our protocol design or, even if the study is successful, accept the results of a single study of a different trial design as sufficient evidence for approval of the

MuSK-MG

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Proof-of-concept

clinical trial evaluating Firdapse

for the treatment of SMA Type 3

Our exploratory study,

SMA-001

(A Randomized Placebo Controlled Crossover Study to Evaluate the Safety and Efficacy of Amifampridine Phosphate in Ambulatory Patients with Spinal Muscular Atrophy (SMA) Type 3, met the primary endpoint of a statistically significant difference for the Hammersmith Functional Motor Scale Expanded (HFMSE). Clinically, however, the effect was modest. The secondary endpoints were not statistically significant, although several individual quality of life measures demonstrated a positive nominally statistically significant change. Key opinion leaders with whom we have spoken believed that Firdapse

HNPP

proof-of-concept

study

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