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, 2021

Commission File

No. 001-33057

CATALYST PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

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, 2021, 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 $551,581,521.

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: 102,744,913 shares of common stock, $0.001 par value per share, were outstanding as of March 14, 2022.

Part III incorporates certain information by reference from the registrant’s definitive proxy statement for the 2022 annual meeting of stockholders. The proxy statement with respect to the 2022 annual meeting of stockholders will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2021.

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Page

PART I 1

Item 1. Business 3

Item 1A. Risk Factors 27

Item 1B. Unresolved Staff Comments 47

Item 2. Properties 47

Item 3. Legal Proceedings 48

Item 4. Mine Safety Disclosure 49

Item 6. Selected Financial Data 52

Item 7. Financial Condition and Results of Operations 52

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

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;

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

• Whether our version of vigabatrin tablets will ever be approved by the FDA;

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

and on our plans to seek to acquire or

in-license

additional products. 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.

Item 1. Business

Overview

We are a commercial-stage biopharmaceutical company focused on

in-licensing,

developing and commercializing novel medicines for patients living with rare diseases. With exceptional patient focus, we are committed to developing a robust pipeline of cutting-edge,

best-in-class

medicines for rare diseases. We historically focused our efforts on developing products that treat diseases in the neuromuscular and neurological space, but in 2021 we made a strategic decision to broaden and diversify our product portfolio through acquisitions of both early and late-stage products or companies or technology platforms in rare disease therapeutic categories outside of neuromuscular diseases. To accomplish these new priorities, we are employing a disciplined approach to evaluating assets and we believe that this strategic expansion will better position our company to build out a broader more diversified portfolio of drug candidates, which should add greater value to our company over the near and long-term. However, there can be no assurance that whatever product candidates or technology platforms we acquire, if any, will be successfully developed or commercialized.

We are currently exploring several potential opportunities to acquire companies with drug products in development or to

in-license

or acquire drug products in development. However, no definitive agreements have been entered into to date. Further, during the third quarter of 2021 we hired Dr. Preethi Sundaram, who serves as our Chief Strategy Officer. In that position, Dr. Sundaram is leading our efforts to acquire R&D assets, from early stage through late-stage clinical programs and technologies to treat rare diseases, and once such drug candidates are acquired, Dr. Sundaram will help oversee the development of those assets.

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 affected our business operations in numerous ways, and we continue to monitor applicable government modifications. We had to make modifications to our normal operations because of the

COVID-19

pandemic, including allowing our employees to work remotely. At present, our operations have returned to mostly being

in-person,

with some contact with physicians by our commercial sales force still being done remotely. Notwithstanding, the

COVID-19

pandemic, including the emergence of new

COVID-19

variants, including the delta and omicron variants, could affect the health and availability of our workforce as well as those of third parties whom we are relying upon to take similar measures. As such, we have experienced in the past, and may experience in the future, disruptions to our business operations because of the

COVID-19

pandemic, and our business could be materially adversely affected by such disruptions, directly or indirectly. National, state and local governments in affected regions have implemented and may continue to implement varying safety precautions, such as quarantines, border closures, increased border controls, travel restrictions,

shelter-in-place

orders and shutdowns, business closures, cancellations of public gatherings and other measures. Organizations and individuals may continue to take additional steps to avoid infection, including limiting travel and staying home from work. These measures may continue to disrupt normal business operations both inside and outside of affected areas and have had significant impacts on healthcare and businesses worldwide.

We believe that because many healthcare providers who treat LEMS patients 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 when conditions allow healthcare providers to resume seeing new patients in person on a regular basis, the impact of this aspect of the

COVID-19

pandemic on our business will lessen.

One area where we have not been impacted by the pandemic is in our supply chain. To date, we have been able to avoid material disruptions in the production of FIRDAPSE

and, based upon current estimates, we have sufficient inventory to meet current and foreseeable patient needs for at least the next 12 months.

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FIRDAPSE

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

Tablets 10 mg for the treatment of adult patients (ages 17 and above) with Lambert-Eaton, Myasthenic Syndrome (“LEMS”). In January 2019, we launched FIRDAPSE

in the United States. We sell our product through a field force experienced in neurologic, central nervous system or rare disease products consisting at this time of approximately 30 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 five medical science liaisons who are helping educate the medical communities and patients about LEMS and our programs supporting patients and access to FIRDAPSE

Further, we have contracted with an experienced inside sales agency that works to generate leads through telemarketing to targeted physicians. This inside sales agency allows our sales efforts to not only reach the neuromuscular specialists who regularly treat LEMS patients, but also the roughly 9,000 neurology and neuromuscular healthcare providers that may be treating an adult LEMS patient who can benefit from FIRDAPSE

. Additionally, we recently began

non-personal

promotion to oncologists that may treat adult LEMS patients. We also are continuing 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.

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

We are supporting the distribution of FIRDAPSE

through Catalyst Pathways

, our personalized treatment support program for patients who enroll in it. Catalyst Pathways

is a single source for personalized treatment support, education and guidance through the challenging dosing and titration regimen required to reach an effective therapeutic dose. It also includes distributing the drug through a very small group of exclusive specialty pharmacies (primarily AnovoRx), which is consistent with the way that most drug products for ultra-orphan diseases are distributed and dispensed to patients. 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 (currently $0.00 per month) is available for all LEMS patients who are 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

has been regularly prescribed

off-label

to adult LEMS patients. 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, and Jacobus Pharmaceuticals (Jacobus) intervened in our 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 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. We appealed the District Court’s decision to the U.S. Circuit Court of Appeals for the 11

Circuit. By early 2021, the case was fully briefed, and oral argument was held in March 2021.

On September 30, 2021, a three-judge panel of 11

Circuit judges issued a unanimous decision overturning the District Court’s decision. The appellate court adopted our argument that the FDA’s approval of Ruzurgi

violated our rights to Orphan Drug Exclusivity and remanded the case to the District Court with orders to enter summary judgment in our favor. In November 2021, Jacobus filed a motion seeking rehearing of the case from the full 11

Circuit, which motion was denied in January 2022. Further, in January 2022, Jacobus filed motions with both the 11

Circuit and the U.S. Supreme Court seeking a stay of the 11

Circuit’s ruling indicating that it would seek a review of the 11

Circuit’s decision from the U.S. Supreme Court. Both stay motions were denied, and on January 28, 2022, the 11

Circuit issued a mandate directing the District Court to enter summary judgment in our favor. The District Court entered that order on January 31, 2022. On February 1, 2022, the FDA informed Jacobus that, consistent with the Court of Appeals for the Eleventh Circuit’s September 30, 2021, decision in favor of Catalyst, the final approval of the Ruzurgi

NDA was switched to a tentative approval until the

7-year

orphan-drug exclusivity (ODE) for Firdapse

has expired.

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There can be no assurance as to whether Jacobus will seek U.S. Supreme Court review of the 11

Circuit’s decision, whether the U.S. Supreme Court will agree to hear the case, or whether, if the U.S. Supreme Court agrees to hear the case, Jacobus’ appeal to overturn the decision of the 11

Circuit will be successful. Similarly, there can be no assurance as to whether the U.S. Congress will pass, and the President will sign, legislation revising the Orphan Drug Act that effectively overturns the decision of the U.S. Court of Appeals for the 11

Circuit, and whether any such legislation, if passed and signed into law, will retroactively affect the outcome of the 11

Circuit decision and allow the FDA to reinstate the approval of Ruzurgi

before the expiration of FIRDAPSE

’s orphan drug exclusivity.

We are actively working with parents and physicians of pediatric LEMS patients to make sure that such patients will be able to obtain FIRDAPSE

through appropriate legal and regulatory means. In addition, we are working to file an application with the FDA seeking approval for use of FIRDAPSE

by pediatric LEMS patients, though any effort to obtain such authorization is not guaranteed. We anticipate submitting the sNDA before the end of the first quarter. For the adult LEMS patients who have been taking Ruzurgi

off-label

(who are believed to be a large majority of the patients currently taking Ruzurgi

), we are working with prescribers to transition such patients to FIRDAPSE

as needed.

We have been developing a long-acting formulation of amifampridine phosphate. While a number of formulations have been prepared, after discussions with researchers and an advisory board made up of both patients and physicians, we recently concluded that we would be unable to develop a long-acting formulation that was both beneficial to patients and commercially viable, and as a result we have made the determination not to proceed with development of this product.

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. Following our receipt of these results, we analyzed the data and proposed a plan to FDA to perform an additional study evaluating FIRDAPSE

for the treatment of

MuSK-MG.

In response, the FDA provided written comments that were unfavorable towards our proposed revised study design and further questioned the ability of the initial

MuSK-MG

pilot study to be supportive. These remarks make it unlikely that a single study of similar design to

MSK-002

would be sufficient for potential approval of the

MuSK-MG

indication. We also held an expert panel with key opinion leaders (KOLs) to discuss options and review the likelihood of success for the

MuSK-MG

indication for FIRDAPSE

under these circumstances. After receiving the input of the FDA and the KOLs, we concluded that the approval of FIRDAPSE

as a first line therapy for

MuSK-MG

is unlikely, and therefore we have decided not to further pursue this indication.

We previously announced our intent to conduct a

proof-of-concept

study evaluating FIRDAPSE

as a treatment for Hereditary Neuropathy with Liability to Pressure Palsies (HNPP). The FDA requested that a new, patient-centric endpoint be researched and used for our proposed study, without assurance that such endpoint would be acceptable for approval. Based upon the uncertainty of such an endpoint, we have decided not to conduct this study as a company-sponsored study, though there is a possibility that this study will move forward as investigator-initiated study that we will support.

There can be no assurance that any future clinical trials of FIRDAPSE

that we undertake 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 was obligated to pay us an

up-front

payment based on approval, a milestone upon attainment of marketing authorization and product supply, milestones based on achievements of sales and regulatory milestones, and a sharing of defined net sales following commercialization.

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

for the treatment of LEMS. We 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.

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On June 3, 2021, we announced a positive decision in this proceeding that quashed the NOC previously issued for Ruzurgi

and remanded the matter to the Minister of Health to redetermine its decision to grant marketing authorization to Ruzurgi

in spite of FIRDAPSE

’s data protection rights. However, on June 28, 2021, we announced that Health Canada had

re-issued

an NOC for Ruzurgi

, once again allowing the product to be marketed in Canada for patients with LEMS. As a result, in July 2021 we, along with our partner KYE, filed a second suit against Health Canada to overturn this decision. That case was fully briefed in late 2021, with oral argument held in early December.

On March 11, 2022, we announced that we had received a favorable decision from the Canadian court setting aside, for the second time, the decision of Health Canada approving Ruzurgi

for the treatment of LEMS patients. In its ruling, the court determined that the Minister of Health’s approach to evaluating whether FIRDAPSE

’s data deserved protection based on FIRDAPSE

’s status as an innovative drug, which protects by regulation the use of such data as part of a submission seeking an NOC for eight years from approval of the innovative drug, was legally flawed and not supported by the evidence. As a result, the matter has, once again, been remanded to the Minister of Health to redetermine its decision in light of the court’s ruling. There can be no assurance as to the outcome of this proceeding.

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

. 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 to our licensor 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 reached an agreement with Japanese regulatory authorities as to the scope of the clinical trial that will be required to be completed before an application can be submitted to Japanese regulatory authorities to commercialize FIRDAPSE

for the treatment of LEMS in Japan. We also have been granted orphan drug designation in Japan for FIRDAPSE

for the symptomatic treatment of LEMS.

On June 28, 2021, we entered into a

sub-license

agreement with DyDo Pharma, Inc. (DyDo), pursuant to which we

sub-licensed

to DyDo the Japanese rights for FIRDAPSE

for the treatment of LEMS. Under the terms of the Agreement, DyDo will have joint rights to develop FIRDAPSE

, and exclusive rights to commercialize the product, in Japan. DyDo will be responsible for funding all clinical, regulatory, marketing and commercialization activities in Japan. We will be responsible for clinical and commercial supply, as well as providing support to DyDo in its efforts to obtain regulatory approval for the product from the Japanese regulatory authorities. Subject to the satisfaction of terms and conditions as set forth in the Agreement, we have earned an upfront payment and are eligible to receive further development and sales milestones for FIRDAPSE

, as well as revenue on product supplied to DyDo.

In December 2021, we announced that DyDo had initiated a Phase 3 registrational study in Japan to evaluate the efficacy and safety of FIRDAPSE

for the treatment of LEMS. We anticipate completion of that study sometime in 2023. There can be no assurance that this trial will be successful or that DyDo will be granted the right to commercialize FIRDAPSE

in Japan.

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. 10,793,893 (the ’893 patent) to our licensor and thereby to us, and the patent issued on October 6, 2020. The patent is directed to the use of suitable doses of amifampridine to treat patients, regardless of the therapeutic indication, that are slow metabolizers of amifampridine. 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 April 2021, the USPTO also allowed Patent No. 11,060,128 (the ’128 patent) to our licensor and thereby to us, and this second patent issued on July 13, 2021. The patent is directed to the use of suitable doses of amifampridine to treat patients suffering with LEMS that are slow metabolizers of amifampridine. Any drug product containing amifampridine with a label for the treatment of LEMS, that states the patented dosing regimens and doses in the Dosing and Administration section of a product label, including generic drug product labels, could possibly infringe this patent prior to this patent’s expiration date.

On December 24, 2021, the USPTO allowed continuing application, 17/503,190. On January 3, 2022, the USPTO allowed related continuing application 17/503,148. A further related continuing application, 17/503,092 was allowed on January 7, 2022. All three patents were issued in March 2022. The claims in each of these applications have either already been listed in the Orange Book for FIRDAPSE

or are in the process of being listed.

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.

In that regard, in October 2020, we filed lawsuits against Jacobus and the specialty pharmacy marketing Ruzurgi

, PantherRx Rare LLC (PantherRx), for infringement of the ‘893 patent. The suits have now been consolidated in a single action in the U.S. District Court for New Jersey. Further, in August 2021, the lawsuits were amended to include alleged infringement of the ‘128 patent. The lawsuits arise from Jacobus’ and PantherRx’s sales and marketing of Ruzurgi

(amifampridine) Tablets, 10 mg. The lawsuits allege that the Ruzurgi

product infringes the ‘893 patent and the ‘128 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. The lawsuit is in the discovery stage and there can be no assurance as to the results of these proceedings.

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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. If and when the product is launched, 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. 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, 2021, we had cash and investments of approximately $191.3 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 report.

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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.

Lambert-Eaton Myasthenic Syndrome (LEMS)

Lambert-Eaton Myasthenic Syndrome (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 which we offer at no cost to health-care providers to be used to definitively determine whether a patient has 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 currently 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

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 required us to conduct a clinical trial to evaluate the effect of hepatic impairment on the exposure of amifampridine after oral administration of FIRDAPSE

relative to that in subjects with normal hepatic function. This study was recently completed and submitted to the FDA. 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 have completed and submitted to the FDA.

Expanded access program

We operate an expanded access program (EAP) that is currently making FIRDAPSE

available to a limited number of patients diagnosed with CMS or Downbeat Nystagmus (DN). It is anticipated that the EAP may be used to make FIRDAPSE

available to pediatric LEMS patients now that the Ruzurgi

approval has been vacated, subject to applicable legal and regulatory requirements.

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 five 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 for enrolled patients. 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 drug 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.

In addition to our current work to assist former Ruzurgi

patients to transition to FIRDAPSE

, 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 (currently $0.00 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 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 continue to 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. We appealed the District Court’s decision to the U.S. Court of Appeals for the 11

Circuit. The case was fully briefed in early 2021, and oral argument was held in March 2021.

On September 30, 2021, a three-judge panel of 11

Circuit judges issued a unanimous decision overturning the District Court’s decision. The appellate court adopted our argument that the FDA’s approval of Ruzurgi

violated our rights to Orphan Drug Exclusivity and remanded the case to the District Court with orders to enter summary judgment in our favor. In November 2021, Jacobus filed a motion

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seeking rehearing of the case from the full 11

Circuit, which motion was denied in January 2022. Further, in January 2022, Jacobus filed motions with both the 11

Circuit and the U.S. Supreme Court seeking a stay of the 11

Circuit’s ruling indicating that it would seek a review of the 11

Circuit’s decision from the U.S. Supreme Court. Both stay motions were denied, and on January 28, 2022, the 11

NDA was switched to a tentative approval until the

7-year

orphan-drug exclusivity (ODE) for Firdapse

has expired.

There can be no assurance as to whether Jacobus will seek U.S. Supreme Court review of the 11th Circuit’s decision, whether the U.S. Supreme Court will agree to hear the case, or whether, if the U.S. Supreme Court agrees to hear the case, Jacobus’ appeal to overturn the decision of the 11th Circuit will be successful. Similarly, there can be no assurance as to whether the U.S. Congress will pass, and the President will sign, legislation revising the Orphan Drug Act that effectively overturns the decision of the U.S. Court of Appeals for the 11th Circuit, and whether any such legislation, if passed and signed into law, will retroactively affect the outcome of the 11

Circuit decision and allow the FDA to reinstate the approval of Ruzurgi

before the expiration of FIRDAPSE

’s orphan drug exclusivity.

Third-Party Reimbursement

Sales of drug 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. 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

Over the past few years, we have studied FIRDAPSE

as a potential treatment for multiple neuromuscular indications other than LEMS, and the results of recent studies are summarized below. Based on the results of these activities, in 2021 we have made a strategic decision not to proceed forward to further study FIRDAPSE

as a potential treatment for additional indications.

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

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