Catalyst Pharmaceuticals - Earnings Call - Q4 2021
March 17, 2022
Transcript
Speaker 0
Greetings, and welcome to the Catalyst Pharmaceuticals Fourth Quarter and Full Year twenty twenty one Results Call. At this time, participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ali Grande, Chief Financial Officer for Catalyst Pharmaceuticals.
Thank you. You may begin.
Speaker 1
Good morning, everyone, and thank you for joining our conference call to discuss Catalyst's fourth quarter and full year twenty twenty one financial results and corporate highlights. During the call today, we have Patrick McAnani, Chairman and Chief Executive Officer. We are also joined by Doctor. Steven Miller, Chief Operating Officer and Chief Scientific Officer and Jeffrey Del Carmen, Chief Commercial Officer. For the Q and A session, we'll also have Doctor.
Gary Ingenito, Chief Medical and Regulatory Officer. Before we begin, I would like to remind you that in the following comments and in the Q and A session, we will make statements about expected future results, which may be forward looking statements for purposes of federal securities laws. These statements relate to our current expectations, estimates and projections and are not guarantees of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and may prove not to be accurate, especially in light of the effects of COVID-nineteen. Actual results may vary from the expectations contained in our forward looking statements.
These forward looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our 2021 Annual Report on Form 10 ks. At this time, I'll turn the call over to Ben.
Speaker 2
Thanks, Ali. Good morning, everyone, and thank you for joining us today for Catalyst's fourth quarter and full year twenty '21 financial results and update call. 2021 was an extraordinary year for Catalyst as we attained several significant milestones and achieved strong financial performance, creating a substantial foundation to sustain our growth plans as we diligently pursue opportunities to diversify our commercial and development portfolio. To date, in 2022, we have continued to execute our business plan and operate to budget. Let's start with our commercial performance in the fourth quarter of twenty twenty one, where we achieved Firdapse net product revenues of $38,000,000 a 24% revenue increase versus the fourth quarter of twenty twenty.
Growth during the fourth quarter was driven by continued strong Firdapse performance despite not yet being back to optimal pre pandemic conditions. Our full year 2021 total revenues were $141,000,000 representing an 18% increase year over year compared to $119,000,000 in total revenue for 2020. Net income before income taxes for Q4 of twenty twenty one was $12,800,000 a 47% increase compared to $8,700,000 for Q4 of twenty twenty. We reported GAAP net income of $9,000,000 for Q4 of twenty twenty one or $09 per basic and diluted share. We ended the year 2021 with $191,000,000 in cash and short term investments.
We continue to judiciously repurchase shares of our common stock from the open market. During 2021, we repurchased 2,200,000.0 shares at an average price of $5.47 per share for a total purchase price of $12,100,000 We have guided full year 2022 total revenues to be between $195,000,000 and $2.00 $5,000,000 representing a 38% to 45% increase in total revenues compared to 2021. We also anticipate our cash OpEx to be between 65,000,000 and $70,000,000 for the full year. Allie will provide you with more details during her financial report. Our 2022 guidance assumptions reflect the positive outcome from The U.
S. Courts, reaffirming the orphan drug exclusivity for Firdapse for the treatment of adult patients with Lambert Eaton myasthenic syndrome. As we reported last month, the U. S. District Court ruled that The U.
S. Approval of Resurgi for the treatment of pediatric LEMS patients violated The U. S. Orphan drug exclusivity for Firdapse. As a result, The U.
S. Approval previously granted for Rezurgi for pediatric patients has now been rescinded by the FDA. The reaffirmation of Firdapse market exclusivity is a significant milestone, enabling us to advance treatment within the LEMS community, where Firdapse has already been prescribed by six forty seven unique physicians to approximately 25 of the estimated three thousand LEMS patients. Importantly, this outcome represents a pivotal point for additional new patient enrollment growth as those patients on Resurgi seek to transition to Firdapse. We estimate the number of patients recently on Resurgi to be about one hundred and twenty five patients, a significant majority of whom are adult LEMS patients, and we've already seen many of those patients transition to Firdapse during this quarter, which aligns with our revenue forecast for the year.
The transition of Rezergi patients to Firdapse is proceeding seamlessly. Thanks to our patient first approach and our established Catalyst Pathways access programs, which are there to assist all patients seeking access to Firdapse for LEMS treatment. Similarly, we announced last week a victory in the Federal Court of Canada in the lawsuit by Catalyst and Kai Pharmaceuticals to require Health Canada to enforce the data protection for Firdapse as an innovative drug. In that case, the judge agreed with our positions on the applicability of the data protection provisions and that Health Canada's approval of Resurgi did not comply with them. Resurgi has been removed from the market in Canada and the matter remanded to the Minister of Health for redetermination consistent with the judge's decision.
Our other significant litigation is our pending patent suit against Jacobus and PantherRx, Jacobus' specialty pharmacy for Resurgi. This suit is now in discovery and we'll continue to keep you advised as this case progresses. We entered 2022 with significant momentum and with a continued focus on sustained product growth as well as to the rare disease community we serve. We have enhanced our efforts to drive awareness and education to both patients and providers with an expanded focus on perineoplastic patients extending out to thoracic oncologists provides an important potential for reaching new LEMS patients as approximately fifty percent of LEMS patients have some form of cancer, most typically small cell lung cancer. We also expect to see continued growth with newly diagnosed LEMS patients who are not yet on Firdapse as well as acceleration of the process for definitive LEMS diagnosis.
We have also made important advances in strengthening our intellectual property portfolio for Firdapse. With the recent issuance of three new U. S. Patents, these patents are directed to the treatment of patients suffering from LEMS and cover all amifampridine metabolizer types within the LEMS patient population. This milestone further fortifies our intellectual property of state, and we believe this provides us with lasting commercial durability for Firdapse, which has U.
S. Patent protection until 02/1934. All of these newly issued patents will be listed in the FDA's orange book within the next few weeks, which will bring the total number of patents listed to five. We will continue to execute our key initiatives to further strengthen and protect the long term durability of Firdapse. Steve will provide more details later on this call.
We're also pleased with the progress being made by our sublicensing partner, Daido Pharma. In December 2021, Daido initiated a small Phase III registration study in Japan to evaluate the efficacy and safety of Firdapse for the treatment of LEMS. The initiation of this trial marked an important milestone towards expanding our global footprint. Currently, there are no approved treatments for LINZ in Japan, and we believe Firdapse can provide a meaningful new therapy option to those living with this disease. Assuming the trial is successful, we expect Firdapse to be granted ten years of market exclusivity upon approval in that market.
Our goal to expand our portfolio and pipeline with differentiated products to treat rare diseases, which currently are without any approved therapy, remains a strategic priority for this year. We have a robust and enhanced process in place in identifying potential assets to pursue and have made considerable progress on this front. Our teams are actively engaged in extensive due diligence, and we are encouraged about projects currently under review. We remain confident in our ability to advance on these initiatives this year. As part of our ongoing effort to help raise awareness and amplify the voices of patients with rare disease in need of approved therapies, we recently teamed up with the leading patient advocacy groups and our partners at NASDAQ for participating in the opening bell ceremony on February 28 to honor Global Rare Disease Day twenty twenty two.
We thank all of our partners for coming together and allowing us to show our support for the rare disease community. As a result of the many accomplishments, Catalyst is named on Forbes 2022 America's Best Small Companies published list, ranking 65 out of more than 1,000 companies screened. It is an honor to be recognized by Forbes as one of the country's best small companies as well as the acknowledgment of the value we are creating. In saying that, we are excited about the path ahead of us. We continue to execute across all near and long term priorities to drive substantial growth.
We believe that we are well positioned to build upon our success and are optimistic about the future. Now I will turn the call over to Jeff Del Carmen, our Chief Commercial Officer, who will provide further highlights on our commercial execution.
Speaker 3
Thanks, Pat, and good morning, everyone. The Catalyst Commercial team performed extremely well over the course of 2021. We are very pleased with the full year Firdapse net sales of 138,000,000 representing a 16% growth year over year. In Q4 twenty twenty one, net Firdapse sales were $38,300,000 a 7% growth versus Q3 twenty twenty one despite challenges presented by the continued resurgence of the pandemic. I want to take this opportunity to thank the entire Catalyst team for their flawless execution in 2021, a true testament to our ability to remain agile while maintaining our commitment to the LEMS community.
The foundation of the Firdapse business continues to be solid. Operational excellence drove new patient starts, maintained favorable access, continued high compliance and lower discontinuations. Naive new enrollments in 2021 were 15% greater year over year, while discontinuations were 20% less year over year. Q4 discontinuations were only 5%, which is the lowest discontinuation rate since the commercial launch in 2019 and thirty seven percent fewer than Q4 twenty twenty. We expect considerable growth in 2022 and beyond.
The current Firdapse market penetration is approximately 25 of the total adult LEMS population. Organically, growth will be driven from new patient enrollments of already diagnosed adult LEMS patients not yet on Firdapse as well as a significant number of LEMS patients who are unfortunately misdiagnosed or undiagnosed. Additionally, we expect our non personal promotion in other educational efforts to small cell lung cancer treaters about LEMS and Firdapse will yield more adult patients with a proper diagnosis of LEMS and accelerate the opportunity to receive treatment for this disease. Early indicators thus far in Q1 show that we are building upon the momentum from 2021. Q1 growth in patients on therapy is on pace to exceed the entire year of 2021.
Reimbursed patient discontinuation rates are also tracking to match the Q4 discontinuation rate of five percent. We continue to collaborate with advocacy groups such as NORD, Global Genes, Muscular Dystrophy Association, Myasthenia Gravis Foundation of America, CONQUER MG and Myasthenia Gravis Association is part of the ongoing efforts of the biopharma industry and patient advocacy groups to call attention to the need for collaboration to encourage research and development of orphan drugs and bring new treatments to market for rare diseases that affect small patient populations. In addition to ringing the opening bell at NASDAQ to celebrate Rare Disease Day, Catalyst has launched a LEMS Aware podcast to increase awareness of and connections in the LEMS community. Furthermore, we partnered with key professional societies like the American Association of Neuromuscular and Electrodiagnostic Medicine and the American Academy of Neurology to educate their members about LEMS and FERVAS at their respective conferences. Our Catalyst Pathways patient services team did a tremendous job in 2021, supporting the needs of adult LEMS patients, caregivers and healthcare professionals.
Catalyst Pathways has numerous types of financial assistance programs to help patients with their out of pocket costs. Patients enrolled in Catalyst Pathways, including those who are covered by Medicare and accessing foundation assistance, have an average co pay of less than $2 per month. Prescription approval rates remain over 90% across all payers, government or private commercial insurers. Catalyst Pathways patient services team also connects patients to community and advocacy resources such as patient support groups. All of these resources are crucial as we effectively and compassionately transition patients from Resurgi.
In closing, we are very optimistic about the growth potential for Firdapse. We will continue to generate new patient enrollments through precise commercial execution and seamless transition of Bresergy patients. Catalyst is committed to serving the LEMS community and is passionate about ensuring access for all LEMS patients. I'll now turn the call over to Doctor. Steven Miller, our Chief Operating Officer and Chief Scientific Officer, for an update on R and D activities.
Speaker 4
Thanks for the commercial update, Jeff. I'll now provide an update on the important progress we are making on our clinical and product development efforts. Catalyst continues to work on improvements to Firdapse franchise to address the needs of all patients. Our medical affairs department continues to make valuable progress in increasing healthcare provider awareness of LEMS through our medical affairs programs. An accredited continuing medical education or CME course about LEMS is available through Medscape.
To date, over 5,000 mostly healthcare provider workers have viewed the course. And as of February 17, seventeen 100 licensed healthcare providers have obtained CME credit. We have also provided a grant to physician education resource to host a LEMS session at a live tumor board of oncologists to expand our support for CME programs. This live program will be recorded and provided as an enduring adult LEMS CME course intended primarily for oncologists for one year. Physician education resources will make this program available to all oncologists in their database along with posting ads for it in several neurology and oncology publications.
CME courses provide a non biased educational opportunity for doctors that support gaining knowledge and clinical updates in particular therapeutic areas and the Catalyst sponsored CME courses have been a very successful method of educating physicians about LEMS. In alignment with our commitment to provide treatment for all LEMS patients, we are now completing a supplementary NDA submission package for the treatment of pediatric LEMS with Firdapse. We anticipate filing this supplement with the FDA this quarter. Catalyst has all the required data, including all necessary safety data to file a complete submission for this label expansion. The preparation of this supplement is a high priority for CATALYST as we remain committed to advancing our efforts to expand the use of Firdapse so that we may be able to provide all LEMS patients with an approved treatment option.
We have made significant progress on developing an intellectual property estate to extend the market exclusivity of Firdapse. We recently announced the three new patents covering additional patient amifampridine metabolizer types have been allowed, and I am pleased to report that they have now been issued by the U. S. Patent and Trademark Office. One of the three patents was issued on March 8, and the other two patents were issued two days ago, bringing the total number of issued patents protecting the Firdapse franchise to five.
The claims in these new patents, combined with our previously issued patents, claim the treatment of all relevant amifampridine metabolizer types within the LEMS patient population. One of the three new patents is already listed in the FDA's Orange Book, and the last two will be listed by the end of the quarter, bringing the total number of patents listed in the FDA's Orange Book to five patents. As a reminder, the first two patents were listed in the Orange Book shortly after their issuance in 2021 and 2020, respectively. This is an important milestone as our patent portfolio now provides broad comprehensive protection for the Firdapse franchise regardless of the MAT2 metabolizer type. We are pleased with the progress we are making on the intellectual property front, and we will continue to execute our key initiatives to strengthen and protect the long term durability of Firdapse, which currently has patent exclusivity protection in The U.
S. Until mid-two thousand and thirty four. In addition to The U. S, Firdapse currently has data exclusivity in Canada until July of twenty twenty eight. And in Japan, we expect Firdapse will be granted ten years of market exclusivity upon approval in that market.
As previously reported, Catalyst has been developing a long acting version of Firdapse and our development efforts were progressing well. Over the course of the past several quarters, we conducted an in-depth evaluation of how the new formulation would be used by doctors and patients. In doing so, it was determined that transitioning patients to the long acting dosing regimens would be a much more involved process than anticipated for doctors to accommodate and manage due to the wide variability in metabolism of amifampridine by an acetyltransferase type two or NAT2 in patients and also due to the great differences in drug release characteristics between the two formulations. Additionally, it was determined that titration and dosing of the new formulation would differ substantially from the current version of Firdapse and such differences could lead to complexities on how best to treat and titrate patients and could even be a risk for medication dosing errors. Therefore, adding Firdapse LA to the available treatment options would not be the most beneficial path for treatment delivery and for achieving optimum patient care compared to using only the currently approved Firdapse formulation.
In alignment with our commitment to our patient first approach and to do what we believe is best for patients and health care providers, we have decided to suspend further development of the long acting version of Firdapse. We will continue to be open to further development opportunities in the future whenever such development is in the best interest of patients. Now I would like to provide an update on our ongoing global expansion initiative. As we previously announced in June, we partnered with Didopharma for the development and commercialization of Firdapse for the treatment of Lambert Eaton myosin syndrome in Japan. Currently, there are no approved therapies for LEMS in Japan, and we believe Firdapse has the potential to be a novel therapy to address this important unmet need.
Vaido has made great strides in initiating development activities, including consulting with the Japanese Pharmaceuticals and Medical Devices Agency to confirm the clinical study parameters and requirements to obtain regulatory approval. As a result of their efforts, Dido initiated the required clinical study in December of last year and anticipates that this to be a small scale Phase III clinical trial. Catalyst continues to support Daito in the execution of the clinical trial by supplying clinical trial materials as well as collaborating with Daito in its efforts to obtain the required documentation for the Japanese regulatory authorities. We will continue to execute on our key initiatives to enhance the market exclusivity of Firdapse and expand the Firdapse market geographically. During this quarter, we also advanced our objectives to expand our portfolio of rare disease treatments beyond Firdapse.
As Pat mentioned, we continue to actively evaluate new products or other kinds of transactions to expand both Catalyst product offerings and or our research and development pipeline. Our teams, including the product development team, are actively and vigorously engaging in the process as we look for worthwhile prospects where we can utilize our expertise, resources and know how to expand our programs and drive growth. We have an improved process enabling a very efficient approach to identifying and assessing opportunities and are very pleased with the progress we are making as we remain committed to advancing our initiatives to expand our portfolio of rare disease treatments. We remain enthusiastic about the path ahead and confident in our ability to identify the right opportunities to maximize our capabilities and resources. I will now turn the call over to Ali Grande, our Chief Financial Officer, to review our financial results.
Speaker 1
Thank you, Steve. We are very pleased with our financial results for the fourth quarter and full year 2021. As reported, we ended the year with cash and investments of slightly more than $191,000,000 and no funded debt. We believe this allows us the financial flexibility to advance our existing R and D programs and to support our strategic initiatives acquiring earlier stage opportunities and innovative technologies leading to future growth and value creation. Our total net revenues for 2021 were $141,000,000 an 18% increase when compared to total revenues of $119,000,000 for 2020.
Further, despite the continued challenges of COVID-nineteen, total Firdapse product revenue net was $138,000,000 for 2021, a 16% increase over the net product revenue of $119,000,000 for 2020. Net income before income taxes for 2021 was $53,000,000 an almost 2526% increase over net income before income taxes for 2020 of $42,000,000 We reported GAAP net income for 2021 of $39,000,000 or $0.38 per basic and $0.37 per diluted share. For the year 2020, we reported GAAP net income of $75,000,000 or $0.72 per basic and $0.71 per diluted share. It is important to remember that these figures are not comparative. 2020 benefited from approximately 33,000,000 of income tax benefit, principally from the reporting of a onetime noncash deferred tax asset of almost $32,000,000 upon the reversal of our valuation allowance in the third quarter of twenty twenty.
Our effective tax rate for 2021 on an annualized basis was 25%. While in 2020, we benefited from the use of our federal net operating losses and the release of valuation allowance. In 2021 and future periods, we expect that we will benefit from the use of our deferred tax assets primarily relating to Florida State net operating losses on the orphan drug credit, although those are subject to certain limitations resulting in a more normalized tax rate. Because of the significant effect of the one time recording of our deferred tax asset in 2020, we believe that the non GAAP measures we presented in yesterday's press release provide a more useful comparison of our results of operations for twenty twenty twenty twenty one versus 2020. Non GAAP net income for 2021 was $59,000,000 or $0.57 per basic and $0.55 per diluted share, which excludes from GAAP net income, stock based compensation expense of 6,000,000 depreciation of $192,000 and an income tax provision of $13,000,000 This compares to non GAAP net income for 2020 of $48,000,000 or $0.47 per basic and $0.45 per diluted share, which excludes from GAAP net income, stock based compensation of $6,000,000 depreciation of $92,000 and an income tax benefit of 33,000,000 The above represents an approximately 22% increase of non GAAP income year over year.
Cost of sales expenses were approximately $22,000,000 in 2021 compared to $17,000,000 in 2020. This represents 25% of total operating costs in 2021 compared to 22% for 2020. Cost of sales consist principally of royalties, which increased by 3% when net sales exceed $100,000,000 in any calendar year as defined the applicable license agreement. We expect higher overall royalties as a percentage of product sales as their income increases over $100,000,000 earlier each year as per our forecast. Research and development expenses in 2020 and 2021 were comparable at $17,000,000 for 2021 and $16,000,000 for 2020.
And the expenses decreased slightly as a percentage of total operating expenses to 19% for 2021 compared to 21% for 2020. SG
Speaker 2
and A
Speaker 1
expenses for 2021 totaled $50,000,000 compared to $44,000,000 in 2020. SG and A expenses decreased slightly as a percentage of total operating expenses to 56% for 2021 compared to 57% for 2020. However, the overall increase in SG and A expenses in 2021 was principally due to increased legal costs and increased contributions to five zero one C organization. More detailed information and analysis of our 2021 financial performance may be found in our annual report on Form 10 ks, which was filed with the Securities and Exchange Commission yesterday, March 16, and can be found on the Investor Relations page of our website at www.callispharma.com. And with that, I will turn the call back over to Doug.
Speaker 2
Thanks, Ali. We believe that we are well positioned to build upon our success and are optimistic about the company's future as we diligently pursue opportunities to diversify our commercial and development portfolio that aligns with our core mission to deliver value to patients, healthcare providers and shareholders. Finally, I'd like to thank all of our employees for their continued dedication and commitment to positively impacting patients' lives. Operator, we would now like to open the call for questions.
Speaker 0
Thank you. At this time, we'll be conducting a question and answer session. Our first question comes from the line of Joe Catanzaro with Piper Sandler. Please proceed with your question.
Speaker 5
Hey, guys. Thanks for taking my question and congrats on all the progress here. Pat, I think you mentioned that a significant amount of Ruzurgi patients have already transitioned to Firdapse. I'm just wondering if you'd be able to maybe more specifically say how many of the estimated one hundred twenty five million have done so? And is it fair to say that the growth observed in 1Q that I think Jeff mentioned is being driven by this transition?
Thanks. And I have a follow-up or two.
Speaker 2
Sure. Joe, we really don't want to be specific, but I can tell you that many of those patients have already transitioned. And we expect the transition to be completed by the April. And so we're very pleased with how seamless this process has been. And I think we owe a lot to our specialty pharmacy at NovoRx, who has really done a great job and was ready and willing and able to take on this task.
As far as growth going forward, Jeff, do you want to take that?
Speaker 3
Sure. I can just tell you the transitions did account for significant part of that growth. But I will also say that in March what we've observed the truly naive patients, so those patients that have never been on Firdapse or Vizurgi that have enrolled and been prescribed, That number is tracking to be our best month ever. So that's what we've seen in March. So we are excited about our organic growth as well.
Speaker 5
Okay, got it. That's really helpful. Maybe as a follow-up, I'm wondering what data points inform your estimated number of patients that were on Ruzurgi and how you've gone about identifying them and whether it's possible that maybe there's more patients than you've estimated?
Speaker 2
Yes. Joe, you might be right. We don't know for a fact. We know the number of patients that were on Firdapse that went to Resurgi once it was approved based on some of the docs who had been involved with the company for quite some time. So we know what we lost and we assume that there was some growth on the resergy side over the last couple of years.
So we've got some pretty good data points that I think supports 125 plus or minus 10%. But I think that's as specific as we can be on that subject.
Speaker 5
Okay. Got it. And maybe if I could just squeeze one last one in. I'm wondering if there would be a point where in the absence of any business development, you would consider alternative ways to return capital to shareholders like potentially a special dividend? Yes.
Speaker 2
Good question. I don't think that's on the plate, a special dividend. We've continued to buy our shares back judiciously as we can be. We spent $12,000,000 last year buying shares back. We continued the program.
So that's our way of, I guess, returning money to shareholders without paying a special dividend. So I do believe strongly that we will have a transaction completed sometime this year.
Speaker 5
Okay, great. Thanks for taking my questions.
Speaker 2
Great. Thank you.
Speaker 0
Thank you. Our next question comes from the line of Charles Duncan with Cantor Fitzgerald. Please proceed with your question.
Speaker 6
Yes. Good morning, Pat and team. Let me add my congratulations on the commercial progress this last year. Had a few questions for you. Wanted to ask you or Jeff a little bit more about market dynamics.
I guess I'm wondering, as you think about the switch patients versus new patient adds, where would you think the bulk of the growth could come from this year? And then also if you go beyond the I think it was six forty seven prescribers, what is your goal in terms of the number of prescribers by year end? Just kind of roughly, would you grow that by 5%, 10%? What do you think about that?
Speaker 2
Charles, I think the number of prescribers is difficult to predict. If you look at the numbers, it's easy to see that a lot of those prescribers only have one patient or maybe two or three patients. And so we do believe that our educational programs are very important in helping get to a proper diagnosis and a prescription for a LEMS patient. And so we have a strong effort to increase that number. But to use that, that's not really an internal metric or a goal that we look at.
We really look at patient counts and things like that. So it's a good question, but we don't have an answer to that. And I can't give you a number that is a target for this year for prescribers. That number is growing nicely, and it seems to correlate to our spend for education to HCPs. And as you know, we've got a CME program that educates docs, and we've had, I think, 100 docs avail themselves of that program and actually earn their credit.
And over 5,000 folks that have actually been to the program and studied the program itself. So I think there's a correlation there between our education and the number of docs that we will see as prescribers for Firdapse.
Speaker 6
And Charles,
Speaker 3
just to address your other question there about patients organic versus transition. We've demonstrated the ability to grow organically about 10% to 15% every year organically. And we expect to do the same this year. But I also will say that we do see some tailwinds that will be helping with the hopefully the opening of the country back up again because of the pandemic. Like we've seen in March, we're seeing some good new enrollments of these truly naive patients, and we expect to see strong enrollments of these patients for the rest of the year.
So we do anticipate significant growth from those patients too.
Speaker 6
Okay. That's helpful. Quick question on asset acquisitions that could occur perhaps this year. I guess I'm wondering if you can provide some additional color on how you think that would leverage your existing infrastructure, sales or back office. And if you can provide some color on really the focus areas, maybe therapeutic focus areas for those asset acquisitions that you can anticipate being able to complete this year?
And then I had one follow-up for Ali.
Speaker 2
Okay. So the we would initially, we were looking and hoping to leverage our sales force with finding a product that would fit into the bag of our neuromuscular sales call point previously. And that was just a two year focus, Charles. We again, I think we've repeated this previously, but we made a couple of offers over the last eighteen months and which were fair offers and the counter offers at that time were really egregious. And we looked around and really couldn't find anything else in neuro or neuromuscular that made sense.
So we decided to expand our focus to a much broader therapeutic spectrum, including any therapeutic class outside of oncology. And so that continues to be our focus. We are looking for projects that are obviously rare disease that are beyond proof of concept. And frankly, hopefully, an approved product or a marketed product that we could acquire. We so I'm not sure that on the sales, the commercial side, there's from the reps' point of view, there's a lot of leverage there.
I think from the back office point of view, market access, patient access, advocacy, I think that the we're in good shape to take on other projects, which can be levered. And also there are operational levers as well, including our finance and accounting and as well as our MSLs and medical affairs. So I think that there are synergies that are would be available to us on most acquisitions.
Speaker 6
That's helpful. One last question for Ali. I guess I'm kind of wondering how you're thinking first of all, thank you for the guidance on revenue and OpEx. But I'm wondering how you're thinking about OpEx this year, especially given some of the reduced legal costs. And if you can provide a little bit of color, especially as that drops to the bottom line, How do you feel about last year?
Was this light miss, I think a couple of pennies? But then going into this year, what would you project for bottom line?
Speaker 2
Charles, I'll take that and Ali can certainly chime in. So for last year, we had a couple of areas where there were a few issues. OpEx was up slightly over budget. And a lot of that had to do with higher litigation costs related to our actions against the FDA, Health Canada as well as our patent litigation with Jacobus. And that litigation was very costly, far more than we had budgeted.
And part of that were there were a few appeals in there that we didn't count on. And so we think those over budget is a good ROI based on the outcome. So we're pleased with that spend. Those certainly not budgeted. We saw higher charitable contributions, to 501c3s, foundations that assist Medicare out of pocket expenses related to all LEMS patients, not just Firdapse LEMS patients.
And that amounted to about $1,300,000 over budget. And we think we absorbed to the best of our knowledge, we were the only one with foundation assistance for LEMS patients, which meant that those donations went to all patients that had LEMS that might require assistance no matter which drug they were taking or which therapy that they needed. So again, about $1,000,000 in higher litigation expense, about $1,000,000 in higher charitable contributions. And then on the other side, if you will, the cost of goods sold as a percentage was higher as a result of some inflationary pressure that we saw on the supply side, especially in the third and fourth quarter, which we hope are transitory as well as some costs associated with some scale up work that we did to increase the batch size for our commercial lots. And that total was about $2,000,000 And remember, in our cost of goods sold, our royalties are in there.
And that royalty up to $100,000,000 in each year is 14%. For sales over $100,000,000 there's an additional 3% royalty. So as a result of those three items that I just mentioned, that took our cost of goods up was actually about 1.7% over 2020, 15.9% versus 14.2. And I think those combined total over $4,000,000 which account for the $02 to $03 miss on EPS for the year.
Speaker 4
Going
forward.
Speaker 2
Yes, this year, we've stated that cash OpEx, which is our operating expenses less noncash comp and depreciation will be somewhere between 65,000,000 and $70,000,000
Speaker 6
And some of those it sounds like some of those drivers to the expenses last year may abate this year. Of course, forgetting about the inflationary pressures, you can't really perhaps guide that. But the other drivers?
Speaker 2
Yes. We I think we will find out by the end of this year that those investments that we made last year that got us over budget had a great ROI for the year.
Speaker 6
Okay. Very good. Thanks for the thorough answer and for taking our questions. Congrats on a good year of progress.
Speaker 2
Thanks, Charles.
Speaker 0
Thank you. Our next question comes from the line of Scott Henry with Roth Capital Partners. Please proceed with your question.
Speaker 7
Thank you and good morning. And let me start with a Patrick's Day. Pat, it sounds like you may be one that celebrates that holiday.
Speaker 2
Thank you. Thank you, Scott.
Speaker 7
Also before I dig into the questions, let me just say, I thought the on hold music has certainly turned it up a notch. So moving forward now, a couple of follow-up questions there. First, on the cost of goods sold percentage, that 15.9%. How would you so when we think about 2022, should we be thinking of a number north somewhere between 1617%? Is that kind of the way those trends should play out?
Or maybe some of those onetime costs may offset that? Just trying to get a sense of because I know there are those step ups in revenue numbers.
Speaker 2
In the royalty, yes. Charles, I think that I'm sorry, Scott, I'm not sure that we want to give any guidance on that. But I think at that 15.9, we're at the high end. And from a conservative point of view, it's probably not a bad place to be.
Speaker 7
Okay. Fair enough. And then the other thing that sort of jumped out at me, when you look through the 10 ks and it separates selling costs versus G and A, it looked like the selling costs were higher in Q4. Any driver to that? Should I think about that going forward?
Speaker 2
Jeff, do you want to take that? Yes. So there were areas that we felt that we could make further investments in Q4, Scott, that some of the new programs that we've initiated. You want to take that, Jeff?
Speaker 3
Sure. So to add to what Pat was saying, what we like to do is we look at ROI on some of the initiatives that we're doing. And if there are some initiatives that just are not playing out the way we thought, then we'll reallocate. What we also did in Q4 was we initiated initiated the non personal promotion to oncologists and that also ramped up some of the selling expenses there. So in anticipation of the new year coming, we like to put some of these new resources in place so that we can get traction early in the year.
So that's why we saw the increase in selling expenses.
Speaker 7
Okay, great. And then thinking about 2022 in the kind of the quarterly progression throughout the year, should we sort of expect a bolus in the beginning of that step up in patients and then gradual growth thereafter? Or will it be more steady growth quarter to quarter?
Speaker 3
Well, I think it's a fair question. And we're hoping that the pandemic is subsiding here and the countries opening up. So what we're seeing is that we're seeing a strong March because of the countries opening up again. And we do anticipate from there a steady new enrollments similar to what we're seeing in March.
Speaker 2
So Scott, you may be referring to the bolus of patients that are transitioning to Firdapse. So and we've stated we expect that transition to be completed by the April. So you will see a step up, I think, in Q1. You'll continue to see what we're calling refer to as organic growth. Those are as Jeff had mentioned earlier, those are the naive patients that are when I say naive, naive to any form of thirty four DAP, meaning they haven't been on Firdapse or Resurgi before.
And so and remember, it takes a little time to get these folks that are transitioning on to reimbursed drug. So I think that you'll see sequential growth quarter to quarter this year from our commercial team.
Speaker 7
Okay. Great. And then final bigger picture, more strategic question, Pat. You had mentioned as you look to acquire other technologies that perhaps some of the prices out there are not favorable for what you would want to pay. Sometimes when prices are high, sometimes it's better to be a seller than a buyer.
Is that something you think about in your equation, perhaps being a seller as opposed to being an acquirer?
Speaker 2
Scott, no, we don't think about that often. But as a public company, obviously, if there was incoming interest on the buy side, we, as a public company and the Board of Directors, have to consider what would be a fair offer, but it is not one of our initiatives for this year.
Speaker 7
Okay. Fair enough. Well, thank you again for taking all the questions.
Speaker 2
Thank you, Scott.
Speaker 0
Thank you. Our next question comes
Speaker 1
from the line of Joon Lee with Truist Securities. Please proceed with your question.
Speaker 8
Hi, thanks for taking our questions and congrats on the accolades from Forbes.
Speaker 2
Thank you, Joon.
Speaker 8
Sure. What has been the experience of Firdapse among small cell lung cancer patients so far? It's an aggressive disease with survival of about two years or less from the time of diagnosis. So curious if your rate of patient identification is keeping up or able to exceed patient loss? And also can paraneoplastic syndromes such as LEMS be part of small cell lung cancer or other cancer diagnostic group to facilitate diagnosis and reimbursement?
Thanks. And I have a quick follow-up after that.
Speaker 3
I'll take the first question there. And we are seeing significant uptake in the percent of our new enrollments that are tumor LEMS or paraneoplastic LEMS patients. Currently, we're about twenty percent of our new enrollments are tumor LEMS patients. So part of our goal is to increase that percentage. And the other part of this is, as you mentioned, the survival rate of those patients about two years or We're hopeful that we can accelerate the diagnosis of LEMS in those patients so we can help those patients sooner.
So that's the other part of this the education process that we're putting out there.
Speaker 4
I just have one additional thing to add to what Jeff just said. By making efforts to help diagnose these patients sooner, hopefully their small cell lung cancer will be diagnosed earlier, giving these patients a better prognosis and a longer lifespan than the one to two years that you mentioned in your question.
Speaker 2
What about the
Speaker 8
chances of LEMS being part of the DRG or for small cell lung cancer. Is that something that's reasonable? Or am I not thinking about this correctly?
Speaker 2
Yes. I don't think that's on the radar at this point, Jim.
Speaker 8
Great. And we're really interested in the opportunity in Japan. I know that the Daigo is running the trial, but assuming they're running a similar trial as trials as what you did in The U. S, are you able to disclose whether they're looking at day 14 or day four? Because based on the two trials you ran successfully, the day four had a much more drastic effect size in terms of QMG.
I'm just curious what if that's also their strategy. And can you tell us a little bit about Daido? We know that it's a big Japanese conglomerate with a bigger exposure in the consumer segment, but curious what the experience is in the pharma development. Okay.
Speaker 4
Well, let me answer the first part of your question with regard to the trial. It is a different design than we ran in The United States, but it's also a single arm design. And so it basically is really just to verify that patient Japanese patients will respond to therapy similar to what we've seen in the double blind controlled studies response for patients that were studied in The U. S. As we have previously announced, it is a very small study and Dido has confirmed with PMDA that the small study will be sufficient for that market and they anticipate completing it relatively quickly.
So with regard to Dido's experience, they have actually recently entered the pharmaceutical space and have built an entire pharmaceutical division. They have hired a large number of very experienced pharmaceutical executives across all areas of pharmaceuticals, including research and development, regulatory affairs, sales and marketing, manufacturing, and they have all the necessary experience and talent to successfully market this product in Japan. And they are pursuing other products, although this is one product that they really were happy to get because they feel it will be very successful in Japan.
Speaker 2
I might add that being one of their first couple of products, it's a very important product to them.
Speaker 8
No. I think I got that sense, Grace, on their website. Okay, that's great. That's a single arm will be sufficient. Sounds like a very surmountable bar.
Then you recently announced an agreement with BioMarin to extend the agreement to most of Asia. Mean, I does that include China or does that not include China? Because it sounds like that especially given the small cell lung cancer population, there could be an opportunity, but can you elaborate on that?
Speaker 4
Yes. Our agreement that we negotiated with Bioverin basically requires us to file an NDA in Japan before we are allowed to pursue marketing of the products in the remainder of the Asia Pacific region. Obviously, as we just spoke about, we are going as quickly as we can to get that NDA filed in Japan so that we can open the remainder of our market expansions. You are correct. The Chinese population is large, close to 1,000,000,000 people, and they're heavy smokers.
And so there is a lot of small cell lung cancer in China. And then just simply because of the sheer number of people, there should be a large number of left patients there as well. And so it is one of the nations among the several nations of interest to us in the Asia Pacific region.
Speaker 8
Thank you.
Speaker 0
Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. McEnany for any final comments.
Speaker 2
Thank you. Thanks, everyone, for joining our call. We look forward to our next corporate update. Have a great day.
Speaker 0
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.