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Why Is Catalyst (CPRX) Down 7.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Catalyst Pharmaceutical (CPRX - Free Report) . Shares have lost about 7.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Catalyst due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Catalyst's Q2 Earnings & Revenues Beat Estimates

Catalyst reported earnings of 9 cents per share in the second quarter of 2020, beating the Zacks Consensus Estimate of 8 cents. Meanwhile, the company reported a profit of 10 cents in the year-ago quarter.

The company’s revenues of $29.6 million beat the Zacks Consensus Estimate of $29 million. Revenues in the year-ago quarter came in at $28.8 million. Revenues came entirely from sales of Firdapse, the company’s first-approved drug for the treatment of Lambert-Eaton myasthenic syndrome (LEMS).

Quarter in Detail

Research and development (R&D) expenses of $4.3 million declinedfrom $4.6 million reported in the year-ago quarter. The expenses were attributable to increases in headcount, medical and regulatory affairs, quality assurance expenses, and expenses from the ongoing studies evaluating Firdapse for the treatment of MuSK-MG and theproof-of-concept trial evaluating the samefor the treatment of spinal muscular atrophy (SMA) type 3.

Selling, general and administrative (SG&A) expenses totaled $10.8 million, up from $9 million reported in the year-ago quarter. The increase was led by additional costs from the expansion of the sales force and contraction with a rare-disease, experienced inside sales agency, and an increase in non-cash stock-based compensation.

The company ended the quarter with $115.1 million in cash and investments, up from $89.5 million as ofDec 31, 2019.

Update on Firdapse

Apart from LEMS, Catalyst is working on developing Firdapse for additional indications. The company reported top-line results from the phase III study onFirdapse in anti-MuSK antibody positive myasthenia gravis patients. In the study, the primary and the secondary endpoints did not achieve statistical significance. The company plans to complete the full analysis of data and findings and meet its neuromuscular advisors to decide thepath forward for the MuSK-MG indication.

Firdapse is also being evaluated in a proof-of-concept study for the treatment of spinal muscular atrophy (SMA) type 3 patients. Top-line results from this study are expected before the end of 2020.Investigator studies for two additional neuromuscular indications are expected to commence later in 2020.

A potential approval of the drug for any of the given indications will further drive revenues for the company.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 6.98% due to these changes.

VGM Scores

At this time, Catalyst has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Catalyst has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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