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What's in Store for Catalyst (CPRX) This Earnings Season?

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Catalyst Pharmaceuticals, Inc. (CPRX - Free Report) is expected to report first-quarter 2018 results on May 9, after the market closes. 

In the last reported quarter, the company’s earnings were in line with the estimates. It topped expectations in two of the last four quarters, with an average beat of 8.34%.

Year to date, Catalyst’s shares have decreased 26.9% compared with the industry’s decline of 2.5%.

Let’s see how things are shaping up for this quarter.

Factors to Consider

Catalyst does not have any revenue-generating product in its portfolio. Investor’s focus will be on pipeline and regulatory updates during the first-quarter earnings call. Currently, the company has three candidates under development namely Firdapse, CPP-115 and CPP-109.

Catalyst’s lead pipeline candidate Firdapse has been developed for the symptomatic treatment of Lambert-Eaton myasthenic syndrome (“LEMS”). In February 2018, the company announced positive top-line results from a second phase III study of Firdapse. The study achieved statistical significance for both its co-primary endpoints — quantitative myasthenia gravis score (“QMG”) and subject global impression (“SGI”) and secondary endpoint. The top-line results showed that Firdapse has a significant magnitude of effect for treating the symptoms of LEMS.  

The company met with the FDA for a Type C meeting in February 2018 for getting Firdapse approved for LEMS. The minutes of the meeting received from the FDA reflect the FDA's advice to Catalyst that its proposed filing package will be sufficient for resubmission of an NDA for Firdapse. In March 2018, Catalyst submitted a NDA to the FDA which addressed the two issues raised in the 2016 Refusal to File letter and included all additional information requested by the FDA.  We remind investors that the FDA had given a Refusal to File letter when the company submitted a NDA in 2016 and asked for additional information.

Additionally, the company is working on developing Firdapse for additional indications. In April 2018, the company  enrolled first patient in its phase III study for MuSK antibody positive myasthenia gravis. The company expects that the trial will take about 12 months to complete and therefore it expects to announce topline results in the first half of 2019.

In the second half of 2018, the company expects to report top-line data from its ongoing clinical trial evaluating Firdapse for the treatment of congenital myasthenic syndromes (“CMS”).

Apart from Firdapse, Catalyst is also exploring the possibility of developing CPP-115 (a GABA aminotransferase inhibitor) for the treatment of epilepsy (initially infantile spasms) and the other selected neurological indications such as complex partial seizures and Tourette’s disorder.

Moreover, the company is working on a Lundbeck’s generic version of Sabril (vigabatrin), for the treatment of infantile spasms and complex partial seizures.

Earnings Whispers

Our proven model does not show an earnings beat for Catalyst this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. That is not the case here, as you will see below.

Zacks ESP: Catalyst has an Earnings ESP of 0.00%. That is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Catalyst carries a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

 

Stocks That Warrant a Look

Here are some biotech stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter.

Celgene Corporation is scheduled to release results on May 4. The company has an Earnings ESP of +0.63% and a Zacks Rank #2.

Adverum Biotechnologies, Inc. (ADVM - Free Report) has an Earnings ESP of +6.9% and currently carries a Zacks Rank #3. The company is expected to release first-quarter results on May 8.

Emergent Biosolutions Inc. (EBS - Free Report) has an Earnings ESP of +61.8% and a Zacks Rank #3.  The company is scheduled to release first-quarter results on May 3.

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