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Catalyst (CPRX) Down 27.6% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Catalyst Pharmaceutical (CPRX - Free Report) . Shares have lost about 27.6% 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 its most recent earnings report in order to get a better handle on the important drivers.

Catalyst Reports Q3 Loss as Expected & Pipeline Update

Catalyst reported a loss of 8 cents per share in the third quarter of 2018, in-line with the Zacks Consensus Estimate of a loss of 8 cents but wider than the year-ago loss of 5 cents.

Being a development-stage company, Catalyst does not have any approved product in its portfolio yet. Hence, the company did not generate any revenues in the quarter.

Quarter in Detail

Research and development (R&D) expenses were $4.5 million, up 67.8% from the year-ago quarter. Costs during the first nine months of 2018 increased due to rise in consulting expenses as Catalyst prepared to submit its new drug application (NDA) for Firdapse during the first quarter of 2018, milestone expenses in connection with the acceptance of Catalyst’s NDA submission in May 2018. They also included expenses from Catalyst’s medical affairs program, and compensation and related personnel costs, as Catalyst expands its headcount to support currently ongoing trials and programs. 

General and administrative expenses totaled $3.6 million, up 127.5% from the year-ago quarter. The increase in expenses is attributable to higher pre-commercialization expenses, headcount costs and corporate expenses as Catalyst builds its infrastructure and commercial programs to prepare for a potential launch of Firdapse in 2019.

Pipeline Update

Currently, Catalyst has two candidates under development — Firdapse and CPP-115.

The FDA accepted the NDA for Firdapse, which the company had resubmitted for the treatment of Lambert-Eaton myasthenic syndrome (LEMS). The FDA also granted a priority review status to the NDA and an action date of Nov 28, 2018 is set for the same. The company expects to launch Firdapse in early 2019 assuming approval.

Catalyst expects top-line results from Firdapse’s phase III study for MuSK antibody positive myasthenia gravis in the second half of 2019.

The company also expects top-line results from the phase III congenital myasthenic syndromes (CMS) (CMS-001) study in the second  half of 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -18% due to these changes.

VGM Scores

Currently, Catalyst has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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