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Catalyst (CPRX) Up 58.1% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Catalyst Pharmaceutical (CPRX - Free Report) . Shares have added about 58.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Catalyst due for a pullback? 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 Reports Wider Q4 Loss, Focuses on Firdapse

Catalyst reported a loss of 14 cents per share in the fourth quarter of 2018, wider than the Zacks Consensus Estimate of a loss of 12 cents and the year-ago loss of 6 cents.

During the fourth quarter of 2018, Catalyst had revenues of $0.5 million from its collaboration with Endo International Plc. to market the generic version of Sabril tablets.   

On Dec 18, 2018, Catalyst signed a definitive agreement with Endo International PLC’s subsidiary, Endo Ventures Limited (“Endo”), for development/commercialization of generic Sabril tablets through Endo’s United States Generic Pharmaceuticals segment, Par Pharmaceutical.  Pursuant to the agreement, the company received an up-front payment, and will receive milestone payments based on regulatory approvals, and a share of defined net profits upon commercialization and certain expenses for development.

Catalyst had no revenues for the fourth quarter of 2017.

 Quarter in Detail

During the fourth quarter, the FDA approved Firdapse (amifampridine phosphate) tablets, the first and only evidence-based treatment for patients with Lambert-Eaton myasthenic syndrome (LEMS). In January 2019, the company launched Firdapse in the United States. The company is pleased with the launch of the drug.

Catalystis also working on developing Firdapse for additional indications. The company is currently conducting phase III studies, evaluating Firdapse for the treatment of congenital myasthenic syndromes (“CMS”) and anti- MuSK -antibody positive myasthenia gravis (MuSK-MG).

The company expects to report top-line results from the phase III MuSK-MG and CMS studies in the second half of 2019.

Catalyst is conducting a proof-of-concept clinical study, evaluating Firdapse as a symptomatic treatment for patients with SMA type III and expects to report top-line results from proof-of-concept study on SMA in the first half of 2020.

Research and development (R&D) expenses were $8.4 million, up from $3.4 million in the year-ago quarter. Costs during 2018 increased due to rise in consulting expenses, expenses from Catalyst’s medical affairs program and higher personnel costs to support currently ongoing studies. Catalyst expects R&D costs to be substantial in 2019.

General and administrative expenses totaled $6.9 million, up 228.7% from the year-ago quarter. The increase is attributable to higher pre-commercialization expenses, headcount costs and corporate expenses, as Catalyst builds its infrastructure and commercial programs to support Firdapse’s launch.

2018 Results

The company reported a loss of 33 cents per share in 2018 compared with a loss of 21 cents in 2017.

Catalyst recorded revenues of $0.5 million in 2018 compared with no revenues in 2017.

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 -19.23% due to these changes.

VGM Scores

At this time, Catalyst has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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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