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Why Is Catalyst (CPRX) Up 23% Since Last Earnings Report?

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A month has gone by since the last earnings report for Catalyst Pharmaceutical (CPRX - Free Report) . Shares have added about 23% 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 its most recent earnings report in order to get a better handle on the important drivers.

Catalyst's Q2 Earnings and Revenues Beat Estimates

Catalyst reported earnings of 10 cents per share in the second quarter of 2019, which beat the Zacks Consensus Estimate of 3 cents. The company reported a loss of 6 cents in the year-ago quarter.

The company’s revenues of $28.8 million in the second quarter of 2019 surpassed the Zacks Consensus Estimate of $19 million. It did not record any revenue in the year-ago quarter. Revenues came entirely from Firdapse, the company’s first approved drug for the treatment of Lambert-Eaton myasthenic syndrome (LEMS). The drug was launched in the United States in January 2019 after receiving the FDA approval in November 2018.

Quarter in Detail

Per the company, Firdapse had a strong start. As of Jun 30, 2019, the drug has been prescribed to 409 unique LEMS patients.

Research and development (R&D) expenses were $4.6 million, up from $3.7 million in the year-ago quarter. The R&D costs included expenses in medical, regulatory affairs and quality assurance programs along with those from the Firdapse clinical studies and Expanded Access Program.

Selling, general and administrative (SG&A) expenses totaled $8.9 million, up from $2.6 million in the year-ago quarter. The increase is attributable to higher selling expenses, including the costs of commercial system implementation of the company’s sales force and supporting personnel, product launch expenses, and market access and research costs. The company expects SG&A expenses to increase in 2019, as it continues to build the infrastructure and invest in commercial and patient programs to support Firdapse sales activities in 2019 and prosecutes its lawsuit against the FDA.

Pipeline Update

Catalyst is also working on developing Firdapse for additional indications. The company is currently conducting phase III studies on the drug for the treatment of congenital myasthenic syndromes (“CMS”) and anti-MuSK -antibody positive myasthenia gravis (MuSK-MG). It expects to complete enrollment for the MuSK-MG study in the second half of 2019 and report top-line results in the first half of 2020.

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

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

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 205.56% due to these changes.

VGM Scores

Currently, Catalyst has a nice Growth Score of B, a grade with the same score on the momentum front. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Catalyst has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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