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Catalyst (CPRX) Down 0.4% 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). Shares have lost about 0.4% 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 Q1 Earnings Beat Estimates, Revenues Miss

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

However, the company’s revenues of $29.1 million missed the Zacks Consensus Estimate of $32 million. Revenues in the year-ago quarter came in at $12.5 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

In the first quarter of 2020, 46 new LEMS patients were prescribed Firdapse.
Research and development (R&D) expenses of $4.2 million grew from $3.3 million reported in the year-ago quarter due to increases in headcount, medical and regulatory affairs, quality assurance programs, and expenses from Firdapse clinical trials and studies, as well as a higher non-cash employee-stock-based compensation.

During the quarter, the company almost doubled the size of its field sales force and contracted with a rare-disease, experienced inside sales agency to support the commercial efforts.

Selling, general and administrative (SG&A) expenses totaled $10.1 million, up from $8.4 million reported in the year-ago quarter. The increase is due to additional costs from the expansion of the sales force and contracting with a rare-disease, experienced inside sales agency, and an increase in non-cash stock-based compensation.

The company ended the quarter with $101.8 million in cash and investments, up from $89.5 million at the end of the previous quarter.

Update on Firdapse

Apart from LEMS, Catalyst is working on developing Firdapse for additional indications. The company completed enrollment in a pivotal phase III study on the drug for the symptomatic treatment of MuSK-antibody positive Myasthenia Gravis. Top-line results from the same were expected in the second quarter of 2020 but are now postponed to the third quarter.

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.

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

2020 Guidance

The company withdrew its previously provided 2020 revenue guidance due to the uncertainties surrounding COVID-19 disruptions in the healthcare system. Catalyst had earlier projected Firdapse’s net revenues in the range of $135-$155 million for 2020.


 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -24.53% due to these changes.

VGM Scores

Currently, Catalyst has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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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