Why Is Catalyst (CPRX) Up 16.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Catalyst Pharmaceutical (CPRX). Shares have added about 16.2% 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 Q3 Earnings Miss, Sales Top, ’23 View Up
Catalyst Pharmaceuticals, Inc. reported a loss of 29 cents per share for the third quarter of 2023, wider than the Zacks Consensus Estimate of a loss of 24 cents per share. The company reported earnings of 20 cents in the year-ago quarter.
Adjusted diluted earnings (adjusted for stock-based compensation, depreciation, amortization, tax provision and in-process research and development [IPR&D]) came in at 49 cents per share in the quarter compared with 26 cents a year ago.
Total revenues amounted to $102.7 million in the reported quarter, which surpassed the Zacks Consensus Estimate of $100 million. Total product revenues rose 79.5% from the year-ago quarter’s $57.2 million. The top line primarily comprised product sales of Firdapse, the first approved drug for the treatment of Lambert-Eaton myasthenic syndrome (LEMS), Fycompa (perampanel) CIII and nominal license and other revenues.
Quarter in Detail
Firdapse generated sales worth $66.2 million in the third quarter, up 15.8% year over year, beating our estimate of $64.5 million. The surge was primarily driven by the organic sales growth of Firdapse. The drug has been witnessing strong demand and increasing prescription rates from both autoimmune and small cell lung cancer LEMS patients, as well as continued diagnosis of new LEMS patients.
Catalyst also started recording sales of its newest epilepsy asset, Fycompa, starting the first quarter of 2023. In January, CPRX acquired the U.S. rights for Fycompa (perampanel) CIII from Eisai Co., Ltd. This acquisition diversified the company’s portfolio with the addition of a commercial-stage epilepsy asset.
Fycompa generated robust net product revenues of $36.4 million in third-quarter 2023, which surpassed our estimate of $34.6 million. The reported figure witnessed a 5.2% full-quarter increase compared with the previous reported quarter.
License and other revenues in the reported quarter were flat year over year at a nominal $0.07 million.
The cost of sales was $14.2 million in the third quarter of 2023, up about 46.6% year over year.
Research and development expenses were $83.7 million in the reported quarter, up significantly year over year. The massive uptick in research and development expenses was driven by a one-time charge of $81.5 million for IPR&D in connection with the asset acquisition of Agamree (vamorolone) in July 2023.
Selling, general and administrative expenses totaled $33.6 million, up 145.9% from $13.6 million reported in the year-ago quarter. This uptick in expenses is due to commercial and marketing activities related to the launch of Fycompa in the United States in the reported quarter.
As of Sep 30, 2023, CPRX had cash, cash equivalents and investments worth $121 million compared with $178.8 million as of Jun 30, 2023.
2023 Guidance Raised
Catalyst raised its full-year 2023 total revenue guidance to the range of $390-$395 million from $380-$390 million, marking an 82-84% (previously 77-82%) increase in total revenues from 2022. This guidance also includes the revenues generated from the sales of Fycompa CIII.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -8.99% due to these changes.
VGM Scores
Currently, Catalyst has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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 A. 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.
Performance of an Industry Player
Catalyst belongs to the Zacks Medical - Drugs industry. Another stock from the same industry, Esperion Therapeutics (ESPR), has gained 78.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Esperion Therapeutics reported revenues of $33.97 million in the last reported quarter, representing a year-over-year change of +79%. EPS of -$0.37 for the same period compares with -$0.81 a year ago.
Esperion Therapeutics is expected to post a loss of $0.49 per share for the current quarter, representing a year-over-year change of +35.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -20.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Esperion Therapeutics. Also, the stock has a VGM Score of D.
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