Catalyst Pharmaceuticals, Inc.

CPRX Details

Catalyst Pharmaceuticals, Inc. (NASDAQ: CPRX) is a commercial-stage biopharmaceutical firm specializing in the in-licensing, development, and commercialization of innovative therapies for patients suffering from chronic neuromuscular and neurological disorders. Firdapse, a patented formulation of amifampridine phosphate used to treat adults with Lambert-Eaton Myasthenic Syndrome (LEMS) symptoms, has been marketed by CPRX. It operates through a network of distributors that offer these medications on an emergency basis to specialty pharmacies, medical facilities, and hospitals. The company generates revenue from the sale of Firdapse and payments received under collaborative and license agreements.

New US Patent to Firdapse Tablets 10mg: CPRX stated on July 19, 2021, that the United States Patent and Trademark Office (USPTO) has granted a new patent for Firdapse Tablets 10mg, U.S. Patent No. 11,060,128. This will further strengthen the company's intellectual property portfolio. Firdapse is being tested in clinical studies to treat muscle-specific tyrosine kinase myasthenia gravis (MuSK-MG) and has been designated as an orphan drug by the US Food and Drug Administration (FDA).

6MFY21 Results: The company reported a 13.33% rise in total revenues to USD 66.57 million during 6MFY21 (ended June 30, 2021) compared to USD 58.74 million during 6MFY20, primarily due to an increase in Firdapse sales and collaboration revenue. However, CPRX witnessed a decline in net income to USD 19.84 million during 6MFY21 vs. USD 20.21 million during 6MFY20. As of June 30, 2021, its cash and cash equivalents (including short-term investments) were USD 155.27 million, with no outstanding debt.

Key Risks:  Firdapse is the only commercial product of CPRX. It has a limited history as a commercial company, despite having launched the commercial launch of Firdapse. Firdapse's commercial success is contingent on physician approval and patient willingness to take medicine, and their reluctance to prescribe/continue the drug could impair the company's financial performance. Furthermore, the operations of CPRX are heavily reliant on its key employees, officers, and Board of Directors. Therefore, the loss of any of these individuals' services could have a major impact on the company's operations and objectives.

Outlook: As of Q2FY21, CPRX expects to continue to invest in expanding the commercialization of Firdapse in the US in 2021, as well as protecting its intellectual property portfolio. It also intends to increase its investment in R&D activities, such as acquiring earlier-stage rare disease prospects and innovative technology.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CPRX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CPRX's stock price has surged by 83.24% in the past nine months and made a fresh 52-week high today. The stock is currently trading far above its 50 and 200 DMA levels, and its RSI Index is at 67.47. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 5.55. Considering the significant rise in the stock price, we believe the current price adequately reflects the decent fundamentals. Hence, we recommend a "Sell" rating on the stock at the current price of USD 6.23, up 4.36% as of August 13, 2021, 11:21 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.