Catalyst Pharmaceuticals, Inc.

CPRX Details

Catalyst Pharmaceuticals, Inc. (NASDAQ: CPRX) is a commercial-stage biopharmaceutical company, which develops and commercializes therapies for people suffering from rare, debilitating, chronic neuromuscular and neurological diseases. CPRX has commercialized Firdapse, a patented version of amifampridine phosphate, used to treat adults with the Lambert-Eaton Myasthenic Syndrome (LEMS), Anti-MuSK Antibody Positive Myasthenia Gravis (MuSK-MG), and other related disorders, and developed Ruzurgi for the treatment of pediatric LEMS patients. It operates through a network of distributors who sell these medicines to specialty pharmacies, medical centers, and hospitals on an emergency basis.  As of June 22, 2021, the company’s market capitalization stood at USD 599.51 million.

Revocation of Notice of Compliance (NOC) for Ruzurgi: On June 03, 2021, the company announced that the Canadian Federal Court abrogated Health Canada’s approval of Medunik’s drug in place of Ruzurgi and quashed the previously issued NOC against Ruzurgi. The court’s move will safeguard the interest of CPRX by preventing other pharmaceutical companies from using its innovative drug data.

Q1FY21 Results: CPRX reported total revenue of USD 30.20 million for Q1FY21 (ending March 31, 2021) as compared to USD 29.14 million in Q1FY20, thus realizing growth of 3.67% YoY. CPRX reported a downtick of 8.40% YoY in operating profit in Q1FY21 and achieved operating income of USD 9.80 million with a margin of 32.45%, compared to USD 10.70 million with a margin of 36.72% in Q1FY20. Selling, general and administrative expenses increased 26.36% YoY in Q1FY21, attributable to contribution to LEMS supporting organizations, increased litigation fees related to the expansion of operations and workforce. The company reported a net income of USD 7.67 million with a net margin of 25.37% in Q1FY21 vs USD 10.43 million in Q1FY20.  

Key Risks:  CPRX currently has a single product offering, i.e. Firdapse. While it has initiated the commercial launch of Firdapse, it has limited experience as a commercial company. The successful commercialization of Firdapse depends on its endorsement by the physicians and the readiness of patients to take it, and their unwillingness to prescribe/continue the drug could harm the financial performance of the company. In addition, CPRX relies on a single supplier for manufacturing its drug. If the supplier is unable to meet the demands, it would have a severe impact on the company's operations. 

Outlook: In its Q1FY21 Report, CPRX stated that it expects to continue to enroll more new patients for Firdapse, and generate stronger revenues in FY21. It also stated that it plans to advance other programs for both Firdapse and the remaining of its product pipeline through acquisition or in-licensing activities.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E 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

Stock Recommendation: CPRX has increased 23.55% and 68.71% in the past 3 and 6 months, respectively, and is currently leaning towards the higher band of the 52-week range of USD 2.88 to USD 5.90. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 61.09. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 6.26. Considering the uptick in the stock price, decent fundamentals, positive outlook, and associated risks, we recommend a “Hold” rating on the stock at the closing price of USD 5.77, down 0.52% as of June 22, 2021.

* All forecasted figures and Industry Information have been taken from REFINITIV.

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