Summary
Catalyst Pharma got Firdapse approved for LEMS.
The stock plummeted 25% after the approval.
This is likely a buying opportunity despite the negativity surrounding Firdapse.
This idea was discussed in more depth with members of my private investing community, The Total Pharma Tracker. Start your free trial today »
Like we said a few articles back, we often see companies get their stocks slaughtered after a drug approval, so we suggested it may be a good idea to get out of a stock right before approval. Catalyst Pharmaceuticals (CPRX) is down more than 25% since November 29, when its lead drug candidate Firdapse received the FDA’s nod for treating a rare disease called Lambert-Eaton Myasthenic Syndrome (LEMS) in adults. So, at least for CPRX, what we said pans out.
We also said that each drug’s story is different, so there may be opportunities ahead for some stocks after the post-approval trip to the bottom. So, a stock may bounce back up in certain cases - it all depends on the reason why the stock fell in the first place. That’s because although these stocks fall after approval, almost each case is different, and therefore, the reasons differ for why a stock falls.
The question now becomes: does CPRX have any chance of a bounceback from these lows, making this a buying opportunity?
To figure that out, let's see why the stock fell.
