Summary
- Firdapse is expected to be approved outside the U.S.
- Profitability is expected this year, and the P/E is only about 4.6.
- Catalyst's lawsuit against the FDA has a decent shot at success.
- The primary competitor's product is likely not as worrisome as originally thought.
- Currently trading between $4.50 and $4.75 a share, Cantor Fitzgerald and SunTrust Banks have price targets of $10-12.
General Background
Founded in 2002, Catalyst Pharmaceuticals (CPRX) specializes in obtaining treatments for rare diseases, many of which have no FDA-approved treatment options. Much of this article focuses on the current status of the company, with particular emphasis on the many catalysts for this upcoming year. There are also many references to important statements made by management during the November, 13, 2019 conference call. Overall, with the stock trading at $4.50-4.75 and with the company projected to become profitable this year, Catalyst is likely a great value play. Cantor Fitzgerald has a price target of $10-12 and SunTrust Banks have a price target of $11.
2019 Firdapse Launch and Financials
Firdapse (amifampridine), approved in November 2018, was Catalyst’s first FDA-approved product in the United States for adults with Lambert-Eaton myasthenic syndrome (LEMS). There are an estimated 3,000 people with LEMS in the US. To have a successful launch of Firdapse in 2019, Catalyst had to transition hundreds of patients from its FDA study to insurance-covered patients. According to Catalyst during its November 13, 2019 conference call, the “average co-pay across all patients in September stood at $1.66 per month,” which equates to less than $20 per year.
Catalyst earned $12 million in 1Q, $29 million in 2Q, $31 million in 3Q, and it is estimated that Q4 should be around $33 million. As such, the company will be earning over $100 million in 2019, making it a profitable company. According to an Oppenheimer analyst, Catalyst should report earnings of $1.04 per share for 2019.
At the current price of $4.50 with 103 million shares outstanding, Catalyst has a market cap of approximately $463 million. With the projected $100 million+ in earnings for 2019, it has a price/earnings (P/E) ratio of 4.6. By comparison, many biotech companies have P/E ratios over 15, which means Catalyst stock price is low by comparison.
