Catalyst Pharmaceuticals, Inc. (CPRX) in Coral Gables, Fla., is a lesser-known commercial-stage biopharmaceutical company that is focused on in-licensing, developing, and commercializing medicines for patients living with rare diseases. On January 10, it announced that the 11th Circuit Court of Appeals denied Jacobus Pharmaceutical Company Inc.'s petition for rehearing the 11th Circuit's prior ruling to overturn the U.S. Food and Drug Administration (FDA) approval of Ruzurgi, representing a favorable decision for it.

The stock has gained 76.8% in price over the past year and 2.6% over the past three months to close the last trading session at $6.24. 

CPRX had been making consistent development strides. It reported a record quarter for net sales of FIRDAPSE in the previous reported quarter. Also, its top line and bottom line grew in the third quarter. So, its near-term prospects look bright.

Here is what could shape CPRX’s performance in the near term:

Positive Developments

On December 6, 2021, CPRX announced that its collaboration partner DyDo Pharma had initiated a Phase 3 registrational study in Japan to evaluate the efficacy and safety of CPRX’s FIRDAPSE 10 mg tablets to treat Lambert-Eaton myasthenic syndrome (LEMS). The United States Patent and Trademark Office issued a new U.S. patent to CPRX for Firdapse Tablets 10mg in July 2021. Also, the company repurchased 949,746 million shares during the third quarter of its fiscal 2021 under its share buyback program, reflecting its confidence in its business.

Impressive Financials

CPRX’s total revenues increased 22.6% year-over-year to $35.95 million for the third quarter, ended Sept. 30, 2021. The company’s FIRDAPSE revenue increased 23.1% year-over-year to $35.90 million, driven in part by new patient enrollments. Its non-GAAP net income came in at $15.62 million, representing a 17.9% year-over-year rise. Also, its non-GAAP EPS was $0.14 compared to $0.12 in the year-ago period.

Favorable Analyst Estimates

Analysts expect CPRX’s revenue to increase 18.8% year-over-year to $36.85 million for the quarter ended Dec. 31, 2021. Its revenue is expected to increase 26.1% for the quarter ending March 31, 2022, and 18.2% in fiscal 2022. Also, its EPS is expected to grow 57.1% for the quarter ending March 31, 2022, and 28.2% in fiscal 2022. In addition, Wall Street analysts expect the stock to hit $9.33 in price in the near term, which indicates a potential upside of 49.5%.

POWR Ratings Show Promise

CPRX has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight distinct categories. CPRX has an A grade for Value, which is in sync with its forward EV/S and EV/EBIT of 3.42x and 8.75x, respectively, which are lower than the 5.34x and 19.69x industry averages.

The stock has a B grade for Quality, which is consistent with its 74.59% trailing-12-month gross profit margin, which is 34.6% higher than the 55.41% industry average. Also, it has a B grade for Sentiment, which is in sync with analysts’ expectations that its revenue and EPS will increase.

CPRX is ranked #22 out of 190 stocks in the Medical – Pharmaceuticals industry. In addition to the POWR Rating grades I have just highlighted, we have also rated the stock for Growth, Momentum, and Stability. Click here to get all CPRX’s ratings.

Click here to checkout our Healthcare Sector Report

Bottom Line

Small-cap stock CPRX is not very popular in the biopharmaceutical space. However, it possesses sound fundamentals and reported impressive results in the third quarter. Furthermore, it is currently trading at a discount to its peers. So, we think it could be wise to scoop up its shares now.

How Does Catalyst Pharmaceuticals (CPRX) Stack Up Against its Peers?

While CPRX has an overall POWR Rating of B, one might also want to consider investing in its A-rated (Strong Buy) industry peers: Johnson & Johnson (JNJ), Merck & Co., Inc. (MRK), and GlaxoSmithKline plc (GSK).

CPRX shares were trading at $5.91 per share on Tuesday morning, down $0.33 (-5.29%). Year-to-date, CPRX has declined -12.70%, versus a -3.79% rise in the benchmark S&P 500 index during the same period.

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

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