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Catalyst (CPRX) Down 16.2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Catalyst Pharmaceutical (CPRX). Shares have lost about 16.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Catalyst due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Catalyst Q1 Earnings Lag, Sales Boost Revenues

Catalyst Pharmaceuticals, Inc. reported earnings of 26 cents per share for the first quarter of 2023, missing the Zacks Consensus Estimate of 30 cents. However, earnings were higher than our estimate of 24 cents. The company reported earnings of 12 cents in the year-ago quarter.

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Adjusted earnings (adjusted for stock-based compensation, depreciation, amortization and tax provision) came in at 41 cents per share in the reported quarter compared with 18 cents a year ago. Adjusted earnings also beat our estimate of 34 cents per share.

Total revenues amounted to $85.4 million, beating both the Zacks Consensus Estimate of $83 million and our estimate of $82.9 million. Sales rose 98% from the year-ago quarter’s $43.1 million. The top line primarily comprised product sales of Firdapse, the first-approved drug for the treatment of LEMS, Fycompa (perampanel) CIII and nominal license and other revenues.

Quarter in Detail

Firdapse generated sales worth $57.5 million in the first quarter, up 34% year over year, primarily driven by organic sales growth of Firdapse and the transition of Ruzurgi patients to Firdapse treatment after the dispute settlement with Jacobus Pharmaceuticals. Firdapse sales beat our estimate of $54.9 million in the reported quarter.

Catalyst also started recording sales of its newest epilepsy asset, Fycompa, starting this quarter. In January, Catalyst acquired U.S. rights for Fycompa (perampanel) CIII, from Eisai Co., Ltd. This acquisition diversified Catalyst’s portfolio with the addition of a commercial-stage epilepsy asset.

Fycompa, which generated robust net product revenues of $27.8 million in approximately two months, is almost on par with our estimate of $28 million.

License and other revenues were nominal at $0.06 million in the reported quarter, being relatively flat year over year.

Research and development expenses were $3.6 million, slightly up from the $3.4 million reported in the year-ago quarter.

Selling, general and administrative expenses totaled $29.7 million, up 81.1% from $16.4 million reported in the year-ago quarter. This improvement in expenses is due to commercial and marketing activities related to the launch of Fycompa in the United States in the reported quarter.

As of Mar 31, 2023, CPRX had cash, cash equivalents and investments worth $148.2 million compared with $298.3 million as of Dec 31, 2022.

2023 Guidance Reaffirmed

Catalyst maintained its full-year 2023 total revenues guidance in the range of $375 million to $385 million, marking a 75-80% increase in total revenues from 2022. This guidance also includes the revenues generated from the sales of Fycompa CIII, which is expected to be $130 million for the 11 months ending December 2023.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -25.14% due to these changes.

VGM Scores

At this time, Catalyst has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Catalyst has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Catalyst belongs to the Zacks Medical - Drugs industry. Another stock from the same industry, Ionis Pharmaceuticals (IONS), has gained 17% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.

Ionis Pharmaceuticals reported revenues of $131 million in the last reported quarter, representing a year-over-year change of -7.8%. EPS of -$0.87 for the same period compares with -$0.46 a year ago.

For the current quarter, Ionis Pharmaceuticals is expected to post a loss of $0.93 per share, indicating a change of -25.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Ionis Pharmaceuticals has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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