Catalyst Pharmaceuticals (CPRX) is a commercial-stage biopharmaceutical company. It focuses on therapies for people with rare debilitating, chronic neuromuscular, and neurological and epileptic diseases. Catalyst invests in the acquisition of innovative rare neurological and epilepsy assets that align with its primary focus on conditions treated by neurologists and neuromuscular specialists, explains Douglas Gerlach, editor at Small Cap Informer.
These efforts have so far been successful in kick-starting company growth. Product revenues are generated primarily by two products. Catalyst’s flagship medicine is Firdapse (amifampridine), used for the treatment of adults with Lambert-Eaton Myasthenic Syndrome (LEMS).
LEMS is a rare neuromuscular disease that generally affects men and women between 50 and 60 years of age, causing weakening of upper arms and shoulders muscles; severe, debilitating, and progressive weakness in the upper legs and hips; and life-threatening weakness in respiratory muscles. Firdapse is the only treatment approved in the US for LEMS, which is estimated to affect 3,000 people in the country.
In January 2023, Catalyst expanded its portfolio with the acquisition of US commercial rights to Fycompa (perampanel) CIII, used in various combinations with other drugs to treat epilepsy in both children and adults.
In July 2023, Catalyst added a third drug to its portfolio by acquiring an exclusive North American license for vamorolone, a promising dissociative anti-inflammatory steroid treatment for Duchenne Muscular Dystrophy (DMD). Catalyst expects that its expertise with Firdapse will allow it to efficiently reach neurology and neurosurgeon practitioners with information about the benefits of vamorolone.
Since 2019, Catalyst has grown revenues an average 26.9% a year. EPS have grown annually at 23.3% during the same period, albeit on a much less consistent trajectory. In the second quarter ended June 30, Catalyst saw revenues jump 87.5% to $99.6 million and EPS grow 65.0% to $0.33.
Since Catalyst achieved profitability in 2019, pre-tax profit margins have expanded each year, reaching 48.9% in fiscal 2022. The company’s debt load is trivial, making up less than 1% of total capital.
At the end of the second quarter, Catalyst had $178.8 million in cash on the books. In addition to the cash generated from sales of Firdapse and Fycompa, Catalyst will have ample cash to serve its acquisition costs and milestone and royalty payments, $90 million of which was paid out in the third quarter.
Recommended Action: Buy CPRX.