Catalyst Pharmaceuticals (CPRX) is a small-cap biopharma company focused on in-licensing, developing and commercializing novel medicines to treat rare diseases. It has a market cap of just under $2 billion, notes Tyler Laundon, editor of Cabot-Small Cap Confidential.

While the company came public in 2006, current growth is a result of a collaboration struck with BioMarin (BMRN) in 2012 when Catalyst obtained the North American rights to amifampridine. At the time amifampridine was being developed to treat Lambert-Eaton Myasthenic Syndrome (LEMS), a neuromuscular disorder that often causes severe and progressive muscle weakness and fatigue.

LEMS occurs when the immune system disrupts communication between nerves and muscles and disrupts the release of an important chemical called acetylcholine (ACh). Lacking proper release of ACh muscles don’t fully function. LEMS impacts about 3,000 people in the U.S. and many more worldwide.

In 2018, Catalyst obtained FDA approval for amifampridine tablets (commercial name is Firdapse) for adults with LEMS. Commercial launch was early 2019 and is now available for adults. A pediatric label expansion is now in a Phase 3 trial. Canada has approved the treatment for adults and expansion efforts in Japan are underway.

Catalyst is also on the prowl for assets to spur more growth. In 2021, the company began evaluating drug candidates beyond neuromuscular diseases in an effort to diversify its revenue base. Management has said it will seek to acquire companies and acquire or in-license drug products in development.

On that note, in July 2022 Catalyst acquired the rights to Ruzurgi from Jacobus Pharma. This acquisition settled an on ongoing patent dispute and helped remove an overhang from CPRX stock.

Then on December 19 Catalyst announced the acquisition of the rights to FYCOMPA from Eisai. This drug is approved for epilepsy, should generate $136 million in the 12 months ending March 31, 2023 and should add to Catalyst’s earnings. The $160 million acquisition also includes an option to evaluate and potentially acquire an additional epilepsy drug from Eisai. 

Clearly, Catalyst management is thinking of building a bigger company. In Q3 the company added $35 million to its balance sheet to end the quarter with $256 million in cash. Revenue grew by 59% to $57.2 million. EPS was $0.26 (+86%). 

Analysts expect revenue growth of around 49% ($210 million) in 2022 and growth of 20% ($250 million) in 2023. Expected EPS is $0.73 (+33%) this year and $0.88 (+19%) in 2023. The stock is a speculative Top Pick for the coming year.

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