• Gauntlet Team

Catalyst Pharmaceuticals

COMPANY OVERVIEW Catalyst Pharmaceuticals is a biopharmaceutical company based in Coral Gables, Florida. The company is developing therapeutics for rare neurological diseases, including the phosphate salt of amifampridine for the treatment of Lambert–Eaton myasthenic syndrome (LEMS) under the trade name "Firdapse" which was approved by the United States Food and Drug Administration (FDA) for use in Adult LEMS patients on November 28, 2018 and commercially launched in January of 2019. Catalyst was founded in 2002, and completed an IPO in 2006.It focused primarily on developing therapies to prevent addiction until 2012. FINANCIAL HEALTH On the 4Q 2019 earnings call, Catalyst reported $94.5 million in cash, up from $81.6 million in 3Q 2019, with no funded debt. Revenues grew 20,361.26 % in FY 2019 as compared to FY 2018 to 102.31M. Net income grew 193.74 % to 31.88M. VALUATION CPRX stock is good value based on its PE Ratio of 16.7x compared to the Pharmaceuticals industry average of 22.5x and the Biotech industry average of 18.1x. THE GOOD They own the North American rights to Firdapse - an FDA-designated orphan drug used to treat rare muscular diseases. Firdapse is proprietary and has Orphan Drug Exclusivity for seven years. There are several catalysts to fuel upside growth including clinical data for Firdapse’s potential Musk-MG indication. THE BAD Catalyst is a speculative company with potential risks. Their drug Firdapse has an annual cost of $375,000. Prior to the price change, patients were able to get the drug for free through a U.S. Food and Drug Administration (FDA) compassionate use program. The price increase prompted Senator Bernie Sanders to publicly send a letter asking why they raised the price of the drug. A Rival drug (Ruzurgi) was approved in May '19 for treatment of minors. Catalyst has taken legal action against the FDA. CHART SAYS

Fairly valued between support and resistance channel. CPRX has been in a bullish upward channel since July of 2009. It is currently trading in the middle of the resistance level of $6.10 and support level of $2.80. A second support level around $1.65 was tested in 2012 and 2016. Continued bullish channel since 2012. Level of resistance at $2.85 is a potential buy target. TAKEAWAY Catalyst is a growth story with significant upside potential. However, it’s important to understand that this stock is speculative with plenty of risks for potential investors. Fundamentals for Catalyst have performed as good or better than expected and their stock has taken quite a hit during the Coronavirus selloff. This has created an excellent buying opportunity for anyone who is interested in the stock.


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