Catalyst Pharmaceuticals, Inc. (CPRX) experienced robust growth in the first quarter of 2023, primarily propelled by the growth of FIRDAPSE® and the strong revenue stream derived from its newly acquired product, FYCOMPA®.
FIRDAPSE® is an amifampridine phosphate tablet used for treating patients suffering from Lambert-Eaton Myasthenic Syndrome (LEMS), while FYCOMPA® is a medication for individuals with epilepsy. In January 2023, CPRX completed the acquisition of U.S. rights for FYCOMPA®.
For the first quarter, CPRX posted total revenues of $85.4 million, signifying an impressive 98% year-over-year increase, while its EPS escalated by 117% from the value recorded in the same quarter last year to $0.26.
Despite posting remarkable results, the company did not meet analyst expectations, leading to a fall in its stock price. CPRX shares have slumped 28.3% since the start of the year and are currently trading under their 50-day and 200-day moving averages of $13.82 and $15.28, respectively.
Therefore, it could be wise to observe the company’s ability to maintain its organic revenue growth as the second quarter earnings season approaches before investing in the stock.
A deep dive into the firm’s fundamentals could provide clearer insights for potential investors seeking an appropriate entry point.
Examining Financial Performance: CPRX’s Net Income, Price/Sales Ratio, Revenue, Gross Margin, and Asset Turnover Trends (June 2020 - March 2023)
The trailing-12-month net income of CPRX shows a general upward trend with some fluctuations for the series of data from June 2020 to March 2023.
- In the initial period of the second quarter of 2020, the net income stood at approximately $41.77 million.
- It exhibited an increase reaching around $71.48 million in the third quarter of 2020 and rose to approximately $74.98 million by the end of the fourth quarter of 2020.
- However, in the first quarter of 2021, it dropped marginally to about $72.22 million and then slightly increased to around $74.62 million in the second quarter of 2021.
- The net income then saw a notable decrease to $41.61 million in 2021 third quarter followed by a further drop to roughly $39.48 million in 2021 fourth quarter.
- From the start of 2022, the net income began increasing again, growing to around $45.06 million in the first quarter, $54.50 million in the second quarter, and $66.92 million in the third quarter.
- The upward trend continued through the fourth quarter of 2022 as the net income climbed to approximately $83.08 million.
- By the most recent report available, in the first quarter of 2023, the net income reached its highest mark in the series at roughly $99.41 million.
Comparing the first value in the series with the last, the net income of CPRX has shown significant growth from $41.77 million in June 2020 to $99.41 million in March 2023. The overall behavior of the data series indicates a rising trend with some periods of decline, placing greater emphasis on the recent growth trend since 2022.
The trailing-12-month revenue trend for CPRX displayed continuous growth over the observed period, from June 30, 2020, to March 31, 2023. Explicitly, the company’s revenue increased from $119.76 million to $256.48 million during this period. Here are the key observations from the data:
- In the second half of 2020, CPRX saw marginal fluctuations in its revenue, with a slight drop in September ($118.18 million) before it rebounded to reach $119.07 million by December.
- Throughout 2021, the revenue showed a positive trajectory with a gradual increase each quarter: $120.14 million in March, $126.90 million in June, $133.53 million in September, and saw an appreciable leap to $140.83 million by December.
- The uplift trend continued in 2022. Revenue surged by approximately 8% from $140.83 million in December 2021 to $153.71 million in March 2022.
- A sharp rise can be noted from June 30, 2022, when the revenue was $170.46 million, increasing to $191.75 million by the end of September and concluding the year at $214.20 million, showing significant quarterly growth.
- The most remarkable growth was observed in the 2023 first quarter, with revenue jumping to $256.48 million. This quarter shows a notable increase, breaking the previous steady but slower growth trend.
Overall, the company’s revenue grew by 114% over the period observed, indicating strong performance and promising signs for future growth. Emphasis has been placed on the most recent data, demonstrating the firm’s upward trend in revenue, particularly in the first quarter of 2023.
The Price/Sales Ratio (P/S) of CPRX has shown a general upward trend from June 2020 to March 2023, despite experiencing some fluctuations.
- Starting at a P/S of 3.69 in June 2020, the ratio dipped to 2.90 by September 2020.
- A general upward trend commenced after this substantial drop. By December 2021, the P/S had risen significantly to 5.76, showing a positive development within the period despite a few fluctuations.
- The ratio experienced a moderate dip to 4.63 by March 2022 but was followed by a significant surge, attaining its highest point of 7.88 in September 2022.
- From this peak, it slightly dipped to 7.07 by December 2022 and mildly rose to 7.24 in March 2023.
The data shows that CPRX’s P/S was subject to short-term volatility while maintaining its broader ascending trajectory. It is worth noting the minor decline in the last quarter of 2022, followed by a slight increase in the first quarter of 2023. When measuring the growth rate from June 2020 (3.69) to March 2023 (7.24), CPRX’s P/S has shown an impressive rise of approximately 96% over the period. Given the recent trends, this demonstrates substantial growth. However, it is important to stay aware of potential fluctuations and market influences that might impact future performance.
Here is a summary of the gross margin trends for CPRX from June 2020 to March 2023:
- June 2020: The gross margin stood at 85.7%.
- September 2020: Slight growth was seen, with the gross margin rising to 86.0%.
- By the end of 2020, the gross margin had returned to its June level of 85.7%.
- In the first quarter of 2021, there was a slight decrease to 85.4%.
- June 2021 saw a modest increase in the gross margin to 85.8%, but this dropped slightly to 85.5% by September of the same year.
- The gross margin dipped to 84.5% at the end of 2021, the lowest point in this series.
- From the start of 2022, there were signs of recovery, with the gross margin sitting at 85.0% in March and 84.6% by June.
- Despite a decrease to 84.1% in September 2022, the gross margin increased to 84.5% by December.
- As of March 2023, the gross margin stands at 85.0%, reflecting growth from its lowest point in December 2021.
Over the period, the gross margin has experienced fluctuations but with an overall trend of slight decline. From the start point in June 2020 (85.7%) to the most recent data in March 2023 (85.0%), there has been a modest decrease of 0.7 percentage points. This minor fall illustrates that despite relative stability, the company’s ability to retain revenue after subtracting cost-of-goods-sold had somewhat weakened over this timeframe.
The data series reveals the trend and fluctuations in the Asset Turnover of CPRX from June 2020 to March 2023.
- The Asset Turnover was recorded at 1.05 in June 2020, marking the series’s highest value.
- Subsequently, the Asset Turnover gradually declined, reaching its lowest point at 0.65 in September 2021.
- Interestingly, a noticeable recovery was seen starting from the end of 2021, with the Asset Turnover figure increasing progressively through 2022. The figure slightly dipped from 0.71 in September 2022 to 0.70 in December 2022.
- By March 2023, CPRX’s Asset Turnover improved further to 0.74.
Comparatively, the Asset Turnover had decreased by 29% from the initial 1.05 (June 2020) to 0.74 (March 2023).
CPRX’s Share Price: A Fluctuating Journey in the First Half of 2023
From the data provided, it is clear that CPRX’s share price experiences a period of fluctuation with both growth and decline throughout the first half of 2023.
Here is a detailed summary:
- In January 2023, there was a gradual rise in the share price from $18.83 on January 6 to $20.49 by January 20. However, there’s a sharp decline to $15.85 by the end of the month.
- Moving into February 2023, the share price stabilizes around the $15 mark for the entire month with a slight downward trend, ending at $15.30 by the month’s close.
- For March 2023, the trend continues to be slightly downward through mid-month, with a value of $15.11 on March 17, but an upward trend arises from the third week. By the end of the month, it grows to $16.53.
- April 2023 sees the most growth within the data set, with the share price reaching as high as $17.61 on April 14 before falling again, ending at $16.04 by April 28.
- May 2023 begins with an increase to $16.78 within the first week but experiences a significant decrease throughout the rest of the month, bottoming out at $11.89 by May 26.
- June 2023, however, illustrates a slow but steady incline in share price for CPRX, ending the first half of the year at $13.53 on June 29.
Overall, the company’s share price shows an inconsistent growth rate throughout this period, with ups and downs present. It does not show a clear accelerating or decelerating trend persistently. The value towards the end of the provided timeline ($13.53) is lower than its starting value ($18.83), indicating the overall downward trend during this time. Here is a chart of CPRX’s price over the past 180 days.
Analyzing CPRX’s POWR Ratings
CPRX’s POWR Ratings fluctuated and subsequently declined from January to June 2023. CPRX has an overall C rating, translating to a Neutral in our POWR Ratings system.
Here are some key highlights: -
- The stock started with a B POWR Ratings in January 2023 and maintained it until the end of April 2023. During this period, its rank in the Medical-Pharmaceuticals category, which consists of 169 stocks, improved from the #22 position the week of January 7, 2023, to reach its best rank of #14 in the week of February 11, 2023.
- However, towards the end of April 2023, there was a notable improvement when it increased to an A rating, while its rank in the category was #18.
- Subsequently, in May 2023, there was a considerable decline in performance. Its overall rating fell to C, and its ranking in the category worsened to #44 by May 20, 2023.
- By the end of June 2023, which is the latest available data, CPRX maintained a C rating. Furthermore, its rank further slid down to the #50 spot in its category as of June 29, 2023. All these fluctuations indicate the tumultuous nature of CPRX’s performance within its sector during this timeframe.
Stocks to Consider Instead of Catalyst Pharmaceuticals Inc. (CPRX)
Other stocks in the Medical - Pharmaceuticals sector that may be worth considering are Novo Nordisk A/S (NVO), AbbVie Inc. (ABBV), and Astellas Pharma Inc. (ALPMY) -- they have better POWR Ratings.
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CPRX shares were trading at $13.54 per share on Friday afternoon, up $0.01 (+0.07%). Year-to-date, CPRX has declined -27.20%, versus a 16.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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