Catalyst (CPRX) Reports Narrower-than-Expected Q2 Loss

Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) reported a loss of 6 cents per share in the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of 8 cents and in line with the year-ago loss of 6 cents.

Being a development-stage company, Catalyst Pharma does not have any approved product in its portfolio yet.

Quarter in Detail

Research and development (R&D) expenses were $2.5 million, down 2.7% from the year-ago quarter. General and administrative expenses were down 0.6% to $2.3 million.

Pipeline Update

Bringing major relief to investors, the company has inked an agreement with the FDA on the clinical trial protocol for its second phase III trial on its lead candidate, Firdapse for the treatment of Lambert-Eaton Myasthenic Syndrome (LEMS). In Feb 2015, the company had received a “refusal-to-file” letter from the agency in connection with its New Drug Application (NDA for Firdapse. The FDA had determined that the application was not sufficiently complete after a preliminary review. Catalyst had then met the agency to get better clarity on the agency’s requirements. In response, the FDA asked for positive results from an additional adequate and well-controlled study in LEMS patients in addition to the previously submitted results from the phase III LMS-002 trial.

As a result, Catalyst expects to initiate a small, efficient short-term phase III study on Firdapse in the second half of 2016. Assuming favorable top-line data, the company expects to resubmit the NDA in the second half of 2017. Meanwhile, the company is evaluating Firdapse for the treatment of certain types of congenital myasthenic syndromes (CMS) and a specific form of myasthenia gravis. The company has initiated an investigator-sponsored study on the candidate for the symptomatic treatment of MuSK-antibody positive myasthenia gravis (MuSK-MG) and top-line results from this study are expected in early 2017. The company also plans to initiate a registration-quality trial in the U.S.

The company stated that other long-term toxicology studies in two species, development and reproductive toxicology, and additional ADME studies are required to make its candidate, CPP-115, ready for phase II. The company is currently looking for potential partners for continued development of CPP-115, as it has already devoted most of its own funds for the development of Firdapse.

The company is also evaluating a generic version of Sabril.

Our Take

Catalyst Pharma’s second-quarter loss was narrower than expected. Going ahead, we expect investor focus on the additional study on Firdapse, which has been requisitioned by the FDA. As the company is required to conduct additional studies per the agency’s requirement, this will not only increase costs but further delay the NDA resubmission. On the other hand, R&D spend in 2016 would increase due to continued clinical development efforts on Firdapse. Catalyst believes that its existing cash resources will give it sufficient runway through at least the next year.

Currently, Catalyst Pharma carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Pacira Pharmaceuticals, Inc. (NASDAQ:PCRX) , Corcept Therapeutics Incorporated (NASDAQ:CORT) and ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) . All of these stocks sport a Zacks Rank #1 (Strong Buy).

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