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Catalyst (CPRX) Posts In-Line Q1 Loss, Firdapse in Focus

Catalyst Pharmaceuticals, Inc. CPRX reported a loss of 7 cents per share in the first quarter of 2016, which was wider than the year-ago loss of 6 cents but in line with the Zacks Consensus Estimate.

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 $3.5 million, up 50.9% from the year-ago quarter primarily due to activities related to an expanded access program for Firdapse, including manufacturing of the drug, and increased activities associated with other ongoing studies and trials.

General and administrative expenses were up 38.5% to $2.7 million. Expenses rose primarily due to higher pre-commercialization expenses, and an increase in headcount, payroll and benefit expenses.

Pipeline Update

In a major setback, the company received a “refusal-to-file” letter from the FDA in Feb 2015 in connection with its new drug application (NDA)  for its lead candidate, Firdapse. The FDA had determined that the application was not sufficiently complete after a preliminary review.

Catalyst recently announced that it held a meeting with the agency to get better clarity on the agency’s requirements. The FDA informed the company that it needs positive results from an additional adequate and well-controlled study in patients with Lambert-Eaton myasthenic syndrome (LEMS), in addition to previously submitted results from the phase III LMS-002 trial.

The company is currently in discussions with the FDA regarding the protocol and logistics for this confirmatory study. The agency is also ready to discuss a design that could efficiently accomplish the requirement with a small, short-term study. It has also requisitioned several additional short-term toxicology studies, which are expected to be initiated soon.

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 of the candidate for the symptomatic treatment of MuSK-antibody positive myasthenia gravis (MuSK-MG) in Feb 2016 and top-line results from this study are expected in 2017.

The company had earlier planned to conduct a phase I dose ranging study in 2016 on its other candidate, CPP-115, at lower doses, subject to the availability of funding, and a phase II trial on the candidate which is being evaluated for the treatment of epilepsy and other selected neurological indications, such as complex partial seizures and Tourette’s disorder.

Our Take

Catalyst Pharma’s first-quarter results were on par with estimates. Going ahead, we expect investor focus on updates regarding the additional study on Firdapse as requisitioned by the FDA. As the company is required to conduct additional studies per the FDA’s requirement, this will not only mean additional costs but further delay the NDA resubmission.

On the other hand, R&D spend for 2016 would increase due to continued clinical development efforts for Firdapse, including the recently initiated clinical trial for CMS in a pediatric population and a clinical program for MuSK-MG among others.

Currently, Catalyst Pharma carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include ArQule, Inc. ARQL, Shire plc SHPG and Abbott Laboratories ABT. All three stocks sport a Zacks Rank #2 (Buy).

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