Why CPRX is a buy?

First of all, I would like to thank @Zirmas who asked me about this company and that's how I got to know it.

Generally, the healthcare industry is not my field but I decided to make an exception and try to understand the company thoroughly.

For me it is a BUY! .. but let's start from the beginning

Founded in 2002, Catalyst successfully completed its initial public offering (IPO) in 2006.

It is a pharmaceutical company focused on the development and marketing of prescription drugs targeting diseases and disorders of the central nervous system, including addiction and epilepsy.

He has developed two products, CPP-109 and CPP-115 (is a new GABA aminotransferase inhibitor and vigabatrin analogue which, based on preclinical studies to date, is more than 100 times more potent than vigabatrin and may have reduced side effects Compared with vigabatrin CPP-109 has obtained Fast Track status from the FDA for the treatment of cocaine addiction Catalyst also plans to evaluate CPP-109 for the treatment of other addictions.

In 2012 he obtained the rights to BioMarin's amifampridine.

In 2018, they launched a phase 3 study of amifampridine in patients with myasthenia gravis, with a focus on a subgroup, called muscle specific receptor tyrosine kinase (MuSK-MG). Another clinical development program launched in 2018 will investigate the use of the drug in patients with spinal muscular atrophy (SMA).

They are currently researching other possible uses for amifampridine.

On November 28, 2018, the US FDA approved firdapse (arnifampridine) tablets for use in adults with Lambert-Eaton myasthenenic syndrom (LEMS) and Catalyst began its 2019 commercial launch. As of today, amifampridine is the the only evidence-based treatment approved by the FDA for adult patients with this syndrome.

ADMINISTRATION

Respectful administration, you can find the various members of the administration here, I will focus only on some information:

https://catalystpharma.com/board-of-directors/

Patrick J. McEnany

Co-Founder, Chairman, President and Chief Executive Officer

CEO from the Foundation to date! Before 2002 he held other important positions in other pharmaceutical companies.

Philip H. Coelho

Is a member of the Catalyst Board of Directors since October 2002, is an engineer and inventor, educated at the University of California.

He holds more than 40 U.S. patents related to cell selection, cell cryopreservation, cell washing, automated cryogenic freezing and storage of cells and harvesting clotting proteins from blood.

Richard Daly

Richard J. Daly joined the Catalyst Board of Directors in February 2015.

Previously, from 2016 he was Chairman and CEO of Neuralstem, Inc. Until October 2014, Mr. Daly served as President of AstraZeneca US Diabetes, where he led all commercial and medical plans and objectives for a $ 1.2 billion, 3,000-employee division, including the successful launch of an orphan / rare disorder drug, Myalept, for lipodystrophy.

Ok now analyzing their finances.

Let's start with Q3 of 2020.

Let's read:

"I am pleased to report on a very productive third quarter and on our continued commercial execution under challenging conditions and remain confident that we will continue to see more success as physicians and other providers adapt to this virtual working environment. Also, we are very encouraged by the number of new LEMS patient starts that were initiated over the past 2 months and are hopeful that this is the beginning of a trend, "

... "Additionally, during the third quarter we were excited to announce the issuance of our U.S. patent for Firdapse®, which we believe significantly fortifies our intellectual property position. We continue to work diligently alongside partners to protect Firdapse® and to ensure that we are able to advance and make available therapeutics for patients suffering from rare neurological conditions. "

So it's great news that they got their license for their Firdapse product.

Key points of the report:

1. Product revenue, net in the third quarter of 2020 was $ 29.2 million, compared to $ 30.9 million for the third quarter of 2019 (-5%), but with an annual increase of 22% compared to the same period in 2019.

2. Operating income for the third quarter of 2020 was $ 11.7 million, compared to $ 13.8 million in the third quarter of 2019.

3. Reported net income of $ 43.3 million, or $ 0.42 per basic and $ 0.41 per diluted share, in the third quarter of 2020, compared with net income of $ 13.6 million, or $ 0.13 per basic and diluted share, for the third quarter of 2019.

4. Net income in the third quarter of 2020 includes $ 31.3 million ($ 0.30 per basic and $ 0.29 per diluted share) of benefit from recording of deferred tax asset, upon reversal of valuation allowance.

5. Research and development expenses for the third quarter of 2020 were $ 3.7 million as compared to $ 4.6 million for the third quarter of 2019. I generally support an increase in research and development spending. However, in the K10 of 2019 in the research and development item we read: "To date, all of our research and development resources have been devoted to the development of Firdapse®, CPP-109 (our version of vigabatrin), and formerly CPP-115, and we currently expect that our future development costs will be attributable principally to the continued development of Firdapse®. " Comparing this expenses in 2018, we have an increase of over 75% in 2019, so a decrease of 6% in 2020 is not alarming considering also the fact that they managed to get the license for their Firdapse, so a drop in expenses is normal having conducted all the various tests in 2019.

6. Selling, general and administrative expenses for the third quarter of 2020 totaled $ 10.0 million as compared to $ 8.1 million in the third quarter of 2019.

7. They have cash and cash equivalents and investments of $ 127.1 million and no funded debt (excellent).

Furthermore, among the key points of the near future we find:

• - Expansion of U.S. commercialization of Firdapse®.

• - On-going development programs evaluating Firdapse® for the treatment of MuSK-MG and SMA Type 3, and our Expanded Access Program for Firdapse®.

• - Continue support for our Firdapse® long-acting formulation and other development programs.

• - Support Canada pre-commercialization activities for Firdapse®.

• - Continue Japan regulatory activities to seek marketing authorization for Firdapse®.

• So they also have the goal of extending their sales to Canada and Japan.

• For the "balance sheet" we have:

• - 23% increase in total assets compared to 2019.

• - A 26% decrease in their liabilities

• - Total liabilities and stockholders' equity increased by 57%. Great!

Why is it a buy for me?

1. The administration is excellent and I think they are very prepared.

2. It is a relatively young company (2002) and given the company's strategy of expanding outside the US it significantly increases their market.

3. They see the possibility of using their arnifampridine-based medicine for the treatment of MuSK-MG and SMA as well as the LEMS for which they already have the authorization of the FDA.

4. Catalyst's Board of Directors recently approved an expansion of the company's strategic focus to include the acquisition or licensing of innovative and validated technology platforms and pre-stage programs in other therapeutic categories outside the neuromuscular diseases. To realize these new priorities, Catalyst is poised to invest more in research and development, including capturing opportunities in earlier stages and validating innovative technologies. Catalyst believes this strategic expansion positions the company better to build a larger and more diverse portfolio of drug candidates that Catalyst expects will add more value to the company in the short and long term.

5. They have solid finances, moreover their profit margin is 87% (this means that their "cost of revenue" is only 13% compared to revenue).

6. They have increased their Gross Profit by 23% and it is estimated that this percentage will increase in the coming years.

7. They have no debt and have a very strong balance sheet

8. P / E ratio of 5.2

Currently, unlike other companies that are part of the same sector, it is not subject to the “FOMO” (read here what it is: https://etoro.tw/3lVufHm) and its finances improve year by year.

How much can it be worth at the end of 2021?

I believe they can easily double their value or still reach a value of $ 6 per share.

I will not allocate a high percentage of my portfolio to this company but it is still a must have in the portfolio.

And what do you think?