Every small-cap biotechnology investor knows the industry is prone to binary events. Whether it’s receiving updates from an important clinical trial or hearing from regulators about an approval decision, some biotech stocks can face all-or-nothing moments that can either send the stock soaring or cause it to crash.
One biotech stock Roth Capital’s Scott Henry has his eye on right now is Catalyst Pharmaceuticals (CPRX), which its lead candidate Firdapse is currently pending regulatory approval as a treatment option for Lambert-Eaton Myasthenic Syndrome (LEMS). Henry has circled November 28 on his calendar — when the FDA is scheduled to make its final decision.
Henry wrote, “On the [earnings] call, management indicated that labeling discussions are ongoing (a positive sign in our opinion) […] The company reached agreement with the FDA under a Special Protocol Assessment (SPA) for the design, clinical endpoints, and statistical analysis approach for the phase 3 trial – which we believe reduces regulatory risk. We continue to expect final approval (90% probability in our opinion) based on strong clinical data. Recall, both primary endpoints carried low p-values including the quantitative myasthenia gravis score (QMG – p value of 0.0004) and the subject global impression score (SGI – p value of 0.0003).”
“We target multiple clinical data results in 2019+ for expanded indications, including Firdapse to treat 1) congenital myasthenic syndromes (CMS) in 2H19 (from 1H19); 2) myasthenia gravis MuSK in 2H19; and 3) spinal muscular atrophy type 3 in 1H20 (from 2H19). Separately, the company intends to leverage Firdapse by exploring approval in Canada and a potentially longer acting version (1-2X/ day versus 3-4X/day), which could extend the franchise duration,” the analyst continued.
Henry’s bullish outlook on CPRX stock translated into a Buy rating and $6.00 price target, which represents a potential upside of 117% from current share price.
CPRX has one of the best ratings by the Street. TipRanks reveals that the stock has a Strong Buy analyst consensus rating with 6 back-to-back buy ratings in the last 12 months. Meanwhile the average analyst price target of $6.50 suggests the stock still has upside potential of 135% from the current share price for the next 12 months. (See CPRX’s price targets and analyst ratings on TipRanks)