Cantor Sees Strong Upside in Catalyst Pharmaceuticals (CPRX) Shares, Sets an $8 Price Target

Many investors hope to win big on biotech stocks as shares can skyrocket when there is good news. With that in mind, Cantor analyst Charles Duncan explains why there are plenty of promising developments in store for Catalyst Pharmaceuticals (CPRX).

This afternoon, Duncan initiated coverage on Catalyst shares with an Overweight rating, while setting an $8 price target, which represents a potential upside of 155% from where the stock is currently trading. The analyst also lists the stock as a Top Pick as he has higher conviction on near-term upside.

Duncan believes there is a very strong possibility that Catalyst’s lead candidate Firdapse will be approved on its PDUFA date of November 28, 2018. There should be limited regulatory risk for Firdapse given:

  • 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 trials, which reduces regulatory risk.
  • Strong clinical data in two phase 3 trials gives Firdapse a high likelihood of approval.
  • 3,4 DAP has been available for years to some LEMS patients through compassionate IND program and through compounding pharmacies.
  • BioMarin markets Firdapse in the EU since 2010, where it is recommended as first-line therapy.

Duncan noted, “We believe the valuation gap can close with approval of Firdapse in LEMS and positive P3 data in CMS followed by sNDA submission, and positive trial data for MuSK-MG and SMA Type 3 in next 12-18 months […] In valuing CPRX, we used a discounted NPV revenue calculation that yields ~$4.50 for Firdapse in LEMS, ~$1.90 in CMS, and ~$1.50 ($150M total NPV) as a pipeline placeholder for other indications.”

Wall Street backs Duncan’s bullish perspective on this biotech stock, as TipRanks analytics indicate CPRX as a Strong Buy. Out of 5 analysts polled in the last 3 months, all 5 are bullish on Catalyst stock. With a return potential of nearly 117%, the stock’s consensus target price stands at $6.80. (See CPRX’s price targets and analyst ratings on TipRanks)