Catalyst Pharmaceutical Partners Inc. CPRX is scheduled to report third-quarter 2015 results after the market closes on Nov 9.
Catalyst has a pretty good track record with the company beating estimates in three of the last four quarters with a positive average earnings surprise of 13.40%. Let's see how things are shaping up for this announcement.
Factors Influencing This Quarter
Given that Catalyst does not have any revenue generating products in its portfolio, investor focus will remain on pipeline and regulatory updates.
At present, Catalyst has three candidates in development – Firdapse, CPP-115 and CPP-109.
The company’s lead candidate, Firdapse (already approved in Europe for symptomatic treatment of Lambert-Eaton myasthenic syndrome (LEMS)) looks interesting. Catalyst is currently submitting a rolling new drug application (NDA) to the FDA for Firdapse with the target of completing the submission in the fourth quarter of 2015 for the treatment of LEMS. Firdapse enjoys breakthrough therapy status in the U.S. The company expects FDA approval by mid 2016.
Additionally, the company is evaluating Firdapse for the treatment of neuromuscular orphan diseases such as certain forms of congenital myasthenic syndromes (CMS) and myasthenia gravis. The company enjoys orphan drug status for both LEMS and CMS. The company is currently conducting small blinded study in the pediatric CMS population (ages 2 to 17) with completion expected by Apr 2016.
Catalyst is also working on filing an abbreviated new drug application for CPP-109, its generic version of Lundbeck Inc.’s Sabril (vigabatrin) which is approved for the treatment of infantile spasms and complex partial seizures.
The company expects its research and development expenses to increase for the remaining quarter of 2015 as it gears up for NDA submission as well as advancement in ongoing studies.
What Our Model Indicates
Our proven model does not conclusively show that Catalyst is likely to beat expectations this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat earnings. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are a loss of 7 cents.
Zacks Rank: Catalyst carries a Zacks Rank #3. Though a Zacks Rank #1, #2 or #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes a surprise prediction difficult.
However, we caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for Intercept Pharmaceuticals, Inc. ICPT is +1.54% and it carries a Zacks Rank #3. The company is expected to release results on Nov 9.
Alnylam Pharmaceuticals, Inc. ALNY has an Earnings ESP of +2.13% and carries a Zacks Rank #3. The company is slated to release third-quarter results on Nov 9.
Merrimack Pharmaceuticals, Inc. MACK has an Earnings ESP of +2.44% and carries a Zacks Rank #3. The company is slated to release third-quarter results on Nov 9.
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