Strikingly Similar Catalyst Pharmaceutical Partners Poised to be Next High Flying Acadia Pharmaceuticals
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A few smart investors who bought Acadia Pharmaceuticals, Inc. (NASDAQ: ACAD) last year are jumping for joy and smiling every step of the way to the bank, while the investors who only thought about it but didn’t pull the trigger, are still kicking themselves pretty hard. Surprisingly, even the most bullish Acadia enthusiasts didn’t foresee shares gaining almost 1,500% in only one year making Acadia one of the best performing stocks in the entire market.
Fortunately, for those who missed the boat with Acadia, there is another strikingly similar, small-cap company named Catalyst Pharmaceutical Partners, Inc. (NASDAQ: CPRX) that appears to be about one year behind Acadia and is all teed up to repeat their stunning performance. One short year ago, Acadia’s market cap was less than $60 million. Today, it is $1.4 billion. Catalyst’s market cap is less than $50 million. A year ago, Acadia was on the ropes because their lead drug Pimavanserin failed its Phase III trial. Last November, Catalyst announced that their drug CPP109 for cocaine addiction failed its Phase II trial. Acadia redesigned their trial and this time Pimavanserin worked.
Catalyst quickly shifted its focus to CPP115 as the next generation of CPP 109 for a large number of indications including epilepsy, infantile spasms, Tourette Syndrome, Post Traumatic Stress Disorder and movement disorders. CPP115 is 200 times stronger than CPP109 and it has been shown to be free of the potential adverse side effect of loss of peripheral vision that was associated with CPP109. Acadia’s Pimavanserin addressed an orphan drug market of fewer than 50,000 patients suffering from Parkinson’s Disease Psychosis. Catalysts CPP115 also addresses the lucrative orphan drug markets but is expected to treat more indications than Pimavanserin.
CPP115 was designed by Dr. Richard Silverman, the well-known drug designer who created the blockbusters Lyrica and Neurontin for Pfizer (PFE).
Catalyst pleasantly surprised investors by in licensing Firdapse from BioMarin (BMRN) in October 2012. Firdapse is already approved and selling in Europe as the top line treatment for Lambert-Eaton Myasthenic Syndrome, “LEMS”. Phase III trials in the U.S. are currently underway with Top Line Data expected in the second quarter of 2014. The fact that Firdapse has already been approved in Europe is a strong indication that it will also be approved in the U.S. Firdapse has the potential to generate sales of between $300 to $500 million per year and is expected to be commercially available at the beginning of 2016. BioMarin is a very successful orphan drug developer that understands this space very well and the fact that they invested $5,000,000 in Catalyst for 17% ownership reflects their confidence in not only Firdapse, but in Catalyst.
Acadia’s lead drug, Pimavanserin is expected to be commercialized in 2015 while Catalyst’s Firdapse is expected to be commercialized one year later in early 2016.
Both Pimavanserin and CPP115 have the potential to generate very large sales because they are expected to treat several indications. See Catalyst Pharmaceutical's CPP-115 May Be Big Pipeline In Just One Little Pill.
Another comparison of Acadia and Catalyst that demonstrates the remarkable similarities is a comparison of financial highlights. Since Acadia Pharmaceuticals appears to be about one year ahead of Catalyst, and since the most recent financial report from Catalyst is from Q1 2013, Acadia’s first quarter results from 2012 will be compared in this article to Catalysts first quarter results of 2013.
ACADIA reported a net loss of $5.4 million, or $0.10 per common share, for the first quarter of 2012 while for the same quarter in 2013, Catalyst reported a net loss of $1,744,889, or $0.04 per basic and diluted share. Acadia reported cash & equivalents of $26 million for the quarter ending March 2012 and Catalyst reported cash of $14.4 million in Q1 2013. Revenues from both companies were almost non-existent with Acadia reporting revenues of only $450,000 that resulted primarily from grants while Catalyst reported no revenues.
Acadia had approximately 52.9 million shares outstanding as of the end of Q1 2012 and Catalyst had about 41.4 million shares outstanding fully weighted. Acadia reported $9 million in total liabilities while Catalyst reported only $1.55 million in total liabilities. Acadia had stockholder equity of $26.5 million at the end of Q1 2012 while Catalyst had shareholder equity of $14.47 million in Q1 2013.
Examination and comparison of these numbers demonstrate very close similarities between Acadia Pharmaceuticals and Catalyst Pharmaceutical Partners. Combined with the likely potential for commercialization of Firdapse only one year after the expected launch date of Pimavanserin, and with the explosive potential for CPP115 to treat so many orphan indications where the advantages over traditional drugs are staggering, Catalyst appears to be poised for large percentage gains in the coming year and beyond.
Acadia Pharmaceuticals is more mature than Catalyst Pharmaceutical Partners and therefore does not appear to have as much percentage return potential as Catalyst at this time. At close to $1.00 per share, Catalyst Pharmaceutical Partners appears to offer investors a second chance at an outstanding buying opportunity that may match the 12 month performance of Acadia Pharmaceuticals.
Acadia Pharmaceuticals and Catalyst Pharmaceutical Partners both share the risks of drug approvals from the regulatory agencies, market acceptance of their drugs, reimbursement for their drugs, and adequate capital to continue operations.
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