It is entirely possible that the meme coin Shiba Inu (CRYPTO:SHIB) could be on the rise this year as the cryptocurrency is starting to make a bullish recovery from the bear market. But for those who want to invest in an asset that will steadily increase in value indefinitely as a result of actually producing things that people actually want to buy, investing in joke cryptocurrencies is probably the equivalent of barking up the wrong tree. Is.
As stated, there is reason to believe that Catalyst Pharmaceuticals (NASDAQ: CPRX) is on a bullish path.
With new drug and abundant cash, the future looks bright
Catalyst has a trio of growth drivers this year. First, a new drug called Agamri is launching in the first quarter. Agamri is a steroid indicated to treat Duchenne muscular dystrophy (DMD), and thanks to its projected sales, Wall Street financial analysts estimate that the company could bring in an average of $467 million in 2024. This is a significant increase from management’s guidance of as much as $395 million for 2023.
However, Agamari is only one drug that will have new sales. It also makes a drug called Phycompa for epilepsy, as well as Firdaps, its lead treatment for Lambert-Eaton myasthenic syndrome (LEMS), a rare neuromuscular disease. Firdapse was launched in early 2019, and Phycompa was only launched in early 2023, so both will likely have more top-line and bottom-line growth on the way as they enter their markets. .
The final catalyst for the catalyst in 2024 is its cash reserves. At the end of Q3, it had $121 million in cash, equivalents and short-term investments. It also has trailing-12-month (TTM) free cash flow (FCF) of $95 million. As if that wasn’t enough, on January 5 it held a public offering of its stock with the goal of raising $150 million. Once the offering closes on January 9, the biotech will have a boatload of dough. And for reasons we’ll get into in the next section, having so much money on hand is a major bullish factor because of the way Catalyst does business.
Becoming a shareholder can sometimes be difficult
Catalyst isn’t exactly like other biotech companies. Instead of doing research and development (R&D) in house, it primarily involves acquiring the rights to late-stage pharmaceutical assets, finishing them by running additional clinical trials if necessary, and then filing for approval. Likes. Then, it conducts additional late-stage clinical trials to try to expand the indications for which the drug can be prescribed. The more cash it has ready, the more aggressively it can bid for assets – and the more assets it can buy and then commercialize for development.
The advantage of working this way is that it enables the company to keep its R&D expenses lower as a proportion of its revenues than its peers in biopharma. Catalyst spends only about 9% of its annual sales on R&D, while major pharmaceutical businesses will spend an average of about 19% in 2022.
The downside is that as a shareholder, it is quite difficult to get an idea of what specifically the company is going to do to continue growing in the future. In short, management will not make any friends by over-talking about potential acquisition targets, as deals may fall apart before completion. Similarly, while shareholders can sometimes get clues about which disease areas management is particularly interested in exploring, the company is limited to buying only what is actually for sale.
So being in the dark is more or less inherent to investing in Catalyst as it is currently conceived and operated. This makes it difficult to develop a strong long-term thesis for holding it, not to mention the conviction to follow through with holding the stock.
Still, the stock’s returns over the past few years have been more than enough to keep shareholders (including me) on board. Its shares have increased 514% since the beginning of 2019. Of course, such growth is much less than that of Shiba Inu. On the other hand, you won’t need to wait for a cryptocurrency bull market to see Catalyst Pharmaceuticals stock rise, and the fact that it’s a profitable business makes it much less risky, too.
Should you invest $1,000 in Catalyst Pharmaceuticals now?
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Alex Carchidi holds positions in Catalyst Pharmaceuticals and Shiba Inu. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Forget Shiba Inu: This Stock Is Poised for a Potential Uptrend in 2024 was originally published by The Motley Fool.
