One of the notable penny stocks to watch in the pharmaceutical sector has stumbled this month. The stock had been on a particularly hot streak in the initial part of 2019, but Catalyst Pharmaceuticals (CPRX Stock Report) may be heading in a different direction now.
The biotech penny stock has found genuine success with its Lambert-Eaton myasthenic syndrome (LEMS) drug named Firdapse. It had been approved by the US Food and Drug Administration and then went on to claim a dominant position in the market for that particular drug.
Due to the impressive performance of the drug, it was believed that it would eventually generate revenues to the tune of hundreds of millions. Furthermore, since it had a market cap only $400 million, CPRX stock soon started to soar.
Less Of A ‘Catalyst’ Lately
However, that has now come to an end and in the month of May, the Catalyst stock nosedived significantly and shed much of the gains.
The problem with Catalysts’ highly prized LEMS drug was that the company had decided to price a yearly treatment at an outrageous $375,000 a year and it was not surprising that it found itself in the eye of a political storm. Over the years, such pricing has often landed drug companies in trouble in the US and for Catalyst Pharmaceuticals, it proved to be a problem because a similar drug was available in the market for no more than $6,000 a year.
The drug in question is named Ruzurgi, made by Jacobus Pharma and the FDA quickly acted on the outrage that had been instigated by Firdapse’s pricing. In a move that proved to be a body blow for Catalyst, Ruzurgi was awarded an approval by the FDA earlier on in May. Once the approval was awarded, Catalyst’s stock started plummeting and shed more than 50% of its value in just two days of trading.
Will The Future Be Brighter For This Penny Stock?
These companies enjoyed a significant competitive advantage in the LEMS drug market but the FDA has pretty much blunted it. Perhaps one option for Catalyst is to take matters to a court. It is possible for it to state that Firdapse is an orphan drug and the approval awarded to Ruzurgi infringes upon that.
However, it remains a bit of a long shot. That is perhaps a reason why the stock is having such a tough time. We highlighted this company last week. Catalyst has been one of the most watched penny stocks on Robinhood this month. (see: The Top 10 Penny Stocks On Robinhood This Month)
CPRX’s stock is down almost 40% from its recent peak price of $6.16. However, Catalyst’s stock is still up 70% since the beginning of this year.