Why You Should Pass On Investing In This $3.00 Drug Stock

One of things it takes to be a good analyst is to try to look at a company from every angle before buying any shares, especially in the small cap space. Before I recommend any stock I read not only what analysts are noting about the company but what also other contributors are saying, whether it be here or from other financial sites. Obviously sometimes analysts can be conflicted and it always pays to get several different views on a company and its stock before deciding to pull the trigger on a new investment.

I assigned a staffer recently to look at a small early stage drug company called:

Catalyst Pharmaceuticals (NASDAQ:CPRX)

The stock goes for just over $3.00 a share and has been getting some positive attention from analysts recently. I wanted to get some preliminary research done for this possible new position before I dived in deeper myself before making any decision to recommend this company as a holding.

My staffer did very good job putting together a quick overview of the company as well as what analysts were saying about it. Overall it was a positive review – as you can see from the write up that will follow this summary. However, upon further digging and reading what others are saying about the company I am passing as there seems to be one key thing my staffer and analysts seem to be missing on Catalyst Pharmaceuticals.

This was recently captured in a piece by Adam Feuerstein who writes over at TheStreet and is one of the best in the business in finding potential landmines in the small biotech space. It seems Catalyst’s main drug candidate Firdapse is really just a reformulation of an existing drug that has been given away for free for decades for treatment of a rare condition called LEMS which effects a few thousand people in the U.S.

Catalyst was planning according to reports to price this “new” drug at some $200,000 annually. Obviously given the current political environment and the hot water that