IBD Sector Leader Catalyst Pharmaceuticals (CPRX) plunged more than 10% on Friday after news that the biotech company has priced a secondary stock offering of 10 million shares at $15 each. The offering is set to close next week. On the positive side, the sector leader has shown superb sales and earnings growth over the past seven quarters.

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Sales growth has ranged between 43% and 98% during the period, while earnings per share grew between 64% and 138%, according to IBD MarketSmith. In an industry group with more than 750 companies, Catalyst has the highest EPS Rating and SMR Rating.

In the third quarter, sales grew 79% to $102.7 million while earnings of 49 cents per share showed 88% growth.

The biotech company makes drugs to treat rare diseases. Its chief product Firdapse achieved a milestone with revenue of $66.2 million during the quarter. Also, the  company increased its sales outlook for the full year to $393 million at the midpoint, or an 83% increase from 2022.

For fiscal 2023, Wall Street expects earnings per share of $1.90, or an 87% increase.

Catalyst Pharma ranks second in the biotech group. Further, the group holds 17th place among IBD’s 197 industry groups.

CPRX Stock’s Recent Wins

The company has been adding some feathers to its cap in recent quarters. In December, it submitted an application for the use of Firdapse through its partner in Japan. The drug treats patients with Lambert Eaton Myasthenic Syndrome (LEMS) and is the only approved treatment for the disease in the U.S. LEMS is a condition that can affect the ability of nerves to send signals to the muscles.

In November, the U.S. patent office accepted two more patent applications for Firdapse while in July, the company got exclusive rights to market Agamree, a drug to treat a rare genetic condition of weakening muscles that can be deadly.

In September 2022, Catalyst won the right to develop and commercialize Ruzurgi, another drug to treat LEMS, in the U.S. and Mexico.

CPRX stock is trading within a long range. IBD MarketSmith‘s chart analysis reveals a handle entry of 15.08 in a rather deep and choppy pattern.

Mutual funds own 63% of shares outstanding. The stock has an Accumulation/Distribution Rating of B, which shows support from fund managers over the past 13 weeks.

Among exchange traded funds that own CPRX stock are BlackRock’s iShares Core S&P Small Cap ETF (IJR) and State Street’s SPDR S&P Biotech ETF (XBI).

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