In many ways, the rare disease drugmaker Catalyst Pharmaceuticals (NASDAQ:CPRX) had an outstanding year in 2019. The company's first approved medicine Firdapse -- indicated for an autoimmune disease known as Lambert-Eaton myasthenic syndrome (LEMS) -- officially hit the market on Jan. 15, 2019. It subsequently went on to markedly exceed Wall Street's sales projections for the year. As a direct result, Catalyst's shares nearly doubled in value over the course of the year. That's a successful year by most accounts.

A closer inspection of the drugmaker's year, though, reveals some serious problems that could impact its long-term outlook. Last May, for instance, the Food and Drug Administration dealt Catalyst an unexpected blow with the approval of Jacobus Pharma's Ruzurgi for use in LEMS patients between the ages of six and 17. The big deal is that doctors can prescribe Ruzurgi off-label for adult LEMS patients -- a phenomenon that did in fact cut into Catalyst's market share during the latter part of the year. The direct consequence of this unexpected competitive threat is that Catalyst's shares ultimately shed 49% of their value, relative to their 52-week high. 

Paper plane concept illustrating a rebounding trend line.

Image source: Getty Images.

Can Catalyst recapture its mojo in 2020? Let's take a deeper look at the drugmaker's rapidly developing story to find out. 

2020 will be a busy year for Catalyst

In early January, Catalyst released an encouraging corporate update. For the fourth quarter of 2019, the company said that it expects net revenue to come in at approximately $30 million -- a figure that topped Wall Street's consensus estimate by around $600,000. Even more importantly, Catalyst also rolled out a preliminary annual guidance calling for full year 2020 Firdapse net product revenues of between $135 million and $155 million. While that predicted revenue range is more or less just in line with Wall Street's projections, it should still reassure nervous investors concerned about the competitive threat emanating from Ruzurgi. Put simply, Catalyst thinks that Ruzurgi will only have a minor impact on sales this year.  

In addition, Catalyst noted that Firdapse's ongoing pivotal study as a treatment for anti-MuSK antibody positive myasthenia gravis (MuSK-MG) remains on track to produce top-line data in the first half of 2020. This indication wouldn't exactly be a game changer for Catalyst from a revenue generation standpoint, but it would provide another fairly healthy avenue for cash flow generation. As such, this upcoming data reveal could provide a nice boost to the biotech's share price later on this year. 

Last but not least, Catalyst said that it expects a resolution in regards to the lawsuit over Ruzurgi's approval by mid-year. The outcome of this civil suit looms large over Catalyst's fortunes in 2020. If the biotech wins, investors will surely feel far more comfortable owning this small-cap biotech stock. A loss, on the other hand, won't necessarily devastate Catalyst's underlying investing thesis, but it will keep this key risk factor in play for the foreseeable future -- a fact that probably won't sit well with investors. 

Is Catalyst stock worth owning right now?

Investors are clearly starting to warm up to this name. During just the first three weeks of 2020, Catalyst's shares have gained almost 10%. Nonetheless, the drugmaker's shares remain well off of their 52-week highs, which seems to indicate that investors are still nervous about the Ruzurgi threat. This competitive threat, however, is arguably way overblown.

The fact of the matter is that Firdapse hasn't lost a significant amount of market share since Ruzurgi's approval -- and there's also a decent chance that Catalyst will win its pending civil suit. So even though Catalyst's stock does sport an elevated level of risk at this stage of the game, risk-tolerant investors may still want to snap up some shares soon. This small-cap biotech stock, after all, could quickly retest its former highs if Ruzurgi's approval is rescinded and/or Firdapse hits the mark in MuSK-MG later this year.