By Jake King
Catalyst Pharmaceutical Partners (NASDAQ:CPRX - News) climbed as much as 18% ahead of the bell Wednesday after the companyannouncedthat it licensed the rights to an orphan drug for Lambert-Eaton Myasthenic Syndrome (LEMS) from BioMarin Pharmaceutical (NASDAQ:BMRN - News). Catalyst took on the development and commercialization of Firdapse, which is currently in a Phase 3 trial, and will provide future milestone and royalty payments to BioMarin upon certain criteria. BioMarin made a $5M investment in Catalyst, which will be converted into CPRX common stock either 30 days after CPP-109 data, or by March 31, 2013. Catalyst reiterated in Wednesday's press release that the company plans to release top-line data from its Phase 2b CPP-109 trial in the first half of November (read morehere).
Today's announcement is positive in the long-term for the company, who's pipeline is largely focused on addiction treatment. Catalyst develops its lead candidate, CPP-109 (vigabatrin), as a treatment for cocaine and methamphetamine addiction, while CPP-115 is a more potent version of the drug. The compounds work by increasing GABA levels in the brain, which in turn reduces dopamine production and the pleasurable feeling associated with cocaine or methamphetamine use. A previous CPP-109 trial (2a) reported lackluster results due to poor compliance among patients, but Catalystclaimsthat further analysis demonstrated efficacy in patients who remained compliant; the 2b trial is the second attempt at proving CPP-109's safety and efficacy. Vigabatrin has been around for some time (marketed as Sabril) and is approved as a treatment for infantile spasms and some forms of epilepsy. And while the drug has a history of causing vision problems when used chronically, Catalyst believes these side effects are a low risk with short-term use of CPP-109.
Firdapse is an interesting addition to Catalyst's pipeline. LEMS is a rare autoimmune disease that results in muscle weakness, fatigue, and stiffness, and can be dangerous when weakness involves respiratory muscles. It is a paraneoplastic syndrome, meaning that it is often a byproduct of a malignancy elsewhere in the body, usually lung cancer. When LEMS is associated with a malignancy (50% of cases), treatment of the cancer often alleviates LEMS symptoms, begging the question, "How well can this drug do?" The European Medicines Agency approved Firdapse for LEMS treatment in 2009, which went on togeneratesales of $6.4M and $13.1M for BioMarin in its first two years on the market. For a company of Catalyst's size ($50M market capitalization), domestic sales even in that range would be substantial and support a higher valuation for the company. Of course, it bears noting that the first portion of the Phase 3 LEMS trial (double-blind, followed by open-label) won't becompleteduntil the second half of 2014. That means time and cash before the company can bring Firdapse to the U.S. market. We estimate Catalyst's available capital at around $16M following an August capital raise and BioMarin's $5M addition. Catalyst burns approximately $5M annually, so the company should be able to continue operating without additional cash for some time. The stock is likely to rise ahead of the Phase 2b data, and while the Firdapse licensing is a positive for CPRX, pending dilution from the BioMarin deal may trouble shares until resolved.
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