PropThink: Catalyst Licenses New Candidate Ahead of November Data Release
(Thomson Reuters ONE) -
By Jake King
Catalyst Pharmaceutical Partners (NASDAQ:CPRX) climbed as much as 18% ahead of
the bell Wednesday after the company announced that it licensed the rights to an
orphan drug for Lambert-Eaton Myasthenic Syndrome (LEMS) from BioMarin
Pharmaceutical (NASDAQ:BMRN). 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
more here).
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 Catalyst claims that 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 to
generate sales 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 be completed until 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.
Read this article in its original form.
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