Catalyst Pharmaceutical Partners (CPRX) Plunges on Questionable Drug

Joel Anderson  |

Shares in small-cap biopharmaceutical company Catalyst Pharmaceutical Partners (CPRX) tumbled sharply Friday morning on heavy volume. Catalyst's stock opened down 21.5 percent, saw losses reach 34.5 percent by mid-morning, and remained off just under 25 percent by early afternoon. There was no immediately apparent reason for the major sell-off, which saw volume nearing 8 million shares as compared to an average daily volume of about 2.5 million, except for an article by analyst Adam Feuerstein.

Firdapse Not the Only LEMS Treatment

The most damning allegation included in Feuerstein’s article was that a private, family-owned pharmaceutical company, Jacobus Pharmaceuticals, manufactures and distributes a drug called 3,4-dap for treatment of Lambert-Eaton Myasthenic Syndrome (LEMS) – a rare neuromuscular disease that leads to progressive muscle weakness and affects only a few thousand Americans a year – at no cost. This is trouble for Catalyst, which is currently seeking orphan drug status for Firdapse, another drug that treats LEMS. Firdapse is already being used to treat LEMS in Europe and Catalyst had licensed it from Biomarin Pharmaceuticals (BMRN) , its European distributor, for use in the United States. They’re currently seeking FDA approval for the drug and, should the current Phase III clinical trial return positive results, the company is anticipating a approval in 2015 and to begin selling in 2016.

But 3,4-Dap has been available for decades and is an equivalent drug to Firdapse, undercutting the potential for tremendous profits for Catalyst. Catalyst anticipates charging about $60,000 a year for Firdapse treatment, so Feuerstein’s revelation could be potentially damning.

Blemish on a Strong Year

Friday’s plunge comes amid a strong year for Catalyst, that saw the stock gain nearly 680 percent from January 1 by the time it hit its 52-week high on October 3. The company’s run, though, has been driven in large part by the potential of Firdapse. The sharp downward move also comes just two days after Roth Capital raised their price target for the stock to $3.75 a share. After today’s drop, shares are trading at just under $2.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


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