Catalyst Pharmaceutical shares plummet on competitor’s positive results

Catalyst Pharmaceutical (NASDAQ: CPRX) shares tumbled as much as 42% after Jacobus Pharmaceuticals, a competitor, disclosed positive results of 3,4-diaminopyridine (3,4-DAP, amifampridine) in patients with Lambert-Eaton myasthenic syndrome (LEMS) at the AAN2015 Annual Meeting.

LEMS is a rare autoimmune disease with a prevalence of 3000 patients in the U.S. and Canada. In LEMS patients, autoantibodies are formed against calcium channels, resulting in muscle weakness. Approximately 50% of LEMS patients have small cell lung cancer (SCLC) and will not survive for long.

3,4-DAP is recommended to improve LEMS symptoms. The compound blocks potassium channel efflux in nerve terminals so that calcium channels can be open for a longer time. In 2010 BioMarin Pharmaceutical (NASDAQ: BMRN) launched Firdapse (3,4-DAP phosphate) in the EU. Firdapse is the first and only approved drug for this indication.

In October 2012, BioMarin out-licensed North American rights of Firdapse to Catalyst. In August 2013, Firdapse received Breakthrough Therapy Designation from the FDA. In September 2014, Catalyst announced positive Phase III results. Catalyst expects an NDA submission to the FDA by 2015Q3. If approved, Firdapse may cost $60,000-80,000 per year, which would yield sales of $200 million.

For the past 20 years, Jacobus Pharmaceuticals, a family-owned pharmaceutical company has provided LEMS patients with 3,4-DAP for free in the U.S. under an FDA-approved compassionate use program. Compassionate use, also called expanded access, provides a pathway for patients to use investigational drugs that have not yet been approved by the FDA.

The company was founded by David Jacobus in 1977. About 20 years ago, Jacobus began to manufacture 3,4-DAP at the request of the Muscular Dystrophy Association. Jacobus sends 3,4-DAP to patients or their doctors every three months. The only thing Jacobus asks in return is that patients should mail back the ice packs used to protect 3,4-DAP.

Why supply 3,4-Dap for free? “Because supplying the drug for free is the right thing to do,” said Laura Jacobus. She also charged Catalyst with greed and indifference to LEMS patients. “They don’t want to help LEMS patients; they just want to make money.” Jacobus are conducting its own clinical trial to win FDA approval.

However, no one is perfect. The Jacobus compassionate use program can only reach 100-200 patients, which means most patients do not have access to treatment. Even more serious is the cGMP defects of Jacobus in the past. The FDA issued 483 inspection reports for the Jacobus facility in 2011 and again in 2012 (read them here and here).

Catalyst’s Firdapse contains the phosphate salt of 3,4-DAP. The phosphate salt form is more stable than the free base form of the 3,4-DAP that is available from Jacobus. Catalyst CEO Patrick McEnany stressed that their 3,4-DAP is produced under all requirements of cGMP. If there were an approved drug by the FDA, most patients would have easy access to this drug.

Catalyst and Jacobus are racing to get 3,4-Dap approved by the FDA. The winner will get seven years of orphan drug exclusivity in the U.S. and the loser would be frozen out.

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