x min read

Can Catabasis Pharmaceuticals Inc (NASDAQ:CATB) Recover?

Can Catabasis Pharmaceuticals Inc (NASDAQ:CATB) Recover?
Written by
Chris Sandburg
Published on
March 14, 2017
Copy URL
Share on LinkedIn
Share on Reddit
Share on Twitter/X
Share on Facebook
InsidrFinancial

Catabasis Pharmaceuticals Inc (NASDAQ:CATB) ran up close to 50% at the end of the last week, without any real fundamental catalysts seemingly driving the action. The company is set to stage a conference call this coming Thursday (March 16) and it looks as though the action we are seeing is an attempt by shorter term operators to pick up a speculative position ahead of any good news that hits press on the back of the call.And it looks like it might be a smart play.This one is down pretty heavily year to date, with Catabasis having released some data related to its lead DMD asset back at the end of January, and the data essentially saying that its drug doesn’t work. Well, that was the market's interpretation of the data, anyway (we'll look at this at little more closely shortly).The question is, with the data we've already got in place, what could management tell us no the conference call that would drive some upside momentum?Some might argue that the answer to this question is rooted in the bringing forward of a Parkinson's disease program to the lead, and the relegation of the DMD asset to second fiddle. That's valid, but for us, not likely.For us, it remains all about DMD. By way of a bit of background, Catabasis is currently investigating the safety and efficacy of the drug in question, an asset called CAT-1004, as part of a phase II study in young-boy DMD sufferers. The study is broken into three parts, and the first two parts have already completed. The first part was basically just a safety study, and showed that the drug was well tolerated. The second is the part that read out at the end of January, and related to efficacy. Basically, the drug demonstrated some degree of improvement, but the improvement was deemed not statistically significant, so it was an endpoint miss. The third part, and the part's success on which Catabasis in now heavily reliant, is ongoing, and is basically an extension study of the second part.The third part should read out mid to late this year (we're expecting a third quarter release) and the company – and its shareholders – are hoping that the no stat sig improvement will expand into a stat sig improvement as the patient population expands and the dosing accrues.It's a long shot, but far from an impossibility.The thing to recognize here is that DMD basically has no effective treatments available other than a drug called Eteplirsen, which Sarepta Therapeutics Inc (NASDAQ:SRPT) is currently trying to commercialize. Eteplirsen only targets around 13% of the patient population, and was approved despite some pretty questionable efficacy data, derived from a tiny patient sample.What we're saying here is that Catabasis isn’t going to have to produce anything spectacular to get 1004 approved. If the company can eek out some degree of efficacy, and avoid any serious safety concerns (the latter of which doesn’t seem like it's going to be a problem) then a speculative submission to the FDA, coupled with an accelerated approval pathway (which Sarepta got for Eteplirsen and which Catabasis should get for this one) could see the drug approved as early as next year. Again, it's a long shot, but far from an impossibility, and at its current valuation, there's a lot of upside available that could justify a long shot for a risk tolerant player.And it looks as though these risk tolerant players are piling into the stock, as mentioned, ahead of the call.So to answer our initial question, what could management say on the call that's indicative of success, we're looking for some data specifics that could paint a path to efficacy as the third part reads out. Specifically, does management believe that some of the secondary endpoints, those that demonstrated improvement that wasn’t classed as stat sig, can switch to stat sig at the outcome of the extension.If so, the question then becomes why, and when will we know.We will be updating our subscribers as soon as we know more. For the latest updates on CATB, sign up below!Disclosure: We have no position in CATB and have not been compensated for this article.

Discover Hidden Gems

Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.