A couple of weeks ago, we published this piece on development stage biotechnology company Catabasis Pharmaceuticals Inc (NASDAQ:CATB).It wasn't the first time that we had highlighted the company as being one to watch; we actually put forward a long-term thesis as to where we expected Catabasis to go, and why, back in March this year.That piece is available here. CATB Daily ChartAt the time of our initial coverage, Catabasis had just put out some data from a phase 2 trial of its lead development asset, a drug called edasalonexent (CAT-1004), which it is trying to get approved in the US as a treatment for Duchenne muscular dystrophy (DMD).The data was not great but we took a look at the science and put forward the suggestion that it might have been rooted in an issue with dosing and that, over time, a cumulative dosing effect might improve performance. In turn, we pointed to an open-label extension study of the same phase 2 trial as potentially building on the disappointing data and turning things around.That was back in March. Fast forward to mid-September and we got the announcement that the company plans to present the data in question, the open-label extension data, at the 22nd International Congress of the World Muscle Society.On this announcement, the company started to gain strength primarily because it is very rare that a junior biotech in Catabasis' position would submit data as a late-breaking application to one of these industry-leading conferences and even rarer that it would then announce the submission to wider markets if it didn't think the numbers supported safety and efficacy.We now also know that Catabasis plans to present some preclinical data rooted in the same drug but in a collaboration with Sarepta Therapeutics Inc (NASDAQ:SRPT), at the same event. Some reading might already be familiar with Sarepta – it was the company that in September last year picked up a controversial approval for its own DMD drug, Eteplirsen.Anyway, against the backdrop of this activity, the company has taken off.Back in March, when we suggested that the data might have been misinterpreted, you'd have been lucky to sell shares for $1.30 apiece. Fast-forward to today and the company trades for $2.80, having gained 25% during the session on Monday and a further 7% pre-market on Tuesday.Why all this activity?One reason – tomorrow is presentation day.Markets are loading up in anticipation of the numbers hitting press as positive (for the reasons outlined above) and, if the numbers do support further development, the run we are seeing right now will be just the beginning of a longer-term revaluation for Catabasis.So what are we looking for from the data?To put it plainly, any indication that this drug can bring about even a small degree of improvement in its target DMD population is enough to get the stock running. The above discussed Eteplirsen was approved on some very thin efficacy data purely because these patients essentially have no other options available to them. If a company can show that its asset is safe, therefore, and that it can potentially benefit even a small portion of the target population, there is a good chance that it will pick up FDA approval on submission.The risk here is that we see a buy the rumor, sell the fact situation – the company puts out disappointing data and sells off subsequently to the presentation. As outlined, however, the chances of it doing so seem small right now and, when coupled with the relatively low threshold for efficacy requirements, there looks to be more than enough upside on offer to justify the risk.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on CATB, sign up below!Image courtesy of Tõnu Mauring via FlickrDisclosure: We have no position in CATB and have not been compensated for this article.
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