Catalyst Pharmaceutical May Need More Stimulus

| About: Catalyst Pharmaceutical (CPRX)

The current pipeline for Catalyst Pharmaceutical (NASDAQ:CPRX) tells a story of an anemic future. The company is working on two compounds, CPP-115 and CPP-109, with the latter being the furthest along in the clinical trial process. CPP-115 has multiple indications, but all of them are still in the preclinical stage. Therefore, at present, the fortunes of the company are tied to CPP-109. CPP-109, a molecule that is closely related to vigabatrin, is currently in Phase 2 trials for cocaine addiction and there is some literature that hints at the possible efficacy. Notable is the study that is available from Catalyst.

In the study (pdf) - randomized, double blind, and placebo controlled - vigabatrin was used to treat cocaine dependence in a parolee population outside of the United States. Efficacy and safety were reported, but this study had a number of shortcomings. It is important to note, in this study, the retention rates and the final patient size in the vigabatrin and placebo arms. The placebo and vigabatrin arm had retention rates of 41.5 percent and 62 percent, respectively. The final results, as reported, indicated close to a four-fold increase in end-of-trial abstinence in the vigabatrin versus the placebo arms. However, when retention rates and the final patient population size is taken into account, the difference in end-of-trial abstinence drops significantly to just over a two-fold increase and not the four-fold increase reported. Furthermore, the study reported three patients or 6 percent of subjects with “visual abnormalities observed at physical examination,” but once again, when one calculates this using the final number of patients of 31, that percentage becomes closer to 10 percent. The study did not indicate the specific nature of “visual abnormalities,” but it is well known that vigabatrin can cause significant permanent visual defects (pdf) and vision loss. To complicate the interpretation of the results, this study was conducted in a community–based setting where it was “resource poor and without independent daily onsite - monitoring.” To truly gauge the effectiveness of this drug, long-term abstinence rates (six months to 1 year) should have been performed and documented. Instead, the study provided numbers for a four-week follow-up assessment.

A successful treatment for cocaine dependence must address the craving component and this study indicated no difference in cravings for cocaine between the two arms – vigabatrin and placebo. If the drug has no effect on cravings, then compliance will become a significant issue in a less-controlled environment such as an outpatient setting when patients are given prescriptions for CPP-109 by their physician, directed to obtain the drug at a pharmacy and take the medication on a regular basis. Patients can simply not take the CPP-109 and continue their cocaine dependence. A similar scenario is seen with Antabuse, an alcohol - dependence medication that only works when you combine it with alcohol. The combination of alcohol and Antabuse results in a strong “hangover” effect – nausea, vomiting, headache, flushing, and confusion - that dependent patients who crave alcohol can avoid by simply not taking Antabuse and continue consuming alcohol. This contributed to poor usage and sales of Antabuse and the branded drug has been discontinued.

If approved for cocaine dependence, the market potential for CPP-109 may not be as large as estimated. In the drug-dependence space, there have been comparisons to Suboxone by Reckitt Benckiser (OTC:RBGPY) and its 1.2 billion dollar sales figure in 2010. This is an understandable comparison, but not an accurate one. Suboxone is used to treat opiod dependence and that market is twice the size of cocaine addiction. In 2010, it is estimated (pdf) that more than 2 million Americans were dependent on opiates (heroin and pain relievers) and 1 million individuals were dependent on cocaine. By advancing CPP-109 to preclinical studies, Catalyst suggests that CPP-109 may be effective for opiod dependence, similar to Suboxone, but this is tenuous at best. Opiates and cocaine produce opposite biological responses and undergo different mechanisms to produce euphoria – one is due to an increase in neurotransmitter concentration and the other is receptor binding driven.

The current Phase 2b trial has been de-risked a bit from the partnership with the National Institute on Drug Abuse (NIDA). Under the agreement, NIDA will provide approximately 75 percent or 7.5 million of the Phase 2b cost with Catalyst being responsible for the remainder. Per its 2010 10K, Catalyst has no long-term nor short-term debt. If, and when, this drug gets approved, will sales be similar to Reckitt’s Suboxone at 1.2 billion? Or will sales be similar to Forest Labs’ (NYSE:FRX) Campral for alcohol dependence - a much larger market with 18 million affected Americans – at just slightly over 80 million dollars in 2009? Future expectations need to be tempered as there is a higher probability that sales of CPP-109 will be closer to that of Campral.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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