Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) just reported that the FDA has granted Orphan Drug Designation to its lead development candidate, and the company is up nearly 10% on the news. The drug in question is called Firdapse, and it’s targeting a rare condition called myasthenia gravis (MG). There’s a big unmet need on this one, and Catalyst is pushing to fill the gap with its candidate. The drug is has completed a number of late stage trials in other indications, specifically a global phase III in a related condition called, Lambert-Eaton myasthenic syndrome (LEMS), and data from these trials look good as far as feeding into the MG trial is concerned. It’s a phase II, and topline is set to hit press early 2017 (we read this as first quarter).

The drug also has Breakthrough Designation, and a combo of BD and OD is a real bonus for a rare disease target, so with this in mind, and ahead of the topline release, let’s take a look at the drug in question, and what we’re looking for from the trial come data day as indicative of efficacy.

So, as mentioned, it’s targeting a condition called MG. MG is a neuromuscular disease that is degenerative, and leads to muscle weakness in various parts of the body. While there is no strict definition as far as which parts of the body are affected, it generally limits itself to the face and neck. Scientists aren’t 100% on the physiology of the condition, but they know it comes about as the result of defects in impulse transmission from nerves to muscles. The MOA is pretty complicated, but the drug essentially blocks potassium channels to increase what’s called action potential in nerve terminals. Increased action potential means the calcium channels in the nerves are open for longer, and this allows more of a neurotransmitter called acetylcholine to be released. More acetylcholine translates to more muscle stimulation, countering the effects of MG.

The drug is already approved in Europe (since 2010) in a LEMS indication, and marketed by BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) in the region.

So what are we looking for from the data as indicative of efficacy?

The company has been pretty quiet on the trial, and as yet hasn’t registered it with clinicaltrials.org. As such, the primary endpoint is a bit of a mystery – but that doesn’t mean we cant forecast our expectations.

It’s a double blind placebo control, so chances are the primary endpoint will be an improvement in MuSK MG symptoms from baseline over the control arm of the study. We can further estimate that this improvement will be measured using some kind of patient assessment (as opposed to a physiological based assessment). There is some evidence of an antibody called anti-MuSK correlating with severity, and this might play into the data interpretation as well.

So, bottom line, we are looking for an improvement in muscle weakness symptoms in the patients that are part of the active arm, when compared to the control arm. It’s a very small study (target enrollment is 20 patients, men and women) but this condition is rare enough for that not to have too much of an impact on the data validity come release day.

Secondary endpoints will likely include safety and tolerability, so alongside the baseline improvement we’d also like to see a low grade AE report, and if any high grades, then a low frequency.

What’s the likely impact of positive topline on the company’s market capitalization?

MuSK-MG is a subtype of MG, so this limits the patient population a little bit, but not to the point that an approval wouldn’t be worth a lot to the company. The former accounts for up to 8% of the latter, equating to a potential patient population somewhere in the region of 4500 patients in the US. This type of MG is at the more severe end of the scale, and so sufferers will likely have no hesitation in seeking treatment. Current SOC is pretty ineffective in many of these 4500, so it won’t take too premium a price point to bring in a decent revenues figure for Catalyst on approval. As such, positive topline is probably worth a 10-20% upside on the company’s current market capitalization come data day.

One to keep an eye on.