Catabasis Pharmaceuticals Inc (NASDAQ:CATB) is a tiny junior biotech based in Massachusetts, with one lead development candidate of any note (there are a couple of preclinical compounds but they aren’t playing into valuation right now) that’s just reported a net loss of $.61 per share or $9.4 million for the second quarter 2016. Despite the report, however, the company gained nearly 4% during Thursday’s session, and boosted this to 5% after hours. It’s up more than 40% since mid-July. This seems counterintuitive, but it’s pretty common in developing stage biotech to see these sorts of swings on event driven catalysts.

So what was the event? Well, alongside the earnings report, Catabasis gave us an update on its two lead clinical trials, and hinted at a data release before the close of 2016. If the data shows efficacy, the company could find itself on the receiving end of some real upside momentum, and in turn, might be an opportunity at current levels to get in ahead of the release. With this in mind, and in the spirit of looking forward to the data, let’s take a look at what the company’s lead candidate is and does, and what we are watching for when the data hits.

The drug in question is called edasalonexent, and it’s targeting Duchenne’s muscular dystrophy, or DMD. In healthy patients, a gene called dystrophin codes for a protein called – not surprisingly – also dystrophin. In DMD patients, the dystrophin gene is mutated, and it either doesn’t produce the protein at all, or it produces ineffective versions of it. When there is a lack of dystrophin in a patient’s system, a protein called NF-kB becomes overactivated. NF-kB in healthy patients is responsible for DNA transcription, cell reproduction, that sort of thing. When it becomes activated, it causes muscle degradation. This is OK when a patient has high levels of dystrophin in the system, because some level of muscle degradation is natural. No dystrophin or low levels of dystrophin, however, translates to higher levels of activated NF-kB, which in turn translates to high levels of muscle degradation – the lead characteristic of DMD as a disease.

Catabasis’ edasalonexent is designed to inhibit NF-kB.  By inhibiting the NF-kB protein, the theory is that it will reduce the muscle degradation in DMD patients, and relieve some of the primary symptoms. There’s a secondary thesis that it can eventually cure the disease, essentially replacing dystrophin, but symptom relief is the target right now.

In early trials, the drug showed some promising signs of efficacy, and was also proven safe and tolerable.

The trial we are looking at now is called MoveDMD, and it’s targeting boys ages 4-7 with DMD. It is split into three parts. The first part is a seven-day safety trial. Eligible patients from the first part of the trial will then move into the second part, which is a placebo-controlled efficacy trial designed to prove that edasalonexent is superior to placebo in controlling DMD symptoms. It’s 12 weeks long, and after the 12-week period, patients who wish to continue on into an extension will be allowed to do so – the third part of the trial. This is a 36 week follow up, and will offer insight into the long term safety and clinical benefit of the drug in question.

There are two co-primary endpoints to keep an eye on when the data hits. The first is simple safety and tolerability, as measured by the rate of adverse events during the initial 12-week period. The second, and probably the more interesting of the two, is a measurement of muscle composition and inflammation as measured by MRI. Ideally, we are looking for an improvement in muscle composition and a reduction in inflammation from baseline as an endpoint hit. However, it is likely that the company will also consider a non-worsening report as an endpoint hit as well, assuming safety and tolerability data is strong. The trial kicked off in April this year, and primary completion is scheduled for December, the latter of which is the month to watch for the data release. Study completion is September next year, based on the 36-week extension arm of the trial.