Catalyst Pharmaceutical Partners Inc. (NASDAQ: CPRX) announced positive topline results from its Phase 3 clinical trial of Firdapse for the symptomatic treatment of Lambert-Eaton Myasthenic Syndrome, or LEMS. In the study, Firdapse was reported as being “significantly superior” to the placebo on both co-primary endpoints. The news sent Catalyst’s shares soaring and we wanted to dig a bit further to see what upside or downside investors should expect ahead.

The clinical trial was a double-blind study with a total of 38 patients that completed the 91-day period. Firdapse is a potassium channel inhibitor that increases the nerve repolarization time, causes an increase in the influx of calcium, increases acetylcholine release, and restores muscle fiber contraction. This ultimately relieves muscle weakness caused by LEMS.

One thing investors may want to consider is that Catalyst’s 2013 annual report mentioned that the company only had 7 (seven) employees. However, it also utilizes the services of consultants including its Chief Medical Officer and several members of its Scientific Advisory Board.

Patrick McEnany, CEO of Catalyst, commented on the clinical trial:

These results show that Firdapse provides an important benefit to LEMS patients and continues to demonstrate a favorable safety profile. We plan to meet with the FDA in the near future to determine the fastest way to get an NDA for Firdapse approved. We are committed to the LEMS patient community and are pleased that we will be launching our expanded access program next month. This program will provide Firdapse at no charge to patients who meet the inclusion/exclusion requirements.

Adam Feuerstein reported, from TheStreet, that this report is not as favorable for those suffering from LEMS as one might think. He said:

The company has not disclosed a price but analysts believe the drug will cost upwards of $60,000 to $80,000 per year… Catalyst is hardly the feel-good story of a company bringing a new treatment to patients suffering from a horrible, orphan disease. Catalyst is a profiteer. Firdapse is not a new treatment for LEMS. The active ingredient in Firdapse is a compound known as 3,4-Dap, which has been available in the U.S. for more than 20 years. Doctors treating the small numbers of LEMS patients in the U.S. can obtain inexpensive 3,4-Dap from compounding pharmacies.

LEMS is extremely rare. It is often associated with small cell lung cancer. Medscape shows under the Epidemiology as follows:

The true incidence of LEMS is unknown. An estimated 3% of patients with SCLC have LEMS. The prevalence of SCLC is 5 cases per million population in the United States. Because only 50-70% of patients with LEMS have an identifiable cancer and because LEMS goes undiagnosed in many patients, the true total prevalence of LEMS may be considerably higher.

The overwhelming majority of cancers associated with LEMS are SCLC. However, many different malignancies may be involved. A partial list includes non-SCLC; neuroendocrine carcinomas; lymphosarcoma; malignant thymoma; cancers of the breast, stomach, colon, prostate, bladder, kidney, gallbladder, and rectum; basal cell carcinoma; leukemia; lymphoproliferative disorders such as Castleman syndrome; and Hodgkin lymphoma.

According to one estimate, there are approximately 400 cases in the United States at any given time. However, this estimate does not take into account the number of patients with LEMS who do not have SCLC or any other identifiable malignancy.

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Even after a 11% gain to $3.32, this stock has a 52-week range of $1.29 to $3.65 and it has a market cap of $223 million. We would also note that the 15.4 million shares traded on Tuesday was more than 15 times its normal trading volume.

Ultimately, investors and consumers will make their call and the money will follow in or out of this name. We have included an image showing the drug pipeline for Catalyst below.

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