Catabasis Pharmaceuticals Inc (NASDAQ:CATB) Is Finally Playing Out As We Expected

Readers that have been with us for a while might remember our coverage of development stage biotechnology company Catabasis Pharmaceuticals Inc (NASDAQ:CATB) back in March.A few weeks earlier, Catabasis had just taken a considerable hit to its market capitalization, falling from more than $4 a share to around $1.24 practically overnight, on news that its lead development trial had failed to meet the primary endpoint of the study. CATB Daily ChartThe trial in question was set up to investigate an asset called CAT-1004 in a target indication of the Duchenne muscular dystrophy, or DMD. The trail was split into three parts, with the first being basically a safety study (and not all that relevant to valuation), the second being an efficacy readout (the one that caused the company to decline early February) and the third being what amounts to basically an extension of the second, with patients followed up open-label in an attempt to confirm, or reaffirm, any early efficacy signals.The point of our coverage back in March was to highlight the potential for Catabasis to recover a large portion of the lost market strength as and when the third part of this phase 2 study hit press.Our thesis was relatively simple.The early-stage data was disappointing, but very little time had been allowed for dosing to accrue in the patients that comprise the study and, in a condition like DMD, accrued dosing can make all the difference. In turn, we suggested that if the numbers can turn a non-statistically significant improvement into a statistically significant one, which might not be that difficult to achieve given the nature of this condition and the drug in question, then the company should recover and more heading into the end of 2017.Subsequent to our coverage, Catabasis recovered a little bit before giving back the recovery and trading essentially flat throughout April-August. During September, however, the company has started to pick up strength and now goes for $1.83 apiece having run more than 10% during the session on Wednesday.What is this latest run rooted in?The data we've been looking for.Specifically, management announced yesterday that it intends to present data from an open-label extension study of CAT-1004 in DMD patients at the 22nd International Congress of the World Muscle Society. The presentation will take place at 10:30 am CEST on Wednesday, October 4, and it has been registered as a late-breaking submission.A couple of things are important here.First, that the fact that management wants to get this data in front of the industry, and is willing to submit a late-breaking application to do so, suggests the numbers are relatively strong. After all, why would anybody want to get up in front of the professionals that comprise the industry in present disappointing data?The second is that, even if the data isn't fantastic, there is still a strong chance that the district and pick up approval in the US assuming there is some degree of statistically significant efficacy and assuming safety remains in line with what we have already seen.Why is this?Because this is an area of healthcare with a significant unmet need and patients only have one real treatment option available to them right now – Sarepta Therapeutics Inc (NASDAQ:SRPT)'s Eteplirsen. This latter drug (as some reading may remember) was approved last September on the back of questionable efficacy data and the approval was widely regarded as the FDA taking a pretty loose stance on DMD, based purely on the necessity for any treatment on the market, however significant the efficacy it can induce.So where things stand now is that markets seem to be loading up ahead of the data release in anticipation of something positive, in line with the two above-mentioned key points.The risk here is that the data isn't positive, but given we are seeing it hit press as part of a late-breaking presentation, this risk is minimal as compared to the upside that's on offer should it hit press as numbers that shareholders want to see.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 Centre for Alternative Technology www.cat.org.uk via FlickrDisclosure: We have no position in CATB and have not been compensated for this article.