What happened

Shares of Catalyst Pharmaceuticals (CPRX -0.31%), a maker of drugs for rare diseases, rose by as much as 19.1% on more than three times the average daily volume today. What sparked this rally?

Catalyst's shares are jumping in response to the company's fourth-quarter and full-year earnings report released after the bell Monday. The news is that Firdapse, the company's newly approved medicine for patients with the autoimmune disease Lambert-Eaton Myasthenic Syndrome (LEMS), is off to a strong start since its launch on Jan. 15. 

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Image source: Getty Images.

So what

Despite concerns that Firdapse's commercial launch would be undermined by access to a cheaper form of the drug known as 3,4-DAP, Catalyst stated that it has already transitioned large numbers of LEMS patients onto its treatment, and that most payers are readily providing coverage for the drug. That's obviously great news for Catalyst and shareholders.

Check out the latest earnings call transcript for Catalyst Pharmaceuticals.

Now what

Turning to the details, the company reported that 250 LEMS patients were now taking Firdapse, instead of 3,4 DAP. The drug's rapid uptake has been helped by the fact that most patients are only paying $10 out of pocket for the drug. Previously, skeptics argued that Firdapse's premium price point and a lack of coverage by third-party payers would stunt the drug's adoption. In hindsight, those concerns now appear to have been wildly overstated.

Is Catalyst a buy on this news? With two more late-stage trial readouts on the horizon and Firdapse off to an unexpectedly strong start, this orphan-drug play seems poised to head even higher. As such, investors may indeed want to take a flier on this promising growth play right now.