What happened

Catalyst Pharmaceuticals (NASDAQ:CPRX), an orphan drugmaker, gained a whopping 77% last month, according to data from S&P Global Market Intelligence. What sparked this breakout?

Catalyst's shares initially popped on the company's fourth-quarter earnings report on March 18. But the biotech's shares got a second major jolt from a corporate presentation at the Oppenheimer's 29th Annual Healthcare Conference on March 20.

A rocket taking off

Image source: Getty Images.

Taken together, the biotech's latest earnings release and corporate update helped to assuage investors' concerns regarding Firdapse's recent commercial launch. Firdapse was approved by the Food and Drug Administration as a treatment for the rare autoimmune disease Lambert-Eaton myasthenic syndrome (LEMS) in late 2018. 

So what

Firdapse's commercial debut in America was widely expected to be a flop by industry insiders. After all, this branded drug is basically a vastly more expensive version of a medicine known as 3,4-DAP that's been available for free to most patients for over 20 years.

Nonetheless, Catalyst was still able to transition a large number of 3,4-DAP users onto Firdapse during the first two months of 2019. This rapid adoption rate strongly supports the company's internal forecast that Firdapse could eventually generate between $300 million to $900 million in sales as a LEMS treatment.   

Now what

Catalyst has big plans for Firdapse. Later this year, the drugmaker is scheduled to announce late-stage results for the drug in patients with congenital myasthenic syndromes and myasthenia gravis. And next year, Firdapse's proof-of-concept trial in patients with type 3 spinal muscular atrophy is also slated to produce top-line results. If all the stars align, this highly controversial orphan drug could turn out to be a blockbuster-level product. Catalyst's shares, in that case, might have a lot more room to run. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.