Catalyst Pharmaceuticals CEO Outlines Biotech's 5 Phases Of Risk

Published: Nov 24, 2014

Catalyst CEO Outlines Biotech's 5 Phases Of Risk

November 24, 2014
By Josh Baxt, Breaking News Staff

Catalyst Pharmaceuticals president and CEO Patrick McEnany doesn’t sugarcoat the challenges of starting a biomedical company. “Biotech’s not for the faint of heart,” he says. “I don’t know the exact percentage of successful companies, but it’s not very high.”

Will Catalyst be different? They recently received good news from a pivotal phase III trial, which brought cheers from the company’s small staff and gave McEnany a better night’s sleep.
Still, the road is strewn with potholes and the company has a lot of work to do before securing FDA approval. McEnany outlines five phases of risk that shadow a company from startup through commercialization: developmental, clinical, regulatory, commercial and financial. Catalyst is roughly halfway through the process. Here’s how it’s working for them.

1. Developmental
Identifying a therapeutic target and developing a small molecule, antibody or other agent to hit it, is a long, arduous journey. Catalyst bypassed this process, somewhat, by acquiring an existing drug, Firdapse, which treats Lambert-Eaton Myasthenic Syndrome (LEMS), a rare muscle disease.

LEMS is an autoimmune disorder, in which the body attacks calcium channels in the nerve endings connected to muscles. Patients experience progressive weakness and are at greater risk for lung cancer. There are few treatments for LEMS, which affects about 3,500 people in the United States. Firdapse is approved in Europe and Catalyst acquired North American rights from BioMarin.

“The premise was that Catalyst would be a virtual company,” says McEnany. “We weren’t going to do any basic research; we were going to leave that up to academia and other institutions.”

The virtual model has the advantage of keeping Catalyst small and lean. They currently have 11 employees, up from seven a few months ago.

2. Clinical
Virtual or not, biotechs live or die by their clinical trial results. As noted above, Catalyst received a big boost in September from their pivotal phase III trial, in which Firdapse met both primary endpoints. Equally promising, the drug was well-tolerated by patients.

“There were 38 patients in the trial and all of them wanted to continue with Firdapse in the open label safety extension,” notes McEnany, who has high praise for Worldwide Clinical Trials, the company that oversaw the complicated phase III.

“How do you build a biotech without doing any basic research, clinical trials or manufacturing?” asks McEnany. “You do it by sourcing out the finest contractors you can find.”

3. Regulatory
Firdapse received FDA Breakthrough Therapy Designation in 2013. Breakthrough status and positive trial results are big wins for Catalyst. Still, there’s no such thing as a slam dunk.

“The development and clinical issues are off the table now that we have the clinical data in hand from the phase III trial,” says McEnany. “Regulatory is a hurdle we have yet to get over.”

Catalyst anticipates submitting a rolling NDA in 2015 and hopes to launch Firdapse in early 2016.

4. Commercial
This is the area where Catalyst is going in-house. They’ve already begun gearing up for the Firdapse rollout, hiring an EVP of corporate development and a VP of patient advocacy and reimbursement. McEnany anticipates growing the staff to around 40, including 15 to 20 in sales and marketing. The future looks promising, but there are always unknown unknowns.

“Every day you read headlines about events that weren’t expected,” says McEnany. “We try to anticipate the things we haven’t experienced, but we’re comfortable with the assumptions we’ve made on commercial risk.”

5. Financial
McEnany has a few pointers for anyone who’s thinking about starting a biotech: Take care of the due diligence up front; hire good consultants; and make sure you have access to capital.

The need to acquire capital is less a phase than a constant companion. Catalyst’s virtual approach alleviates the need to build a large R&D infrastructure, but hiring outside companies to conduct trials and perform other tasks is not cheap.

“You always need to be able to find capital,” says McEnany, “even when the capital markets aren’t good. It’s not a lot of fun, but you have to do it. And plan on more capital than you think you need. You’re going to need it.”

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