Catalyst Pharmaceuticals: Buy the Dip?

Yesterday, Catalyst Pharmaceuticals (NASDAQ: CPRX) announced that its flagship drug, Firdapse (amifampridine phosphate), failed to meet the primary endpoint of a late-stage trial as a treatment for congenital myasthenic syndrome, a genetically based muscle disorder that can lead to a person having difficulty breathing. The drugmaker's stock, in turn, shed 13% of its value during Wednesday's trading session.

Should investors run for the hills in the wake of this clinical setback, or does yesterday's sell-off represent a compelling entry point for long-term-oriented investors? Let's break down the consequences of this late-stage failure in regards to Catalyst's long-term value proposition to find out.

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Source Fool.com