Catalyst Pharmaceuticals (CPRX) - Get Report received a rare and embarrassing "refuse to file" letter from the U.S. Food and Drug Administration on its new drug application for a rare muscle-wasting disorder, the company said Wednesday.

The FDA deemed the approval application for the Catalyst drug Firdapse to be "not sufficiently complete" and requested additional information, the company said.

Catalyst shares were down 51% to 91 cents in trading early Wednesday. The stock closed Tuesday at $1.85.

Catalyst submitted Firdapse last December, seeking approval as a treatment for Lambert-Eaton Myasthenic Syndrome, or LEMS, a rare neuromuscular disease which causes progressive muscle weakness.

Firdapse is controversial because it is essentially identical to an inexpensive, unapproved drug known as 3,4-Dap currently used to treat LEMS patients for more than 30 years.

Catalyst is trying to take advantage of a loophole in U.S. law that allows companies to seek approval for old drugs that are currently in use to treat patients but lack formal marketing clearance from the FDA. If Catalyst were to secure approval for Firdapse, the company could charge a sky-high price to treat LEMS patients while also blocking access to cheaper 3,4-Dap.

Some doctors treating LEMS patients have accused Catalyst of profiteering off vulnerable patients in much the same way Valeant Pharmaceuticals (VRX) and Turing Pharmaceuticals, among other drug companies, have come under intense criticism for raising the price on established drugs.

The FDA's refuse-to-file letter throws a significant roadblock in front of Catalyst's regulatory plans for Firdapse. The company said it plans to meet with the FDA "in the coming weeks" to determine what information is needed before the drug can be resubmitted. No timetable for that resubmission was provided.

Jacobus Pharmaceuticals has been providing 3,4-Dap to LEMS patients free of charge for more than 20 years and is now working to get the drug approved officially by the FDA.

The Catalyst setback with Firdapse gives Jacobus more time to secure FDA approval for 3,4-Dap first and possibly freeze out Catalyst for seven years due to the market exclusivity granted newly approved orphan disease drugs.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.