The long weekend is over in the US, and markets are back in full swing on Tuesday. We’ve already seen some strong moves in the biotech sector – here are two to keep an eye as today’s session matures, Insys Therapeutics Inc (NASDAQ:INSY) and Cempra Inc (NASDAQ:CEMP). Both are up on positive news ahead of the session start, and look set to log further gains as US markets play out today.

Insys Therapeutics Inc

First, then, Insys. Insys had a start-July PDUFA set for its lead development candidate, an oral administration cannabinoid treatment called Syndros, targeting anorexia in AIDS patients and nausea and vomiting in cancer patients (undergoing chemotherapy). The date was already delayed from earlier in the year, and market expectations were pretty low for the drug’s chances. Heading into the holiday weekend, however, a slight kick up suggested a flicker of hope for the drug.

For those not familiar with the company, Insys is at the center of a scandal involving the highly addictive fentanyl (and some suspicious sales practices) and sentiment has been decidedly negative over the last six or seven months.

No longer.

Premarket on Tuesday, the FDA announced it had approved Syndros in its target indication, and sentiment has shifted on a dime. The company closed out last week at a little over $13.4 a share, up slightly on its $11.4 weekly open. At market open in the US, and at time of writing, Insys is hovering around $16 a share – up circa 20% on last week’s close – and looks set to gain further as volume picks up throughout the session.

It’s a surprise approval, but just how long market sentiment will remain positive towards the company remains to be seen. There are ongoing investigations, and a number of sales reps have plead guilty to what is essentially off label pushing of the company’s other approved drug, Subsys.

Analysts have put peak potential sales of the just approved Syndros at around $1 billion, so given a successful commercialization campaign there’s (theoretically) plenty of further upside to be had. Just how much the pending litigation/investigation will dampen this upside, however, is something we’ll have to wait to find out.

For now, expect further upside as markets digest what will go down as the biggest surprise in biotech this week.

Cempra Inc

Moving on, let’s look at Cempra. This one’s not quite as sensational as Insys’ approval, but it’s news based nonetheless. At market open on Tuesday, the company announced that the FDA had accepted-for-filing both of its new drug applications (NDAs) for solithromycin. The drug, filed under the commercial name Solithera, targets what’s called community-acquired bacterial pneumonia (“CABP”), which is by far and away the most common form of pneumonia in humans. So why two NDAs? Well, Cempra is targeting an approval in two different versions of Solithera – one an oral administration version and the other intravenous. Both versions have some pretty solid phase III data to back them up, hitting primary endpoints on topline from two separate phase IIIs (one involving oral administration only and the other involving intravenous administration followed by oral administration after a prespecified timeframe) and demonstrating very little in the way of adverse events across both cohorts.

Before markets opened on Tuesday, Cempra traded for a more than 3% premium to its Friday close. By market open this had muted somewhat, and the company now (early market Tuesday) trades for $17.29 – a few percentage points off the pre market $17.70 highs but still up (circa 1.2%) on last week’s $17.05 close.

Again, we expect this one to gain further as today’s session matures. It’s playing second fiddle in the biotech sector right now because the Insys approval is drawing most of the speculative attention. When things settle a bit, expect Cempra volume to pick up and drive the company’s valuation to fresh intraday highs.

The drug is also filed for approval with the EMA in Europe, a filing submitted at the end of January this year. From a medium term milestone perspective, the outcome of this filing (as well as any updates as to the status of the domestic filing) is likely the next catalyst.