Puma Biotechnology Inc (NASDAQ:PBYI) is running up this week on news that the FDA has set aside a date for a review panel to take a look at its lead development asset – neratinib. The drug is an oncology candidate, and Puma is trying to get a green light for commercialization as a treatment for patients with HER2-positive breast cancer that has previously been treated with a trastuzumab containing regimen.

For those not familiar with the process of getting a drug past the FDA, the first step is getting the agency to accept a new drug application (NDA) for review. Once accepted, the agency will set a PDUFA (which is a date by which it intends to have made and published a decision on the drug in question) and then sometimes, if it deems it necessary, will set an advisory panel review meeting date. This is a meeting that gives a group of experts in the space (generally made up of scientists, physicians etc. in the particular subsection of healthcare at which the drug is targeted) a chance to discuss the merits and potential pitfalls of the drug, and then make a recommendation to the FDA as to their opinion on whether the drug is safe, effective and should be approved or not.

The FDA doesn’t have to follow the decision of the panel (and there have been numerous occasions over the last five years on which we’ve seen the agency go against the recommendation of its review panels) but the outcome offers key insight into the considerations of the FDA ahead of PDUFA and – by proxy – final decision.

So, Puma initially submitted the NDA for this one last year, and announced that the FDA had accepted he application for review back in September. The agency didn’t set a specific PDUFA on this occasion (which is unusual, but not unheard of), but markets assume (and the assumption is a logical one) that the decision will hit press at some point in July. The latest news, the announcing of the agency’s setting of an advisory review panel, will see the Oncologic Drugs Advisory Committee (ODAC) meet on May 24, 2017, which gives the FDA somewhere in the region of eight weeks to digest the outcome of the meeting, and form its own conclusions (and in turn, make its own decision) on the green or red lighting of the breast cancer drug.

It’s worth noting here that the setting of an advisory panel meeting is no real indication either way as to the chances of a drug getting approval or getting turned down when it goes in front of the regulators in the US. Some view it as potentially negative, in the sense that the FDA must be getting a second opinion as it is unsure about a particular aspect of the safety or efficacy profile of the drug in question; in this instance, neratinib. Ask others, however, and they’ll tell you it’s a good sign because it suggests that the agency is looking to approve the asset, and is pulling together the ODAC to get a confirmatory thumbs up (a kind of last minute check, if you will) before it gives a green light.

Neither of these suggestions are particularly accurate, and market response to these sorts of announcements, and should be taken with a pinch of salt. In this instance, markets are trading up on Puma ahead of the meeting. The company currently goes for a just shy of $40 a share, trading for a close to 12% premium on its pre-announcement market capitalization.  We suspect that this is speculative loading ahead of both the agency’s final decision, and the review panel’s outcome. Both have the potential to be real binary catalysts, with obviously the major weighting on the second of the two decisions, and the attention that the announcement of a panel review meet setting brings to the company looks to have also brought with it a spate of speculative buy volume.

So what’s next?

Well, now it’s all about decision day. As we say, chances are we’ll see some loading up ahead of this day, and there’s a gap to close on the charts, so don’t expect Puma to give back too much of the just earned gains moving forward.