We’ve had another busy week in the biotechnology sector this week with a whole host of fresh developments translating to volatility in the market capitalization of the companies to which they relate.
At the start of the week, the majority of action was dominated by inputs released at the American Society of Hematology (ASH) meeting but, as the week has matured, markets have turned towards alternative news streams as indicative of sentiment influence.
Here is a look at a couple of the companies that are moving the most towards the end of the week with a discussion of what’s moving each and where we expect the companies in question to go next.
The two companies in our crosshairs for today are DURECT Corporation (NASDAQ:DRRX) and Pfizer Inc. (NYSE:PFE).
First up, then, Durect.
On Wednesday, Durect announced that the Food and Drug Administration (FDA) in the US had accepted its New Drug Application (NDA) for a drug called RBP-7000. This situation is one that is a little bit convoluted but, to simplify, the NDA was actually submitted by Indivior UK Limited, an affiliate of Invidior PLC, as opposed to Durect, based on an agreement that was first put in place back at the end of September this year.
Basically, Invidior bought the patents (and in turn, the asset) from Durect for $12.5 million up front and there is a further $5 million due to be paid by the former to the latter, contingent upon the drug picking approval in the US subsequent to the latest submission. On top of this, there are quarterly earn-out payments that are based on a single digit percentage of U.S. net sales for certain products covered by the assigned patent rights, including RBP-7000.
The drug is a schizophrenia target meaning there is a very large market in the US that is searching for alternative treatment options right now, so not only is the potential approval of this one important from a windfall perspective (the $5 million mentioned above is due on approval) but there’s also the potential for considerable earnings-based on the royalties agreement associated with the asset purchase.
The FDA has accepted the submission for review, meaning that it deems the application complete. Note that this doesn’t necessarily guarantee approval, far from it, but it does suggest that the two companies have managed to jump through the early stage hurdles and it’s a big step towards picking up a regulatory green light in this indication.
Durect has closed up a few percentage points on the news but we expect the major move to come as PDUFA approaches, with the latter slated for July 28, 2017.
Next up, Pfizer.
This one is not quite so positive.
The FDA announced on Wednesday that it had extended the PDUFA date for a drug called XELJANZ (tofacitinib), which the company is trying to get approved for the treatment of ulcerative colitis (UC), by three months.
According to the press release that detailed the extension, the FDA determined that additional review time was necessary due to information recently submitted by Pfizer that, as reported, constitutes a major amendment.
These sorts of extensions are not uncommon and a three-month extension is pretty standard when the FDA feels that a fresh addition to application constitutes a major change, so as far as chances of approval are concerned, it likely isn’t a major development.
With that said, however, markets are pretty fickle when it comes to this sort of thing so any degree of extension is always going to translate to some weakening of sentiment for the company it involves and that’s what we have seen here.
Pfizer is a giant in this space, so it’s never going to move tens of percentage points. With that said, the company closed down a point or two on Thursday, echoing the market’s disappointment with the news.
Original PDUFA was estimated at around March 13, 2018, so with the three-month delay, we are now likely looking at June 13, 2018, as a potential decision date for the drug and for Pfizer in this indication.