Biohaven stock hurdled its 50-day and 200-day lines Tuesday after the Food and Drug Administration granted its spinocerebellar ataxia treatment a speedier review time.
Spinocerebellar ataxia, or SCA, is a neurodegenerative condition that affects the cerebellum and spinal cord. Over time, patients lose coordination, balance and movement control. The FDA previously refused to accept Biohaven's application for approval of its drug, troriluzole, due to a mixed Phase 3 study.
In response, Biohaven ran another study showing troriluzole slowed progression by 50% to 70% over a three-year study. That represents a 1.5- to 2.2-year slowdown in disease progression, William Blair analyst Sarah Schram said in a report.
Now, the FDA will make an approval decision on troriluzole within the next six months.
"In that we've detected some level of angst from investors as to whether FDA would actually accept this filing, we think shares should react positively to this news today," Piper Sandler analyst Christopher Raymond said in a client note.
On today's stock market, Biohaven stock jumped 11.2% to 42.54.
Biohaven Stock: Third-Quarter Approval?
Piper Sandler's Raymond expects an approval decision before Aug. 11. That lines up with Biohaven's guidance for potential approval to come some time in the third quarter.
"We like the chances for approval," he said.
Biohaven had a mixed Phase 3 study, suggesting the benefits of troriluzole might not be robust. So, with the FDA's blessing, the company designed a study using real-world evidence. That showed promising results, with a 50% slowing of disease progression at three years compared to the natural history of the disease.
"Because of the FDA's recent flexibility, especially with serious neurological conditions with no treatment options like SCA, and its apparent blessing on the RWE (real-world evidence) protocol, we think the chances for approval here are high," Raymond said.
He rates Biohaven stock an outperform.
Topline Benefit Could Be Massive
RBC Capital Markets analyst Leonid Timashev was more cautious. Historically, 90% of drugs that win a speedier priority review, like troriluzole, also win FDA approval. That compares to an 81% approval rate for those without a priority review.
He sees it more likely the conservative Center for Drug Evaluation and Research will consider the firm's application for troriluzole. CDER is a group within the FDA.
Timashev, who has an outperform rating on Biohaven stock, sees a 30% chance troriluzole gains FDA approval in the third quarter. But it would be incredibly bullish for shares if the approval happened, he says.
"Troriluzole represents a high value rare disease indication with ~$1B in U.S. sales potential, and we would expect a steep launch curve given it is a rare disease," he said. "We believe an approval could add as much as $4B in fair value, which would imply +$30-35/sh and shares nearly doubling from here, and downside could bring shares back to the low-30s in our view."
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
