(By Rich Bieglmeier) On July 2, 2012, in this column I wrote a story titled, Supernus Pharmaceuticals (SUPN): A Super Stock Or Just The Generic Variety. The biotech is likely to get another chance to answer that question tomorrow. The FDA is expected to decide on epilepsy drug SPN-804.
The Epilepsy Foundation says one in 10 adults will have a seizure sometime during their lives. They can last from a few seconds to a few minutes and "have many symptoms, from convulsions and loss of consciousness to some that are not always recognized as seizures by the person experiencing them or by health care professionals: blank staring, lip smacking, or jerking movements of arms and legs."
SPN-804 is a version of oxcarbazepine (ox-kar-BAY-zih-peen), which is primarily used for epilepsy. It is also used for anxiety and mood disorders, and benign motor tics. It's been approved by the FDA and is marketed by Novartis (NVS) under the name Trileptal. According to Cardinal Health, the brand name drug generates more than $169.9 million per year in revenue.
The purported benefit of SUPN's version could sway DRs to write more scripts for Supernus' drug. Management says the major difference is that its slow-release, once-daily version avoids blood level fluctuations caused by oxcarbazepine and has a "more tolerable safety profile."
Obviously, an FDA OK on Friday is not a "game changer," but for an upstart biotech, it could be a lifesaver. Additionally, FDA approvals and rejections are stock price changers.
For example, on June 26th, Supernus' other epilepsy drug, Trokendi XR, received a tentative approval with some strings attached before the drug can be marketed, which is expected to begin early in 2013. On the semi-positive news, the stock gapped up to $12.23 cents from the previous night's close of $5.71 – definitely a "price changer," especially considering it won't be until June 2013 – at the earliest - before any sales can start. The stock has traded as high as $16.88 since the June announcement.
Oddly, unlike our experience with other pharma stocks on the eve of FDA word, SUPN remains relatively quiet the day before lightning strikes. In June, shares waffled around $5 for most of the month, with a spike in volume two days before the news, and a late run on the 25th.
Today, the price is drifting lower on super light volume. Either this is the best-kept secret on Wall Street, or investors are unsure on what to expect. Once the FDA shows-its-hand, iStock would expect the stock price to at least challenge the 52-week high, if not blow by $16.88. If the regulatory agency throws the red flag, the chart shows support at $9.50ish; anything below $9.50, and look out below, to as low as $6.
One way or the other, Supernus Pharmaceuticals shareholders can expect big changes, as early as tomorrow.