Another setback of 3 months for Zevra (NASDAQ: ZVRA). For long time shareholders including myself, these couple of years this position has been a letdown. By the way the street thinks the FDA will likely approve Arimoclomol.
Aquestive Therapeutics (AQST) is also finally seeing strong momentum, which will likely continue into 2024.
Here is the latest analyst rating for ZVRA.
Canaccord Genuity
Biotechnology | Company Update
Our glass is half-full on 3-month push-out of action date on acrimoclomol to 9/21;
Reiterate BUY, $24 PT
ZVRA-NASDAQ | Price US$6.22 | Market Cap US$216.0M
BUY Unchanged
PRICE TARGET US$24.00 Unchanged
Weakness presents an opportunity to BUY into action date, other catalysts
This morning, ZVRA announced that the FDA has extended the action date on its pending filing for arimoclomol for Niemann-Pick Type C (NPC) by three months to 9/21/24. Recall the company had resubmitted the filing on 12/27/23. We subsequently viewed the quick turnaround by the FDA on accepting the filing on 1/8/24 and issuing an action date with priority review of 6/21/24 as boding well for the filing. With the caveat that it is difficult to second guess what the FDA might eventually do, we are optimistic that the modest 3- month delay of the action date also bodes well for the pending filing. Specifically, we are encouraged by the fact pattern here. First, given this was a resubmission, FDA had ample chance to refuse to file or to not turn around as quickly as it did, or could issue a complete response letter (CRL) on its original timeline. Second, the company has responded to all requests for information in a highly timely manner so far. Third, the FDA has not requested any new clinical data in any of the interactions that ZVRA has had on the resubmission. We confirmed points two and three in our follow-up with management earlier today. Separately, while the circumstances in each case are likely to be very different, we note the FDA has issued several 3-month extensions that have led to timely approvals on/ around the new action dates especially when unmet need in the underlying indications is high. For these reasons, we view today's weakness on the 3-month push out of the action date on arimoclomol for NPC as an opportunity to BUY this significantly undervalued and under-followed stock. In addition to a potential Advisory Committee meeting (AdCom) and action on the NDA, we await Phase 2 data for KP1077 for idiopathic hypersomnia (IH) in 1H24, and a read on the ongoing launch of Olpruva for urea cycle disorders (see here). Reiterate BUY.
Some interesting tidbits from government/FDA documents
The Code of Federal Regulations (21 CFR Sec. 314.60 here) is clear that major amendments also apply to resubmissions of new drug application (NDA) filings. In addition, the FDA's CDER 21st Century Review Process Desk Reference Guide states the following on deciding whether to extend the review cycle by 3 months after a major amendment: "This decision should be based, in part, on whether the amendment has the potential of bringing the application into condition for approval. If there are deficiencies that cannot be addressed by the amendment, the division should generally defer review of the amendment until a subsequent review cycle without extending the review clock." see page 31 here for details. Prior FDA draft guidance, e.g., pg. 5 of the 2018 document and pg. 16 of the 2005 document is also consistent with this philosophy.
Recent 3-month extensions have mostly led to timely approvals
We performed a quick search of filings that were subject to 3-month action date extensions by the FDA. While our list of ~20 filings (mostly 2019+) is not comprehensive, we found most products were approved, while two had complete response letters (CRL); see Table 1 (pgs.2-3). We will be watching pending filings with action dates prior to 9/21/24 closely for any counterintuitive FDA rulings.
No change to model; we still assume a 2025E arimoclomol launch
We include arimoclomol for NPC at an unchanged 60% probability of approval with a potential launch in 2025E and peak unadjusted sales of $302mn in 2034E. We still believe our probability of approval assumption is conservative for a product with an issued action date. We also include KP1077 in idiopathic hypersomnia (IH) and narcolepsy at a 15% probability of approval each, with assumed launches in 2027 and 2028E, respectively. For Olpruva (UCD), which ZVRA is launching currently, we estimate peak sales of $174mn in 2034E, which we view as conservative. Our unchanged DCF-based price target of $24 represents ~285% potential upside from current levels.