Why Shares of BioXcel Therapeutics Shot Up 25.4% This Week

Investors may be anticipating a positive review by the FDA of the company’s lead drug candidate.

Investors may be anticipating a positive review by the FDA of the company’s lead drug candidate.

What happened

Shares of BioXcel Therapeutics ( BTAI 15.97% ) rose 25.4% this week, according to data from S&P Global Market Intelligence. The stock closed at $17.66 a share on Friday, then opened at $17.70 on Monday.

The company’s shares rose throughout the week, going as high as $22.13 on Thursday. So far this year, BioXcel Therapeutics stock is up more than 7.5%.

An Alzheimer's patient is attended to by a family member.

Image source: Getty Images

So what

The company is a clinical-stage biopharmaceutical company that uses artificial intelligence to help find neuroscience and immunology therapies. Investors are jumping in with high expectations that the company’s lead therapy BXCL501 will be approved by the Food and Drug Administration (FDA) next month to treat agitation connected with schizophrenia and bipolar disorder.

The Prescription Drug User Fee Act (PDUFA) date set by the FDA for a decision is April 5, signaling the possible end of its review process. The FDA had previously said it would make its decision on the BXCL501 New Drug Application (NDA) by Jan. 5, but pushed the date back by three months.

There are solid reasons for investor optimism. The company said it’s already hiring sales representatives and working on marketing for the drug. A survey of 150 healthcare providers found that 83% had a favorable impression after reviewing marketing materials and added they would prescribe it to 40% of their schizophrenia and bipolar patients.

On top of that, an approval would make it more likely that the company could quickly expand on the label usage for BXCL501 as it has the drug in two Phase 3 trials to treat agitation in Alzheimer’s patients. BioXcel has submitted an Investigational New Drug application to use the drug as an adjunct therapy for major depressive disorder (MDD).

Now what

Getting its first marketed drug approved would be a huge deal for BioXcel. The company reported no revenue the past two years. As of Dec. 31, it had $233 million in cash, enough at its current burn rate to get it through the next two years. If the drug is approved, though, the company will really start to spend money with the hopes of quickly monetizing the drug.

There appears to be plenty of potential there. According to BioXcel research, there are more than 150 million people globally with schizophrenia, bipolar disorder, dementia, delirium, or opioid-use disorder and more than 13 million patients just in the U.S. who experience agitation from those diseases.

Bear in mind, though, that another extension of the FDA’s decision, or anything less than an approval of the drug — such as a request for more data, a complete response letter, or an outright rejection — could send the stock plummeting.

Read this article on Motley Fool

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