Why Hyperion Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biotechnology company Hyperion Therapeutics (NASDAQ: HPTX  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Hyperion and see what CAPS investors are saying about the stock right now.

Hyperion facts

Headquarters (founded)

South San Francisco, Calif. (2006)

Market Cap

$246.7 million

Industry

Biotechnology

Trailing-12-Month EBITDA

($27.4 million)

Management

CEO Donald Santel (since 2008)
CFO Jeffrey Farrow (since 2010)

Cash/Debt

$56.5 million / $12.0 million

Competitors

Alexion Pharmaceuticals
Cumberland Pharmaceuticals
Salix Pharmaceuticals

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 69% of the 13 members who have rated Hyperion believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star zzlangerhans, tapped the stock's recent surge as particularly unsustainable:

Hyperion is a strange case. Not because the FDA informed them that they wouldn't have a decision on Ravicti by the January 23 PDUFA date -- that's sadly become a common occurrence over the last two years. The odd part is that Hyperion chose to telegraph that Hyperion had been approved by elaborating that the reason for the delay was to iron out labeling and post-marketing requirements. The market therefore reacted as though approval had been announced, sending the stock up 25% since the announcement.

I see Ravicti approval as a sell-on-the-news event. There's already a standard treatment of urea cycle disorders called Buphenyl. Ravicti is an upgrade with less frequent dosing and better tolerability, but Buphenyl revenues are only about [$15M] per year. How much will Hyperion be able to chisel out of insurers for an upgrade? ...

The only question now is will the news be what everyone apparently thinks it will be, and has approval been completely priced in. If so, I don't think the current iteration of biopharma traders will stick around to see if Ravicti is really worth a [$250M] market cap.

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