Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Zogenix (NASDAQ:ZGNX), a small-cap pharmaceutical company focused on developing therapies to treat chronic pain and central nervous system disorders, tumbled as much as 12% this morning after rival Purdue Pharma's abuse-resistant hydrocodone tablet was granted priority review by the Food and Drug Administration.
So what?: Under the terms of a priority review, Purdue Pharma will have its hydrocodone chronic pain tablet reviewed over a six-month period instead of the standard 10 month new drug application review process. As noted by Zogenix just last week, it's in the process of developing new formulations of its abuse-resistant hydrocodone pain medication Zohydro ER. Zogenix anticipates filing an application for approval for the capsule version in October, but doesn't anticipate filing an NDA for its abuse-resistant tablet until 2016.
Now what?: The biggest ongoing concern for Zogenix investors is whether or not Zohydro ER will continue to sell in its current form. Efficacy certainly isn't the issue with Zogenix's severe pain medication. Instead, the FDA has noted that there's the possibility Zohydro ER could be pulled from market if a competing severe pain medication that was considerably more abuse-resistant made it to market. In other words, if Purdue's tablet is approved (and its approval potential just received a four-month boost), then Zohydro ER's days could be numbered, at least until its newly reformulated capsule hits pharmacy shelves. Still, even if Zogenix also gets a priority review for its new formulation, Purdue is likely looking at a three month head start which could go a long way to building rapport with physicians. It's possible that Zogenix's chance at turning the corner to profitability by fiscal 2015 may have just flown the coup!
Zohydro ER may offer plenty of potential, but compared to this revolutionary product it could be left in the dust!
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.