What happened

Shares of Zogenix (ZGNX) rose nearly 24% today after the company announced that it had come to an agreement with the Food and Drug Administration to resubmit a new drug application (NDA) for Fintepla, a drug candidate intended to treat seizures associated with Dravet syndrome. The development resumes the process for potentially getting the drug on the market after an embarrassing delay. 

Regulators handed Zogenix a refusal-to-file (RTF) in April. In other words, the FDA decided it wouldn't even consider Fintepla for review after finding two errors in the original NDA. The company apparently didn't include all nonclinical studies of the drug and submitted an incorrect version of a clinical data set. The issues have been cleared up after a recent meeting, and the NDA can now be submitted for review. But it won't happen until the third quarter of 2019. 

As of 11:53 a.m. EDT Thursday, the stock had settled to a 19.6% gain.

A woman checking her smartphone and pumping her fist in excitement as cash money falls around her.

Image source: Getty Images.

So what

Today's news puts Zogenix back on the path to potentially receiving marketing approval for Fintepla, but investors may want to inject some caution into their optimism. The drug is racing to compete with Epidiolex from GW Pharmaceuticals for the same indication, which makes the three-month delay potentially costly.

Now what

Will a three-month delay really matter in the long run? Well, prior to receiving the RTF letter from regulators, analysts projected that Fintepla might be able to generate peak annual sales of $600 million in Dravet syndrome by 2029. Considering that the errors in the original NDA weren't related to the drug candidate's performance, it's possible this episode is forgotten. 

That said, Zogenix is in this position because of its inexperience as a pre-commercial drug company, which is a risk investors cannot dismiss during market launch and while it is ramping up sales.