What happened

Shares of DURECT (NASDAQ:DRRX) are up 8% at 11:54 a.m. EST, having increased as much as 12% today, as investors jump in ahead of a Food and Drug Administration advisory committee meeting to review its pain drug Posimir scheduled for release Jan. 16.

So what

The original marketing application for Posimir was rejected in 2014, with the FDA requesting that DURECT conduct additional clinical safety studies. The company responded to the requests in June 2019, which resulted in a six-month review period that was supposed to be completed by Dec. 27.

Unfortunately, the agency decided it needed advice from its outside experts and scheduled an advisory committee meeting for next month. An approval decision should come a few weeks to months after the advisory committee meeting, although the agency hasn't set a formal date.

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Investors should be cautious jumping in at inflated prices. All of the information about the initial rejection of Posimir and DURECT's response comes from the company because the FDA doesn't publicly comment on drug rejections. While the FDA might have convened the advisory committee meeting out of undue caution, it seems just as likely that the agency is still concerned about the safety issue that originally caused the rejection.

Now what

While the committee's vote on Jan. 16 will be important, it's only a recommendation, and the FDA has the final say. To get a better idea of what the agency's reviewers think of DURECT's response, biotech investors should check out the package of information that the agency sends to the committee members, which should be posted on the FDA's website two days before the meeting.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.