What happened

Shares of BioXcel Therapeutics (NASDAQ:BTAI) were down by 11.6% as of 3:08 p.m. ET Wednesday. The biotech's shares are retreating today in response to the Food and Drug Administration's decision to extend the review date under the Prescription Drug User Fee Act (PDUFA) for the New Drug Application of BXCL501 for the acute treatment of agitation associated with schizophrenia and bipolar disorders I and II.

Previously, the agency was slated to make a final decision on BXCL501's New Drug Application (NDA) by Jan. 5, 2022. Following this extension, the agency's new target date is April 5, 2022. The good news is that BioXcel reportedly met with the FDA on Tuesday to discuss the NDA, and the company said that the agency isn't requesting any additional clinical data.  

A person drawing a red, downward trending line with a marker.

Image source: Getty Images.

So what

After this latest pullback, BioXcel's shares are now down by a whopping 68% relative to their former 52-week high. Investors have jumped ship lately due to a recent downgrade by Goldman Sachs and concerns about its ability to commercialize BXCL501. Wall Street's low-end 2022 sales estimate for BXCL501 presently stands at a mere $2.8 million. That's not surprising given that most early-stage commercial biopharmas struggle to monetize their first products, at least initially. 

Now what

Is this beaten-down biotech a strong buy? BXCL501 has the potential to generate approximately $500 million in sales within the next four years. That's only $69 million less than the company's current market cap. What's more, PDUFA delays rarely translate into flat-out rejections. It only means the FDA needs more time to review the NDA. So, all things considered, BioXcel might indeed be worth picking up on this significant drop. 

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.