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Why Beyond Air Stock Is Tanking Today

By George Budwell – Dec 9, 2021 at 12:10PM

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A regulatory delay is weighing heavily on the medical device company's shares today.

What happened

Shares of the clinical-stage medical device and biopharmaceutical company Beyond Air (XAIR 2.15%) are down by a hefty 24.9% as of 11:13 a.m. ET Thursday morning. The healthcare company's stock is crashing today in response to a regulatory delay for its persistent pulmonary hypertension of the newborn (PPHN) treatment device known as LungFit.

Although management previously seemed confident that LungFit would get a green light from the Food and Drug Administration (FDA) before year's end, the company announced this morning that a commercial launch in the U.S. is unlikely prior to Dec. 31, 2021. Beyond Air said that this newly revised commercial launch forecast is based on its ongoing communications with the FDA.

A worried investor.

Image source: Getty Images.

So what

What appears to be truly rattling this stock today is the lack of clarity in the company's press release about the underlying reason for this regulatory hiccup. The FDA has been missing regulatory deadlines for scores of non-COVID-19 products of late. So it's not unreasonable to assume that the agency simply kicked the can down the road on LungFit's premarket approval (PMA) submission as a result of its COVID-19 priorities.

However, Beyond Air didn't cite COVID-19 as the reason for this delay. That doesn't mean that the coronavirus isn't to blame for this regulatory setback. But the press release doesn't clarify whether the delay stems from a coronavirus issue or a more worrisome problem with LungFit's PMA. Investors in clinical-stage medical device or drug companies tend to react poorly to information vacuums.   

Now what

Is Beyond Air stock a bad-news buy? It all depends on your take regarding today's regulatory update. If you believe this delay is indeed a FDA logjam problem, then Beyond Air's stock may be worth buying. LungFit, after all, is targeting a billion-dollar addressable market across the whole of its intended indications. That's an enormous commercial opportunity for a company with a market cap of roughly $212 million after today's pullback. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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