Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Xeris Biopharma Stock Is Jumping Today

By Cory Renauer – Dec 31, 2021 at 8:42AM

Key Points

  • Earlier this year Xeris Biopharma merged with Stonebridge Biopharma, partly to acquire Recorlev, a new treatment for Cushing's syndrome.
  • Cushing's syndrome patients suffer from an overabundance of the hormone cortisol, which Recorlev helps reduce.
  • With a low valuation now and more than one drug to sell, Xeris Biopharma could be a top-performing stock in 2022.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The FDA approved Recorlev for the treatment of endogenous Cushing's syndrome.

What happened

Shares of Xeris Biopharma (XERS), a small-cap biopharmaceutical company, are on the move following good news from the Food and Drug Administration (FDA). Investors excited about the company's latest new drug approval drove the stock 27.7% higher as of 12:07 p.m. ET on Friday.

So what 

In May, Xeris Biopharma agreed to use shares of its own stock to acquire Strongbridge Biopharma, which was developing Recorlev. The decision to acquire Strongbridge came shortly after the FDA began reviewing a new drug application for Recorlev, and it looks like Xeris made the right decision.

Scientist looking down into a microscope.

Image source: Getty Images.

Recorlev is a purified isomer of ketoconazole, a decades-old drug used to treat fungal infections. Today, the FDA approved it to treat patients with Cushing's syndrome, or hypercortisolism.

During trials leading to its approval, treatment with Recorlev helped normalize the amount of cortisol coursing through a patient's bloodstream.

Now what

Cushing's syndrome is rare, but patients display a variety of symptoms usually associated with more common diseases, including elevated blood pressure and blood sugar. As such, it's often misdiagnosed. The availability of a new tablet to treat the disorder could bring enough patients out of the woodwork to drive annual sales above $200 million in a few short years.

Recorlev wasn't the only rare disease drug Xeris acquired from Strongbridge. The company also picked up Keveyis. This is the first and only available treatment approved by the FDA to treat primary periodic paralysis. 

During the first nine months of 2021, Keveyis sales rose 33% year over year to $30 million. With the addition of Recorlev to Xeris' product line, the company could feasibly begin generating annual sales above $100 million before the end of 2023.

At recent prices, Xeris Biopharma sports a very modest market cap of just $366 million. That seems extremely cheap for a company with several commercial-stage products. I wouldn't be surprised if this biotech stock shoots through the roof in the new year.

Cory Renauer 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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.