What happened
A big regulatory win was reaping huge prizes for Tonix Pharmaceuticals (TNXP) on Thursday. Following a new nod from the Food and Drug Administration (FDA) for one of its leading pipeline drugs, the biotech's shares went on a quick trip skyward, rising 33% in price on the day.
So what
With obvious pride and satisfaction, Tonix announced that the FDA has granted its TNX-2900 orphan drug designation for the treatment of Prader-Willi syndrome. This is a rare genetic disorder that frequently leads to obesity and diabetes.
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The FDA's orphan drug designation is reserved for promising treatments aimed at conditions suffered by 200,000 or fewer people in the U.S. Holding such a status grants numerous development incentives, including tax credits, breaks on regulatory fees, development grants that can reach into the millions of dollars, and perhaps most importantly, a seven-year exclusivity period.
"Orphan drug designation by the FDA is an important milestone and further validates our efforts to investigate the utility of TNX-2900 for Prader-Willi syndrome," Tonix quoted CEO Seth Lederman as saying.
The designation is highly prized in the biotech and pharmaceutical industries. This is because such treatments tend to be more profitable than other drugs, as they frequently cost less to develop and can be very profitable, thanks to exclusivity.
Now what
As such, this is inarguably a massive victory for Tonix. Biotech companies are almost entirely dependent on the success or failure of their pipeline programs, and winning orphan drug designation is one of the most significant successes in the industry. The bulls are rushing into Tonix stock right now -- expect many of them to stick around as the company reaps the benefits.
