What happened
Shares of the small-cap biopharma Veru (VERU 0.39%) are under heavy pressure today. The drugmaker's shares are down by a noteworthy 52% on sky-high volume as of 11:56 a.m. ET Thursday morning.
Veru's shares are taking a big haircut this morning in response to a negative advisory committee vote for the experimental COVID-19 drug sabizabulin. The medication is an orally administered therapy under review by the Food and Drug Administration (FDA) as a treatment for moderate to severe COVID-19 in patients who are at high risk for acute respiratory distress syndrome.
So what
Veru was hoping to get this oral COVID therapy approved via the FDA's Emergency Use Authorization (EUA) mechanism. This 8-to-5 vote by the agency's advisory committee against approving sabizabulin under the EUA pathway might put a damper on these plans, however.
While the FDA doesn't have to follow the recommendation of its panel of experts, the agency rarely goes against the vote of an advisory committee. In fact, the FDA tends to agree with these expert recommendations nearly 80% of the time. So while Veru's sabizabulin might still get approved following this regulatory setback, the odds are decidedly against this outcome.
Now what
Is Veru stock a bad news buy? Sabizabulin, if approved, was expected to be a billion-dollar-a-year earner for the company. A protracted regulatory delay, which appears to be the most likely outcome, could significantly lower the drug's commercial opportunity. As such, investors might be best served by watching this falling knife from the sidelines for the time being.
