What happened
What a difference a week can make to a volatile stock. Following a significant swoon late last week, BioXcel Therapeutics (BTAI 0.77%) sharply reversed course in the subsequent frame. As of early Friday morning, according to data compiled by S&P Global Market Intelligence, its share price had rocketed more than 63% higher week to date.
So what
The monster sell-off occurred last Thursday, after BioXcel released the results from a phase 3 clinical trial of its BXCL501, a therapy that targets the agitation suffered by Alzheimer's disease patients. The results were encouraging, with the drug meeting its primary efficacy endpoint. It was also well tolerated, and produced no serious adverse events.
That wasn't the source of the concern, though. It soon came to light that an investigator at one of the trial's sites might not have been entirely honest in communicating about a significant side effect of the medication. Any alarm bell that relates to a biotech's clinical process is going to rattle the market.
Investors clearly thought their initial, panicky reaction was overblown -- after all, BXCL501 tested well at the end of the day, and that's the factor that really matters. This explains the big leap the stock has enjoyed over the past few trading days.
Now what
It also seems like BXCL501 has a good future ahead of it. BioXcel said that it plans to submit a supplemental New Drug Application (NDA) later this year with the U.S. Food and Drug Administration (FDA). According to the company, there are currently around 100 million Alzheimer's disease-related agitation episodes per year in the U.S. alone, providing a potentially large and deep market for the medication.
