Please ensure Javascript is enabled for purposes of website accessibility

Why Hyperion Therapeutics Inc. Shares Popped

By Sean Williams - Feb 25, 2014 at 1:58PM

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

Shares of Hyperion jumped after publishing successful midstage results for a key drug in the March issue of Hepatology. Should investors welcome this news with open arms or be cautious moving forward?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Hyperion Therapeutics (NASDAQ: HPTX), a biopharmaceutical company focused on treatment hepatology disorders and other orphan diseases, jumped as much as 15% after publishing the midstage results of its glycerol phenylbutyrate (GPB) study for the treatment of hepatic encephalopathy (HE) -- a worsening of brain function due to reduced liver function -- in the March 2014 issue of Hepatology.

So what: According to Hyperion's results, which tested 178 patients with liver cirrhosis, "GPB significantly reduced the proportion of patients who experienced a HE event (21% compared to 36%), as well as the time to first HE event." With a hazard ratio of 0.56, this would imply a 44% clinical risk reduction in first-time HE events for those taking GPB. Hyperion notes that since the trial met its primary endpoint it will be moving onto a pivotal phase 3 trial later this year or in early 2015.

Now what: There's no way to construe this as anything but good news for Hyperion. GPB demonstrated a meaningful reduction in HE events and length of time noted to first HE event for studied patients. Although Hyperion estimates that its drug could target some 140,000 cirrhosis patients in the U.S., investors should also understand that HE drug competition can be fierce, and Hyperion's GPB would be in no way guaranteed of gaining significant market share. Furthermore, with Hyperion now valued at six times the peak sales of its lone FDA-approved urea-cycle disorder drug Ravicti, I'd suggest that its shares could be nearing a high-water point.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

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