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 rare disease drugmaker Retrophin (NASDAQ:RTRX) climbed by nearly 30% today on exceptionally high volume after the company announced that they had purchased the worldwide rights to the newly-approved bile acid synthesis disorder drug Cholbam from Asklepion Pharmaceuticals, LLC. Per the terms of the agreement, Retrophin will pay Asklepion $27 million in cash and hand over 661,278 shares of Retrophin common stock. Going forward, Asklepion is eligible to receive up to $37 million in cumulative sales, as well as tiered royalties.
So what: Retrophin's outlook has been murky ever since the company's founder and former CEO Martin Shrkeli was ousted for alleged "securities irregularities" late last year. Today's positive regulatory news for Cholbam gives the tiny drugmaker three approved products for rare diseases and further suggests that the company is putting its recent problems in the rear view mirror.
Now what: Retrophin is planning on launching Cholbam within the next two to four weeks, according to the company. Although the drug's peak sales are hard to estimate due to the extreme rarity of this disorder, Cholbam is a highly coveted orphan drug, giving it seven years of market exclusivity and a likely premium pricing structure to boot. In light of all the M&A activity among orphan drugmakers of late, this recent approval and subsequent acquisition of Cholbam's commercial rights therefore might turn Retrophin into a strong buyout candidate moving forward. Time will tell.