Zogenix, Inc.(NASDAQ:ZGNX)’s shares have gone up on Wednesday, after investors speculated that a late decision on the lead drug of the company may result in a positive approval in the weeks to come.
Zogenix reported on Tuesday that the Food and Drug Administration would take some more time to review its long-acting version of hydrocodone painkiller, Zohydro. The FDA has not given any explanation for the holdup, however, it has hinted that it the review may be delayed for a few weeks only. Zogenix has said that the company has not been asked to provide any extra information.
If FDA approves of Zohydro, it would be the first pure hydrocodone medication that will be available in the US. Presently, all the available products combine the drug with lower-grade painkillers, like acetaminophen. Investors may have been surprised at the company’s announcement that FDA is still reviewing the drug, making them wonder about the negative review from the federal advisers. An FDA panel of specialists had voted 11-2 against the drug in December over concerns that it had the potential to be abused by people, who are addicted to painkillers. Hydrocodone is a part of the family of medicines called opiates, including codeine, methadone, morphine and oxycodone.
The FDA is not bound to abide by the guidance of its advisers, even though it often does so.
Michael Tong of Wells Fargo has mentioned in a note to shareholders that the holdup may mean well for Zogenix, because there were possibilities of FDA rejecting the drug straight away if it thought that the drug cannot be approved. Tong also said that the short-term delay may indicate that the FDA is working on steps to ensure that the drug is safe to consume.
Tond rates the stock as Outperform and his price target is $1.21.
Shares of the company soared 40.50% to $1.70.