Supernus Pharmaceuticals Inc (NASDAQ:SUPN) spiked 2% out of the gate before profit-takers immediately seized upon the opportunity and brought SUPN stock down nearly 2%. That dip was followed by another spike, and (are you sensing a pattern here?) another dip.
As I write this paragraph, Supernus Pharma is down 3%. That result doesn’t feel likely to stick.
Surely, there are a number of reasons explaining why Supernus is reacting the way it is, but let’s talk catalysts first.
Joining the party of biotechs unleashing positive clinical trial data, SUPN stock posted top-line results from its Phase 2b trial of SPN-812 for children with attention deficit hyperactivity disorder.
The treatment met its primary endpoint, which showed the efficacy of daily doses of SPN-812, ranging from 200 mg to 400 mg, at relieving the symptoms of ADHD according to the ADHA Rating Scale-IV. The results have led Supernus to plan an end-of-Phase 2 meeting with the Food and Drug Administration, beginning Phase 3 trials after.
Supernus CEO Jack Khattar had this to say:
“We are very excited about these results and that SPN-812 met the objectives of the study with an encouraging and strong clinical profile. We believe SPN-812 has the potential of being a well differentiated treatment for ADHD that sets itself apart from current treatment options.”
Why All the Profit-Taking?
The move in SUPN might have you scratching your head. After all, the market opportunity for ADHD treatments is outsized. Economists forecast the market to reach just shy of $14 billion by 2024, from just $6.1 billion in 2014.
According to Rachel Markwick, an analyst with GlobalData:
“The ADHD market is rife with unmet needs. These include a need for more treatment options, clinically relevant head-to-head comparisons between current marketed and pipeline drugs, improved diagnostic tests, and increased education and recognition of ADHD.”
Supernus certainly has a viable alternative treatment. SPN-812, a non-stimulant, showed results atypical with non-stimulants, with 87% of patients showing “a high level of confidence in SPN-812.” The treatment seems to have minimal adverse risks, with most cases in the trial being of a mild or moderate classification.
However, while biotechs are just plain volatile normally, the ever-present threat of a Hillary Clinton presidency seems to have investors spooked and more trigger-happy than usual. Sure enough, over the few weeks after Clinton tweeted her intent to take down price-gouging in the biotech sector, SUPN stock lost 31%. That’s in spite of besting per-share estimates by 300% during that period.
Fast-forward to today, and Supernus stock is up 9.6% since that tweet, and 71% for the year.
If I were a shareholder, I might be taking profits too.
But it’s understandable why there’d be buyers here, too. Supernus is still some 17% away from the median price target of $27.70, and analysts are more bullish than not. Of the six rating SUPN stock, four recommend buying, while two rate the stock a “hold.” It looks a bit frothy trading hands at 49 times earnings, but it’s a biotech after all, and that’s actually under the industry average.
Its growth rate is phenomenal, too — expected to race by at a 150% clip this quarter and 142% for the year. The next five years? 75%. Not too shabby.
That’s enough of a reason to get in on SUPN now, but with uncertainty in the air amid the presidential election, I can’t say I blame you for taking your money and running.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
