Why Avanir Pharmaceuticals Shares Jumped

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 Avanir Pharmaceuticals , a biopharmaceutical company focused on rare central nervous systems disorders, jumped as much as 13% after the Food and Drug Administration OK'd an accelerated development pathway for AVP-786.

So what: In a pre-investigational new drug meeting with the FDA, Avanir was able to rely on information from previous studies in AVP-923 to gain an expedited development pathway for its proposed neuropathic pain medication, AVP-786. This means that it will only need to run a limited amount of preclinical trials prior to moving on to human clinical trials. Obviously, if all goes well in the preclinical and clinical settings, this could get AVP-786 to market a lot faster and should reduce Avanir's out-of-pocket trial costs. In addition to neuropathic pain, Avanir is angling AVP-786 to treat agitation in Alzheimer's disease and levodopa-induced dyskinesia in Parkinson's disease.


Now what: Obviously, this is good news for Avanir, but to put this is another way, it's like a sports team signing a free agent in the offseason. None of the games have even been played yet, so really anything could happen. In the meantime, investors will really want to focus their attention on sales of Nuedexta, the company's FDA-approved treatment for psuedobulbar affect, or PBA. In the second quarter, Nuedexta net revenue grew 81% from the previous year to $16.5 million, but only 11% over the sequential quarter. If you ask me, with peak sales estimates ranging from $300 million to $500 million, it's failing to live up to the hype in treating PBA thus far. Until I see sales improve or a reason to get really excited about its pipeline, I'd suggest keeping your distance.

Craving more input? Start by adding Avanir Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in biotechs like Avanir, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Why Avanir Pharmaceuticals Shares Jumped originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Investor’s Toolbox

Improve your investing savvy with the right financial toolset.

View Course »

Income Investing

Grow your nest-egg.

View Course »

Add a Comment

*0 / 3000 Character Maximum