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NEW YORK (
Hyperion Therapeutics(HPTX) is a rare-disease drug developer with an FDA approval decision for Ravicti expected on Jan. 23, 2013. Ravicti is being developed to treat adults and children with urea cycle disorders (UCD) -- a genetic disease that prevents enzymes from removing ammonia in the blood.
As I've written previously, FDA drug approval decisions are prime biotech run-up trading opportunities. Hyperion will be no exception due to its low float (16 million shares outstanding), small short interest and low daily average trading volume. In many ways, I see Hyperion acting similarly to
Supernus Pharma(SUPN) during its first tentative FDA approval.
Hyperion closed Tuesday at $10.54. Once the looming Ravicti approval decision lands on traders' radar screens, the stock could move into the $12-13 per share range ahead of the FDA's Jan. 23 decision, with a spike as high as $15-17 if Ravicti is approved.
I believe FDA will approve Ravicti. The drug is a reformulation of Buphenyl, currently the only product used to control ammonia levels in UCD patients. Ravicti, however, is more tolerable and convenient than Buphenyl while retaining equivalent efficacy, according to clinical data filed in support of the drug's approval.
In September, Hyperion announced a three-month delay in Ravicti's FDA approval decision, necessitated by the agency's requirement for additional time to review data that support the use of the drug in children with UCD. I don't see this delay as a risk to FDA's decision to approve Ravicti.
Hyperion completed an initial public offering in July, selling 5.75 million shares at $10. As of September 30, the company reported $56.5 million in cash and $12 million in debt. Hyperion's quarterly burn rate is approximately $7 million.
That's a good cash position, bolstering Hyperion's run-up potential into the Ravicti approval decision just two months away.
Disclosure: Messier is long Hyperion.