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Biotech Catalyst Play: Neos Therapeutics Inc (NASDAQ:NEOS)

Biotech Catalyst Play: Neos Therapeutics Inc (NASDAQ:NEOS)
Written by
Chris Sandburg
Published on
September 1, 2017
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Back in June, we published this piece presenting what we saw as a great opportunity to pick up an exposure to biotechnology company Neos Therapeutics Inc (NASDAQ:NEOS) ahead of a near-term catalyst for the stock. Within a few weeks, the catalyst hit press and our readers who took position picked up a nice clean quick turnaround profit on the stock.Fast forward a few months, and we've got another one. Yet again, it's rooted in a near-term catalyst for Neos.Some readers might remember the last catalyst, but for those that don't, it was rooted in a drug called Cotempla XR-ODT. Neos was trying to get it approved in a target indication of ADHD, specifically targeting a subpopulation of children between the ages of 6-17 that have difficulty taking the current standards of care (SOC). As most will likely already know, ADHD is a brain disorder marked by an ongoing pattern of inattention and/or hyperactivity-impulsivity that results in an interference with everyday life. It's most common in children and the current standard of care (seemingly counter-intuitively) in the space right now are stimulants, primarily amphetamine based products. NEOS Daily ChartThere is a large portion of patients, however, (considering that those in this indication are generally very young) that aren't able to swallow the standard of care pills for their condition. Neos developed its ODT product to allow these patients to just put in the mouth and it will disintegrate on his own.In that instance, the already approved drug that the company applied its ODT technology two was Cotempla. This is the only drug that is available in this indication for these patients, however, and Neos has done the same as it did for Cotempla but with two other types of ADHD drug.One is Adzenys, for which the company picked up an approval back in January last year. The other is an amphetamine that the company calls (when it combines it with its ODT tech) NT0201.Back in November, Neos submitted a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for NT0201. Adzenys is also an amphetamine product, but it requires refrigeration and reconstitution of pharmacy level. The idea behind NT0201 is that it can serve a similar medical function to Adzenys (the mechanism of action is essentially the same) but that it can be far more convenient at all levels (manufacturer to end user) because of the above-mentioned advantages.Subsequent to the company's submission of the NDA, the FDA accepted the application and set a PDUFA of September 15, 2017. That means we've got around two weeks before the agency in the US puts forward its decision on the drug.As far as risk goes, we see this one as a pretty solid bet. The drug is based on a technology that underpins two already approved drugs of very similar makeup and targeting pretty much exactly the same population in the US. The data that underpins the application is strong and didn't flag up any major safety concerns across the trials on which it is based.Sure, there is a chance that we've missed something – we don't get to see the application in its full form, after all. However, the two already approved assets serve to provide a degree of risk mitigation going into the decision, considering the technology is the same, and the strong application reinforces this mitigation somewhat.If the company does pick up approval, it will complete a clean sweep of FDA approvals for its ODT technology in ADHD and will almost certainly see a strong period of upside revaluation heading into the final quarter of the year.Check out our previous coverage of this one here.We will be updating our subscribers as soon as we know more. For the latest updates on NEOS, sign up below!Image courtesy of Practical Cures via FlickrDisclosure: We have no position in NEOS and have not been compensated for this article.

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