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

Getting in ahead of a major FDA decision can be a great way to pick up an exposure to a run in the biotech space and here at Insider Financial we like to make sure our readers don't miss out of these sorts of opportunities. Here's a company with an upcoming PDUFA that could really run as and when the agency's decision hits press.The company in question is Neos Therapeutics Inc (NASDAQ:NEOS).It's a circa $200 million biotech play that's developing a suite of products based on a proprietary technology that allows it to modify the release profile of certain drugs. We've said it before – a great strategy as a biotechnology company is to take existing drugs and try and address the problems that limit the market potential of the drug in question. There are generally three ways to go about this: improve efficacy, just as Protalix Biotherapeutics Inc (NYSEMKT:PLX) is trying to do, improve on tolerability, reduce cost, as Adamis Pharmaceuticals Corp (NASDAQ:ADMP) is trying to do, or alter administration method for convenience.Neos falls into the latter category.The company's lead development asset and the one that underpins the upcoming PDUFA catalyst is called Cotempla XR-ODT.Many reading will already be familiar with this type of in its current commercial and generic form. It’s an oral administration pill designed to treat patients (and specifically, children) with ADHD, and it's better known as Ritalin or Concerta, or generically, methylphenidate.Current standard of care administration methods revolve around kids taking a once-daily pill. For some children, this is no problem. For a large portion, however, and estimates put this portion at anywhere between 50-60%, it's an issue. They can't swallow pills whole and this makes once daily treatment difficult.With Cotempla, Neos has taken Ritalin and turned it into what's called an orally disintegrable tablet, or ODT. Basically, the kid puts the tablet in his or her mouth, doesn’t chew, and it breaks down into an easily swallowable saliva/active compound mix.The methylphenidate is a $3.4 billion market in the US alone. There's not huge scope for expansion of this sort of asset outside of the US as amphetamine type products for children aren’t as readily accepted in Europe or Asia, but that's no real problem for a company of Neos's size. If it can capture even a modest portion of the US market, and with a product that addresses a problem that as many as 60% of patients in a $3.4 billion have then it should be able to do this easily, it's going to start generating revenues that dramatically outweigh its current $200 million capitalization.So what are the chances of approval?The application for the drug suffered a slight setback at the end 2015 when, in November of that year, the FDA issued a CRL requiring that the Company conduct a bridging study to demonstrate bioequivalence between the clinical trial material and the to-be-marketed drug product, including an assessment of food effect, and to provide validation and three months of stability data.The company completed the request, resubmitted twelve months and the FDA accepted the resubmission pretty much right away. The data on which the initial application is strong, and bolstered by the resubmission inclusion data, we think there's a very good chance of the drug picking up a regulatory nod when PDUFA comes around.This is a neat drug in an unmet need and one that's based on an already-recognized-as-safe and well established active compound. With bioequivalence established, it's almost a shoo-in for approval.The only real risk here is that the drug is aimed at children and so labeling and usage is going to have be extremely tight from a regulatory perspective. We're assuming the company knows this (the same concept applies to an already approved Neos drug called 201, again in ADHD, so it's not the company's first rodeo) but there's a small chance of a second CRL if certain boxes aren’t ticked.Anyway, PDUFA is June 19 and we expect this one to run into that date. For anyone looking for an exposure to the potential upside, now's the time to load up.We will be updating our subscribers as soon as we know more. For the latest updates on NEOS, sign up below!Disclosure: We have no position in any of the securities mentioned and have not been compensated for this article.