Shares of Crinetics Pharmaceuticals surged Friday after the Food and Drug Administration approved the company's acromegaly drug, Palsonify.
Acromegaly is a rare condition in which the pituitary gland produces too much growth hormone. This causes some bones, organs and other tissues to grow bigger. The late wrestler and actor Andre Rene Roussimoff — widely known as "Andre the Giant" — suffered from acromegaly.
Palsonify will cost $290,000 a year, well above expectations for about $80,000, Oppenheimer analyst Leland Gershell said in a report. He expects the once-daily pill to become the standard of care over time "for an under-treated and under-diagnosed population." Existing options synthetic hormones.
"Management appeared confident in Palsonify's potential to capture market share over time," Leerink Partners analyst Joseph Schwartz said in a report. "They anticipate a gradual launch as patients navigate the appointment system to consult with their physicians."
On today's stock market, Crinetics Pharmaceuticals stock rocketed 27.9%, closing at 45.91. Shares recently retook their 200-day moving average, but they still have a low IBD Digital Relative Strength Rating of 23, reflecting their 12-month performance on a 1-99 scale.
A Slow Launch
Existing options include injectable hormones from companies like Novartis and Ipsen. Leerink's Schwartz expects legacy drugmakers to scale back support of older drugs that treat acromegaly.
"This could open the door for new entrants like CRNX to gain traction with the first new treatment in decades," he said. "CRNX will begin taking orders immediately, with shipments expected to commence in October."
He reiterated his outperform rating and 80 price target on Crinetics stock.
Gershell, the Oppenheimer analyst, says Crinetics Pharmaceuticals has deployed about 80 commercial personnel, including 36 experienced sales reps and 14 medical science liaisons. He notes that about 60% of acromegaly patients receive treatment in community practices with an additional 1,800 in academics/pituitary treatment centers.
But, he notes, the company says it will take six to nine months to ensure formulary placements, so the launch will likely be slow initially.
He rates Crinetics stock an outperform.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
