Zevra Therapeutics stock crashed Wednesday in what one analyst called an "overreaction" to issues surrounding its acquired drug, Olpruva.
Olpruva, which Zevra acquired in its takeover of Acer Therapeutics in 2023, treats urea cycle disorders. In these conditions, the body can't properly remove ammonia, a byproduct of protein breakdown. The buildup of ammonia can damage the brain and other organs.
During the June quarter, Zevra came in with $300,000 in sales of Olpruva, lagging forecasts for half a million dollars.
"Despite achieving 79% coverage, adoption has been slower due to the mature UCD market and strong patient satisfaction with existing treatments, with only one new prescription enrollment form in the quarter," William Blair analyst Sami Corwin said in a report.
Zevra stock plummeted 19.8%, closing at 9.43. That reversed an 89% run from a low point at 6.19 in early April to Tuesday's close. Shares undercut their 50-day moving average for the first time since May.
Olpruva Concerns Overshadow Strong Sales
The company kept its tone cautious where Olpruva is concerned. During the quarter, Zevra recorded a noncash impairment charge and an inventory write-down, "reflecting cautious expectations," Corwin said.
"However, the company is also cautiously optimistic that a near-term shift in competitive dynamics may provide an opportunity for patients to switch to Olpruva if they are at risk of losing their patient support services with their current medications," she said.
Other drugs in this space include Amgen's Buphenyl and Ravicti.
Maxim Group analyst Jason McCarthy noted that the Acer acquisition came with favorable financial terms, "limited downside risk and significant potential upside." At the time, it was a means of hedging against risk the Food and Drug Administration wouldn't approve Miplyffa. Today, Miplyffa is Zevra's biggest asset.
"We'll see what happens with Olpruva," he said in a client note. "It still has potential in the longer term but not that Olpruva, in our view is not the key driver, it was and is Miplyffa, which continues to grow," he said. He called the sell-off in Zevra shares an "overreaction."
Zevra Therapeutics' Miplyffa Launch
Across its portfolio, Zevra earned $1.21 per share, flipping from a year-earlier loss of 48 cents. But that lagged the Street's call for a gain of $2.26 a share.
Promisingly, the strong Miplyffa launch helped drive strong sales. Sales grew almost sixfold to $25.9 million, beating views for $22.6 million, according to FactSet. Miplyffa accounted for $21.5 million of total sales. That topped views for $19.2 million.
Miplyffa treats the neurological symptoms associated with Niemann-Pick disease type C. NPC is a rare, genetic neurodegeneration disorder that causes progressive neurological and development decline. It primarily affects children.
Zevra Therapeutics noted it has received seven new prescription enrollment forms, bringing the total to 129 since the drug launched late last year. There are also 89 patients in Europe under an expanded access program.
The company is trying to expand diagnosis rates through a "Read Between the Signs" campaign and machine learning to parse through symptom profiles to find undiagnosed NPC patients. This could help close the gap on the estimated 900 NPC patients in the U.S. and the 300 to 350 currently diagnosed
Top 6% Stock
William Blair's Corwin kept her outperform rating on Zevra stock. All eight analysts who cover Zevra Therapeutics, according to FactSet, rate its shares a buy or buy-equivalent.
Shares have a strong IBD Digital Relative Strength Rating of 94. This means Zevra stock ranks in the top 6% of all stocks when it comes to 12-month performance. The Composite Rating, a measure of fundamental and technical metrics, is a lower 84.
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