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Here's Why Zogenix Leaped 26.8% in June

Maxx Chatsko, The Motley Fool

What happened

Shares of Zogenix (NASDAQ: ZGNX) rose nearly 27% last month, according to data provided by S&P Global Market Intelligence. The move higher came on the news that the company had worked out an issue with the Food and Drug Administration (FDA) over the new drug application (NDA) for Fintepla, intended to treat seizures associated with Dravet syndrome.

As investors will recall, Zogenix received a refusal-to-file letter from the FDA in early April. That meant regulators weren't even going to look at the original NDA for Fintepla because the company failed to include certain safety data and submitted an incorrect data set. The embarrassing gaffe cost the company precious time for getting the drug on the market, but it now has a path to resubmit the NDA. 

A man holding a cut out of a white arrow pointing up.

Image source: Getty Images.

So what

Zogenix met with the FDA and agreed on ways to rectify the previous miscues. It now expects to resubmit the NDA for Fintepla in the third quarter of 2019. Investors cheered the quick turnaround, but it's possible the delay will prove costly nonetheless. 

That's because Epidiolex from GW Pharmaceuticals (NASDAQ: GWPH) and Diacomit from Laboratoires Biocodex are also approved for seizures associated with Dravet syndrome. In fact, the recent approval of Epidiolex, coupled with the delay for Fintepla, forced the FDA to rescind the latter's Breakthrough Therapy Designation. It's more of a technicality -- the breakthrough status was granted in part due to a lack of treatment options -- but serves as a reminder that there's competition in the market.

Now what

The suddenly competitive landscape for Dravet syndrome is great news for patients, and is full of intrigue for investors. There are no head-to-head data comparing Epidiolex and Fintepla, since both were experimental treatments at the same time. But Zogenix did demonstrate that adding Fintepla to Diacomit resulted in a significant reduction in seizures compared with Diacomit alone. That said, investors might have to wait for the market to decide which treatment option is preferred in the coming quarters and years.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.