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KalVista Shares More Than Double on Drug Test Results

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GuruFocus.com
·2 min read
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- By Barry Cohen

Do favorable results in a mid-stage drug trial justify the stock of the developer more than doubling in a day?

That's what happened to the shares of KalVista Pharmaceuticals Inc. (NASDAQ:KALV) on Tuesday after the Cambridge, Massachusetts-based pharma company reported that its oral medication cut the use of injectable rescue treatments in patients suffering from swelling attacks associated with a rare disease. The test results put KalVista on a path to supplant treatments from Takeda Pharmaceuticals Inc. (NYSE:TAK) and Pharming Group (NASDAQ:PHAR) with its own KVD900.


While the phase 2 results for KVD900 are impressive, the drug is still quite a way from the finish line. KalVista is now planning to hold an end of phase 2 meeting with the Food and Drug Administration before moving quickly into phase 3, where a great deal more will be learned about the drug's effectiveness. That means much of the heavy lifting still needs to be done.

KVD900 is being tested to treat the rare disease, hereditary angioedema. BioPharma Dive reported significantly fewer patients given the pill after suffering one of the disease's swelling attacks needed injectable "rescue" drugs like those from Takeda and Pharming.

HAE can cause life-threatening swelling of the throat or intestines, along with the face and extremities. It affects about one in 100,000 people. Despite that, the existing medications generate a lot of cash, withness Takeda's sales of $1.2 billion from its three HAE drugs in the 12 months ending March 31, 2020.

KalVista Shares More Than Double on Drug Test Results
KalVista Shares More Than Double on Drug Test Results

Top Wall Street analysts believe the KalVista drug has a good chance of being a commercial success if it passes muster in forthcoming tests. Achieving "injectable-like" effectiveness in a pill should make KVD900 competitive with existing treatments, Stifel analyst Paul Matteis wrote in a Feb. 9 note.

Until today's surge in price to $33.50, KalVista shares have been relatively flat over the past year. Analysts rate the stock a buy and assign it a median target price of $30, with a high estimate of $39 and a low of $21.

Disclosure: The author has no positions in any of the companies mentioned in this article.

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This article first appeared on GuruFocus.