Hyperion Therapeutics (NASDAQ:HPTX)

Hyperion is a strange case. Not because the FDA informed them that they wouldn't have a decision on Ravicti by the January 23 PDUFA date - that's sadly become a common occurrence over the last two years. The odd part is that Hyperion chose to telegraph that Hyperion had been approved by elaborating that the reason for the delay was to iron out labeling and post-marketing requirements. The market therefore reacted as though approval had been announced, sending the stock up 25% since the announcement.

I see Ravicti approval as a sell-on-the-news event. There's already a standard treatment of urea cycle disorders called Buphenyl. Ravicti is an upgrade with less frequent dosing and better tolerability, but Buphenyl revenues are only about 15M per year. How much will Hyperion be able to chisel out of insurers for an upgrade? Buphenyl developer Ucyclyd chose not to progress Ravicti to approval themselves, opting instead to sell it to Hyperion for 6M upfront, milestones, and royalties. Not a huge vote of confidence that Ravicti will supplant Buphenyl.

The only question now is will the news be what everyone apparently thinks it will be, and has approval been completely priced in. If so, I don't think the current iteration of biopharma traders will stick around to see if Ravicti is really worth a 250M market cap.