Top-ranked biotech stock Amphastar Pharmaceuticals crashed Tuesday after the company received its second Food and Drug Administration rejection since June.
FDA officials declined to approve Amphastar's AMP-002. The company is developing the injectable drug as a generic, but hasn't disclosed what it treats. Amphastar hopes to respond to the FDA's concerns in the third quarter and, potentially, secure a new review date in the first quarter of 2023.
This is the second setback for a prominent generic from Amphastar since June, Needham analyst Serge Belanger said in a report to clients. Earlier, the FDA rejected Amphastar's AMP-015, a hormone to help increase bone mineral density and strength.
"While new products recently launched, additional and more notable product approvals are unlikely until 2023," he said.
In morning trades on today's stock market, the biotech stock tumbled 15.1% to close at 32.06.
Biotech Stock: Amphastar Beats Earnings Views
The FDA rejection overshadowed a strong second-quarter report.
During the June quarter, Amphastar earned 39 cents per share, excluding certain items, on $123.5 million in sales. Earnings climbed 86% while sales jumped 21%. Both measures easily beat biotech stock analysts' projection for earnings of 35 cents a share and $118.1 million in sales.
The quarter was driven by strength from lidocaine and epinephrine. Lidocaine is a pain blocker and epinephrine is an injection for unexpected allergic reactions. Sales of both offset seasonal weakness for Amphastar's asthma inhaler, Primatene Mist.
"Based on these trends, and the seasonality around Primatene Mist, we expect sales growth to be flattish in the fourth quarter," Needham's Belanger said. He reiterated his hold rating on the biotech stock, noting its epinephrine is still benefiting from competitors' market shortages.
Amphastar stock is consolidating with a buy point at 42.41, according to MarketSmith.com.
Syndax Loses Less Than Projected
Also late Monday, runaway biotech stock Syndax Pharmaceuticals reported a net loss of 62 cents per share, crushing analysts' call for a 64-cent per-share loss. Syndax doesn't yet have a commercial product.
The biotech stock rose at first on Tuesday but ended the day down 1.2% to 23.99. Syndax stock broke out of a double-bottom base with an entry at 20.01 in July. Shares have since touched a profit-taking zone, 20%-25% above their buy point.
Both biotech stocks are also highly rated. Amphastar has a perfect Composite Rating of 99, while Syndax stock has a CR of 95. This puts shares in the top 1% and 5% of all stocks, respectively, in terms of fundamental and technical measures, according to IBD Digital.
The two stocks also have strong Relative Strength Ratings of 98. This puts their 12-month performance in the top 2% of all stocks. This month, alone, Syndax stock has surged more than 21%.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
