Top-notch biotech stock Pharvaris surged within striking distance of a profit-taking zone Monday after U.S. regulators said it could begin testing a treatment for a swelling disorder in people.
Pharvaris is testing a pill it hopes will prevent swelling attacks associated with hereditary angioedema, or HAE. But in 2022, the Food and Drug Administration put Pharvaris' drug on clinical hold, meaning the company couldn't begin testing it in people.
The FDA reversed course Monday saying Pharvaris could begin studies of its drug, deucrictibant, in people with HAE. The agency based its decision on data from studies in rats submitted in December.
"With the hold removed, we see Pharvaris in a strong position to advance deucrictibant and see an oral offering with injectable (effectiveness) as a desirable product profile in the HAE space," Wedbush analyst Laura Chico said in a report to clients.
On today's stock market, the biotech stock popped 6.3% to 29 in above-average volume. Shares have a strong IBD Digital Composite Rating of 98. This puts Pharvaris stock in the top 2% of all stocks when it comes to fundamental and technical measures.
Biotech Stocks Nears Key Zone
It's important to note, the FDA is the only regulatory agency to have placed a hold on Pharvaris' drug, Chico said. In June, the FDA said Pharvaris could test deucrictibant as an acute treatment for HAE-related swelling attacks.
Now, the final piece of the puzzle is in place. Chico expects "few surprises" as Pharvaris likely looks to begin testing deucrictibant as a preventive treatment before year end.
In December, Pharvaris unveiled midstage test results from 34 patients abroad who received its twice-a-day pill for 12 weeks. Over a month, patients who received deucrictibant had an 84.5% reduction in swelling attacks compared to placebo recipients. The biotech stock rocketed more than 18% that day, Dec. 6, breaking out of a cup base with a buy point at 26.86, according to MarketSmith.com.
On Monday, Pharvaris stock rose as much as 12.7% to 30.76. The biotech stock could soon hit a profit-taking zone that runs from 32.23 to 33.58. Savvy investors are encouraged to take some profits when a stock rises 20% to 25% above its entry.
Wedbush's Chico also raised her price target on Pharvaris stock to 35 from 24. She has an outperform rating on the biotech stock.
"While we hear the concerns over the crowded HAE therapeutic landscape, deucrictibant appears differentiated with an oral format that will likely resonate with patients," she said.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
