BridgeBio Pharma (BBIO) Stock Soars on Positive Clinical Results. Will it Last?
BridgeBio Pharma (BBIO) Stock Soars on Positive Clinical Results. Will it Last?
BridgeBio Pharma Stock Surges on Positive Clinical Results
BridgeBio Pharma (BBIO), a Palo Alto biopharmaceutical company, surged 12.29% to $18.55 per share on Tuesday, extending an even more impressive 51.98% gain on Monday after announcing positive drug trial results.
The company announced positive phase 2 trial results for its candidate therapy drug infigratinib, which treats achondroplasia in children. The genetic condition causes abnormal behavior in a protein necessary for proper growth in bone within growth plate cartilage, often resulting in short-limbed dwarfism.
In the trial, ten children showed an annual gain in height velocity of about 3 centimeters. Those results are much more impressive than what is seen with Voxzogo, the only approved medication for achondroplasia, developed by BioMarin Pharmaceuticals. After BBIO’s announcement, BioMarin’s stock price fell about 7% on Monday and 0.93% on Tuesday.
Achondroplasia is the most common form of skeletal dysplasia, affecting one in every 40,000 births, according to Johns Hopkins Medicine. That makes the market for BridgeBio’s drug a rather deep one and explains the stock price’s reaction. While encouraging, the drug must progress through phase III trials, a critical step where more than half of drugs fail. That said, future road bumps with this drug would likely result in a sharp move in the other direction, but if it succeeds, more upside is expected.
Trading A Directional Bias After IV Contraction
BridgeBio Pharma saw its implied volatility rank (IVR) fall as prices rose quickly this week. That removes an incentive for premium sellers but bodes well for those wanting to take up a directional play by using calls or puts. Given the sharp increase, taking a long position may work better once a pullback occurs. Alternatively, playing a pullback in a mean-reverting strategy by using puts may be more attractive for traders now.
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