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Why Avanir Pharmaceuticals, Inc. (AVNR) Shares Jumped

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR), a biopharmaceutical company focused on rare central nervous systems disorders, jumped as much as 13% after the Food and Drug Administration OK’d an accelerated development pathway for AVP-786.

Avanir Pharmaceuticals, Inc.So what: In a pre-investigational new drug meeting with the FDA, Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR) was able to rely on information from previous studies in AVP-923 to gain an expedited development pathway for its proposed neuropathic pain medication, AVP-786. This means that it will only need to run a limited amount of preclinical trials prior to moving on to human clinical trials. Obviously, if all goes well in the preclinical and clinical settings, this could get AVP-786 to market a lot faster and should reduce Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR)’s out-of-pocket trial costs. In addition to neuropathic pain, Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR) is angling AVP-786 to treat agitation in Alzheimer’s disease and levodopa-induced dyskinesia in Parkinson’s disease.

Now what: Obviously, this is good news for Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR), but to put this is another way, it’s like a sports team signing a free agent in the offseason. None of the games have even been played yet, so really anything could happen. In the meantime, investors will really want to focus their attention on sales of Nuedexta, the company’s FDA-approved treatment for psuedobulbar affect, or PBA. In the second quarter, Nuedexta net revenue grew 81% from the previous year to $16.5 million, but only 11% over the sequential quarter. If you ask me, with peak sales estimates ranging from $300 million to $500 million, it’s failing to live up to the hype in treating PBA thus far. Until I see sales improve or a reason to get really excited about its pipeline, I’d suggest keeping your distance.

The article Why Avanir Pharmaceuticals Shares Jumped originally appeared on and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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