Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why Pharmacyclics, Inc. (PCYC) Shares Vaulted Higher

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 Pharmacyclics, Inc. (NASDAQ:PCYC), a clinical-stage biopharmaceutical company researching therapies for cancer and immune-related treatments, soared 14% after the company and its licensing partner Johnson & Johnson (NYSE:JNJ) announced that they had filed a new drug application for ibrutinib.

Pharmacyclics, Inc. (NASDAQ:PCYC)

So what: Ibrutinib, which is targeted as a treatment for mantle cell lymphoma and chronic lymphocytic leukemia, received the new but rare breakthrough therapy designation from the Food and Drug Administration in April. Today’s filing by Pharmacyclics, Inc. (NASDAQ:PCYC) and J&J is seeking an expedited review process, which would shorten a decision on their compound from 10 months to just six — and given its breakthrough designation, I don’t see that being much of a problem. Ibrutinib was particularly effective in treating mantle cell lymphoma, delivering a complete or partial response in 71% of treatment-naive patients in trials.

Now what: This is a big step for Pharmacyclics, Inc. (NASDAQ:PCYC), as an approval could trigger a cascade of milestone payments from J&J that will sustain its research for years to come. In addition, it could go a long way to helping validate what I currently see as a ludicrous $7.3 billion market valuation for a wholly clinical company. Ibrutinib peak sales estimates do range as high as $5 billion, so ultimately Pharmacyclics’ valuation may actually prove to be cheap. Then again, there’s a lot riding on ibrutinib — and everything from the FDA panel’s thoughts, to the FDA’s decision, all the way to marketing (assuming it gets approved) would have to go picture perfect if it hopes to maintain this valuation. As of now, I’m a perfectly happy sideline observer.

Craving more input? Start by adding Pharmacyclics to your free and personalized watchlist so you can keep up with the latest news on the company.

The article Why Pharmacyclics Shares Vaulted Higher originally appeared on Fool.com 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.The Motley Fool owns shares of, and recommends, Johnson & Johnson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.