Shares of Onyx Pharmaceuticals Inc jumped to a life high after an advisory committee recommended the approval of Onyx's blood cancer drug, unexpectedly downplaying the U.S. Food and Drug Administration's concerns about the drug's side effects.
The stock rose 41 percent to a high of $63 earlier in the session, its biggest single-day percentage gain in more than five years. It was among the biggest percentage gainers and volume movers on the Nasdaq.
The panel of independent experts advising the U.S. health regulator unanimously voted to recommend approval of Onyx's drug Kyprolis for blood cancer patients who did not respond to other medicines. A final FDA decision is expected by July 27.
Analysts said they were surprised by the positive vote as FDA staff had raised questions about the drug's safety earlier in the week, citing serious heart, lung and liver side effects.
"While three panelists voiced concerns around cardiovascular toxicity associated with Kyprolis, the majority of panelists appeared to be comfortable with the risk/benefit profile," Barclays analyst Ying Huang said in a note.
Multiple myeloma is a type of cancer that affects the plasma cells in bone marrow.
Onyx's Kyprolis is being studied as a treatment for patients with relapsed and refractory multiple myeloma who have received at least two prior lines of therapy, including Takeda Pharmaceutical Co Ltd's Velcade and Celgene Corp's Revlimid or Thalomid.
It is also being tested as a treatment for newly diagnosed multiple myeloma patients.
The positive panel vote prompted several analysts to advance their estimated approval date for the drug.
"We now assume a 90 percent probability of accelerated approval," J.P. Morgan analyst Cory Kasimov said in a note.
"This conviction is based on the panel's essentially unanimous vote, the FDA's benign review, and specific commentary from senior FDA officials," Kasimov added.
Accelerated approval is an application process where a single clinical trial is sufficient to show benefit, as long as the company conducts a follow-up study to confirm the drug actually works.
The designation is given to drugs that treat an unmet medical need.
Several brokerages including Barclays, Jefferies, Baird and Deutshe Bank raised their price target on the company's stock.
The positive panel vote also pushed the shares of Ligand Pharmaceuticals Inc - a small biotech firm that contributed to Kyprolis and would receive royalties from its sales - up 6 percent to $15.40.
Deutsche Bank analyst Navdeep Singh estimates peak Kyprolis sales to reach $1.5 billion.
Onyx is known for its big-selling liver cancer drug Nexavar that it markets under a partnership with German drugmaker Bayer AG.
Nexavar, which is also marketed to treat kidney cancer, is being studied as a treatment for breast cancer.
The south San Francisco, California-based company's shares were trading at $60.82 on the Nasdaq. About 14 million shares had changed hands by 1030 ET, about 7 times their 10-day average volume.
(Reporting by Esha Dey in Bangalore, additional reporting by Prateek Kumar; Editing by Roshni Menon)