Suffice it to say that biotech stock trading can be exhilarating or devastating, depending on the latest news developments. Today would definitely fall into the “devastating” category for ObsEva’s investors. The company, which develops novel therapies to improve women's reproductive health, is evidently planning to initiate a corporate restructuring, and refocus its development and commercialization strategy.
Sometimes strategy changes can be a positive event, but this doesn’t seem to be the case with ObsEva today. Reportedly, the FDA notified ObsEva of “review issues regarding deficiencies in the New Drug Application (NDA) for linzagolix for uterine fibroids.” Due to these review issues, ObsEva cannot discuss labeling and post-marketing commitments for the time being.
OBSV Stock Is in Freefall
This story is ongoing, and might still have a happy ending for ObsEva. The company is in discussions with the FDA, and this includes the submission of documentation. Apparently, there’s also a plan in the works for ObsEva to provide additional data to the FDA addressing the issues/deficiencies.
Don’t expect this to happen in the very near future, though. ObsEva acknowledged that the “resolution of the identified review issues may not be feasible” by Sept. 13, 2022, the “target action date under the Prescription Drug User Fee Act (PDUFA).”
Plus, there are other developments to consider. ObsEva’s board of directors decided to terminate ObsEva’s license agreement with Kissei Pharmaceutical (OTCMKTS:KSPHF) for linzagolix. Furthermore, ObsEva has planned a corporate restructuring, and applied to the Swiss court for a moratorium to “facilitate” this restructuring.
Overall, stock traders didn’t take a positive view of ObsEva’s press release. By 11:30 a.m. Eastern, OBSV stock was down a whopping 70% and the trading volume on the stock was 20 times its average for an entire day.
It will be interesting to see whether ObsEva can work out its issues with the FDA concerning linzagolix. Today, however, the issues linger and clearly, some investors aren’t willing to wait for a resolution.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.