Is Alcobra’s (ADHD) Fate in the Hands of FDA’s December Feedback?

By Carrie Williams

HealthcareAfter reporting a Q3 miss by $0.02 yesterday, emerging pharmaceutical company Alcobra Ltd (NASDAQ: ADHD) shed more than 5% of its share price in a single day and is currently trading at a price of $1.85. The company has been on a downward spiral ever since the Division of Psychiatry Products at FDA placed a full clinical hold on ADHD’s lead drug candidate MDX (Metadoxine Extended Release).

According to the corporate update provided during the Q3 results call, ADHD plans to meet with FDA in December for discussing a plan to have the current clinical hold removed. Following the new development, Jefferies’ analyst Biren Amin reiterated his Buy rating and $6 price target on ADHD. The PT is an upside of 224.32% from the current levels.

AHDH had reported lackluster 3Q16 results yesterday with a GAAP EPS of -$0.28 (vs consensus of -$0.26) which was $0.01 better than Jefferies estimate. Due to the delay in the MEASURE trial for MDX, the 3Q16 cash balance of $54.3M for ADHD is estimated to last until mid-2018.

Post the FDA hold, Alcobra had paused new subject enrolling as well as subject treatment in measure their Phase III Adult ADHD study. In order to get the FDA ban lifted, ADHD plans to propose multiple potential options to the FDA to amend protocols and alleviate FDA’s concerns. The management also plans to propose a nerve conduction evaluation to be included in an LT safety study as well as in the MEASURE trial.

Amin expressed confidence that these protocol amendments has a high possibility of being approved by FDA and ADHD would be able to update their future action plan soon after the December meeting. Moreover, Amin believes that the data generated till now could also be analyzed in multiple ways to form an interim futility analysis. This would in help in instilling investor confidence with nominal risk to a final efficacy analysis when the trial finally restarts. However, the stark truth remains that the lifting of FDA ban is the only way forward for ADHD to grow out of its current Penny Stock status, as the sale of the drug MDX in adult and pediatric ADHD is expected to bring in $624 million by 2027 if its launch happens as planned in 2020.

Based on data compiled by TipRanks of analyst recent ratings on Alcobra, the overall consensus rating on the company is Hold with a $3.73 price target. The average price target is now an upside of 101.62% from the last close price.