What Happened?
Shares of pharmaceutical company Amneal Pharmaceuticals (NASDAQ:AMRX) jumped 4.7% in the afternoon session after the company announced it received U.S. Food and Drug Administration (FDA) approval for its generic narcolepsy drug, sodium oxybate oral solution.
The approved drug is an Abbreviated New Drug Application (ANDA) that references Jazz Pharmaceuticals' brand-name drug, Xyrem®. Sodium oxybate is a central nervous system depressant used to treat cataplexy or excessive daytime sleepiness in patients with narcolepsy. Amneal had previously distributed an authorized generic version of the drug in limited quantities. This full approval allows the company to provide a more affordable alternative for the approximately 150,000 individuals in the U.S. with the rare neurological condition, potentially expanding its market presence in a therapeutic area historically dominated by a single manufacturer.
After the initial pop the shares cooled down to $10.18, up 3.6% from previous close.
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What Is The Market Telling Us
Amneal’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 29 days ago when the stock gained 3.2% on the news that markets continued to rally amid growing speculation of an impending interest rate cut by the Federal Reserve. Following a favorable Consumer Price Index (CPI) report, investors are increasingly betting on a rate reduction next month, a sentiment amplified by U.S. Treasury Secretary Scott Bessent's call for a significant cut. This has fueled a 'risk-on' environment across Wall Street. Lower interest rates are typically beneficial for growth-oriented sectors like healthcare, as they reduce the cost of borrowing for research and innovation and increase the present value of future earnings.
Amneal is up 31.1% since the beginning of the year, and at $10.18 per share, has set a new 52-week high. Investors who bought $1,000 worth of Amneal’s shares 5 years ago would now be looking at an investment worth $2,772.
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