Shares of Vanda Pharmaceuticals Inc. soared in premarket trading Friday, a day after FDA advisers recommended approval for the company's potential sleep disorder drug tasimelteon.
The company said Thursday that the Food and Drug Administration's Peripheral and Central Nervous System Drugs Advisory Committee voted overwhelmingly to recommend the drug for the treatment of a rare, chronic condition called non-24-hour disorder in people who are totally blind.
Patients with this condition have difficulty synchronizing their bodies with the 24-hour day-night cycle because they can't detect light. That can lead to a significant sleep disruption.
The FDA is expected to decide on the drug by Jan. 31. The agency is not required to follow the recommendations of its advisers, but it usually does.
Jefferies analyst Oren G. Livnat said in a research note that the market will now assume that the drug receives a final FDA approval. He wrote that he expects peak U.S. sales to climb past $350 million, and that could be a conservative estimate.
Livnat raised his price target on the stock to $20 from $13 to account for a lower risk on the FDA decision.
Shares of Washington, D.C.-based Vanda jumped 22 percent, or $2.87 per share, to $15.91 in premarket trading. The shares had already nearly doubled since closing at $6.79 on Monday.
The stock started soaring Tuesday as the FDA advisers prepared to meet and analysts found briefing documents posted on the agency's website encouraging. The Nasdaq exchange then halted trading of Vanda shares on Thursday, when the advisory committee met.
The stock closed 2012 trading at $3.70.