Street sees buying opportunity as Disc Medicine slips on FDA review delay

Shares of Disc Medicine (IRON) are underperforming on Thursday following a news report saying the Food and Drug Administration pushed back by two weeks a review of the company’s experimental drug for a rare blood disorder following concerns about trial data and its risk for abuse. Both Wedbush and Stifel’s analysts see the weakness in stock as a buying opportunity. The news report says the agency also stalled their review of Sanofi’s (SNY) Tzield for late-stage type 1 diabetes by more than a month over adverse event reports.

REVIEW DELAY: The Food and Drug Administration pushed back by two weeks a review of Disc Medicine’s experimental drug for a rare blood disorder following concerns about trial data and its risk for abuse and stalled their review of Sanofi’s Tzield for late-stage type 1 diabetes by more than a month over adverse event reports, delaying reviews of two drugs chosen for the Trump administration’s new fast-track program, internal documents seen by Reuters show. Two other drugs tapped for the speedy review program have also been pushed by weeks or longer beyond the original target date. A decision on Boehringer Ingelheim’s zongertinib for lung cancer is currently expected mid-February, and Eli Lilly’s (LLY) weight-loss pill is now due April 10, according to Reuters.

BUYING OPPORTUNITY: Wedbush views the selloff in Disc Medicine shares after Reuters reported the FDA delayed by two weeks a review of the company’s bitopertin due to concerns over trial data as a buying opportunity. The firm sees limited risk to bitopertin’s eventual approval given the drug’s “strong efficacy, potential liver benefit, and limited alternatives.” The two-week delay has a negligible impact, Wedbush said, adding that a later launch would allow additional time for Disc Medicine to build commercial readiness. The firm has an Outperform rating on the shares with an $110 price target.

Voicing a similar opinion, Stifel says the delay of any potential approval into late-May based on traditional accelerated approval represents an insignificant impact to its current valuation framework. Stifel acknowledges it’s hard to have a read on potential efficacy and risk for abuse concerns mentioned in the article. However, it views this stock weakness as a buying opportunity given the positive FDA feedback previously received by Disc on the use of endpoints where bitopertin has demonstrated meaningful differences; and the fact that abuse concerns were evaluated by Roche (RHHBY) and deemed to be a non-issue. The firm has a Buy rating on Disc Medicine.

PRICE ACTION: Shares of Disc Medicine are down over 6% to $72.16 in late morning trading following the report.