A new drug was rejected by the FDA upon entering the market, causing Biohaven (BHVN.US) stock price to plummet by 40%. Bank of America downgraded the rating to "Neutral".

On Wednesday, Biohaven (BHVN.US) stock price plummeted by 40.22%, hitting a 52-week low. Prior to this, the company announced that the U.S. Food and Drug Administration (FDA) issued a complete response letter (CRL) for its main asset, Vyglxia (troriluzole), explicitly refusing to approve the drug. In response, Bank of America Corp downgraded the stock rating from "buy" to "neutral" and significantly lowered the target price from $49 per share to $10 per share. On Tuesday night, the biotechnology company based in New Haven, Connecticut revealed that its New Drug Application (NDA) for Spinocerebellar Ataxia (a group of rare neurodegenerative diseases) received a CRL from the FDA. The application had previously received priority review designation from the FDA earlier this year, and when the regulatory agency canceled the scheduled advisory committee meeting related to the NDA in August, it briefly raised market expectations for the drug approval. However, the issuance of this CRL caught Biohaven off guard. CEO Vlad Coric stated, "We are deeply disappointed on behalf of the patient community by the decision from the FDA's Neuroscience Office." Bank of America Corp analyst Jason Gerrard pointed out in a research report, "Based on the regulatory interactions details disclosed in the press release, we believe the path forward for the drug is now unclear, and we can only cautiously assume that there is no viable path to approval for it." Nevertheless, Biohaven stated that they will continue to communicate with the FDA, progress with the regulatory approval process for Vyglxia, and look forward to meeting with regulatory agencies to discuss next steps. Meanwhile, Biohaven announced the initiation of a reorganization plan, pausing or delaying non-priority research pipeline projects, with an expected reduction of approximately 60% in annual research and development expenses. Jason Gerrard remains cautious about this, believing that the reorganization plan may restrict resource allocation for the company's three core assets (including the Kv7 ion channel activator, Opakalim), and has removed troriluzole-related forecasts from the valuation model.