Applied Therapeutics, Inc. (Nasdaq: APLT), a clinical-stage biopharmaceutical company focused on rare diseases, saw a significant drop in its stock price following the recent news that the U.S. Food and Drug Administration (FDA) issued a Complete Response Letter (CRL) for its New Drug Application (NDA) for govorestat, a drug aimed at treating Classic Galactosemia. As of Friday’s premarket session, Applied Therapeutics’ stock plunged by a staggering 75.26%, falling to $2.12.
This sharp decline in the company’s stock raises several questions about its future prospects, especially given the positive momentum it had been building throughout the year. Let’s delve into what this CRL means for the company, explore the products and treatments in its pipeline, and analyze its year-to-date (YTD) stock performance in comparison to the broader market, including the S&P 500.
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The FDA’s Complete Response Letter: A Major Setback
The FDA’s decision to issue a CRL on the govorestat NDA came as a blow to Applied Therapeutics. The agency cited deficiencies in the clinical application, indicating that the drug is not yet ready for approval in its current form. Govorestat is a novel aldose reductase inhibitor (ARI) that aims to treat Classic Galactosemia, a rare genetic disorder characterized by the inability to metabolize the sugar galactose, leading to toxic buildup and neurological complications.
For Applied Therapeutics, this rejection is significant, as govorestat is the cornerstone of their pipeline, and the company had been optimistic about its potential to treat a debilitating disease with no current treatment options. Despite the setback, the company remains committed to its mission and plans to engage with the FDA to understand the concerns outlined in the CRL. They aim to work on addressing these issues and eventually seek resubmission or appeal the decision.
What’s Next for Applied Therapeutics?
In the wake of the FDA’s CRL, Applied Therapeutics is not giving up. The company has expressed its determination to continue its work on govorestat, as it has shown promising clinical trial results. The drug demonstrated a significant reduction in galactitol levels, a toxic byproduct in patients with Galactosemia, and showed clinical benefits across a variety of symptoms, such as motor skills, cognition, and behavior.
In addition to govorestat’s development for Galactosemia, the drug is also in clinical trials for other rare diseases, such as Sorbitol Dehydrogenase (SORD) Deficiency, a neuromuscular disorder. The company is planning to submit another NDA for govorestat in the first quarter of 2025, focusing on SORD Deficiency, which may offer a potential lifeline for the company.
Applied Therapeutics’ Year-to-Date Stock Performance
Despite the recent drop in its stock price, it’s important to consider the broader context of Applied Therapeutics’ YTD performance. The stock has gained an impressive +155.82% in 2024, reflecting investor optimism earlier in the year. This growth was likely fueled by the anticipation of govorestat’s FDA approval and the company’s progress in clinical trials.
However, this sharp decline in stock price due to the FDA’s decision underscores the volatility and uncertainty that often accompanies biotech investments. The stock’s dramatic fall also serves as a reminder of the risks involved in clinical-stage pharmaceutical companies, where regulatory hurdles can have an immediate and significant impact on stock valuations.
When comparing Applied Therapeutics’ YTD performance to the broader market, the contrast is stark. The S&P 500 has gained +25.76% this year, highlighting the strength of the broader market but also putting Applied Therapeutics’ performance in a different light. While the company’s stock has outperformed the market for much of 2024, its recent fall is a painful reminder of how quickly fortunes can change in the biotech sector.
About Applied Therapeutics: A Commitment to Rare Disease Treatment
Founded with the goal of developing treatments for rare and underserved diseases, Applied Therapeutics is focused on providing novel therapeutic options for conditions that currently lack effective treatments. The company’s approach centers on creating drugs that address specific molecular targets in rare diseases, particularly those with a genetic or metabolic origin.
Applied Therapeutics’ lead drug candidate, govorestat, is designed to treat Classic Galactosemia, a rare and serious condition that affects the body’s ability to process galactose, a sugar found in milk and other foods. When untreated, Galactosemia leads to severe developmental issues, including cognitive and behavioral problems, motor difficulties, tremors, and seizures. Currently, there are no approved treatments for this disease, making govorestat a potentially life-changing option for patients.
Beyond Galactosemia, Applied Therapeutics is also exploring treatments for SORD Deficiency, a neuromuscular disease that causes progressive loss of motor function, and PMM2-congenital disorder of glycosylation (CDG), a rare metabolic disorder that affects many organ systems. The company has received several designations for govorestat, including Orphan Drug and Pediatric Rare Disease designations from the FDA, further emphasizing the importance of its mission to treat rare conditions.
The Future of Applied Therapeutics
While the news of the FDA’s CRL is a setback, Applied Therapeutics’ commitment to advancing treatment options for rare diseases remains strong. The company’s focus on addressing critical unmet medical needs, especially in the realm of genetic and metabolic disorders, means that its work will continue to be closely watched by both investors and the medical community.
The upcoming submission for govorestat in SORD Deficiency in early 2025 could prove to be a pivotal moment for the company, as it seeks to regain investor confidence and continue its journey toward bringing much-needed therapies to market.
Final Thoughts
While Applied Therapeutics has seen remarkable growth this year, the recent FDA decision has cast a shadow over its future. The company remains resolute in its mission to bring transformative treatments to patients with rare diseases, but the road ahead is uncertain. Investors will have to keep a close eye on how the company navigates this setback and whether it can bounce back with new strategies or resubmissions in the near future. For now, the sharp decline in stock price serves as a reminder of the inherent risks in biotech investments.