What happened
Shares of InflaRx(NASDAQ: IFRX) were up 48% an hour after the market opened on Wednesday on news the company's COVID-19 therapy was receiving an Emergency Use Authorization (EUA) from the Food and Drug Administration (FDA). The German clinical-stage biotech focuses on anti-inflammatory therapies.
So what
The healthcare stock jumped to a 52-week high of $7.25 a share in early trading after the FDA approved an EUA for Gohibic (vilobelimab), a monoclonal anti-human complement factor C5a antibody, to treat hospitalized COVID-19 patients within 48 hours of receiving oxygen through a ventilator or through a heart-lung machine. The EUA is based on the company's successful phase 3 study of the drug on 369 hospitalized patients that showed a 23.9% reduction in the mortality rate compared with placebo.
Now what
While an EUA is not the same thing as a full approval, it does mean that the company can begin earning revenue from its first marketed product in the meantime.
Gohibic is the company's lead candidate, and it is also in a phase 2 study to treat cutaneous squamous cell carcinoma, a type of skin cancer, as well as a phase 3 study to treat pyoderma pangrenosum (PG), a rare disease that leaves ulcers on the skin, usually on the legs. InflaRx's only revenue in 2022 was 20.1 million euros from the German government in grant payments for developing Gohibic. The company reported an annual loss of 29.5 million euros.
Investors can expect a price pullback, considering the large jump on Wednesday, but in the long run, the EUA is a big deal for InflaRx. The next step will be if it gets full approval from the FDA with a Biologics License Application. The company is also looking forward to getting an approval in Europe for the therapy from the European Medicines Agency. It's also possible the company could use the opportunity to raise capital through a stock sale.
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Jim Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
