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Why Milestone Pharmaceuticals Stock Wilted on Wednesday
Key Points
Pundits tracking the stock were expecting its first FDA-approved stock to be notably more popular.
Cardamyst was launched in mid-February.
Not many investors were willing to walk a mile with Milestone Pharmaceuticals (NASDAQ: MIST) on Hump Day. Shares of the biotech fell by more than 9% that trading session, following its release of a quarterly earnings report and business update.
High expectations
This, despite Milestone's first quarter being historic for the company due to Cardamyst, a drug that earned the company its first U.S. Food and Drug Administration (FDA) approval last December. This is a nasal spray that quickly converts acute symptomatic episodes of paroxysmal supraventricular tachycardia (PSVT) to sinus rhythm; i.e., it treats sudden, rapid heartbeats.
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The drug generated $238,000 in sales during the period, accounting for all the company's revenue. However, like most new drugs, Cardamyst required significant commercial spending to raise awareness and interest. With commercial expenses rising 52% year over year, Milestone's net loss deepened to over $26 million ($0.20 per share), from the year-ago deficit of under $20.8 million.
Analysts had expected far more from the new product. Their consensus revenue estimate was more than $56 million, while they modeled a net profit of $0.23 per share. I should note, however, that it can often be difficult to predict a biotech's results, particularly when it has introduced a new product.
In the earnings release/update, Milestone said that roughly 600 scripts for Cardamyst, which was launched in mid-February, had been filled by the end of April.
There's still time
Although it certainly would have been more encouraging for Cardamyst to perform closer to analyst expectations, it's too soon to consider it a failed product. Some medications take some time to gather momentum in the market, particularly a specialized one like the spray.
Meanwhile, buttressed by cash, cash equivalents, and short-term investments of nearly $184 million, Milestone says it has sufficient runway into the second half of 2027. In other words, it has more than a few quarters to stir interest in Cardamyst and to develop the drug for other indications. I wouldn't give up on this stock just yet.
Eric Volkman 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.