Why Karyopharm Therapeutics Inc. Shares Swooned

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Karyopharm Therapeutics , a clinical-stage biopharmaceutical company focused on developing therapies to treat cancer and other diseases, dipped as much as 13% after the company announced a positive view from the Food and Drug Administration regarding verdinexor as an oral treatment for lymphoma in dogs.

So what: According to the company's early morning press release, the FDA's Center for Veterinary Medicine found the effectiveness and safety portion of its new animal drug application to be sufficiently complete that it would support conditional approval of verdinexor. As Karyopharm noted, the drug would be classified as "minor use," which is similar to a drug for humans being classified as orphan in that it treats a fairly small patient population. As part of its conditional marketing approval, Karyopharm must complete a randomized study to confirm the activity of verdinexor within the next five years. In phase 2 studies of the single-agent drug, 34% of dogs exhibited an overall objective response, with 19 showing signs of partial response and one having a complete response. Furthermore, dog owners claimed via a questionnaire that verdinexor didn't reduce their pet's quality of life, enhancing the tolerability and safety of the drug.

Now what: As Karyopharm noted, this is the first approval to treat canine lymphoma in more than two decades, so for client-owned dogs with B- and T-cell lymphomas this could be a great alternative care option.

By now you're probably wondering why Karyopharm is down. That likely has to do with profit-taking following its 93.5% price surge on Friday after the company reported positive phase 1 data from its combo of selinexor and a low dose of dexamethasone as a treatment for advanced multiple myeloma (in humans). Out of its evaluable patients, 50% exhibited in an objective response, with 75% showing a clinical benefit (i.e., some degree of tumor response or shrinkage and/or stable disease). While that is good news, perhaps a near-doubling in its share price, even with these patients having averaged 5.5 therapies prior to treatment with selinexor and low-dose dexamethasone, was a bit premature for a phase 1 investigational drug. I look forward to Karyopharm finally being generating some revenue via verdinexor to lessen its cash burn, and will be watching the development of selinexor closely, but with the company's valuation topping $1.2 billion I'm sticking to the sidelines.

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