Why Neos Therapeutics Inc (NEOS) Stock’s Tumbling Today


Yesterday after the close, the FDA granted approval to Neos Therapeutics Inc (NASDAQ:NEOS) ADHD treatment Cotempla XR-ODT. However, Neos shares tumbled nearly 9% today, as investor reaction to the approval appears to be ‘sell on the news.’

‘Buy the rumor, sell the news’ is something that happens particularly in the biotech sector. Traders trade based on what they believe will occur in a given catalyst (the rumor). Once the catalyst passes they dump their positions.

NEOS Chart

CEO Vipin Garg noted, “We are excited about the FDA approval of Cotempla XR-ODT, which offers patients and caregivers a new treatment option to manage the symptoms commonly associated with ADHD […] With this approval, Neos will be the only company to have both a branded methylphenidate and a branded amphetamine product available in an extended-release orally disintegrating tablet dosage form. We look forward to having Cotempla XR-ODT join our Adzenys XR-ODT®(amphetamine) extended-release orally disintegrating tablets on the market this fall.”

“Cotempla XR-ODT offers a new methylphenidate option in ADHD management because it dissolves in the mouth with no need for chewing or drinking water. It has a clinical profile consistent with commonly prescribed methylphenidate ADHD treatments, which are generally available as capsules that must be swallowed whole […] Cotempla XR-ODT will offer physicians and their patients a differentiated treatment option that combines the convenience of once-daily dosing with an orally disintegrating methylphenidate dosage form,” said Ann Childress, M.D., President of the Center for Psychiatry and Behavioral Medicine, Las Vegas, NV.

On the ratings front, NEOS stock has been the subject of a number of recent research reports. In a report issued today, BMO analyst Gary Nachman reiterated an Outperform rating on NEOS, with a price target of $15, which represents a potential upside of 68% from where the stock is currently trading. On April 5, Cowen’s Tyler Van Buren initiated coverage with a Buy rating on the stock and has a price target of $20.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Gary Nachman and Tyler Van Buren have a yearly average return of 11% and a loss of 14.5% respectively. Nachman has a success rate of 59% and is ranked #697 out of 4573 analysts, while Buren has a success rate of 40% and is ranked #4106.

Neos Therapeutics operates as a pharmaceutical company, which engages in developing, manufacturing, and commercializing products using proprietary, extended-release drug delivery technology platform. It uses this technology to develop products for the treatment of attention deficit hyperactivity disorder (ADHD), including an extended-release orally disintegrating tablet.