NEW YORK-- A Friedman Billings Ramsey analyst downgraded New River Pharmaceuticals Inc. Monday as the stock surged on the Food and Drug Administration's near-approval of its attention deficit disorder drug.
The Radford, Va.-based drug developer's shares jumped to a new 52-week high of $44.72 after news Friday that the FDA issued an "approvable Letter" for NRP104, being codeveloped with U.K. drug maker Shire PLC. The letter, which does not require additional studies on the drug, requests additional information on the application before approval. Analysts and investors viewed the letter as a positive sign.
Analyst Robert Uhl, who previously reaffirmed his position on the company, later downgraded it to "Market Perform" from "Outperform" citing the stock's value. He has a $45 price target.
"We believe that the significant short position in the shares, 5.9 million reported in early September, has played a role in the sharply higher share price observed in the market today," he wrote.
"We believe that short covering may be responsible for part of the upward share price move seen in market trading today."
The company's fundamentals remain strong, he wrote, and the drug NRP104 is expected to launch in 2007. The company will next respond to the FDA's letter and start a 60-day review process.
Shares of New River surged $16.11, or 61.5 percent, to close at $42.32 on the Nasdaq.
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