Why CymaBay Therapeutics Stock Rocketed Nearly 8% Higher Today

Hardly for the first time this year, biotech CymaBay Therapeutics (NASDAQ:CBAY) had a winning day on the market Monday. Following the news that its leading drug candidate had been granted an important designation by a regulator, investors piled into the company's shares. CymaBay closed the session almost 8% higher, in sharp contrast to the 0.2% decline of the S&P 500 index.

Seladelpar's Breakthrough Therapy Designation was expanded

That drug is seladelpar, which was developed to treat a chronic liver disease called primary biliary cholangitis. Ever since CymaBay disclosed highly positive results from a late-stage clinical trial of seladelpar in early September, the stock has been in favor with biotech investors.

Its reputation was only enhanced on Monday when the Food and Drug Administration (FDA) revised its Breakthrough Therapy Designation on seladelpar. That designation now includes the treatment of pruritus (itchiness) in adults without cirrhosis (scarring of the liver) or with compensated cirrhosis.

CymaBay had originally earned Breakthrough Therapy Designation for seladelpar in 2019, on the back of encouraging preliminary results from a phase 2 clinical trial. These findings indicated that the drug substantially reduced serum alkaline phosphatase, an enzyme that at elevated levels can indicate liver disease.

Will seladelpar soon be approved?

While the FDA's latest ruling on seladelpar is neither an authorization nor an approval, it was a highly encouraging signal that the drug is well on its way toward getting the FDA's green light. If and when it does, it's likely to be a popular treatment, assuming that it's marketed effectively.

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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.