At the start of June, we published this piece on Neos Therapeutics Inc (NASDAQ:NEOS). The piece was the-then latest addition to our Biotech Catalyst series, through which we highlight potential near term movers in the biotech space based on certain upcoming catalysts (PDUFA, data release, that sort of thing).With Neos, we were looking at a PDUFA.The company had an application with the FDA in the US, one for which it had suffered a pretty rough path to submission, concerning a drug called Cotempla XR-ODT. Neos was trying to get it approved in a target indication of ADHD, specifically targeting a sub-population of children between the ages of 6-17 that have difficulty taking the current standards of care (SOC).We won't go into too much detail on the development pathway for the drug here, as it's something we looked at last time. Readers looking to catch up on the road-to-this-point should check out our previous coverage, available here.Suffice to say, it's what's called an orally disintegrable tablet, or ODT. The current treatments are amphetamine based drugs that need to be swallowed, in pill form, once or twice daily. These are children, and especially at ages 6-10, many find swallowing a pill whole a pretty tough task.Neos' answer is to create an ODT formulation of the current SOC, offering these kids an option that they can just put in their mouth and let it dissolve. No water, no swallowing, just a simple admin. Reports suggest that up to 60% of these patients have trouble with the legacy pills, and it's these reports when taken against a total ADHD market in the US of $3.4 billion that underpinned a bull thesis on the company if it could get this asset to market.A few setbacks in the rearview mirror and that's exactly what it's done.The FDA announced its approval of the drug on Monday, as per the PDUFA we highlighted to our readers.As per the labeling (which we get what amounts to a preliminary look at on the approval announcement; preliminary in the sense that it sometimes alters slightly before the drug hits shelves), there doesn’t look to be any concerns over safety that might limit market potential. The active compound has generally been regarded as safe for a while, and Neos has proven that there's very limited potential for overdose (important in a pediatric indication drug). Packaging is portable and child resistant and the once daily dosing should contribute to a reduced potential for inadvertent abuse (as it's simple to keep track of).Action around the approval has been pretty interesting. The company reported the approval post-market, pre-market trading pushed it up to around $10.50 a piece, from Monday's close at $9 s share. Heading into the open, however, this has been pushed back to the $9.10 mark.Right off the bat, that's not a great response, but we think it's just a bit of short pressure in the restricted premarket back and forth. As soon as the session opens, this one's going to run.As we've mentioned, this is a billion-dollar market and Neos has an asset about to hit shelves (target commercialization during the fourth quarter of this year) that addresses a problem more than half of all patients in the population have. With a market capitalization at a little over $200 million, there's no way this can stay as is.With 2.7 million shares short and a ten-day cover period, we could well be in for a squeeze once markets open in the US.There's one risk here and that's that the company will take advantage of any run to announce an offering – Neos needs cash to fund commercialization. Near-term, this may taper any aggregate upside. Longer term, however, it shouldn't matter, especially if it's put to good use from a marketing perspective.We got it right with Adamis Pharmaceuticals Corp (NASDAQ:ADMP).We got it right with Neos.Don't miss out on our next Biotech Catalyst coverage. Subscribe below and we'll let you know what's up next!
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