Normally, when a healthcare stock like Tarsus Pharmaceuticals (NASDAQ:TARS) lands a win at the Food and Drug Administration (FDA), it’s a great day for the stock price. However, it was anything but for Tarsus, as its share price dropped over 25% at one point in Tuesday afternoon’s trading session despite a green light from the government on a new treatment for an eyelid disease.
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Tarsus managed to win the go-ahead for TP-03, the name for its treatment for Demodex blephartis, an eyelid disease that hits roughly one in every 12 adults. TP-03 is also known as Xdemvy, and it’s the first—and so far only—treatment designed to tackle the eyelid disorder directly. Xdemvy targets Demodex mites, which are the cause of Demodex blephartis, and does so better than a “comparative agent” in tests. Xdemvy should go live as a prescription medication within the next few weeks. Xdemvy actually started life as lotilaner, a flea and tick treatment designed for use in pets. But the reformulation into a human eye drop made it an effective tool against the Demodex mite.
So, what sent share prices plunging? After all, this is great news and investors would normally be loading up as Tarsus prepares to take a fairly large market by storm complete with first-mover advantage. Well, the problem is that insiders aren’t sticking around. Both the chief commercial officer Aziz Mottiwala and the current CEO Bobak Azamian were both spotted selling off shares at a pretty good clip. So while Tarsus may be in for quite a success, two of the company’s top officials are selling off at a frantic pace.
Despite this setback, analysts are still unanimously on board. Seven Buy ratings makes Tarsus Pharmaceuticals stock a Strong Buy. Plus, with an average price target of $46.43, Tarsus Pharmaceuticals stock comes with an upside potential of 157.8%.
