Why Novartis Stock Topped the Market Today

Although it's never guaranteed that regulatory approval of a new drug will juice the share price of its developer, this often happens in the pharmaceutical field. Sure enough, after receiving regulatory approval for one of its medications, Novartis (NYSE: NVS) saw a nearly 3% increase in its share price. This easily surpassed the S&P 500 index's gain of 0.9% that trading session.

New drug approved by the FDA

Novartis announced late Monday that the U.S. Food and Drug Administration (FDA) approved its Itvisma for certain forms of spinal muscular atrophy (SMA). The healthcare company didn't hesitate to mention that this makes the drug the first and only gene replacement therapy for the affliction. The approval covered patients two years and older.

Image source: Getty Images.

SMA, a rare genetic neuromuscular disorder, is caused by a missing or mutated gene. Itvisma is a different formulation of the same active ingredient used in the company's pediatric SMA drug Zolgensma.

That regulatory green light is based on data from phase 3 clinical trials of the medication. These demonstrated statistically significant improvements in motor function, as well as stabilization of motor abilities.

In its press release heralding the FDA's approval, Novartis quoted Victor Bultó, President of Novartis US, as saying, "with the first gene replacement therapy for this challenging disease, we can now help address unmet needs across an even broader SMA population with the approval of Itvisma."

More where that came from, hopefully

This is certainly an encouraging development for Novartis, as the SMA Foundation estimates that the patient population in this country may be as large as 10,000 to 25,000 people. It's also a win for gene therapies, which have struggled for success in the development phase over the years.

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.