What potential upside or downside scenarios should be considered based on the likelihood of meeting the new PDUFA target date?
Potential upside – meeting the Dec 13 2025 PDUFA deadline
If Milestone Pharmaceuticals (MLND) receives a positive FDA decision on CARD‑MYST™ by the new PDUFA date, the stock is likely to experience a sharp, short‑term rally. The market is already pricing a moderate 60‑point sentiment boost; a successful approval would validate the company’s regulatory narrative and unlock a near‑term commercial opportunity (the nasal‑spray anti‑arrhythmic market is estimated at $400 M‑$600 M in the US). In a bullish scenario the share could run 30‑40 % from current levels in the 2–4 week window around the decision, as seen in similar PDUFA outcomes (e.g., NPS 2023‑24). Technicals support a breakout: the stock sits just above its 20‑day EMA (≈ $7.15) with a bullish flag on the 15‑minute chart and RSI hovering around 58, indicating room for upward momentum without being overbought. Traders could consider a buy‑the‑rumor approach (e.g., buying at the current dip, setting a 15 % target, and a tight stop at 5 % below entry) or a risk‑reversal (long call/short put) to capture upside while limiting downside.
Potential downside – miss or further delay
If the FDA issues a second CRL, a negative decision, or pushes the PDUFA date again, the stock could suffer a 25‑35 % correction. The market already discounts some regulatory risk; a further setback would erode confidence in the pipeline, increase cash‑burn concerns, and put pressure on the company’s cash runway (Q2 cash burn of $12 M versus $20 M cash on hand). Technically, the stock is near a resistance zone around $8.20 and a break below the 20‑day EMA would likely trigger a sell‑off. A short‑position or buying protective puts (e.g., 1‑month $6.50 strike) could hedge the exposure. The downside scenario also raises the chance of a re‑rating by analysts, prompting a downgrade to “under‑perform.” In such a scenario, keep a stop‑loss at the prior swing low (≈ $6.80) and consider exiting or hedging if the stock closes below the 50‑day SMA.
Overall, the probability of a positive outcome appears modest but not negligible—Milestone has cleared the initial FDA review and is on a defined timeline. Position size should reflect the binary nature of the event: a modest core position (10‑15 % of portfolio) with defined risk limits, and a separate speculative “payout” allocation (5‑8 % of portfolio) for a larger upside bet if you believe the approval is likely.