Agouron Stock Rockets on News of AIDS Discovery
The value of La Jolla-based Agouron Pharmaceuticals’ stock more than doubled during heavy trading Friday after the company reported success in finding the 3-D structure of a key enzyme in the AIDS virus.
Sensing a possible AIDS breakthrough, investors rushed to buy Agouron, sending the stock to an all-time high of $19 per share in NASDAQ over-the-counter trading, up from $9 at the start. Six months ago, Agouron was trading at its all-time low of $3.25.
Just as impressive was Friday’s volume: 604,200 shares, more than 100 times Agouron’s normal trading level.
While market analysts were not surprised by the stock’s rapid improvement, they remained cautious.
“The stock has not performed as well as many of the other biotech stocks until this, and it’s catch-up time for them,” said Irving Katz, director of research for Mason, Hunt & Co. in San Diego. “What it means ultimately, nobody knows.”
Agouron, founded in 1984, reported in the journal Science on Friday that its scientists had determined the structure of an enzyme essential to replication of the AIDS virus in the body.
Before publication, the company filed for patents on more than 50 chemicals that show the potential to act as drugs against the enzyme’s action.
It was the potential for an AIDS breakthrough that sent investors scurrying to buy, Katz said.
“People are enchanted with the possibility of any discovery relating to AIDS,” he said.
An analyst who is looking at Agouron’s jump with special satisfaction is Jim McCamant, editor of Medical Technology Stockletter. His investment advisory newsletter urged readers to buy Agouron when it was selling for $3.25.
“When we first recommended this stock six months ago, we did it because they were able to do this kind of thing. And they’ve just proven it,” McCamant said.
The investor confidence comes despite the fact that Agouron remains in the loss-producing research and development phase of its operations. The firm lost $15 million over the last three fiscal years.
“Companies that have potential can always attract investors,” Katz said. “So the fact that Agouron lost $15 million--so what? If they come up with an AIDS drug, that’s nothing to worry about.”
Agouron officials were vacillating between being pleased and being overwhelmed by the stock’s movement.
“We knew there would be some reaction, but we were just amazed by how strong it was,” said Donna Nichols, Agouron’s director of corporate communications.
