Test Results Boost NeoTherapeutics Stock 20%

From Bloomberg News

NeoTherapeutics Inc. shares rose 20% Monday after the company said that tests of its Neotrofin drug in animals suggested the compound could stimulate nerves to grow again after they had been damaged.

The Irvine biotechnology company’s stock rose $2.31 a share to $13.50, after trading as high as $14.50 earlier in the session. More than 566,000 shares changed hands, more than quadruple the average trading volume for the stock over the past six months.

The animal research--a vote of confidence in the drug’s ability to improve nerve functioning and help repair damaged neurons--comes as NeoTherapeutics works to complete the second of three stages of drug testing in humans required by the Food and Drug Administration. The company is studying Neotrofin for use in treating patients who have mild to moderate Alzheimer’s disease.

“These results indicate that Neotrofin may provide therapeutic benefit in several different neurodegenerative diseases such as Alzheimer’s disease, spinal cord injury, and stroke,” said Alvin Glasky, president, chief executive officer and director of research at NeoTherapeutics.


The results were announced at the XIII International Congress of Pharmacology in Munich, Germany. The company didn’t release data from the animal trials.

Researchers found that giving the compound to animals caused nerves to regenerate after they were destroyed in conditions mimicking a stroke or brain damage. In Petrie dishes, scientists could see the nerve cells resprouting after only hours, and in animals that had been deliberately brain-damaged, improvement was apparent after about four days, the company said.

The drug appears to work by stimulating certain genes that are involved in natural repair of the nerve tissues found in the brain and spinal cord. The activated genes are thought to set off a chain of positive effects that results in nerve regeneration and better functioning, NeoTherapeutics said.

Shares in the company have been volatile recently, more than doubling in May on initial reports of the experimental drug’s promise in treating Alzheimer’s only to lose about 30% of their value the following day as investors learned more about the risks involved in developing Neotrofin, or any other new drug.


Neotrofin is also known as AIT-082.