Cancer News Fuels Stock Gain for Techniclone
Caught up in investors’ frenzy over a promising treatment for cancer, Techniclone Corp. shares surged after the Tustin biotechnology firm released research data about its anti-cancer agents.
Volume topped 19.3 million shares, making Techniclone the most active stock on all U.S. markets.
Staffers at the troubled firm, which has had layoffs and financial difficulties over the past year, were surprised when its stock rocketed from 84 cents a share to as high as $2.66 before retreating a bit to close at $1.34, up 50 cents for the day.
“We were shocked,” said Dr. Jamie Oliver, vice president for clinical and regulatory affairs at Techniclone. “I have no doubt that our stock activity is happening because of the interest in EntreMed.”
The buzz over businesses working in cancer research began Monday, when EntreMed Inc.’s stock price more than quadrupled on news that it is developing two compounds that eliminate many tumors in laboratory mice.
According to published reports, EntreMed has found that the two substances, angiostatin and endostatin, interfere with the blood supply to tumors when used together. If a tumor’s blood supply is cut off, the tumor shrinks or disappears--and can be prevented from returning--according to published findings by Dr. Judah Folkman, a cancer researcher at Children’s Hospital in Boston.
On Tuesday, Techniclone released early research findings indicating that its anti-cancer drugs also attack a tumor’s blood supply. The Tustin firm is testing four drug compounds in animal trials, but the drugs, if approved, would not be available to the public for at least five years.
Several other small biotech firms enjoyed gains Tuesday. Ribozyme Pharmaceuticals Inc., which rose $1.25 a share to $7.06, also issued a statement about research findings on its anti-cancer compound. And Agouron Pharmaceuticals Inc., a La Jolla firm working on a similar drug, jumped $2.50 a share to $36.88.
“It’s insane, because this stock feeding frenzy was started over really old news,” said Jim McCamant, editor of the Medical Technology Stock Letter. “[EntreMed’s] mice data was published back in November. It’s just that the [news] media got around to reporting it now, and the market is responding to the hype.”
As with other recent technology stock booms--such as the frenzy in April over companies with Internet-related products--the biotech boom figures to be relatively short-lived. A day after their furious rise, for example, EntreMed shares dropped $8.69 to close at $43.13.
“Such extremes are the nature of these high-tech industries,” said Wole M. Fayemi, director of health care research at Cruttenden Roth. “EntreMed helped highlight the biotechnology sector. Now, investors are shuffling through the stocks and looking for companies that are small, ignored or undervalued.”
Techniclone fits all three parameters. Last spring, the company launched a $12-million sale of convertible preferred stock to help fund research for its experimental cancer treatments.
The stock deal was structured to encourage investors to put off converting their shares to common stock by setting up a scale of conversion discounts that rose over time.
But Techniclone’s stock began to drop, falling from $5 in the spring to 78 cents last month. Stung by the nearly ruinous stock financing bid, the company has spent much of the past year pulling itself out of financial muck. It has until June 18 to get its stock above $1 a share for 10 consecutive days, or be delisted from Nasdaq.
While new investors flocked to Techniclone looking for a good deal, McCamant said some shareholders took Tuesday’s price fluctuation as an opportunity to dump their stock.
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Active Issue
More than 19 million shares of Techniclone Corp. stock traded Tuesday, making it the most active stock on all U.S. exchanges. Daily volume, in thousands of shares:
May 5 19,338
Source: Bloomberg News
