Techniclone Shares Soar Another 33%
The trading frenzy over Techniclone Corp. stock continued Wednesday for a second consecutive day, as investors bid up the shares another 33%.
A total of 12.8 million shares were traded, making Techniclone the fifth most active stock in U.S. markets.
Shares of the tiny Tustin developer of experimental cancer treatments rose 44 cents to close at $1.78. On Tuesday, the stock topped the most-active list as more than 19.3 million shares were traded. The stock surged 50 cents, or nearly 60%, to $1.34.
The company continues to ride the explosive run-up in stocks of cancer research companies earlier this week, touched off Monday when EntreMed Inc.’s stock more than quadrupled on publicity over compounds it is developing that may eliminate many tumors in laboratory mice. Techniclone has tested a different technology that it says appears to eliminate tumors in large mice.
Analysts, aware that compounds deemed promising in animals rarely get approved eventually for treating people, expressed disbelief over the staggering volume in Techniclone shares.
“This is a psychology I don’t understand,” said Robert Swift, an analyst at Bigelow & Co., in Denver. “The movement in Techniclone does not appear to be the result of a fundamental change in the company.”
Elizabeth Gorbett-Frost, the company’s chief financial officer, attributed some of the volume to trading by investors who have recently converted the company’s preferred stock into common shares. For instance, since April 30, investors in preferred stock issued a year ago have converted their holdings into about 6 million common shares.
She predicted the high-volume trading will continue. She says the company’s stock must trade over $1 for a number of days or face delisting from Nasdaq’s small cap market this summer.
The preferred stock was issued as part of a troublesome $12-million private financing the company made a year ago. The deal was structured to encourage investors to put off converting their preferred shares to common by setting up a scale of conversion discounts that rose over time.
But the company’s common stock dropped, falling from $5 in the spring to 78 cents last month. Conversions of the preferred stock at discount prices worked to push down the price.
Gorbett-Frost attributed the stock activity this week mostly to investor interest in cancer research stocks generally and prospects for Techniclone’s technologies in particular.
Two news releases Tuesday that promoted company research findings may have fed the frenzy. One referred to publication of results of its tests in mice in the May 1 issue of a research journal.
The second--a shortened version of a release issued March 6--reiterated that the company had received regulatory approval to begin testing a different tumor-busting technology in people. Gorbett-Frost said the company didn’t reissue the information, which was carried over news wires March 6 and May 5.
