2 O.C. Firms’ Stocks Leap in Biotech Frenzy
Two Orange County drug developers Wednesday became the latest firms swept up in investors’ euphoria over companies working on treatments for a variety of serious diseases.
NeoTherapeutics Inc.’s stock more than doubled to $19.25 a share from $9.60, making it the biggest percentage gainer in U.S. markets, after the Irvine company reported encouraging results for an Alzheimer’s disease treatment.
Investors also bid up Cortex Pharmaceuticals after the Irvine company’s chief executive made a presentation to potential drug-company partners at a conference in Boston.
Shares of Cortex, which is developing treatments for mental disorders, surged 91 cents, or 41%, to close at $3.13 on Nasdaq.
NeoTherapeutics officials said they were puzzled by the price run-up and heavy volume, pointing out that the results reported Wednesday about the company’s treatment have been reported at various times over the last year.
“There seems to be a hunger for biotech opportunities,” said Steven Runnels, NeoTherapeutics’ executive vice president.
He compared Wall Street’s response to NeoTherapeutics to the frenzy earlier this month over EntreMed Inc. Its shares quadrupled after the New York Times reported that the Maryland company’s cancer treatment had positive results in animal tests.
“We tried to do everything we could do not to become the next EntreMed,” Runnels said, pointing out that his company’s financial results so far do not support such a high stock price. Over the last four years, the company has lost $8.4 million and generated no sales.
On Wednesday, 7.57 million shares of NeoTherapeutics stock changed hands on Nasdaq, compared with average daily volume over the last three months of 154,000 shares.
The activity occurred after Chief Executive Alvin Glasky said in an interview that limited clinical trials found that patients given the company’s AIT-082 compound showed memory and behavioral improvements.
But earlier this month, the company issued a similar statement about the effects of the treatment.
