Neopharm Inc. shares slumped 75%, to a 52-week low, after the company announced that its experimental drug for brain cancer didn't perform statistically better in a clinical trial than an existing drug.
The stock was trading recently at $1.73, off $4.99 from Friday's close at $6.72. Earlier, the shares fell to $1.68, off $5.04 from Friday's close and surpassing a previous 52-week low of $4.32 set in July.
Volume was 10.4 million shares traded, compared with a daily average of 426,000.
Analysts called the sell-off warranted.
"It's a very fair reaction," said Brean Murray Carret & Co. analyst Jonathan Aschoff, who noted that he had a sell rating on Neopharm shares prior to Monday's development.
Aschoff said he thinks shares of Neopharm, a Waukegan, Ill., pharmaceutical company, are worth "a couple bucks," or a slight premium to the company's cash.
Neopharm's drug - cintredekin besudotox - "did not beat the control" in the study, Aschoff said. "It was slightly better, but no where near statistically so."
ThinkEquity Partners analyst Vinny Jindal said it's unclear what the company will do now.
Jindal described the investor reaction as "largely justified," and he said he plans to listen closely to a Neopharm conference call that's been scheduled for after Monday's market close to see "how (company executives) plan to put Humpty Dumpty back together again."
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