One day after doubling in price, NeoTherapeutics Inc.'s stock fell 31% Thursday after the biotechnology company elaborated on the risks and costs of its attempt to develop a drug for Alzheimer's disease.
NeoTherapeutics fell $6 to $13.25 as 3.2 million shares were traded. On Wednesday, the stock doubled to $19.25 after reporting encouraging results for a treatment of Alzheimer's disease.
Officials at the Irvine company said the results reported Wednesday had been disclosed previously. The company also said it would need additional funding to complete all the required tests of the drug, and that it does not have a licensing agreement with a pharmaceutical company for the drug. Such agreements are common when a small biotechnology company has a promising drug.
"It's pure, pure speculation," said Steve Lisi, a biotechnology analyst at Mehta Partners. "People who bought [NeoTherapeutics] at $18, I don't know what they were doing or what they were thinking."
The stock of another Irvine biotech firm also retreated Thursday after a big surge the previous day. Cortex Pharmaceuticals shares, which had moved up 41% on Wednesday, fell 24%, or 75 cents a share, on Thursday to close at $2.38. The chief executive of the company, which is developing treatments for mental disorders, had made a presentation Wednesday to potential drug-company partners at a conference in Boston.