Nuvelo Sinks 75% On Trial News: Over-reaction?

by H.S. Ayoub
BioHealth Investor


Shares of Nuvelo (NUVO) sank more than 75% on Monday after the company announced that its late stage trial of its new blood clot dissolver alfimeprase, which is co-developed by Bayer Healthcare, susidiary of Bayer (BAY), failed to meet primary endpoints.

The two primary goals of the study was to determine if alfimeprase could keep patients with blocked arteries from needing surgery, and to restore the function of blocked catheters within 15 minutes.

Alfimeprase would have provided another treatment for patients suffering acute peripheral arterial occlusion (PAO) who currently have limited treatment options.

Both companies will attempt to look at the data one more time and discuss future options with the FDA for salvaging whatever hope still remains for moving alfimeprase along.

While Nuvelo does have a couple of other drug candidates in clinical trials, any meaningful data is still years away.

So was the stock loss on Monday an investor over-reaction? Yes, but what isn't in biotech investing?

Consider Acorda Therapeutics (ACOR) which moved up almost four times in stock price in one day after the company came out with positive trial data, even though the data was preliminary.

Sinking 75% on bad news is, and I hate to say this, customary for little biotech stocks. The stock may well be much higher a year from now, or could be a penny stock.

It all depends on what the Nuvelo does with Alfimeprase; continue further studies and there is hope, discontinue the program and the 75% drop will seem small compared to the next one as investors will lose confidence in the company's other programs.

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