Prosensa plummets on trial data
Shares of Prosensa (NASDAQ:RNA) traded sharply lower on Friday morning following some startling news surrounding the company’s muscular dystrophy drug. Over the last year the biotechnology sector has performed exceptionally well. Some of the largest names within the sector have run to the upside by more than 100%. Exuberance within the sector has caused a number of smaller companies to hit the public markets in recent months. Included was Prosensa which priced at the high end of its range in June. After pricing 6,000,000 of its ordinary shares at an initial public offering price of $13.00 per share, shares traded as high as $20 per share on the first day of trading.
The company’s experimental drug for Duchenne muscular dystrophy from GlaxoSmithKline and Prosensa failed to meet its goal in a late-stage clinical trial, as a result Prosensa was sent tumbling 75 percent in pre-market trading. For weeks investors have sought exposure to the space, however, the results of the trials don’t paint a pretty picture. In the study patients failed to show the drug was statistically significant in improving patient mobility.
Up until today, 2013 has been a strong year for Glaxo research, with new drug approvals in HIV, cancer and respiratory disease. However, finding a treatment for Duchenne muscular dystrophy (DMD), like developing a therapeutic cancer vaccine, was always a difficult prospect. Shares of Prosensa are down by 17 points early in the session to $7 per share. Volume has soared from the traditionally low levels. Normally 200k shares exchange hands per day, however, more than 8 million shares traded hands within the first hour. Traders and investors alike should consider the volatility involved with Prosensa. Over the next few trading sessions it is likely shares will be subject to great price swings.
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