Updated with CEO reaction, new stock price.
Investors were apparently fooled into believing otherwise Tuesday after the nearly bankrupt, penny-stock company issued a press release announcing "FDA Issues Orphan Status Approval for PermaDerm."
Shares of Regenicin rose 12 cents, or 80%, to 27 cents per share Tuesday on massive volume of 4.1 million shares. On a typical day, only 168,000 shares of Regenicin trade hands.Reality set in Wednesday as Regenicin shares fell 9 cents, or 33%, to 18 cents a share in late trading. Investors trading Regenicin Tuesday believed the company was on the cusp of selling PermaDerm, but they were mistaken. The FDA action only granted Regenicin the right to pursue the clinical development of PermaDerm as a treatment for an orphan disease, or rare medical condition. PermaDerm is still experimental and Regenicin, even with some of the shortcuts granted with an orphan disease product, still has to conduct clinical trials and seek FDA approval -- steps the company hasn't accomplished yet. PermaDerm is a skin graft prepared using a sample of a patient's own skin. This skin sample is grown into a larger replacement graft that can be used later by surgeons to treat severe burn victims. Regenicin hopes to start clinical trials of PermaDerm this year and request FDA approval in 2013, according to the company's most recent annual report filed with the Securities and Exchange Commission. Regenicin CEO Randy McCoy, in a phone interview, claims FDA will allow PermaDerm to be approved and marketed without filing a formal approval application. When his claim was challenged, McCoy got mad and hung up the phone. PermaDerm has been in development for more than 20 years, during which U.S. regulators have issued multiples warning letters due to unreliable clinical data and improper testing procedures, according to a 2011 report by BioPharmCatalyst. Regenicin is close to insolvency. The company, which is headquartered in the home of its CEO, finished the first quarter with only $36,000 in cash on hand. Since then, Regenicin has survived on high-interest loans from certain unnamed individuals, according to SEC filings. --Written by Adam Feuerstein in Boston.
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