BROOMFIELD, Colo. (
) -- Wacky, inexplicable things sometimes happen to biotech stocks. Like Friday, when
shares more than tripled after the small drug company was granted a new U.S. patent for its experimental heart failure drug.
Arca shares rose an astonishing $5.57, or 210%, to close Friday at $8.22. Calculated another way, one U.S. patent for Arca added $40 million in market value.
Not bad, especially considering Friday's announcement wasn't particularly new. Arca issued a press release in January announcing the U.S. Patent and Trademark Office had informed the company that the patent was coming. Friday's press release simply confirmed that the patent had been issued.
In case you're wondering, Arca shares rose just 17 cents as a result of the January press release.
So, what's made Arca rocket Friday when it barely budged in January on the same patent news?
Like I said, some things in biotech defy logic. Fundamentals had nothing to do it, clearly. Instead, Friday's move was more likely a function of momentum traders finding an easy plaything in Arca, which sports a tiny float of just 4.4 million shares.
More than 49 million Arca shares traded hands Friday, or seven times the number of shares outstanding.
It was little noticed Friday, but Arca actually disclosed some bad news regarding the development of its heart failure drug bucindolol. Arca and the U.S. Food and Drug Administration have still not come to agreement on a Special Protocol Assessment for a proposed phase III study of bucindolol. Arca said Friday it had to submit revisions to the design of the study, which will now enroll 3,200 heart failure patients, up from 3,000 patients previously.
Arca needs FDA sign off on the bucindolol trial design, after which the company needs to raise money to conduct the trial. Arca says it can likely start the pivotal bucindolol study one year after both those things happen. The company expects the study to take two years to complete once fully enrolled.
As of December 31, Arca had $7.8 million in its coffers.
Arca is developing bucindolol with a companion genetic test that will help doctors determine which heart failure patients are likely to respond to treatment with the drug. The FDA refused to approve bucindolol last year, forcing Arca to conduct the new clinical trial.
-- Reported by Adam Feuerstein in Boston.
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