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*Update* Truth Serum: FDA Squashes Aronex Application, Stock Goes Poof

Shares of Aronex were lately down more than 40% after the FDA withdrew an invitation for the company to present its Atragen leukemia drug.

Marcial Flaw

OK, this is why we said never to chase drug-development


All the sheep who piled into biotech firm



in the past three weeks based on positive mentions in

Business Week's

Inside Wall Street column and rumors on some Net services got destroyed this morning.

Less than an hour into trading today, shares of Aronex were down more than 40% to 4 1/8 after the

Food and Drug Administration

withdrew an invitation for the company to present its


leukemia drug.

Buy the rumor and sometimes you can't sell the fact fast enough.

The FDA cited unspecified deficiencies in the company's filing, which usually means that the company didn't have enough patients in its trials or enough data to prove safety or efficacy.

A spokeswoman for Aronex said, "We don't know the problem or the magnitude," adding that it could be about the clinical data, but it also could be simply a manufacturing or other type of problem. She said that though "it is confusing, all is not lost. We will continue to work with the FDA. We are very, very bullish on this product."

And, if you need them, here are some more reasons not to play small biotechs with anything but that extra couple of hundred thousand that you just had lying around: They have huge regulatory risk, management is often inexperienced with the ways of the FDA and you simply don't know how good or complete the data are.

Until it's too late.

We're depending on our readers for sources, rumors and ideas. Send any to our Truth Serum hotline.