Updated from 3:08 p.m. EST

Shares of

GeoPharma

(GORX)

walked a tightrope of miscommunication Wednesday, rising as much as 150% after the company trumpeted marketing clearance for a device to treat painful mouth sores caused by some cancer treatments.

Shares of Largo, Fla.-based GeoPharma soared as much as 153% to $11.25 in early Wednesday trading after the company issued a press releasing stating that its

Belcher Pharmaceuticals

unit had received FDA approval to market Mucotrol to oncologists for the treatment of oral mucositis and stomatitis. GeoPharma estimated the commercial potential for Mucotrol would be in the range of $75 million to $300 million per year.

Early in the afternoon, the stock tumbled and was subsequently halted at $6.81 after FDA officials told media outlets including this Web site that they had no record of Mucotrol.

But the agency later backtracked, saying the treatment had been cleared for marketing on Nov. 24 -- not as a drug, but as a device. The product received so-called 510(k) marketing clearance because of its substantial similarity to a product already on the market. That product is GelClair, marketed by

OSI Pharmaceuticals

(OSIP)

.

Mucotrol is a wafer coated with soluble gums that dissolves in a patient's mouth and is designed to relieve the pain caused by oral mucositis, according to GeoPharma President Kotha Sekharam. Mucotrol is an improvement over GelClair because it's easier to use (GelClair must be dissolved in water), says Sekharam, but he acknowledges that there is no active drug ingredient in Mucotrol, which the company refers to as a "prescription product."

Wednesday's confusion, with the FDA first saying Mucotrol wasn't approved, then backtracking and saying it had received marketing clearance, was likely caused because the FDA officials were checking with reviewers in the agency's drug division, not its medical device division, says Sekharam.

But in the past, GeoPharma has referred to Mucotrol as a drug. In a July 13

press release announcing clinical trial results, GeoPharma describes Mucotrol (then known as MF5232) as a "patent-pending drug for mucositis in cancer patients."

"When we applied for approval at the FDA, this product went into the device category, so it must be called a device," said Sekharam, who wouldn't explain why the product was previously described as a "drug" when there is no drug in Mucotrol.

GeoPharma may have a tough time racking up $75 million to $300 million in Mucotrol sales, too. In its last quarterly report filed with the

Securities and Exchange Commission

, OSI Pharmaceuticals said it recorded GelClair sales of $335,000 in the quarter ended June 30, 2004, and $911,000 in GelClair sales for the nine months ended June 30, 2004. Moreover, the company forecast fiscal 2004 GelClair sales of between $1.2 million to $1.5 million for fiscal 2004.

"Although Gelclair product sales have been less than originally forecasted, we believe that our product sales of Gelclair will increase in the oncology market as we continue our sales and marketing efforts which we launched in the fourth quarter of calendar 2003," the company stated.

It's still a long way to $75 million in Mucotrol sales, however, considering that Mucotrol and GelClair are similar products, administered in different ways. The main ingredients in GelClair are PVP, a film-forming agent; hyaluronic acid, a lubricating agent; and licorice root extract, a sweetener.

Sekharam says the ingredients that make up the Mucotrol wafer are similar but not exactly the same.

GeoPharma remains halted for trading.

As originally published, this story contained an error. Please see

Corrections and Clarifications.

Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

adam.feuerstein@thestreet.com.