Updated from 2:29 p.m. EDT

Shares of Advancis Pharmaceutical ( AVNC) plummeted 59% after a drug it's working on with Par Pharmaceutical ( PRX) failed a late-stage clinical trial. The companies said a phase III trial for the Amoxicillin Pulsys drug used to treat adults and adolescents with pharyngitis/tonsillitis failed to reach its end point. "We will further investigate these results and look to the results of our pediatric phase III trial that we anticipate receiving next month before deciding upon the next steps for our amoxicillin program," said CEO Edward Rudnic. Advancis closed down $2.96 to $2.03; Par finished down $1.94, or 5.8%, to $31.57.

Shares of InKine Pharmaceutical ( INKP) rose 0.5% after the company announced that the Philadelphia Court of Common Pleas entered a final judgment order approving the settlement its class-action litigation related to the denial of certain claimed preemptive rights. The court determined that the settlement was fair to the members of the class. The company said the settlement and litigation costs incurred by InKine were being funded by a third party. The court's judgment cannot be appealed after 30 days. The stock closed up a penny to $2.17.

Shares of Universal Health Realty ( UHT) fell 1.27% after the company was downgraded by Merrill Lynch to neutral from buy on valuation concerns. The brokerage said that in the two months since UHT received an unsolicited takeover offer, shares have appreciated almost 32%. Merrill also said that in light of the recent run-up the likelihood that a buyer could pay a substantial premium for the company has diminished. The stock closed down 49 cents to $38.23.

Prana Biotechnology ( PRAN) was flat after CEO Jonas Alsenas stepped down to pursue other interests. Geoffrey Kempler will assume his duties until a successor is named. The company also reaffirmed its commitment to the development of PBT2 for the treatment of Alzheimer's disease. Prana said it is confident that the drug will not present the impurity problems that were found in PBT1. Prana started a series of phase I clinical trials of PBT2 in March. The stock closed unchanged at $1.29.

Other health stocks on the move were Mylan Labs ( MYL), down 16 cents to $19.69; Biogen Idec ( BIIB), up $1.22 to $36.25; Elan ( ELN), down 7 cents to $7.02; Chiron ( CHIR), up 22 cents to $35.69; and Sanofi-Aventis ( SNY), down $2.10 to $41.17.

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