(Biotech winners and losers item updated for closing stock prices.)

NEW YORK ( TheStreet) -- Alexza Pharmaceuticals ( ALXA) had the most unfortunate story in the biotech library Monday, as investors stripped more than half the market cap from the company's stock after the Food and Drug Administration denied approval of Alexza's treatment for schizophrenia and bipolar disorder.

Called AZ-004 and co-marketed with Valeant Pharmaceuticals ( VRX), the treatment takes a generic drug called loxapine and delivers it to patients through an inhaler.

The FDA, however, said it had safety concerns about how the inhaled doses affected the lungs. Some patients in Phase 1 trials exhibited decreased pulmonary function, the FDA said.

In frantic trading Monday, Alexza shares ended the session at $1.38, down $1.65, or 54.4%. Volume exceeded 16 million shares, more than 20 times the daily average turnover in the name.

Elsewhere in the biotech sector, stocks were trading mixed. The Nasdaq Biotechnology Index declined 2.35 points to 908.39.

Among notable gainers, Geron ( GERN) shares rose 6.4% to $5.67 on heavy volume after the company announced it had launched a Phase 1 human clinical trial of a stem-cell-based treatment for spinal cord injuries.

The study is seminal -- and not just for the controversial Geron. The study marks the first time that stem cells removed from a human embryo will be tested in a human being. Geron's hope is that the cells will fix spinal nerve damage soon after injuries occur, thereby avoiding permanent paralysis.

The Geron trial comes after political skirmishing at the highest levels. Former President George W. Bush had famously placed restrictions on the use of federal funds for stem-cell research -- restrictions lifted by President Obama and upheld by a U.S. appeals court in September. Development of the Geron drug has partly been funded by a handful of states that rebelled against Bush's restrictions and offered grants on their own.

Among other winners in the land of experimental medicines, Pozen ( POZN) saw its shares rise steeply Monday after the European Union approved the company's pain reliever Vimovo for sale on the Continent. AstraZenca ( AZN) is Pozen's partner in the development of the drug, which combines naproxen with the British pharma giant's heartburn blockbuster Nexium.

Pozen shares closed the session at $7.29, up 7.5%.

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