AP
Analyst Says Nucryst Surge "Overdone"
Monday July 23, 1:18 pm ET
Nucryst Pharma Shares Fall After SunTrust Robinson Analyst Says Reaction to FDA OK "Overdone"
NEW YORK (AP) -- Shares of Nucryst Pharmaceuticals dropped sharply Monday in heavy trading after a SunTrust Robinson Humphrey analyst said the market overreacted to last week's news that the FDA approved Nycryst's topical antibiotic.
On Friday, Nucryst shares more than doubled after the FDA cleared the company's prescription topical cream containing nano-crystalline technology to fight infection. The cream acts as a barrier to bacteria involved in antibiotic-resistant Staph infections.
Shares jumped from Thursday's close of $2.23 to peak at $6.75 Friday before ending the session at $5.84. In Monday morning trading, however, the stock tumbled 20 percent to $4.67.
Analyst Jonathan Block downgraded the stock to "Neutral" from "Buy," noting that the cream may be several months away from coming to market, as distribution plans have yet to be determined. Furthermore, Block thinks the cream's market opportunity is relatively modest, since rival Stiefel Labs garners only about $10 million per year in revenue from its prescription moisturizing cream.
The company first tested the cream's active ingredient, NPI 32101, as a treatment for children and adolescents with atopic dermatitis. But in September, Nucryst revealed that the ingredient failed a mid-stage study for that indication. The stock lost nearly a quarter of its value on that news and has declined ever since.
Block also cautioned that Nucryst's Acticoat products will continue to see moderating sales due to lower-cost silver dressings entering the wound care market, and warned that Canadian parent Westaim may take advantage of the recent stock appreciation to sell off some of its 75 percent stake in order to fund other investments.
surf's up......crikey
