Biotech company Prana Biotechnology Limited (ASX: PBT) saw its shares soar 33% to 22 cents in trading today, following similar gains (21%) in its NASDAQ-listed shares overnight.
Prana was issued a speeding ticket by the ASX for the price move and abnormal volumes, but the company says it is not aware of any reason for the heavy trading and price increase.
The company is currently in Phase 2 of trialling a product in the treatment of Alzheimer's disease. When preliminary results were released in March proved disappointing, Prana's shares crashed, losing around 75% of their value in one day.
The sudden spike today could be in anticipation of some positive results being released, and there is also some speculation which suggests the drug is effective in treating Huntington's disease.
The company, investors and shareholders may be perplexed by the moves today, but we may have to wait awhile to find out why.
Biotech stocks can be extremely volatile – as witnessed by the share price moves this year of Prana, Acrux Limited (ASX: ACR) and also QRxPharma Ltd (ASX: QRX). Investors need to have a full understanding of the products they are developing as well as the laborious drug approval process in the US.
Prana is not a stock I'd be speculating on, preferring profitable stocks such as the following stock that is growing earnings, pays a decent dividend and could be the stock of the year. If you want to find out what it is, read on…
