Shares of Avanir Pharmaceuticals slid 14 percent Wednesday before markets opened after the drug developer said its pain treatment for multiple sclerosis fared no better than a fake drug in a clinical study. Its fourth-quarter loss widened.
The Aliso Viejo, Calif., company is reviewing data from its mid-stage trial of the experimental drug, labeled AVP-923, and some previously generated data on diabetic peripheral neuropathic pain to determine its next steps.
Jefferies analyst Thomas Wei said the drug's use with multiple sclerosis patients "very risky," and he doesn't include it in his valuation of the company. He has a "hold" rating on the stock and a $4.50 price target.
Avanir also said Tuesday after markets closed that its loss in the final quarter of fiscal 2013 widened to $35.4 million, or 24 cents per share, from $11.7 million, or 9 cents per share in last year's quarter. Revenue jumped 60 percent to $21.6 million.
Avanir's loss totaled 10 cents per share, excluding a one-time, $20-million payment the company made for a potential migraine treatment labeled AVP-825 .
Analysts surveyed by FactSet expected, on average, a loss of 8 cents per share on $21.9 million in revenue.
The next catalyst for the company's stock will be a patent litigation ruling on Nuedexta, Avanir's treatment for pseudobulbar affect. Wei said that could come by February or sooner, and he already gives the company credit for winning the patent challenge.
Pseudobulbar affect is a condition associated with brain disease or injury that involves involuntary emotional outbursts like laughing or crying.
Shares of Avanir Pharmaceuticals Inc. fell 61 cents to $3.68 Wednesday in premarket trading. The shares had climbed about 64 percent so far this year.