Alcobra Ltd’s market value more than halved on Thursday, a day after the company said the U.S. Food and Drug Administration had placed a hold on its lead experimental drug.
Shares of the Israel-based company fell as much as 58 percent to a record low of $1.95.
The hold affects an ongoing late-stage study of drug, MDX, in adult patients with Attention Deficit Hyperactivity Disorder (ADHD), as well as its application to test the drug in adolescents with ADHD and Fragile X syndrome (FXS), Alcobra said on Wednesday.
Results from the study, MEASURE, were expected by the first quarter of 2017.
Alcobra said the agency imposed the hold due to adverse neurological findings in a preclinical study.
“We view this setback as a delay to commercialization of MDX with increased uncertainty around future cash requirements”, Jay Olson, an analyst with Oppenheimer, wrote in a note on Thursday.
Olson downgraded the stock to “perform” and withdrew his price target of $16.
He, however, said the announcement was surprising as metadoxine, the active ingredient of MDX, has been available for about 30 years outside the United States and has been used in over 13 million patients without any reports of significant safety concerns.
ADHD is a brain disorder with symptoms such as poor concentration, hyperactivity and learning difficulties.
The disorder affects about 4.1 percent of American adults aged 18 and above in a given year, and 9 percent of children aged 13-18 years, according to the National Institute of Mental Health.
Fragile X syndrome is a genetic incurable condition that causes a range of developmental problems including autism, learning disabilities and cognitive impairment.
Four of eight brokerages covering the stock rate it “buy” or higher, 3 “hold” and 1 “sell”, according to Thomson Reuters data.
On Thursday, Jefferies cut its price target to $6 from $9. The median price target on the stock has dropped to $11 from $14 in June.
Shares of Tel Aviv-based Alcobra were down about 55 percent in late-morning trading. More than 5.81 million shares traded, in their second busiest day.
(Reporting by Akankshita Mukhopadhyay and Natalie Grover in Bengaluru; Editing by Sriraj Kalluvila)