What happened
Shares of Longeveron (LGVN -4.48%), a clinical-stage biopharmaceutical company, jumped more than 25% higher when the stock market opened. Investors eager to cash in on the next possible Alzheimer's drug were responsible for the bounce, which quickly began losing steam. Longeveron's stock price was 10.8% higher at 11:50 a.m. ET on Wednesday.
So what
This morning, Longeveron announced the initiation of a phase 2 trial that will eventually enroll 48 patients with Alzheimer's disease.
Image source: Getty Images.
With a pre-commercial company, steps toward marketing a first new drug can get more attention than they deserve. The beginning of a phase 2 trial might seem important, but this morning's stock price movement was probably unwarranted.
Longeveron reported successful final results of a phase 1 trial with its lead candidate, Lomacel-B, last April. Beginning a phase 2 trial nine months after succeeding in phase 1 isn't something any drugmaker should brag about.
Now what
Lomacel-B isn't an innovative gene therapy that makes the FDA unusually nervous. It's just an infusion of stem cells derived from healthy donors. The long delay in the development of Lomacel-B for Alzheimer's disease, an indication potentially worth billions in annual sales, suggests this Miami-headquartered biotechnology company could be in over its head.
One thing we can be sure about with Longeveron is that it's going to need a lot more resources to develop Lomacel-B than it has on hand. The company finished September with just $19 million in cash after burning through $13 million during the first nine months of 2021. Longeveron raised around $20.5 million before fees in December, but running more clinical trials will accelerate operating expenses this year.
