It's a grim fact of life for drug development: A drugmaker will sometimes get a complete response letter from the Food and Drug Administration, asking for more clinical trials. Without any other form of revenue, that drugmaker has no choice but to cut its workforce and hunker down for the long haul.
Earlier in the week, Orexigen Therapeutics
Before that, the same fate befell Arena Pharmaceuticals
Investors should be cheering. Surviving to the finish line is goal No. 1.
Instead, they sent MannKind down 11% in after-hours trading. Continued selling led to a 25% collapse today. Orexigen was down 6% the day after its announcement.
I'm guessing that the price reaction stems from investors' sudden realization that they can't expect any quick fixes. Such remedies do exist; Forest Laboratories
Of course, investors should have known that already. Alas, some biotech investors are eternal optimists. Do these share price plunges mean eternity is coming to an end?
Follow MannKind and Orexigen as they make additional attempts at gaining FDA approvals. Click on their names to add them to My Watchlist, which will help you keep track of all our Foolish analysis on the companies.