BioLineRx Ltd. (BLRX) tumbled the most on record after an experimental treatment for schizophrenia failed to help patients in a mid-stage clinical trial, prompting the Israeli drugmaker to end development of the compound.
BioLine, based in Jerusalem, plunged 51 percent to $1.87 at 12:01 p.m. in New York, the lowest price since July 2011, when the shares were listed in the U.S. The Bloomberg Israel-US Equity Index of the biggest Israeli companies in the U.S. rose for the first time in four days, adding 0.8 percent.
The treatment, BL-1020, didn’t meet the trial’s main goal of improving cognitive function compared with risperidone, a generic drug, BioLine said in a statement. The American depositary receipts had gained 51 percent this year through yesterday. Shares in Tel Aviv dropped 52 percent to 6.82 shekels, or $1.86 today.
“For the stock price to be cut in half, in our view, seems excessive,” Raghuram Selvaraju, an analyst at New York-based Aegis Capital Corp., said in a phone interview. He cut his share-price estimate today by 36 percent to $7 and kept a buy rating on BioLine. “All the institutional investors I spoke with thought it would fail.”
The biopharmaceutical company said in the statement that research and development costs will drop this year and in part of 2014 by about $6 million to $7 million.
Schizophrenia is a disabling brain disorder, affecting about 1 percent of Americans, according to the National Institute of Mental Health.
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