Price of Newport Pharmaceuticals Stock Plummets

In the wake of Newport Pharmaceuticals’ announcement that its only drug has failed to prove effective for treating AIDS-related complex, the price of the company’s stock Wednesday plummeted more than 60%.

At the close of Wednesday’s trading, the Newport Beach company’s stock sold for $2.25 a share, down from $5.75 at the close of trading Tuesday. The company disclosed the bad news about its drug Isoprinosine after the markets closed Tuesday.

After learning that the firm’s most recent clinical studies showed that Isoprinosine was no more effective in treating ARC than a placebo, Newport Pharmaceuticals decided to give up efforts to win U.S. Food and Drug Administration approval of Isoprinosine as a treatment of the disease.

The company, which has been trying to prove the effectiveness of Isoprinosine in treating a variety of maladies since the early 1970s, also said that it is getting out of drug research and development because it finds the cost prohibitive. Instead, the company said, it will focus on expanding its now marginally profitable drug mail-order business.

“The speculative interest just drained out of the company,” Jeff Kilpatrick, president of Costa Mesa-based Newport Securities, said of Wednesday’s sharp price decline.

Kilpatrick said he believes that the trading price of the stock, which has a book value of 70 cents a share, could drop even more, especially if the adverse news about the ARC tests taints the credibility of the drug in its existing overseas market.

The company has said that it will continue to sell Isoprinosine abroad, where it is used mostly in Western Europe to treat such ailments as herpes, genital warts and a rare form of measles.