Most of the time, a company saying that it is delaying drug development and cutting up to 50 percent of its work force would cripple a share price. While that's the fundamental news from PhaseRx, Inc. (NASDAQ:PZRX), shares have shot upward at the opening bell as traders wonder what the future holds.
The Seattle-based biopharmaceutical company is focused on developing messenger RNA products for treating genetic liver diseases in children, including PRX-OTC, PhaseRx's lead pre-clinical drug candidate for Ornithine Transcarbamylase Deficiency (OTCD). The company said this morning that is will delay development of PRX-OTC as it looks to restructure operations and shave expenses to preserve its $8.4 million in cash and equivalents. As part of the turnaround plan, the company is laying-off 10 of its 20 employees, including some executive officers, although no names were provided.
PhaseRx buffered the news with the initiation of a review of strategic alternatives, including a potential merger. Again, no details as to time frame, potential merger candidate or assurances of any transaction happening were disclosed. To that point, the company said that it has no intentions of discussion developments until management deems it appropriate.
Market participants are cheering the plan, most likely as it relates to a possible merger, as measured by shares of PZRX gapping ahead from Thursday's close at 88 cents to $1.34. Shares surged to a more than five month high at $1.89 just after the market open, but have slid back to $1.35 about 45 minutes into the session, representing an early gain of 52.6%.
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