Why Avanir Shares Popped and Then Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotechnologist Avanir Pharmaceuticals surged as high as 21% today after a European regulatory body recommended approval of is drug Nuedexta.

So what: The Committee for Medicinal Products for Human Use, or CHMP, recommended that Nuedexta be used to treat pseudobulbar affect, or PBA, in Europe, quickly triggering plenty of optimism over Avanir's revenue growth going forward. Unfortunately for Avanir bulls, however, the stock has drifted down steadily ever since the opening surge, suggesting that the news isn't as huge as investors initially thought.

Now what: The European Commission -- which has the final say on drug approval in Europe -- typically follows the recommendations of the CHMP, and usually comes to a decision within three months of the CHMP opinion. "We will continue to work with the European Medicines Agency and the European Commission toward the marketing authorization so that patients suffering from PBA have ready access to NUEDEXTA in Europe," said Chief Scientic Officer Dr. Joao Siffert. So while the stock remains just too risky for average Fools, speculative types might want to pounce on today's manic price action and buy into those prospects.

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The article Why Avanir Shares Popped and Then Plunged originally appeared on Fool.com.

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