Shares of little-known Aptorum (NASDAQ:APM) stock are up 40% today amid a broader market downturn. This begs the question: What is going on with shares of the British biopharmaceutical company?
Today’s big move higher seems to be driven largely by social media, with retail investors promoting the news that Aptorum recently received a key designation from the U.S. Food and Drug Administration (FDA). This designation clears the way for it to begin clinical trials of its treatment for neuroblastoma, a type of cancer that forms in the adrenal glands.
APM stock had fallen 53% over the past year to trade at $1.62 prior to today’s reversal. Aptorum stock’s increase comes as the S&P 500 declines nearly 1.2% today, pushing it further into correction territory.
What Happened With APM Stock
On Jan. 20, Aptorum reported that the FDA granted orphan drug designation to SACT-1, the company’s repurposed small molecule compound for the treatment of neuroblastoma. The designation allows Aptorum to proceed with a Phase 1b/2a clinical trial for SACT-1 and test the drug in neuroblastoma patients. These trials should begin in 2022.
“The granting of orphan drug designation for SACT-1 for the treatment of Neuroblastoma is another important step forward in the development of our drug candidate and reflects both the FDA’s and Aptorum’s commitment to addressing the unmet clinical needs of patients with Neuroblastoma,” Aptorum President Darren Lui said in a news release.
Retail investors on social media have latched onto news of the FDA designation to push shares of APM stock sharply higher. There does not appear to be any other news related to the company that would serve as a catalyst to spark a rally in the share price.
Why It Matters
For thinly traded APM stock, today’s big move higher is welcome news given that the share price has lost more than half its value over the past year and is currently trading deep in penny stock territory. Aptorum had been trading as high as $32.28 in the summer of 2019.
The sharp 40% gain in APM stock may also signal that the meme stocks craze is not yet over. With stock markets falling more than 10% in the first three weeks of the trading year, many analysts have been calling for an end to meme stocks. Aptorum stock may indicate that the demise of meme stocks has been called prematurely.
What’s Next for Aptorum
Bounces such as the one impacting Aptorum stock today are welcomed by shareholders, but they are typically short-lived. Investors pushing the share price up today are just as likely to quickly abandon the stock once they have made some money, sending shares back to earth.
Given the steady erosion in the value of Aptorum stock and that there is little positive news to maintain the momentum in the share price, investors would be best advised to either stay away from APM stock or get in and get out in a hurry.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.