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Investors Are Going Crazy for Aquinox

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Investors Are Going Crazy for Aquinox

Aug 11 2015, 07.58am GMT


Shares of small cap Canadian company Aquinox Pharmaceuticals Inc. (AQXP, +81.19%) skyrocketed by more than 2000% on an intraday basis during the last two trading sessions, driven in no small measure by investor reaction on Twitter. 

The company released a press statement on 6 August in which President and CEO David Main said, “Consistently, positive results from multiple secondary endpoints have strengthened our confidence in further development of AQX-1125 for BPS/IC.” The new drug is for the treatment of severe bladder pain caused by Interstitial Cystitis or Bladder Pain Syndrome. Main added that the next step was that the drug would now have to go to the regulatory authorities such as the FDA and the EMA as the initial stages for potential approval.

The share opened at $1.79 on Friday morning and by 13:00, it was trading at $11.43, closing at $10.42 that afternoon. By 10:30am Monday morning, the share had soared by 286% to an amazing price of $40.26 before dropping back to $18.88 to show a loss of 53.1% on the day’s high, at the close. The share gained $7.45 or 81% on the day.

The volume of shares traded was exceptionally high with almost 18 million shares changing hands on Monday, approximately 90 times its average volume.

The results of trial data often trigger sharp price swings with the shares of small cap companies particularly vulnerable to investor sentiment resulting from press releases. The company had announced negative trial results for another drug on 9 July which resulted in their shares falling 67% in one trading session.

What makes this price move uncommon is the degree of activity it activated on Twitter which has become an important platform for day traders to exchange views and tips as well as to brag about their successes.

As the Arab Spring revolution showed the world, social media such as Twitter can be an extremely powerful medium of getting the message across.

Analysts were left bewildered by the price change with Canaccord Genuity analyst Corey Smith saying in an email, “I wish I could have a comment….”

MarketWatch reports that they attempted to obtain statistics of the stock mentions from Twitter (TWTR, +9.10%) but had not received feedback. Aquinox had also not immediately responded to MarketWatch when asked for comment.

For the record, Aquinox reported a quarterly loss of $4.8 million, down from the $5.4 million loss in the same period last year. The company reported a drop in cash, cash equivalents and investments which stood at $44.1 million on 31 December to $29 million on 30 June.

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