Shares of junior biotechnology group Novogen Limited (ASX: NRT) have taken a belting today following the sudden resignation of its Chief Executive Officer and Director, Dr Graham Kelly, effective immediately.
The US-Australian drug development company's shares fell as much as 12.8% during the session but later recovered to trade 8.5% lower following the announcement in which the company said Kelly had decided to leave in order to resume his work in non-oncology based early stage research.
Upon his departure, Kelly said: "The Company is well placed now to proceed into the clinic with its 3 oncology drug candidates. It doesn't require me to steer it from here. My particular interest and skills are in early-stage drug development, and now I want to focus on that."
Indeed, Novogen has three drug candidates on track to enter Phase 1 clinical trials in the 2016/17 financial year which it believes it is in a sound financial position to manage.
Taking Kelly's place until a replacement can be found will be Iain Ross who is a former Novogen director with experience as a pharmaceutical and biotechnology executive. Ross said: "My goal in the short term is to bring focus and clarity to the organisation, whilst finding the best person to lead the Company going forward. We intend to keep shareholders fully informed during this transition."
It has by no means been smooth sailing for Novogen shareholders who have been taken on something of a rollercoaster ride over the last five years. The stock hit a high of 44.6 cents in April this year following two successful cancer drug studies, but has since retreated considerably to just 21.5 cents today.
Indeed, investing in the biopharmaceutical sector carries enormous risks for investors who need only look as far as the sector's biggest players, such as ResMed Inc. (CHESS) (ASX: RMD) and Sirtex Medical Limited (ASX: SRX), which were slammed earlier this year on disappointing trial results.
The impact a poor result can have on a smaller company like Novogen can be significantly worse, so it is vital that investors only ever invest an amount of money they can comfortably afford to lose in case things don't go according to plan.
