Biotech rocket ride

Stock of biotech La Jolla Pharmaceutical today (February 27) soared a rollicking 76.75 percent to $35.12. The company got excellent results in tests for a treatment for catecholamine-resistant hypotension, a life-threatening condition featuring inadequate blood flow to vital organs.

La Jolla's LJPC-501 worked for 70 percent of patients. Only 23 percent of patients given a placebo responded favorably. However, as Motley Fool pointed out, the treatment did not extend life spans of patients by a significant margin.

This company had worked two decades to develop a drug for lupus. In 2009 it failed in tests. Since that was the only drug in its pipeline, the company considered liquidation, arguing that its lupus drug was all it had. The stock plummeted to as low as 7 cents and the value of the company was said to be less than half that. But the company shifted its focus and scrapped on. Today's results and stock market rocket shot seems to validate management's approach.

Warning: Roller-coaster rides are common in biotech stocks. Most are only for investors who can stomach extreme volatility.