Advanced Tissue Sciences Inc. (ATIS) shares Friday plummeted 26 percent on 10.5 million shares traded when Morgan Stanley analyst Eric Hecht downgraded ATIS to "neutral" from "strong buy" after concluding that the company's Dermagraft-Ulcer trial data in diabetic foot ulcers are less robust than he had believed.

In addition, he said, overall trial results weren't significant when all evaluable patients were included. The analysis, he said, was based on the 85 percent of evaluable patients who received "the best treatment approach," which resulted in a p value of 0.01.