Ebb & Flow

For the past few years, the major focus for investors in Neurobiological Technologies (NTII) has been on its Memantine, which is marketed in Europe for Alzheimer's disease and is awaiting U.S. approval for the same indication. But the compound failed last week in a Phase III trial in diabetic neuropathic pain, which is the indication where NTII had the most to gain.

While the company has 1% royalty for AD, NTII's lottery ticket was the diabetic neuropathic pain indication, where it stands to get 13%. "That's where we hope to make our money," said President and CEO Paul Freiman...