The risks of investing in biotech stocks are glaringly illustrated by the fate of Prana Biotechnology and its drug testing programme.

In a serious setback for Prana Biotechnology, the Alzheimer's researcher has had to abandon plans to run a 400-person clinical trial after concerns about side effects of its drug. The drug, called PBT1 or clioquinol, was Prana's most advanced project and was due to be tested in a substantial phase two/three trial in 2005 and 2006.