3 Horrendous Health-Care Stocks This Week

If you like watching carnage, look no further than the health-care sector. This week saw several stocks crash and burn in spectacular fashion. Here are  three of the week's most horrendous health-care stocks.

Collapse by cancellation
Geron (NASDAQ: GERN  ) plunged nearly 27% this week, following cancellation of its GRN1005 cancer drug program. The company experienced a double whammy with two disappointments related to the drug.

Interim results from a phase 2 study focusing on brain metastases resulting from breast cancer found no evidence that the drug worked as hoped. Another phase 2 study for use of GRN1005 in treating brain metastases arising from non-small cell lung cancer couldn't find enough patients to enroll.

Employees at Geron received even more bad news. The company announced a restructuring as part of an effort to conserve cash.  This shake-up will result in 43 staff losing their jobs -- 40% of Geron's current workforce. The company plans to refocus on development of imetelstat, another cancer drug in its pipeline.

All by itself
Shares of Amarin (NASDAQ: AMRN  ) dropped over 21% for the week. The company announced that it was moving ahead on its own with a commercial launch of its triglyceride drug Vascepa. Management unveiled a "hybrid debt-like" deal with Pharmakon Advisers to raise $100 million to hire a sales force and market the drug.

Much speculation has centered on potential partners for Amarin. Most recently, rumors swirled about that Teva Pharmaceuticals (NYSE: TEVA  ) could be interested in buying Amarin. However, nothing has materialized with Teva (or anyone else) and the clock is ticking, so Amarin decided to go solo. 

Investors' hopes in an acquisition or partnership deal contributed to a nice run for Amarin over the last several weeks. With reality setting in that those deals might not materialize, some shareholders decided to bail out. 

Best to worst
Last on our horrendous list for the week is Acadia Pharmaceuticals (NASDAQ: ACAD  ) . Shares for the biotech fell 13% over the past five days.

I doubt that many Acadia shareholders are shedding tears, though. Just last week, the company made our list of humongous performers of the week by jumping 137% in one day. That huge jump came after the company announced great results from its phase 3 study of pimavanserin in treating Parkinson's disease psychosis.

There really wasn't any bad news precipitating Acadia's slide this week. After more than doubling last week, a comparatively small pullback isn't surprising. 

Horrendous blip or trip?
My hunch is that two of the three stocks in this week's list of horrendous health-care performers are just experiencing a temporary blip. Amarin could be a buy after its big drop. I still wouldn't be shocked in the least if an acquirer or partner steps forward at some point in the future. Acadia seems positioned well, also. Assuming pimavanserin gains FDA approval down the road, shares should go well higher.

Geron, however, is experiencing a world of hurt. It could come roaring back from this week's devastation, but I wouldn't put my money on the line for that scenario playing out. A horrendous week could stretch into a longer period for this small biotech.

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  • Report this Comment On December 08, 2012, at 1:41 PM, jim760 wrote:

    They did not say they were going it alone...

    They said they are hiring a sales force and by-the-way the sales force will not be fully activated until January 2013... a lot of things can happen before then, including a buyout.

    The loan to hire the sales force has no prepayment penalty, also will not be activated until January 2013.

    I think these steps are chess moves by Joe Z. to negociate a better deal.

    Good journalism calls for putting all the facts out there so we fools can make up our own minds - not punchy headlines that push half baked opinions!

  • Report this Comment On December 08, 2012, at 3:28 PM, kthor wrote:

    actually jim, a good investor will do his/her own DD so they can make up there own mind .. an article is there to help support/find/discover etc ..some facts about stocks someone might find interesting..or for caps play ..

    funny I just read a caps comment when someone was $#% at people for putting green thumps up and that guy bought stocks of it without DD LOL

  • Report this Comment On December 08, 2012, at 4:48 PM, Kebin008 wrote:

    Joe Z mentioned during the quarter conference call that AMRN would start hiring the sales team by mid-November, however that decision was postponed until this week. This was not news.. it should have been expected to materialize due to the timing of NCE status and talks with other big pharmas.

    Management at AMRN would of rather recieved a "no" for NCE rather than continue waiting for a decision to be made by the FDA. Atleast that way they could of explored all their alternatives without being held back by the NCE overhang.

    I believed that it would be unlikely for AMRN to be acquired without knowing the outcome of NCE status due to the uncertainty in valuation. The orange book is updated around the second week of month, therefore we can hopefully get an answer from the FDA by next week. Therefore, I do not know why investors were suprised this week that AMRN has not been acquired yet and started to hire the sales team.

    In my opinion, AMRN is currently priced with the worst case scenerios, Self launch and no NCE status. However both these factors have not been decided yet. There is definately significant upside with limited downside since pretty much all the bad news has already been priced in to the stock.

    I am long AMRN!

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