3 Humongous Health-Care Stocks This Week

Every week we answer the pressing question on the minds of millions: "Which health-care stocks were the biggest winners over the past five days?" All right, maybe it's not the most pressing question for millions, but plenty of investors will want to know about three humongous health-care stocks for the market week ending Jan. 11. 

Waiting and watching
Shares of Isis Pharmaceuticals (NASDAQ: ISIS  ) leaped 22% higher this week. Part of the rise probably stems from eager anticipation of the FDA's decision on approval for Kynamro, Isis' familial hypercholesterolemia drug developed with Sanofi (NYSE: SNY  ) . That decision is slated for Jan. 29.

The other likely cause of the stock's rapid rise is the company's presentation at the J.P. Morgan Healthcare Conference. Isis had a great message about its strong pipeline. The company expects midstage and late-stage results on nine different drugs in 2013. Isis thinks that five of those could be approved within the next five years, starting with Kynamro. The market watched the presentation and liked what it saw.

Of course, the cautious would caution (that's what they do, after all) not to count your familial hypercholesterolemia eggs before they hatch. The FDA advisory committee voted only 9-6 in favor of recommending Kynamro. Some members had concerns about the drug's safety profile, and even if it's approved, Kynamro could be limited to a fairly small market because of those concerns. 

Firing on all cylinders
If there's one biotech firing on all cylinders these days, it's Celgene (NASDAQ: CELG  ) . Shares jumped 17% this week after the company announced good news on practically every front.

Where do we start? The company said earnings for 2012 would be on the high end of previous guidance and perhaps even slightly beat the range given earlier. Celgene projected impressive sales growth over the next five years. On top of all this good news, the company revealed that apremilast met all primary and secondary endpoints in three phase 3 trials for treating psoriasis.

I can understand why the market is so excited. With great potential for Abraxane, apremilast, and Pomalyst plus continued strength from Revlimid, Celgene appears to be in great shape. The company recently even made my pick for the best biotech for 2013. We'll find out in less than 11 months if I'm right.

Rolling the dice
Dynavax
(NASDAQ: DVAX  ) shares rose more than 16% this week. If you're looking for news stories that explain the increase, you probably won't find them. This one seems to boil down to (yet again) the J.P. Morgan conference.

Dynavax shares were hit hard in November, after the FDA's advisory committee recommended against approval for the company's Heplisav hepatitis B vaccine because of safety concerns. At the conference, Dynavax CEO Dino Dena said the company was working closely with the FDA to resolve issues the committee raised. Dena indicated that those talks were going well, but he couldn't predict what would happen.

My hunch is that the stock run-up came from investors who are willing to roll the dice on approval of Heplisav and were emboldened by Dena's comments. While it's a risky bet, the payoff could be huge if that scenario plays out. 

Repeat performances?
It doesn't happen often, but sometimes the momentum that lands a stock on our top list in one week carries over to the next week enough for a repeat performance. I'm not sure if any of these three will do so, but Isis might have the best shot. It wouldn't surprise me if the anticipation for the FDA decision on Kynamro reaches a fever pitch. Check back next week to see what happens.

 

Celgene probably won't jump another 17% next week, but many investors see it as a smarter way to play the biotech investing game, with its broad portfolio of drugs and a strong pipeline. While Celgene might be a safer stock than its small biotech brethren, investors need to know about the key opportunities and risks facing the company. We run through them all in The Motley Fool's brand-new premium report on Celgene. To claim your copy today, simply click here now.


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  • Report this Comment On January 12, 2013, at 2:35 PM, biotech101invest wrote:

    Celgene is still inexpensive by many measures vs stocks like BIIB and AMGN and GILD. Still under a 1.0 PEG ratio & not expensive at all. Best EPS growth in all of biotech - near the tops in the ENTIRE S&P 500. And even with all the good news there are still MANY very big near term catalysts coming.

    As I posted here a yr ago – it would soon become apparent that we will have 5 separate billion $ a yr drugs.

    People put down Abraxane – then CELG got lung cancer approval, stunning melanoma and Pancreatic Cancer top line that could make this the standard of care in this difficult disease. Some didn't believe in Apremilast - they said its impossible to have an oral PDE4 inhibitor without serious GI side effects. They forgot about oral aza and the rest of the pipeline. And they are STILL underestimating Pomalidomide as well as International Revlimid sales and Non-Myeloma Revlimid sales. The pipeline is still seriously undervalued at the current PPS. They continue to miss the "earning leverage story" as international sales ramp with industry high margins and industry low tax rates combined with a world class buyback/capital plan.

    So what was the turning point yesterday – sure the $13-$14 EPS in 2017 helps as at a 1 PEG that is a $350 stock in 2017 discounted back. This stock is still cheap

    But to me what was of paramount importance was the Apremilast news. Most of us were expecting only Esteem 1 results but CEO Hugin delivered a stunner as “breaking news” that they had BOTH Esteem 1 and Esteem 2 trial results – 2 Phase 3 trials with an impressive 1250 patients and the key word was HIGHLY statistically significant with positive safety profile consistent with the THREE PsA Ph 3 trials and EVEN better than the Phase 2 positive safety results. Then after reading the Apremilast PR investors started to realize that the endpoint is PASI 75 – which if you talk to dermatologists is a pretty high bar and HIGHLY stat sig over this bar is amazing for an oral PDE-4 inhibitor. When you look at tthe side effects of Enbrel – you wonder why anyone would ever again take Enbrel before at least trying Apremilast once approved.

    In addition the comments on EU front line and what is in the long term guidance exudes confidence in Pomalidomide, Apremilast, Abraxane Pancreatic Cancer detailed data coming and MM-020 coming results.

    Before this weeks move this stock had not reacted to all the positive news in the second half of 2012 but this is only the beginning with MANY big catalysts still to come including:

    China/Mexico/Brazil/South Korea/Russia Revlimid approvals, Pomalidomide approval, MM-020 data, detail Pancreatic Cancer OS data Jan 25th at ASCO GI, and more. Yes the stock is still cheap by almost any measure. Its still under a 1.0 PEG ratio. Its at a ridiculous discount to 3 or 5 yr discounted cash flow or discounted earnings stream. And it still does not reflect the value of this companies pipeline, strong margins, amazing cash flow and now world class capital plan completing the third leg of the stool thanks to our superstar CFO. Ms Jackie Fouse is the best CFO in all of biotech (Voted #1 by Buy Side institions per 2013 Inst Investor survey) and CEO Hugin has assembled one of the best biotech executive teams in the world.

    Generalist funds and growth funds, who avoided biotech for yrs now has a voracious appetite for large cap biotech as they cannot find earnings growth like this anywhere else in the S&P. Right now CELG is at the top of their list as a "must own" for yrs. Lazard just conservatively raised target to $123 saying if they used Street ests it would be in the $140s. Expect Citi and others to raise next week as well.

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