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The Motley Fool's annual April Fools' Day joke this year focused on the "hugest bubble in history" that is set to explode. For some health-care stocks, though, the bubble popping was no joke. Here are three horrendous health-care stocks that deflated over the past week.
Good, bad, and ugly
Rigel Pharmaceuticals (NASDAQ: RIGL ) experienced an ugly week. Shares plunged nearly 34% since the prior week's close.
Results from a late-stage clinical study of fostamatinib conducted by Rigel's partner AstraZeneca carried good and bad news. The good news was that the drug did show statistically significant improvement in ACR20, a measurement of change in rheumatoid arthritis symptoms. What's the bad news? Fostamatinib didn't show improvement in an X-ray test that measures the progression of of joint damage.
This isn't the first bad news for the drug. Back in December, AstraZeneca announced study results showing that fostamatinib wasn't as effective as the leading rheumatoid arthritis drug, AbbVie's (NYSE: ABBV ) Humira. While AstraZeneca still has results forthcoming from two other phase 3 fostamatinib studies, it looks like the bad and ugly will win out over the good.
Shares of Achillion Pharmaceuticals (NASDAQ: ACHN ) appeared to be hit by investor skittishness about the tight competition in the hepatitis-C market. The stock fell 12% for the week.
Achillion counts two hep-C drugs in mid-stage clinical trials that show promise: Sovaprevir and ACH-3102. However, the market might get somewhat crowded. Gilead Sciences (NASDAQ: GILD ) is one of the larger players aiming for success. Wells Fargo speculated that recent pressure on Achillion's stock could stem from concerns about competition, particularly from Gilead, which has multiple hepatitis C drugs in development.
Analysts think highly of Achillion's prospects, though. The mean analyst target price is $15 per share, nearly double where the stock stands now. However, there's a lot of time remaining for clinical trials -- and a lot that can happen to bounce shares up and down in the meantime.
Halozyme Therapeutics (NASDAQ: HALO ) saw its shares sink nearly 11% this week. There wasn't any real news developing for the biotech, so what happened?
This appears to be a case of good news after-glow fading a bit. On March 22, the European Medicine Agency's Committee for Medicinal Products for Human Use, or CHMP, gave a positive opinion on HyQvia. The drug, which Halozyme developed with partner Baxter International, targets treatment of primary and secondary immunodeficiencies. Halozyme's shares soared on the good news from Europe, but have been drifting downward since then.
Which of this week's three horrendous health-care stocks still might hold promise for Foolish investors? I would count Rigel out. Prospects for fostamatinib don't look great. Halozyme could regain its momentum, but to me the best best is Achillion. At this point, though, the operative word is "bet." Buying shares in development-stage biotechs can often be similar to gambling. If you can handle the risk, fool on -- but cautiously.
Rigel might not present much of a threat for AbbVie now, but what are the other big challenges facing the new company? Many investors wonder what the future holds once the company's golden goose, Humira, is cooked. The Fool's brand new premium report on the company answers the high-profile questions that AbbVie investors are asking. Simply click here now to claim your copy today.