3 Humongous Health-Care Stocks This Week

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Even with overall markets experiencing some jitters this week, several health-care stocks had spectacular results. Here are three of the most humongous health-care performers over the past five days.

How does a 60% gain in one day sound? The stock chart for Vertex Pharmaceuticals (NASDAQ: VRTX  ) shows a nearly vertical line this week, as that one-day increase had shares jumping 53% for the week.

All of this exuberance stemmed from very positive results from Vertex's phase 2 study of experimental drug VX-661 and currently marketed drug Kalydeco. The company reported on Thursday that the combination of the two drugs produced significant improvement in lung capacity for adult patients, with the most common gene mutation related to cystic fibrosis.

The solid results bode well for Vertex, as it hopes to move into late-stage studies for VX-661. The biotech received FDA approval for Kalydeco in treating another cystic fibrosis mutation last year. Vertex also has another drug targeting the disease, VX-809, in a phase 3 study.

Breathing easier
Shares of Theravance (UNKNOWN: THRX.DL  ) popped 34% this week. The nice gains came after Theravance and partner GlaxoSmithKline (NYSE: GSK  ) announced that the FDA's Pulmonary-Allergy Drugs Advisory Committee voted 9-4 to recommend Breo Ellipta for approval.

Breo Ellipta is administered once daily via inhaler for the treatment of chronic obstructive pulmonary disease, or COPD. Glaxo already claims a blockbuster COPD drug, Advair, which also is used in treating asthma. However, Advair lost U.S. patent exclusivity in 2011. No generic rivals have yet emerged, but Breo Ellipta could help bolster sales for Glaxo when they do. Theravance stands as the big winner, with only one product currently on the market.

The advisory committee's recommendation isn't binding, so the FDA could still ultimately turn down approval for Breo Ellipta. However, a positive recommendation with a solid majority in favor certainly doesn't hurt its chances.

Cause for cheer
(NASDAQ: ALKS  ) shareholders were happy campers this week. The stock jumped 25% on encouraging mid-stage study results of experimental drug ALKS 5461.

The study found that ALKS 5461 significantly reduced depressive symptoms in patients with major depressive disorder, or MDD. Maurizio Fava, M.D., director of the Depression Clinical and Research Program at Massachusetts General Hospital and Slater Family Professor of Psychiatry at Harvard Medical School, said that the results were "among the most robust I have seen in a phase 2 study for depression in the past two decades."

The company plans to meet with the FDA about moving the drug into a late-stage study. If ultimately approved, Alkermes should be able to achieve commercial success with ALKS 5461. More than 16 million Americans suffer from MDD. Some analysts project that the drug could hit peak annual sales exceeding $500 million.

Spectacularly humongous
All three of this week's winners have outstanding prospects. If I had to pick only one right now, though, I would go with Theravance.

My primary reasoning is based on probability. Theravance just received a nod from an FDA advisory committee and has only one other big hurdle to pass. I also see a reasonable chance that Glaxo might decide to acquire its smaller partner at some point in the future. The odds look to be in Theravance's favor, in my view.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 20, 2013, at 9:35 AM, chentang wrote:

    I agree with the author. My pick could be THRX too. On the news of favorable recommendation from FDA Advisory Committee for once-a-day Breo which both THRX and GSK expects to succeed GSK's off patent twice-a-day Advair with $8 billion sales last yr, THRX is up 34%. That is an increase in market cap of about $850M. FDA's decision for approval or not is schedule for 5/12 in a few weeks. On the other hand, the news of VRTX's positive Phase II data on VRTX's yet to be named CB drug VX-661, VRTX popped 61% in a day. That is an increase of $7.1 billion in market cap. The drug still have to go through Phase III and if successful the FDA, both of which are a few years out Analysts estimated 30,000 US patients and 70,000 WW. I m feeling investors who bid up VRTX maybe overly optimistic.

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9/30/2016 4:00 PM
ALKS $47.03 Up +0.32 +0.69%
Alkermes CAPS Rating: ****
THRX.DL $0.00 Down +0.00 +0.00%
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VRTX $87.21 Up +2.21 +2.60%
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GSK $43.13 Up +0.23 +0.54%
GlaxoSmithKline CAPS Rating: ***