While the overall market rally appeared to run out of steam somewhat this week, some stocks were just cranking up. Here are three humongous performers in the health-care sector this week.
Anticipation and speculation
MannKind (NASDAQ: MNKD ) enjoyed one of its best weeks in a long time. Shares jumped 26% even though the company didn't make any major announcement.
The catalyst behind the biotech's stock move appears to be largely investor anticipation and speculation. Many investors are eagerly anticipating the conclusion of phase 3 clinical trials for Afrezza, the company's inhalable insulin product. Results from these studies are expected to be announced in August.
Recent speculation has centered on the possibilities for MannKind to either form a partnership with or perhaps be bought by a larger company. The former alternative looks to be a foregone conclusion. MannKind is already in talks with multiple prospective partners and knows that it cannot launch Afrezza by itself. An acquisition of MannKind is quite possible, but the company hasn't given any clues thus far that this route will be pursued.
The (First) Manhattan project
VIVUS (NASDAQ: VVUS ) wasn't far behind MannKind this week. Shares of the maker of obesity drug Qsymia soared by more than 20%.
A drama developed over the last several days related to efforts by First Manhattan to place its own lineup of directors on VIVUS' board. First Manhattan owns about 10% of the company and has been a vocal critic of how management has handled the launch of Qsymia. In a letter to shareholders, VIVUS CEO Leland Wilson said that the company would "vigorously oppose First Manhattan's hostile solicitation."
First Manhattan's moves appear to have played a key role in VIVUS shares rising steadily through the week. VIVUS had a short interest of almost 29% as of the end of April. Short-sellers are likely covering some of their positions since battles between activist investors and management tend to drive shares higher.
Bullish talk and actions
Ariad Pharmaceuticals (NASDAQ: ARIA ) also had a big week. Shares in the biotech surged 17% on some bullish talk and bullish actions.
The week kicked off with Ariad CEO Harvey Berger presenting at the UBS Global Healthcare Conference. Berger's comments highlighted plenty of good news about the company's launch of leukemia drug Iclusig. He also noted that Ariad fully expects European approval soon and stands ready to launch Iclusig in Europe in July.
Berger isn't the only one with a positive view for Ariad. RBC Capital reiterated its outperform rating for the stock with a target price of $36 -- more than 80% higher than Ariad's current price. Also, options activity this week showed that some large bullish positions were taken in Ariad.
Paying for potential
Buying any of these three stocks right now involves paying for potential. With MannKind, the potential is in positive results for Afrezza or possibly an acquisition. The potential with VIVUS is that the conflict between management and First Manhattan could shake things up one way or the other, perhaps resulting in a better strategy for Qsymia. Ariad's potential is that momentum for Iclusig continues to build.
I suspect that all of this potential can be achieved. VIVUS has the most uncertainty in my view, but the stock could keep on benefiting from the current wrestling match. MannKind seems highly likely to receive positive results from clinical trials for Afrezza and at least secure a solid partnership. Ariad also looks to be in great shape for European approval and further success with Iclusig. Which stock has the most potential to be a humongous performer over the long run? Tell us your opinion in the comments below.
What to expect from VIVUS?
VIVUS' shares were clobbered after Qsymia's dismal launch but now appear to be clawing their way back at least a little. In a new premium research report, the Fool's top health care contributor breaks down this complex story and explains the details VIVUS investors must know -- including reasons to buy and sell. To find out more about this premium report click here now.