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Gloom, despair, and agony. Shareholders of at least three health-care stocks experienced one or more of these feelings over the past few days. Here are three of the most horrendous health-care stocks of the week.
Shares of biotech Aveo Pharmaceuticals (NASDAQ: AVEO ) dropped 10% this week. A decision by the company's partner, Astellas Pharma, caused the damage.
Astellas told Aveo that it wouldn't pursue European approval for kidney drug tivozanib and would not fund any further studies for the drug in renal cancer. The two companies partnered in 2011 to jointly market tivozanib.
This marked yet another setback for Aveo. An advisory committee with the U.S. Food and Drug Administration voted 13-1 against recommending approval for tivozanib earlier in May. Before that point, FDA staff stated that the drug didn't improve survival rates for patients compared to currently approved drug Nexavar, which is marketed by Bayer AG and Onyx Pharmaceuticals.
Amag Pharmaceuticals (NASDAQ: AMAG ) shares fell around 12% this week. The company announced that its partner Takeda was recalling a batch of anemia drug Rienso after a Swiss patient who took the drug died.
Several other patients taking Rienso suffered from adverse reactions after taking the drug. The problems appear to be related to only one batch sold in Switzerland. Rienso received approval for sale in the country last August. Amag and Takeda are investigating the batch and collecting data on the adverse reactions.
Takeda markets Rienso in Europe and in Canada under the brand name Feraheme. Amag sells Feraheme in the United States. The company reported 2012 sales of $58.3 million for the drug, up 12% from the prior year.
Ironwood Pharmaceuticals (NASDAQ: IRWD ) this week ran into one of the most common dilemmas for biotech companies. It needed to raise cash, but doing so caused shares to fall -- by around 11% in this case.
The company announced a secondary offering of 10.5 million shares at a price of $13 per share. With around 108 million shares outstanding currently, that reflects dilution of almost 10%.
Ironwood's goal in raising more money is to help fund the launch of Linzess and further the company's pipeline development. Linzess, which treats irritable bowel syndrome with constipation or chronic idiopathic constipation, first hit the market in late 2012. Ironwood partners with Forest Labs (NYSE: FRX ) in the commercialization of the drug.
Forest Labs reported Linzess sales of $4.5 million during the first quarter. That's a drop from the $19.2 million recorded in the fourth quarter of 2012. However, a large portion of those sales stemmed from initial stocking of the drug.
Worst of the worst
Which of this week's horrendous stocks looks to be the worst? I'd have to go with Aveo right now. The outlook for tivozanib doesn't appear too bright -- at least for renal cancer. Amag's recall woes probably will be short-lived. The same is true for Ironwood's share pullback related to the secondary offering. Gloom, despair, and agony could just be temporary for at least two of these stocks.
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