Biotech's the biggest boom-or-bust business on the market, with regulatory approvals and clinical trial results routinely sending stocks hurtling up or down by significant amounts. Even the Nasdaq Biotechnology Index can swing wildly with a strong week, the way it did over the past five days, shooting up by nearly 5.5% -- more than twice the S&P 500's (SNPINDEX: ^GSPC ) gains for the week despite the S&P's run up to record highs.
What fueled biotech's big gains this week? Let's check out three of the top movers in the industry and dig into what you need to know.
Celldex falls, but potential remains
Celldex Therapeutics (NASDAQ: CLDX ) didn't help the biotech industry's cause this week with a 4.4% dip, but the drop wasn't for a lack of performance recently. It's hard to pick out stocks that have rewarded investors as Celldex has this year, as shares of the company, which is in the developmental stage as it builds up its phase 3 trial for glioblastoma-fighting Rindopepimut, have jumped an explosive 200% year to date. That's the kind of booms that a biotech investment get can you.
Celldex didn't have bad news plague its week, either -- on the contrary, this company's been humming along just fine recently. For a company still early on its life, Celldex has looked strong so far as it develops Rindopepimut and CDX-011, its phase 2 drug candidate to fight a difficult form of breast cancer. This week's fall seems more about investors looking to pull back on gains more than anything else, but CDX-011 and Rindopepimut both have looked strong in combatting stubborn diseases so far, and this stock has proved that big gains are no problem. In the world of biotech, a 200% year-to-date run-up certainly doesn't preclude even higher gains if Celldex's good momentum keeps up.
Alexion Pharmaceuticals (NASDAQ: ALXN ) posted a much better week for investors, as the orphan disease-treating company's shares jumped 18.5% over the past five days. In the biotech world, buyout rumors are hype-worthy events -- and Alexion's right in the center of one, as Big Pharma's Roche (NASDAQOTH: RHHBY ) is reportedly looking into adding the company to its ranks, according to sources listed by Reuters.
It won't be a cheap buy for Roche: Alexion's already valued at more than $22 billion by its market cap. However, Alexion's worth the money: Its orphan blood disease-treating Soliris, the company's only drug on the market, racked up more than $1.1 billion in sales last year, a 45% year-over-year gain that's only headed higher. Analysts expect around $1.5 billion in sales for the drug this year and north of $2.5 billion by 2017, helped out by the therapy's costly list price of more than $400,000. For Roche, expanding into orphan drugs with big potential -- especially with Alexion's second orphan drug in the pipeline, asfotase alfa, gaining a development-expediting breakthrough therapy designation from the FDA back in May -- is worth a big payout. For Alexion investors, it could be a marvelous addition to what's been a great run-up for this biotech boomer.
Yet no stock in biotech had a week like Alnylam Pharmaceuticals (NASDAQ: ALNY ) , whose stock shot up more than 32% over the past five days. Company shares rocketed up 19% on Thursday alone, after the company released early-stage clinical results that showed Alnylam's developmental therapy ALN-TTRsc, a treatment for a rare genetic disorder, reduced levels of the disease, transthyretin (or TTR) amyloidosis, by 80%. Alnylam also noted that the drug had been well received by clinical subjects, a critical key for investors cautious about the drug's safety.
It's important to note that the subcutaneous ALN-TTRsc's still in early trials, but both it and Alnylam's injectable ALN-TTR02, another early-stage treatment for gene disorders, have shown promise so far. Alnylam will have to show more of the same down the road, but it's so far, so good for this biotech in its early going. Alnylam's stock has shot up by more than 170% so far, so expect likely volatility in the future -- but in the big picture, positive results are all that matter for long-term biotech investors.
Profiting for the long term
Perhaps no industry's as prone to reward-and risk-as biotech. Savvy investors can make a fortune here, but for every Alexion Pharmaceuticals, there's a stock that just couldn't cut it on the market. For smart investors, picking companies for the long term remains the best way to amass riches. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.