If April brings showers and May brings flowers, what does September bring?
Aside from plenty of football, the first week of September brought some big gains for several health-care stocks. Here are three of the most humongous winners.
Sharpened by iron
Rockwell Medical (NASDAQ: RMTI ) lands the top spot on our weekly look at big health-care winners. The biopharmaceutical company's shares surged nearly 50% this week.
Great results from a phase 3 study of soluble ferric pyrophosphate, or SFP, served as the catalyst. Rockwell announced that the iron replacement therapy for chronic kidney disease patients on dialysis met its primary and secondary endpoints.
With a solid safety profile in addition to solid efficacy results, Rockwell now plans to submit a New Drug Application, or NDA, for the anemia drug to the U.S. Food and Drug Administration. If approved, analysts project peak annual sales from $150 million to $225 million.
Clinical-stage vaccine developer Inovio Pharmaceuticals (NYSEMKT: INO ) might be small, but it's definitely attracted interest from some big-time players. From all appearances, some of those interested parties were doing some buying this week. Inovio's stock surged almost 43%.
The list of institutional investors with positions in Inovio looks like a who's-who of major firms, with Vanguard standing atop the group with nearly 3.5 million shares as of June 30. It seems quite possible that a few of these big investors could have been scooping up more shares over the last week. The volume of shares traded was exceptionally high, with more than 16 million shares bought and sold on Friday. For comparison, Inovio's average daily volume over the past three months was just over 8 million shares.
The most likely catalyst for all this action appears to be that Inovio is presenting at two upcoming investor conferences. Dr. J. Joseph Kim, Inovio's CEO, will speak at the Rodman & Renshaw Global Investment Conference on Sept. 10 and at the Stifel Nicolaus Weisel Healthcare Conference on Sept. 12. Perhaps next week will better explain the reason behind the heavy buying activity over the past few days.
Otsuka offered $8.50 per share, a 48% premium over Astex's average trading price over the past month. That valued Astex at $866 million. Otsuka hopes to take advantage of the smaller company's Pyramid fragment-based drug discovery technology to help in its own development efforts. Picking up myelodysplastic syndromes drug Dacogen, which Astex markets along with Johnson & Johnson (NYSE: JNJ ) , was another big plus in the deal for Otsuka.
Despite the huge gains this week, some investors and analysts huffed and puffed at what they saw as a low-ball price for Astex. Gene Mack with Brean Capital said that the company should have fetched $13 per share -- over 50% more than Otsuka's offer. Stuart Weisbrod with Iguana Healthcare Partners, which owns some of Astex's stock, said the deal "will go down as the biggest rip-off of investors in biotech history."
Bigger and better
Which of this week's three humongous stocks is most likely to see even better days ahead? Unless the deal falls through for Astex, I'd count it out. Inovio could certainly go much higher with several vaccines in development. If the company's CEO announces any positive news next week, the stock will probably continue its upward trajectory.
Rockwell looks to be the safest bet of the three, though. Assuming the company gains approval for SFP, its value should move up even higher. Of course, even that assumption involves an "if" scenario. Always remember that there's no such thing as a sure thing in the stock market.
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