3 Humongous Health-Care Stocks This Week

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While the overall markets largely muddled along this week, some stocks kicked into high gear. Here are three of the week's most humongous performers in the health-care sector.

Pet tricks
Aratana Therapeutics
(NASDAQ: PETX  ) takes our top spot this week. The maker of prescription pet medications saw its stock perform a nice trick -- jumping a whopping 57%.

The only news from Aratana this week, though, stemmed from the company's presentation at the Stifel Nicolaus Weisel Healthcare Conference in Boston on Wednesday. It could be that investors really liked what they heard, because shares surged afterward.

After completing its initial public offering at the end of June, the Stifel conference marked the first big investor conference for Aratana. The company highlighted the growing market for pet medications, favorable economics for drug development when compared with human medications, and its three drugs currently in development. Aratana anticipates that the U.S. Food and Drug Administration could approve those drugs in 2016 if all goes well.

Putting it nicely
The second-biggest health-care stock for the week, Geron (NASDAQ: GERN  ) , also presented at the Stifel conference. Shares soared by 29% -- but there could have been more involved than just a nice investor presentation.

Options trading can sometimes be a driving force behind big price moves in biotech stocks, especially those that have low share prices. That could be the case this week for Geron. On Thursday, someone sold 10,000 Geron puts with a strike price of $2 and an October expiration. That's a hugely optimistic bet that Geron's stock will do pretty well over the next few weeks.

Geron currently has one phase 2 clinical trial under way for its experimental drug imetelstat. The study focuses on use of the drug as a treatment for essential thrombocythemia or polycythemia vera. Another investigator-sponsored mid-stage study of imetelstat is also in process for myelofibrosis.

Positive momentum
Kythera Biopharmaceuticals
(UNKNOWN: KYTH.DL  ) looks to be continuing positive momentum from last week. Shares climbed another 20% this week after rising 8% the week before.

A solid "outperform" rating from investment firm Cowen and Company on Sept. 6 got the ball rolling. Cowen set a price target for Kythera at $50 -- almost 80% higher than were the stock traded before the initiation of coverage on the drugmaker. That ball kept rolling upward this week, but there wasn't any additional news behind the movement.

Kythera counts one drug in its pipeline -- ATX-101. The drug, which targets helping people get rid of their double chins, is currently in phase 3 testing. Results are expected by early fourth quarter, which means a potential catalyst for Kythera is on the way soon.

Best of the bunch
I like the market Aratana is in and the compelling business model. It isn't too big of a stretch to imagine that the company could be acquired by a larger player. Zoetis (NYSE: ZTS  ) is the first to come to mind. It's the largest animal health business and has enough cash to buy a smaller company the size of Aratana. However, I wouldn't bank on a buyout just yet -- from Zoetis or anyone else. Aratana is an intriguing consideration for investors, though.

Geron enjoyed nice gains this week, but I wonder how long-lasting that surge will be. The individual(s) who sold all of those puts could know something that the rest of us don't. Maybe something big is on the way. It seems to me, though, that unless such a big event happens (like an acquisition or big partnership deal), Geron's gains could be temporary.

Kythera appears to have the best shot at rising substantially more in the near future. Of course, its chances hinge on the outcome of the phase 3 study. I'll go with Kythera as the best of the bunch for this week. However, caution is advised with any of these high-flyers. What goes up can easily go right back down.

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Related Tickers

9/23/2016 4:00 PM
GERN $2.20 Down -0.02 -0.90%
Geron CAPS Rating: ***
KYTH.DL $0.00 Down +0.00 +0.00%
Kythera Biopharmac… CAPS Rating: *