Watch stocks you care about
The single, easiest way to keep track of all the stocks that matter...
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
September is almost over, but some investors probably wish it would keep going after racking up tremendous gains. That's especially true for shareholders of these three humongous health-care stocks of the week.
If you think the world of orthopedics never has any excitement, think again. Shares of robotic orthopedic surgical systems company Mako Surgical (UNKNOWN: MAKO.DL ) skyrocketed more than 80% this week on news of a big buyout.
Large medical-device maker Stryker (NYSE: SYK ) announced on Wednesday plans to acquire Mako for a tidy sum of $1.65 billion. Stryker's $30-per-share offer reflected a big premium over Mako's closing price of around $16 on the day before the buyout news became public.
The deal didn't come cheap, but Stryker now gains Mako's RIO robotic-arm interactive orthopedic system technology to add to its broad lineup of hip replacement, knee replacement, and other orthopedic products. For Mako, the nice price tag provides reasons to celebrate following years of incurring net losses.
Plan B gets an A+
Roche's "plan B" scored the top grade with Pacific Biosciences of California (NASDAQ: PACB ) investors this week. Shares of the genetic sequencing company soared 63% after landing a big contract with the Swiss pharmaceutical and diagnostics firm.
The deal allows Roche to gain exclusive rights to market Pacific Biosciences' human in vitro diagnostics products around the globe. In return, Roche will pay $35 million upfront and potential milestone payments of $40 million. The big jackpot for Pacific Biosciences, though, will come from Roche's sales of the diagnostics systems and consumables.
This basically was a backup strategy for Roche. The company tried to buy Illumina (NASDAQ: ILMN ) earlier this year but walked away from the deal after Illumina wanted more than Roche was willing to pay. Following the collapse of the Illumina acquisition talks, Roche Chairman Franz Humer commented that "there are several alternatives to get hold of gene-sequencing technology." We now know at least one of those alternatives Humer had in mind.
Much ado about ... something?
For the second time out of the past three weeks, Geron (NASDAQ: GERN ) ranks among the top health-care stocks on our list. The big news this week for the biotech was that ... well, there was no big news this week. None at all. That didn't stop shares from climbing almost 50%, though.
What's behind the bullish outlook for Geron? The best bet is that some investors are expecting good news from a Mayo Clinic study of the biotech's imetelstat. Geron announced updated results in June from a phase 2 study of the drug in treating essential thrombocythemia. However, the Mayo study will focus on myelofibrosis.
Interim results from the early stage myelofibrosis study are expected to be given at the American Society of Hematology, or ASH, meeting in December. If those results are positive, Geron will probably embark upon its own larger trials for the indication.
Playing it safe
Normally, I point out the one stock of the three most humongous performers that seems to have the best chances to continue doing well. This week, though, I'm going to play it safe and abstain. Mako is off the list, anyway, since it's being bought out.
Pacific Biosciences could benefit greatly from the Roche deal, but I'd prefer to see some of that revenue stream materialize first. Geron's fortunes right now are purely speculative. Yes, the stock could take off on good results from the Mayo Clinic study. I'll take a wait-and-see stance for now. There's no need to rush with either of these two stocks, in my view.
Playing it smart
The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In the Motley Fool's brand-new free report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.