Ariad's Plunge Leads Biotech's Week-Long Retreat

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...

Click Here Now

Biotech stocks couldn't hold up the sector's record highs of recent weeks, as the Nasdaq Biotechnology Index lost more than 4.3% over the past five days. While the sector suffered a terrible start to the week, investors can't blame all of biotech's losses on the Washington shutdown: A few key stocks made investors pull their hair out in frustration this week, led by Ariad Pharmaceuticals' (NASDAQ: ARIA  ) absolute implosion.

Ariad wasn't the only stock to suffer in a week where a meager few biotech picks managed to stay in the green. Let's catch up on what you need to know from the sector's woes this week.

Ariad's not the only biotech falling
Idenix Pharmaceuticals
(UNKNOWN: IDIX.DL  ) took a tough blow over the past five days, as shares lost nearly 24%. Idenix has already taken one big hit recently: Back in June, this stock nosedived by 35% on a single day after the FDA put a hold on the company's plans of human clinical trials for its developmental hepatitis-C drug, IDX20963. Regulators requested more safety data at the time, an unfortunate setback for a company that's already been hurt by safety concerns of earlier drugs.

Now Idenix has taken another hit after the company's partner, Johnson & Johnson, opted to acquire a rival hepatitis-C medication from GlaxoSmithKline. Idenix will have to seek a new partner for its drug now, and time's slipping away in its fight to capture a piece of the oral hepatitis-C market. AbbVie and Gilead are surging ahead in this race to bring the first all-oral hep-C drug to approval for a market that analysts say could reach $20 billion, and Idenix will need to move fast if it wants to hold its own in this race.

NPS Pharmaceuticals (UNKNOWN: NPSP.DL  ) has been one of the darlings of the biotech sector this year, but the stock dropped more than 14.5% over the past week. Still, investors hardly can be displeased by the stock in 2013: NPS's shares have jumped more than 225% year-to-date. With little news out from this company over the past five days, the weekly loss looks more like an example of profit-taking rather than anything seriously wrong with the stock.

In the long term, NPS looks like a winner. Between its successful launch of short bowel syndrome treatment Gattex so far to the company's ongoing development of hypoparathyroidism treatment Natpara, NPS is looking up. Even with the stock's big gains in 2013, I don't think this week's fall is an indication that NPS has hit its zenith -- especially if Gattex continues to roll.

The biggest biotech story this week, however, was Ariad. Shares collapsed to the tune of a 77.3% fall over the past five days. The biggest drop came Thursday, after the FDA initiated a partial hold on clinical trials of Ariad's developmental leukemia drug Iclusig when earlier study data showed an increase in heart problems and blood clots in patients.

Iclusig's still on the market and selling after being approved for two other indications in the recent past, but Ariad had hoped to expand the drug's market. Now with the FDA launching an investigation into Ariad's drug and any reported side effects from it, the future's looking murky. Wall Street's already notched several downgrades for Ariad's stock, and with the situation in flux, it's a dangerous time for Ariad shareholders. Caution should rule the day with this stock until the situation progresses, so keep your eye on Ariad in the near future in case the FDA comes up with more news -- either good or bad.

How you can profit from biotech's run
Looking to break into biotech investing with the sector's recent record highs? 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.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2680099, ~/Articles/ArticleHandler.aspx, 9/28/2016 10:16:30 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 28 minutes ago Sponsored by:
DOW 18,339.24 110.94 0.61%
S&P 500 2,171.37 11.44 0.53%
NASD 5,318.55 12.84 0.24%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/28/2016 4:00 PM
ARIA $14.14 Up +0.19 +1.36%
Ariad Pharmaceutic… CAPS Rating: **
IDIX.DL $0.00 Down +0.00 +0.00%
Idenix Pharmaceuti… CAPS Rating: **
NPSP.DL $0.00 Down +0.00 +0.00%
NPS Pharmaceutical… CAPS Rating: ****