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3 Horrendous Health-Care Stocks This Week

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Halloween wasn't just frightening for kids this week. Several health-care stocks put a scare into investors over the past few days. Here are three of the most horrendous.

Shrinking before our eyes
Blame the data for Synta Pharmaceuticals' (NASDAQ: SNTA.DL  ) horrible performance this week. Shares fell 33% after the company released more information from a mid-stage study of cancer drug ganetespib.

Was the new data that bad? Not on the surface. Patients treated with ganetespib plus chemotherapy had median survival of 10.7 months compared to a median survival of 7.4 months for patients taking chemotherapy only. The risk of death was reduced by 25% in the group of patients taking ganetespib with chemotherapy.

The problem for Synta is that these results show less benefit than did earlier results, raising doubts about how successful the phase 3 study for ganetespib will be. This isn't the first time that additional data revealed shrinking benefits. Synta announced results in June that also were disappointing.

Suspense in the air
Like hockey-mask-wearing killer Jason from the Friday the 13th movies, Ariad Pharmaceuticals'  (NASDAQ: ARIA  )  Iclusig problems don't seem to every go away. Shares plunged 27% this week on more bad news from the U.S. Food and Drug Administration. It would have been even worse if Ariad had not enjoyed a rally on Friday.

Ariad announced on Thursday that the FDA asked it to suspend sales of leukemia drug Iclusig. The FDA placed a clinical hold on enrollment in a late-stage study of Iclusig two weeks ago after a number of patients in earlier studies developed serious arterial blood clotting with some fatalities. According to the agency, some patients experienced severe adverse reactions as soon as two weeks after beginning use of the drug.

What's next for Ariad? The company said that it's talking with the FDA about possible label changes and ways to manage risks with Iclusig. Even if those efforts are successful, Iclusig seems likely to remain off the market for quite a while.

Nail in the coffin
The FDA hammered away at Amarin (NASDAQ: AMRN  ) again this week, leading my fellow Fool Brian Orelli to write that the company has received "a nail in its already-dead drug-approval coffin." The market seemed to agree in large part: Amarin's shares sank 25% for the week.

What was this nail? The FDA snatched away the special protocol assessment for triglyceride drug Vascepa. This wasn't a shocker, considering that a couple of weeks ago an FDA advisory committee voted overwhelmingly against recommendation for the drug in treating adult patients with high triglycerides in the range of 200-499 mg/dL. 

Amarin's best hope now is to complete the REDUCE-IT outcomes study that is already in progress. If it can prove cardiovascular benefit from using Vascepa, regulatory approval could still be achieved. That process will take a few years, though.  

Walking dead?
I usually pick the one company from the weekly list of horrendous health-care stocks most likely to mount a comeback. This week, though, I'm going to have to take a pass. I'm just not confident that any of these stocks will roar back anytime soon.

Are all three stocks basically the walking dead? Maybe not. Ariad could possibly somehow manage to restore Iclusig to the market, although that's definitely an uphill battle. Synta could finally produce better results for ganetespib next year. Amarin could hang in there and prove Vascepa skeptics wrong -- or maybe find a buyer.

All these scenarios are possible. Of course, it might be better for investors to do what the teens in horror movies never do -- run away as fast as you can and don't look back. 

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Related Tickers

9/26/2016 11:39 AM
AMRN $3.06 Up +0.12 +4.08%
Amarin CAPS Rating: ****
ARIA $13.74 Up +0.22 +1.59%
Ariad Pharmaceutic… CAPS Rating: **
SNTA.DL $0.00 Down +0.00 +0.00%
Synta Pharmaceutic… CAPS Rating: ***