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Imagine you invested $10,000 in a stock and it gained $3,700 -- in a week. If you owned one of these three health-care stocks, no imagination is required. Here's the story behind their humongous gains.
A big sigh of relief
Just three weeks ago, Ariad Pharmaceuticals (NASDAQ: ARIA ) made our list of the worst health-care stocks for the week after the U.S.. Food and Drug Administration suspended sales of leukemia drug Iclusig. This week, though, European regulators decided that the drug can continue to be marketed. Ariad's shares soared nearly 52% as investors breathed big sighs of relief.
The FDA took its action because patients developed severe blood clotting after taking Iclusig. Europe's Committee for Human Medicinal Products, or CHMP, decided that the drug could continue to be used. However, CHMP recommended several measures to help minimize the risks for patients using Iclusig.
This was music to Ariad's ears. Had CHMP followed the FDA's lead in yanking Iclusig from the market, the company would have in a seemingly hopeless situation. This week's decision gives Ariad a new lease on life, although the European Medicines Agency is conducting a further review and could come back with more recommendations about use of Iclusig.
Under the terms of the deal, Horizon picked up U.S. marketing rights for Vimovo for $35 million. AstraZeneca retains exclusivity for the drug outside of the U.S. It looks to be a good buy for Horizon, since Vimovo generated $5 million in U.S. sales just last quarter.
Vimovo also makes a good addition to Horizon's lineup. The company's sales team will promote the drug along with rheumatoid arthritis drug Duexis and anti-inflammatory drug Rayos to many of the same doctors. Horizon expects Vimovo to help it become profitable next year.
No news is good news
There wasn't a licensing deal or positive regulatory decision to help Galena Biopharma (NASDAQ: GALE ) this week -- but the company didn't need one. Shares jumped 37% for the week on no real news.
Galena is still experiencing solid momentum from its news announced a couple of weeks ago. The company reported positive results from a phase 1 study of its Folate Binding Protein, or FBP, vaccine. FBP showed promise for helping prevent recurrence of endometrial and ovarian cancer.
While FBP generated the recent spike in excitement about Galena, cancer drug Neuvax is the company's lead candidate. Neuvax is in a late-stage study for treating breast cancer as well as another phase 2 study for the indication.
Pick of the week
Which of this week's three humongous health-care stocks is most likely to keep on performing well? Horizon wouldn't be a bad pick. The Vimovo deal was a smart move and the future looks bright.
Ariad has a tougher road ahead. Despite the much-needed good news from Europe this week, the company faces challenges in overcoming safety concerns for Iclusig.
Galena stands a good chance of success with Neuvax and, over the longer term, FBP. The company should also experience a degree of success from sublingual breakthrough cancer pain drug Abstral.
In my view, it comes down to a decision between Galena and Horizon. I'll go with Galena. It's certainly a speculative pick, but I suspect we'll hear a lot from this up-and-coming biopharmaceuticals company over the next couple of years.
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