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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Can Geron rebound?
Shares of Geron dropped yesterday after the company cancelled an early stage trial of its blood cancer drug imetelstat. Geron's imetelstat has had a rocky history -- it was originally intended to be a breast and lung cancer drug, but that plan was scrapped in September 2012 after disappointing trial results. In November 2012, Geron tried to bring imetelstat back as a treatment for the blood disorders essential thrombocythemia and multiple myeloma, in a trial sponsored by the Mayo Clinic for myeloid malignancies.
However, the news that truly caught investors' attention last summer was the initiation of a phase 1 study testing the drug as a treatment for myelofibrosis, a bone marrow disorder which interferes with a patient's natural ability to produce blood cells. In November 2013, Geron announced that four of the first 18 myelofibrosis patients were disease-free -- propelling the stock to a 52-week high of $5.15 by December.
There are only a handful of treatments approved for myelofibrosis, such as Celgene's Revlimid and Thalomid, and Incyte and Novartis' Jakafi. Of these treatments, only Jakafi is a dedicated treatment for myelofibrosis, which indicates that imetelstat has plenty of growth potential if approved for the indication.
However, imetelstat's mechanism is controversial, since it is a telomerase inhibitor -- and to date, no drug in that class has ever been approved. With it's most important drug trial now on the ropes, investors should probably step back and carefully assess the damage before re-evaluating Geron.
Ariad gets a commercialization partner down under
Meanwhile, Ariad Pharmaceuticals, which is still bouncing around on wild acquisition rumors, just granted Specialised Therapeutics Australia (STA) exclusive commercialization rights to its blood cancer drug Iclusig in Australia for patients with Philadelphia-positive (Ph+) leukemias.
The term of the agreement is seven years, starting from the first commercial sale of Iclusig in Australia, after which Ariad will be granted the option to either take over commercialization duties in Australia or to extend the agreement with STA. Investors should note, however, that Iclusig has not been approved in Australia yet. Ariad submitted a marketing application for the drug in the third quarter of 2013 to the Therapeutic Goods Administration (TGA) in Australia. A possible approval and commercial launch are expected in the fourth quarter of 2014.
There are an estimated 1,500 patients in Australia being treated for CML, with 290 new cases surfacing annually. At a wholesale cost of $115,000 per patient per year, that market represents an opportunity of $172.5 million annually for STA.
While this development won't affect Ariad too much, it is a key vote of confidence for Iclusig, which has been on shaky ground after the FDA pulled the drug off the U.S. market in October amid safety concerns. The drug was subsequently allowed back on the market in December, but the stock has fallen nearly 60% over the past six months as a result.
Pfizer's fourth quarter tops Wall Street expectations
Last but definitely not least, Pfizer just reported its fourth quarter earnings, topping modest Wall Street expectations with lackluster results. For its fourth quarter, Pfizer reported net income of $0.39 per share -- a 59% plunge from the $0.85 per share it posted in the prior year quarter.
Excluding one-time items, Pfizer's earnings came in at $0.56 per share, topping analyst expectations by four cents. Revenue slid 2% year-over-year to $13.56 billion, but still topped the consensus estimate of $13.36 billion. Pfizer attributed the bottom line decline to restructuring among its main divisions, other charges, and generic competition from former top-selling drugs like its cholesterol drug Lipitor.
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