Geron, Zogenix, Synta Pharmaceuticals, and Pfizer: Today’s Top Health Care Stories

Geron, Zogenix, Synta Pharmaceuticals, and Pfizer could all make health care headlines this morning. Here’s why.

Mar 12, 2014 at 9:38AM

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.

Let's take a closer look at four companies -- Geron (NASDAQ:GERN), Zogenix (NASDAQ:ZGNX), Synta Pharmaceuticals (NASDAQ:SNTA), and Pfizer (NYSE:PFE) -- which could all loom large in health care headlines this morning.

Geron plunges after the FDA halts trials of imetelstat
Our top story this morning is Geron, which is down 65% after the FDA placed a full clinical hold on its IND (investigational new drug) application for its lead cancer drug imetelstat, due to concerns regarding liver damage. The hold will affect its mid-stage thrombocythemia, polycythemia vera, and multiple myeloma studies, and could delay its planned phase 2 trial for its closely watched myelofibrosis indication.

Investors had hoped that imetelstat, which previously failed as a treatment for breast cancer and non-small cell lung cancer (NSCLC), could be approved as a treatment for various blood disorders. Imetelstat belongs to an experimental class of drugs known as telomerase inhibitors, which inhibit the production of the enzyme telomerase. Telomerase enables rapid cell division and therefore plays a possible role in the proliferation of cancer cells. However, no telomerase inhibitor has ever been approved.

Geron's stock soared nearly 200% over the past 12 months, thanks to positive data from a Mayo Clinic study of 22 patients testing imetelstat as a treatment for myelofibrosis. Unfortunately, problems started surfacing in January, when Geron announced that 20 out of 79 of patients enrolled in a Mayo Clinic trial for myeloid malignancies had dropped out and that enrollment in the trial had ceased.

Now that several key trials of imetelstat have been halted, Geron is in a precarious situation. It has no marketed products, and finished last quarter with $66.2 million in cash and equivalents. Geron's negative operating cash flow of $40.3 million over the past 12 months also indicates that the company might need to offer additional shares to generate more cash to fund future trials.

Purdue Pharma's new drug could force Zogenix's Zohydro off the market
Zogenix, the maker of the controversial painkiller Zohydro ER, is down about 14% as of this writing, after a Bloomberg report stated that Purdue Pharma plans to apply for a regulatory approval for a tamper-resistant rival painkiller to force Zohydro off the market.

Zohydro ER, an extended release formulation of the narcotic painkiller hydrocodone, is notably five to ten times more potent than vicodin, which is a milder mix of hydrocodone and acetaminophen. Zohydro is not tamper resistant, which means that it can be crushed or dissolved for recreational drug use. It is currently classified as a Schedule II controlled substance.

That potential for abuse has caused 28 state attorneys general and two U.S. senators to ask the FDA to reconsider Zohydro's approval. Zogenix is working on a tamper-resistant version of Zohydro, but it won't be available until 2016 at the earliest, according to the company. Analysts had originally hoped that Zohydro would generate $300 million in annual sales.

Purdue will ask the FDA for a priority review of its tamper-resistant painkiller hydrocodone bitartrate, which recently met its goal of reducing chronic lower-back pain in a late-stage trial.

Bob Rappaport, the FDA's director of pain medications, notably stated on October 25 that "serious consideration" would be given to assuring "non-abuse formulations are removed from the market" -- indicating that the FDA could pull Zohydro off the market if Purdue's drug is found to be a suitable alternative.

Synta gets slammed by an analyst downgrade
Meanwhile, Synta, which just reported its fourth quarter and full year earnings yesterday, is down 17% as of this writing after BMO Capital analyst Jim Birchenough downgraded the stock from Market Perform to Underperform and reduced his price target to $1 -- indicating a huge drop from its closing price of $5.28 yesterday.

Birchenough stated that the company's limited cash (its year-end cash and equivalents fell 9% year-over-year to $91.5 million), the recent departure of its CEO, and the questionable future of its lead drug candidate ganetespib, a potential treatment for non-small cell lung cancer, breast cancer, ovarian cancer, and acute myeloid leukemia. In particular, he noted that the extension of the timelines of GALAXY-2, its crucial phase 3 trial for NSCLC, have been pushed back to 2016 and beyond the "year-end limits of current cash."

Promising data regarding Pfizer's Prevnar 13
Last but not least, Pfizer just presented positive data regarding Prevnar 13, a vaccine against the disease caused by the bacteria Streptococcus pneumoniae, also known as pneumococcus, as a treatment for adults 65 years of age and older.

The CAPiTA trial, which tested the vaccine on 85,000 elderly patients, could expand Prevnar 13's market to an older group, since the FDA originally approved the vaccine in 2010 for infants, children (6 to 17 years of age), and adults over the age of 50. Prevnar 13 is one of three PCVs (pneumococcal conjugate vaccines) available on the market, along with GlaxoSmithKline's Synflorix and Pfizer's original Prevnar.

The Prevnar family of vaccines is a major source of revenue for Pfizer, generating $3.97 billion in sales in fiscal 2013 and accounting for 8% of the company's top line. However, Prevnar sales fell 3% year-over-year in 2013, which means that expanding the Prevnar 13 indication to adults over the age of 65 could help Pfizer reverse those losses in 2014.

One more top stock to watch this morning
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

 

Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers