Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



3 Biotech Stocks Making Big Moves Last Week

Biotech investors have been taken on a roller coaster ride over the past few months as stratospheric gains in the fourth and first quarters have been realized to pay tax bills and rebalance to other industries.

While Foolish investors should never focus too much attention on short-term news that can move stocks up or down week to week, such moves can be tied to important developments that may impact investors over the long term, too.

Given that backdrop, let's take a look at the reasons United Therapeutics (NASDAQ: UTHR  ) , Cubist Pharmaceuticals (NASDAQ: CBST.DL  ) , and Incyte Corporation  (NASDAQ: INCY  )  made big moves last week.

1. United Therapeutics

UTHR Chart

UTHR data by YCharts.

Between mid-February and April 28th, United Therapeutics shares slumped 15% to $89. However, a solid first-quarter earnings report has jolted new life into share prices, sending them up 17% since.

That enthusiasm stems from United Therapeutics reporting that more patients were prescribed its pulmonary arterial hypertension, or PAH, drugs last quarter. That allowed United Therapeutics sales to climb 18% from a year ago to $289 million in the first quarter.

Sales Remodulin -- United Therapeutics' top-selling drug -- grew almost 19% to $136 million. Tyvaso and Adcirca, which is now being prescribed in two out of every three pulmonary hypertension patients, were also strong performers, with year-over-year sales advancing 13% and 22%, respectively.

Source: United Therapeutics First Quarter Earnings Release.

Overall, analysts expect United Therapeutics to generate full-year 2014 EPS of $8.28, which gives United a P/E of less than 13. Shares may prove even cheaper if new drugs capture market share. United Therapeutics' recently won approval for Orenitram, an oral dose of prostacyclin.

However, that will depend on whether United Therapeutics can outshine competitors including Actelion (NASDAQOTH: ALIOF  )  

Actelion already markets Tracleer for PAH patients, and Tracleer generated sales of $437 million during the first quarter -- more than all three of United Therapeutics' drugs combined.

Last fall, Actelion launched Opsumit and the company expects to update investors on phase 3 results for its oral PAH drug, selexipag, soon as well. Given those two new drugs, the indication is likely to be more competitive this year than it was last year.  

2. Cubist Pharmaceuticals

CBST Chart

CBST data by YCharts.

Cubist Pharmaceuticals also made a big move last week following its earnings release. Shares advanced 14% after Cubist Pharmaceuticals reported adjusted EPS of $0.10 instead of an expected loss.

The EPS surprise came thanks to Cubist's sales advancing 14% to $261 million. Earnings would have been even higher except that one-time items knocked them down by $0.20.

Investors took Cubist shares down from $80 in early March to the low $60s ahead of the earnings report on concerns over Cubicin, a drug for bacterial infection. Cubicin isn't recommended for use in pneumonia patients, so the first quarter is typically its weakest given pneumonia is more common in the cold weather months.

As a result, Cubicin's sales fell 14% between the fourth and first quarters. However, Cubicin's sales were still up 5% year over year, reaching $212 million in the quarter, despite U.S. volume falling 3.6% because of the seasonal headwinds.

In addition to looking beyond Cubicin's first-quarter results, investors seem encouraged by the potential for two new drug approvals.

In March, Cubist won unanimous support from a key advisory panel for Sivextro, a drug for acute bacterial skin infections like MRSA. The FDA is expected to make a decision on approval on June 20th, and if approved, Cubist thinks Sivextro's less frequent dosing and shorter treatment regimen can help it win market share from Pfizer's Zyvox.

Cubist also filed ceftolozane/tazobactam, a drug used to treat complicated urinary tract and intra-abdominal infections, for approval on April 21st. 

Overall, Cubist expects sales to total $1.19 billion to $1.275 billion this year, which has Wall Street analysts projecting EPS of $1.94. Longer term, Cubist's management has set a goal of $2 billion in sales and non-GAAP operating income of $700 million in 2017.

3. Incyte Corporation

INCY Chart

INCY data by YCharts.

Incyte's shares jumped nearly 14% last week, despite reporting a first-quarter loss.

That suggests investors were more than happy to look beyond sales and earnings that missed estimates to focus on the potential for Incyte's fast growing myelofibrosis drug Jakafi. Jakafi's sales climbed 44% to nearly $70 million in the first quarter. 

Thanks to positive phase 3 results, Incyte plans to file Jakafi for FDA approval as a treatment for polycythemia vera, a rare bone marrow disorder, by mid year.

However, Jakafi's opportunity isn't limited to myelofibrosis and polycthemia vera. The company has launched a phase 3 trial in pancreatic cancer, too.

Since pancreatic cancer remains a very tough to treat cancer with a significant unmet need, Incyte could see Jakafi gain a foothold there, too, if the data are strong. That has analysts thinking Incyte may turn the corner to profitability as early as next year.

Further out, Incyte and co-development partner Eli Lilly may have an opportunity in baricitinib, a rheumatoid arthritis drug that put up solid results in mid-stage studies. Baricitinib is currently in phase 3 trials with results expected in 2015. 

Will this stock be your next multi-bagger?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Read/Post Comments (0) | Recommend This Article (2)

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.

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: 2943566, ~/Articles/ArticleHandler.aspx, 8/30/2015 4:17:38 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...

Todd Campbell

Todd has been helping buy side portfolio managers as an independent researcher for over a decade. In 2003, Todd founded E.B. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Todd has provided insight to a variety of publications, including SmartMoney, Barron's, and CNN/fn.

Today's Market

updated 1 day ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

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

8/26/2015 11:14 AM
ALIOF $134.95 Down +0.00 +0.00%
ACTELION LTD CAPS Rating: No stars
CBST.DL $0.00 Down +0.00 +0.00%
Cubist Pharmaceuti… CAPS Rating: ****
INCY $119.93 Up +6.08 +5.34%
Incyte Corp CAPS Rating: **
UTHR $160.48 Up +0.24 +0.15%
United Therapeutic… CAPS Rating: ****