Tuesday’s Top Health Care Stories: Halozyme, Insys, Pfizer, and AstraZeneca

Halozyme, Insys, Pfizer, and AstraZeneca are the top health-care stocks to watch on Tuesday morning.

May 13, 2014 at 9:20AM

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Let's take a look at four stocks -- Halozyme (NASDAQ:HALO), Insys Therapeutics (NASDAQ:INSY), Pfizer (NYSE:PFE), and AstraZeneca (NYSE:AZN) -- that could all make waves across the health-care sector this Tuesday morning.

Halozyme rises on a positive opinion regarding its halted PEGPH20 trial
Halozyme was up more than 11% in pre-market trading after an independent data monitoring panel supported the continued enrollment of patients for a phase 2 trial of the company's experimental pancreatic cancer treatment.

Halozyme in April halted enrollment and dosing in the phase 2 trial of PEGPH20, which is an advanced version of its intravenous drug delivery system for chemotherapy. Halozyme stated that the decision was a "precautionary measure" to evaluate potential issues with blocked blood vessels. That announcement caused Halozyme shares to plunge more than 32% on April 4.

If the drug is approved, Jefferies analyst Eun Yang believes PEGPH20 could be launched in the U.S. and Europe by 2019, and generate peak sales of $548 million by 2027.

Halozyme also reported a wider first-quarter loss yesterday, due to higher expenses related to PEGPH20 and its programs for Hylenex. Hylenex breaks down a structural component of the skin to allow certain drugs to be injected subcutaneously. Halozyme revenue inched up 1.7% year over year to $12 million. However, the company reported a net loss of $0.22 per share, compared to a loss of $0.17 per share in the prior-year quarter.

Insys weighed down by weak first-quarter earnings and fraud allegations
Insys Therapeutics this morning reported its first-quarter earnings, missing consensus estimates on both the top and bottom lines. Insys earned $0.23 per share, or $7.7 million, on revenue of $41.6 million. Analysts had expected earnings of $0.28 per share on revenue of $45.6 million.

The majority of Insys' revenue is generated from sales of Subsys, a sublingual spray for breakthrough cancer pain. During the quarter, revenue from Subsys sales climbed 319% year over year to $40.7 million. Prescriptions for Subsys rose 15.3% sequentially, according to IMS data. Insys expects Subsys revenue to continue rising to $52 million in the second quarter.

Investors should note that Insys stock plunged more than 15% on Monday after Dr. Gavin Awerbuch -- a doctor responsible for 20.3% of Subsys prescriptions to Medicare beneficiaries between 2009 and 2014 -- was charged with fraud in federal court in Detroit. Medicare paid Awerbuch $6.9 million between Jan. 1, 2009, and Feb. 6, 2014, for Subsys prescriptions.

In response to those charges, Insys said it has expanded its commercial organization since the launch of Subsys, and that no single physician has written more than 5% of all Subsys prescriptions in 2014.

Bearish comments on Monday from Bronte Capital analyst John Hempton criticizing the company's "incentive-based pay structure" and aggressive sales tactics also kept the stock under pressure. However, Wells Fargo analyst Michael Faerm stated that the sell-off was "overdone" and maintained an outperform rating on the stock with a price target of $58 to $60.

Shares of Insys were down nearly 6% in pre-market trading this morning. However, the stock is still up more than 280% over the past 12 months.

All eyes on Pfizer and AstraZeneca
Last but not least, investors should keep a close eye on Pfizer's proposed acquisition of AstraZeneca. AstraZeneca CEO Pascal Soriot today told a committee of British lawmakers that "It's impossible to say we would never accept any offer."

AstraZeneca, Britain's second-largest pharmaceutical company, has rejected three takeover offers from Pfizer since January -- the latest of which was a $106 billion cash and stock offer. AstraZeneca has repeatedly stated that Pfizer's proposed deal undervalues the company and could disrupt research on its lucrative pipeline of new drugs.

Pfizer, which trails many of its industry rivals in oncology, would benefit from adding AstraZeneca's growing portfolio of cancer drugs to its own newer cancer treatments such as Xalkori and Inlyta.

Meanwhile, the British Parliament's Business Innovation and Skills Committee questioned Pfizer CEO Ian Read regarding potential job losses in the U.K. and the protection of prior research. Both issues are key points of contention among opponents of the potential takeover.

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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.

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