Wednesday’s Top Health Care Stories: Isis Pharmaceuticals, Enzymotec, Incyte, and AstraZeneca

Let's take a look at four stocks -- Isis Pharmaceuticals (NASDAQ: ISIS  ) , Enzymotec (NASDAQ: ENZY  ) , Incyte (NASDAQ: INCY  ) , and AstraZeneca (NYSE: AZN  ) -- that could make waves across the health-care sector this Wednesday morning.

Isis surges on positive midstage results for diabetes drug
Isis Pharmaceuticals was up more than 13% in pre-market trading, following the announcement that its experimental type 2 diabetes drug, ISIS-GCGRRx, successfully reduced blood sugar levels in patients during a midstage study. The trial tested two doses of the drug on 75 patients with type 2 diabetes who experienced uncontrolled blood sugar levels despite receiving standard treatment.

Although this is a positive development for Isis, investors should remember that ISIS-GCGRRx is not one of the company's most advanced drug candidates.

Isis currently has one marketed product with Sanofi (NYSE: SNY  ) -- Kynamro, a treatment for homozygous familial hypercholesterolemia, or HoFH, a rare genetic disorder that only affects one in 1 million. Kynamro's only rival in HoFH treatment is Aegerion's Juxtapid, one of the priciest drugs in the world with a price tag of nearly $300,000 per patient per year. Kynamro is much cheaper at $176,000 annually.

One of Isis' most promising pipeline drugs is ISIS-TTRRx, an experimental treatment for TTR Amyloidosis, a neurodegenerative disease characterized by pain, numbness, muscular weakness, and autonomic dysfunction. ISIS-TTRRx is being tested in phase 3 trials with GlaxoSmithKline. Isis also holds several midstage pipeline collaborations with Biogen Idec, Roche, and Regulus.

Enzymotec falls despite topping analyst estimates for the first quarter
Enzymotec, a manufacturer of active bio-lipid ingredients and medical foods, was down more than 8% in pre-market trading this morning despite reporting first-quarter earnings that topped analyst estimates on the bottom line -- although there was a slight miss on the top line.

Enzymotec reported that its non-generally accepted accounting principles net income rose 135% year over year to $5.6 million, or $0.24 per share. Revenue, based on its equity method of accounting, rose 29% to $17.9 million. Analysts had expected Enzymotec to earn $0.17 per share on revenue of $19.4 million.

For the full year, Enzymotec forecasts non-GAAP earnings of $0.64 to $0.94 per share, in line with analyst estimates. Full-year 2014 net revenue, based on the equity method of accounting, is expected to rise 5% to 31% year over year to a range between $68 million and $85 million.

Enzymotec mentioned that two major events will impact its second-quarter earnings -- a temporary shutdown of a manufacturing plant to upgrade its capacity, and changes in Chinese regulations regarding infant formula that require the company to update its production chain. Neither change, however, is expected to impact overall full-year revenue.

However, investors should remember that Enzymotec is engaged in a patent litigation dispute with Neptune Technologies & Bioressources over products made from Antarctic krill oil -- which could result in required royalty payments eroding its bottom-line growth.

Shares of Enzymotec, which went public last September, have fallen 13% over the past three months. That decline can be attributed to concerns about Neptune and a secondary offering of 4.4 million shares in early March.

Incyte signs a new collaboration with AstraZeneca
Last but not least, Incyte just announced two new collaborations with AstraZeneca's MedImmune subsidiary to study new cancer treatments. AstraZeneca acquired MedImmune for $15.6 billion back in 2007 to expand its portfolio of biologic drugs.

The companies will test a combination of two drugs, known as immunotherapies, designed to boost the immune system's natural ability to fight cancerous tumors. A combination of the two drugs -- AstraZeneca's MEDI4736 and Incyte's INCB24360 -- will be tested in a phase 1/2 clinical study evaluating their efficacy in treating multiple solid tumors such as skin, lung, head, neck, and pancreatic cancers.

Incyte notably entered into a similar agreement with Merck in February, evaluating INCB24360 alongside Merck's immunotherapy drug MK-3475 in a phase 1/2 study for non-small cell lung cancer.

These partnerships represent promising new ways for Incyte to decrease its dependence on revenue from Jakafi/Jakavi, a treatment for the blood disorder myelofibrosis. Incyte markets the drug as Jakafi in the United States, while its partner Novartis markets it as Jakavi abroad. Last quarter, Incyte reported that U.S. sales of Jakafi rose 44% year over year to $69.7 million, accounting for 78% of its top line. The remainder of Incyte's revenues are mainly generated by royalty payments and collaborative revenues. Shares of Incyte are up more than 130% over the past 12 months.

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  • Report this Comment On May 14, 2014, at 10:03 AM, biz2befree wrote:

    The other encouraging piece of news for ISIS GCGRRx is that it is still wholly owned by ISIS which means that they may be in store for a large partnering fee at some point in the process.

    I guess the main decision of whether ISIS is a good investment or not is really your time frame. If your time frame is 2 to 3 years or more, the company keeps coming out with more and more positive news.

    If your time frame is 2 to 3 months, who knows? Much more dependent on the mood of the market.

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