Tuesday’s Top Health Care Stories: Ophthotech, Dendreon, Edwards Lifesciences, and Medtronic

Ophthotech, Dendreon, Edwards Lifesciences, and Medtronic could all loom large in health care headlines this Tuesday morning.

May 20, 2014 at 9:24AM


Let's take a look a four stocks -- Ophthotech (NASDAQ:OPHT), Dendreon (NASDAQ:DNDN), Edwards Lifesciences (NYSE:EW), and Medtronic (NYSE:MDT) -- which could all make waves in the health care sector this Tuesday morning.

Ophthotech surges after signing a deal with Novartis
Shares of Ophthotech are up almost 20% this morning in pre-market trading, after signing an agreement with Novartis (NYSE:NVS) to commercialize its wet AMD (age-related macular degeneration) treatment Fovista outside the U.S. Ophthotech will retain the rights to commercialize Fovista in the U.S.

Ophthotech will receive an upfront payment of $200 million, and be entitled to over $1 billion in potential milestones, as well as additional royalty payments. Fovista is currently in three late-stage trials in the U.S.

Analysts believe that Fovista could generate peak sales as high as $3.5 billion if approved. Two other prominent treatments in Wet AMD -- Novartis and Roche's Lucentis and Regeneron and Bayer's Eylea -- are both proven blockbusters. Lucentis and Eylea respectively generated over $4 billion and $1.9 billion in global sales in 2013.

Ophthotech has no marketed products. Fovista is its most advanced product, followed by Zimura, another Wet AMD treatment currently in phase 2 trials.

Dendreon rises on update regarding Provenge
Dendreon, the maker of the late-stage prostate cancer drug Provenge, is up about 11% in pre-market trading this morning after announcing the presentation of data from the ProACT and IMPACT studies.

Dendreon stated that the studies show that Provenge elicits an immune response associated with an overall survival benefit. The evaluation was based on 601 prostate cancer patients in four randomized clinical trials who underwent at least one leukapheresis -- in which white blood cells are separated from the blood. Complete data, however, has not been released to the public yet.

Shares of Dendreon have fallen more than 46% over the past 12 months, primarily due to sluggish sales growth and intense competition from Johnson & Johnson's Zytiga and Medivation/Astellas' Xtandi. Dendreon, which is an immunotherapy treatment, is infused, whereas Zytiga and Xtandi are both orally administered.

Provenge was originally pegged to be a blockbuster, with sales forecasts as high as $4 billion. Those hopes have not materialized -- Dendreon reported Provenge sales of $325.3 million in 2012, followed by a steep decline to $283.7 million in 2013.

However, a few positive catalysts have kept investors interested in the stock. Provenge's European approval last September, which was followed by a European manufacturing deal with PharmaCell, gave investors hope that Dendreon could improve in 2014.

Edwards Lifesciences and Medtronic settle their patent disputes
Last but not least, Edwards Lifesciences and Medtronic have just settled their patent disputes regarding transcatheter heart valves. The companies mutually agreed to dismiss all pending cases and appeals in courts and patent offices worldwide, and to not initiate any more patent litigation against each another for eight years.

The original dispute centered around Medtronic's CoreValve, a newly approved challenger to Edwards' uncontested market for aortic valves which can be inserted without cracking the chest. Edwards has dominated that market since November 2011. Edwards claimed that the CoreValve infringed on its existing patent. The worldwide market for these valves is expected to reach $3 billion by 2019.

Medtronic will make a one-time payment of $750 million to Edwards, then make quarterly royalty payments to Edwards based on a percentage of Medtronic CoreValve sales through April 2022. That percentage is also subject to a minimum payment of $40 million per year. Edwards will contribute $50 million of its settlement with Medtronic to its Every Heartbeat Matters philanthropic program. Shares of Edwards, which is the clear winner in this case, are up 2% in pre-market trading this morning.

Medtronic also reported its fourth quarter earnings this morning. The company's revenue rose 3% year-over-year on a constant currency basis to $4.6 billion, but slightly missed analyst estimates. Non-GAAP earnings per share rose 2% to $1.12, matching the consensus estimate. Shares of Medtronic remain relatively unchanged following the two announcements.

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Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson and Medtronic. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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