3 Stocks With Eye-Popping Gains This Month

Achillion, Vital Therapies, and Alder Biopharmaceuticals were among biotech's biggest movers in June.

Jun 30, 2014 at 3:12PM

Shares in biotechnology companies can make breathtaking moves higher and lower on whims and whispers, and June was no exception. Following the sector's rollicking ride higher last year and dramatic sell-off in the first quarter, investors are right to be cautious.

Yet investor interest in bargain biotechs continued in June, with the industry ETF (NASDAQ:IBB) returning more than 7%, over 5% more than the S&P 500. Leading that move higher were a slate of emerging biotech companies, including Achillion Pharmaceuticals (NASDAQ:ACHN), Vital Therapies (NASDAQ:VTL), and Alder Biopharmaceuticals (NASDAQ:ALDR).

ACHN Chart

ACHN data by YCharts.

Rushing for a next-generation hepatitis C cure
Achillion's dramatic 186% jump came on the heels of Merck announcing that it would acquire Achillion competitor Idenix on June 9. Even though Idenix's most advanced drug is only in midstage clinical trials, Merck paid $3.8 billion to get its hands on the company's promising hepatitis C pipeline.

G

Source: Achillion Pharmaceuticals.

That valuation was more than three times Idenix's previous closing price.

Merck's willingness to ante up in order to bulk up its hepatitis C research and development drove investors to question whether Achillion, one of the few remaining major emerging independent hepatitis C pure plays, is undervalued, especially given that Gilead Science's newly launched hepatitis C drug Sovaldi notched more than $2 billion in sales during the first quarter -- which was also its first quarter on the market.

Whether Achillion could find also find a buyout suitor remains to be seen. Achillion has four compounds in clinical trials, including two in phase 2. One is ACH-3102, an NS5A inhibitor that has been awarded FDA fast-track designation. Achillion is studying ACH-3102 as an adjunct to Sovaldi to see if the two can effectively cure the disease in just six or eight weeks.

The other is phase 2 drug is sovaprevir, an NS3/4A protease inhibitor that also has fast-track status and that Achillion is studying alongside ACH-3102 as part of combination therapy. In a small phase 2 study, 100% of genotype 1b patients treated with sovaprevir, ACH-3102, and ribavirin achieved sustained viral response at 12 weeks, the benchmark for an effective cure. Additionally, the FDA recently removed a clinical hold on sovaprevir, allowing development to continue.  

Vital

Source: Vital Therapies

Restoring liver function
Vital Therapies IPO'd in April. While it boasts a market cap north of $500 million, it trades fewer than 200,000 shares a day on average over the past three months, which means it can make big moves quickly -- so investors should be cautious.

That said, Vital shares surged more than 100% this month as investors became increasingly hopeful that its liver assist technology will post positive results in phase 3 trials when they're released next year.

Vital is working on a process that would use human cells to simulate liver function in people with acute liver failure, or ALF. Although ALF isn't common -- there are just 2,000 cases annually in the U.S. -- there are few treatment options other than liver transplant.

Vital hopes that its therapy can help bridge the gap for these patients, but it may face a tough hurdle in phase 3. That's because the company's phase 2 trials, while showing an improving trend in survival, didn't achieve statistical significance. As a result, Vital reworked its phase 3 patient enrollment criteria to better reflect the patient population most likely to benefit from its approach, a move which may -- or may not -- allow it to reach that significant survival readout when it reports data next year.

Tackling big markets
Alder is another recent IPO notching an impressive gain this month. Shares have rallied more than 70% in June, but unlike Vital, Alder comes with a well-heeled collaborator in Bristol-Myers, which reported in May that it owns a 5% stake in Alder.

G

Alder Biopharmaceuticals.

Alder is working on antibody therapies: Its two most advanced drugs are ALD403 for migraine and clazakizumab for psoriatic arthritis and rheumatoid arthritis.

Both of those markets are large and potentially lucrative, but clazakizumab intrigued Bristol most. In order to partner on clazakizumab, Bristol paid Alder $85 million up front in 2009 and agreed to potential milestones and royalties that could be worth hundreds of millions more if the drug ever reaches market.

However, despite the Bristol deal, Alder has been going through cash quickly; prior to the IPO the company's auditors warned that Alder would need to raise money by the end of this year if it hoped to remain in business.

That worry is likely one reason Bristol agreed to lend credibility to Alder's IPO by taking an equity stake -- a move that was quite profitable given the move this month. Following the IPO, auditors should be more comfortable given that the company raised $80 million when it went public.

Fool-worthy final thoughts
All three of these biotech winners are clinical stage companies that currently don't have any products on the market. Each has promising therapies in trials; however, trials often fail. As many as nine out of 10 drugs entering clinic never making it to market.

That suggests investors should remain careful on these three. Personally, I'll be staying on the sidelines, but watching each closely for updates on their clinical trials. 

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool’s new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Todd Campbell owns shares of Gilead Sciences. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool owns and recommends shares of Gilead Sciences. 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