3 Biotechs Making Big Moves on Big News

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Today, the Dow Jones Industrial Average (INDEX: ^DJI ) closed down 66 points after the Federal Reserve indicated it would not be providing more near-term stimulus to the economy. But as volatile as the broader market was -- having been up before the Fed's disappointing announcement -- significantly larger moves happened in the health-care sector. For instance, poor phase 2 results sent Endocyte (Nasdaq: ECYT  ) shares down 63% today. EC145, its cancer-fighting drug candidate, was not shown to increase survival in a subset of ovarian cancer patients.

Let's take a closer look at some biotechs that also made moves today, albeit less dramatic than Endocyte's.

Alexza Pharmaceuticals (Nasdaq: ALXA  ) announced that an FDA advisory committee reviewing Adasuve recommended approving the schizophrenia and bipolar disorder drug. Shares closed up 25% and tacked on an additional 7% after hours. Investors should be excited but need to keep in mind two key things. First, while the vote for efficacy was a decisive 17-1, the panel only recommended approval by a 9-8 margin (with one abstention). And secondly, the FDA always has final say -- always.

Avanir Pharmaceuticals (Nasdaq: AVNR  ) saw shares plunge 12% after reporting a quarter that the market didn't appreciate. The company's top drug, Neudexta, which treats uncontrollable laughing and crying, has struggled to find much traction. Failing to launch has become increasingly common in recent months after Dendreon's (Nasdaq: DNDN  ) Provenge missed expectations so badly that management pulled guidance, and since the heralded new lupus drug Benlysta earned Human Genome Sciences (Nasdaq: HGSI  ) only $18.8 million last quarter. Neudexta fared even worse, producing just $4.3 million in quarterly revenue, bringing its 2011 total up to an even $7 million. Cash used in operations was $14 million, but Avanir is sitting on a decent war chest of nearly $82 million, so the company has some time to get things straightened out.

Finally, YM Biosciences (AMEX: YMI  ) announced encouraging results for its phase 1/2 trial of myelofibrosis drug, CYT387. Phrases like "significant and durable responses" and "meaningful improvements" were thrown around as CYT387 was shown to keep patients transfusion-independent for a clinically relevant amount of time. The drug appears to have a solid safety profile as well. Shares were up 15%. It is still early in the process, but this definitely is reassuring for investors as they wait for the drug to progress through phase 3 trials that should start next year.

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David Williamson owns shares of Dendreon, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Dendreon. 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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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.

  • Report this Comment On December 15, 2011, at 8:07 AM, jefferiessucks wrote:

    Jefferies lied about Avanir in their statement following the quarterly results. Why did they have to lie? Does it have anything to do with the 29Million+ short interest? The quarterly results were wonderful and beat or were in line with analyst expectations. Traction is picking up with 100% increase in sales of Nuedexta, a reality that short interest wants to ignore. Jefferies' act was illegal. Is that manipulation or what? By the way, one analyst increased price target to $11 while Jefferies was bashing Avanir by lying about it to their customers and the world. So it wasn't the market per se, it was the misinformation campaign that caused the drop.

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