Tuesday was another solid day for the stock market, and the Dow and S&P 500 inched closer toward new record highs. Strength in the energy arena helped support the overall market, although weakness in healthcare helped pull major market benchmarks back down from their high-water marks earlier in the afternoon. Amid all the crosscurrents, investors are still trying to speculate what the Federal Reserve is likely to do with interest rates at its June meeting and what impact that decision will have on financial markets going forward. Even though the indexes stayed relatively close to unchanged, several stocks posted big declines, and some of the worst performers included Biogen (NASDAQ:BIIB), LendingClub (NYSE:LC), and Valeant Pharmaceuticals (NYSE:BHC).
Biogen lost 13% after the biotech giant reported disappointing trial results with one of its more promising treatments. The phase 2 trial of multiple sclerosis treatment opicinumab produced data that failed to support either the primary or secondary endpoints of the study. Biogen had hoped that opicinumab would produce confirmed improvement of neurophysical or cognitive function or disability over the time frame of the study, which covered 72 weeks. The company had also hoped that fewer subjects would see worsening of neurophysical or cognitive function in a timed 25-foot walk and other standard measures of physical disability. Biogen hasn't yet determined what it will do next with the program for the treatment, but investors didn't waste any time expressing their discontent with the failure to product unequivocally positive results.
LendingClub fell 7% in the wake of its decision to postpone its annual shareholder meeting. The lender increased the interest rates it charges borrowers and tightened its lending standards in an attempt to reassure investors that the company is acting in the best interests of its shareholders. However, it revealed that its second-largest shareholder had sold off its stock in LendingClub, and it also warned that loan volume for its standard lending program would likely fall about 5% as a result of its attempts to limit exposure to riskier borrowers. The shareholder meeting was only postponed to June 28, but these issues are just the latest in what has been a turbulent time for the company, and investors want to see more signs of stability before they'll feel entirely comfortable with the stock.
Finally, Valeant Pharmaceuticals dropped 15%. The beleaguered drug company cut its outlook once again, and news that one of its largest shareholders had reduced its position in the stock substantially negatively affected confidence among investors. Sequoia Fund's latest filing as of the end of May indicated that the fund had sold off more than 14 million shares of Valeant, leaving itself with just over 16 million, or about a 4.7% stake. At the same time, the company's first-quarter results included a reduction in full-year revenue expectations by $1.1 billion, with Valeant now expecting sales of $9.9 billion to $10.1 billion. New earnings projections of $6.60 to $7 per share are down as much as $3.50 per share from the previous range, and investors are increasingly concerned that Valeant's extensive debt could become a problem if financials deteriorate further. At this point, Valeant is in a race to see if it can recover quickly enough to avoid near-term challenges.