It's been an outstanding year for fledgling biotechnology companies across the board, but these three haven't fared as well as the rest of their industry in recent weeks.

All of these biotech stocks have been battered for different reasons, and bouncing back will be a lot easier for some than for others. 

Company (Symbol) One-Month Loss  Market Capitalization
Idera Pharmaceuticals (NASDAQ:IDRA) (35%) $199.7 million
Spark Therapeutics (NASDAQ:ONCE) (38%) $2.16 billion
Tesaro (NASDAQ: TSRO) (40%) $1.49 billion

Here's what needs to happen if these stocks are going to mount a comeback.

Idera Pharmaceuticals: A bad year for combinations

In 2017, this biotech stock rose thanks to encouraging early data from a combination study with its lead candidate, tilsotolimod, an experimental drug that signals the immune system to make more cancer-fighting T-cells. Adding tilsotolimod to Yervoy from Bristol Myers Squibb (NYSE:BMY) led to more tumor responses than you'd expect from a small group of heavily pretreated melanoma patients, but high-profile immunotherapy combination disasters since then have soured the mood.

Idera Pharmaceuticals shares slid further when management announced an attempt to merge with BioCryst Pharmaceuticals (NASDAQ:BCRX) earlier this year. BioCryst shareholders vehemently opposed the merger, which has investors feeling extra skeptical about tilsotolimod's potential.

At recent prices, Idera sports a minuscule $62.5 million enterprise value that would increase several times over if investigators can show that adding tilsotolimod to Yervoy provides a significant benefit over Yervoy alone during a 300-patient phase 3 trial that began earlier this year.

IDRA Chart

IDRA data by YCharts

You can probably find dozens of novel immuno-oncology candidates that showed promise in small combination studies but couldn't deliver when it really mattered. Given Idera's track record for value creation over the past couple of decades, investors want to watch this show from a safe distance.

Spark Therapeutics: Safety issues

This gene-therapy pioneer has given investors plenty to get excited about, including a landmark approval for a one-time blindness cure and a partnership with Pfizer Inc. (NYSE:PFE). The double dose of good news drove this stock up to a tall perch that wasn't very stable.

Person in a suit wrestling with a downward sloping chart.

Image source: Getty Images.

Pfizer has already started a pivotal trial with Spark's hemophilia B candidate, fidanacogene elaparvovec, but the company ran into trouble with a similar candidate intended to treat hemophilia A. In a previous study, SPK-8011 helped 12 patients reduce their dependence on expensive clotting factor transfusions by an annualized 97% as of July 13.

However, seven patients needed to take steroids to offset troubling immune responses. Patients showed signs of liver damage and declining levels of the clotting factor that SPK-8011 is supposed to help them produce in greater quantities. Treatment with steroids helped, but two patients required infusions of factor replacement therapy again.

Freeing 10 out of 12 hemophilia A patients from reliance on clotting factor replacement therapy with a single dose is amazing, but SPK-8011's up against some tough looking competition from Biomarin and Roche. If Spark Therapeutics stock is going to bounce back in the near term, it will have to convince investors that the issues that cropped up in phase 1 can be avoided.

Tesaro Inc.: Fears confirmed

This stock has been sliding all year from fear of competition for its lead drug, Zejula, a treatment approved in 2017 to prevent ovarian cancer from coming back after a successful round of chemotherapy. Unfortunately for Tesaro, the FDA has since approved two drugs of the same class, Lynparza from AstraZeneca and Rubraca from Clovis Oncology, to treat the same limited group of patients.

Person on phone with hand over eyes.

Image source: Getty Images.

Investors worried the competition would crimp Zejula's growth felt their fears were confirmed during the company's second-quarter earnings call. Zejula sales hit an annualized run rate of $196 million during the second quarter which was 10% higher than during the previous quarter. Management spooked investors by lowering its full-year estimate for Zejula sales from a range between $255 million and $275 million to a tighter range that tops out at just $235 million.

Now that Tesaro has divested its only other drug, a trial that could expand Zejula to newly diagnosed patients has become crucial. If the results of the Prima trial distinguish Zejula from its competitors when they're read off in a couple of years, the stock might bounce back, but that's a long time to wait for a long shot.

A clear favorite

Tesaro and Idera have a chance to bounce back, but the odds too long to consider. If I had to pick a favorite, Spark Therapeutics looks like the safest bet at the moment. Luxturna alone can't support Spark's valuation, but I think investors buying this stock now and holding on for the long run have a pretty good chance of coming out ahead even if its hemophilia program fizzles. 

In less than four years as a publicly traded company, Spark launched its own groundbreaking gene therapy based on proprietary delivery technology that underpins the candidate Pfizer picked up earlier this year. Another experimental therapy aimed at a rare eye disease, SPK-7001 has entered clinical trials, and I expect several more to produce data before this company needs to ask investors for more cash.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.