Please ensure Javascript is enabled for purposes of website accessibility

3 Healthcare Stocks That Surged Last Week

By Cory Renauer – Jun 21, 2020 at 8:47AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's what pushed up shares of the highest-flying healthcare stocks.

Last week was another good one for healthcare stocks across the board, and a stellar week for investors holding shares of these recent high flyers. 

Now that they've made some big gains, investors are right to wonder if there's more fuel in the tank. Here's what you need to know about what drove them higher. 

Company (Symbol) Price Change During Week Ended Jun. 19, 2020  Market Cap
Quidel (QDEL) 22% $8.8 billion
IDEAYA Biosciences (IDYA 5.74%) 86% $300 million
Celldex Therapeutics (CLDX -0.85%) 72% $521 million

Data source: Yahoo! Finance.

1.Quidel: Inside buy

This company develops tests that can rapidly diagnose a variety of diseases including a point-of-care test for SARS-CoV-2, the virus responsible for COVID-19. Quidel's test, called the Sofia 2 SARS-CoV-2 Antigen FIA looks for pieces of the novel coronavirus floating around in the bloodstream and this gives it a leg up on the competition.

Three healthcare professionals with their thumbs up.

Image source: Getty Images.

Looking for pieces of the virus itself make Quidel's test significantly more accurate than tests that look for the antibodies our immune systems produce in response to SARS-CoV-2. This is because there are lots of similar antibodies directed against other coronaviruses and all antibodies stick around long after patients recover from an infection.

In May, shares of Quidel shot up after the FDA granted an emergency use authorization (EUA) to Quidel's SARS-CoV-2 test in anticipation of soaring sales. It appears that insiders are equally bullish. The stock soared on Monday in response to a regulatory filing that shows CEO Douglas Bryant, bought 5,000 shares of his own company on June 11, raising his stake in the company to 445,823 shares. 

2. IDEAYA Biosciences: New targets

This company's using DNA-based testing to identify potential targets for new cancer therapies. After finding several interesting targets IDEAYA Biosciences has started developing small molecule drug candidates to that aim in their direction.

IDEAYA stock soared last week after GlaxoSmithKline (GSK 0.24%) entered a broad collaboration deal with the clinical-stage biotech. The tiny biotech's new big pharma partnership covers three potential first-in-class therapies that target MAT2A, Pol Theta, and Werner Helicase. 

GlaxoSmithKline will pay IDEAYA $100 million upfront, plus another $20 million in the form of an equity stake in the tiny biotech. IDEAYA is eligible to receive half of any available profits that arise from the partnership but responsible for just 20% of global development costs. 

Somebody handing a doctor some cash.

Image source: Getty Images.

3. Celldex Therapeutics: Chronic hives

Celldex spent over a decade developing novel cancer therapies without any late-stage clinical trial successes to show for it. With this in mind, it's not surprising that the company has switched gears to immunology with CDX-1059, a potential first-in-class KIT blocker.

Although KIT has been shown to drive tumor growth, it also appears to play a role in autoimmune disorders, including chronic hives. Celldex stock roared higher last week because the company reported positive results from a 32-patient safety study with healthy volunteers. 

In addition to a lack of dangerous side effects from volunteers that received CDX-1059, Celldex reported significantly reduced production of an enzyme related to hives and other immune system reactions. The company plans to begin a clinical trial with people that actually have chronic hives before the end of the year. 

What's next?

We still have no idea if Celldex's experimental treatment will actually help people with chronic hives, but this didn't stop insiders, including the CEO from buying up shares of their own company. 

Rolled up banknotes in shape of upward sloping chart.

Image source: Getty Images.

When it comes to evaluating insider trades from Quidel, Celldex, or any company, it's important to remember insiders are also people with bills to pay and vacation homes to purchase. While insiders have an endless list of innocuous reasons to sell shares, confidence in their company's future is the only reason to buy more.

At a glance, Bryant's purchase seems minor in relation to the number of shares he's already accumulated, but it probably doesn't feel like a minor purchase to him. In 2019, Bryant's total compensation worked out to around $4.2 million, but that's all tied up in stock and option awards that he appears unwilling to let go of. Bryant's actual salary was just $633,993 last year, which makes an $801,670 bet on his company's future a significant sign of confidence.

At the end of March, IDEAYA had just $90.9 million in cash after burning through $12.0 million during the first three months of 2020. The company has already taken advantage of its recently inflated stock price to raise $100 million in a secondary offering. Receiving $100 million upfront from Glaxo, and getting its new partner to pay 80% of development expenses for three early stage programs should give the company a long enough cash runway to produce some evidence its drugs work before asking for more.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Quidel. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Celldex Therapeutics, Inc. Stock Quote
Celldex Therapeutics, Inc.
CLDX
$28.11 (-0.85%) $0.24
Quidel Corporation Stock Quote
Quidel Corporation
QDEL
IDEAYA Biosciences, Inc. Stock Quote
IDEAYA Biosciences, Inc.
IDYA
$14.92 (5.74%) $0.81
GSK Stock Quote
GSK
GSK
$29.43 (0.24%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.