Big moves in biotech today as a rebuffed takeout attempt led to an instant double, and one of the larger players in the space soared on great drug results.
First let's jump on Human Genome Sciences
To date, Benlysta is a flop, registering a mere $25.7 million in sales last quarter. HGS isn't expecting to turn a profit until 2014 at the earliest. Because of these difficulties, HGS's shares were trading at just one quarter of their 52-week high, but not everything that's cheap is a bargain, and paying roughly 25 times annualized sales is cause for concern. Glaxo might be able to ramp sales by bringing Benlysta fully in house, but I wonder whether this is more about the two shared drugs in the pipeline than Benlysta or once-rejected anthrax treatment raxibacumab. Both darapladib and albiglutide are currently in phase 3 trials, and the markets for cardiovascular disease and type-2 diabetes are significantly larger than lupus. If these trials are going well, thae acquiring HGS would be a much more expensive proposition once the results are public.
Perfectly illustrating that point is Gilead
The results today came from a combination of GS-7977 and Bristol's daclatasvir, which showed a 93% cure rate, better than GS-7977 and ribavirin alone. This supports the theory that future Hep-C treatment will involve a cocktail approach, similar to the strategy Gilead pioneered with HIV treatment. Bristol is "very interested" in a team-up, while Gilead is playing hard to get, hoping one of its internal candidates can replace Bristol's contribution -- but at the end of the day, whatever tie-up generates the best results is going to be the one available for patients.
The current standard of care is Vertex's
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David Williamson holds no position in any company mentioned. Check out his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline, Gilead Sciences, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.