There's power in positive thinking. The late author Norman Vincent Peale made plenty of money off that philosophy. Some investors made lots of money over the last five days thanks to positive thinking about these three health-care stocks that saw humongous gains.
Optimism from Morgan Stanley
Analysts at Morgan Stanley must have read Peale's book. On Tuesday, the investment firm upgraded Infinity Pharmaceuticals (NASDAQ:INFI) to "overweight" and set a new price target of $47 per share. Infinity shares responded by jumping nearly 18% for the week.
What sparked Morgan Stanley's glowing endorsement? The main reason seems to be Infinity's experimental PI3K inhibitor IPI-145. Infinity reported positive results from its phase 1 trial of IPI-145 targeting treatment of blood cancers back in December. The company plans to advance the drug into phase 2 studies for this indication in 2013. Infinity also has mid-stage trials either planned or in progress for IPI-145 in treating asthma and rheumatoid arthritis.
Such exuberance might seem a little on the irrational side. However, my guess is that Morgan Stanley and others are probably looking at the success that other companies have had with kinase inhibitors. Privately held Calistoga Pharmaceuticals was snatched up by Gilead Sciences (NASDAQ:GILD) in 2011 based on early success with its PI3K inhibitor CAL-101. Pharmacyclics (UNKNOWN:PCYC.DL) has seen shares surge more than 65% over the past three months on good news with its Bruton's tyrosine kinase inhibitor, ibrutinib.
Celldex (NASDAQ:CLDX) shares popped 13% this week. There wasn't really any news from the company this week; instead, the nice gains appear to be a continuation from momentum that started last week.
A Valentine's Day announcement had Celldex investors feeling good about prospects for the company's experimental drug CDX-301. A phase 1 study of the drug in hematopoietic stem cell transplantation yielded positive results. Volunteers in the study who took CDX-301 experienced large increases in CD34+ and dendritic cells, findings that bode well for improved transplant outcomes.
Celldex also has other potential winners that are farther along in development. In November, the company announced positive phase 2 results for rindopepimut in treating EGFRvIII-positive glioblastoma. It also released good results in December from a phase 2 study of CDX-011 in treating breast cancer.
More happy thoughts
Another investment firm had happy thoughts this week, too. Mizuho upgraded Questcor Pharmaceuticals (UNKNOWN:QCOR.DL) from "neutral" to "buy" and raised its price target to $41 per share. Questcor's shares were up 8% for the week.
Mizuho indicated that it sees less reason to worry about on-going reimbursement of Questcor's Acthar gel. The firm also notes improving fundamentals with Questcor. The Street Ratings joined in as well, upgrading Questcor from "hold" to "buy" based on several performance metrics.
Some have speculated that insurers would clamp down heavily on reimbursements for Acthar. Fears that this could happen caused Questcor's shares to plummet last September. The stock has climbed back somewhat but is still more than 80% lower than the high hit in July.
Curb your enthusiasm?
Do investors need to curb their enthusiasm somewhat after a great week? I would say that might be prudent for Infinity. After all, the excitement is over phase 1 results. Plenty could still go wrong for Celldex, too. It's not that both companies don't have solid potential. They do. But it's still early in the game.
What about Questcor? It's one of the most debated names in biotech. Naysayers think insurance companies will ultimately quit covering the drug. They also point to possible fallout from a government investigation. Others say the stock is way under-priced and could generate fantastic gains for steadfast investors.