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3 Humongous Health-Care Stocks This Week

By Keith Speights - Apr 20, 2013 at 6:30AM

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Looking for good news in a time of turmoil? Here are three stocks that produced plenty of good news this week.

Even with overall markets experiencing some jitters this week, several health-care stocks had spectacular results. Here are three of the most humongous health-care performers over the past five days.

How does a 60% gain in one day sound? The stock chart for Vertex Pharmaceuticals (VRTX 0.05%) shows a nearly vertical line this week, as that one-day increase had shares jumping 53% for the week.

All of this exuberance stemmed from very positive results from Vertex's phase 2 study of experimental drug VX-661 and currently marketed drug Kalydeco. The company reported on Thursday that the combination of the two drugs produced significant improvement in lung capacity for adult patients, with the most common gene mutation related to cystic fibrosis.

The solid results bode well for Vertex, as it hopes to move into late-stage studies for VX-661. The biotech received FDA approval for Kalydeco in treating another cystic fibrosis mutation last year. Vertex also has another drug targeting the disease, VX-809, in a phase 3 study.

Breathing easier
Shares of Theravance (NASDAQ: THRX) popped 34% this week. The nice gains came after Theravance and partner GlaxoSmithKline (GSK 0.56%) announced that the FDA's Pulmonary-Allergy Drugs Advisory Committee voted 9-4 to recommend Breo Ellipta for approval.

Breo Ellipta is administered once daily via inhaler for the treatment of chronic obstructive pulmonary disease, or COPD. Glaxo already claims a blockbuster COPD drug, Advair, which also is used in treating asthma. However, Advair lost U.S. patent exclusivity in 2011. No generic rivals have yet emerged, but Breo Ellipta could help bolster sales for Glaxo when they do. Theravance stands as the big winner, with only one product currently on the market.

The advisory committee's recommendation isn't binding, so the FDA could still ultimately turn down approval for Breo Ellipta. However, a positive recommendation with a solid majority in favor certainly doesn't hurt its chances.

Cause for cheer
(ALKS -3.24%) shareholders were happy campers this week. The stock jumped 25% on encouraging mid-stage study results of experimental drug ALKS 5461.

The study found that ALKS 5461 significantly reduced depressive symptoms in patients with major depressive disorder, or MDD. Maurizio Fava, M.D., director of the Depression Clinical and Research Program at Massachusetts General Hospital and Slater Family Professor of Psychiatry at Harvard Medical School, said that the results were "among the most robust I have seen in a phase 2 study for depression in the past two decades."

The company plans to meet with the FDA about moving the drug into a late-stage study. If ultimately approved, Alkermes should be able to achieve commercial success with ALKS 5461. More than 16 million Americans suffer from MDD. Some analysts project that the drug could hit peak annual sales exceeding $500 million.

Spectacularly humongous
All three of this week's winners have outstanding prospects. If I had to pick only one right now, though, I would go with Theravance.

My primary reasoning is based on probability. Theravance just received a nod from an FDA advisory committee and has only one other big hurdle to pass. I also see a reasonable chance that Glaxo might decide to acquire its smaller partner at some point in the future. The odds look to be in Theravance's favor, in my view.

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Stocks Mentioned

Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
$268.48 (0.05%) $0.13
Alkermes plc Stock Quote
Alkermes plc
$28.35 (-3.24%) $0.95
GlaxoSmithKline plc Stock Quote
GlaxoSmithKline plc
$45.00 (0.56%) $0.25

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

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