How would you like to make a 27%-plus return on your investment -- within one week? Shareholders in three health-care companies enjoyed such gains this week. Here are the three humongous winners.
Short-sellers have placed their bull's-eyes on Questcor Pharmaceuticals (UNKNOWN:QCOR.DL) for a while. Speculation that its Acthar gel will lose reimbursement has made Questcor one volatile stock. This week, though, the company took some wind out of the short-sellers' sails with a blowout earnings report. Shares soared more than 30% for the week.
To put into perspective just how good Questor's second-quarter numbers were, consider that the most optimistic analyst polled by Thomson Reuters expected that earnings would come in at $1.18 per share. Questcor's actual earnings were $1.35 per share. Now that's what you call an earnings beat.
Questcor continues to expand sales for Acthar by targeting new indications. The company reported tremendous results from its launch into rheumatology. Next up is going after the pulmonary market.
Christmas in August
Synta Pharmaceuticals (NASDAQ:SNTA.DL) played the role of Santa Claus (or maybe Synta Claus?) with a nice gift to shareholders this week. The company's shares jumped 27% on positive results from a phase 2 study of cancer drug ganetespib .
The clinical study, known as ENCHANT-1, focused on evaluating ganetespib in treating patients with newly diagnosed locally advanced or metastatic HER2-positive or triple-negative breast cancer. Two patients achieved objective tumor response and three achieved stable disease after taking ganetespib. These results were more than satisfactory to warrant moving ahead with further enrollment.
ENCHANT-1 is one of more than 20 clinical trials for ganetespib. The study farthest along right now is a phase 3 trial for the drug combined with docetaxel as a second-line treatment of non-small-cell lung adenocarcinoma.
Thank you, Uncle Sam
It's been an up-and-down year for eHealth (NASDAQ:EHTH). In March, the stock was down by more than 45% year to date. "Up" was the word for this week, though. Shares surged more than 27% thanks to a little help from Uncle Sam.
After more than a year of hard lobbying to sell insurance plans participating in Obamacare health-insurance exchanges, eHealth finally won a contract this week with the Centers for Medicare and Medicaid Services, or CMS. The Obamacare exchanges, scheduled to launch in October, have taken a lot of heat from inside and outside the federal government because of missed deadlines. Now, eHealth could be riding to the rescue.
While the current deal with CMS allows eHealth to only market insurance plans that participate in the federally operated health exchanges, it's still a tremendous victory for the company. With this win, eHealth is pushing hard to pick up business from some of the state exchanges.
Best of the best
My view is that Synta should do well with ganetespib. I wouldn't be surprised to see the stock climb to above $10 per share from its Friday closing price of $6.43 over the next year or so.
I'm a little more reserved on eHealth, but only because I'm not sure how many individuals will actually purchase Obamacare insurance plans. If optimists are correct, eHealth shares should keep marching upward. For now, my stance is to wait and see.
Synta and/or eHealth could do well, but Questcor stands out as my favorite of this week's humongous performers. The company isn't dependent on how well clinical trials go, as Synta is. Questcor's success has been achieved by solid execution of a smart business model.
Even with this week's huge gains, Questcor's price/earnings-to-growth, or PEG, ratio stands at only 0.58. That's really low. If Acthar sales continue to grow as I suspect they will, this stock still has plenty of room to run.