In a way, stocks go through seasons like the weather. Sometimes they spring forth, sometimes they're hot like summer, sometimes they're dormant and cold like winter. And sometimes they just fall. "Fall" was the operative word for quite a few health-care stocks over the past few days. Here are the week's most horrendous performers.
Bad AIMS
At the bottom of the leaf pile (and therefore first on our list) is Neurocrine Biosciences (NBIX +3.92%). Neurocrine's stock dropped 34% this week on disappointing mid-stage clinical results.
The company announced the results from a phase 2 study of experimental drug NBI-98854 in treating tardive dyskinesia. The disorder manifests itself through involuntary body movements. Neurocrine's primary endpoint for the study was improvement in the Abnormal Involuntary Movement Scale, or AIMS, after six weeks. This scale enables physicians to track the severity of tardive dyskinesia in patients. Unfortunately for Neurocrine, the 50 mg dose of NBI-98854 didn't enable patients in the study to significantly improve their AIMS assessment.
There was a little bit of good news in that patients who took a 100 mg dose of the drug did see improvement at week two. Neurocrine plans to move forward with testing the higher dosage. The company is also partnering with AbbVie (ABBV 0.29%) on a phase 3 study of elagolix in treating endometriosis and another phase 2 study for the drug in treating uterine fibroids. AbbVie and Neurocrine anticipate announcing the late-stage results in the third quarter of 2014.
Expectations game
ChemoCentryx (CCXI +0.00%) found itself on the losing end of the expectations game this week. Shares plunged 25% after the company announced top-line interim phase 2 results for experimental drug CCX140.
The study focused on the use of CCX140 in treating diabetic nephropathy, which is also known as diabetic kidney disease. ChemoCentryx hoped to find significant reduction in levels of proteinuria (protein in the urine) and hemoglobin A1c, or HbA1c, both of which are elevated in patients with diabetic nephropathy. The findings did show a 12% reduction in levels of proteinuria. However, that improvement wasn't as great as the 20% reduction that ChemoCentryx had earlier said would be a benchmark of success.
This marks the second big setback for ChemoCentryx in just three weeks. In August, its partner, GlaxoSmithKline (GSK +2.13%), announced that experimental Crohn's disease drug vercirnon failed to meet its primary endpoint in the first of four late-stage studies. That failure resulted in ChemoCentryx losing nearly half of its value. The latest CCX140 news just adds fuel to the fire.
Downward pull of gravity
Gravity took its toll on shares of Avanir Pharmaceuticals (NASDAQ: AVNR) this week -- literally. The stock fell 30% after a report chock-full of allegations was posted online by Gravity Research, which has a short position in Avanir.
Listed among the potential issues for Avanir were alleged illegal off-label marketing of Nuedexta, a perceived likelihood of losing a patent case over the drug, and possible financial difficulties. Gravity Research stated that Avanir was "doomed to fail as a company within the next two years."
As you might expect, Avanir didn't take kindly to the negative blast from the short-seller. Investment firm Summer Street Research contacted the company's management team, which "vehemently" denied the allegations made by Gravity Research. Summer Street subsequently reiterated its buy recommendation for Avanir with a one-year price target of $17 per share.
Seasons change
All three of this week's horrendous stocks could be in store for a long wait for a more pleasant season to arrive. ChemoCentryx's double-whammy in a matter of weeks probably gives it the biggest challenge to overcome.
As for Avanir, its outlook for success depend on how effectively the company defends itself. There have been past examples of this type of attack from a short-seller go down in flames as the allegations are proven to be overblown. On the other hand, if doubts linger in the minds of investors, there can be a longer-term impact on the stock.
Good news from the elagolix late-stage tests could help Neurocrine bounce back. However, those results are a year in the future. For now, I look for the stock to experience a bit of winter after its fall. Maybe positive results in 2014 and a strong partnership with AbbVie can help Neurocrine spring forward down the road.
