Looking for the sector where investors have flourished this year? Look no further than biotech, which has beaten the market's substantial year-to-date gains in 2013 and hasn't slowed down all year. The Nasdaq Biotechnology Index continued its march higher this week by picking up another 0.9%, adding to year-to-date gains of around 49%.
A few big winners blew away investors this week, but biotech's a volatile sector: There were the markets' share of big losers here as well. Let's catch up on this week in biotech.
Investors jump on way-too-early data
Alnylam Pharmaceuticals (NASDAQ:ALNY) put in a strong showing for investors this week, with shares gaining nearly 12% over the past five days. The company develops therapies based on RNA interference, and the company announced earlier this week that its treatment for TTR-mediated amyloidosis (ATTR), ALN-TTRsc, succeeded in a phase 1 trial. The drug reduced specific protein levels by 94% in the trial and was well tolerated in the patient group, according to the company.
Any biotech investor knows that phase 1 trials are still too early to count on a drug's success, but Alnylam intends to kick the drug up to a mid-stage trial by the end of the year. If that succeeds, it's on to late-stage studies some time next year. It's a process to watch for investors over the course of 2014, but for now, Alnylam's shares are soaring because of the data. Considering that the stock's up 250% year to date, it's safe to say that shareholders are patting this company on the back because of its progress in 2013.
Still, Alnylam had nothing on this week's big riser, Celldex Therapeutics (NASDAQ:CLDX). Celldex's stock roared up by more than 24% over the past five days. It wasn't so much science that sent shares soaring, but opinion: Leerink Swann boosted the stock's price target from an earlier $28 to $45, maintaining an "outperform" rating for the stock.
Leerink's rationale is the company's cancer therapy CDX-1127, which it cited as having significant upside. However, CDX-1127 hasn't even reported phase 1 trial data yet. Forget Alnylam shareholders jumping the gun -- Celldex hasn't even gotten that far. The stock's erupted by gaining more than 400% year to date, but this week's boost is a clear-cut case of the biotech sector's volatility. Keep an eye on the long-term and stay patient with Celldex: Don't base your investing decisions on simple upgrades or price raises.
On the other side of the market, Clovis Oncology's (NASDAQ:CLVS) shares nosedived this week by 18.7%. The company's developing ovarian cancer drug rucaparib, which is in early-stage trials, but Clovis is reportedly in pursuit of finding a buyer -- something that would certainly please investors. What's the catch? Clovis reportedly hasn't been able to find any buyers in its search, according to Bloomberg. Fellow analyst Sean Williams has pointed out that Clovis' small, early-stage pipeline and high valuation make it a lackluster acquisition target for Big Pharma or larger biotechs, so investors may be left waiting on this stock.
Clovis' fall didn't match Nektar Therapeutics' (NASDAQ:NKTR) nearly 24.5% drop this week that came after the company reported disappointing mid-stage data for its chronic pain medication NKTR-181. Nektar's collaborated with larger pharmaceutical and biotech firms in the past to develop drugs that have reached approval, and investors should take heart despite the disappointment: Even though NKTR-181 didn't work any better than a placebo in the study, patients still welcomed pain relief -- and at least one analyst from Cowen and Co. projects that the company will manage to win approval for the drug in the long term. Considering that Nektar also receives considerable royalties from its past partnerships already, this could even be a buying opportunity for savvy investors, rather than a reason to abandon ship on the stock.