What a week for health-care investors! At least 17 health-care stocks experienced gains of more than 20% over the past few days. But three of those went up a lot more than just 20%. Here are the three most humongous health-care stocks of the week.
Up, up, and away
On Jan. 3, tiny Intercept Pharmaceuticals (ICPT) traded just over $69 per share. By end of day this past Thursday, the stock was up nearly 300%. By the end of the week, Intercept had gained a staggering 545%. That's right -- this stock was a six-bagger in just seven days.
Where did all of this exuberance come from? A phase 2 study of Intercept's obeticholic acid targeting treatment of nonalcoholic steathohepatitis, or NASH, produced results so positive that the data safety monitoring board recommended that the trial be stopped early. The unexpected news led to multiple investment firms hiking price targets for Intercept -- with the stock literally skyrocketing in response.
Investors' excitement is directly linked to the current situation for NASH. More than 6 million Americans suffer from the liver disease that can ultimately lead to cirrhosis -- even though patients drink little or no alcohol. There are currently no approved drugs for the disease. Should Intercept ultimately gain approval for obeticholic acid, that's a big untapped market.
Picking up where it left off
Back in September, Neurocrine Biosciences (NBIX -0.87%) hit a rough spell. Shares plummeted after disappointing results from a phase 2b study of tardive dyskinesia drug NBI-98854, which ultimately cut Neurocrine's market cap in half. This week, though, shares came roaring back with Neurocrine gaining over 98%.
The catalyst was the same thing that led to the stock collapse a few months ago -- a phase 2b study for NBI-98854 in treating tardive dyskinesia. This time around, though, Neurocrine had its ducks in a row on reducing the potential for the placebo effect to call the efficacy of NBI-98854 into question. A better study design led to better results.
While the latest news certainly got Neurocrine back on track, the company still must move forward with a late-stage study. It remains to be seen how NBI-98854 will fare in a larger trial, but at least Neurocrine knows now how to avoid the mistakes from earlier in 2013.
Proof positive
Clinical-stage biopharmaceutical firm Epizyme (EPZM) announced good results from a phase 1 study. The market liked what it heard -- shares soared almost 97% for the week.
Normally, an early stage study wouldn't make that big of a difference. But the results for Epizyme's acute leukemia drug EPZ-5676 earned the company a $25 million proof-of-concept milestone payment from partner Celgene (CELG). That puts Epizyme in a considerably better cash position than previously forecasted.
Epizyme's positive results could conceivably attract even more interest from Celgene. The company has made several acquisitions in the past that have helped make it one of the best big biotechs around. One of the keys for Celgene's continued success is in making more smart investments. Epizyme just might fit that bill.
Going even higher
It probably sounds crazy to some, but Intercept just might have the most room to run higher out of all three of this week's humongous health-care stocks. Yes, there will likely be a lot of volatility in the stock. And there are plenty of risks. However, the market potential assuming Intercept ultimately wins approval for obeticholic acid is big enough to support a higher valuation even after this week's massive gains.
Having said that, I do like Epizyme's potential. Celgene appears to have chosen wisely in partnering with the smaller company. Neurocrine, likewise, could have a bright future if phase 3 testing of its tardive dyskinesia drug goes well. Any of these three stocks could continue to produce wins for investors. Just don't expect a repeat of this week's amazing runs.
