While the overall hot streak for health care continues unabated despite the latest signs of a pullback in the broader market, not every health-care stock is prospering. Here are three of this week's most horrendous performers.
Amarin (NASDAQ:AMRN) just can't seem to catch a lucky break these days. Its shares sank nearly 25% this week on another negative decision by the U.S. Food and Drug Administration affecting the company's fish-oil drug Vascepa.
The company announced on Tuesday that the FDA denied Amarin's appeal of the agency's rescission of a Special Protocol Assessment for Vascepa. Amarin held a sliver of hope that the earlier decision would be overturned and clear the way for Vascepa to be marketed to the large group of Americans with high, but not extremely high, triglyceride levels. That friendly folks at the FDA dashed that hope.
Is Amarin now destined to move forward with a lengthy outcomes study? Probably -- but the company isn't giving up on changing the FDA's mind just yet. Amarin plans to appeal the latest decision. There's also the possibility fellow Fool Brian Orelli put forward recently that the FDA could allow Amarin to include results from its clinical study of moderate triglyceride levels in the packaging without receiving official approval for the expanded indication.
At one point last week, shares of Agios Pharmaceuticals (NASDAQ:AGIO) were up 83% for the year. The stock is still up considerably year to date, but not nearly as much after dropping 21% this week.
Investors' excitement kicked into high gear as Agios presented at the J.P. Morgan Healthcare Conference on Jan. 13. Agios is working on several cancer drugs, most notably AG-221, which inhibits mutated IDH2 proteins. The stock pullback doesn't appear to be related to any concerns about the potential for Agios' pipeline, though. Part of the decline could just be that the glow from the J.P. Morgan conference is fading a bit.
There was another bit of news for Agios this week. Company Senior Vice President Glen Goddard sold 10,000 shares for a little over $347,000. That's a relatively insignificant amount in the big scheme of things, but some traders head for the exits when they see insiders selling.
Short and not-so-sweet
One of the high flyers of the second half of 2013 lost some altitude this week, as 3-D bioprinting company Organovo Holdings (NASDAQ:ONVO) slipped 18% following the posting of an "urgent trading warning to the public" by short-seller Citron Research.
Citron's warning focused primarily on alleged improper "cold calling" by Japanese firm Kanagawa Associates to encourage Swedish investors to buy Organovo stock. Citron also expressed concern about Organovo's high valuation with low institutional ownership and sparse analyst coverage.
It should be noted that Citron Research didn't direct its allegations against Organovo itself. And despite several accurate predictions of doom and gloom for stocks along the way (helped by Citron's own announcements), the short-seller's track record includes some misses. Last February, Citron attacked another 3-D printing company, 3D Systems (NYSE: DDD), calling it a "bubble stock." Since then, that so-called bubble stock has soared more than 80%.
An investor's view
If you're a trader, letting go of a stock because of an adverse FDA decision, insider selling, or a short-seller attack makes sense. If you're an investor, though, a quick reaction isn't always the best move. For investors, all three of these stocks could have potential over the long run.
It might take a few years, but Amarin should still have a reasonable chance of gaining approval for Vascepa in treating more moderately high triglyceride levels. Agios' cancer drugs could prove to be big winners in the not-too-distant future. And Organovo's bioprinting technology could eventually revolutionize medicine.
Of course, all three companies could also stumble along the way. However, the horrendous stocks of today could become the humongous stocks of tomorrow.