I'm all for big jumps in the price of drug stocks when positive clinical trial data is revealed. That's the fun of investing in -- and writing about -- drug companies. But sometimes, I think investors just don't read the press releases.
Last February, the companies stopped a similar phase 3 liver cancer trial; Nexavar was working so well that the companies decided to get their control subjects off placebos and onto the real drug. Everyone got a look at the data at the ASCO conference in June, so there was little doubt in my mind that a clinical trial in a different population would have the same result.
The best news I can derive from the press release is that the Nexavar should have no problems getting approved in Asia; the purpose of the study was to ensure that the drug also worked in Asia-Pacific patient populations. While I guess there was a chance that Nexavar might prove less effective there, the drug's high chance of success in other populations should have been priced in well before the trial results were announced.
The trial results will add a few more countries in which Onyx and Bayer have a head start over rival Pfizer's
Onyx set a 52-week high today, even though the good news wasn't all that new. After the recent dearth of FDA approvals, investors may be flocking to a drug that's nearly certain to get the agency's thumbs-up. Expanding Nexavar's label to include liver cancer will certainly help Onyx get into the black, but clinical trials in non-small-cell lung cancer and breast cancer will be where Onyx lives and dies. Those larger markets have the possibility of making Nexavar a cash cow, and their trial results will likely drive Onyx's stock price over the next few years.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a recommendation of the Inside Value newsletter. The Fool's disclosure policy works every time.
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