The Motley Fool’s annual April Fools’ Day joke this year focused on the “hugest bubble in history” that is set to explode. For some health-care stocks, though, the bubble popping was no joke. Here are three horrendous health-care stocks that deflated over the past week.
Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) experienced an ugly week. Shares plunged nearly 34% since the prior week’s close.
Results from a late-stage clinical study of fostamatinib conducted by Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL)’s partner AstraZeneca plc (ADR) (NYSE:AZN) carried good and bad news. The good news was that the drug did show statistically significant improvement in ACR20, a measurement of change in rheumatoid arthritis symptoms. What’s the bad news? Fostamatinib didn’t show improvement in an X-ray test that measures the progression of of joint damage.
This isn’t the first bad news for the drug. Back in December, AstraZeneca plc (ADR) (NYSE:AZN) announced study results showing that fostamatinib wasn’t as effective as the leading rheumatoid arthritis drug, AbbVie Inc (NYSE:ABBV)‘s Humira. While AstraZeneca still has results forthcoming from two other phase 3 fostamatinib studies, it looks like the bad and ugly will win out over the good.
Skittish
Shares of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) appeared to be hit by investor skittishness about the tight competition in the hepatitis-C market. The stock fell 12% for the week.
Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) counts two hep-C drugs in mid-stage clinical trials that show promise: Sovaprevir and ACH-3102. However, the market might get somewhat crowded. Gilead Sciences, Inc. (NASDAQ:GILD) is one of the larger players aiming for success. Wells Fargo speculated that recent pressure on Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)’s stock could stem from concerns about competition, particularly from Gilead Sciences, Inc. (NASDAQ:GILD), which has multiple hepatitis C drugs in development.
Analysts think highly of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)’s prospects, though. The mean analyst target price is $15 per share, nearly double where the stock stands now. However, there’s a lot of time remaining for clinical trials — and a lot that can happen to bounce shares up and down in the meantime.
Fading halo?
Halozyme Therapeutics, Inc. (NASDAQ:HALO) saw its shares sink nearly 11% this week. There wasn’t any real news developing for the biotech, so what happened?
This appears to be a case of good news after-glow fading a bit. On March 22, the European Medicine Agency’s Committee for Medicinal Products for Human Use, or CHMP, gave a positive opinion on HyQvia. The drug, which Halozyme Therapeutics, Inc. (NASDAQ:HALO) developed with partner Baxter International Inc. (NYSE:BAX), targets treatment of primary and secondary immunodeficiencies. Halozyme’s shares soared on the good news from Europe, but have been drifting downward since then.
Fooling on
Which of this week’s three horrendous health-care stocks still might hold promise for Foolish investors? I would count Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) out. Prospects for fostamatinib don’t look great. Halozyme could regain its momentum, but to me the best best is Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN). At this point, though, the operative word is “bet.” Buying shares in development-stage biotechs can often be similar to gambling. If you can handle the risk, fool on — but cautiously.
