Healthcare is the most happening industry these days with new drugs on the line and investors injecting cash into companies with greater speculative growth. The year 2013 was very encouraging for small cap biotech companies. The growth prospects of these companies were way more than the pharmaceutical giants, which is why investors trusted these companies with their cash. I saw a number of biotech stocks experience rapid escalation in their stock prices this year. But the best of all was Clovis Oncology Inc (NASDAQ:CLVS).
Cancer treatments on the rise
At the beginning of this year, the stock price of Clovis was around $16. Now it stands at a majestic $75.72 mark after bagging possibly the largest gain of over 300% among the biotech stocks this year. This uplift is majorly attributed to the successful clinical trial results of the company’s product candidate CO-1686.
Clovis Oncology Inc (NASDAQ:CLVS) is biopharmaceutical company with its prime focus on oncology. Its CO-1686 is a potential treatment for NSCLC, a kind of epithelial lung cancer. CO-1686 targets both the initial activating EGFR mutations as well as the main resistance mutation T790M. Thus, it has the ability to treat NSCLC both as first line or second line therapy.
The data that it presented at ASCO most recently showed that patients were responding to CO-1686 compound. The use of this compound also showed a significant shrinkage in tumor at various organ sites, including the liver and brain. Similarly, data presented regarding the second potential candidate of the company, rucaprib has also gained a lot of appreciation. The Phase I trials of this ovarian and breast cancer treatment compound showed that 89% of its users experienced clinical benefits. This news majorly helped the company stock to rise beyond all limits and its market cap stretched to over $2 billion.
Another advantage that Clovis Oncology Inc (NASDAQ:CLVS) holds over its competitors is that even though the NSCLC candidate CO-1686 competes with approved drugs like Tarceva and Iressa, still it has fewer side effects. CO-1686 offers superior efficacy due to the activity against T790M resistance movement and avoids skin rash and gastro intestinal toxicities associated with its counterparts.
As both of these drugs are still in Phase I/II clinical trials, it would take them some years to gain FDA approval. Because of this, I believe the company has bright future growth prospects.
Other major gainers
Cytokinetics, Inc. (NASDAQ:CYTK) is another company that gained over 200% in 2013. Its strategic collaboration with Amgen for the drug called Omecamtiv Mecarbil is a therapy for the treatment of heart failure. The company was invited to present results from its Phase 2 heart disease study at a well-known European event. A number of people there considered that its experimental drug for acute heart failure is working. Other than that it also has another drug in the phase II clinical trials known as Tirasemtiv for the treatment of ALS. In the case of Omecamtiv Mecarbil, Cytokinetics, Inc. (NASDAQ:CYTK) will only receive royalties from Amgen, but Tirasemtiv will prove to be its main revenue driver in a few years. Similarly ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is also one of the 200%-plus gainers. The stock is due to the respond to data for its psychosis drug, pimavanserin, which is used for the treatment of Parkinson’s disease. The company proved through clinical trials that pimavanserin helped in the reduction of psychotic events. Moreover, in March this year, the company disclosed that Phase 3 trials would not be required for the drug, which indicates that the company is now waiting to get FDA approval. Thus, I believe that its stock still has a margin to go up once it is ready for the FDA approval.
Final assessment
I would like to see how Clovis Oncology Inc (NASDAQ:CLVS) is going to perform until the end of next year. The company has the potential to grow more, and once its leading components, i.e. CO-1686 and rucaprib, come near to getting FDA approvals, the company should once more soar in to the skies.
usman iftikhar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. usman is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Three Healthcare Companies to Watch Out For originally appeared on Fool.com and is written by usman iftikhar.
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