Friday's U.S. Top Gainers Have A Biotech Flavor

by: Jessica King Holden

It's likely too soon to call 2012 the year of the biotech resurgence, but it is tempting. There are the solid success stories like that of Regeneron's (NASDAQ:REGN) Eylea launch and its stock up over 150% YTD. Next, there is the excited speculation over progress and approval of obesity drugs from Vivus (NASDAQ:VVUS), Arena (NASDAQ:ARNA) and Orexigen (NASDAQ:OREX) which has kept volatility flowing and given the sector more exposure. Added to that, we have the talk of unsolicited bids by big pharma for the likes of Ilumina's (NASDAQ:ILMN) gene sequencing ability and Human Genome Science's (HGSI) lupus drug Benlysta. Riding the wave of success, Friday's close has a decided biotech flavor. Arena Pharmaceuticals, Synergy Pharmaceuticals (SGYPW) and Jazz Pharmaceuticals (NASDAQ:JAZZ) so far have made the list of U.S. top gainers Friday.

Arena Pharmaceuticals continued to ride the wave of obesity drug excitement. The stock was up over 24% at press time. The company's obesity drug, Lorcaserin, has been the source of high speculation concerning its potential for approval and the stock has responded with appropriate volatility. In anticipation of the FDA Advisory Committee Meeting upcoming May 10th, look to see even more volatility. This is certainly a highly speculative area that could be soar or crash and burn for ARNA. As a small cap, the upside is potentially enormous. For every expert that believes in its approval by the PDUFA date June 27th, there seems to another who seriously doubts success. If you are into speculation in your portfolio and like what the FDA had to say about Vivus' Qnexa already this year, it may be time to take a gamble on ARNA heading into May.

Synergy Pharmaceuticals is another smaller cap that was up over 20% today. The company specializes in GI diseases and disorders. Its lead drug, Plecanatide, in Phase IIb/III clinical trials, treats Chronic Idiopathic Constipation. The company uplisted to the Naadaq recently. Brean Murray has issued a one-year $13 price target on the stock. As it has reached the halfway point of its Phase II/III trial for Plecanatide, it is coming to the point where it could start to see positive and eventually financial attention. This is one to keep an eye on.

Jazz Pharmaceuticals, in my opinion, looks to be the most stable mover of the bunch. After hours gains shot the stock up early on news of its acquisition of privately held EUSA and its FDA approved Erwinaze, a drug for the treatment of leukemia and it never looked back. The stock was up nearly 17% as of press time. Jazz expects to add $210-230 million and an EPS of $0.75-0.85 from sales of this drug.

The concern over this money making biotech was its ability to diversify away from Xyrem for the treatment of narcolepsy. Label extensions for the revenue generating drug look bleak. To bolster business, Jazz picked up 10 CNS and female health revenue generating drugs from the acquisition of Azur Pharmaceuticals in early 2012. Now adding another successful drug to expand its offerings has the market taking notice. Jeffries today announced an increased one-year price target at $74. Admittedly, Jazz's pipeline still needs boosting, but for now the moves made already in 2012 are impressive. With nearly a $3 billion market cap, the potential and stability of Jazz makes this a buy for many. Trading today at around $52, with good business sense and a host of drugs which produce revenue, Jazz is a good move that still has room for growth long term.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in JAZZ over the next 72 hours.

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