Always one of the more exciting sectors to play for the speculative potential or raking in huge gains based on catalyst and event-driven spikes, it's already been a big week for the healthcare sector.
Here's some of the highlights and a few stocks to keep an eye on ...
The drama surrounding the long-expected and much-anticipated GlaxoSmithKline (NYSE:GSK) buyout of Human Genome Sciences (HGSI) is finally coming to a close. After months of posturing by both companies, Glaxo finally upped its bid to three billion dollars for HGSI ($3.6 billion before cash and debt is considered), up from the original $2.6 bid of earlier this year. As a result of the revised offer, Human Genome shares were up by nearly five percent at the open of the new trading week to come in line with the valuation of the new offer.
Given the longstanding partnership between these two companies, centered mainly around HGSI's lupus drug Benlysta that was approved last year and was then quickly commercialized by GSK, the consummation of this marriage should come as no surprise. For years speculation often drove the HGSI share price higher or lower as the buyout rumors continuously hit the wires.
The only real surprise was the hostility that emerged between the partners after the first buyout offer of $2.6 billion was announced. That's just proof-positive that in the world of big business, you've got partners, but not friends.
Some investors will not be happy about the buyout price. Although slow to gain sales momentum to date, Benlysta is expected to eventually hit blockbuster status, being the first FDA approved treatment for lupus to hit the street in over fifty years. That, combined with the rest of the Human Genome pipeline, has many investors that bought-in when HGSI surged to over twenty dollars following the Benlysta approval wondering if they got cheated.
Naturally, when such investor concerns are evident, the lawyers start smelling a payday. At least one firm has announced that it is looking into the allegedly questionable "fiduciary duty" of the Human Genome board.
As usual, don't expect anything to materialize from a class action suit, but be happy with the gains realized by those who loaded up for below seven bucks earlier this year.
There's nothing wrong with a quick double.
Gilead Sciences (NASDAQ:GILD) is not just making headlines because its share price has rapidly accelerated to the mid-fifty dollar range from below forty, but the company just received historic word from the FDA that the company's once-daily orally-taken drug Truvada has been approved for HIV prevention in uninfected adults. Truvada is already the most-prescribed antiretroviral in the United States, having been on the market since 2004 as an HIV treatment, but the latest approval could boost revenue even further.
In order to portray the appropriate messages in conjunction with the approval, the official word from the company is that Truvada can reduce the chances of HIV infection "in combination with safer sex practices."
So let's not get too carried away, protection is still key, but this is nonetheless a historic move by the FDA.
Given the wide-stretching implications of the approval, Norbert Bischofberger, PhD, Executive Vice President, Research and Development and Chief Scientific Officer of Gilead Sciences noted that:
“Today’s decision is the culmination of almost 20 years of research involving investigators, academic and medical institutions, funding agencies and nearly 20,000 trial participants around the world, and Gilead is proud to have been a partner in this effort. This advancement in the field of HIV prevention was made possible due to the leadership and commitment of the FDA and the Department of Health and Human Services to reduce the number of new HIV infections in the United States and worldwide.”
Gilead has proven a huge winner over the course of the last year, both in terms of share price gains and the continued historic advances of its HIV-treating pipeline.
Also noteworthy ...
Dendreon Corp (NASDAQ:DNDN) is slated to report earnings at the end of the month. Even with a seven percent price spike on Monday, shares are still trading for under seven bucks and could be positioned to run even further, should any encouraging trends of Provenge sales growth emerge from the upcoming report.
Worth keeping an eye on this one at the current prices as both a potential rebound play and - as is often the case in this sector today - as a potential buyout play.
Amarin Corp (NASDAQ:AMRN) also continued its upward trend on Monday as the pre-FDA decision run-up takes full effect this week. The buyout talk is heavy surrounding this company as it's widely expected that the FDA is going to approve AMR-101 for the treatment of high triglycerides, based on very solid Phase III data. Still one to watch with an additional move higher likely.
Spectrum Pharmaceuticals (NASDAQ:SPPI) also continued its own move higher on Monday in anticipation of the company's upcoming earnings release. As previously mentioned, as well, Spectrum is a huge "short squeeze play," and it's possible that we've only seen the beginning signs of that squeeze.
Lpath, Inc (LPTN.OB) is another one that opened the week strong, moving higher by over two percent on strong volume in anticipation of the re-start of the company's Phase II trials for its lead drug candidate. Previous comments from the company have indicated that the trials could pick up again as early as August, an expected catalyst that could drive shares higher by as much as thirty percent, assuming shares can rebound to the point where they traded before the trial halt. Lpath also has the backing of a Pfizer (NYSE:PFE) partnership, adding intrigue to the potential of this pick.
Disclosure: Long LPTN.