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.
Good, bad, and ugly
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.
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.
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.
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.