This week’s list of the most horrendous health-care stocks is brought to you by the letter “S.” Just like on Sesame Street, all of the names we will discuss start with the same letter. Here are the three swiftest-sinking stocks in the sector for the week.
The check wasn’t in the mail
Genetic analysis solutions provider Sequenom, Inc. (NASDAQ:SQNM) announced its second-quarter financial results this week. Mr. Market wasn’t happy. Shares plunged nearly 30% for the week.
Sequenom, Inc. (NASDAQ:SQNM) attributed lower-than-expected top-line and bottom-line numbers to billing code changes made by the Centers for Medicare and Medicaid Services and insurance companies. As a result of these changes, payments to the company were delayed. To make matters worse, Sequenom, Inc. (NASDAQ:SQNM) switched from an outsourced billing provider to an in-house system during the quarter. The external provider didn’t collect nearly as much in payments due as was expected.
Even though Sequenom, Inc. (NASDAQ:SQNM) expects the payment delay issues to be largely resolved in the second half of the year, analysts didn’t wait long to begin downgrading the stock. Those downgrades came partly because of comments made the company made about increased competitive pressure for its MaterniT21 diagnostic tests.
The biotech stated that it plans to move ahead with submitting a New Drug Application, or NDA, for Duchenne muscular dystrophy drug eteplirsen based on phase 2 clinical data. However, the Food and Drug Administration wouldn’t commit to an accelerated approval pathway for the drug.
Uncertainties related to whether Sarepta Therapeutics Inc (NASDAQ:SRPT) will be able to gain approval for eteplirsen led several analysts to downgrade the stock. While the FDA did say that it is “open to considering an NDA” based on clinical data provided by the company, those words don’t give anyone a warm-and-fuzzy feeling.
Bracing for bad news?
Unlike Sequenom, Inc. (NASDAQ:SQNM) and Sarepta Therapeutics Inc (NASDAQ:SRPT), Synta Pharmaceuticals Corp. (NASDAQ:SNTA) didn’t announce earnings or a major decision about a drug. But its shares still sank by nearly 12% this week. What gives?
This appears to be a case of some investors bracing for bad news. Synta Pharmaceuticals Corp. (NASDAQ:SNTA) announces its second-quarter results next week on Aug. 1. With no products on the market and no significant revenue to speak of, it’s not as if anyone expects great financial numbers for the quarter. However, like other development-stage biotechs, Synta Pharmaceuticals Corp. (NASDAQ:SNTA) focuses primarily on clinical updates during its earnings conference call. My guess is that there could be jitters about what the company says.