A great week for the overall market didn’t trickle down to every stock. Here are three of the most horrendous health-care stocks this week.
Not so merry
As is often the case with small pharmaceutical companies, the culprit was the sale of new shares. On Wednesday, Merrimack Pharmaceuticals Inc (NASDAQ:MACK) announced a secondary offering to sell $50 million of new stock and plans to issue $75 million in senior notes maturing in 2020. Those numbers changed the following day, though, when the company announced that it would instead sell $25 million worth of shares and issue senior notes of $125 million.
The initial figure represented potential share dilution of around 10%, with the revised number half as large. Merrimack Pharmaceuticals Inc (NASDAQ:MACK) plans to use the cash it raises primarily to fund development and to seek regulatory approval for its pancreatic cancer drug MM-398.
In the stock market, the old saying that “sticks and stones may break my bones, but words can never hurt me” doesn’t hold water. GTx, Inc. (NASDAQ:GTXI) investors experienced that reality firsthand this week, with shares dropping 15% from an online article published on Wednesday.
The Street’s Adam Feuerstein wrote about why a fund manager he knows is shorting GTx, Inc. (NASDAQ:GTXI) stock. This fund manager has accurately predicted negative clinical results for other biotech stocks recently. Investors quickly dumped shares of GTx, Inc. (NASDAQ:GTXI) in response to the article.
Wedbush responded to the article the next day, calling the criticisms of the phase 2 study of GTx, Inc. (NASDAQ:GTXI)’s Enobosarm “unfounded.” Wedbush analyst David Nierengarten said, “While we usually do not respond to a journalist repeating a short-seller’s thesis on a covered stock, the 25% drop intraday compels us to respond.” The firm reiterated its outperform rating on GTx, Inc. (NASDAQ:GTXI) and its price target of $9 per share.
Down on da Vinci
Long a health-care technology darling, the market doesn’t feel the love so much these days for Intuitive Surgical, Inc. (NASDAQ:ISRG). Shares fell 15% this week after the company announced disappointing preliminary second quarter numbers.
Sales for Intuitive Surgical, Inc. (NASDAQ:ISRG)’s da Vinci robotic surgical systems declined around 6% in the last quarter compared with a year ago. The company attributed the drop to “increased economic pressure on hospitals” and to “moderating growth” in benign gynecologic procedures. Intuitive Surgical, Inc. (NASDAQ:ISRG)’s statement that the slowdown in gynecologic procedure growth is due to “a trend by payers toward encouraging conservative management and treatment in outpatient settings” caused lots of eyebrows to rise.