Health stocks soar going into Labor Day weekend; well, not everyone. Here’s my take on three big movers: Abeona, UroGen and Otonomy.

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Abeona Therapeutics Inc. (Nasdaq:ABEO) led advancing issues, soaring 57% over the week to $14.20 as of close Tuesday, Sept. 5. That huge gain resulted primarily from the US Food and Drug Administration granting “breakthrough therapy” designation for the biotech’s EB-101 gene-therapy program for treating patients with recessive dystrophic epidermolysis bullosa.

This rare genetic disease causes the skin to blister easily and can lead to serious medical problems. Breakthrough therapy designation is certainly good news, since it can speed up the drug development and approval process. The designation is especially helpful to Dallas, TX-based Abeona right now, as the company is working with the FDA to finalize the design of a Phase 3 study of EB-101. Abeona hopes to begin that study in early 2018.

While EB-101 is Abeona’s lead candidate, its experimental treatment for another rare genetic disease isn’t too far behind. ABO-102 is in a Phase 1/2 study for treating Sanfilippo syndrome type A. Abeona’s pipeline also includes one other clinical gene therapy program and seven pre-clinical programs.

Despite its massive gains last week, Abeona has a relatively low market cap of $556 million. The company isn’t tightly linked to a larger biopharma company yet, either. That could make it more appealing to big drugmakers that don’t have a strong gene therapy focus yet.

Here’s what the analysts think.

As of Sept. 1, 2017, the consensus forecast among 5 polled analysts covering Abeona advises that the company will Outperform the market. This has been the consensus forecast since the sentiment of analysts deteriorated on Aug 08, 2012. The previous consensus forecast advised investors to Buy equity in Abeona.

Share price forecast

The 5 analysts offering 12-month price targets for Abeona Therapeutics Inc have a median target of $20.00, with a high estimate of $21.00 and a low estimate of $17.00. The median estimate represents a 40.85% increase from the last price of $14.20.

Steve’s Take:

Despite its massive gains last week, Abeona has a relatively low market cap of $556 million. The company isn’t tightly linked to a larger biopharma company yet, either. That could definitely make it more appealing to the big boys that don’t have a strong gene-therapy focus yet.

This name is a Buy.

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Elsewhere, UroGen Pharma Ltd. (Nasdaq:URGN) rocketed 47% to $25.68. The Israeli clinical-stage biopharmaceutical company developing treatments to address unmet needs in the field of urology, with a focus on uro-oncology, announced that the FDA has granted “fast track” designation for the company’s lead product candidate.

MitoGel is being developed and tested for the treatment of patients with low-grade upper tract urothelial carcinoma (UTUC) not amendable to endoscopic resection or with contraindication to nephroureterectomy (removal of kidney and upper tract), including impaired renal function. UTUC refers to cancer of the upper tract, which connects the bladder to the kidney, and the renal pelvis.

MitoGel is currently being evaluated in the ongoing, single-arm, open-label, pivotal Phase 3 OLYMPUS clinical trial in patients with low-grade UTUC. There are currently no drugs approved by the FDA for the treatment of UTUC.

Non-muscle invasive upper tract urothelial carcinoma UTUC has an estimated annual incidence in the US of up to 7,500 cases–about 5% to 10% of all new cases of urothelial cancer. There are approximately 2,500 new cases of low-grade UTUC in the US with a prevalence of approximately 14,500.

Due to the specific anatomy and physiology of the upper tract and renal pelvis, the performance of organ-sparing endoscopic resection and instillation of neoadjuvant or adjuvant chemotherapy are often challenging, leading to high rates of recurrence.

No drugs are currently FDA-approved for the treatment of UTUC.

Analysts remain bullish

As of Sept. 1, 2017, the consensus forecast among 4 polled analysts covering UroGen advises investors to Buy equity in the company. This has been the consensus forecast since the sentiment of investment analysts improved on May 30, 2017. The previous consensus forecast advised that UroGen would Outperform the market.

Share price forecast

The 2 analysts offering 12-month price targets for UroGen have a median target of $29.50, with a high estimate of $32.00 and a low estimate of $27.00. The median estimate represents a 16.65% increase from the last price of 25.29.

As of Friday, Sept. 1, the company had a market cap of $329 million.

Steve’s Take:

There’s no question that UroGen’s MitoGel has serious upside potential. For the true gambling investor who can afford the risk of a major collapse due to unforeseen negative clinical data, this name fills the bill. But for the more risk-averse, because there are so many instances of a med’s unexpected failure in Phase 3 testing, I would Pass on this one until there’s new, positive clinical data that support a solid Buy argument.

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Hitting the skids, however, Otonomy Inc. (Nasdaq:OTIC) plunged 83% to $3.38 after saying it suspended developing its drug for Meniere’s disease, a chronic disorder of the inner ear, after it failed a late-stage trial. Meniere’s typically affects one ear, causing vertigo, a persistent ringing in the ear, and ultimately, permanent loss of hearing. The disease affects about 600,000 Americans. The FDA has so far not approved any specific drug for Meniere’s.

San Diego-based Otonomy’s drug, Otividex, is a formulation of an existing steroid designed to become a viscous gel upon injection, allowing for a quicker, five-minute procedure. Otividex missed the trial’s main goal of significantly reducing the number and severity of vertigo episodes over a three-month period when compared with a placebo.

A lit­tle more than two years ago, Oton­omy tried to ex­plain why it was tak­ing its failed Phase 2b drug for Ménière’s into a piv­otal study with two Phase 3 tri­als. While Otividex flunked the pri­mary end­point in re­duc­ing ver­tigo fre­quency, it managed to just barely reach the target for re­duc­ing counted ver­tigo days by the third month. So, they modified the end­points to reduce ver­tigo days and went into Phase 3, anyway.

The new approach failed, however, according to Xconomy.

The specifics: Patients on the Otonomy drug had a 58% reduction in the frequency of vertigo episodes, compared to a 55% reduction for those on placebo. The results weren’t statistically significant, and neither were the drug’s data on a variety of secondary measures calculating its impact on patients’ vertigo.

Consensus recommendation of analysts

As of Sept. 1, 2017, the consensus forecast among 6 polled analysts covering Otonomy advises that the company will Outperform the market. This has been the consensus forecast since the sentiment improved on Aug. 10, 2015. The previous consensus forecast advised investors to Hold their position in Otonomy.

Share price forecast

The 4 analysts offering 12-month price targets for Otonomy Inc have a median target of $12.00, with a high estimate of $28.00 and a low estimate of $8.00. The median estimate represents a 355.03% increase from the last price of $3.38.

Steve’s Take:

Investment in experimental drugs for hearing loss, long an untapped field in the pharmaceutical industry, may be picking up, but drugs that actually help with these disorders remain elusive.

Otonomy’s drugs aren’t based on new biological understandings. They are different formulations of existing drugs–like dexamethasone, or the antibiotic ciprofloxacin—that can be injected directly into the ear.

The company has made progress with this approach. It won FDA approval of its first drug, ciprofloxacin otic (Otiprio) for children with an infection of the middle ear undergoing tube surgeries, in December 2015. But the drug has been a commercial bust so far, generating just $326,000 in sales during its last quarter compared to $100,000 over the same period in 2016.

The results of the latest Phase 3 trial were so devastating that Otonomy has decided to immediately stop all ongoing tests of Otividex, including a second Phase 3 trial in Meniere’s, and halt development of the drug, according to a press release.

Otonomy was looking to its Optividex for Meniere’s to change its fortunes.

This is a total gamble bet (TGB) that the market over-reacted to the awful trial news. The high median price of analysts is mouthwatering with an upside marked out at 355%. But at the moment, the company doesn’t know what its next move is, other than to conserve cash.

I’d avoid this name for the time being. Once the company unveils its next strategic steps, buying this punished name could make sense. Definitely not for the risk-averse portfolio.

Steve Walker has no position in any stocks mentioned. MedContent Inc. has no position in any stocks mentioned. MondayMorning.com has a disclosure policy.