Health-sector stocks were whipsawed upward, downward, backward and forward last week, rekindling memories of the Yardbirds’ hit song in the 60’s with a similar name. Still, when the dust settled, the XLV, an ETF that tracks the healthcare industry’s biggest companies, was down just 0.5% for the week as of close, Friday, May 17, 2019. It closed Monday, May 20, 2019 down just 0.05% as information tech plummeted 1.75%, real estate skidded 1.62% and materials stumbled 1.46%.
Looking at the biggest three winners and two losers among healthcare equities, here is the very short list with the reasons for their dramatic price swings and outlook:
1) Outlook Therapeutics Inc. (Nasdaq:OTLK) led advancing issues, soaring 75% for the week ending May 17, to $2.10 after Oppenheimer analyst Leland Gershell initiated coverage of Outlook at a price target of $12, while giving it an outperform rating. Outlook is investigating a formulation of bevacizumab it calls ONS-5010, meant to treat wet age-related macular degeneration (wet AMD). The main wet AMD drugs right now are Genentech’s Lucentis, Regeneron Pharmaceuticals Inc.’s Eylea and Avastin, also by Genentech. Avastin, an oncology drug used off label to treat wet AMD, is popular among providers and payers because it’s cheaper than Lucentis and Eylea.
However, risk of contamination has been a concern for the FDA, and Oppenheimer thinks ONS-5010 could one day end up taking over Avastin’s large share of the AMD space. Cranbury, NJ-based Outlook’s stock was still down 47% year to date, while the iShares Nasdaq Biotechnology has gained 7.9% and the S&P 500 has advanced 14%. Shares closed Monday up another 43% at $3.00.
The Barchart Opinion rating on this name is Hold.
2) Elsewhere, Adverum Biotechnologies Inc. (Nasdaq:ADVM) shot up 37% to $9.05 in response to its announcement that the FDA has lifted the clinical hold on the second cohort in a Phase 1 study, OPTIC, evaluating lead gene therapy ADVM-022 (AAV.7m8-aflibercept) in patients with wet age-related macular degeneration (wet AMD). The FDA action allows dose escalation to three times that used in the first cohort, although a lower dose will be administered when treatment resumes next month.
The partial clinical hold, which suspends enrollment but allows current participants to continue treatment, remains in effect for the third cohort. Citing the promising responses seen in the first cohort, the company does not plan to use the highest dose in this group. The FDA instituted the clinical hold last month to allow it to review additional chemistry, manufacturing and controls (CMC) information. “We look forward to presenting 24-week primary and secondary outcomes from this cohort of patients at a scientific meeting in the second half of this year,” said Leone Patterson, CEO of Menlo Park, CA-based Adverum.
Adverum slipped 2% Monday to $8.89. The Barchart Opinion rating on this name is Strong Buy.
3) And Iovance Biotherapeutics Inc. (Nasdaq:IOVA) jumped 36% to $15.03 after the company reported interim data from ongoing clinical trials for two drug candidates. Both experimental treatments use tumor-infiltrating lymphocytes (TIL) to harness an individual’s immune system to target and attack cancer cells. The San Carlos, CA-based biopharma announced that LN-145 achieved an overall response rate (ORR) of 44% for advanced cervical cancer patients. By comparison, Keytruda from Merck & Co. has an ORR of 14% in the same patient population. Meanwhile, LN-144 (lifileucel) maintained its previously observed ORR of 38% in advanced melanoma and delivered a disease control rate of 76% at the 7.4-month median follow-up.
While early-stage clinical results can be promising, it’s always important for the glimpses of efficacy and safety to hold up in later-stage studies. The interim data for LN-145 are part of a Phase 2 trial, while the update for lifileucel is from a Phase 3 trial. What’s more, the company may only be scratching the surface of what TILs can do.
Shares tacked on another 4% Monday to $15.61. The Barchart Opinion rating on this name is Strong Buy.
4) But Soliton Inc. (Nasdaq:SOLY), a company that hopes to get a new device approved for removing tattoos before the end of the year, tanked 46% to $7.32 after a short report sank shares to a record drop on Thursday. The Houston, TX-based company told investors that it expected feedback from the Food and Drug Administration on its Rapid Acoustic Pulse shockwave device before the end of May. The company was responding to an anonymous short report posted on Seeking Alpha on Thursday. The stock had more than doubled from its $5 a share initial public offering in February before Thursday’s report. Its shares traded as high as $8.56 intraday Friday after closing at $7.22 on Thursday. Bearish bets against the company have trimmed down to 4.9% of the company’s float, from 6.1% at the end of April, according to financial analytics firm S3 Partners.
Shares fell another 12% Monday to $6.41. The Market Screener short-term technical analysis for this name is bearish.
5) And ImmunoGen Inc. (Nasdaq:IMGN) plummeted 37% to $2.05 after it announced that the Food and Drug Administration wants it to conduct another Phase 3 clinical study of experimental ovarian cancer drug mirvetuximab soravtansine before seeking approval for it. ImmunoGen announced in March that in its late-stage Forward I clinical trial, mirvetuximab soravtansine failed to meet the primary endpoint of progression-free survival in either the entire group of enrolled patients or the prespecified subset of patients with high folate receptor alpha expression. However, the Waltham, MA-based company had hoped to be able to file for FDA approval based on the drug’s meeting secondary endpoints in the study. That’s not a viable path now.
The FDA told ImmunoGen that the data on the secondary endpoints of the Forward I study couldn’t be used to support a filing for accelerated approval of mirvetuximab. However, the FDA did provide some guidance for designing another study that could lead to approval for the drug.
Shares slipped another 5% Monday to $1.94. The Barchart Opinion rating on this name is Strong Sell.