Cancer Stocks Hammered Once Again

After plunging in the week following ASCO and then underperforming the following week, cancer stocks were hammered yet again.

The list below, with data from StockVal, is comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week.

The 14 double-digit declines exceeded the 12 that plunged immediately following the ASCO meeting, with just a single double-digit gainer. The median return of -4.2% and the average return of -4.9 trailed the S&P 500 significantly (-2.3% and -3.0% respectively). Clearly, cancer-related stocks have been very weak this month and are now lagging the market, on average, for the year-to-date.

click to enlarge

Vical (VICL) was the only double-digit gainer on the week. Though it is still down year-to-date, it is showing good momentum over the past quarter. While the company has several programs devoted to treating cancer, the news that drove the stock this week wasn’t related to them but rather a successful Phase 2 trial for an outlicensed drug to treat ischemia. On the downside, Coley (COLY) stood out, plunging over 50% on Pfizer’s (PFE) decision to exit development of a COLY drug in Phase 3 (not effective). Zila (ZILA), mentioned in this negative part of the report now on what seems like a regular basis, continued its decline toward the sub-$1 zone following the Q3 earnings release. Allos (ALTH) suffered a failed trial for a brain cancer drug. Genvec (GNVC), another regular in this section of the report, barely retains its positive year-to-date performance. This one is probably worth a look, as it is sitting on top of very strong support at 2.25-2.50 area. Several other double-digit decliners remain positive year-to-date, including Trubion (TRBN), IDM Pharma (IDMI), Dendreon (DNDN), Onyx (ONXX), Arqule (ARQL) and Idera (IDP).

Showing Momentum

Parameters: 4-week outpeformance (S&P 500) of 3% or more, 13-week outperformance of 10% or more and Price Momentum Index of <2.

(Note that several of these are in the process of being acquired)

Potential Rebounds

Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.

Disclosure: Long ISRG

Comments

[hpski]

Great post! It would be quite useful if your excel file could be downloaded, then someone could sort on other attributes, or even add some, e.g. #drugs in phase 3, total #drugs in pipeline, #big pharma collaborations, PADUFA dates, if any, etc. I'm offering a few comments vis-à-vis individual companies: I think EXEL, which probably has the deepest pipeline on your list, is gaining because investors believe Glaxo will take XL647. I believe it's, "show's over", for TELK (Telcyta is finito). Onyx is declining because it faces stiff competition from Pfizer's Sutent &amp; now Wyeth's Torisol in renal cell carcinoma. Any sales increases for Onyx's Nexavar will come from off-label use in liver cancer, but that is not, in my opinion, a reason to invest. CEGE's recent decline is a gift - when European Revlimid sales appear on their balance sheet, along with clinical milestone press releases, it'll get back into the 60's. GNTA has been on a slippery slope for some time now - their CEO, Ray Warrell, is very smart, very committed, and held in high regard by his oncology peers at his alma mater, MSKCC. He is making use of FDA's dispute process for Genasense in CLL, so some investors are betting FDA will offer up a conditional approval in subsets of patients. The key here is that CLL is a very heterogeneous disease - therapy needs to be more individualized. Finally, in my opinion, ISRG is absolutely the future of surgery. Any decline into the low 130's is a bargain. Thanks again for your article!

[AlanBrochstein]

Thanks for the comment and the compliment. Thanks also for the information. Contact me by phone or email if you would like to discuss your ideas.

[bsrichard]

Hi Alan,
What is your current opinion on Clarient (CLRT)?
Thanks very much,
Don

[AlanBrochstein]

I don't know the company, but it sure looks interesting. Technically, it would be nice to hold 1.75. The company is seemingly deficient in cash - it would appear that there will be either an equity or debt offering this year. If they become profitable as forecast this year, the stock could get some attention - diagnostics have been hot.

[bsrichard]

Maybe BofA should by this one too.

Which bank took the highly rated debt at a discount from TMA?

[bsrichard]

please ignore the comment above. it was posted in the wrong thread.

[bsrichard]

Alan,

What are your thoughts on Chemokine Therapeutics Corp (CHKT)?

And Meridian Co LTD (MRDAF)?