Some Stocks to Cheer You Up!
Sonam is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In a month ridden with doubt about the fiscal cliff and its implications, the biotech sector managed to bring some smiles to worried faces.
Leading the charge was Halozyme Therapeutics (NASDAQ: HALO), the San Diego-based biopharmaceutical company. The company is best known for its delivery platform Enhanze, which enables subcutaneous delivery of biologics normally injected intravenously.
Rise and Shine
Rising 26.99% to $7.01 by closing time on Friday, Dec. 21, the company witnessed its highest single day increase since 2007. Of course you must be wondering what the cause of such a spike in its price was?
It was the announcement of a collaborative deal with pharma giant Pfizer (NYSE: PFE), made on Friday. The collaboration was made in a bid to commercialize products that combine Pfizer's biologics with Halozyme's Enhanze. The deal gives Pfizer the worldwide license to develop and market products that involve the use of Halozyme's patented enzyme rHuPH20. With an initial payment of $8 million, the deal has the potential to make Halozyme richer by $507 million if Pfizer clears certain milestones. Apart from this, Halozyme will also receive royalties on net sales of the finished product.
While this may mean profits for Halozyme in the short term, its impact is unlikely to last in the long run. This is mainly because of the company's dependence on FDA approvals, which may lead to frequent price fluctuations. For those who've forgotten, Halozyme saw a sharp fall in its stock prices this August, following an FDA decision that rejected a biologic made by Baxter, using Enhanze.
Strangely, Pfizer fell approximately 1.5% to close at $25.08 following the deal. However, investors in Pfizer need not panic. The company recently announced an increase in its Q1 dividend for 2014. The dividend on its common stock is now $0.24, up from $0.22. Its dividend yield stands at 3.80%. Holding on to this stock may prove to be beneficial in the future.
Another stock that made a similar deal this month was TrovaGene. The molecular diagnostic company dealing mainly in urine-based testing entered into a deal with Genoptix on Thursday. The deal allows Genoptix, a Novartis (NYSE: NVS) company, to use TrovaGene's patent protein NPM1 for research and testing on acute myelogenous leukemia (AML). TrovaGene is set to receive initial payment as well as royalties for granting this non-exclusive license to Genoptix. Following this news, TrovaGene shares rose to a high of $7.73, finally closing at $7.28 on Friday the same week. Deals with noteworthy companies (such as Novartis, Quest Diagnostics and Strand Life Sciences), the advantages of urine-based testing, and the increasing potential use of trans-renal nucleic acids in oncology and women health care, make me optimistic about TrovaGene's future.
Rising from the Ashes
The surprise of the month, however, has been Vivus (NASDAQ: VVUS). On Dec. 20, the company made the announcement that Express Scripts, the Pharmacy Benefit Manager, will now include Qysmia in its Standard Benefits Program. Vivus reached a high of $14.54 following the news. Qysmia is an obesity drug that was launched by Vivus in September 2012. Soon after the launch, the company's stock prices took a tumble following poor sales of the drug. The company posted a net loss of $40.4 million in Q3 of 2012. However, despite the possible risk for heart patients, high price, and problems in the European markets, sales figures for Qysmia are now getting better, especially since health insurer Aetna included it in its coverage last month. Soon, with other insurers joining the bandwagon, its Q4 results will surely have much more joy to spread. Vivus investors can look forward to better times ahead.
While TrovaGene and Vivus look promising, investors in Pfizer have nothing to worry for the time being. As for Halozyme, its dependence on FDA approvals make it a more risky stock. To all those conservative long term investors who have their eyes set on this stock, here's what I'd say- look elsewhere!
sonamchamaria has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!