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3 of the Best & Worst Performing Drug Stocks of Q1

Arpita Dutt

After a tough and challenging 2016, pharma and biotech stocks have been showing signs of recovery this year. The sector started the year on a strong note with the NASDAQ Biotechnology Index and the NYSE ARCA Pharmaceutical Index gaining 10.7% and 5.7%, respectively, in the first quarter of 2017.

Despite the drug pricing issue remaining a headline risk this year, investors have been gaining confidence in the sector based on strong results, R&D success and innovation, FDA approvals, ramp up in new product sales and continued strong performance from legacy products. Expectations are also high that M&As will pick up this year.

There has also been some talk about speeding up the FDA approval process. Last year, the number of new drug approvals slipped to 22, well below the 45 approvals in 2015 and 41 in 2014. President Trump said that the FDA will be streamlined and the drug approval process will be much faster. The recently signed 21st Century Cures Act is a step in this direction. With the passing of this Act, expectations are that there will be more innovation in the sector and, maybe, a surge in new drug approvals. So far in 2017, 13 drugs have been approved by the agency.

While all these factors should work in favor of the sector, challenges remain in the form of additional competition, high profile pipeline setbacks, slowdown in growth of mature products and loss of exclusivity for certain key drugs.

Here is a look at 3 of the best and worst-performing drug stocks in the first quarter of 2017.

3 Best Performing Drug Stocks in Q1

Esperion Therapeutics, Inc. ESPR: Ann Arbor, MI-based Esperion is a lipid management company focused on developing and commercializing convenient, complementary, cost-effective, once-daily, oral therapies for the treatment of patients with elevated low density lipoprotein cholesterol (LDL-C). The company’s lead pipeline candidate, bempedoic acid, is in late-stage development with the company looking to file for FDA approval for a LDL-C lowering indication by the first half of 2019. Esperion’s shares gained a whopping 182% in the first quarter of 2017 -- a key catalyst was news about the FDA confirming that the company’s ongoing LDL-C lowering program would be adequate to support approval for this indication. Top-line results from these studies should be out by mid-2018. Year-to-date (YTD), Esperion’s shares are up 185.2%, outperforming the Zacks-categorized Medical-Drugs industry, which is up 1.6%.

Vertex Pharmaceuticals Incorporated VRTX: Boston, MA-based Vertex, which holds a strong position in the cystic fibrosis (CF) market, got a boost with positive data from a couple of late-stage studies evaluating a combination of tezacaftor and Kalydeco (ivacaftor). Statistically significant improvements in lung function were observed in people with CF ages 12 and older who have certain mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene.

Vertex plans to seek approval in the U.S. and EU in the third quarter of 2017 for the treatment of people with CF ages 12 and older who have two copies of the F508del mutation and in people who have one mutation that results in residual CFTR function and F508del mutation. While the company’s shares shot up 48% in the first quarter of the year, shares are up 54.9% YTD, outperforming the Zacks-categorized Medical-Biomedical/Genetics industry which is up 3.6% so far in 2017.

Nektar Therapeutics NKTR: California-based Nektar is a research-based biopharma company focused on addressing the unmet medical needs of patients with the company’s pipeline including potential treatments for cancer, auto-immune disease and chronic pain. The company’s shares shot up 91.3% in the first quarter -- Nektar received a major boost with positive late-stage data on NKTR-181, a first-in-class opioid analgesic. NKTR-181, which has fast track designation in the U.S. for the treatment of moderate to severe chronic pain, is the first full mu-opioid agonist designed to provide potent pain relief without the high levels of euphoria that can lead to abuse and addiction with standard opioids. NKTR-181’s efficacy along with significantly lower abuse potential than oxycodone could help it change the way of treating patients with chronic pain conditions (Read more: Nektar's Pain Drug Positive in Phase III Study; Shares Gain). YTD, Nektar’s shares are up 71.8%.  

While Nektar and Esperion are Zacks Rank #3 (Hold) stocks, Vertex is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3 Worst Performing Drug Stocks of Q1

Argos Therapeutics, Inc. ARGS: Durham, NC-based Argos is an immuno-oncology company focused on the development and commercialization of individualized immunotherapies for the treatment of cancer and infectious diseases using its Arcelis technology platform. Argos suffered a huge setback when an interim data analysis showed that the company’s pivotal late-stage study on its most advanced pipeline candidate, rocapuldencel-T, should be discontinued for futility. The company’s shares were hit hard by this news and were down 90.8% in the first quarter and 91.8% YTD.

Cidara Therapeutics, Inc. CDTX: San Diego, CA-based Cidara is a biotech company focused on developing novel anti-infectives including immunotherapies. Cidara suffered a setback in February on disappointing mid-stage data on CD101 topical which was being evaluated for acute vulvovaginal candidiasis (VVC). The company has decided to stop further development of the topical formulation for VVC and will instead focus its resources towards the development of the IV formulation of CD101, as well as the expansion and acceleration of the Cloudbreak immunotherapy platform. CD101 IV is currently in a mid-stage study for candidemia with results expected in the fourth quarter. Cidara’s shares declined 25% during Q1 and are down 28.4% YTD.

Xenon Pharmaceuticals Inc. XENE: Clinical-stage biopharma company, Xenon, saw its shares lose 48.1% in the first quarter with the company being hit by disappointing data on its experimental acne treatment, XEN801. XEN801 failed to demonstrate efficacy in a mid-stage study and Xenon announced that the topline results do not support the continued development of XEN801. YTD, Xenon’s shares are down 49.4%.

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Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report
Argos Therapeutics, Inc. (ARGS): Free Stock Analysis Report
Xenon Pharmaceuticals Inc. (XENE): Free Stock Analysis Report
Cidara Therapeutics, Inc. (CDTX): Free Stock Analysis Report
Nektar Therapeutics (NKTR): Free Stock Analysis Report
Esperion Therapeutics, Inc. (ESPR): Free Stock Analysis Report
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