2 Tempting Biotech Stocks to Avoid Like Mad
March 6, 2017
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Biotech investors are always looking for a good return on investment, but some stocks that appear to be a good deal can quickly turn into a financial quagmire. Two biotech stocks currently fit that mold. Contributing analysts to the Motley Fool pointed out Teva Pharmaceuticals and Trevena as two stocks to avoid.
Teva—Shares of Teva Pharmaceuticals are down more than 3 percent this morning, trading at $33.62 as of 10:26 a.m. Falling share prices has been a trend for the Israel-based company, Keith Speights said, dropping more than 30 percent over the past year.
The company is certainly facing some challenges, least of all finding a new chief executive officer. Former CEO Erez Vigodman abruptly left his position earlier this month after serving only three years in the job. Teva is facing a tough immediate future. It has been embroiled in in legal action with Mexican drugmaker Rimsa and in December paid out $519 million to settle parallel civil and criminal charges that allegedly violated the Foreign Corrupt Practices Act when it paid bribes to foreign government officials in Russia, Ukraine, and Mexico between 2002 and 2012.
Additionally, Teva’s top branded drug, Copaxone, which is used to treat multiple sclerosis, is facing a tough financial future. The drug accounts for about 16 percent of Teva’s sales, but is facing a patent challenge from a generic drug developed by Novartis. Patents protecting the drug expired in 2015.
While Teva does have some challenges, there are some positives, including its recent Actavis generics acquisition. During a call with reporters earlier on Feb. 13, interim CEO Yitzhak Peterburg said the company’s primary focus for 2017 will be to extract synergies from the Actavis deal. Speights said drugs from that deal are already helping the company by boosting sales and earnings. But, despite that ray of sunshine, Speights said investors would be wise to hold onto their money and let Teva find a new CEO and deal with the Copaxone situation before investing.
Trevena–Shares of Trevana are also down 3 percent this morning. The stock is currently trading at $4.04 per share, but was at a low of $3.96 per share.
Although the company reported in February that its pain treatment, oliceridine (Olinovo), which has been thought to be a replacement for morphine, met its Phase III endpoints, there was some concern over secondary endpoints. George Budwell said the trials’ secondary endpoints failed to clearly differentiate oliceridine from morphine.
“Even worse, Olinvo was unable to outperform morphine on key safety measures like respiratory burden and nausea at higher doses, lowering its appeal as a safer, more tolerable alternative to morphine,” Budwell wrote.
Trevana is planning to file a New Drug Application for oliceridine, but Budwell said he does not see many hospitals purchasing a drug that’s more expensive than morphine and doesn’t have a superior clinical profile. The company will discuss its 2016 financial results on March 8.