Avoid These 3 Biotech Stocks Like the Plague

March 1, 2017
By Alex Keown, BioSpace.com Breaking News Staff

CHICAGO – Often we tout analyst reports about biotech and pharma stocks that are “must-haves” for industry investors. Sometimes though, analysts point to stocks that investors should avoid.

This morning, analysts writing in the Motley Fool marked three companies investors should avoid at all costs—MannKind , Novavax and Organovo Holdings .

1. MannKind Corporation

MannKind has been struggling for a long time, particularly when it comes to developing a strategy to market its lead product Afrezza, a rapid-acting inhaled form of insulin to treat diabetes. Afrezza has had a troubled past. Last year partner Paris-based Sanofi terminated its license and collaboration deal for Afrezza with MannKind because the drug had not met sales expectations. Motley Fool analyst Sean Williams highlights the troubled history of Afrezza and notes that MannKind has lost about 90 percent of its market share. Even with all the losses, Williams said it’s likely MannKind will continue to struggle as it attempts to market Afrezza. Although Williams said MannKind has managed to get Afrezza on the formularies for Express Scripts and Aetna, the drugs’ higher price tag is likely to be an impediment. Shares of MannKind are trading at 55 cents this morning.

2. Novavax

In September, shares of Novavax plunged more than 82 percent after the company released data that its Phase III trial for its RSV F Vaccine for older adults did not meet its goals, failing to demonstrate “vaccine efficacy.” The Phase III Resolve trial failed to meet both its primary and secondary endpoints. The primary objective of the Resolve trial was to demonstrate efficacy in the prevention of moderate-severe RSV-associated lower respiratory tract disease. The company is running another Phase III trial aimed at passing immunity on to infants by giving the vaccine to pregnant women, Brian Feroldi of the Motley Fool said. Additionally, the company is taking another stab at older adults and has launched a Phase II trial in adults 60 years of age or older. While Feroldi credited the company for staying the course in developing a RSV vaccine, he said it would be wise for investors to avoid buying the stock for now because the chances of the drug repeating its trial failure are “quite high.” Shares of Novavax are trading at $1.52 this morning.

3. Organovo Holdings

Shares of Organovo Holdings are up slightly this morning over its opening price, currently trading at $3.16. The stock did jump to a morning high of $3.23 before sliding back. Motely Fool’s Corey Renauer said shares of Organovo are volatile and “at a sky-high multiple of about 71.3 times the amount of revenue it reported during the past year.” Earlier this month the company reduced its 2017 outlook. Although there is interest in 3D bioprinting services from Organovo, Renauer said the company’s interest “in printed human tissues for preclinical new-drug testing appears to be waning.” Because of that company’s strategies, Renauer said investors interested in bioprinting should look at Johnson & Johnson , which will be less likely to “lead to sleep losses” in the long run.