June 16, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Standard investment advice is “Buy low and sell high,” but sometimes a company’s stocks are low because the company’s not worth much; other times the stock value is low because of recent setbacks, because of short-term problems, or are just plain undervalued. Here are three life science stocks that have taken a beating lately, but may have improvements in the near future.
Writing for The Motley Fool, Keith Speights discusses what he describes as “the biggest healthcare losers so far in 2016.” They are Valeant Pharmaceuticals , Endo International and Ionis Pharmaceuticals .
Valeant Pharmaceuticals
Valeant has been having problems for a while, but Speights notes that its stock is down more than 75 percent to date. The company’s problems have ranged from U.S. Securities and Exchange Commission investigations and various lawsuits related to insider trading over a failed hostile takeover bid of Allergan (AGN) in 2014, getting tangled up in a national discussion of drug pricing during the U.S. presidential election, bad PR and $30 billion in debt. The company’s chief executive officer, Michael Pearson, recently left the company, but will remain with the company as a consultant.
One of the things going for the company now is new leadership, as Perrigo Company (PRGO)’s former chief executive officer, Joe Papa, took over for Pearson in April. However, writes Speights, “Valeant expects to be profitable in 2016. The company now has a new CEO with a great track record. Its pipeline looks good, too, with 18 products in late-stage studies.”
Endo International
Malvern, Pennsylvania-based Endo International stock traded for $84.82 on Aug. 14, 2015 and is currently trading for $16.56. In February, the company shuttered its Astora Women’s Health division because of product liability issues, and wasn’t able to sell the business unit. It also reported sluggish sales in its U.S. generics business in the fourth quarter. Then, fearing a generic version of its Voltaren Gel, it cut prices, which contributed to a downgrade of its full-year 2016 guidance.
Although the company has a debt load greater than $8.5 billion and the U.S. generics market doesn’t look so great, Speights says, “Endo hopes to turn things around by re-establishing growth in its branded-pharmaceuticals business and focusing on its generic-drug pipeline and sterile injectable products.”
The company’s sales of Xiaflex for Dupuytren’s contracture, as well as a new drug, Belbuca for chronic pain, should push profits. It also has, writes Speights, “plans to launch around 30 new generic drugs this year and submit between 25 to 30 generics for approval.”
Ionis Pharmaceuticals
Ionis Pharmaceuticals , headquartered in Carlsbad, California, is Speight’s third pick. Stocks are down about 65 percent so far this year, although much of that is because GlaxoSmithKline (GSK) delayed the start of a Phase III trial of IONIS-TTRrx in patients with TTR amyloid cardiomyopathy because of safety concerns. The U.S. Food and Drug Administration (FDA) placed a clinical hold on the Phase III study, as well as an investigator-initiated Phase II clinical study. GSK decided to wait for the results of the Phase II trial, as well as another ongoing trial.
There’s hope that GSK will decide to go ahead with the trial based on new data, and Ionis has other products. In addition, the company has more than $723 million in cash and less than $479 million in debt.
“Ionis regained rights for homozygous familial hypercholesterolemia drug Kynamro earlier this year,” writes Speights. “The biotech soon licensed those rights out to privately held Kastle Therapeutics. Ionis expects results from late-stage studies for nusinersen and volanesorsen in the first half of 2017.”
In addition, the company has two drugs, plazomicin, an antibiotic, and custirsen, a cancer drug, in late-stage trials with other partners. It also has 12 other drugs in its pipeline in Phase II trials and six drugs in Phase I trials.
“Valeant, Endo, and Ionis are battered and bruised right now,” Speights writes. “However, I suspect that five years from now, we will look in the rearview mirror and see that all of these stocks were bargain buys at current price levels.”
