As biotech companies work to develop therapies for conditions that have proven to be nearly insurmountable from a treatment perspective, their stock prices will experience the highs and lows of the whole process. Once successful in such an endeavor, these companies can become prime takeover targets. This cycle has been on display in the biotech arena in recent trading sessions. Here are three biotech stocks on the move right now.
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Breathing Easy
Shares of InterMune (Nasdaq: INTM) surged 59.3% on Friday after the Food and Drug Administration posted briefing documents on the company's investigational drug for the treatment of patients with idiopathic pulmonary fibrosis. An advisory panel to the FDA is scheduled to make its recommendations on pirfenidone this week and the FDA will follow with a financial decision prior to May 4.
The market is clearly optimistic that InterMune's New Drug Application will ultimately be approved. An approval of pirfenidone in the U.S. would be huge for InterMune as there is presently no effective treatment for this condition on the market. This drug has already been approved in Japan.
Oncology Treatment on the Mark
OSI Pharmaceuticals (NYSE: OSIP) has seen its shares jump more than 50% this month as it has become the target of a takeover by the Japanese company Astellas Pharma. Astellas covets OSI's oncology franchise. Tarceva, OSI's therapy for advanced lung cancer, brought in $359 million in revenue for OSI in 2009.
Astellas has made a bid of $52 per share for OSI, but OSI's stock price has already risen above $56 per share. This trend is an indication that Astellas will likely have to raise its bid price if it wants to succeed in this takeover. The past success of Tarceva as well as the prospects of it being approved for earlier stages of treatment both serve as good reasons for Astellas to reconsider its initial offer.
Thrown for a Loss
The management team at Medivation (Nasdaq: MDVN) will be heading back to the drawing board after a late stage trial for Dimebon failed to noticeably improve the thinking ability and daily function in patients that had been afflicted with Alzheimer's disease. The company has partnered with Pfizer (NYSE: PFE) for this undertaking. Shares of Medivation have lost 69.5% of their value since the results of this study were released last Wednesday.
Fortunately, Medivation has a prostate cancer drug in testing that has Medivation partnered with Astellas. The company is readying itself for Phase 3 trials of MDV3100, its other development stage drug. It could be some time before MDV3100 makes it to market and the picture for Dimebon has become much drearier. Shares of MDVN may be worth a gamble now that the market has priced in an overwhelming degree of pessimism towards the company.
The Bottom Line
All three of these biotech companies are swinging for the fences and this approach has been reflected in their stock prices. InterMune and OSI appear to be on the up and up while Medivation may need to dust itself off before stepping back in to the batter's box. Expect more waves from each one of these companies in the weeks ahead. (For related reading, check out Chasing Down Biotech Zombie Stocks.)
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