Stocks Shaking the Investment World
There are one-hit wonders, and then there are those stocks for which the initial big move is only a preview for even bigger and better gains to come.
Today, we list a pair of stocks that made some of the biggest upward moves over the past month, despite the incredible volatility in the market, which we'll pair with the ratings issued by our Motley Fool CAPS community. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.
1-Month % Change
CAPS Rating (out of 5)
|Endocyte (NAS: ECYT)||61.2%||***|
|Amylin Pharmaceuticals (NAS: AMLN)||44.3%||***|
Source: FinViz.com; one-month percentage change from Feb. 8 to March 9.
While you were out, the markets rebounded, but they may turn tail again if Europe's fragile financial system falls apart. So before we get shaken out again, let's see why the CAPS community thinks some of these companies might continue to outperform the market.
A mighty temblor
Vintafolide could be Endocyte's billion-dollar baby. While it got $120 million up front from Merck (NYS: MRK) , if the ovarian cancer drug, which is currently in phase 3 trials, meets various milestones along the way to approval, Endocyte could generate another $880 million in payments. In return, the pharmaceutical giant gets global rights to the drug but will kick in U.S. profit and royalty payments to Endocyte if it gains FDA approval. It also gets double-digit percentage royalties on sales in the rest of the world.
As the Fool's Brian Orelli notes, however, Endocyte will be using that upfront money to pay for further testing, as it is responsible for a majority of the funding and completion of the ovarian cancer trial. He also points out Merck isn't the first pharma that comes to mind when thinking about cancer research, but it recently acquired rights to a cancer therapy from Exelixis (NAS: EXEL) , too, so it's definitely getting more interested in what goes on here.
Reading between the lines, the headline number of potentially $1 Billion in milestones is for SIX successful applications of [its] platform. Only two are progressing. Having Merck, again, does help validate the chances, but large drug [companies] are constantly [ponying] up contracts even with [companies] that eventually DO NOT succeed.
But tell me in the comments section below whether you think Merck's vote of confidence suggests a higher probability of success, and then add Endocyte to your Watchlist to see how it plays out.
As the late Sen. Everett Dirksen was once rumored to have said, "A billion here, a billion there, and soon you're talking real money."
Another pharmaceutical giant was willing to reel off a few billion dollars to get at a biotech's drug, pipeline with Bristol-Myers Squibb (NYS: BMY) offering to buy Amylin Pharmaceuticals for $3.5 billion, a bid that was ultimately rejected. As Motley Fool writer Tony Daltorio notes, over the past five years there have been 16 acquisitions valued at more than $1 billion each. That could be why Merck felt the need to pay up for Endocyte's drug: You have to pay to play, or lose out altogether.
Amylin's specialty has been in the field of diabetes, and it teamed up with Eli Lilly to successfully bring Byetta to market. But the wandering eye of Eli Lilly for German drugmaker Boehringer Ingelheim's competing compound caused Amylin to seek a divorce. Now it's regained the rights to Byetta and is trying to transform the twice-a-day diabetes treatment into once-weekly Bydureon.
Yet with activist shareholder Carl Icahn on the prowl to force a sale of the biotech, the $22 offer Bristol-Myers made may indeed prove too little. CAPS member NHWeston102 sees that as enough reason to expect a successful conclusion regardless.
Folks expect this stock to get bought by the end of the year -- Lord [knows] Carl Icahn is furious that a rumored Bristol-Meyers bid was rejected. They have an injectable, once-weekly diabetes treatment that is already doing well in Europe where diabetes giant Novo-Nordisk reigns. Many pharmas want to fast-track into diabetes treatment, and buying [Amylin] would do it -- although taking on [Novo] is going to be a serious fire-fight.
Add the biotech to the Fool's free portfolio tracker, and tell us on the Amylin Pharmaceuticals CAPS page whether you think it will be able to continue its climb higher regardless of the outcome.
Shake, rattle, and roll
These two stocks shook the market this past month, but the Fool has found one company that's digging up massive profits and is likely to continue to do so if the markets become rattled. Roll on over to get your free copy, but hurry, because it's available for only a limited time.
At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Exelixis.Motley Fool newsletter serviceshave recommended buying shares of Exelixis. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.