3 Horrendous Health-Care Stocks This Week

The markets had a short week with the Martin Luther King holiday on Monday, but we had no shortage of horrendous stocks in the health-care sector. Here are three of the worst performers.

Yo-yo effect
Pacific Biosciences of California  shares fell 12%. Last week, the stock gained in the double digits. Shareholders might be feeling as if they bought a yo-yo.

There really hasn't been any major news to hit the wires about Pacific Biosciences that would move the stock dramatically. It could be that this week's drop merely reflects some profit taking. Even with the decline, shares have more than doubled since October.

The company benefited earlier this month from a decision by the FDA to use its DNA sequencing technology in a major study. That study involves genetic sequencing of 100,000 foodborne pathogens to determine how bacterial infections evolve.  

Weighty matters
Arena Pharmaceuticals dropped 11% over the last week. Shares fell after the company announced questions for its obesity drug Belviq were raised by the European Medicines Agency's Committee for Medicinal Products for Human Use, or CHMP.

CHMP's Day 180 List of Outstanding Issues referenced several concerns arising from clinical studies of Belviq, including the occurrence of tumors on rats as well as heart valve problems and adverse psychiatric effects in humans. These issues weren't viewed as serious enough to derail Belviq's U.S. approval by the FDA, but European approval is a different matter.

Proponents of Arena would argue that the concerns raised by CHMP are overblown and that Belviq should still be approved for Europe. Detractors would maintain that Arena is likely to follow the same path of rival VIVUS . European authorities rejected approval of VIVUS' Qsymia over concerns about potential cardiovascular and central nervous system effects of the drug. The next few months will reveal which side is right. For this week, at least, the naysayers's opinions carried more weight.

No energy for Synergy
Shares for Synergy Pharmaceuticals were down over 8% this week on the heels of a 9% fall last week. What's going on? 

Synergy started the year off on a good note with positive results from its phase 2b/3 trial of plecanatide. The experimental drug for chronic idiopathic constipation met its primary and key secondary endpoints in the study. That news helped drive shares higher by 25%. But the stock has gone steadily downward since Jan. 17.

It's probably merely a coincidence that Synergy announced the closing of its merger with Callisto Pharmaceuticals on that date, especially since the deal has been in the works for months. The decline might be related to worries that Synergy won't be able to find a partner to bring plecanatide to market. Whatever the reason, shares have certainly lost the energy from earlier in January.

Temporary pain?
I think that it's quite possible that this horrendous week of losses could be temporary for all three of these companies. Pacific Bioscience's drop could just be a minor pullback in an overall uptrend. Better news from Europe would lift Arena's shares. Announcement of a partner should reenergize Synergy's stock.  If so, temporary pain could lead to the opportunity for down-the-road gain. 

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The article 3 Horrendous Health-Care Stocks This Week originally appeared on Fool.com.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Pacific Biosciences of California. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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