Why Sinovac, Pluristem, and Synta Could Be Worth Watching Today
Nov 13th 2013 9:22AM
Updated Nov 13th 2013 9:24AM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Good morning, fellow Foolish investors! Let's take a look at the top headlines in the health-care sector today.
Sinovac returns to profitability in the third quarter
Sinovac Biotech , a Chinese biotech company focusing on the development of vaccines for infectious diseases, jumped nearly 10% after hours yesterday, following a robust third-quarter report, which showed a return to profitability.
For its third quarter, Sinovac reported earnings of $0.04 per share, or $2.3 million -- a huge improvement from the loss of $0.05 per share, or $3.0 million, that it reported in the prior-year quarter. Revenue soared 54.5% year over year, to $22.08 million.
Sinovac specializes in vaccines for hepatitis A and B, and various strains of influenza, mumps, and rabies. The company has received a lot of attention for its H5N1 and H1N1 flu vaccines, due to the outbreaks in China that occurred over the past decade. As a result, the stock has rallied nearly 130% over the past 12 months. The company also has a robust pipeline of upcoming treatments, including the EV71 vaccine for hand, foot, and mouth disease, and new vaccines for rotavirus and human rabies.
Back in August, Sinovac was chosen by the Beijing Health Bureau for the sixth time in six years to be one of four suppliers for the seasonal flu vaccine. A total of 1.8 million doses of the vaccine were requested for 2013, of which Sinovac delivered approximately 340,000 doses of its vaccine, Aniflu. Total sales of Aniflu jumped 121% from the prior-year quarter.
Last month, Sinovac was also chosen by the Jiangsu Centers of Disease Control and Prevention as two main suppliers of the inactivated hepatitis A vaccine for children. The total request was for 1.8 million doses, of which Sinovac provided 900,000 doses of its vaccine, Healive.
In my opinion, the increased demand for better health care, and the positive relationship with the Chinese government, are strong bullish catalysts for this stock's long-term growth potential.
Pluristem gains approval for an investigational new drug study in South Korea
Another stock to follow today is Pluristem , a biotech company focused on cell therapy treatments for a variety of degenerative, blood clot, and autoimmune disorders. The company's pipeline of products consists of treatments derived from stem cells from human placenta, a source considered much less controversial than embryonic stem cells.
Earlier today, Pluristem announced that the South Korean Ministry of Food and Drug Safety had approved its IND (investigational new drug) application to initiate a phase 2 study using its PLX-PAD cells to treat a type of peripheral artery disease known as Intermittent Claudication (IC). South Korea is the fourth country to approve Pluristem's IND for the study, following approvals in the U.S., Germany, and Israel.
Pluristem's phase 2 study for the treatment of IC has a primary endpoint of increasing the maximum walking distance of patients during a treadmill test against a placebo. IC patients generally suffer from aches, numbness, and fatigue in the calf muscle during exercise.
This positive development could help offset the negative press it received in June, after the FDA placed its phase 2 IC study on clinical hold after a patient developed a severe allergic reaction to the treatment. Shares of Pluristem climbed 8% in after-hours trading following the announcement.
Synta decides to sacrifice shareholder value for some much needed cash
Last but not least, Synta Pharmaceuticals could continue its month-long slide today, after the company announced a proposed offering of common stock. Although the size of the offering has not been disclosed, the idea of more shares entering the market caused shares to slide 6% in pre-market trading.
Synta has had a really tough year already. The company has no marketed products, but its best hope is ganetespib, a treatment for non-small cell lung cancer (NSCLC), which is being tested with chemotherapy. However, at the end of October, Synta announced that the drug had shown less clinical benefit in a mid-stage (phase 2b/3) trial than it had previously claimed, reducing the chance of death in patients by 25% -- compared to the 39% it had reported back in June.
Looking at Synta's stock price, it's pretty easy to see what investors thought of Synta's results -- they weren't impressed in June, and were even less impressed in October.
Synta also stated that it was considering increasing the enrollment of the trial to 700 to 800 patients, up from the 500 patients that it had originally planned to enroll. Analysts believed that, with only $70 million in cash and equivalents, the company simply wouldn't have enough resources to finish the study, especially with additional patients.
That's where Synta's new offering of common stock comes in -- it needs to sacrifice shareholder value for fresh capital to get its trial back on track. Unfortunately, Synta's situation is looking increasingly more like an all-in bet on a losing horse.
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The article Why Sinovac, Pluristem, and Synta Could Be Worth Watching Today originally appeared on Fool.com.Fool contributor Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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