Biotech Blowout: 3 Stocks Taking a Hit

by Adam Benjamin | October 9, 2013 1:48 pm

Wednesday has been a particularly bloody day in the world of biotech stocks. While the sector is usually prone to a lot of volatility, a number of headlines all crept up in just a couple days to knock down several biotechs at once.

Namely, three biotech companies have seen their stocks take a seat in the wake of bad news for their products. Here’s a look at what’s happening to drive each biotech stock down, and just how bad the damage is:

Idenix Pharmaceuticals (IDIX[1]) is bleeding heavily today after getting stabbed in the back[2] by partner Johnson & Johnson (JNJ[3]). The two companies had partnered up for a hepatitis C treatment, but took a hit back in June when regulators started looking for more safety data regarding the treatment. IDIX dropped nearly 30% in one day, though it has spent the past four months climbing back up. However, yesterday, JNJ announced that it was buying the rights to a different compound for hepatitis C treatments from GlaxoSmithKline (GSK[4]). IDIX stock is down nearly 25% since Tuesday (including 10% today), with analysts suggesting the company will need to find a new partner for its treatment.

Lexicon Pharmaceuticals (LXRX[5]) is the victim of bad news today, announcing that its ulcerative colitis treatment isn’t showing enough promise[6] to move forward with development. The company’s chief medical officer said that LXRX will instead focus on one of its other in-development treatments, abandoning the ulcerative colitis treatment. LXRX fell as much as 15% today before recovering to roughly 10% losses at time of writing.

But the real loser today has been Ariad Pharmaceuticals (ARIA[7]). The company announced that one of its drugs, Iclusig, has more harmful side effects[8] on the blood stream and heart than the company initially reported. As a result, the company had to stop clinical trials and advise users to lower dosages. ARIA shares are off 70% today in response.

Adam Benjamin is an Assistant Editor of InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:

  1. IDIX: http://studio-5.financialcontent.com/investplace/quote?Symbol=IDIX
  2. getting stabbed in the back: http://www.bloomberg.com/news/2013-10-08/idenix-shares-fall-as-j-j-buys-rival-hepatitis-c-therapy.html
  3. JNJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=JNJ
  4. GSK: http://studio-5.financialcontent.com/investplace/quote?Symbol=GSK
  5. LXRX: http://studio-5.financialcontent.com/investplace/quote?Symbol=LXRX
  6. isn’t showing enough promise: http://online.wsj.com/article/BT-CO-20131009-704361.html
  7. ARIA: http://studio-5.financialcontent.com/investplace/quote?Symbol=ARIA
  8. more harmful side effects: http://www.thestreet.com/story/12063343/1/ariad-pharma-plunges-on-disclosure-of-iclusig-toxicity.html

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