The month of May isn’t usually a good one for the overall market. Though a handful of familiar names somehow muster bullishness in the month, the S&P 500’s average performance for the May is a loss of 0.2%.
As it turns out, however, not only do some stocks manage to thrive as the summer doldrums begin, some groups of stocks generally pick up the pace around this time of year.
Among the most surprising winners are pharmaceutical stocks, and biotech stocks in particular. Not only does the typical biotech name advance to the tune of 2% this month, May marks the beginning of an average 10.6% rally that usually doesn’t end up stopping until early September. Go figure.
The catalyst for this big move? A fair share of the industry’s expos and conventions — where these companies often unveil trial updates — happen in the summertime. But, the Food and Drug Administration also happens to be just as busy in the middle of the year as it as at the beginning or end of it, approving or rejecting drugs. Nothing lights a fire under biotech stocks like an FDA decision (even if that fire ends up burning the stock rather than send it rocketing higher).
With that as the backdrop, here’s a closer look at biotech stocks with noteworthy catalysts on the near-term radar.
Biotech Stocks to Watch: Merck & Co., Inc. (MRK)
Ok, Merck & Co., Inc. (NYSE:MRK) is more of a conventional pharmaceutical stock than a biotech name, but it’s got some news due in a few days that could cause some tremors on the industry’s cancer-treatment landscape.
On Wednesday, May 10, Keytruda is scheduled to get a yay or a nay from the FDA as a first-line treatment for non-squamous non-small cell lung cancer. Obviously there are never any guarantees, but the fact this application of Keytruda has been put on an accelerated approval path bodes well.
Keytruda is already on the market as a therapy for other types of cancer, and is one of the first anti-PD1 therapy approved in the United States.
Biotech Stocks to Watch: Regeneron Pharmaceuticals Inc (REGN)
Sarilumab — the rheumatoid arthritis drug from Regeneron Pharmaceuticals Inc (NASDAQ:REGN) — has been run through the proverbial wringer.
The spin cycle’s going to stop on May 22 though, one way or another. That’s when Sarilumab has a date with destiny, so to speak, with the FDA scheduled to either approve or deny Regeneron’s request for approval.
It’s not headed into the Prescription Drug User Fee Act (PDUFA) meeting without some dents and dings. Sarilumab is the same drug the FDA issued a complete response letter about to REGN back in October of last year, which pointed out no problems with the safety profile of the drug, but rather, potential problems with the facility in which it would be made.
Biotech Stocks to Watch: Puma Biotechnology Inc (PBYI)
Be sure to mark May 24 on your calendar if you’re at all interested in Puma Biotechnology Inc (NASDAQ:PBYI). That’s when the company begins to run through a two-month gauntlet with its breast cancer drug PB272 in tow.
Although the FDA’s approvals or rejections tend to be a focal point for traders that like to predict wide swings, PDUFA events aren’t usually the make-or-break decisions. The advisory panel makes its yes/no recommendation to the FDA well before the agency makes the final call, and far more often than not, the agency follows the advisory panels advice.
It matters to current and would-be PBYI owners simply because the FDA’s oncology advisory panel will be sharing its opinion on PB272 on May 24, for a final decision scheduled for July 20. That whole two-month stretch can make for some very interesting trading.
On that note, know that PB272, or neratinib, has been surrounded by controversy for a while. Some think that the advisory panel’s shortened allotment of time to discuss the drug on the 24th means it’s already largely decided to not recommend its approval.
Of course, against a pessimistic backdrop, an actual approval could be just that much more bullish for the stock.
Biotech Stocks to Watch: Incyte Corporation (INCY)
Finally, June 3 is going to start a very busy three-day stretch for the folks who run Incyte Corporation (NASDAQ:INCY). The company has several presentations scheduled for this year’s American Society of Clinical Oncology (ASCO) conference between the 2nd and the 6th of June … 15 in all, each taking a closer look at early and mid-stage trials currently underway.
ASCO is arguably the pinnacle pow-wow of the year for makers of cancer treatments. All interested eyes keep close tabs on everything that goes on there, and if the news is encouraging, the bulls tend to take action with those biotech stocks featured at the event.
The proverbial big Kahuna to watch will be INCY’s presentation of how its Epacadostat performs with the aforementioned Keytruda, from Merck, as a treatment for melanoma.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
