Tuesday's Health Winners & Losers

Health-related stocks advanced Tuesday amid a broader stock market rally and positive data from a few names.

Valeant Pharmaceuticals (VRX Quote) surged after the company said that the first of two late-stage pivotal trials for its Retigabine epilepsy drug met all primary efficacy endpoints. The trial, RESTORE 1, looked at the highest dose the company is evaluating, 1,200 mg daily, vs. placebo.

The company expects results in the second quarter from RESTORE 2, the second phase III trial that is studying lower doses of the drug. Valeant said it anticipates filing for regulatory approval of Retigabine with U.S. and European regulators before the end of the year.

Shares jumped $1.62, or 14%, to $13.25.

Elsewhere, Depomed (DEPO Quote) announced positive efficacy results from a midstage trial evaluating an extended release formulation of gabapentin to treat women with moderate-to-severe menopausal hot flashes. The data showed that gabapentin GR significantly reduced the frequency and severity of hot flashes from baseline to the end of treatment compared to placebo, according to the company.

Gabapentin is already approved in the U.S. to treat seizures and postherpetic neuralgia, a form of herpes. Shares of Depomed rose 46 cents, or 14%, to $3.73.

Elsewhere, Dyax (DYAX Quote) gained ground after announcing a licensing deal with Sanofi-Aventis(SNY Quote) worth $25 million in 2008 and up to $500 million in potential license fees and milestone payments.

With the agreement, Sanofi-Aventis received exclusive worldwide license rights for the development and commercialization of the fully human monoclonal antibody DX-2240, as well as a nonexclusive license to Dyax's antibody phage display technology.

Dyax will also retain co-development and profit sharing rights for certain other future antibody product candidates discovered by Sanofi-Aventis. Shares of Dyax climbed 74 cents, or 21%, to $4.30 on the news.

Depomed and Dyax are both components of the Nasdaq Biotechnology Index, which advanced 5.27, or 0.7%, to 802.35.

Another stock on the rise was Natus Medical(BABY Quote). The maker of medical products for babies said the FDA gave it a green light to resume shipping its Olympic Cool-Cap, used to cool newborns' heads to prevent or reduce the severity of neurologic injury associated with hypoxic ischemic encephalopathy, or damage to cells in the central nervous system from inadequate oxygen during labor and delivery.

Natus received premarket approval for the caps in December 2006, but was required to submit a supplement to its application for approval because it updated some of the components used in the devices' production.

Shares bounced $1.34, or 7.8%, to $18.51 on the new approval.

Medical device company NxStage (NXTM Quote) headed the other direction, with shares plunging $4.26, or 33%, to $8.49. The company said its fourth-quarter loss widened to $17.4 million, or 47 cents a share, from $10.4 million, or 37 cent a share, a year ago. Analysts surveyed by Thomson Financial predicted a fourth quarter loss of 34 cents a share.

For 2008, NxStage said it expects to lose $1.41 to $1.52 a share on revenue of $130 million to $140 million. That fell short of analysts' target for a profit of 92 cents a share and revenue of $136.7 million.

Vertex Pharmaceuticals(VRTX Quote) slid after reporting weakened 2007 results and a worse-than-expected guidance. The company said on an adjusted basis, its 2007 loss widened to $324.8 million, or $2.52 a share, from $171.2 million, or $1.51 a share, a year earlier.

Revenue shrank to $199 million $216.4 million in 2006, due to a reduction in revenue recognized from research-based collaborations.

Looking ahead, Vertex projected a 2008 loss between $380 million and $410 million on revenue between $200 million and $220 million. Analysts had forecast a loss of $369.2 million and revenue of $271.7 million.