This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

For Biotech, 'Fail' is Making a Big Comeback


BOSTON ( TheStreet) --"Fail" is re-entering the lexicon of the biotech investor.

Biotech stocks seemed like they could do no wrong for awhile there, but all hot streaks come to an end eventually, witnessed by a recent string of disappointing clinical trial results and FDA rejections.

Monday, Tranzyme Pharma (TZYM) announced the failure of a phase III study of ulimorelin, an experimental drug designed to accelerate the gastrointestinal recovery of patients after bowel surgery. Transyme shares plummeted 71% to $1.49 in early trading.

Late Friday, Anthera Pharmaceuticals (ANTH) was forced to halt early a phase III study of its heart drug varespladib. The problem: Varespladib doesn't work. Anthera shares are trading down 55% to $2.81 in Monday pre-market session.

Also Friday, Peregrine Pharmaceuticals (PPHM) released negative results from a phase II study of its lung cancer drug bavituximab, which was only able to delay tumor growth by 9 days over a control.

10 Top Warren Buffett Dividend Stocks

These three drug blowups follow closely the setback for Oncothyreon's (ONTY) lung cancer vaccine Stimuvax, which failed to show a significant benefit after a much-hyped interim analysis of a late-stage trial.

The FDA approved a new therapy to improve lung function of premature babies from Discovery Labs (DSCO), but a short-lived pop in the company's stock price was quickly sold off. FDA also rejected drug applications from NeurogesX (NGSX) and Astex Pharmaceuticals (ASTX).

The Nasdaq Biotechnology Index is up 14% for the year and still outperforming the broader indices, but the gap is narrowing. What was an 11% margin in mid-February between the NBI and S&P 500 is now down to a 5% gap.

Investors are being reminded that drug development is risky, but they are also being bombarded with a glut of new stock issued by biotech and drug companies seeking to raise new cash on the sector's strength. Amylin Pharmaceuticals (AMLN), Xoma (XOMA) and Jazz Pharmaceuticals (JAZZ) are among companies selling stock to raise cash in recent weeks.

10 Mid-Cap Stocks That Have Almost Doubled in 2012

Adding insult to injury, Peregrine filed a new $150 million mixed shelf on the same day it announced the negative bavituximab data. Adventrx Pharmaceuticals (ANX), a serial stock diluter with an abysmal drug development track record, signaled its intent to once again hit up investors for more cash. The company filed a $150 million mixed shelf Friday.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs