Versartis Price Gains on Drug Approval, eHealth Rises: Tech Winners & Losers

NEW YORK (TheStreet) -- The Food and Drug Administration had the right remedy for biotech Versartis (VSAR). eHealth  (EHTH) may be reaping the benefits of a recent U.S. Supreme Court decision. Shares of network solutions provider Silicom (SILC) dropped markedly after the company issued an advisory that earnings for its second quarter would fall well below analyst projections. 

The agency that oversees drug testing and approvals gave Menlo Park, Calif.-based Versartis a green light to continue its phase III testing for a drug that would help children with human growth hormone deficiency. Shares of the company rose 29.4% to $18.92.

Pricing of biotech shares depend heavily on pushing new products through their pipelines, but the process can be unpredictable, including FDA oversight. 

"Our team has continued to work diligently with the FDA and we are excited to be moving forward with the Phase 3 clinical trial of VRS-317 in pediatric GHD patients," said Jay Shepard, the chief executive. "There is a significant need for these patients to have treatment options that are less burdensome than the daily injections that are the current standard of care."

In May, the FDA asked Versartis to halt enrollment in the late-stage trial and provide additional "bioanalytical data" for VRS-317. That delayed Versartis' schedule by six months and pushed the stock price down by more than 10%. 

Versartis says it's now on track to show top-line, 12-month results by the middle of 2017 and to present VRS-317 for approval by 2018.

eHealth shares rose 13.3% to $13.72 after an upgrade from RBC Capital to outperform. RBC Capital raised its price target for the company from $14 to $16 a share. 

Shares of the Mountain View, Calif.-based provider of online health insurance products for families and small businesses have fluctuated wildly reaching a high of $37.87 last year but dropping to just under $9 a share earlier this year.

However, the company may have been buoyed by the recent Supreme Court decision upholding provisions of the Affordable Care Act.

Last year, eHealth reported that applications for short-term health insurance soared 130% from 2013 to 2014. Short-term health insurance plans offer consumers increased flexibility. They can be purchased outside the Affordable Care Act's open enrollment period without a qualifying life event as a prerequisite. (The main downside of these policies is that they are also open to Federal tax penalties.) But a number of healthcare and insurance stocks were rocked amidst uncertainty as to how the Supreme Court would decide. 

eHealth beat the consensus of analysts polled by Thomson Reuters in its last quarterly earnings reported April 24. The company generated more than $60 million in revenue for the quarter, about $15 million more than expectations. 

Silicom shares plummeted 25.3% to $27.21. The Israeli company, which produces server adapters and appliance cards, said Monday its revenue for the second quarter would fall between $16.8 million and $17.2 million. Analysts expected revenue of just under $20 million. Silicom is projecting revenue of $18 to $19 million for the third quarter, which would represent year-over-year growth. 

The company's CEO and President Shaike Orbach said the unexpected dip stemmed from "a softening of demand from some of our customers, due to longer-than-expected decision making processes together with the slower market deployment of our high-potential design wins and our new solutions for upcoming industry trends. We expect that the second quarter will be the low-point of our revenues for the year and believe that the strategy that has worked extremely well for us for many years will continue to prove itself in the future."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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