Cancer Stocks Weekly Review: The Bleeding Slows

by Alan J. Brochstein, CFA
AB Analytical Services

After plunging in the weeks following ASCO, cancer stocks were stabilized this week. The lists below, with data from StockVal, are comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week. If the reader believes that there are erroneous inclusions or exclusions, feel free to let me know.

There were much fewer outliers this week, with 5 double-digit gainers and just three double-digit decliners. The median return of -0.7% trailed the S&P 500 return, which was flat, but the average of 0.1% was in line. Clearly, cancer-related stocks were very weak in June and are now lagging the market, on average, for the year-to-date.

Ventana (VMSI) was the huge

winner this week, soaring on a hostile bid by Roche (RHHBY), which is trying to build out its diagnostics platform. Zila (ZILA) recovered somewhat from what has been a horrible year thus far. Alfacell (ACEL) closed an incredibly strong quarter with more strength after consolidating near 2. There was an interesting article Science Daily, but the driver this week was that the company reported positive clinical data on its lead drug, ONCONASE, in treating neuroblastomas. Insmed (INSM) experienced what looks like a dead-cat bounce, though it did issue a couple of press releases regarding a new hire and a positive report on a component of a combination drug they are developing (not cancer-related). Trubion (TRBN), bounced back from a sharp drop last week and is on the verge of breaking out. The company, which conducted its IPO at 3 in October, is now up over 50%. Its lead drug candidate is for Rheumatoid Arthritis, but it has a pipeline addressing cancer.

As far as the big losers, leading the way was Micromet (MITI), which closed at its lowest point in 2007 after continuing weakness following an equity offering in the prior week. Molecular Insight (MIPI), a busted IPO from February, continued its march lower as it initiated a Phase 2 trial for a cardiac drug. IDM (IDMI), which is developing Junovan for bone cancer, got nailed on an equity offering. The stock, which rocketed earlier this year before getting a negative outcome at an FDA panel, is still up year-to-date. Finally, Allos (ALTH), which has rolled over and is within spitting distance of the base it formed on the way up last summer, continued to suffer from negative data on one of its lead candidates, Efaproxyn.

SHOWING MO

Parameters: 4-week outpeformance (S&P 500) of 3% or more, 13-week outperformance of 10% or more and Price Momentum Index of <2

(Note that several of these are in the process of being acquired)

POTENTIAL REBOUNDS

Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.