Today’s healthcare sector offered a great deal of rumble and tumble with the following volatile stocks making headlines today: AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG), Galena Biopharma Inc (NASDAQ:GALE), and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA). Whereas ARIA has caught a positive tide amid merger & acquisition news, AMAG and GALE investors suffered a rocky second Monday into 2017.
Let’s take a closer look:
AMAG Pharmaceuticals: Gamble Between Three Pieces of the Puzzle That Sent Shareholders Fleeing
AMAG shares are collapsing 34% after entering into an agreement with Palatin Technologies, Inc. (NYSEMKT:PTN) gaining exclusive rights to develop and commercialize in North America their key drug candidate, Rekynda, designed to treat hypoactive sexual desire disorder in pre-menopausal women.
As per the deal’s arrangements, AMAG will pay up front a fee of $60 million followed by an added $380 million should specified regulatory and sales milestones be achieved. Moreover, AMAG will pay up to a $25 million reimbursement to PTN in development costs along with tiered royalties on net sales.
Rekynda has two successful Phase 3 trials under its belt, having reached statistical significance on two primary endpoints. The firm expects to file a new drug application (NDA) by the start of 2018 for Rekynda, and if all proceeds smoothly, an approval and launch should follow in the beginning of 2019.
However, investors also received a preliminary preview of fourth-quarter results coupled with guidance that fell short of analyst expectations, from non-GAAP revenue predicted to hit $150 to $155 million to full-year 2016 revenue to reach a $546 million to $551 million range. Non-GAAP revenue outlook for 2017 fared better with expectations, projected to fall between $625 and $675 million. Nonetheless, a double miss could be one piece to the downturn that tripped shares today.
Meanwhile, both Zachs and Raymond James downgraded AMAG shares, which also could be attributed to investors sent scrambling in the aftermath.
Galena Biopharma Swirls with Negative Publicity Amid Legal Scandal
Galena shares are dipping 4% after the team revealed in an SEC filing it is under both criminal as well as civic investigation by the U.S. Attorney’s Office for the District of New Jersey delving into the ins and outs of marketing/promotional practices for Abstral, the firm’s leading commercial product sold in the fourth quarter of 2015.
News of the subpoena hit like a small wild fire, particularly as now the firm must include an updated risk factor in its quarterly and annual reports relating to its former commercial operations.
Another nail in the coffin of Monday’s setbacks for GALE, two “high-prescribing” physicians for Abstral has led to their criminal prosecution on back of a federal investigation, with a criminal trial that commenced just five days prior. Amid the legal scuffle, the firm is promising to reimburse former employees’ attorney fees for litigation.
Galena officials bring to light, “Pursuant to the Company’s charter, we are currently reimbursing any former and current employees’ attorney’s fees with respect to the investigation. We are cooperating with the civil and criminal investigation, and through our outside counsel we have recently begun preliminary discussions with the government aimed at the ultimate resolution of the investigation regarding the Company.”
Ariad Pharmaceuticals Multi-Billion Dollar M&A Cash Deal to Close by the End of February
Ariad shares are skyrocketing nearly 73% after the biotech firm started the week off on a high note: an M&A deal circling $5.2 billion, where ARIA will gain $24.00 per share for all outstanding shares and Takeda Pharmaceutical Co Ltd (ADR) (OTCMKTS:TKPYY) will acquire ARIA. The transaction has not only solidified approval from both boards of the companies, but investors clearly have taken the news rather agreeably.
Notably, Ariad has two key oncology drug contenders in its pipeline: First is investigational tyrosine kinase inhibitor brigatinib, designed to treat patients with anaplastic lymphoma kinase-positive advanced non-small cell lung cancer (NSCLC), a therapy with global potential.
The firm’s second main contender is Iclusig (ponatinib), used in the treatment of chronic myeloid leukemia (CML) and Ph+ Acute lymphoblastic leukemia (ALL). Takeda has its eyes on Ariad for these drug candidates to take its oncology portfolio to the next level.
Ariad chairman Alexander Denner sees this as a huge win for both firms, contending,, “This transaction is a great outcome for shareholders of ARIAD and Takeda. Both ARIAD and Takeda are passionate about helping cancer patients, and I believe the talent and resources of Takeda coupled with ARIAD’s pipeline and people will accelerate the development of cancer treatments. I would like to extend my deepest gratitude to the management team and everyone at ARIAD for their unrelenting dedication.”