The Zacks Analyst Blog Highlights: Tekmira, Chimerix, Gilead, AbbVie, Achillion Pharmaceuticals, Agios Pharmaceuticals, PTC Therapeutics and Tetraphase Pharmaceuticals

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Dec 29, 2014, 09:30 ET

CHICAGO, Dec. 29, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Tekmira (Nasdaq:TKMR-Free Report), Chimerix (Nasdaq:CMRX-Free Report), Gilead (Nasdaq:GILD-Free Report), AbbVie (NYSE:ABBV-Free Report), Achillion Pharmaceuticals, Inc. (Nasdaq:ACHN-Free Report), Agios Pharmaceuticals, Inc. (Nasdaq:AGIO-Free Report), PTC Therapeutics, Inc. (Nasdaq:PTCT-Free Report) and Tetraphase Pharmaceuticals, Inc. (Nasdaq:TTPH-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

4 Biotech Stocks that Doubled in 2014

It has been an eventful year for the biotech sector with mergers and acquisitions (M&As) and deals showing no signs of slowing down. Moreover, several companies came out with important and highly-awaited pipeline updates especially at the annual meeting of the American Society of Oncology (ASCO) and the American Society of Hematology (ASH).

Deal-Making Frenzy Continues

2014 has been one of the most active years where M&As and licensing agreements are concerned. While tax inversion deals were being actively pursued until a few months back, these cross-border deals do not look all that attractive now considering new rules imposed by the Treasury Department.

To make up for thin pipelines and generic competition, pharma companies sitting on huge piles of cash continue to seek suitable acquisition targets. Several important acquisitions were announced/completed this year including those between Roche-InterMune, Merck-Idenix, Endo-Auxilium, BioMarin-Prosensa and Merck-Cubist.

Licensing agreements and deals including those with opt-in arrangements have also picked up pace with oncology remaining a favorite area. Most of the deals signed with big pharma companies are focused on cancer and immuno-oncology, which has been attracting a lot of interest. Immuno-oncology therapies have the potential to change the treatment paradigm for cancer -- they basically use the natural capability of the patient's own immune system to fight the cancer.

According to the IMS Institute for Healthcare Informatics, more than 2,000 products are estimated to be in late-stage development at present -- oncology therapies make up for about one-fourth of this total.

Ebola – Focused Companies in the Limelight

Meanwhile, the Ebola outbreak, which has been making headlines, has brought quite a few biotech companies like Tekmira (Nasdaq:TKMR-Free Report) and Chimerix (Nasdaq:CMRX-Free Report) into the limelight for their experimental Ebola disease treatments.

Several Blockbuster Potentials Gain Approval

Several important product approvals and label expansions came through this year as well. Both Gilead (Nasdaq:GILD-Free Report) and AbbVie (NYSE:ABBV-Free Report) gained FDA approval for their new hepatitis C virus (HCV) treatments – Harvoni and Viekira Pak, respectively. Both are slated to bring in multi-billion dollar sales for the companies.

The highly lucrative obesity market got a new player with Orexigen's Contrave gaining FDA approval. Meanwhile, it proved to be third time lucky for MannKind with the company finally gaining FDA approval for diabetes product, Afrezza.

The FDA also said yes to BioMarin's Vimizim for the treatment of Morquio A syndrome, Celgene's blockbuster hopeful Otezla and Amgen's leukemia drug, Blincyto. Products like Medivation's Xtandi and Pharmacyclics' Imbruvica gained label expansions.

But it hasn't been all good news on the pipeline and regulatory front. In fact, it's been a rough year for companies like Sunesis, Cytokinetics, OncoGenex and Regado which came out with disappointing pipeline updates. Meanwhile, Dendreon, which had been struggling for quite some time with the performance of its sole product, Provenge, filed for bankruptcy.

A Look at 4 Biotech Stocks that Doubled This Year

The biotech sector, which had an incredibly good run over the last two years, went through a major selloff in late March triggered by concerns about the pricing of Gilead's HCV treatment, Sovaldi. However, the sector pulled off a slow but steady recovery with the NASDAQ Biotechnology index delivering a year-to-date (YTD) return of 32%.

Here's a look at some stocks that doubled in 2014 despite the volatility in the biotech sector.

New Haven, CT-based Achillion Pharmaceuticals, Inc. (Nasdaq:ACHN-Free Report) focuses on the development of treatments for infectious diseases and immune system disorders. The company is in the news frequently thanks to its HCV pipeline. Achillion has often been viewed as a potential takeover target mainly due to its promising HCV pipeline, especially its nucleotide prodrug inhibitor. This Zacks Rank #2 (Buy) stock has had a strong run in 2014, delivering a YTD return of 295.76%.

Agios Pharmaceuticals, Inc., (Nasdaq:AGIO-Free Report) based in Cambridge, MA, focuses on the fields of cancer metabolism and rare genetic disorders of metabolism. Agios' differentiated cancer metabolism research platform has helped it strike a collaboration agreement with biotech major, Celgene. Positive pipeline updates have helped this Zacks Rank #3 (Hold) stock deliver a YTD return of 356.58%.

South Plainfield, NJ-based PTC Therapeutics, Inc. (Nasdaq:PTCT-Free Report) shot up more than 30% in May 2014 on a positive update regarding its marketing application for its Duchenne muscular dystrophy treatment, Translarna in the EU. Since then, it has been mostly an upward trajectory for this Zacks Rank #3 stock, which has delivered a YTD return of 208.6%. With Translarna gaining conditional approval in the EU, investor focus will remain on the commercialization of the product and label expansion into additional indications like cystic fibrosis.

Tetraphase Pharmaceuticals, Inc. (Nasdaq:TTPH-Free Report) is another biotech company that fared well in 2014 delivering a YTD return of 186.58%. Shares of this Watertown, MA-based company that focuses on the development of antibiotics for serious and life-threatening multidrug-resistant bacterial infections have been rising consistently thanks to positive data on its experimental antibiotic, eravacycline. This Zacks Rank #2 stock could have many important catalysts stored for 2015 with the company expected to file for FDA approval of the experimental antibiotic next year.

Looking Ahead

Strong pipelines, innovative treatments, impressive results, growing demand for drugs especially for rare-to-treat diseases, an aging population and increased health care spending should support growth in the biotech sector.

With the sector witnessing a lot of M&A and licensing activity this year, expectations are high that more such deals will follow. Companies that may attract such deals include those focusing on immuno-oncology, antibody drug conjugates (ADCs), CAR T-cell therapy, anti-infectives, HCV treatments, TCRs and breakthrough therapies. The development of personalized treatments will also gain momentum.

On the flip side, the high cost of treatments and the emerging threat of biosimilars remain dampeners for this high risk-high return sector. In fact, the biotech sector is currently under pressure as pricing concerns are materializing following pharmacy benefit manager, Express Scripts' decision to replace Gilead and Johnson and Johnson's HCV drugs with AbbVie's newly approved and lower-priced HCV treatment in its National Preferred Formulary.

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