Valeant's Paulson Boost, Plus 2 Rival Drug Stocks Moving Big on Trial Data

Hedge fund manager John Paulson is taking a seat on the Valeant Pharmaceuticals board

Managing Editor
Jun 19, 2017 at 10:40 AM
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U.S. stocks are rising today, boosted by big-cap tech names. Among specific names on the move today are drug stock Valeant Pharmaceuticals Intl Inc (NYSE:VRX), cancer treatment developer Clovis Oncology Inc (NASDAQ:CLVS), and drugmaker TESARO Inc (NASDAQ:TSRO). Here's a quick look at what's moving shares of VRX, CLVS, and TSRO.

Board Addition Boosts VRX Stock

Valeant Pharmaceuticals stock jumped 3% to trade at $13.07, after news broke that hedge fund manager John Paulson was elected to the company's board of directors. Paulson's own hedge fund is Valeant's largest shareholder.

VRX is down 10% year-to-date, and the stock is staring up at its 150-day moving average, which capped a mid-May rally attempt. However, with the shares up 57% from April's eight-year low of $8.31, options traders are favoring calls. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows VRX with a 50-day call/put volume ratio of 2.83, ranking in the 97th percentile of its annual range.

Upbeat Drug Data Sends CLVS Stock Soaring

Clovis Oncology stock is roaring today, up 40% to trade at $84.92, after its ovarian cancer drug Rubraca delivered positive results in a late-stage study. Clovis plans to submit the drug for a label expansion soon, which would allow the treatment to be used for longer periods in a wider range of patients. The boost today sends CLVS stock to an 18-month high of $91, with the stock bouncing strongly off its 80-day moving average.

Heading into today's announcement, options traders were bracing for big moves from CLVS. The equity's Schaeffer's Volatility Index (SVI) of 1.50 rates higher than 90% of all other readings from the past year, indicating that front-month options have priced in higher volatility expectations only 10% of the time during the past year.

TSRO Stock Stumbles After Rival Drug Study Succeeds

Tesaro stock is down 6% to trade at $135.22, after rival Clovis Oncology reported positive results for its cancer treatment drug. TSRO shares have been declining steadily from their Feb. 21 all-time high of $192.94, and today's drop has the stock on pace to close below its 200-day moving average for the first time since its big bullish gap in June 2016.

Analysts remain optimistic, however. Nine out of 16 brokerages covering TSRO stock rate it a "buy" or better, which leaves the door open for downgrades going forward.

 

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