Drug Stock Dives 67% on Disappointing Data

Buyout buzz has CELG stock selling off

by Karee Venema

Published on Feb 28, 2019 at 3:36 PM

Stocks are trading lower today, after the U.S.-North Korea summit ended without a resolution. Among individual names making notable moves are healthcare stocks Novavax, Inc. (NASDAQ:NVAX), Celgene Corporation (NASDAQ:CELG), and Horizon Pharma PLC (NASDAQ:HZNP). Here's a quick look at what's moving the shares of NVAX, CELG and HZNP.

NVAX Nosedives on Vaccine Fail

Novavax stock is down 67% at $0.70, and earlier touched a nearly 10-year low of $0.67, after the company's respiratory vaccine failed a late-stage study -- a "major setback," according to Cantor Fitzgerald. The shares have now sliced through a trendline connecting higher lows since August, and have shed 72.9% since their mid-December peak at $2.58.

NVAX options volume has exploded today, with 55,350 calls and 26,850 puts on the tape so far today, nearly three times what's typically seen at this point. The July 2.50 and 4 calls are most active, and it looks like one trader may be liquidating a spread that may have been initiated in late January.

Buyout Uncertainty Sinks CELG Shares

Celgene stock is down 8.4% at $83.39, as high-profile investors wax pessimistic on Bristol-Myers Squibb's (BMY) plans to buy the firm. More specifically, activist investor Starboard Value said it would vote against the "poorly conceived and ill-advised plan," and encourage other BMY shareholders to do the same -- a sentiment echoed by BMY's second biggest stakeholder, Wellington Management.

Analysts were quick to chime in, too, with Jefferies calling the potential merger an "uphill" battle, while Baird said the deal would be beneficial to Bristol-Myers Squibb. Overall, most analysts are on the sideline when it comes to CELG, with 10 of 17 maintaining a lukewarm "hold" rating.

Drug Data Lifts HZNP

Horizon Pharma stock is surging -- up 32.7% at $28.99, fresh off a three-year high of $29.25 -- after the company reported positive late-stage data for its thyroid eye disease (TED) drug, teprotumumab, with nearly 85% of patients showing "meaningful improvement in in proptosis, or bulging of the eye." Price-target hikes at Cowen and Company (to $33) and Jefferies (to $34) have come through, too, putting the equity on track for its biggest one-day gain since Nov. 19, 2013, when it rallied over 31.5%.

Options traders are blitzing the surging stock, too, with more than 15,350 calls and 2,600 puts on the tape -- 17 times the average intraday amount, and a new annual high. HZNP's short-term trajectory is in focus, with new positions being initiated at the March 28 and 30 calls, April 27 calls, and May 30 calls.

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