3 Horrendous Health-Care Stocks This Week

Has the so-called biotech bubble burst? Two of this week’s most horrendous health-care stocks bolster the theory, while the third stock could simply be experiencing the effects of market gravity.

Source: Wikimedia Commons

The biotech’s shares plunged more than 46% for the week.

Exelixis (Nasdaq: EXEL)

Source: Yahoo! Finance

• It announced on Tuesday the completion of an interim analysis of Cometriq and that the phase 3 prostate cancer trial would continue to final analysis.

• Many observers expected the study would be stopped early, as Johnson & Johnson’s Zytiga and Medivation’s Xtandi were.

• Exelexis expects top-line data from the phase 3 study later this year.

Why Exelixis got clobbered

Shares of the cloud-based health-care technology company dropped 27% this week.

Castlight Health (NYSE: CSLT)

Source: Yahoo! Finance

• Castlight’s IPO was last week, with the stock vaulting nearly 150% on its first day of trading.

• With only $13 million in revenue, Castlight’s market cap hit $3 billion.

• The backlash is apparently now under way, with plenty of critics.

• Yahoo! Finance called Castlight the “most overpriced IPO of the century.”

Why Castlight’s stock careened

The stock of the biopharmaceutical company fell 24% this week.

Galena Biopharma (Nasdaq: GALE)

Source: Yahoo! Finance

• This week’s decline appears to be a continuation from last week’s announcement of an SEC investigation.

• The investigation stems from alleged questionable stock-promotions efforts by The DreamTeam Group, particularly involving the posting of positive articles about Galena.

• Several online financial sites, including The Motley Fool, pulled articles related to the controversy over the past few months.

Why Galena shares dropped

• While Castlight’s business model is compelling, the stock really is overpriced right now.

• Galena could certainly come back with good news from cancer immunotherapy Neuvax.

• Exelixis gets the nod as the most likely to rebound.

• Continuation of the Cometriq study was disappointing, but the market overreacted, in my view.

Best shot at bouncing back?

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