Healthcare Recap: Earnings, Drug Trials, and Liquidation

Earnings reports released by UnitedHealth (NYSE:UNH) last Thursday and WellPoint (NYSE:WLP) on Wednesday have provided a generally positive overview of the healthcare industry. While insurance companies are busy preparing for changes resulting from the U.S. Affordable Care Act, both UnitedHealth and WellPoint reported strong profits, partly due to the return of former healthcare usage patterns.

Against this backdrop, shares of Vanda Pharmaceuticals, Novartis, and Myrexis are trading up on Wednesday.

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1) Vanda Pharmaceuticals (NASDAQ:VNDA): Current Price $4.25

Vanda Pharmaceuticals, a developer of treatments for central nervous system disorders, was given a boost from the release of positive trial results for its Non-24-Hour Disorder treatment. The disease is a circadian rhythm disorder that affects totally blind individuals who lack light perception and cannot reset their master body clock to the 24-hour day. Vanda’s study of 20 patients found that those taking the drug Tasimelteon showed less “deterioration in measures of nighttime sleep, daytime naps, and timing of sleep” than those taking the placebo.

No current treatment for Non-24-Hour Disorder currently exists, and Vanda plans to submit a New Drug Application to the U.S. Food and Drug administration halfway through this year.

2) Novartis (NYSE:NVS): Current Price $67.43

Analysts at Citigroup upgraded shares of Novartis to a Buy on Wednesday following strong fourth-quarter earning report and important changes to its management.

The Switzerland-based pharmaceutical company announced that its net profit rose for the quarter even though sales were hindered by competition, cheaper generics, and price cuts. In particular, Novartis was hurt in recent months by the loss of patent protection for its blockbuster heart drug Diovan. But the company said it expects to return to growth next year.

“After our 2013 patent expirations are behind us, our relentless focus on innovation, growth, and productivity is expected to result in group net sales growth of at least mid-single digits in both 2014 and 2015, with core operating income growing ahead of sales,” said Chief Executive Joe Jimenez in a statement.

For the three-month period, net profit rose to $2.05 billion from 1.18 billion in the year-ago quarter, missing analysts expectations of $2.38 billion. However, net sales for the quarter, which remained flat at $14.83 billion, beat estimates.

The company also announced that its longtime chairman Daniel Vasella, who was responsible for transforming and strengthening the company’s business, was stepping down.

3) Myrexis (NASDAQ:MYRX) Current Price $2.91

Shares of Myrexis, a pharmaceutical company specializing in oncology and autoimmune diseases, were trading up Wednesday after its board of directors announced they were no longer pursuing a plan to liquidate and dissolve the company.

In early November, Myrexis said its board had determined it was in the best interest of shareholders to dissolve the company, a decision that came after the company suspended all of its clinical programs earlier in the year. However, it will now pursue different options. The board also cancelled the special meeting of its shareholders that had be scheduled for Wednesday.

“After a lengthy review and evaluation of potential alternatives to the Company’s liquidation and dissolution, including consideration of advice provided by the Company’s financial advisor, Stifel Nicolaus Weisel, the Board of Directors reached the conclusion that it is in the best interests of the shareholders to terminate further consideration of dissolution, appoint Jonathan M. Couchman as Director, President and Chief Executive Officer of the Company, and distribute $2.86 per share to the shareholders,” the company stated in a press release. Couchman is expected to acquire “revenue or income producing” assets that will bring additional value to Myrexis in the future.

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