U.S. healthcare stocks hit by spate of bad news, spotlight on pricing

Mon Apr 27, 2015 4:14pm EDT
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By Sinead Carew

April 27 (Reuters) - Healthcare shares were some of the U.S. market's worst performers on Monday after negative drug development news, reports criticizing high drug prices and a merger setback.

The S&P 500's healthcare sector was the benchmark index's biggest laggard with a 1.9 percent decline and the Nasdaq Biotechnology index fell 4.3 percent. Selling accelerated toward the market close. Both the S&P sector and the volatile biotech index were on track for their worst performances since early March.

Options traders have been seeking to protect themselves from a sell-off in the sector, which has risen for the last seven years.

Amgen was one of the biggest drags on the broader S&P on Monday with a 3.4 percent decline after U.S. Food and Drug Administration staff reviewers said they could not consider an accelerated review of its skin cancer immunotherapy at this time due to design concerns and results of a key study. {ID:nL4N0XO59O]

Celladon Corp shares were down 80 percent on extremely high volume Monday, after it warned Sunday that its hotly anticipated heart failure gene therapy Mydicar failed to meet its primary and secondary endpoints in an important trial. Investors have been waiting for the test data.

Other healthcare company shares were hurt by reports in both the Wall Street Journal and Bloomberg highlighting high drug pricing, which has long been a concern among healthcare investors due to pressure for discounts.

"What we're seeing is a healthy correction based on multiple negative news events in the biotech space," said Paul Yook, portfolio manager for the Bioshares Biotechnology Products Fund and the Bioshares Biotechnology Clinical Trials Fund at LifeSci Partners in New York.

The Celladon and Amgen news followed Aerie Pharmaceuticals' announcement on Thursday that a trial of its Rhopressa glaucoma treatment did not meet its primary endpoint, and Athersys Inc said on April 17 that its experimental cell therapy did not meet the primary and secondary endpoints of a study testing it as a treatment for a type of stroke.   Continued...