April 27, 2015 / 8:19 PM / 3 years ago

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

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.

Aerie fell another 16 percent on Monday and the stock has lost roughly 70 percent of its value since Thursday.

Investors were also discouraged by less than promising data presented at a conference last week by companies developing CAR-T cell therapies, which reprogram T-cells responsible for the body’s immunity against cancer, according to Jerry Isaacson, director of research at LifeSci Partners. Kite Pharmaceuticals shares were down 8 percent Monday and have lost 14.6 percent of their value since before the conference while Juno Therapeutics Inc shares have fallen 19.8 percent in the same timeframe including an 8.6 percent drop on Monday.

A Wall Street Journal article published late Sunday highlighted drug price increases at companies including Valeant Pharmaceuticals International Inc , Mallinckrodt Plc and Horizon Pharma Plc.

This followed a Bloomberg report Friday afternoon about price increases of older multiple sclerosis drugs from companies including Biogen Inc.

Biogen shares have fallen 9 percent over two days after its quarterly update on Friday included news of slowing sales of its key multiple sclerosis (MS) drug Tecfidera and a delay in a data readout for its keenly watched Alzheimer’s drug.

Mylan NV shares also weighed on the S&P with a 5 percent decline after the company rejected Teva Pharmaceutical Industries Ltd’s $40 billion takeover offer, saying it grossly undervalued the company and that Mylan has no interest in payment in what it termed “high-risk” Teva stock. (Reporting by Sinead Carew; editing by Linda Stern and Cynthia Osterman)

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