The healthcare industry comprises multiple sectors, including biotechnology, pharmaceuticals, and healthcare equipment, each offering a unique and potentially risky opportunity.
News regarding FDA approval and positive results for therapies, pharmaceuticals, and trials greatly influences the outlook for companies, especially ones with small market cap share price. Healthcare companies can see a massive surge in their share price, following encouraging treatment outcomes, but the reverse is also true.
If results are lackluster, the stock price could plummet. It is a double-edged sword, and investors can get burned quickly if they’re not careful about investing in the biotech and pharmaceutical industry.
Let’s look at three healthcare companies that investors should avoid at this time.
Sage Therapeutics (SAGE)
Sage Therapeutics (NASDAQ:SAGE) is a biopharmaceutical company that develops medicines to treat neurologic disorders of the brain. Their flagship medication Zulresso is an injection to treat postpartum depression, and their only novel therapy publicly marketed now.
Although the FDA approved their newest medication Zurzuvae for postpartum depression treatment, hurdles remain in obtaining the thumbs up for major depressive disorder. The company has other treatments like Zurzuvae in a joint venture with Biogen (NASDAQ:BIIB) a large drug manufacturer. It passed Phase 3 clinical trials and is now in the registration phase.
Over the past year, their share price has fallen by 46%. On August 7, Sage Therapeutics released their earnings results for Q2 of 2023. Total revenue increased by 65%., and net loss expanded by 27%. Following the release of this earnings report, the share price fell by 54% from $36.10 to $16.75.
Therefore, SAGE announced a restructuring to their marketing commercial launch, expected late 2023, of Zurzuvae solely for the treatment of postpartum depression.
Novocure (NASDAQ:NVCR) is based in Saint Helier, Jersey, one of the British Islands located in the English Channel.
They develop, manufacture, and sell medical devices that help to treat cancerous tumors. Their two main products include Optune, which allows them to treat an aggressive form of brain cancer, and Optune Lua, which helps to treat mesothelioma. Novocure also has tumor treatments that are part of clinical trials and may soon be approved for commercial use.
NVCR’s stock price since September 2022 has fallen by 73%. On July 27, Novocure released their latest earnings result for the second quarter of 2023. Total revenue fell by 11%, and their net loss more than doubled compared to the prior year. As of Q2, Novocure reported 3,571 patients were undergoing therapy. Also, 1,556 new patients started treatment in that same quarter, a 13% increase year over year (YOY). In addition, Novocure has seen positive results in the Phase 3 trial of Lunar, which helps to treat non-small cell lung cancer.
Revance Therapeutics (RVNC)
Revance Therapeutics (NASDAQ:RVNC) is a biotech company that uses botox injections for therapeutic and aesthetic purposes.
Their flagship therapy, Daxxify, has been approved by the FDA for aesthetic use to treat frown lines. On August 14, the company announced the use of Daxxify for the treatment of cervical dystonia, which is a painful condition in which the neck muscles contract involuntarily.
Over the past year, the company’s share price has fallen by approximately 13%. In the recent earnings report, the company stated a revenue increase of 105% and a net loss that slightly expanded by 10% YOY. Revance said Daxxify accounted for their revenue increase of 47% quarter over quarter to $23 million.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines