On Tuesday after the market closes, small cap healthcare stocks ACADIA Pharmaceuticals (NASDAQ: ACAD), GenMark Diagnostics (NASDAQ: GNMK) and XOMA Corporation (NASDAQ: XOMA) are all scheduled to report earnings, but what should also be catching investor attention is the recent stock performance for all three. Specifically, ACADIA Pharmaceuticals is up 308.1% over the past year while GenMark Diagnostics is up 168.7% and XOMA Corporation is up 161.7% – not a bad performance for investors and traders alike. So where do you stand with these three small cap healthcare stocks going into earnings? Here is a quick look:
ACADIA Pharmaceuticals (NASDAQ: ACAD) Has the Bulls Salivating Ahead of Earnings
ACADIA Pharmaceuticals is a biopharmaceutical company focused on treatments that address unmet medical needs in neurological and related central nervous system disorders. Specifically, ACADIA Pharmaceuticals has a pipeline of product candidates led by pimavanserin – a Phase III potential first-in-class treatment for Parkinson's disease psychosis. On Friday, ACADIA Pharmaceuticals fell 0.15% to $6.53 (ACAD has a 52 week trading range of $1.29 to $6.88 a share) for a market cap of $389.56 million plus the stock is up 308.1% over the past year and down 21.5% over the past five years. However and on Thursday, overall option volume for ACADIA Pharmaceuticals surpassed 27,000 contracts – seven times its daily average in the last month and only 426 of those contracts were puts. Back in December, ACADIA Pharmaceuticals announced a private sale of stock worth $86.4 million for $4.43 per share (the closing price for the day the sale went through) – taking some pressure off the company’s books and perhaps making it easier to find a collaborative partner. ACADIA Pharmaceuticals also surged in November after the company announced its drug pimavanserin reduced psychosis in patients with Parkinson's disease. This means the real catalysts for ACADIA Pharmaceuticals won’t be the numbers in the earnings report but any update from management regarding the company’s drug pipeline.
GenMark Diagnostics (NASDAQ: GNMK) Reported 299% Revenue Growth Last Earnings Season
GenMark Diagnostics is a provider of automated, multiplex molecular diagnostic testing systems that detect and measure DNA and RNA targets to diagnose disease and optimize patient treatment. On Friday, GenMark Diagnostics rose 1.77% to $10.91 (GNMK has a 52 week trading range of $3.63 to $11.56 a share) for a market cap of $356.38 million plus the stock is up 168.7% over the past year and up 102% since June 2010. The last time GenMark Diagnostics reported earnings, it reported a 299% year-over-year revenue increase from $1.3 million to $5.3 million thanks to an increase in the number of systems placed at customer sites (a net 35 analyzers were placed during the quarter, bringing the total installed base to 255) along with a significant increase in the number of tests sold. However, operating expenses increased from $2.8 million to $8.5 million due to a $2.6 million R&D spending increase, but the company’s loss per share was $0.20 verses $0.31. Otherwise, GenMark Diagnostics’ net loss for the first nine months of last year was $17.4 million ($0.71 loss per share) verses $18.5 million for the same period last year and the company ended the quarter with $57.0 million in cash and cash equivalents. That means this time around investors should probably pay attention once again to how big the growth was for GenMark Diagnostics’ revenue and unit sales rather than the bottom line results.
XOMA Corporation (NASDAQ: XOMA) Watch for Clinical Developments and the Cash Position
XOMA Corporation combines a portfolio of innovative therapeutic antibodies, both in late-stage clinical development and in preclinical research, with its recently launched commercial operations. On Friday, XOMA Corporation rose 1.01% to $3.01 (XOMA has a 52 week trading range of $1.77 to $4.13 a share) for a market cap of $245.48 million plus the stock is up 161.7% over the past year and down 92.2% over the past five years. Its worth noting that at the end of February, the option volume for XOMA Corporation suddenly rose from an average of 27 contracts per session to 3,088 as a trader bet the stock would hold above the $2.50 strike price through expiration in mid-April. XOMA Corporation announced encouraging preliminary top-line data from an interim analysis of its Phase 2 proof-of-concept (POC) study for gevokizumab – a treatment of the inflammatory facial lesions seen in patients with moderate to severe acne vulgaris. Back in early 2011, XOMA Corporation found a partner for the drug in France's Les Laboratoires Servier and has since focused on orphan inflammatory conditions for it with the drug being in three clinical trials. Gevokizumab could also ultimately be used for treating cardiovascular diseases. Otherwise, it should be noted that XOMA Corporation has reported revenues of $7,250k (most recent reported quarter), $9,275k and $9,865k for the first three quarters of last year along with net losses of $26,851k (most recent reported quarter), $16,155k and $30,425k. It did end the third quarter with $42,199k in cash and $16,996k in short-term investments – which may or may not be enough to get through this year with.
The Bottom Line. Obviously small cap stocks ACADIA Pharmaceuticals, GenMark Diagnostics and XOMA Corporation have had good run-up which could very well continue after earnings. On the other hand, what goes up can come down just as suddenly and with a thud – even more reason to pay attention to these earnings reports.