Pharmaceutical companies face increased risks if they do not have enough new drugs in the pipeline to replace those with expiring patents, or if tests on new drugs under development are negative, or new drugs are not approved by the FDA. Pharmaceutical companies address those risks by increased research and development, extending patents by tweaking the drug formulas, and by merging with other companies. It doesn’t always work, and the pharmaceutical industry has many more failures than successes. Here are some of the worst companies TheStreet Quant Ratings says you should consider selling. Number 3 is Omeros Corporation. With a ‘D-‘ rating, the company’s weaknesses can be seen in its deteriorating net income and weak operating cash flow. 2nd is, Corcept Therapeutics Incorporated. This rating is also a ‘D-.’ Corcept Therapeutics’ faults can be seen in its high debt-to-equity ratio and its very high debt management risk by most measures. Number 1 is XenoPort. With a ‘D-‘ rating the company’s weaknesses can be seen in its weak operating cash flow and generally high debt management risk. TheStreet Ratings are algorithmic stock picks based on 32 major data points. S&P 500 stocks rated ‘buy’ yielded a 16-and-a-half-percent return in 2014, beating the S&P 500 Total Return Index by more than 300 basis points. For the full reports on these stocks, you can check out TheStreet.com/QuantRatings.
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