Last year the top three cancer drugs, Rituxan, Herceptin and Avastin had combined sales in excess of $20 billion. Rituxan, a monoclonal antibody approved treatment for common forms of blood cancer, including non-Hodgkin’s lymphoma (NHL), follicular lymphoma and chronic lymphocytic leukaemia (CLL) and Herceptin a breast cancer drug that also has a first-line approval for treatment of HER2+ metastatic cancer of the stomach were both from Swiss healthcare company Roche.
Avastin on the other hand is developed by Biogen and is FDA approved to treat advanced breast, lung, kidney, cervical and ovarian cancers and glioblastoma, a type of brain cancer while in Europe it has approval as a first-line treatment for patients with metastatic colorectal cancer.
Even though Biogen and Roche dominated the $100 billion cancer treatment market, this still wasn’t enough to entice the street as both shares dipped 4 percent and 16 percent respectively on a year-to-date basis compared to the broader S&P 500’s 5 percent gain. While some may feel turned off by the stocks’ poor performance, it is important to remember that both pay a nice dividend which should keep investors happy as they wait for an appreciation.
However, due the massive size of companies such as Biogen and Roche, even having the top selling cancer drugs may not be enough to move the needle in terms of shareholder value. For investors looking to realize above average returns, it may prove more worthwhile looking at smaller companies developing newer and innovative therapies with potential for breakthrough status.
Next generation cancer therapies
There are more than a hundred publicly listed companies developing some sort of cancer therapy which they hope will provide better efficacy and safety profiles than existing standards. But with the 21st century’s advancements in technology, investors have their work cut out for them as radiation and chemotherapy focused companies offer some of the biggest opportunities in the cancer treatment market.
One such company developing what can be described as a next generation radiation based cancer treatment is Advanced Medical Isotope (OTCMKS: ADMD). The late stage clinical biotech is currently developing an Yttrium-90 (or Y-90) based radiation treatment called RadioGel which could redefine how inoperable tumors are treated. Y-90 is a radio isotope that offers a lot more benefits over those currently in use with the major one being its extremely short half-life that averages about 2.7 days.
What makes RadioGel particularly interesting from a medical viewpoint is that it is injected into hard to reach tumors which can’t be removed surgically, where it then solidifies and effectively stops the spread of the cancerous cells. Initially, ADMD plans to use RadioGel to target non-removable cancers such as pancreatic, prostate and brain which could lead to a paradigm shift in the way such tumors are treated. Currently, the treatment for higher-grade tumors begins with surgery followed by radiation therapy and chemotherapy which significantly reduce the quality of life for patients by exposing them to huge doses its of radiation.
In addition to RadioGel, ADMD is also developing another product called the Radio Paste. This product will be applied following the removal of a tumor inside the body in order to get rid of the residual cancer cells. Patients with cancers such as non-small cell lung cancer (NSCLC) and breast cancer which have a 15 percent and 50 percent recurrence rate respectively even after curative surgery will be among the major beneficiaries of Radio Paste.
For those investors who may still be skeptical about ADMD going forward, Sirtex (OTCMKTS: SXMDF) an Australian based life sciences Company that develops and delivers oncology treatments using novel small particle technology should be looked into. The company offers SIR-Spheres Y-90 resin microspheres, a medical device used in interventional oncology and delivered to the liver tumors via Selective Internal Radiation Therapy (SIRT).
Sirtex’s SIR-Spheres Y-90 resin microspheres are the only FDA PMA approved microspheres for the treatment of colorectal liver metastases. For the FY2016, the company reported robust sales growth as doses soled increased 16.4 percent to 11,931 doses compared to the prior year. Total product revenue for the year came in at $232.5 million representing a 32 percent increase over the prior while net profit also surged 32.8 percent to $$53.6 million.
Other interesting cancer stocks
Bellicum (NASDAQ: BLCM) currently trades at $15.4 per share and has a market cap of $417.6 million. The company is currently focused on developing its lead product candidate BPX-501 which is a CAR-T based therapy. Although the CAR-T space is close to saturation with bigger names like Juno and Kite developing almost similar products, Bellicum distinguishes itself clearly from the pack.
This is because Bellicum’s treatment, unlike competitors, incorporates a proprietary self-destruct switch technology built upon research from the Baylor College of Medicine which can switch off the CAR-T treatment if it threatens healthy cells.
Considering that one-third of patients who have undergone CAR-T treatment have developed severe fevers and inflammation with some resulting in death, the importance of this new treatment can’t be underestimated.
Exelixis (NASDAQ: EXEL) has been on an excellent run this year as its stock price has nearly tripled this year. The company has a market capitalization of $4.3 billion which unlike other biotechs hasn’t been driven purely by speculation. Its two drugs Cometriq and Cabometyx which treat medullary thyroid cancer have been well received by the market.
Cabometyx in particular has done well gaining a 35 percent market share as a third line treatment for kidney cancer and a 20 percent market share as a second line treatment. Moreover, the treatment’s biggest breakthrough could come after the drug achieves firs line treatment status for kidney cancer. According to recently released clinical trial results, Cabometyx is already outshining the current standard of care Sutent which bodes well for Exelixis’ shareholders.
Clovis Oncology (NASDAQ: CLVS) is another biotech that had a great year, gaining 30 percent since the beginning of the year. The company focuses on acquiring, developing and commercializing cancer treatments. Its lead product candidate is Rucaparib which is an advanced stages of development for the treatment of ovarian cancer. The stock recently rallied by at least 10 percent on an FDA announcement that revealed the treatment would be getting an accelerated approval for treatment of ovarian cancer.