2012 has been an incredible year for the pharmaceutical indsutry. We saw a whopping total of 102 new FDA approvals for therapies since the start of the year.
I've boiled down that enormous list of newly approved drugs into five that are within the field of oncology (or cancer treatment) for investors that want to enter a subindustry that has enormous potential within the United States, due to the aging population and the increasing incidence of cancer in the population.
On top of that, anyone making an investment in these drugs/companies doesn't have to worry about the long clinical development process or the possibility of a stressful FDA rejection.
1.) Abraxane, Celgene Corporation (CELG)
Abraxane (paclitaxel protein-bound particles for injectable suspension) is a novel treatment for metastatic breast cancer (MBC) that was approved back in 2005, although it was approved for a new indication this year. On October 12 of this year, after showing beneficial results in a phase III trial, it received approval for the first-line treatment of non-small cell lung carcinoma (NSCLC) for patients that are not candidates for the standard of care - radiation and curative surgery.
Lung cancer incidence is very high in the United States, with a 2012 estimate of 226,160 new cases. NSCLC has about 171,000 new cases each year, making up the vast majority of the lung cancer patient demographic.
On top of market potential in 2013 in the lung cancer drug market, Abraxane is expected to receive additional expansion of its label into pancreatic cancer treatment, as well as melanoma. These development programs are nearing completion of phase III trials, and will cause additional expansion of the Abraxane label in coming years. Celegene is up over 20% in the last 6 months largely due to the positive developments in Abraxane. The upward momentum in the stock and the company's fundamental outlook is still intact, so do consider Celgene as a well-diversified biotech play for 2013.
2.) Kyprolis, Onyx Pharmaceuticals (ONXX)
Onyx has had an exceptional year - especially after it saw accelerated approval from the FDA as described in a company press release from July 20th. ONXX jumped 43% on the news, and did not see a sell-the-news reaction. Instead, ONXX moved up consistently until it reached a new 52-week high of $93.18/share. Onyx stock has retreated quite a bit from those levels, but Kyprolis has not gone anywhere.
Kyprolis (also called carfilzomib) is a treatment for the rare and dead form of cancer known as multiple myeloma. It is the most fatal of the major classifications of blood cancers (with an approximate 5-year survival rate of only 41%), and has a patient population of roughly 1.012 million.
In Onyx's third quarter results, we saw Kyprolis sales revenue of $18.6 million - quite good for any drug in its first quarter on the market. There are a wide range of estimates on Kyprolis' sales growth in coming quarters, but the general consensus is that Kyprolis will reach peak annual sales high enough to justify the enormous increase in Onyx's market capitalization (worth about $1.4 billion) that occurred right after the drug's approval. Investors who are invested (or interested) in ONXX should definitely keep an eye on Kyprolis' progress.
3.) Xtandi, Medivation (MDVN)
Medivation has been another incredible biotech performer this year - the best on this list actually on a percentage basis. MDVN is up 127% since the start of the year based on speculation over its metastatic castration-resistent prostate cancer (MCRPC) treatment Xtandi, which received an unsurprising FDA approval on September 4th, 2012.
Another drug in the MCRPC space, Zytiga (marketed by Johnson & Johnson) is projected to reach $1 billion in sales for the fiscal year of 2012. Another competing treatment called Provenge (marketed by Dendreon) made $224 million in FY 2011, with marginal improvement expected for 2012. Xtandi is expected to come closer to Zytiga's sales figures when it has time to saturate the MCRPC market, which should justify the company's now-enormous market capitalization of $3.9 billion.
4.) Marquibo, Talon Therapeutics (TLON.OB)
Talon is has one of the most overlooked drugs out there considering that it has already received FDA approval, but there is good reason. Marquibo is actually made up of the generic (and commonly used) chemotherapy agent vincristine. Going into the drug's history, you can see that Marquibo failed to receive FDA approval for treatment in non-Hodgkin's Lymphoma back in 2005. Talon decided to buy the rights to Marquibo to give it a try in acute lymphoblastic leukemia (ALL). Not everyone was expecting the drug to be approved in August of this year, but it was. An MAA (Marketing Authorization Application) is expected in 2013.
The company has a target patient population of about 2,000. This doesn't present a huge amount of opportunity for Marquibo even under the best conditions, but it does imply that the company can earn annual revenues of roughly $80 million or so when this drug hits peak sales.
The company's market capitalization is also misleading. It is technically $11.55 million, although stockerholder's equity is actually -$96 million as shown in Q3 earnings, largely due to warrants that were issued earlier in the year to raise more cash for Talon. Marquibo has to show strong performance in 2013 to make TLON worth it, but investors may be rewarded quite well for their high risk tolerance.
5.) Zaltrap, Regeneron (REGN)
Regeneron has been moving up very smoothly in the last few months (shares are up 42% in the last 6 month) mostly because of the great success of its wet-AMD treatment EYLEA, although it's also worth noting that the company got approval for its metastatic colorectal cancer treatment Zaltrap on August 3rd, 2012.
Zaltrap posted $8 million in sales for the third quarter of fiscal year 2012, although I expect to see at least double that number a year from now. Watch Zaltrap (and EYLEA) in 2013 to see whether or not their sales growth justifies Regeneron's share price.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.