3 Breast Cancer Drugs That Could Boost Your Portfolio

 |  Includes: BMY, CLDX, GALE, TEVA
by: Amy Baldwin

Breast cancer is the most diagnosed cancer in the U.S., with an estimated 232,340 new cases this year and nearly 40,000 deaths in the U.S. in 2013 alone. It goes without saying that breast cancer drug development is a very lucrative business, and a successful drug can earn billions in annual sales. However, large gains can also be created while such drugs are in clinical development.

Since 2012, breast cancer drugs have led to gains of more than 800% for Celldex Therapeutics (NASDAQ:CLDX) and Galena Biopharma (NASDAQ:GALE). Also, Puma Biotechnology (NYSE:PBYI) has soared 370% this year alone with the development of its breast cancer drug, including 85% in the last five sessions. But what's even better is that if these companies reach the market with their drugs, gains could be significantly larger.

CDX-001 at the Center of a Remarkable Two Years

Celldex Therapeutics is a multi-product developmental company, with late-stage products that treat breast and brain cancers and also boasts a large early stage pipeline. Since 2012, the majority of gains were created from speculation, clinical updates, and then final data from a Phase 2 breast cancer product called CDX-011, a fully-human monoclonal antibody-drug conjugate (ADC) that targets an overexpressed protein called glycoprotein NMB (GPNMB).

In final data released on December 8, 2012, CDX-011 produced a clinical benefit in heavily pre-treated breast cancer patients with tumors that over-express GPNMB. CDX-011 was tested in multiple patient settings; but the most impressive data came from those who were triple negative with high expressions of GPNMB, further showing that the drug's function was being carried out. In this setting CDX-011 produced a response rate of 33%. Now keep in mind that this is a patient population that failed to respond to any other treatments. The control group had a 0% response rate, showing a remarkable outcome in favor of CDX-011. In addition, overall survival increased from just 3 months to 10 months… once more, very impressive clinical data.

The peak sales potential of CDX-011 varies widely, with some estimating a low at $400 million and other analysts expecting a billion dollars in sales. However, the consensus seems to be around $700 million. With a market cap of $2.15 billion, Celldex trades at three times its peak sales estimates for CDX-011 in a biotechnology industry that trades at 8.7 times sales. Consequently, Celldex should not be considered a pricey or inflated investment at the present, especially when you consider its pipeline.

Celldex also has a Phase 3 drug called rindopepimut, which is nearing an FDA approval pending strong data. It is a drug that treats brain cancer and could create another $300-$600 million in annual sales. Furthermore, its pipeline could create even larger sales, including CDX-1127, which Oppenheimer believes could earn sales of $8 billion if successful. As evidenced, Celldex has done well in the last couple of years… but long-term gains could be even better.

Unparalleled Upside if NeuVax Can Continue its Path

Galena Biopharma is another company that has produced robust data (but is not nearly as expensive) with a market cap of $450 million, and the potential to earn up to $5 billion annually with its breast cancer vaccine NeuVax.

NeuVax is a comparable drug to the best-selling breast cancer drug of all-time, Herceptin. NeuVax essentially treats the patient population that is not eligible for the $6 billion a year Herceptin, those who express lower levels of the protein HER2. In fact, only 25%-35% of patients qualify for Herceptin, while more than 50% will qualify for NeuVax if successful. This difference in patient population suggests that $5 billion in peak potential might be somewhat conservative.

Like CDX-011, NeuVax has produced very compelling data to this point. Galena has announced data and clinical updates vigorously, including at various times following treatment, with and without boosters, and at different doses. Perhaps the most impressive data comes from its 5-year disease-free setting in patients who received booster shots with treatment. In this large group, 94.4% of patients were disease-free versus 74.1% in the control group, with a NeuVax recurrence rate of 5.6% versus 25.9% in the control group; this is definitely statically significant. And what's got investors optimistic regarding the company's 700+ patient Phase 3 trial is that the study design is based on the same factors that produced these results.

While Galena still has about 3 years until NeuVax would hit the market, the expectations and potential alone is what's consistently driving shares of Galena higher. The stock has a Buy rating by all the analysts who cover it, and Galena already has a foreign partnership with Teva Pharmaceuticals (NASDAQ:TEVA). Keep an eye on this biotech: the next three years could be very interesting as it applies to Galena's stock. If we use the same formula as with Celldex, then Galena trades at less than 0.10 times its peak sales, which is incomparable given its data.

An Emerging Breast Cancer Gem

The final breast cancer company I will profile is Puma Biotechnology. While it hasn't been a top-market performer for as long as Galena and Celldex, it has commanded the attention of investors.

Back on December 5, Puma reported data from a Phase 2 trial of its breast cancer drug neratinib. In the study, neratinib was combined with Bristol-Myers' (NYSE:BMY) Taxol and was then tested against Taxol combined with Herceptin. Surprisingly, the neratinib arm had far better results than the Herceptin arm in treating breast cancer, those with Stage 2 or worse.

With these results in mind, neratinib is looking like a real gem. What's even more impressive is that the drug was also tested with Glaxo's Tykerb, which also produced strong data. Puma will now progress into a larger study. The Phase 2 trial's endpoint was pathological complete response (pCR) in both the breast and lymph nodes at the time of surgery. Now, given that Puma's data reveals a much more favorable response than Herceptin data, it's likely that a survival benefit will also be found.

As aforementioned, Puma's stock has more than doubled in the last month. Keep in mind that this is a company that just became public in 2012. Puma's only product is its breast cancer drug within its pipeline, but the company hopes it can be effective in treating a wide array of breast cancers at different stages of the disease. Thus, the revenue potential is great, especially considering it is an oral and potent irreversible tyrosine kinase inhibitor.


Unfortunately, with Puma having a market cap of $2.5 billion, a lack of diversity within its pipeline, and the need for much more data to earn an FDA approval, I'd say it's a distant third in regards to being the best investment opportunity of these three profiled companies.

Celldex and Galena are far better stocks, having both value and robust data with large pipelines. Of course, with Galena still enrolling its 700+ patient Phase 3 trial, it naturally carries more risk than Celldex, but has far more upside potential if NeuVax is proven successful. Essentially, given NeuVax's upside, Galena could easily become the next Pharmacyclics. Celldex could also become significantly larger; but with a market cap in excess of $2 billion, it is already a large company. To conclude, these are all interesting companies with remarkable data in treating breast cancer, having products that could very well be household names in the years ahead… and these stocks might very well add substantial gains to your portfolio.

Disclosure: I am long GALE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.