(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)
When it comes to the Next Big Thing in medicine, the most sought after blockbusters are usually diseases that people are familiar with that don't have any, or many, highly effective methods of treatment or prevention. These usually get the most headlines and the most investor attention. This is understandable, but to the discerning investor, this imbalance opens up opportunities to look for companies treating diseases that people don't often pay too much attention to precisely because there are already highly effective methods of treatment or prevention available. Why would the treatment of such diseases be a signal for investors if there are already effective methods of prevention on the market? Because preventive measures are not available to everyone, and those that do contract such diseases still need help. And the fact that the mainstream often ignores these cases implies that discounts are available in these niches.
My case in point is cervical cancer. Cervical cancer is so easily preventable it rarely occurs to anybody that, in some regions of the world, it is a serious problem. It is almost universally caused by human papillomavirus [HPV], which is considered a "necessary cause" of the disease (over 90% of cases). HPV is a sexually transmitted disease for which there are two prophylactic vaccines already available, Merck's (MRK) Gardasil partnered with Sanofi (SNY) and GlaxoSmithKline's (GSK) Cervarix. These two only guard against two cancer-causing strains of HPV, 16 and 18, that cause 70% of cancer incidence, and are therefore not 100% effective, but these are only the first line of defense. Another is practicing safe sex, though that is neither a medical nor investible solution. A third is a regular smear test for women, as that would indicate any HPV infection which can then be monitored and treated for precancerous lesions, and HPV does not develop into cervical cancer until years, even a decade, after infection. With up to 10 years to prevent cervical cancer even upon HPV infection, nevermind smear tests, safe sex, and two effective prophylactic HPV vaccines, how could cervical cancer even be an issue?
And yet it is. In 2008 there were an estimated 473,000 cases of cervical cancer worldwide, 85% of them in developing countries where people do not have access to medical care or extensive knowledge of HPV, much less HPV vaccines.
Further, there may be something about cervical cancer that makes it an especially attractive candidate for treatment. I say this not as a scientist or biotechnician, as I am neither of those, but it seems to me that cervical cancer would be an attractive target for a biotech company because, as it has one nearly universal cause-HPV-the actual cancer may theoretically vary much less in its makeup and genetic expression, making it more uniform and easily targeted by treatments. Other cancers which develop spontaneously often vary heavily in antigens presented and other genetic targets offered for attack. That's why you often see cancer trials targeting a certain form of a certain subset of cancer that may have a higher expression of some antigen or other, and these patient populations become very stratified and hard to identify and match with the treatment under development. For cervical cancer, by contrast, if a company successfully develops a therapeutic vaccine, there could be a higher chance that it would apply to a larger percentage of the affected population, especially since 70% of all cases are caused by only two strains of HPV, types 16 and 18.
A quick look into the HPV market through Gardisil and Cervarix
Both Merck and Glaxo have done well with their respective HPV vaccines. Merck's Gardasil was its 7th best seller in 2012, grossing over $1.63B in sales. Even more impressive, since 2011, Gardasil is Merck's 4th fastest growing product at 35% sales growth year over year. Since 2010 it is its 9th fastest growing product at 65%, not at all pocket change or a trivial product.
As for Glaxo, Cervarix has been doing well, though not as well as Gardasil. Sales of Cervarix were down in 2012 due to a Japanese government program to get its population vaccinated that came to an end at the close of 2011.
Beyond Gardisil and Cervarix
As for therapeutics, there aren't many public companies developing cervical cancer treatments these days, or treatments for other HPV related diseases. In fact, in my search of the clinicaltrials.gov filings, I came across only four (after much filtering) investable companies even trying, and two of them are Glaxo and Merck, and these not so aggressively. Although Glaxo has 7 trials running, six of them are either Phase III retests of Cervarix on those who received a placebo in previous trials, dosage schedule changes for efficacy testing, or prevention tests through carcinogenic DNA testing on HPV positive precancerous women. Essentially then, Glaxo is only testing one new drug for cervical cancer itself, and that is a combination of trametinib and unnamed GSK2141795, both of which inhibit certain proteins essential for tumor growth. As for Merck, there is not much new going on in its retrial of Gardasil on HIV positive patients to help treat cancerous precursors. That Phase II is scheduled for completion in 2016.
Along with Merck and Glaxo, there are two other smaller companies traveling along in Big Pharma's wake, and this is where the more exciting stuff is happening with cervical cancer. One is Advaxis (ADXS) and the other Onconova Therapeutics (ONTX). Advaxis is progressing through 3 clinical trials involving HPV related cancers, and Onconova one.
The Onconova trial is mildly interesting because it is testing both a HPV and non HPV cohort for cervical cancer (the few cases that do exist) to see if a new drug, rigosertib, has any different effects on the two. Rigosertib inhibits two proteins that promote survival of cancer cells and has been included in 29 different trials already since 2006. This cervical cancer trial is due for completion in 2015. I'm not too excited about the rigosertib approach though because cancer growth pathway inhibitors have been around for many years. They are hit and miss. Most recently, Onconova announced the failure of rigosertib for metastatic pancreatic cancer. Its share price reflects that failure, dropping 56% since October. There is hope for rigosertib yet, with Phase III data due any time now for high risk MDS, a form of blood cancer, though rigosertib being around experimentally since 2006 with no big successes will probably dampen investor hopes.
This leaves Advaxis as the only company aggressively pursuing HPV-related disease treatment. Its approach in ADXS-HPV is quite novel, in that it is not simply pursuing the next cancer growth factor inhibitor or antigen-loaded vaccine. Rather, its approach introduces a genetically engineered bacteria called Listeria that is attenuated and reprogrammed with DNA plasmids that instruct it to invade and reprogram antigen presenting cancer cells, escape, and then secrete the same antigens it infected the cancer cells with to attract the immune system. So basically, it baits the cancer with antigens and then spreads that same bait to immune cells, like tagging them with immune cell magnets and priming the immune system like one would a bomb-sniffing dog.
Advaxis recently completed a Phase II trial for ADXS-HPV in India, and SeekingAlpha author Grant Zeng summarized the data as follows:
Great efficacy has been observed which are very promising. Compared to GOG historical one year survival of 5%, ADXS-HPV has achieved 36% one year survival rate. This is a huge improvement. Other literature data showed that generally, recurrent cervical cancer has a poor 1-year survival rate of 15% and a 5-year survival rate of 3-13%. ADXS-HPV's 36% one year survival rate is also a 100% improvement. 18 month survival also reached 28%. Further investigation is warranted.
A second important development with Advaxis is that it just recently snagged a big licensing deal with Global BioPharma, a Taiwanese company that covers an area where 40% of the world's cases of HPV cervical cancer are diagnosed each year. According to the deal, GBP will be responsible for all clinical development costs for ADXS-HPV, in addition to paying for the enrollment of up to 150 patients in its Phase III trials.
This should presumably keep the financial burden on Advaxis light, and an infusion of much-needed cash into the company by GBP. A chronic problem with Advaxis is that it almost never has any cash on hand, and relies on dilutive equity financings to hobble along. This, of course, is the flipside of going after a disease like cervical cancer that most investors ignore because they think it is irrelevant. On the one hand, it does lead to undervaluation due to lack of attention. On the other hand, it presents serious risks because companies that go after diseases with little investor interest tend to chronically lack cash like Advaxis, and dilution will likely continue to some degree throughout the Phase III trial.
These risks considered, with GBP as its partner and positive Phase II results (which likely played a big part in attracting GBP in the first place) the immediate risk of bankruptcy for the company has been averted and it will now proceed into Phase III for ADXS-HPV. The stock has not seen a significant bump despite the double dose of good news, again, because not too many people have cervical cancer on their radar in the first place, which gives those who are interested the opportunity to buy in at their leisure. If the deal with GBP combined with positive Phase II results won't attract attention, then only an outright FDA approval will, and there is certainly some time ahead until the possibility of that happening.