There are numerous biotech companies focused on cancer research and treatment, so it can be difficult for investors to make a decision in which they feel confident. With so many options, the information about research and drugs in the pipeline can be overwhelming. Though options are vast, there are three stocks on which I am focused in regard to cancer research. I believe one of these stocks is a potentially solid long-term investment, one is iffy but optimistic, and the third I believe to be one of the worst investments out there. It is a great example of why biotech investing can be so fickle and so difficult to predict.
The first of my 'buy soon' companies is Spectrum Pharmaceuticals (SPPI). The company features a varied portfolio of drug treatment, all of which focus on oncology and urology. Included in the portfolio is the FDA approved Fusilev for injection, intended for patients with advanced metastatic colorectal cancer and for high-dose methotrexate rescue therapy in osteosarcoma. The company's other approved drug is Zevalin, a proprietary biological drug for indolent non-Hodgkin's lymphoma.
Spectrum's pipeline also includes drugs such as Belinostat, a novel HDAC inhibitor in late stage clinical trials for peripheral T-cell lymphoma and other solid tumors, Apaziquone, a synthetic bio-reductive prodrug in two different phase 3 studies for treating non-invasive bladder cancer, Ozarelix, a drug in phase 2 studies for treatment of prostate cancer, SPI-2012, also in stage 2 for chemotherapy induced neutropenia, and Lucanthone, stage 2 development for chemotherapy sensitization in the treatment of recurrent, malignant brain tumors.
In addition to these hopefully close-to-market opportunities, Spectrum has several drugs in phase 1, development including a treatment for solid tumors, an adjunct to chemotherapy, a treatment for taxane-refractory tumors, and a treatment for end stage renal disease.
Spectrum did see apaziquone fail in phase 3 trials last week, as the bladder cancer drug failed to show an improvement in reoccuring tumors after a two year period. However, when the data from the two trials was pooled, it did show statistical significance. Even though apaziquone will likely be on the sidelines for quite some time, I believe the company does still have the potential to be a lucrative investment. Spectrum is currently at around $11 per share, which I believe offers a great buying opportunity for a company with so much in its pipeline. Buying comes with some risk, but the potential here is great especially since approval and success of any of the drugs could yield great results for investors. With so many opportunities in phases 1 and 2, I think Spectrum is a potentially solid long-term investment.
My consider buying now, but do so with caution pick is Dendreon (DNDN). Prices are especially low right now because the company faced a disastrous 2011. Most of its expectations were sent on the prostate cancer treatment Provenge, which faced major competition from Johnson & Johnson. Prices bottomed out, making it a great time to buy in based on what lies in Dendreon's pipeline.
However, I still share many concerns about the future of Provenge and, therefore, Dendreon. Provenge is one of the most talked about drugs to hit the market in decades. It raises ire in supporters and those who believe it is not as safe as supporters would have you think. This makes me nervous in regard to Dendreon's dependence on its flagship drug. The company is making major strides to remedy its public relations problems. It has gone to great lengths to improve its image, including appointing a new CEO. Regardless of the outcome of all the debate about Provenge, there are still three other projects to look forward to on the Dendreon front.
Dendreon's pipeline includes DN24-02, an ACI targeted at the HER 2/neu receptor, D-3263 HCl, a small molecule compound that activates the ion channel receptor TRPM8 (also known as TRPP8) in clinical development for the potential treatment of patients with solid tumors, and two additional antigen targets, carbonic anhydrase IX (CA9) and carcinoembryonic antigen (CEA), for the development of ACI candidates.
At the moment Dendreon is selling for around $10 per share. There should be movement in the coming months as the company's new CEO, John H. Johnson, former CEO of Savient Pharmaceuticals (SVNT), expands the use of Provenge in the United States and throughout the world. He also intends to lower manufacturing cost for the drug, open a new office on the East Cost, and develop new drugs to treat other forms of cancer. In my opinion, this makes Dendreon more than capable of recovering from the Provenge mishap and possible future backlash. I believe the company is poised to make a big splash in 2012 into 2013, but I would still proceed with caution. Keep an eye on the ever-changing Provenge story, as well as the future developments for Dendreon. Risk of non-approval for drugs in its pipeline is high.
Finally, the stock that I would use as an example of why the biotech market is such a volatile, exciting, and often disappointing place is Keryx (KERX).
Keryx had high expectations in the cancer market, but the recent results in April from its phase 3 clinical trials for perifosine failed. Within days it was trading at well under $2, falling 66% from a strong March when hopes were still high. Keryx will now focus on the only other drug in its pipeline, Zerenex. Zerenex is an oral, iron-based compound that will be used to treat chronic renal failure. However, most experts agree Zerenex is not viewed as a blockbuster in the biotech market, and will do little to boost Keryx too far past $5 or $6. Those searching for a new investment opportunity in the cancer research field should avoid Keryx, but if I made my purchase awhile ago based on perifosine's pending success, I would hold onto what I own for awhile to see if there is at small resurgence in shares. The risk of total failure of perifosine is priced in, however, the drug may have another shot in later studies and Zerenex is slated for an additional comprehensive study in late 2012. The current share price implies a low likelihood of success for Zerenex, which may be unwarranted.
Ultimately, the biotech market has a great deal of opportunity, but there is often a lot of risk involved. One misstep on one product and your investment will be a bust. What I look for when making investment decisions in biotech is companies with a lot going on in their pipeline. Some of my investments might still be risky, but I feel better knowing there might be something strong right behind a failed opportunity.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.