The ASCO is a meeting that I anxiously await on a yearly basis. This year the event lacked the number of headlines that I have come to expect, but nonetheless, it still provided further proof that we are inching our way closer to curing cancer. The last few years have been eventful, as biotechnology companies have showed further progress than at any period over the last 30 years at finally curing cancer. In the past I would look forward to the ASCO as a way to capitalize on potential investments, and also as a period of reflection to remember those lost to such a deadly disease. Yet now I use the meeting as a way to get ahead of future trends, as cancer treatments are advancing on a near daily basis, in places that you might not expect.
At last weekend's ASCO, the presumed winners may have been Bristol-Myers (BMY) and Johnson & Johnson (JNJ). However, the real winners are cancer patients, as this year's meeting further validates our move away from conventional treatments into therapies that are more effective and less harmful, via targeting specific cells and/ or tumors. Each year we are seeing more and more companies create products that have the capabilities to limit harmful side effects and produce results that are unprecedented in the treatment of cancer. The immunotherapy approach, made famous by Dendreon's (DNDN) Provenge, has become the measure of success that all companies are now trying to tweak and then mirror. However, even more conventional treatments that had seen few advancements in the past such, as with radiation, are now being modified with the same theory as immunotherapy: to target specific cancers that cannot be removed or treated successfully with any other method.
Despite Provenge's early issues with meeting sales guidance, the vaccine did change the way that scientists and physicians are developing drugs. The science behind Provenge and immunotherapy drugs is that they target specific antigens that are highly expressed in certain cancers by stimulating the immune system and, therefore, using the body's own natural defense to recognize the tumor as foreign. The vaccine causes the body to "seek and destroy" the cancerous cells while leaving healthy cells unharmed. As a result Provenge is often described as the most innovating cancer drug in the market.
Immunotherapy and the process of targeting specific cells have created a significant amount of excitement among both drug developers and investors. Stocks in the space have been among the largest in terms of gains in 2012. Preclinical companies have been able to file for IPOs, raising excessive amounts of cash considering the early stage of development, such as Verastem (VSTM) and Oncomed, a company hoping to raise over $100 million during its IPO despite its latest candidate being a Phase 1 drug. In addition to large IPOs for companies targeting specific cells with breakthrough candidates, large pharma has also showed an increased interest in companies with late- stage candidates that exercise this approach. This is evident with the billion dollar acquisitions of Biovax and Micromet along with the $2.6 billion purchase of Boston Biomedical for its patent portfolio and late- stage candidates.
The diversification within the industry has also been a provider of growth, as companies are realizing they can target specific cells in other ways besides immunotherapy and still experience success. For example, Verastem's candidate that uses small molecules rather than immunotherapy, further illustrates a class of treatments that are building from the success of the immunotherapy targeting concept. At this point there is a lot of trial and error, and scientists are trying to test the limits of this new concept of targeting cancer cells. In early trials, the results are positive and raise the question of what other treatment alternatives may be successful using the same theory of targeting.
One method that is being tested is the use of radiation or radioisotopes, which was a treatment that we were trying to avoid with the targeting of cancer stem cells. However, some companies are exploring radiation treatment and finding that it also can be used to target specific cells and be more effective without the harmful side effects of traditional radiation therapies.
One of the goals of new cancer treatments has been to replace or supplement the more conventional treatments of the past such as chemotherapy and radiation. However, in recent years the use of radiation has been ever so quietly evolving and new treatments involving medical isotopes are being explored to target and deliver radioactive substances directly to the cells while causing little harm to healthy cells. These radioactive substance, also called radioisotopes, are much different from external beam radiation treatments where the radiation is directed from outside the body.
About 90% of all radioisotopes used in the United States are imported from two companies, Nordion (NDZ) and Covidien (COV). Both are innovating leaders in the space, but use radioisotopes for more of a diagnostic tool, a use that is growing by over 10% per year. However, both companies have had problems as of late with supply and demand. The demand is present but supply has been short. Nordion just recently announced that its provider of medical isotopes, National Research Universal, is now producing at full capacity. Yet the issues of supply remain a problem that companies in the space have encountered, leaving a demand for alternative treatments.
As a result of supply issues and the overwhelming use of radioisotopes in the treatment of cancer, there are many companies focusing on alternative methods that use the power of radiation, but have altered its delivery. One such example that uses the power of radiation with the theory of targeting cancer cells is with an isotope product developed by Battelle, called "radiogel", that is injected into the body, stays in place, and then delivers a high dose of cancer-killing radiation, and is a result of years of research by scientists at Battelle.
The technology for this new "radiogel" does seem promising, as we have known for years the benefit to using radiation in cancer patients. However, with this technology we now have a way to provide a controlled, high-dose of Yttrium-90 to solid tumors that cannot be surgically removed. This candidate reminds me a lot of Dendreon's Provenge with the exception of targeting antigens by using radiation. The concept of treating cancer by targeting the tumor exclusively is what hits home, and further shows just how instrumental Dendreon and others are that brought targeted therapy to the forefront. Battelle has licensed this technology, "radiogel", to a very small company, Advanced Medical Isotope (ADMD.OB), a company that will now further test the technology on the treatment of patients, which could be yet another game-changer in the way we treat cancer.
According to a study published by The Lancet, if current population trends continue, the number of people with cancer worldwide will go up to 22.2 million by 2030, up from 12.7 million in 2008. This is a surge that is expected to occur in all regions of the world, but mostly in poorer parts of the world that are unable to handle the burden. Consequently, we need new cheaply developed therapies to handle this demand, and it is possible that radiation targeting therapies may be the answer, due to its low cost compared to therapies such as Provenge.
The advancements in cancer therapy are a winning situation for both the patients and the companies that develop the treatments. With recent developments in cancer stem cell targeting vaccines via immunotherapy and antibodies, we are seeing shifts in the way that we develop cancer therapies, even the most conventional. Eventually, if cancer treatments become more efficient, costs will actually decline as there will be fewer rounds of treatment and more occurrences of success. A good example is the "radiogel". Treatments such as this could become a great opportunity for investors as physicians are already comfortable with the use of radiation. By making radiation more efficient, it would benefit the patients and be easily adopted by physicians. As investors, it is hard to stay on top of the continuous developments within the cancer space, but I view the industry as a place of great opportunity that is continuously presenting new therapies and making old therapies even better. Investors and physicians will both take more note of the targeted approach to cancer treatment and the hope it can bring.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.