Over the last two years the most common trend in cancer treatment has become targeting therapies, which has resulted in less optimism for therapies that use various forms of radiation. Recent advancements, along with a shortage of nuclear reactors, have caused some investors to abandon their investments in companies with radiation based treatments for a more innovative class of drugs. However, what some don't realize is that radiation has also adopted the theories of targeting specific tumors, therefore causing less harm to healthy cells. Let's take a look at four different therapies: two underperformers that are now seeing changes in aggressively growing revenue and then two other therapies that are innovative in their approach, but are under-the-radar among investors.
One of the more significant problems that companies focusing on radiation treatment are facing is a lack of supply and even a change in perception among physicians and patients. By now all cancer patients have heard the horror stories of using radiation and how it destroy healthy cells and negatively affects the person's health. Although we have made progress, these issues have remained. As a result, there has been a change to cancer-targeting vaccines and even less funding for therapies with medical isotopes/radiation.
To find future trends within this very large space, one only needs to look and assess the decisions of Nordion (NDZ), which is one of the two largest players in the space. The company operates in three segments: Sterilization, Medical Isotopes, and Targeted Therapies. The sterilization business machinery and compounds are used to sterilize medical supplies, and accounts for a sizeable percentage of its business, but lacks a growth advantage. The company's medical isotope segment harvests Mo-99 which is primarily used in diagnostics and testing. Nordion has the advantage over potential competition because of exclusive agreements with Mo-99 producing reactors, and because it's a space that is very hard to enter due to regulative hurdles and a shortage of Mo-99 producing reactors. The company generates nearly 40% of its sales from this segment. However, I imagine it is a segment that NDZ would love to abandon due to its stability issues.
The growth potential of Nordion reflects the change of focus in the space, as its third segment, the targeted therapies, is where the value lies for radioactive isotope companies. Nordion's targeted therapy is TheraSphere, a radiation treatment for inoperable liver cancer that is administered via catheter. The treatment has been proven to be more efficient than conventional treatments due to its ability to deliver high doses of radiation with minimal damage, with a targeted approach. Although the treatment has grown at a compound average of 40% over the last five years, it has still faced adoption issues among physicians. Some believe that the results of recent trials will help with its acceptance among physicians. There are obvious benefits to the treatment, but like most in the space, early problems have become standard. Nonetheless, the potential is still very evident.
Zevalin (by Spectrum Pharmaceuticals (SPPI) is another drug in the space with high hopes that experienced early problems. Zevalin is known as a radio-immunotherapy, which is an antibody conjugated with radio isotopes - at one time a true innovation in the field. The therapy delivers radioactive material directly to the cancerous cells, and then kills them with minimal side effects. Back when it was first approved, Wall Street analysts projected immediate sales in excess of $100 million, and eventual sales of more than $500 million. However, the drug has encountered one unexpected event after another, with an expensive price tag, and a number of scans and diagnostic steps that must be taken. As a result, Zevelin sales are just $28 million though Spectrum Pharmaceuticals has attempted numerous actions to increase sales as of late.
The early innovating radiation therapies, such as Zevalin and TheraSphere, have showed great promise, but failed to meet high expectations. Spectrum Pharmaceuticals, despite being one of the fastest growing biotechnology companies, trades with a very modest market cap and has experienced issues in gaining investor support. Both companies are now taking further steps to show the effectiveness of their targeted treatments. Nordion is testing TheraSphere in a YES-P trial, in Europe that includes 350 patients at 24 sites to determine the effectiveness of the drug at treating a subgroup of patients with hepatocellular carcinoma (liver cancer). If the trial is successful, it will present the company with new opportunities and faster revenue growth. On the other hand, Spectrum just announced promising data on Zevalin at this year's ASCO, showing it can be used on patients who have received stem cell transplants, on the elderly, and with limited chemotherapy. Spectrum has placed much of its emphasis on Zevalin, with new testing following its expensive bioscan being lifted, a test that many believed were keeping sales from rising.
Despite Zevalin's and Therasphere's early development issues, they now appear to be on the right track. Both NDZ and SPPI are investing heavily into their treatments to determine how much further upside exists. The two treatments are much different, however, still fall in the same class that use a form of targeted radiation. As investors, we must consider both companies' early problems and the efforts to correct the problems, and if new therapies have taken into account the mistakes and unexpected events that have occurred during the early stage targeted radiation therapies.
Over the last few years we have seen an increase in demand for ground-breaking brachytherapy treatments, which are internal radiation therapies. This is a type of radiation that is placed inside the affected area, therefore allowing high doses of radiation to the cancer with minimum affect to healthy cells. One therapy that is receiving a lot of positive publicity is a previously unsuccessful venture being marketed as Gliasite, one of IsoRay's (ISR) newer therapies that treat meningioma brain tumors. The treatment allows physicians to place a specific amount of radiation in an area where the brain tumor remains, following surgery. Gliasite was recently approved in 31 European countries, and is an innovative treatment that could create more excitement for the use of targeted radiation, seeing as how it causes less damage to healthy cells and brain tissue.
In addition to targeting therapies by the use of catheter, such as Gliasite, there is also an injectable water-based radiation that delivers the radiation directly to the tumor, a technology that mirrors that of antigen targeting vaccines that have become so desired over the last year. These vaccines present the possibility to be well adopted as the medical community appears to be open to the idea of vaccines in the future treatment of cancer. Battelle has created a technology such as this with its radiogel, a form of radiation that is injected directly into the body, stays in place, and then delivers the radiation directly to the cancer cells, with very minimal effect on healthy cells. The radiogel would be used similarly to IsoRay's Gliasite, when solid tumors cannot be removed safely by surgical excision, and on tumors that do not respond well to conventional external-beam therapy. The patents to radiogel was licensed to a small company, Advanced Medical Isotope (ADMD.OB), a stock that has climbed over 100% in the last month since the announcement of it being awarded the radiogel patents from Battelle. Considering the size of the company, the idea that it was given this opportunity could provide a nice spark and may change the company if the treatment is well adopted in the medical community.
The primary question regarding the future of radiation based therapies is whether or not unconventional therapies have innovated enough, and are now able to grow, with a targeted approach. These therapies have all been proven effective, and with recent changes, investors should feel optimistic that new marketing approaches will return better revenue than what we have witnessed in the past.
The treatment of cancer is changing rapidly. We already know of the advancements in immunotherapy, but with companies such as Nordion and Spectrum Pharmaceuticals, investing a lot of money into its radiation-based treatments, and companies (such as IsoRay and Battelle) creating therapies that mirror the most innovative treatments in cancer, it does appear that the use of radiation in the treatment of cancer is far from being extinct. Furthermore, it looks likely that the use of radiation could very well grow to new lengths over the next few years, thanks to the innovation of companies such as the four mentioned above.
Disclosure: I am long SPPI.