Although the arsenal of weapons used to fight cancer is growing almost daily, surgical intervention continues to be a common first-line treatment in many cases. Generally, cancerous tissues or tumors are surgically removed in a process called resectioning. After a resection, adjuvant treatments are often administered to fight cancer cells that remain on the margins of the area or have spread to other areas of the body through the lymph nodes, bloodstream, or other means.
However, there are many situations in which a patient may not be a viable candidate for surgery. The location of the tumor, the progression of the disease, and the health and resilience of the patient are all factors that can make surgical intervention inadvisable.
Traditionally, chemotherapy, immunotherapy, and radiotherapy have been used in cases where surgery is ruled out, but these treatments are not always ideal, posing health risks and providing only intermittent effectiveness when used on solid tumors and other tissue types.
Several publicly traded companies are tackling this issue head on by exploring noninvasive or minimally invasive technologies with the potential to dramatically improve survival rates, remission rates, and overall quality of life for patients whose cancers can't be treated surgically. Although these technologies are still in the early stages of development, some are enjoying promising early trial results and continued support from the medical community, suggesting the potential for new product approvals, a profitable buyout, or revenue generation in the near future.
Investors interested in this emerging area of cancer treatment may wish to take a closer look at three companies that are focused on noninvasive or minimally invasive devices and technologies. These three companies are currently trading at dips with no recent news meriting such trading ranges. In the author's opinion, they are also undervalued relative to their peers with each providing investment potential for varying types of investors from the cautious ones wanting solid gains with minimal downside risk to the ones more able to tolerate volatility with large upside potential and associated downside risks.
Radiofrequency ablation - FDA approvals could open up a massive market
Radiofrequency ablation (RFA) utilizes a probe inserted directly into the cancerous tissue. Usually monitored by ultrasound, the probe is energized by radiofrequency once inside the tumor or tissue region, which heats the surrounding tissue by resistive friction. By closely monitoring and heating the area between 50°C and 100°C, cancerous cells in the targeted area can be destroyed.
AngioDynamics (ANGO) is the most advanced player in radiofrequency ablation field with an impressive line of medical devices and supplies used in a variety of treatments, including targeted tumor ablation and pain relief. Its most promising device is the NanoKnife® System, which has received FDA 510K clearance for the surgical ablation of soft tissue.
In January of this year, the company had to recall a product - to the tune of $3.5 million - because a software update didn't follow proper FDA approval channels. Although AngioDynamics was able to resume shipment of the system soon, they are still recovering from the financial ramifications of the recall.
The company's StarBurst® RFA device, an even finer RFA device for treating smaller lesions, does not have the FDA's 510K clearance, but does possess the CE mark for sales in the EU, where it can be used to treat a variety of cancers. Regulatory approval for the US would be a significant catalyst for the company, and potential shareholders should take this into consideration when performing their own research.
AngioDynamics has had an exciting year with an earlier FDA clearance for its NeverTouch Direct™ Procedure Kit (used in conjunction with their VenaCure EVLT® Laser Vein Ablation System), as well as a completed acquisition of Navilyst Medical. The acquisition cost the company about $355 million but could double AngioDynamics's share of the vascular access market and enhance their position in the peripheral vascular market.
Despite a $371 market capitalization, strong earnings in 2011 and 2012 4Q earnings that are particularly impressive when the Navilyst acquisition costs are factored in, investor response has been lukewarm at best. The company's shares are now trading at the 52-week low with a range of $10.35 to $16.39. This could be a good entry for the mid to longer term with downsize risk minimal due to good earnings, a dynamic growth model and solid technical support for the stock at about $10.
AngioDynamics is a rapidly growing company with an impressive line of radiofrequency ablation options and supplies. Its financials will likely continue to improve as its product becomes more widely accepted and its sales force keeps the company's financials growing - a dynamic that will also support additional clinical trials for long-term growth.
Electroporation: Share-price drop despite promising trial results
Electroporation is the process of applying an electrical current across a targeted tumor or cancer tissue region. This current dramatically, but temporarily, increases the targeted cells' membrane porosity, which allows them to more efficiently uptake pre-injected chemotherapy (bleomycin) or immunotherapy (IL-12 plasma DNA construct) agents.
OncoSec Medical (ONCS.OB), a company that has developed a proprietary electroporation platform, has had an eventful year that included a number of promising developments and, counter-intuitively, a large drop in share price.
The company has two platforms based on the electroporation technique. ImmunoPulse (formerly ElectroImmunotherapy) makes creative use of the body's immune system to target cancer cells. The technology sends an IL-12 plasmid DNA construct directly into electroporated cancer cells. This DNA construct causes the cells to produce interleukin-12, a naturally occurring protein that stimulates cytotoxic T-cells and macrophages-both of which would normally ignore the cancer cells-to attack and destroy affected cells. Two phase 2 trials for metastatic melanoma and Merkel-cell carcinoma are already underway, with interim data to be presented in 4Q of this year. A third phase 2 trial for cutaneous T-cell lymphoma began enrollment in July. Although the company has not specified time frames for sharing data on this trial, investors should probably expect interim data within a year. The latest trials follow a phase 1 trial for malignant melanoma that yielded promising data indicating a solid safety profile and good efficacy, In this phase 1 trial, more than half (53%) of patients treated with distant metastatic lesions had an objective response and more than one in six (16%) had a complete response.
OncoSec is also analyzing data from two previous phase 3 recurrent head and neck cancer trials for NeoPulse (formerly ElectroChemotherapy), a platform that delivers a proven chemotherapy agent directly to cancer cells. It has the potential to be used with many chemotherapy agents, but the company is currently focusing on bleomycin, a chemotherapeutic drug approved for in the treatment of several types of cancer. The company acquired the technology from Inovio Pharmaceuticals (INO), which had already performed phase 3 trials for head and neck cancer using the therapy. Inovio had terminated enrollment in 2007 after the Data Monitoring Committee (DMC) recommended trial termination, citing concerns about efficacy and the risk of serious adverse events. However, in July of this year, OncoSec released reanalyzed trial data and reported no statistically significant differences between the control and experimental groups in terms of time to death or local efficacy. As more trial data is evaluated and made public, and particularly if that data is provided by a third-party entity, this could be a large share-price mover.
OncoSec's financials are certainly not comparable to those of AngioDynamic. The company is still a development-phase entity, but this has been taken into consideration with the current low market capitalization. The author would like to see additional agents utilized in both the chemotherapy-based NeoPulse technology (now only using bleomycin) and the immunotherapy-based ImmunoPulse (now only utilizing the plasmid DNA construct for IL-12) for diversification purposes.
OncoSec does appear to be on more solid ground financially for the interim. According to their May 29th letter to shareholders, recent financing of about $7.75 million should get the company through the phase 2 Merkel-cell carcinoma and metastatic melanoma trials currently underway. Success in either of these trials, along with a general acceptance of the Inovio trial re-evaluations, will help to validate these proprietary platforms, and could be catalysts in improving the company's low share price and driving up their current market capitalization of $16.7 million.
Additionally, if the re-evaluation of the NeoPulse phase 3 trial (purchased from Inovio) shows enough promise, this could potentially lead to additional trials, product licensing, or the beginning of regulatory approval for the company's electroporation technologies. It appears that failure has already been priced in, and if this is so, downside should be minimal pertaining to this data. The smaller market capitalization than others mentioned in this article does provide for a high level of risk due to price manipulation (upward and downward) and less liquidity due to its OTCBB listing. This investment should be carefully considered as its upside potential does have the corresponding downside risks depending on the company's financial situation and the success of its electroporation platform.
Leader in minimally invasive techniques could be the most undervalued
Boston Scientific Corporation (BSX) is arguably the leader in non-invasive and minimally invasive products for the diagnosis and treatment of cancer and a host of other diseases. Yet with a current market capitalization of $7.9 billion, the author believes this to be one of the most undervalued medical device companies on the NYSE.
The company's list of approved products and supplies is extensive: so much so that their website gives visitors the option to search them alphabetically or by indication. A search on the FDA website for medical devices for "Boston Scientific", though not an indicator of the number of approved products, returns over 95,000 hits, a strong testament to the company's productivity and initiative.
BSX reported its 2Q 2012 results on July 26th, with a 7% sales decline on a reported basis and $1.828 billion in reported sales. However, the two weakest segments of the company's business were "interventional cardiology" and "cardiac rhythm management", with reported currency basis changes of down 16% and down 10%, respectively. This would seem to imply that the company's oncology sector is robust and still growing. And in fact, the company's 2011 10K alluded to the growth in its oncology platform directly: "Our interventional oncology franchise continued strong worldwide sales growth, as recently launched products, including the Renegade® HI-FLO™ Fathom® microcatheter and guidewire system and Interlock™ - 35 Fibered IDC™ Occlusion System for peripheral embolization, continue to be well received by our customers. We expect to have a number of new PI (Peripheral Interventions) products launching throughout 2012 that we believe will drive future growth in this business."
As a fully diversified, revenue-generating medical device company, a leader in the medical device field and the most established representative of this emerging sector, Boston Scientific is worth the consideration of any investor looking to increase their exposure not only to minimally-invasive procedure technologies but to many other medical device platforms. Its future is seemingly secure, and value should only grow over time due to sales of its medical devices and the continued growth of its product lines for oncology and a range of other applications.
Trading low, aiming high: minimally invasive technologies are worth exploring
All three companies included in this analysis are not only notable for their technological advancements in the field of non-invasive or minimally invasive cancer treatment, but also for their current trading ranges: each one is trading in the lower end of their 52-week charts. Although companies in this sector are not immune to the overall downward pressure of today's markets, they should be more insulated than many. Regardless of financial conditions, the demand for innovative cancer therapies - especially those available to patients who may not be good candidates for more aggressive treatment alternatives - will continue to grow.