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In a recent explained on the popular site Nature, there was discussion on immunotherapy, which has become a crucial aspect in the treatment of cancer. Immunotherapy is the likely future of cancer treatment, and companies are creating more advanced therapies to tackle the disease via the immunotherapy approach. In the Nature issue, the importance of the immune system and immunotherapy is explained:

The tumour microenvironment is an important aspect of cancer biology that contributes to tumour initiation, tumour progression, and responses to therapy. Cells and molecules of the immune system are a fundamental component of the tumour microenvironment. Importantly, therapeutic strategies can harness the immune system to specifically target tumour cells, and this is particularly appealing owing to the possibility of inducing tumour-specific immunological memory, which might cause long-lasting regression and prevent relapse in cancer patients.

The study and practice of immunotherapy is still relatively new, as we have only scratched the surface of its potential. It has been about 2½ years since Dendreon (NASDAQ:DNDN) was awarded the first approval of an immunotherapy for Provenge®, and was trading with a valuation in excess of $5 billion. The space has since evolved, and now there are many candidates in clinical studies, or that are in line to be approved, and that are much more advanced, returning better results, and have effectively learned how to harness the immune system and target specific tumor cells. As a result of the innovation and evolution of immunotherapies, those suffering with cancer are seeing much better results and, in time, it is possible that companies may learn to harness the power of the immune system to fight other diseases besides just cancer.

In the past, companies and physicians believed that in order to fight cancer they would need harsh treatments such as chemotherapy, radiation, and surgery in order to succeed. But after decades of little progress, success is being found in immunotherapy -- a strategy that may have seemed comical in the past. Of course, like all areas of treatment, there are certain pioneers of the space. There are certain companies that are pushing the envelope, and are years ahead of everyone else. These companies are building on the innovation of Dendreon, creating therapies that could possibly treat numerous diseases, all the while possibly returning billions in revenue as the conventional treatments of old are replaced. Let's take a look at a few of these therapies that are pushing the envelope with encouraging clinical trials that have large market potential and should prove to be a win for companies, patients, and investors. And what's even more encouraging is that it's not only the big pharma companies commanding this space, but also small companies with innovative drugs that should return enormous gains for several stocks over the next several years.

Large Pharma in Late Stage Development

For an approach as promising as immunotherapy it makes sense that large pharma would already have a strong presence in the development of promising, blockbuster-potential candidates. Bristol-Myers Squibb (NYSE:BMY) made its presence known in the immunotherapy field after its success with Yervoy for the treatment of metastatic melanoma earned an FDA approval in March 2011. The drug, which is the first to prolong the lives of people with this particular cancer, extends the lives of those who have exhausted other treatment options for metastatic melanoma by 10 months. For many, 10 months may not sound long, but when compared to the average of just 6.4 months in the control group of the Yervoy trial, it shows a very significant advantage considering that success in many cancers is measured in just months or even weeks at times. Therefore, in addition to Provenge, Yervoy is yet another step in the right direction for the future of immunotherapy, and is an example of yet another condition that immunotherapy is conquering.

In regards to other large pharma companies, GlaxoSmithKline (NYSE:GSK), Amgen (NASDAQ:AMGN), and Novartis (NYSE:NVS) are all developing late stage immunotherapy products. GlaxoSmithKline is using a mixture of proteins to boost the body's immune system in an attempt to fight a variety of cancers that express the MAGE-A3 antigen. The company's latest trial is in metastatic melanoma, similar to Yervoy, and will target a specific audience, as melanoma is a disease that companies are trying desperately to fight with its large market potential. Amgen's candidate, formerly OncoVex, is yet another in Phase III to treat melanoma. Novartis, however, is working with Transgene, and has an exclusive option to in-license TG4010 based on its Phase IIb/III trial for patients with advanced Non-Small Cell Lung Cancer (NSCLC). This provides a focus outside metastatic melanoma for large pharma companies.

Developmental Biotech with Most Promising Immunotherapies

Obviously Pfizer (NYSE:PFE) did not become a dominant force in the biotechnology arena overnight. It has been a long and tedious journey for the company, and like all large pharma companies, it has had to continue to evolve and grow its pipeline and earn FDA approvals with products that return sales in the billions. One of the more common methods of growth for the large and dominant biotech companies is to grow through acquisitions. Already having impressive profits due to higher margin drug sales, large pharmaceuticals have the privilege of operating with large cash positions for high-profile acquisitions. In fact, most of the large pharma companies developing immunotherapy candidates are the result of acquisitions. Since drugs such as Yervoy and Provenge return strong sales, and other candidates in the field also surpass standard of care in clinical trials, investors should expect that high profile candidates of developmental stage companies could be acquired. In biotechnology, especially among the large companies in the space, it's a race to determine which company can acquire the best, most innovative drugs to gain an edge on the competition. It can be inferred that the following clinical stage companies will most likely be acquired for large premiums at some point in the future due to clinical results that are separating these candidates from the others in the field. However, it may be possible for these companies to elect to grow on the success of their immunotherapy, starting the journey of possibly becoming the next Pfizer. Following are rising immunotherapy stars in the biotech sector that could be the next acquisition targets, or could be early stage big pharma in the making:

One of the most high-profile targets of developmental companies with immunotherapy candidates has been glioblastoma multiforme (GBM), and Celldex Therapeutics (NASDAQ:CLDX) is the most advanced in terms of clinical studies. The company's candidate, CDX-110, has been granted Fast Track designation for the Phase III study in patients presenting the EGFRvIII gene. Although CDX-110 is the most advanced, and will probably earn an FDA approval, ImmunoCellular Therapeutics (NYSEMKT:IMUC) has a Phase II candidate, ICT-107, which is by far the most promising, with half of the patients treated with the vaccine still alive after four years. This is impressive considering only 6% live three years with standard care alone. Meanwhile, 38.5% of the patients treated with ICT-107 saw no progression of the disease at three years. As a result, ICT-107 may be the most promising of any immunotherapy. Both ICT-107 and CDX-110 are taking great strides via the immunotherapy approach proving that even the formidable GBM can be effectively treated by this approach.

Galena Biopharma (NASDAQ:GALE), in my opinion, presents the greatest investment opportunity with the most upside potential. The company's lead candidate, NeuVax, showed a 50% reduction in breast cancer recurrence in a 200 patient Phase II trial. In its Phase III trial, it will be testing 700-1,000 patients, but the trial will only test for the indication in which NeuVax has already been proven to be effective. As a result, there is a great likelihood of success, as it's only targeting patients with low to intermediate levels of HER2, which represents a very significant share of total breast cancer patients. The reason I believe it presents the most upside is because it is a $110 million company, with a vaccine proven effective on its targeted subgroup, which has sales potential similar to Herceptin, a drug that returned $6 billion in 2011. With this being said, GALE presents a great opportunity in the immunotherapy space, with a candidate that effectively treats a large unmet medical need. Success in the phase II trial and the large targeted treatment group are most likely why the stock has increased in value by nearly 250% in 2012, making it one of the most promising immunotherapies in development.

NewLink Genetics (NASDAQ:NLNK) is breaking the barriers of treatment with its HyperAcute Pancreas Phase III FDA Fast Track candidate. NewLink is a fairly new company to the market; but with an immunotherapy candidate that observed 12 month disease free survival (DFS) of 62% and median DFS of 14.1 months in a Phase II trial, it also looks poised to be yet another company with significant upside potential that should garnish interest from large pharma-- especially considering the size of its pipeline and its large target patient group potential as well. The early success in the pancreatic cancer indication is particularly impressive considering that the one-year and five-year overall survival rates are 24% and 5%, respectively. The Phase III trial is being evaluated under a Special Protocol Assessment (SPA) with the FDA which provides guidance for the trial design and helps to determine endpoints, which if met, would all but guarantee regulatory approval.

Conclusion

In closing, investors should expect great results and highly profitable drugs from large pharma; and from the developmental phase biotech companies, you could expect similar results and possible acquisitions. The exciting fact is that this is one space not solely controlled by large companies, but where small companies are just as innovative as the better-known names of the space. My belief is that we are entering a new era of cancer treatment; and with the space expected to grow to $75 billion by 2015, there is plenty of room for each company on this list to experience success. With current results, I anticipate that most, if not all, on this list will see approvals in the near future, and that the small companies will return enormous gains to investors in either fundamental growth or by being purchased prior to approvals. These prospects present great opportunities over a course of several years for investors regardless of our country's economic conditions or market headwinds.

Source: A Gold Mine In Biotechnology: The Companies Poised To Benefit