Seeking Alpha
Long/short equity, growth
Profile| Send Message| ()  

When it comes to words that evoke a sense of dread in people, the term cancer must be at the top of the list. According to the American Cancer Society, about half of all men and one-third of all women in the US will develop some sort of cancer during their lifetimes. Needless to say, the financial impacts of the disease are overwhelming. Billions upon billions are spent each year in an attempt to treat the disease, find cures and treat its symptoms.

The goal of investors is to capitalize on the investment potential in these companies that have the most promise in this deadly war. Obviously, any company that is successful in finding cures and new treatments will find themselves thrust to the forefront of medical science. Of course a small initial stake by investors today could potentially turn into substantial gains if this was to happen to their investment. It's almost like looking for a needle in a haystack when searching for these companies, but there are some that definitely have potential. Let's focus on three companies that have cutting edge technology and could change the way we face this deadly disease. The growing hope in each of these companies and their treatment platforms could soon benefit not only fortunate shareholders, but also the patients and healthcare sector in bad need of new treatment options.

Galena Biopharma, Inc. (GALE)

Our first company for investment consideration is Galena Biopharma. The company's primary goal is to develop innovative oncology treatments that address major unmet medical needs dealing with cancer through an immunotherapy approach. For this article, investors should primarily focus on one specific product within their pipeline, NeuVax for the prevention of breast cancer recurrence after standard of care treatments. According to GALE and the National Cancer Institute, over 230,000 women in the U.S. are diagnosed with breast cancer annually. A further breakdown shows that about 75% of these women have breast cancer tissue that tests positive for some level of Human Epidermal Growth Factor Receptor 2 (HER2) staining. Of that number, only 25% of those patients are eligible for the widely used drug, Herceptin, which is produced by the Roche-Genentech label. GALE's goal would be to use their NeuVax immunotherapy product to target the 50 to 60% of patients that are HER2 negative and are not eligible for Herceptin.

For investors, the science behind such innovative products can be difficult to understand but the marketing potential is a bit more easily understood. Let's find some useful data to help determine if GALE might be a good investment. The Herceptin product by the Roche-Genentech team had revenues of over $6 billion in 2011. Needless to say, NeuVax's potential could be just as huge if it is proved to be a successful product. Of course, investors have to remember that GALE is still a speculative investment, and this is easy to see in their latest second quarter financial statements. For example, the operating loss from continuing operations for the three months ended June 30, 2012 was approximately $5.7 million. For the six month period ended June 30, 2012, the operating loss from continuing operations was $10.1 million. As of June 30, 2012, GALE had cash and cash equivalents of $19.2 million, so there is a small cushion of assets to fund the company for some time. The company believes that their existing cash and cash equivalents should be sufficient to fund operations through at least the second quarter of 2013.

GALE represents an interesting investment possibility in the field of cancer treatments. Let's just hope their breast cancer product can come to market and help investors and patients alike. The company began enrollment in its phase III trial of NeuVax for breast cancer in January of this year. An update on this trial or other progress in its pipeline would be significant catalysts for the company's stock which is trading just under $2, its current resistance level. An entry at a dip in the company's shares or a breakout in a close over $2 could be construed as good possible entry positions. As noted above, the targeted market group is substantial and any positive data from the phase III trial could be a huge share price mover for this $127 million market capitalization biotech.

OncoSec Medical Incorporated (OTC:ONCS)

For our next cutting edge company on the front lines of the cancer battle, I would like to introduce OncoSec Medical (OTC:ONCS). This biotech company is focusing on creating treatments for advanced-stage skin cancers and cancer tumors. Needless to say, these are huge markets that ONCS is going after. According to the company, one in five Americans will be diagnosed with skin cancer in their lifetime and, just this year alone, more than 10,000 will die.

ONCS's potential contribution to the war on care hinges on their proprietary technology that is based upon a process called electroporation through its OMS platform. In the simplest terms, the company's device imparts a temporary electrical current between multiple strategically-placed electrodes. This current temporarily increases the porosity of the membranes of affected cells. As a result, previously-injected proven anti-cancer agents can be transmitted more effectively and directed into those specific cancer cells. The company is using two different types of agents to accomplish its goals using its OMS platform, a chemotherapy agent and an immunotherapy agent.

Under this electroporation umbrella, the company is working with two promising treatments. The first is ImmunoPulse, a treatment that uses the body's immune system to target and destroy cancer cells. In this process, ONCS introduces IL-12 DNA construct agent into cancer cells, which triggers targeted cells to produce a protein which identifies the cells as targets and triggers an immune response. In recent news, ONCS announced it had secured an exclusive license with the University of South Florida Research Foundation for the technology relating to the delivery of the gene-based therapeutics via electroporation. This should play right into ONCS's hands as it extends the patent protection for the ImmunoPulse technology to the year 2024. The hope would be that ONCS could get the technology into commercialization well before then to secure lucrative revenue streams for themselves and investors. Not only would this protect its revenue stream, but such protection could make the company a more appealing acquisition target or could be used to more aptly license out its protected treatment.

NeoPulse is the second technology that ONCS is pursuing based on its OMS electroporation platform. This process uses a highly effective, but also highly toxic, chemotherapy drug named bleomycin. In the past this drug was administered intravenously, and its negative side effects were concerning to say the least and affected the dose and duration of treatment. Using the OMS electroporation treatment, the drug can be administered directly at the cancer location with a much lower dose because of its cellular uptake efficiency with less of the drug left to wreak havoc on the patient's body due to its cytotoxic nature. The true benefit of the OMS system is its benefit of using effective cancer fighters that would normally have questionable safety profiles. The OMS platform allows for a small dose to be used at the tumor site while greatly minimizing any systemic exposure. To add a little additional speculative appeal, there are many cancer fighting agents with toxicities impeding their use on patients in bad need of a hopeful treatment.

If OncoSec's OMS platform can show hope through its clinicals (two phase II trials underway, (with interim data due out by the end of this year and another initiating enrollment just recently), then the upside here could be phenomenal. Investors may construe the platform as legitimized and that its use could advance well beyond the bleomycin chemotherapy agent and the IL-12 DNA construct immunotherapy agent currently being utilized. NeoPulse trial data is currently under analysis and according to the company's website, they plan on a using a partner for commercialization.

ONCS's technologies are truly state-of-the-art, but let's look at their financial condition. For Q1 2012, the company recorded a net loss of $771,391. With small biotech companies it is quite common to book losses while projects come to fruition. This is exactly where we find ONCS as it drives through its development phase pipeline. As of April 30, 2012, they had cash and cash equivalents of $6,569,626. With a current market capitalization of $19.3 million and traded on the OTCBB, the company is a risky investment with wild swings in share price possible with good or bad developments.

Potential investors should consider the technological aspects of ONCS's products and try to determine possible future revenue potential that the company could generate. With one in five Americans being diagnosed with skin cancer, and an aging population, the market potential for ONCS is huge. Additional markets involving cancer tumors only add to the company's possibilities. Like Galena Biopharma, OncoSec Medical is a development phase company and is still looking for its first marketing approval. Additional due diligence into the company is advisable before any investment decisions are made.

Celsion Corp. (CLSN)

Our last company we will discuss that is leading the charge against cancer is Celsion. This company is taking some pretty innovative steps in the fight against this deadly disease. Their main focus revolves around a product called ThermoDox. This therapy is a lysolipid thermally sensitive liposome (LTSL) encapsulation of doxorubicin, an already approved and widely-used chemotherapy drug. It is delivered by IV infusion and designed to be used with a wide range of heat-based treatments.

For most people, the technology is fairly complicated. Basically LTSL has the ability to contain the chemotherapy agent within the body in a trapped and inert state. The agent is released from its encapsulation through heat activation by radiofrequency ablation that raises the targeted region's temperature to just above body temperature. Chemotherapy agents are typically highly toxic, and it is commonly accepted that cancer treatments are often worse than the disease, at least before the disease advances. CLSN's candidate tries to mitigate this. In its treatment regimen, the heat is applied to only a targeted area of the body. The result is that the therapy is directly concentrated in a specific area. The company has stated that, in animal models, the ThermoDox method has been shown to deliver 25 times more doxorubicin than normal intravenous administration of doxorubicin into tumors.

The ThermoDox phase III trial, called "HEAT Study" is under a Special Protocol Assessment with the U.S. Food and Drug Administration (FDA). The HEAT Study is treating patients with non-resectable primary liver cancer. The study has been designated as a Priority Trial for liver cancer by the National Institutes of Health. It has received Fast Track Designation from the FDA, and has received Orphan Drug Designation in both the U.S. and Europe.

Celsion's vision does not stop at the FDA approval process. The company does have a commercialization strategy in place for ThermoDox. Currently the company desires to maximize shareholder value by marketing and selling the product in the US. Outside the US, the company will be looking to implement licensing agreements with partners. This strategy has already taken hold as shown by the Japanese license which was completed in 2008. In that agreement there were $4.5 million of fees that would be paid by its partner, Yakult Honsha, with an agreement of shared development costs of $7 million.

Once again, investors need to turn their attention to the company's financial statements to examine CLSN's fiscal health. For the quarter ended June 30, 2012, CLSN reported a net loss of $6.1 million. For the six months ended June 30, 2012, they reported a net loss of $12.3 million. As of June 30st, the company had$24.0 million in cash and investments on its books. To secure more financing, the company entered into a $10 million loan facility with Oxford Finance LLC and Horizon Technology Finance Corporation. This was done in June of 2012. Under the loan the company would receive $5 million upon closing the deal, and the remaining $5 million would be dependent on positive data from the HEAT Study. The company's hope is that these funds will help it operate through the pre-commercialization phase, and aid them in preparation for a New Drug Application (NDA) for ThermoDox. These are, indeed, exciting times for investors in CLSN.

In conclusion, these three entities are just a handful of exciting companies looking to tackle the cancer issue. Each occupies a specific niche within the medical space and, if successful, will prove to be substantial -- not only for investors, but for patients as well. Obviously, there is much more to these companies than can be presented here. This should be construed as the beginning of the readers' research into these potential investments. They should carefully consider all the potential rewards, and balance that with the risks before make any investment. Additional research into each of these will yield areas of concern and excitement. Catalysts abound for them and will offer ample opportunities for trading and for long-term investing.

Source: Promising Development-Phase Pharmas Leading The Fight Against Cancer