By David Sterman
Ever since the nation declared war on cancer, back in 1971 when President Richard Nixon signed the National Cancer Act, it's been an uphill battle. Cancer is still the second-leading cause of death in the U.S., behind heart disease.
But a remarkable set of breakthroughs in medical research labs are giving doctors reason to believe that this long-standing battle may soon be won -- and the credit goes to our own immune systems.
Scientists began to realize that if patients could produce more immune system cells, their bodies could overwhelm tumors. So these medical researchers began extracting these cells from patients' blood, greatly multiplied them in medical research labs, and reinserted them back into the patient. Although this approach had been studied -- with mixed results -- for a number of years, a key breakthrough arrived last spring at the annual meeting held by the American Society of Clinical Oncology.
That's when Bristol-Myers Squibb
) stunned the conference with its release of powerful efficacy and safety data for nivolumab.
Nearly a third of patients taking the experimental drug saw their tumors shrink by a significant margin, and further refinements for this drug may take those rates far higher, especially as nivolumab is tested in combination with other drugs.
Analysts have only begun to calculate how important nivolumab can become. Goldman Sachs thinks the drug could reach peak sales of $7 billion, which would be worth about $14 a share to the company's stock.
Merrill Lynch predicts a 2015 launch for the drug, "reaching peak sales of $2 billion five years after launch, which implies a 35% share of the three markets in which nivolumab is currently in Phase III trials." (Merrill, like other firms, is not yet modeling the potential for this drug in other types of cancers that Bristol-Myers is not yet testing).
Analysts at UBS project $6 billion in annual sales, but caution that competitors are developing their own cancer immunotherapy drugs, which may cap the potential for nivolumab.
Among other Big Pharma firms, Merck
) is developing MK-3475, which has been able to shrink tumors among 25% of the patients enrolled in Phase I clinical trials. "These early data in lung cancer patients were the basis for Merck's decision to rapidly advance MK-3475 into a Phase II/III clinical trial in NSCLC," the company noted in an October press release.
) is also making rapid progress with a portfolio of these immunotherapy drugs. The company has agreed to license the use of a pair of drugs being developed by Inovio Pharmaceuticals
). Inovio is highly speculative and appears to be more squarely focused on vaccines for infectious disease, which is becoming a crowded field. I'm more bullish on Novavax
) in this niche, which I profiled back in September.
Another stock to monitor in this promising niche: AstraZeneca
), which already owns a portfolio of effective cancer drugs that will be paired with immunotherapy drugs developed with privately held Immunocore. AstraZeneca has been quite active in pursing partnerships with early-stage biotechs, and aims to make sure that its MedImmune division (acquired in 2007) remains at the vanguard of the war on cancer.
Risks to consider: All of these cancer immunotherapy drugs still have more hurdles to overcome in the clinical trial process, and the FDA will be watching especially closely.
Action to take:
Investors need to consider the flip side of this potentially major medical breakthrough. For every winner created, existing drugs will come under threat. That's a concern I recently noted for Celgene
) Revlimid. Any other drug or biotech firms that currently generate robust revenues from existing approved drugs will also come under scrutiny. So as you research this trend, also keep an eye on which drugs are at risk of displacement.
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