Tackling Cancer: Your Best Investing Ideas

Over the past three months, we've taken a deep dive into the 12 cancer types most likely to be diagnosed in the U.S. this year according to the American Cancer Society (link opens PDF file). As we've witnessed, public awareness of risk factors have been a big help in reducing the occurrences of some of the most prominent cancer types. But, research has also yielded more effective drugs that are helping improve the quality and length of life for cancer patients for nearly all 12 types of cancer.

Today, as the wrap-up and final article in this Tackling Cancer series, I thought we'd take one final look at the top investment selections across this grouping of cancers, from both a high-risk, high-reward perspective, as well as from an established company perspective.

High-risk, high-reward suggestions
There's an undeniably large dollar amount being pledged to cancer research, but, even if a drug gains approval, that's no guarantee that the biotech or pharmaceutical company behind that drug will be a success. Some of the biggest gains (and losses) come from taking a leap of faith based on clinical data, or the approval of one or two drugs or devices within a pipeline. After that, it's all up to the drug or devices' effectiveness, its pricing, and the success of the marketing teams promoting the drug or device. Here are a few high-risk, high-reward names you should be keeping your eye on.

  • Exelixis (NASDAQ: EXEL  ) : In November Exelixis had its first drug, known as Cometriq, approved by the Food and Drug Administration to treat metastatic medullary thyroid cancer. Although the market for this disease is pretty small -- somewhere between 500 and 700 people in the U.S. -- the near-tripling in progression-free survival, or PFS, in trials would indicate to me a strong likelihood that it could translate to success in other cancer types. In mid-stage prostate cancer trials, for instance, Cometriq was found to be particularly effective in dealing with bone metastases as a second or third-line treatment. We won't get any additional data until next year on Cometriq, but positive data on the prostate cancer front could be enough to double its share price if the PFS, compared to the placebo, is notably strong.
  • ImmunoGen (NASDAQ: IMGN  ) : In February, Roche and ImmunoGen received approval for Kadcyla as a secondary treatment for HER2-positive breast cancer. This is ImmunoGen's first drug approval, and it gives the company a chance to showcase what I feel is one of the future pathways of fighting cancer -- its targeted-antibody payload, or TAP, technology. ImmunoGen's TAP technology works by attaching a toxin -- in this case Roche's Herceptin -- to an antibody, and teaching that antibody to release the toxin when it comes in contact with a protein expressed by the targeted cancer cell. Although ImmunoGen's royalties on Kadcyla are lower than investors would have hoped for, it's the additional 18 clinical trials currently under way that should have investors excited about its potential. If the 50% improvement in PFS over the placebo can be translated to even a few of these other trials, ImmunoGen's share price could soar.
  • Aeterna Zentaris (NASDAQ: AEZS  ) : Bias alert! Bias alert! I own shares of Aeterna Zentaris, but can't help but feel that its late-stage intravenous treatment, AEZS-108, for the treatment of endometrial cancer, is on its way toward an approval. AEZS-108, which is a targeted cytotoxic peptide conjugate (this means it targets cancer cells and leaves healthy cells intact), produced an overall response rate of 30.8% in trials with a clinical benefit rate of 74.4%, and received a special protocol assessment from the FDA. This should streamline getting AEZS-108 to market if its upcoming results prove statistically significant, and would go a long way to improving Aeterna's severely depressed share price.

Established pipeline suggestions
If taking big risks just isn't on your docket over the next couple of years, then the good news is that there are plenty of safer and/or less volatile selections to choose from that already have established pipelines. Here are three additional companies I would suggest you consider.

  • Celgene (NASDAQ: CELG  ) : Celgene has been an absolute beast of a stock in 2013, and it could be just getting started if the company is able to meet on its guidance issued in January during the JPMorgan Healthcare Conference. At that annual meeting, Celgene noted its intentions to double its revenue, and triple EPS, by 2017 -- all through organic growth and drug approvals. Celgene has its blockbuster anemia drug Revlimid locked under patent protection for much of the remainder of this decade while its cancer drug Abraxane keeps racking up new indications. Already approved to treat metastatic breast cancer, and a first-line treatment for non-small cell lung cancer, Abraxane could also be well on its way to gaining approval in treating pancreatic cancer after improving PFS to 8.5 months from 6.7 months for the placebo in trials.
  • Onyx Pharmaceuticals (UNKNOWN: ONXX.DL  ) : Onyx shareholders also have plenty of reason to be dancing in the street over the past year, as its multiple myeloma cancer drug Kyprolis was approved in July, and its leading cancer treatment Nexavar, like Abraxane, continues to pile on the indications and positive data. Nexavar, which is co-developed with Bayer, is already approved by the FDA to treat renal cell carcinoma and unresectable hepatocellular carcinoma, but has shown promise in mid-stage trials in treating breast cancer, when combined with Roche's Xeloda and delivered promising results in a late-stage thyroid cancer trial.
  • Roche: Finally, I'm not sure how any cancer discussion can be had where Roche isn't a possibility. I don't believe a single company appeared in more weekly Tackling Cancer series than Roche, which has a current or pipeline treatment in nine of the 12 most-diagnosed cancer types. It aimed for a 10th with prostate cancer, but Avastin failed to provide any statistical significance there. Between Avastin, Herceptin, Zelboraf, Xeloda, and the dozens of other FDA-approved drugs in its pipeline, Roche is a steady growth story, and perhaps the Superman of all health-care companies when it comes to fighting cancer.

As we come to a close here, I hope you've gained some knowledge with this series about what's going on with cancer research, and who some of the top players are in each cancer type. I know I've personally enjoyed digging into the latest treatments in each cancer type, and look forward to continued innovation throughout the health-care sector.

Can Celgene continue to soar?
Every in-the-know biotech investor has an eye on Celgene. Shares have skyrocketed this year, as the company outlined a plan to almost triple its profits in only a few years. But should you buy the story Celgene is selling? Make sure you understand the key opportunities and risks facing this company by picking up The Motley Fool's brand new premium report on Celgene. To claim your copy today simply click here now.


Read/Post Comments (5) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 01, 2013, at 10:59 PM, TempoAllegro wrote:

    It might be worthy of pointing out that Novartis - NVS - owns one-third of Roche. Right now Novartis has a somewhat lower PE than Roche and offers a dividend, where Roche currently does not offer a dividend.

  • Report this Comment On June 02, 2013, at 12:43 AM, portefeuille wrote:

    Roche currently does not offer a dividend

    ------------

    Basel, 5 March 2013

    Roche Annual General Meeting 2013

    ...

    Furthermore, they decided to increase the dividend for the past financial year by 8% to 7.35 Swiss francs (gross) per share and non-voting equity security. This is the 26th dividend increase in succession.

    ...

    ------------

    :)

    http://www.roche.com/media/media_releases/med-cor-2013-03-05...

  • Report this Comment On June 02, 2013, at 12:45 AM, portefeuille wrote:

    ------------

    Basel, 11 April 2013

    Roche Group posts strong sales growth in the first quarter

    ...

    Full-year targets confirmed

    Roche expects Group sales in 2013 to increase in line with last year’s sales growth, at constant exchange rates. Core EPS is targeted to grow ahead of sales. In 2013 Roche expects to further increase its dividend.

    ...

    ------------

    http://www.roche.com/media/media_releases/med-cor-2013-04-11...

  • Report this Comment On June 02, 2013, at 10:43 AM, TempoAllegro wrote:

    Portefeuille:

    My bad on Roche's dividend! It does, in fact, offer a slightly smaller dividend than Novartis.

    I had Roche (RHHBY) on my watch list at my broker, TD Ameritrade, and it shows zero dividend! However, when you look up the company for further information, it does show a dividend, and that the last ex-dividend happened on March 7th of this year.

    The same thing happened before when I made a comment on Petrobras - PBR. It shows a zero dividend on the watch list but a large dividend yield on the dedicated info page for PBR.

    The fact that other web sites such as yahoo finance and even our beloved Fool.com are either wrong or conflicting on both of the above shares and foreign corporations like them does not help the situation!

  • Report this Comment On June 02, 2013, at 5:32 PM, portefeuille wrote:

    You can usually find out what the dividend is by using google or the investor relations section of the company website. Companies usually do not try to hide the fact that they are paying a dividend ;)

    Also bloomberg is usually about right with its info.

    http://www.bloomberg.com/quote/RHHBY:US.

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