ASCO 2014: Competition Heats Up

Bristol, Merck, Roche and AstraZeneca all boast drugs that are turning cancer into a chronic disease, or even eradicating it entirely, while some analysts look the other way.

Jun 11, 2014 at 4:42PM

Gains in cancer research are maddeningly hard to understand, and many new drug regimens are extremely toxic. That's what analysts from BMO Capital seized upon, when they issued a negative report on biopharma Bristol-Myers Squibb (NYSE:BMY). The report was one factor that sent the stock plunging 6% last Thursday morning.

Good, but not good enough?
BMO analysts downgraded the stock amid concerns about the high toxicity for Bristol's drug combo nivolumab+Yervoy. They also cited lowered expectations for the combo's efficacy against lung and kidney cancers, based on their interpretation of studies released at the world's largest meeting of cancer doctors, the American College of Clinical Oncology meeting in Chicago.

According to ISI's Mark Schoenebaum, Bristol's nivo+Yervoy combo in previously treated kidney cancer showed data that was "quite good, but perhaps not as mind blowing as the combo drugs were in melanoma at last year's ASCO." Schoenebaum was more supportive of nivolumab in first-line lung cancer, with one-year overall survival rates "stellar" at between 59% and 87%.

Competition heating up
While Bristol has outlined how nivo+Yervoy could be a potential megablockbuster that could earn billions of dollars a year, it has some competition to consider. While Bristol is the biggest spender on cancer immune therapies ($649 million in trial spending, with $483 million consumed by trials in Phase 3), Merck (NYSE:MRK) has a competing drug -- pembrolizumab -- in the clinic, and Roche Holding (NASDAQOTH:RHHBY) has its own PD-L1 drug in the race. All three drugs unleash a T-cell attack on cancer cells. In essence, they deactivate a cloaking mechanism that mutes the immune system's response.

Roche is the smallest spender on high-stakes patient trials of the three companies, at $189 million per year, while Merck spends $327 million per year. But Roche believes it may have a safer approach, and early data shows that investigators could use the maximum dose safely, making it a strong candidate.

Another drug from Merck, pembrolizumab, showed median progression-free survival of 5.5 months, with an overall response rate of 40% in some patient groups. So many patients in the trial are still alive that researchers can't yet put a number on how much of a boost they're getting in overall survival from the drug, according to Dr. Antoni Ribas, an oncologist at the University of California.

Merck also released early findings on a Phase 1b study evaluating the drug in patients with advanced head and neck cancer, which is very difficult to treat and, and the news was good enough to support "further study", according to Dr. Tanguy Seiwert, associate director of the Head and Neck Cancer Program at the University of Chicago.

Final thoughts
Cancer research is an investment opportunity, but it's important to remember that there are real people being affected -- people like Kim Sherman--a 48-year-old mother of three with few prospects of survival who joined a clinical trial of Bristol's nivo+Yervoy. According to a report, in Sherman's trial, 79% of the initial group of 53 patients are still alive after two years. In Sherman's case, within three weeks she was seeing pain reductions, and three months later her tumor disappeared, restoring her to her family.

With Merck, Bristol, AstraZeneca, and Roche all racing to test immune therapy drugs on as broad an array of tumors as possible, the long term picture for cancer patients looks more and more promising. That may be a distinction lost on those whose interest in cancer research is strictly in its investing potential, but it shouldn't be missed. Citigroup analysts predict that immune therapies could lead to a market of $35 billion a year. But cancer is still the second most common cause of death in the United States, accounting for nearly 1 out of every 4 deaths. The real excitement for most of us is that we may have finally made an important step toward a cure.

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 Editor's Note: A previous version of this article referred to pembrolizumab by its former name, lambrolizumab. The Fool regrets the error.

Cheryl Swanson has no position in any stocks mentioned. The Motley Fool owns shares of Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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