Clinical-stage biotech companies put their best foot forward at the annual American Society of Clinical Oncology meeting earlier this week, but while many companies released data, it was presentations from bluebird bio (NASDAQ:BLUE), TG Therapeutics (NASDAQ:TGTX), and Loxo Oncology (NASDAQ:LOXO) that were particularly intriguing. Could these companies revolutionize cancer treatment someday?

In this episode of The Motley Fool's Industry Focus: Healthcare, analyst Kristine Harjes and Fool contributor Todd Campbell dive into the data these companies reported and offer up thoughts on what it all might mean for investors.

A full transcript follows the video.

This video was recorded on June 7, 2017.

Kristine Harjes: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. I'm your host, Kristine Harjes. Today is June 7, and our sector is healthcare. As usual, I'm joined via phone by Todd Campbell, who writes for Fool.com. Todd, how is life up in New Hampshire?

Todd Campbell: The sun has emerged, finally. I've been sitting in here prepping for the show, and looking outside and wishing for once that I was outside. The last few days, it's been rainy and gross.

Harjes: Sorry to be keeping you in here for the next 20 minutes. Hopefully afterwards you can go catch some rays.

Campbell: Absolutely. Kristine, have you been doing your linguistic somersaults in preparation for today's show?

Harjes: I've been trying on the side to learn some Greek, and I feel like pronouncing some words in Greek that I've never seen before might actually be easier than pronouncing the pseudo-English drug names.

Campbell: I know. Whenever we talk about clinical-stage drugs, especially in oncology, I always have to lead with "Listeners, I apologize. I'm sure I will butcher at least one of these names."

Harjes: But we'll do our best, and we've already decided we're going to go with nicknames where possible. As we started to mention already, we're going to be talking about a lot of drugs that are so early stage that they don't even have a fancy name yet. Once a drug hits a certain point and it's going to make it to markets, that's when you get your nice names like Humira that everybody can say. Before that, when it's still in the clinic, it has a scientific name. Today, we're talking about some of these early stage compounds that are being developed by various companies working in the oncology space because we just wrapped up -- not "we" as in The Motley Fool, but the ASCO, which is the American Society of Clinical Oncology, just wrapped up its annual meeting in Chicago, which they held between June 2 and 6. This is a pretty big deal. This conference has over 30,000 people at it each year. It's cancer researchers, investors, biopharma executives, policy experts, pretty much everybody from all different parts of the biotech scene convene in Chicago, and you hear a lot of new data reports on drugs that you might not know the latest on yet. A lot of companies will wait until ASCO to report on exciting news that they have. So today, we figured we would highlight three companies who had exciting news to report.

Campbell: I would say, Kristine, this is kind of like the playoffs, for a sports analogy, of oncology research. This is a big deal. From an investing standpoint, stocks in biotech that are working on cancer drugs, they'll start to rise weeks ahead of time before the conference. Then, when the abstracts hit, they could pop or drop or trade all over the map. Then, even in the months following, as industry participants are considering what they saw in ASCO, the stocks can move higher or lower as well. So every year, investors should be paying attention to what's happening at ASCO. I think for a few years in a row now, we tried to keep people up to date on some of the things that are happening. One of the things that I thought was really interesting coming out of ASCO was, most of the drugs that really caught my eye, they're all part of this shift toward precision medicine, this concept of being able to say, how can we screen patients to determine if they have specific genetic abnormalities, and then use that information to better target cancer cells with cancer-killing agents. Today, we're going to be talking about an anti-BCMA CAR-T, we're going to be talking about an anti-CD20, and we're going to be talking about a TRK fusion drug, as well. So it's definitely going to be an interesting show for us.

Harjes: You're laying on the acronyms already. [laughs] Bear with us, listeners.

Campbell: I have to get my practice in.

Harjes: We'll do our best to explain what exactly we're talking about and keep things very digestible. The first company we want to highlight is called bluebird bio. This is a company that is despised by all of The Motley Fool's copy editors, because they do not capitalize their company name. 

Campbell: I know. Every time I write, I figure I have a 50-50 chance of getting it through there with the lowercase. Yeah, it's an interesting company. I want to say it was pretty remarkable data in multiple myeloma at ASCO that took a lot of people by surprise, and sent shares, I don't want to say to the moon, but boy, they rocketed higher.

Harjes: Yeah. This was about a drug called bb2121. I feel like we can pronounce that one all right. This is a CAR-T therapy that is, as you mentioned, directed toward multiple myeloma patients. They reported a 100% response rate in 15 out of 15 of these patients they were studying. Seventy-three percent of those were complete or very good partial responses. Because it was only 15 patients, this is a very early stage result, this was phase 1. But these are truly remarkable results, because these patients had failed on the median of seven prior therapies. So they were at a point where they're really wasn't much hope left, and then this drug comes along and produces what really is an astonishingly good result.

Campbell: Yeah. That's really why people got so excited. It's not like we're talking about a patient population that has a whole lot of other competing treatment options. These patients are heavily pretreated. I think it was 25% of them are more had tried and failed on the five leading drugs that are used in this indication -- Revlimid, Pomalyst, Darzalex, and Velcade. So being able to use this new approach, it's a gene therapy -- we'll explain that in a second -- to better find and destroy cancer and deliver 100% response rates, that's pretty impressive. Seventy-three percent of patients -- again, it's a small patient pool, so take that with a grain of salt -- had a very good partial response or better. Twenty-seven percent were complete responders. Again, fairly remarkable, considering how heavily pretreated this group was.

Harjes: Another important point in the data was, the side-effect profile looked pretty manageable, which is super-important for CAR-Ts. We've seen as a broader class that these drugs have struggled with some patient deaths due to the therapies actually being almost too effective and triggering these negative side effects. But so far with bb2121, it looks pretty good.

Campbell: Yeah. This is the first data that I remember seeing in multiple myeloma for the CAR-Ts. We've seen lymphoma and leukemia at other companies being released. But this is the first one I can remember for multiple myeloma. What's really intriguing to me about it is, they use a slightly different approach. In bb2121, what they're doing is targeting a cell surface protein called BCMA. That protein is really only expressed by plasma cells and most multiple myeloma cells. So that might be one of the reasons why the side-effect profile looks kind of good, because there's maybe not a lot of off-target activity going on. I mean, there were a lot of cytokine release syndrome cases. That's pretty common in CAR-T, as you and I have discussed on the show previously. Obviously, if you're killing off a lot of bad cells, it's going to cause some other unintended consequences in your body that need to be addressed. But yeah, this is a very intriguing drug, and perhaps most intriguing because it's partnered up on the drug with the market-share leader in the indication.

Harjes: Yeah, that's exactly what I was going to follow up with. This drug is partnered with Celgene. We know that Celgene is very good at marketing drugs in this indication. They have Revlimid, which, Todd, you already mentioned. That drug dominates the first and the second line in this indication. It brings in $7 billion a year. They have Pomalyst, which is growing in use in the third-line setting and also brings in $1 billion a year. So this is a company that knows the space very well, already has the relationships with the doctors, and should, hopefully, if this drug makes it past approval, be able to get it to as many people as are eligible for the drug as possible.

Campbell: If you are looking for a partner in multiple myeloma, you cannot do better than Celgene. Bar none, they are the dominant force. They had plenty of experience running trials that can pass the gauntlet of the FDA. And obviously, they have proven their ability to generate commercial successes. If -- getting the cart in front of the horse, this is a phase 1 small trial -- they're able to get this drug on to market someday, Bluebird could come out nicely ahead. They can either sit back and collect royalties, or they can co-commercialize the drug with Celgene, in which case you're splitting the profit.

Harjes: Absolutely. Todd, moving on past Bluebird, let's talk about another company that caught our eye. This one is TG Therapeutics, ticker TGTX.

Campbell: Bluebird is the bigger of all three of these companies. The next two that we'll talk about, including TG Therapeutics, are relatively small. They're riskier, they maybe have smaller drug pipelines, so investors should be aware that they may carry a little bit more risk, all things considered. This is a risky space altogether, but they might carry a bit more risk.

Harjes: Yeah, you take one look at the TG Therapeutics stock chart, even from the beginning of the year, it's been bouncing all over the place.

Campbell: Yeah, it's basically a bucking bronco. You have to be very cautious whenever you're looking at any clinical trial results, even if they're presented at ASCO. We do know, and we've said time and time again, that the majority of clinical trials do end up failing. Just because you make it to phase 3 trials doesn't mean you're going to succeed. About 40% of phase 3 trials still come up short. So you always have to take all of this data with a grain of salt. That being said, TG Therapeutics might be on to something good here.

Harjes: Right. They reported some data in March about their drug that they were developing called TG-1101. At ASCO, they provided a little bit more detail, which looked extremely promising in treating high-risk chronic lymphocytic leukemia.

Campbell: Yeah. What's interesting is of the most common and most successful drugs being used to treat patients with this indication right now is Imbruvica, which is a $1 billion blockbuster drug that's co- marketed by Johnson & Johnson and AbbVie. What TG Therapeutics found is that if they take their anti-CD20 drug, TG-1101, and pair it up with Imbruvica, they can significantly improve the overall response rate within patients that have certain very high-risk mutations.

Harjes: Right. So I want to take a moment here to talk about the different endpoints in trials. We've mentioned, you just said overall response rate, that's a little bit different than some other measurements that we talk about. To lay them all out, and then we'll talk about why this actually matters, there is overall survival, often abbreviated OS, that's the gold standard, that's a measure of how much longer patients live who take the drug as compared with patients that are taking a different drug. This can take years, potentially, especially as these medicines become more precise, as you were mentioning, Todd. You get smaller and smaller genetically defined patient pools. So it can take a while to get data from this. So there are other endpoints that you will sometimes look at, such as ORR, which is your overall response right. That is just how many people had their tumor size reduced. There's also PFS, which is progression-free survival, and that's how long a drug can prevent the cancer from getting worse. These are important because they can shorten your trial duration and get drugs to market sooner. In looking at the data for TG-1101, you're looking at ORR, which is not the gold standard; it's not overall survival. But it's still a pretty important measurement.

Campbell: Yeah, because it gives an indication of the efficacy. The reality is, unfortunately, a lot of people are passing away every day because they have cancer. You have to balance getting these drugs into patients' hands quickly against safety risks. So you want to make sure they're safe, but you also want to make sure they're getting these drugs quickly. If it takes five to 10 years to get a drug all the way through to get the overall survival data, how many people may have passed away who could have benefited from this drug? So you're seeing a little bit of a shift at the FDA and global regulators to consider using other surrogate endpoints such as overall response rate, especially in hard-to-treat, tough-to-treat patient populations where there aren't a lot of other treatment options. So we're throwing a lot of caveats in all of these things we're talking about today, but that's another thing to take with a grain of salt -- the fact that it is overall response right, not progression-free survival, or overall survival, which obviously we would like to see more. That being said, you had a 78% overall response rate with TG-1101 used alongside Imbruvica, and Imbruvica alone only delivered a 45% response rate. There was also complete responders in the two-drug combination, where in the Imbruvica group, I don't believe there were any.

Harjes: Exactly. So going back to the macro-picture here of whether or not ORR is an acceptable endpoint, on Friday, the director of the FDA's Oncology Center of Excellence made a blog post basically saying that it's OK to use these surrogate endpoints. So now, when you look at the data that TG reported, they're now hoping for an accelerated timeline to FDA approval based on the data set that they have. And I would say, given the trend, the way that the FDA has been leaning, it looks promising. Again, early stage, but promising.

Campbell: Yeah. The other thing that was interesting at ASCO, they also updated investors on the use of a triplet combination therapy that includes Imbruvica and TG-1101 and another drug. It was very small, phase 1, six patients, not a lot of people. But 100% overall response rate. So it's possible that not only does TG Therapeutics have this first drug that could get on the market and do pretty well as part of a doublet therapy, but it also has a potential triplet further back. Obviously, the devil will always be in the details. We have no idea whether or not future trial results will play out the way they have here in the past. If they do, then potentially, you have a new standard of care within these patients with these tougher-to-treat mutations.

Harjes: Exactly. Last company that we wanted to discuss today is called Loxo Oncology, ticker LOXO. We know that the future of oncology is going to rely on gene sequencing. Loxo's pipeline is entirely devoted to treating cancers with specific genetic mutations. That's as compared to treating tumors like we often do now, which is dependent on their site of origin. So a little bit of a side note, before we get into Loxo. I wanted to mention Merck's Keytruda, which is a drug we've talked about on the show before. Pretty recently, they received an approval for all patients with a certain biomarker, which was a really big deal, because this was the first time that a drug was approved based on the genetic information of the patient, as opposed to looking at the site of origin of the tumor. So now, when you look at what Loxo is doing, seeing what happened recently with Merck's Keytruda makes this a lot more promising sounding, to me, at least.

Campbell: Yeah. You may not end up saying, in the future, "I got diagnosed with breast cancer." You may end up saying, "I got diagnosed with TRK fusion cancer." Essentially, what we have talked about with Loxo is, we're talking about the drug that -- I'm going to butcher this -- Larotrectinib --

Harjes: We're going to call this one Laro.

Campbell: Yeah, we'll call it Laro for short. A nice, friendly name for us. Laro is putting up some pretty interesting overall response rates in solid tumor cancers. You've got 12 different types of cancer that were evaluated in the Phase I and Phase II trials that they presented at ASCO. It cut across breast cancer and colorectal cancer and lung cancer and melanoma patients, pancreatic cancer patients. But they all shared one thing in common, and that's that there was an abnormality in some cells that are used for the communication pathway between cells. What they've discovered is that when you get these TRK fusions, a TRK fuses with something it's not supposed to, it can cause cancer growth, or tumor growth. So as you mentioned, Kristine, you're now looking not at saying, "Is this a breast cancer patient or a pancreatic cancer patient?" You're saying, "Is this a TRK fusion patient?" Granted, this is not a huge patient population. The company estimates the addressable market annually is about 1,500-5,000 patients that could benefit from this drug. But in the trial, the objective response rate was 76%, and there were 12% of patients who had a complete response rate to the drug.

Harjes: So when you look at those numbers and compare it to, say, Keytruda, Keytruda's approval came from not even as strong numbers. Of course, this was not a head-to-head trial of Keytruda versus Laro. But these are the types of numbers that have worked previously to get approval from the FDA.

Campbell: Right. I think Keytruda's was something like 40%.

Harjes: Yeah, they had 40% ORR, and 7% CRR. That was in a larger patient pool, and the indication was slightly different, so you would think there would be lower numbers for Keytruda. Still, these numbers that the company Loxo has posted are good.

Campbell: Yeah. The other thing that's interesting, we talked about this earlier, you have to balance safety, you have to include safety. I think it's encouraging that 93% of the patients who responded to the drug remained on the drug. So you have a situation or a drug that seems to be effective, that many people are staying on it. No patients, I think, have gone off the drug because of adverse events. That suggests that the precision part of this medicine is reducing some of the side effects that maybe you saw in previous-generation cancer drugs like old chemotherapies, that would cause people to wonder whether or not the treatment was worse than the disease.

Harjes: Exactly. So you think about it from a patient perspective, and that's really a wonderful thing. Going forward for this company, they're waiting on the complete study results and an independent review that will be performed in the second half of this year, and hopefully announced by the end of this year. Honestly, I would not be surprised if a stock offering was right around the corner. The stock popped 50% due to this news. So it could be a pretty advantageous time for them to take advantage of that share-price pop. But they're relatively well funded. So maybe it won't be necessary. But either way, this stock definitely has a long way to go if things continue to go their way.

Campbell: Right. The big ifs, right? Again, we don't know what the final data will look like. We don't know how the FDA will think of this drug, if they'll process it on the accelerated pathway or not. But if they can get a filing to the FDA later this year or early 2018, you're talking, depending on if they get priority or not, six to 10 months later, you'd have a decision. So this drug could be on the market, generating up some revenue from this company as early as 2019. So when you're going and looking at the cash burn rate of this company and trying to figure out whether or not they'll have to raise cash, bear that in mind, that the soonest they will be able to get any commercial revenue from this drug would probably be something like late 2018, early 2019.

Harjes: Right. That's kind of the case with most companies that are presenting at ASCO. They're not even on the market yet. So, you want to always keep an eye on that cash burn to see if they're going to be able to continue their trials and keep the lights on. Partnerships like the one that Bluebird has with Celgene are huge because they can provide this external source of funding in order to continue the trials, plus the expertise, the vote of confidence, that's always something that I like to see. But with each of these companies, you can really see the wave of the future of healthcare, where combination therapies and personalized medicine are truly set to take over and do a lot of good in the field of medicine.

Campbell: Yeah. I was reading recently, Kristine, that we're adding an additional three months of life expectancy for every year at this point. Some of the futurists out there are predicting that some time in the 2030s, because of advances in things like addressing the genetic code and causes of cancer, we may be able to add one year for every year. It's a remarkable time to be paying attention to healthcare and medicine, without a doubt.

Harjes: Yeah. I don't know about you, but that right there is why I love doing this coverage.

Campbell: Yeah. You truly start to see what kind of an impact, beyond simply the dollars and cents side of things that we look at from an investing standpoint -- the impact on people and families that these medicines might have.

Harjes: It's truly incredible. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. For Todd Campbell, I'm Kristine Harjes. Thanks so much for listening, and Fool on!

Kristine Harjes owns shares of Johnson & Johnson. Todd Campbell owns shares of Celgene. The Motley Fool owns shares of and recommends Bluebird Bio, Celgene, and Johnson & Johnson. The Motley Fool has a disclosure policy.