What happened
Shares of Novocure Ltd. (NVCR -0.89%), a company treating brain cancer with electric fields, rose 55% in the first half of the year, according to data from S&P Global Market Intelligence. The odd-looking Optune device got off to a slow start, but investors have good reasons to expect a surge in sales.
So what
Novocure's flagship device uses electric fields to battle brain cancer, and there's a chance it can work for other solid tumors as well. Long ago, Optune failed to show a significant survival benefit against chemo for advanced stage brain cancer patients. The stock has been surging all year because last December the company showed the world that adding Optune to standard chemo increased newly diagnosed patients chances of survival by 37% compared to chemo alone.
Cancer patient setting up a new Optune device. Image source: Novocure Ltd.
In the first quarter, Novocure reported active patients on Optune rose by 59% compared with the previous year to 2,009. This could be just the tip of the iceberg if Optune plus chemo becomes the standard of care for newly diagnosed glioblastoma patients around the world.
Now what
Right now Novocure is a $3 billion company on pace to record just $204 million in revenue this year. That means there's a lot of optimism baked into the price right now and if Optune adoption doesn't continue climbing, investors could lose a bundle.
While the risks are hard to ignore, so is this company's clear path to explosive growth ahead. The National Comprehensive Cancer Network recommended electric field therapy for newly diagnosed brain cancer patients, international markets are opening up, and positive trial results suggest Optune is similarly effective for more common forms of cancer.
