If you're interested in biotech stocks, you're not alone. The SPDR S&P Biotech ETF has outperformed the S&P 500 in eight of the past 10 years, so the industry has been a great source of market-beating ideas.
Biotech investing isn't easy, though. Clinical-trial failures, expiring patents, and stiff competition mean there's plenty of risk associated with owning biotech stocks. Nevertheless, the potential rewards associated with investing in the industry could make owning stocks with upcoming catalysts a great idea. For example, BioMarin (NASDAQ:BMRN), Iovance Biotherapeutics (NASDAQ:IOVA), and Immunomedics (NASDAQ:IMMU) have events coming up that could make buying shares this year smart.
Disrupting a $10 billion market.
BioMarin could be about to revolutionize how doctors treat hemophilia with a mega-blockbuster indication worth $10 billion in revenue annually.
Currently, hemophilia treatment involves regular infusions of missing proteins necessary for clotting blood to prevent or stop bleeding. These infusions cost payers hundreds of thousands of dollars per year, and despite widespread use, patients are still at risk of life-threatening bleeds, joint and organ damage, and a shortened life expectancy.
If BioMarin has its way, European Union (EU) and U.S. regulators will soon approve its gene therapy for hemophilia A, a treatment that could do away with infusions and significantly reduce the risk of uncontrolled bleeding by inserting a gene that produces the missing protein (Factor VIII) in a patient's liver.
The EU is expected to begin its review of BioMarin's gene therapy this month, while the Food and Drug Administration (FDA) should begin reviewing the therapy as soon as February. In both cases, a successful review could lead to approvals that allow BioMarin to begin selling the therapy before the end of 2020.
Although regulators could balk at approval, clinical-trial results for the therapy were solid. BioMarin recently released long-term follow-up data from its phase 1/2 trial showing average annualized bleeding rates and the need for factor VIII infusions fell 96% from baseline in the third year following administration of the therapy in the highest dose cohort. Given the significant costs associated with factor VIII infusions and the fact that BioMarin's therapy could be the first of its kind to win a regulatory OK, BioMarin could be on the cusp of launching a blockbuster.
A new approach to treating melanoma
There's a big need for new, late-line treatment options in patients with melanoma. Currently, just 4% to 10% of patients whose disease has progressed following administration of a PD-1, BRAF, and MEK-targeting treatment respond to re-treatment.
In 2020, Iovance expects to report data from pivotal studies of lifileucel, an autologous adoptive cell-transfer therapy utilizing a tumor-infiltrating lymphocyte manufacturing process, which may improve response rates.
A unique approach, TIL manufacturing involves identifying immune cells that have successfully infiltrated a tumor, multiplying those cells into an army of billions in a lab, and infusing them back into the patient. This process takes about 23 days, but the wait could be worth it. In phase 2, 35% of metastatic melanoma patients had at least some response to lifileucel, despite the average person having failed on a median 3.3 prior treatments, including PD-1 inhibitors -- a common immunotherapy.
Similarly, data from one cohort in an ongoing phase 2 study evaluating a second TIL, LN-145, in cervical cancer showed a 44% objective response rate, including an 11% complete response rate in heavily pretreated patients. If final data from that study is positive, then Iovance expects to file for approval in that indication this year, too.
Possible vindication on deck
Last year, investors may have been questioning a decision by activist investors in 2017 to scuttle a plan for Seattle Genetics (NASDAQ:SGEN) to license Immunomedics' lead drug, sacituzumab govitecan, for $2 billion in upfront money and potential milestones, plus double-digit royalties on future sales. Instead of granting a review and potentially approving sacituzumab govitecan, the FDA issued Immunomedics a complete response letter (CRL) for its use in third-line or higher metastatic triple-negative breast cancer (TNBC) last January, dashing hopes for a regulatory green light in 2019.
Fortunately, the CRL may prove to have been a temporary hiccup. Since the FDA's concerns weren't related to clinical trials but instead to "chemistry, manufacturing, and control" issues, Immunomedics was able to address the FDA's concerns and resubmit its application for approval last month.
In clinical trials, the overall response rate to sacituzumab govitecan was 33% in the third-line setting. Progression-free survival observed in the study was 5.5 months. In both cases, the results were better than the mid-teens rates historically observed for chemotherapy regimens in the second-line setting.
The potential to reshape late-line TNBC treatment shouldn't be ignored. About 8,000 people in the U.S. alone pass away annually from TNBC, an aggressive, tough-to-treat disease accounting for roughly 20% of all breast cancers.
Sacituzumab govitecan's potential isn't limited to late-line TNBC, though. Management expects data from its late-line use in metastatic urothelial cancer soon. If results are positive in that indication, it plans to file for FDA approval, as well.
The company's studying sacituzumab govitecan in combination with immunotherapies as a potential early line alternative, too. The flurry of activity suggests this could be a multi-indication drug with blockbuster potential, so an approval this year could make it one of biotech's big winners in 2020.