Author: Todd Campbell | May 21, 2019
Revolutionary new approaches
More people are alive than at any point in history, and overall, people are living longer than they’ve ever lived before. Caring for this large and growing population is going to be hard, but innovation could make it easier. New models for providing healthcare, approaches to helping the elderly live longer independently, and interventions that produce better outcomes for those suffering chronic or life-threatening disease are key to improving lives in the coming decades. The innovation opportunity is massive for many healthcare companies, including these nine revolutionary industry participants.
No. 1: Guardant Health -- Liquid biopsies
If you have cancer, you want every advantage you can muster. Fortunately, big strides are being made in our understanding of how genetics can cause cancer and importantly, how genetic insight can be leveraged to make sure patients receive the most effective treatment. At the forefront of this shift in understanding is Guardant Health (NASDAQ: GH), a testing company that allows doctors to learn important genetic information without a costly and invasive traditional biopsy. Instead, Guardant Health’s liquid biopsy tests only require a simple blood sample, an advantage particularly important for patients fighting advanced or tough-to-treat cancer. It’s only early days for the company, but sales are skyrocketing. Revenue increased 82% to $91 million in 2018. That’s impressive, but this type of testing may become standard in the future. If so, Guardant Health’s current revenue may only hint at the opportunity ahead.
No. 2: Teladoc -- Virtual health
Americans visit doctors nearly 1 billion times per year and often, those visits require time off from work, long waits in a doctor’s office, and expensive care. In the future, patients may get insight into their health much more easily. Rather than trekking somewhere to meet with a doctor, virtual health companies like Teladoc Health (NASDAQ: TDOC) are providing on-demand insight via smartphones, tablets, and computers. The company contracts with third-party payers, such as insurers, to provide patients with virtual visits for primary care, behavioral health, or second opinions. Wait times are short and because there aren’t expensive offices to support, costs are low. The convenience and money savings associated is already making these services a hit. In 2018, Teladoc’s sales grew 79% to $418 million and in Q1, its virtual visits surpassed 1 million for the first time.
No. 3: Exact Sciences -- Colon cancer screening
Over 76 million baby boomers and 55 million Gen Xers have a lot to keep tabs on when it comes to staying healthy as they age, including staying up to date on screening for colon cancer. Guidelines suggest everyone between the ages of 50 to 85 receive colon cancer screening, yet many fail to do so because of the cost and prep regimen associated with a colonoscopy. In the past, that’s caused far too many colon cancer cases to go undiagnosed until it’s too late to easily treat them. However, that’s changing thanks to Exact Sciences' (NASDAQ: EXAS) Cologuard, a simple stool sample test. With an average price of about $500, Cologuard’s significantly cheaper than a colonoscopy and with no need for uncomfortable preparation, Cologuard is fast-becoming a go-to option for the over-50 crowd. In the future, next-generation tests that improve detection rates are planned, as well as tests for other cancers that, hopefully, will diagnose cancer in its earliest stages using a blood sample.
No. 4: bluebird bio -- Gene therapies
Our increasing understanding of DNA is sparking advances in drug development, resulting in new and game-changing, one-and-done gene therapies. Many biopharma companies are trying to tackle disease by working on therapies that overcome or exploit genetic mutations, but bluebird bio’s (NASDAQ: BLUE) pipeline puts it in rarified air. It’s already filed for European approval of its first gene therapy, Zynteglo (formerly LentiGlobin) and if it’s approved, it could offer a one-and-done solution that eliminates beta thalassemia patients' lifelong need for chronic blood transfusions. The company’s also nearing the finish line for a chimeric antigen receptor T-cell therapy (CAR-T) for multiple myeloma. If bluebird bio’s approach succeeds, it may functionally cure or significantly delay disease progression across a variety of indications.
No. 5: Invitae Corp. -- Genetic insight
DNA screening is expensive, but Invitae (NASDAQ: NVTA) hopes to lower the cost of this screening to levels that allow everyone to know their genetic profile. In the past year alone, it’s lowered its DNA testing costs by 20% and it plans on launching a direct-to-consumer website soon that could bring gene testing to the masses. The company’s tests are already helping drug developers enroll the right patients in clinical trials and they’re helping would-be and new parents understand risks to their children. Last year, Invitae performed 300,000 tests and generated $148 million in revenue, and in 2019 it’s forecasting 500,000 tests and sales of $220 million.
No. 6: Intuitive Surgical -- Robotic surgery
Robotic surgery may sound like something out of the science fiction section, but it isn’t. Robotic assistants sold by Intuitive Surgical (NASDAQ: ISRG) are already helping surgeons perform 1 million minimally invasive surgeries every year. The company has installed over 5,000 of its robots worldwide and its sales eclipsed $3.7 billion in 2018. The potential to reduce complications and costly readmissions in patients makes robotic surgery a valuable alternative to traditional freehand surgery, and I suspect robots will be used to assist or perform most surgeries someday. If so, then this company will enjoy rising demand for years.
No. 7: DexCom -- Diabetes medical devices
One of the biggest health challenges facing the world today is the ever-increasing number of people with diabetes. A chronic disease, diabetes progression can destroy nerves, cause vision loss, and result in life-threatening cardiovascular disease if left unchecked. To keep this from happening, DexCom (Nasdaq: DXCM) sells continuous glucose monitors (CGM) that monitor blood sugar levels to improve insulin dosing. Its CGMs are used by hundreds of thousands of diabetics worldwide and next-generation automated insulin systems that pair them up with insulin pumps could increase the number of users into the millions.
No. 8: Vertex Pharmaceuticals -- Rare disease gene therapy
Cystic fibrosis is a hereditary disorder that can cause the buildup of mucus in the lungs, leading to infections that can damage a patient’s respiratory system and cause premature death. In the past, treatment options were limited. Today, many patients can be prescribed medications from Vertex Pharmaceuticals (Nasdaq: VRTX) that may extend their life. A large biopharma, Vertex Pharmaceuticals won Food and Drug Administration approval of its first cystic fibrosis drug, Kalydeco, in 2012. Although Kalydeco could only address a small percentage of patients with a specific genetic mutation initially, label expansions and new drugs have opened treatment up to more people. Currently, about 44,000 of the 75,000 people with cystic fibrosis can be helped by one of Vertex Pharmaceuticals drugs, but that could increase next year. Vertex Pharmaceuticals recently announced positive results for a new drug that could expand its addressable market to up to 68,000 patients, if it wins FDA approval.
No. 9: HCP Inc. -- Assisted living
Housing an increasingly larger elderly population presents a host of challenges. The longer we live, the greater at risk we are of being diagnosed with multiple conditions that could negatively impact our ability to live independently. Recognizing the challenges ahead, real estate investment company HCP (NYSE: HCP) is investing in assisted living communities specifically designed to take the stress out of aging. The company has about 750 properties in its portfolio, including senior living, medical office, and life sciences buildings. Its future development plan exceeds $1 billion in new projects, so it’s nowhere near done growing yet. Even better, HCP is shareholder friendly, with a current dividend yield of 4.7%. Given shifting demographics, there’s a good chance there will be plenty of future demand for HCP’s rentals and thus, plenty more dividend payments coming.
Todd Campbell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bluebird Bio, Guardant Health, Intuitive Surgical, and Teladoc Health. The Motley Fool recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.