June 15, 2016
By Mark Terry, BioSpace.com Breaking News Staff
There’s no doubt that oncology is a growing sector in drug development, helped along by breakthroughs in immuno-oncology. Worldwide, oncology drug spending last year was over $107 billion and is projected to hit $150 billion by 2020. The Motley Fool asked several of its analysts to talk about their top picks for oncology companies to watch. Let’s take a peek.
Exelixis
Sean Williams chose Cambridge, Massachusetts-based Exelixis, Inc. , noting that the company’s fortunes have been looking up, partly due to its cabozantinib, which is marketed as Cabometyx and Cometriq. The company’s money situation is good, especially after inking a licensing deal with Ipsen Pharmaceuticals (IPSEY) that provides Ipsen with exclusive rights to cabozantinib everywhere but the U.S., Canada and Japan.
The company is involved in various label expansions that are looking promising, and has a potential combination therapy of its drug Cotellic with Roche (RHHBY)’s Zelboraf. “The collaboration,” Williams writes, “will shift toward Roche taking more revenue (and profit) as sales of the drug expand, but in the initial launch we should see Exelixis netting the lion’s share of Cotellic/Zelboraf combination revenue.”
Celldex Therapeutics
Cory Renauer picked Hampton, New Jersey’s Celldex Therapeutics . The company took a hard hit when its first drug, Rintega for advanced brain cancer, didn’t outperform the standard-of-care, but Renauer believes the market ignored the rest of the company’s pipeline. Celldex has three programs, “one of which is in a trial that could support an application in a large, under-served population: triple-negative breast cancer patients.”
The drug there is glembatumumab vedotin, which in an earlier study showed impressive response in patients who “went twice as long without disease progression as patients receiving standard therapies.”
Renauer said, “I think Glemba alone makes Celldex a buy, and additional drugs in its pipeline have also shown encouraging results.”
Ziopharma Oncology
Cheryl Swanson picked Boston-based ZIOPHARM Oncology . The company is working in the crowded field of CAR-T, but it has a technology called RheoSwitch, which seems to allow the company to control CAR-T’s often toxic side effects.
Ziopharm also has a partnership with Intrexon, which has developed automated mass production of CAR-T treatments. One of the overall problems with CAR-T immuno-oncology therapies is how individualized—and hence, labor-intensive and expensive—they are. Ziopharm’s looks to be more of an off-the-shelf type of solution.
“Ziopharm is only suitable for those with extremely high-risk tolerance, as ongoing cash concerns will keep attracting short sellers,” Swanson writes. “But its cash position is not dire—there’s enough on hand to fund planned operations through most of 2017. A high profile endorsement from Merck helps: the Big Pharma handed over $115 million upfront, along with a commitment of $941 million more in milestones, for two CAR-T programs.”
Jazz Pharmaceuticals
And finally, Brian Feroldi picked Dublin-based Jazz Pharmaceuticals . Jazz has the advantage of already being profitable due to its Xyrem, for narcolepsy. It also markets Erwinaze for acute lymphoblastic leukemia, which brings in around $200 million annually, although growth appears to have stalled.
Jazz recently bought Celator Pharmaceuticals (CPXX) for $1.5 billion in hopes of bolstering its oncology area. The lead product is Vyxeos, which is in trials for acute myeloid leukemia. In Phase III trials, Vyxeos improved patients’ overall survival rate to 9.56 months, a dramatic improvement over 5.95 months seen in patients on standard regimens. As a result, it received breakthrough therapy designation from the U.S. Food and Drug Administration (FDA), and already has orphan drug status in the U.S. and European Union.
Feroldi writes, “Investing in companies that have exciting cancer treatments is usually quite risky, but since Jazz is already highly profitable and we already have Phase III trial results for Vyxeos, I think the risk here is about as low as it gets for a cancer treatment developer.”
