The field of oncology is an intriguing one. Not only is there billions of dollars up for grabs for the companies that produce cancer treatments, doing so leads to a better quality and improved length of life for patients, creating a win/win opportunity.
As a result, we are seeing quite a bit of innovation in the field. Of course, with innovation in a high-dollar industry comes investment opportunities, and in the field of oncology, there are several. Some of the most interesting in my view include:
AbbVie (ABBV): Humira Blues Open The Door To Opportunity
AbbVie’s Humira has been a hot topic of discussion as of late. Unfortunately, the company’s blockbuster drug is coming under fire as biosimilars receive approval around the world. Most recently, the FDA approved a biosimilar version of Humira that’s developed by Pfizer (PFE).
While there’s no doubt that biosimilar competition is already dampening sales growth at AbbVie, the concerns surrounding this issue are leading to an opportunity in the market. All in all, 2019 hasn’t been the best of years for the stock, with most of this year being spent in the red. Nonetheless, the company’s oncology franchise could be its saving grace and a massive opportunity for investors.
First and foremost, take a look at the company’s blood cancer drug, Imbruvica. EvaluatePharma predicts that the drug will generate annual sales of $9.5 billion by 2024, making it the fifth best selling drug in the world. While the company is partnered with Johnson & Johnson on the drug, it still makes about 57% of total sales, which could be a massive chunk if sales did reach $9.5 billion annually.
It’s also worth taking a look at the company’s up and coming blood cancer drug Venclexta. Roche and AbbVie have been working on the drug for some time now, and this work is expected to pay off with peak sales reaching between $2 billion and $2.75 billion.
These drugs, combined with a compelling oncology pipeline and a pending acquisition of Allergan that will bring even more valuable assets to the table leads to my belief that AbbVie is tremendously undervalued.
AIM ImmunoTech (AIM): Going From Cold To Hot Is Big Business
Unless you follow AIM ImmunoTech, chances are that this subheading makes very little sense. That’s OK, it will become very clear shortly. AIM ImmunoTech’s flagship candidate is a drug known as Ampligen. While the drug is the only drug on the planet to be approved anywhere for the treatment of severe ME/CFS (in Argentina), its true value has yet to be unlocked.
At the moment, Ampligen is the subject of several clinical trials in very difficult to treat cancer types. Advanced recurrent ovarian cancer, late-stage triple negative breast cancer, brain metastatic breast cancer, and advanced colorectal cancer are all active targets that AIM is, well, aiming for with Ampligen.
These types of cancers produce what is known as cold tumors. Essentially, these are tumors that, due to their microenvironments, are largely invisible to the human immune system as well as targeted therapies like blockade inhibitors. That’s where Ampligen comes in.
Data surrounding the drug increasingly suggests that Ampligen has the ability to change the tumor microenvironment, turning cold tumors into “hot” tumors, making it so that the body’s innate immune system and checkpoint blockade inhibitors are able to target tumors and improve outcomes for patients with these grim prognoses.
While research and development of cancer therapies can be incredibly expensive, AIM ImmunoTech isn’t footing the bill. There are multiple ongoing Ampligen clinical trials that are being funded by grants from the Department of Defense, Merck & Co., and other high-level grantors. As such, much of the financial headache associated with the ongoing clinical trials can be averted.
All in all, due to the fact that there are several active clinical trials, there are multiple catalysts for investors to look forward to. This, combined with available data suggesting that Ampligen has the potential to improve outcomes for patients with difficult-to-treat cancers, and the fact that top-level institutions are footing the bill for these studies, makes AIM ImmunoTech a stock that’s hard to ignore.
Diffusion Pharmaceuticals (DFFN): Could Lead The Charge In Glioblastoma Very Soon
Diffusion Pharmaceuticals recently made headlines after reporting early data from a Phase 3 clinical trial assessing its flagship candidate in glioblastoma, or brain cancer. The candidate is known as Trans Sodium Crocetinate, or TSC, and has shown incredible promise in early and mid-stage studies.
At the moment, Diffusion Pharmaceuticals is working on a 19-patient Phase 3 clinical trial. In the trial, the company is assessing the safety and efficacy of TSC when combined with standard of care in glioblastoma patients.
Early data from the trial is proving to be promising. Not only is the treatment showing positive safety signals in the trial, efficacy signals are hard to ignore. In fact, the median survival to date comes to 14.3 months, with six out of seven patients who received high dose TSC still alive. Due to the fact that these patients are still alive, with the passage of time only comes improvements in the median survival rate.
Nonetheless, even at 14.3 months, this data is overwhelmingly positive. In fact, historical data shows that this patient population only has a median survival rate of 9.2 months when provided with the standard of care alone.
The Phase 2 study data also proved to be positive. In the Phase 2 study, TSC was provided to newly diagnosed glioblastoma multiforme brain cancer patients. The study led to a nearly 4-fold increase in 2 year survival when compared to historical controls.
Considering the strong data that the company is generating in this Phase 3 clinical trial, Diffusion Pharmaceuticals may be headed for the submission of a New Drug Application with the FDA relatively soon. If all goes well, this small oncology company may be breaking into the commercialization stage relatively soon, making this a stock that should be on your watchlist.
Agenus (AGEN): Several Catalysts On The Horizon
Agenus has seen a strong move for the top in the market as of late, and for good reason. Investors are focused on coming catalysts driven by partnerships with Gilead Sciences, Incyte and Merck.
Most importantly, investors should pay close attention to AGEN 1884 and AGEN 2034. These candidates are checkpoint inhibitors being studied as potential options in second-line cervical cancer.
The company is currently in the process of pivotal trials, and if all goes well, it will be using the data from these trials as a basis for an accelerated regulatory filing early next year. Of course, this would be great news for all involved. However, the implications could go far further than what initially meets the eye.
As mentioned above, Agenus has several top-tier partners, including Gilead Sciences, Incyte and Merck. As partners, these large players in the oncology space all have a vested interest in the success of Agenus.
A positive data readout could lead to expanded partnerships or better, an offer to buy the company. Let’s face it, Gilead Sciences, Incyte and Merck all have the money to acquire the company. Not to mention, if data is positive, they all have a very good reason to make such a move.
So, should data continue to be positive, Agenus will either find its way to commercialization or be the subject of a takeover. Either way, this could be a big win for investors!
Clovis Oncology (CLVS): Poor Commercial Performance Leads To An Undervalued Opportunity
Clovis Oncology has been a painful stock to own in 2019. The reason for the gains is easy to pin down. The company’s flagship drug, PARP inhibitor Rubraca simply hasn’t been doing as well in the market as investors have hoped. Not only has this led to upset, it has led to painful quarterly losses.
While the blues are definitely setting in, the declines are creating what I believe to be a compelling opportunity. At the moment, Rubraca is approved for the treatment of advanced ovarian cancer. However, a coming supplemental New Drug Application may change the label on the drug, creating an opportunity to greatly expand revenue.
Before the end of the year, Clovis Oncology is expecting to submit a supplemental New Drug Application with the goal of expanding the Rubraca label to include advanced prostate cancer. This could be a game changer for the company.
If all goes well with the sNDA, Rubraca will be on the market in the advanced prostate cancer indication by late 2020. With this indication bringing a much larger market opportunity with fewer competing drugs, Rubraca could become a blockbuster treatment option.
Considering this, while there will be risk in the company’s weakening financial position, the reward here could be tremendous.
The oncology industry is a booming one, offering the opportunity to generate tremendous revenues while improving outcomes for patients in need of options. In my view, the companies listed above are doing just that, making them compelling investment opportunities worth looking into.
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Disclosure – Neither the author nor Alpha Stock News are investment advisors or broker/dealers. It is always advised that investors do their own research before making any investment decision. CNA Finance, parent company to Alpha Stock News has a financial relationship with AIM ImmunoTech.