Four Big Stocks To Watch Before A Big Meeting
The 39th annual gathering of the American
Society of Clinical Oncology (ASCO) is only eleven days away (May 31 to June 3)
and already Wall Street speculation is brewing on which company will the toast
of the meeting. The ASCO meeting is the largest of the year for cancer
specialists to present their most recent data on the latest research
developments in the treatment of cancer. This year’s meeting will introduce some
novel approaches to the treatment of cancer, approaches that range from
antibody-targeted receptors on the surfaces of cancer cells to adenoviral
mediated vaccines. Obviously this is an exciting meeting for physicians who
treat cancer. However, it is even more exciting for the investors of biotech
since presentations at this meeting can move company stock prices significantly
in either direction. Positive data presented can easily serve as a momentum
builder for any company’s new cancer drug. However, negative data can be
devastating to a new drug’s medical future and to a company’s financial future.
As a physician and investor in biotech, for me the ASCO
meeting is a double dose of speculative pleasure. The raw fact is this meeting
offers traders an opportunity to capitalize on medical news that will move stock
prices in the short term. The key is unearthing those companies and deciphering
the data before the meeting arrives. Unfortunately, the powers that be have made
this task a little more difficult…but not impossible. Prior to this year’s
event, ASCO sent out the clinical abstracts to physicians attending a month
before the meeting. In order to cut down on the speculative financial fever
generated on Wall Street, the organizers have guarded these abstracts with their
lives. Physicians attending this year’s event in Chicago now will get the
abstract summaries only on the day of the big show. During this week, I will
present several articles highlighting the main companies presenting data at this
year’s meeting.
The Big Four:
ImClone (IMCLE), OSI Pharm (OSIP), Genentech (DNA), and Millennium Pharmaceuticals (MLNM)
In my mind there are four
companies that will have a major medical impact on this year’s ASCO meeting, an
impact that will surely translate into stock price movement. Of these four
companies, three share one novel approach to the treatment of cancer,
Epidermal Growth Factor Receptor (EGFR) Inhibitor. This will be the new buzz phrase at the
upcoming ASCO meeting. Epidermal Growth Factor is a protein that exists in the
molecular soup cancer cells thrive in and is well known for stimulating their
growth in the body. Three major biotechs will present data on each of their new
drugs that inhibit the stimulatory affect of Epidermal Growth Factor (EGF) on
cancer cells. These drugs are monoclonal antibodies that bind to EGF receptors
on cancer cells and prevent their growth. They represent an entirely new
approach to the treatment of many cancers, an approach many companies view as a
tremendous source of future revenue. Many cancer specialists are excited about
this new class of cancer drug. However, so far the published data has not lived
up to the hype. Recently, Astra-Zeneca was the first to be granted FDA approval
of its EGFR Inhibitor drug Iressa for the treatment of advanced colorectal
cancer. Despite showing some promising efficacy, Iressa does have its critics. The three companies expected to be the focus of much attention at ASCO because
of their EGFR Inhibitors in development are ImClone Systems
(
IMCLE |
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(
OSIP |
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Genentech
(
DNA |
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ImClone will make several highly
anticipated presentations of late-stage clinical data discussing the use of its EGFR inhibitor C225 (Erbitux) for the treatment of advanced head and neck cancer
and metastatic colorectal cancer. For the head and neck cancer trial, C225 is
being used with chemotherapy and radiation therapy. For the metastatic
colorectal trial, C225 is being tested alone and in combination with
conventional chemotherapy. Both advanced diseases are very difficult to treat
with current drugs on the market and any inroads C225 can make on improving
survival will be greatly applauded. This data mainly comes from Europe and is
eagerly anticipated by physicians and investors. The word in the medical
circles is that C225 may have a positive impact on survival in the metastatic
colorectal trial. This will surely be good news to those with positions in ImClone.
OSI Pharmaceuticals is also
making several presentations of its own EGFR Inhibitor Tarceva (OSI-774). The
company will present phase II clinical data on the use of this drug against a
specific type of advanced lung cancer (bronchioloalveolar), metastatic
colorectal cancer, malignant brain gliomas, and other solid tumors. OSI is
developing this drug with partner Genentech (DNA) and Roche. The drug was
granted “Fast-Track†status in September 2002 for the treatment of advanced lung
cancer. In the past, there had been some concerns about the drug’s safety
profile, with several patients experiencing some serious side effects. However,
an independent review board examined the reports and recommended the trials
continue. In addition to co-presenting data on Tarceva, Genentech is also
making several presentations of its own drug Avastin. This drug, like the EGF
Inhibitors, is a monoclonal antibody. However, unlike the others, Avastin
targets the Vascular Endothelial Growth Factor (VEGF) Receptor on cancer cells. VEGF is another growth factor in the physiologic soup that stimulates the growth
of cancer cells. Genentech is testing Avastin against recurrent lung cancer,
pancreatic cancer, and advanced colorectal cancer.
Last But Not Least
The final company that will have
a major presence at the ASCO meeting at the end of the month is
Millennium
Pharmaceuticals
(
MLNM |
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PowerRating). I must admit, I like this company going into the
meeting. For one thing, Millennium already has momentum by getting FDA
approval of its new drug VELCADE to treat multiple myeloma (an uncommon bone marrow
cancer) last week. The FDA approved this drug in record time (four months) and
the company hopes to broaden its cancer application. The drug falls into a new
class of anticancer compound called a “proteasome inhibitor.†Similar to the
drugs already mentioned in this article, VELCADE acts on the stimulatory soup
that surrounds growing cancer cells. Millennium expects to present over ten
papers or posters at this year’s ASCO meeting, summarizing the use of VELCADE to
treat a variety of cancers. This is the most by any company. The potential
beauty of this drug is its versatility to treat a multitude of cancers, from
ovarian to soft tissue sarcomas. The upcoming presentations at ASCO will go a
long way in validating that potential versatility. One final reason why I like
this company is because it may soon partner up with a larger biotech or
pharmaceutical company. A future marketing partnership will only add value to
the company’s long-term future.
Good Luck,
Paul Ruggieri MD