The Biotechnology Holy Grail: A Cure for Cancer
When Richard Nixon declared war on cancer in the 1970s, the medical establishment feverishly led the charge to conquer this punishing disease. Despite having made great strides in treating and curing many types of cancers over the last 30 years, the medical community realized in the late 1980s it needed help to completely overtake this disease.
The cavalry eventually did arrive–in the form of the biotechnology sector of corporate America. In the last five years, advances in cancer research and drug development have markedly accelerated. It seems like every month the media is reporting on a new breakthrough in the war to cure cancer. Much of the acceleration in cancer research has been fueled by many small and large biotechnology companies eager to gain a large financial piece of the cancer cure pie.
Why is it that cancer, unlike any other disease, creates such an emotional response in people, produces such a media frenzy when possible breakthroughs are reported, and causes such speculative volatility in the biotechnology companies involved in cancer drug development? Despite all the medical advances, the word “cancer” continues to strike fear in the hearts of most of us. I see the reaction every day in patients and their families who are diagnosed with it. A diagnosis of cancer still means a disease with no cure to many patients since they have had family members succumb to it, leaving them with only one pessimistic impression.
The media understands the deep-rooted feelings society has about cancer and its reporting on potential breakthroughs are often met with much attention and interest. Companies are also tuned in to the feelings people have about cancer and are feverishly working toward the next breakthrough.
The impact of this disease on the biotechnology wing of the corporate world is enormous. Over eight million Americans were treated for cancer last year and more than 1.2 million new cases were diagnosed. 500,000 Americans will die of the disease this year. Cancer is second only to heart disease as a cause of death in the Western world. The financial stakes of finding a cure for cancer, any cancer, are incredibly high and can turn a fledgling biotechnology company into a profitable leader in the field, never mind what it could do for its market capitalization and public relations.
Entremed [ENMD>ENMD] is a prime example of how powerful an influence a potential cancer cure can have on a company. In May 1998, the New York Times ran a front page story on two drugs being developed by Entremed, a small, unprofitable, anonymous biotechnology company. Both compounds exhibited striking anti-tumor effects in the lab on all types of cancers without damaging normal cells.
Although these drugs were entirely experimental and had not even made it to human trials yet, the next day the company was a media darling and the stock almost tripled in value despite not having a single drug product on the market.
More recently, Matrix Pharmaceutical Inc. [MATX>MATX] increased over 120% in May after the FDA granted “fast-track” status to its only cancer product.
Is there a rationale for the exuberant volatility in these stocks with no earnings, no revenue stream, and no identity? Yes, and it exists because cancer has and will continue to have a major influence on the health and psyche of people all over the world. Biotechnology corporate America understands this, particularly as the population ages, and many companies are making fascinating inroads into curing this disease.
The next cancer treatment breakthrough
Due to the rapid advances in medical research, particularly at the corporate level, the battle lines for discovering new cancer drugs are constantly shifting. In the past, surgery followed by radiation and chemotherapy was the workhorse cancer treatment regimen. The problem with much of today’s chemotherapy stems from its toxic side effects; chemotherapy not only kills tumor cells, it also destroys normal, healthy cells indiscriminately.
Companies today are concentrating on developing drugs without these side effects and with a very high accuracy of hitting only the tumor cell target. These same companies are also focusing on novel approaches to treat all types of cancers at once, broadening the scope of any drug they might develop and increasing its value on the market.
Let’s continue by taking a look at the hottest areas of cancer research, the companies are fanning the flames of this research, and which of them have the best chance at success.
Tumor angiogenesis inhibitors
This is one of the hottest areas of cancer research today. Tumor angiogenesis inhibitors are drugs that effectively choke off the blood supply to cancerous tumors without harming normal cells. Solid organ cancers anywhere in the body (breast, colon, lung) need a blood supply to grow and there is a biochemical process (angiogenesis) that induces the formation of new blood vessels when a cancer is present. If drugs can be developed to block this process of forming new blood vessels to cancerous cells, the cells will die. The potential to treat a broad spectrum of solid organ cancers this way without surgery or side effects is enormous.
There is a tremendous race among close to a dozen biotechnology companies that are actively pushing tumor angiogenesis inhibitors through clinical trials. Companies like Entremed, Sugen Inc. [SUGN>SUGN], Genentech [GNE>GNE], British Biotech [BBIOY>BBIOY], and Agouron Pharmaceuticals are all racing to accumulate data to support their anti-angiogenesis drugs. Whoever gets their first will come close to finding the cancer holy grail.
Entremed has been the media front-runner for this group ever since the New York Times reported on the company last May. It will soon start clinical trials with its drug endostatin. Sugen Inc., a San Francisco-based company also has anti-angiogenesis compounds in clinical trials, in addition to an emerging pipeline of other cancer drugs. I believe this area of cancer research will generate some exciting news in the next several years.
Antibodies directed at tumor cells
This is another emerging area of cancer research that many small biotechnology companies have their hands in. The concept here is to identify unique areas on a cancer cell (i.e., receptors) that are vital to that cell’s ability to grow out of control. If these areas can be isolated, then drugs can be developed and targeted to block these receptors (antibodies in the body function this way by adhering to receptors). Once blocked, the cancerous cell is thrown into a funk and cannot function.
This was the original magic bullet concept of cancer treatment that today has taken on a new meaning. Imagine developing a drug or antibody aimed at a specific site on a cancer cell, attaching a toxic agent to that drug, parking the drug and toxic agent on the receptor and killing only the cancer cell.
This scenario is not science fiction–it is currently being played out. Companies like Imclone Systems [IMCL>IMCL] are developing specific antibody type drugs to various human cancers. Genentech has already become the pioneer in this field with its genetically engineered prototype antibody drug Herceptin already on the market. Herceptin is being used to treat breast cancer by hugging to a specific site on the cancerous cell and causing that cell’s growth to stop in its tracks. It works with minimal side effects and had sales of over $40 million last quarter.
A company called Idec Pharmaceutical Corporation [IDPH>IDPH] has added a little twist to developing drugs of this category. It currently has a drug on the market (approved in Dec. 1997) called Rituxan that is used to treat cancers of the lymph system. This drug acts by attaching itself to a cancer cell and directing the rest of the body’s immune attack cells to come and destroy. It is a very efficient way of killing cancer cells and doctors have responded well to its presence. Rituxan brought in over $50 million in its first full year on the market and is expected to double that figure in the current year.
Gene manipulation
As the human genome becomes completely unclothed and every gene in the body scrutinized, gene manipulation will take center stage. As cancerous genes become identified, scientists will develop drugs and methods to exploit the cancerous DNA present in order to vanquish the disease even before it starts.
I call this the Terminator approach, named after the Arnold Schwarzenegger movie. In this film, Arnold is sent back as the Terminator to kill an individual who, if allowed to live, would ultimately pose a threat to the future. With this approach, if a cancer causing gene is identified before it can program a cell to turn cancerous, it can be terminated and never pose a threat to life.
The potential for treating all cancers this way exists, and many companies are actively looking to isolate and exploit cancer-causing genes. Genentech and Immunex [IMNX>IMNX] have added a unique twist to the genetic approach of treating cancer: They have combined forces to develop genes that carry out a suicide mission. Once inserted into cancerous cells, these genes have been shown in the lab to cause a process called “apoptosis” to occur. Apoptosis is programmed cell death. The cancerous cell self-destructs when the apoptosis gene is inserted into its DNA. It all happens very discretely. This approach is still in its infancy and is several years away from even being tested in humans, but its potential has companies moving at a rapid pace.
Vaccines and drugs to prevent cancer
This category of drug development is the final frontier of cancer research. The ultimate goal of many scientists is to not find a cure for cancer, but to find a way to prevent it from ever rearing its ugly head or returning.
Several companies are focusing on developing vaccines that recruit the body’s own immune system to ward off the development of any cancerous cells in the future. There is the potential to do to cancer what the Polio vaccine did for the disease polio. Vaccines are currently being investigated to treat cancer if it suddenly returns or to dispose of potential cells that could become cancerous if left alone to grow.
A company called Cell Pathways [CLPA>CLPA] recently reported positive preliminary data on the development of a drug that destroys abnormal cells in the breast or prostate gland before they become full-blown cancer cells. These “premalignant” cells will go on to develop cancerous cells if left alone. However, approaches like Cell Pathways’ new drug could prevent cancer from ever forming.
AstraZeneca Group Plc. [AZN>AZN], a pharmaceutical giant, is the maker of Tamoxifen, a drug used to treat breast cancer. Tamoxifen’s effects in preventing breast cancer were well known and last year the FDA approved its use to prevent breast cancer in high-risk women. This added use was a big boost to AstraZeneca because it markedly expands the drug’s market. Eli Lilly [LLY>LLY] has a drug on the market currently approved for use only to prevent bone loss. Women who were taking Evista were also noted to have a decreased incidence of breast cancer, a finding that could have enormous potential for the drug. There are studies currently underway to confirm this finding and if the FDA ultimately agrees to grant Lilly the approval to use Evista to prevent breast cancer, it will reach blockbuster levels.
The Final Word
With all the companies and new drugs they’re developing, how do you know which ones will hit it big and which ones won’t? Here are some strategies to evaluate the blockbuster potential of a cancer drug.
- It is a Cancer Drug
The simple fact that a drug is designed to fight cancer is a big plus. Cancer is one of the Big Three diseases (along with cardiovascular disease and diabetes) and, as I mentioned, carries with it a presence with people unlike any other disease. Even a partially successful cancer drug will have big consequences for the company involved. - Type of Cancer
Some type of cancers have more influence on the potential of a drug then others. For instance, drugs developed to treat breast cancer, a very high profile disease, will have more of a potential to be successful then those developed to treat lesser known cancers. Prostate cancer is the most common cancer in older men and potential drugs to treat this will have an advantage. - A Novel Approach
Drugs that work differently then anything out there will add to the potential for blockbuster status. Just look at how Pfizer’s Viagra and Monsanto’s Celebrex, both new ways to treat their appropriate diseases, were received upon their introduction. - A Broad Application
A drug that is developed to treat many or all cancers at once has the best chance of obtaining blockbuster status. Single cancer drugs are good, but a wider application is better. - Minimal or No Side Effects
A cancer drug with minimal or no side effects will be quickly accepted by all. - It Must Work
Obviously, for a cancer drug to be successful it must be effective in clinical trails. Many drugs today are not completely effective in treating cancer. Some drugs place cancer in remission and some just slow its growth. Partial effectiveness of a cancer drug can be a plus. However, if a drug is 100% effective in curing cancer, then you have hit the holy grail. - Clinical Trials
Even if a drug has made it to Phase III clinical trials in humans, there is no guarantee of its usefulness. Despite this, the announcement of a cancer drug entering Phase III clinical trials will give a boost to a company’s stock just because it is a drug to treat cancer. - Imminent FDA Approval
A company’s stock will climb in anticipation of FDA approval, particularly when it involves a cancer drug treatment. Obviously, when the FDA does approve its use by the medical profession its potential rises dramatically. - Replacing Existing Therapy
If a cancer drug is more effective than existing therapy or replaces surgery, then it will be one step closer to blockbuster status. Drugs that replace surgery resonate with the media, patients, and doctors (except surgeons). Everyone loves replacing the knife with a pill. - Medical Meetings
Most new potential cancer drugs are displayed at medical meetings. Data is announced by many companies and will usually result in a nice rise in a company’s stock, if positive of course. The interesting thing here is that with cancer, much of the data released is early laboratory information on how a drug stops cancer in a test tube or mice. Regardless of the preliminary nature, many companies benefit. The recent meeting of The Society of Clinical Oncology was a great forum to display potential blockbuster anticancer drugs.
Next month, I will discuss in depth the companies involved in the hottest areas if cancer research and focus on their short- and long-term strategies.