By Amy Baldwin
Today, pharmaceutical companies are developing targeted cancer therapies to attack and destroy cancer cells and tumors. These targeted therapies act like smart bombs because they attack the cancer cells while leaving the healthy tissue alone. Scientists have found that focusing on the molecular and cellular changes that are specific to cancer, targeted therapies may be more effective than just chemotherapy or radiotherapy, and have found success when using targeting therapies alone or in conjunction with other treatments. Targeted therapies work in a number of different applications: by delivering the toxic cancer killing drugs directly to the cancer cells or blocking signals that tell cancer cells to grow and divide, thus stopping or slowing the cancer’s progress, or third, by killing the cancer cells by stimulating the body’s own immune system. Pharmaceutical companies have a number of these targeted drugs already on the market and in various phases of testing. Below are three companies, two giant pharmaceuticals and one micro-cap biopharmaceutical that are actively developing targeted cancer treatments in one form or another.
Roche Holding Limited (PINK:RHHBY), the largest manufacturer of cancer fighting drugs thanks to its acquisition of the pharmaceutical giant Genentech in 2009, has the three top selling cancer fighting drugs on the market: Rituxan — a Non-Hodgkin lymphoma drug, Avastin — a drug approved as a first-line treatment for ovarian cancer, and Herceptin — an HER2 breast cancer drug. Added up, the three drugs accounts for $7.16 billion in annual sales. It now looks as though its previously snubbed trastuzumab emtansine (T-DM1) will gain approval from the FDA for the treatment of patients with HER2-positive metastatic breast cancer. T-DM1 is under study for patients with HER2-positive metastatic disease who have previously received trastuzumab (Herceptin), a monoclonal antibody that targets HER2, and taxane chemotherapy. T-DM1 combines the antibody trastuzumab with the cytotoxic emtansine using an MCC stable linker, thus disrupting HER2 signaling as well as transporting the cytotoxic agent directly into tumor cells. As a result of the positive results achieved with T-DM1, Roche has approximately 25 antibody drug conjugates in development. The company has gathered the late-stage trial data that it needs to seek FDA approval, and plans to send its applications for U.S. and European approval later this year. Analysts expect T-DM1 to surpass $1 billion in global annual sales if approved, and JPMorgan biotech analyst, Cory Kasimov, sees peak sales to reach roughly $3.5 billion and gives the experimental treatment an 85% shot at approval.
Trefis expects Roche’s oncology drug sales to reach $32 billion by the end of their forecast period due to a several positive factors in that many of its drugs have found additional indications over the ones they were manufactured for. There are 6 additional indications relating to Avastin, Herceptin, Tarceva, and Rituxan, which Roche will file for approval in 2012. Zelboraf, a medicine for treatment of melanoma, which regulators in the U.K. have given their approval, is being tested for additional indications like metastatic melanoma and papillary thyroid cancer. Further, Roche has a formidable pipeline in the oncology drug segment and more than 10 other pipeline drugs are expected to be ready for filing in the next 2-3 years. In addition, most of its cancer drugs do not face near-term patents expiry. The company has a pipeline of cancer fighting drugs and expects results from 19 late-stage clinical trials over the next 18 months. Roche stock is up 13% for the year and closed on December 3rd at $48.30, just shy of its 52-week high of $50.82. It has a good yield of $3.82. With Roche’s strong pipeline of drugs in various testing stages, plus having five of the top selling cancer drugs on the market, Roche is a strong company and a good one to have in one’s portfolio for the long term.
Baxter International Inc. (NYSE:BAX) appears to be making a move to be a player in the cancer-fighting drug business, and expects to extend its oncology portfolio with advanced biological research and development. Last month, it announced it began dosing patients who have malignant solid tumors in a Phase I clinical trial of a monoclonal antibody designed to assess the safety, tolerability, and optimal dose of the antibody in up to 44 adult patients. Monoclonal antibodies, like smart bombs, target a specific antigen in the body. The anti-MIF antibody targets the MIF protein; a protein that induces inflammatory responses in the body and that has also been shown to cause the growth and spread of tumors. By inhibiting the cancer-promoting effects of MIF, the anti-MIF antibody may be capable of restricting the growth of tumors. “This research program leverages Baxter’s scientific expertise in systemic oncology therapies and leadership in biologics, and further reinforces our commitment of supporting patients with life-threatening conditions,” said Ludwig Hantson, PhD, president of Baxter’s BioScience business.
Last month, the cash heavy Baxter announced it had entered into a European licensing agreement with Onconova Therapeutics, Inc. for commercialization rights in the European Union (EU) and other countries in Europe for rigosertib, a novel targeted anti-cancer compound. Rigosertib’s targets dual pathways (PI-3K and PLK), which are critical to the growth of cancer cells. It has been studied in more than 600 patients worldwide and has shown activity in treating both solid tumors and hematological malignancies. Rigosertib is in Phase II/III study for pancreatic cancer, and Phase III study for a group of rare hematologic malignancies called Myelodysplastic Syndromes (MDS). Baxter will make an upfront payment of $50 million to Onconova, who may receive up to $515 million in pre-commercial development and regulatory milestones for the MDS and pancreatic cancer indications, in addition to sales milestones and royalties. Baxter has the option to participate in the development and commercialization of rigosertib in additional indications. Baxter has an existing equity investment with Onconova of $50 million. Onconova has gained orphan drug designation for MDS in the United States and Europe.
Baxter has had a good run year to date; the stock is up over 28% and surpassed its 52-week high on Friday Nov 2, before closing at $64.75. On November 1st Piper Jaffray reaffirmed its overweight rating on Baxter with a target price of $73.00 per share, while Mizuho, who has a buy rating on it, raised its price target from $70.00 to $72.00 per share. BMO Capital Markets reiterated an outperform with a target price of $70.00. Meanwhile, on Oct. 24th Zachs placed a neutral rating on Baxter with a target price of $64.00 per share. Baxter reported third quarter profits up 1% over last year to $583 million. However, its sales, year over year, were flat at $3.47 billion, below Zacks consensus estimate of $3.52 billion. Baxter has a market cap of $34.81 billion, and a P/E of 15.46, with a yield of $2.83. Though there have been some detractors, Baxter continues to be a strong stock in one’s portfolio, and with good reason: it has proven itself to be a solid company, well managed, and continues to maintain a strong product pipeline with several products in late-stage clinical development. It will be interesting to see if Baxter can indeed be a player in the cancer drug business; though due to its past history, Baxter would be a solid bet to succeed, and would continue to be a buy.
OncoSec Medical Incorporated (PINK:ONCS), a micro-cap biopharmaceutical company out of San Diego, California, is taking a different approach in developing its two main products: Its advanced-stage ImmunoPulse, a DNA-based immunotherapy to treat solid tumor cancers that have metastasized or spread, and NeoPulse, a drug-based chemotherapy targeting early-stage tumors. Both methods utilize electrical pulses, via a process called electroporation. The typical treatment for late-stage skin cancers is chemotherapy and surgery; however, OncoSec is utilizing ImmunoPulse a noninvasive approach that could improve the quality of life for skin cancer sufferers. Currently OncoSec is conducting Phase II clinical trials with ImmunoPulse, a method that delivers short electrical pulses to the surface of a tumor which causes the pores to open in the membrane of cancer cells, thus targeting the cells more accurately while boosting the effectiveness of the anti-cancer agent it delivers. This process allows a far more effective treatment at significantly lower doses while sparing healthy tissues during early and late- stage clinical trials. The process is more potentially effective with fewer side effects. OncoSec has received almost $12 million in funding and is conducting simultaneous Phase II clinical trials for ImmunoPulse for three types of cancer: metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. Though less common than other skin cancers, these cancers are often drug-resistant and aggressive.
Earlier last month the company announced it has received authorization to CE mark its proprietary gene and drug delivery platform, the OncoSec Medical System (OMS) electroporation device, for use in the European Economic Area (EEA). The granting process involved a comprehensive audit of the company’s quality system as well as thorough evaluation and testing of the OMS electroporation device. This is a big step as Punit Dhillon, President and CEO of OncoSec, noted when he commented that the approval “marks an essential regulatory milestone on the road to commercialization and further approval of the OncoSec Medical System. The CE mark shows that OncoSec has the capability to manufacture and develop a device that meets commercial regulatory requirements.”
In mid November OncoSec presented positive clinical data from its ongoing Phase II metastatic melanoma trial to the 6th World Meeting of Interdisciplinary Melanoma/Skin Cancer Centres. The company presented data that suggests utilizing ImmunoPulse delivers a DNA-based cytokine coded for the immune stimulating agent interleukin-12 (DNA IL-12), and may elicit increased levels of IL-12 in the tumor, thus having the potential to result in a systemic immune response in treating aggressive cancers like MCC without serious side effects. Preliminary analyses of both the Merkel cell carcinoma and metastatic melanoma trials will be based on a subset of enrolled subjects, and will evaluate clinical response to at least one cycle of ImmunoPulse treatment. The positive presentation had a positive response to the company’s stock price, though up almost 20% YTD still appears to be a bargain. OncoSec, with a market cap of $26.36 million, closed December 3rd at $0.34 per share on lighter-than- average trading. ONCS appears to be a good bang for your buck, and should be looked at as a buy.
