By William Sterling
The skin is the largest organ of the body, and skin cancer just happens to be the most common form of cancer. Yearly, 3.5 million Americans are diagnosed with one form of skin cancer or another, more than breast, lung, colon, and prostate cancers combined. Basal cell carcinoma, though rarely fatal, can be disfiguring if not treated early, and it is the most common form of skin cancer, with an estimated 2.8 million Americans diagnosed annually. This is followed by squamous cell carcinoma, with 700,000 cases annually. It is estimated 3,010 deaths from those two skin cancers will occur in the US in 2012. The most deadly form of skin cancer is melanoma. 1 in 50 will be diagnosed with melanoma in their lifetime and, sadly, every hour 1 person dies of this form of cancer. It is estimated that 76,250 new cases of invasive melanoma will be diagnosed in the US in 2012, and 9,180 will die this year of the disease. But there is hope on the horizon, as new drugs have come on the market and therapies are being tested. Below are three promising companies that have invested in new drugs or delivery systems in the fight against skin cancer.
Bristol Myers Squib Co. (NYSE:BMY), a global biopharmaceutical company, announced last Thursday that its late-stage metastatic melanoma drug, Yervoy (ipilimumab), has been recommended by the National Institute of Health and Clinical Excellence. Yervoy, the only approved treatment for metastatic melanoma to deliver a long-term survival benefit at 2 years, had been approved by the Federal Drug Administration (FDA) for use in the US and by the European Union in 2011 for the treatment of previously-treated metastatic melanoma. A pivotal study, which included more than 4.5 years of follow up, found that the median overall survival was 10 months for Yervoy and 6 months for the gp100 control group. Results from a 5-year follow from three Phase 2 exploratory studies were recently presented during the European Society of Medical Oncology Congress, adding to the growing body of long-term survival data for Yervoy in metastatic melanoma. Yervoy, being an innovative immunotherapy, is the first drug approved for metastatic melanoma in over a decade, and has received the Prix Galien USA 2012 Award for Best Biotechnology Product. The award is selected by a preeminent scientific committee, including several Nobel Laureates, and is considered the most prestigious prize in biopharmaceutical research and development. It recognizes the technical, scientific, and clinical research skills and achievements necessary to develop innovative medicines and devices. Yervoy is the only metastatic melanoma therapy proven in a Phase 3 study to deliver a durable long-term survival benefit at 2 years for 24% of previously-treated patients.
Immuno-oncology, which Bristol-Myers Squibb has prioritized as an area of research, focuses on the body’s own immune system to fight cancer. The company is committed to leading advances in this field of research and is exploring a variety of innovative compounds and immunotherapeutic approaches to help address unmet medical needs in a broad range of cancers. In doing so earlier this year, it formed a global collaboration between industry and academia, including ten leading cancer research institutions, to further understand immuno-oncology. The objective is to facilitate the translation of scientific research findings into clinical trials and clinical practice, which will then further advance its drug therapies and development.
Bristol-Myers Squibb, a $29.12 billion market cap company, has seen its stock slump this year on less- than-stellar numbers: revenue for the quarter was down 30.1% on a year-over-year basis, though analysts expect that Bristol Myers Squibb should show $1.96 EPS for the current fiscal year. On October 24th the company reported $0.41 EPS for the quarter, below Thomson Reuters consensus estimate of $0.42. Recently Bristol-Myers Squibb found itself downgraded from an outperform to a market perform by analysts at BMO Capital Markets, who have a target price of $37.00 per share. Analysts at Jefferies Group, on the other hand, have reiterated a buy with a target price of $38.00 per share, while Zacks has kept its neutral rating and sees a $35.00 price target on the shares. Year-over-year the stock has moved very little, having a 52-week low at $30.10 and a 52-week high of $36.34. Lately its been hovering closes to $32.00 dollars per share, which means that even though the market is not all that bullish on the company, it is well below analysts’ target price. The stock’s P/E ratio stands at 29.19, very high compared to the industry sector which stands at 17.20. However, its dividend yield at 4.26 is greater than the industry sector of 3.88. Interestingly the company has a very low price-equity ratio of 3.83 compared to the industry sector of 19.89, which means, at this point, the stock may well be undervalued. I don’t see anything to make the stock run up or down, but it is a solid company and could be a good addition as a stable stock with an excellent yield in one’s portfolio.
Array Biopharma Inc. (NASDAQ:ARRY) a small-cap biopharmaceutical company based in Boulder, Colorado, has been collaborating with the pharmaceutical giant Novartis (NYSE:NVS) on the development of its anti-cancer drug, a small-molecule MEK inhibitor called ARRY-162, which targets a key position in the Ras/Raf/MEK/ERK signaling pathway. MEK, a key protein kinase pathway, acts as a central line in the spread of various tumors—such as melanoma, head/neck, and pancreatic cancers—and is regularly activated in cancer, mostly in tumors that have mutations in the RAS and RAF oncogenes. MEK also regulates the biosynthesis of the inflammatory cytokines TNF, IL-6 and IL-1, which can act as growth and survival factors in cancer. MEK inhibition, such as ARRY-162, either alone or in combination with other agents, is an important therapeutic strategy in treating cancer. Based on the positive ongoing Phase 2 trial results with ARRY-162 in NRAS mutant melanoma, Novartis plans to initiate pivotal trials in patients with NRAS mutant melanoma beginning in 2013, and has a target goal for regulatory submissions on or after 2016. In addition, Novartis announced plans to pursue clinical development in combination with a Raf inhibitor, in BRAF mutant melanoma, with regulatory submissions forecast for on or after 2016.
Array’s stock has been hammered as of late, down 20% in the last few trading sessions and down 32% over the last month; however, YTD it is still up almost 60%. On of the reasons for the recent slide was the company announced the pricing of 18,000,000 primary shares of common stock at a public offering of $3.65 which brought the stock price below $4.00 per share, a price the stock hasn’t seen since mid-July. Array reported revenue of $15.8 million for the third quarter, a decline from the $22.1 million for the same period in 2011. The company’s net loss for the third quarter came in at $11.8 million, or $0.13 per share, compared to $3.6 million, or $0.06 cents per share, for the same quarter in 2011. On a positive note, along with its melanoma drug ARRY-162, Array has five drug products expected to reach the final stage of U.S. Food and Drug Administration approval process by the end of 2013, and all it takes is one winner to send the company from a loss to profits. Though the company is selling well off its highs and AARY-162 looks promising, it might be wise to wait for some news; but if good news comes out this stock might shoot up quickly.
OncoSec Medical Inc. (PINK:ONCS), a small biopharmaceutical company based in San Diego, California, has seen its stock price soar almost 90% in the last 6 months on solid volume. There appears to be good reason for the increase in both price and volume: This company looks to be on the forefront of a proprietary process that delivers skin cancer-fighting drugs through electroporation. Electroporation utilizes an electrical pulse which causes pores to temporarily open in cancer cells. Simply put, once the pores are open, chemotherapeutics, or gene-based cytokines, are injected into the cancer tumors allowing for a more targeted and effective treatment at a significantly lower dose with less crippling side effects. For example, therapies that involve the use of cytokines, which require toxic levels to be effective, were not considered a viable anti-cancer therapy due to the toxicity level. But using electroporation (namely OncoSec’s OMS system) to open the pores of the metastatic melanoma cells, a much lower dosage of cytokines are needed to be delivered, thus resulting in far less toxicity levels, and making cytokines a more viable cancer therapy.
The two clinical applications that OncoSec developed are for two separate treatments. The first is ImmunoPulse which delivers a plasmid DNA that has instructions to produce the IL-12 protein where the gene can then trigger the cell to produce and secrete IL-12 protein. This allows for the body’s own immune system to eliminate the cancer cells. According to the company the initial evidence suggests ImmunoPulse therapy has the potential to not only treat cancer cells in the target area, but to also trigger the immune system affecting remote cancer cells outside the targeted treatment area.
The company’s second OMS platform, NeoPulse, directly targets the cancer cells to deliver an already approved chemotherapy drug, bleomycin. Bleomycin is a type of glycopeptides antibiotic which is traditionally delivered by intravenous infusion. It is highly effective but has many side effects associated with the treatment regimen. However, using NeoPulse’s electroporation to open the cell membranes, it can enhance the drug’s ability to target tumor cells and allow better incorporation of the agent into cancer cells by a factor of as much as 4,000. Furthermore, it has been shown that, shortly after the drugs have been administered, the pores close. This traps the agent inside the cells, thus retaining more of the drug for a longer period of time and increasing the effectiveness of the treatment. Therefore, the patient can receive a much smaller dose of the toxic medicine, 1/20th of a traditional chemotherapy dose and maintain the same level of effectiveness.
What makes OncoSec intriguing to an investor is that the company does not manufacture or develop the highly competitive medicines that fight cancer; rather it has developed an effective delivery system for the medicines. Ergo, they are not competing directly with the giants like Roche Holding Limited (PINK:RHHBY), Baxter International Inc. (NYSE:BAX), or Bristol Myers Squib, but rather enhancing the drugs’ delivery. Hence, they have the ability to create a customer base with these giant drug developers and manufacturers. OncoSec’s common shares seem to have found short term support at $0.30. Analysts target the stock anywhere from $1.00 to $2.00 per share with an average price targeted at $1.50 per share. Though OncoSec has yet to produce any revenue, its product appears to have positive applications and results — and if the industry takes notice, I will look for this stock to rise dramatically, and I’d consider this stock a buy. But caution must be used when investing in any small development company, as the risks are considerably higher… but so are the rewards.
Disclosure: Long ONCS.