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Cancer Drug Conference Gives Sector a Boost

9 June 2015 in Trading Ideas

Earlier this month, cancer drug developers held their annual meeting of the American Society of Clinical Oncology – its chief importance being that it is THE meeting where cancer drug developers share results from recent drug trials, with the associated power to make or break company’s fortunes.

Following the meeting, the cancer drug stock sector lifted higher overall, as outsized gains by companies with impressive results outweighed the disappointments.

Not that it’s been anything but a bull run for the sector lately: the Battling Cancer motif has gained 48.5% in the past year. In that same period, the S&P 500 has increased 6.7%.

However, bullishness surrounding ASCO has already helped lift the sector in the near term. The Battling Cancer motif is already up 6.3% in the last month. In that same time frame, the S&P 500 is off 1%.

One prime example of an ASCO liftoff was seen in shares of ImmunoGen, which had already gained 33% in the past year but soared another 74% after the company said the findings of its ongoing Phase I study of its experimental ovarian cancer treatment were “highly encouraging.”1

The treatment is aimed at patients with ovarian cancer that recurs within a certain period in patients after they have had a platinum-based chemotherapy.

Several companies whose stocks are components in the Battling Cancer motif also presented data at ASCO that was seen in a positive light by many analysts:

• Immunomedics announced that among 49 patients with metastatic triple-negative breast cancer evaluated for response to treatments with the drug sacituzumab govitecan in a mid-stage clinical study, 31%, or 15 patients, showed a reduction in tumor size of 30% or more.2

• Juno Therapeutics gave an update on its Phase I trial of JCAR014 that added further evidence of CAR-T cell therapy’s impressive power against blood cancer, according to Investor’s Business Daily. Some 91% of patients with acute lymphotic leukemia showed a complete response – i.e., their tumors disappeared – as did 40% of patients with chronic lymphocytic leukemia. Juno also said that 63% of patients with non-Hodgkins lymphoma showed a partial or complete response.3

• Celldex Therapeutics updated a clinical trial with data that showed its experimental, targeted Rintega immunotherapy continues to delay tumor growth and extend survival in patients with a certain type of recurrent brain tumor.4

According to a recent report from the IMS Institute for Healthcare Informatics, global spending on cancer medicines hit a new milestone in 2014 — $100 billion.5

As a CNBC.com report noted, that’s up more than 10% from 2013, and up 25% from five years ago. Targeted therapies, which take aim at specific drivers of cancer, now account for almost half of total spending, IMS said.

And as more new cancer drugs get approved, spending is likely to accelerate, CNBC.com said. The compound average growth rate on cancer medicines in the last five years has been 6.5% globally, according to IMS. The research firm predicts that rate to be 6% to 8% through 2018.

That trajectory may pinch consumers harder, but investors in cancer drug stocks may get even healthier.

1Mamta Badkar, “Cancer drugmakers rally on upbeat prognosis,” ft.com, June 1, 2015.

2Chris Lange, “6 Key Cancer Winners From ASCO Presentations,” 247wallst.com, June 1, 2015, http://247wallst.com/healthcare-business/2015/06/01/6-key-cancer-winners-from-asco-presentations/, (accessed June 8, 2015).

3Amy Reeves, “4 Stocks Rising On ASCO Cancer Drug News,” investors.com, June 1, 2015, http://news.investors.com/technology/060115-755063-imgn-bmy-mnta-juno-up-on-asco-presentations.htm, (accessed June 1, 2015).

4Adam Feuerstein, “ASCO ’15: Celldex Immunotherapy Maintains Survival Benefit for Recurrent Brain Tumor Patients,”thestreet.com, May 31, 2015, http://www.thestreet.com/story/13167195/1/asco-15-celldex-immunotherapy-maintains-survival-benefit-for-recurrent-brain-tumor-patients.html, (accessed June 8, 2015).

5Meg Tirrell, “Cancer drug spending tops $100 billion, up 10% in a year,” cnbc.com, May 5, 2015, http://www.cnbc.com/id/102647185, (accessed June 8, 2015).