Securities.io is not an investment adviser, and this does not constitute investment advice, financial advice, or trading advice. Securities.io does not recommend that any security should be bought, sold, or held by you. Conduct your own due diligence and consult a financial adviser before making any investment decisions.
Cancer – The Last Great Illness
Modern medicine has mostly cured most of history's greatest killers, infectious diseases: smallpox, tuberculosis, tetanus, etc. But another category of diseases has proven harder to cure, the one coming from dysfunctions in our own bodies – Cancer.
Some are genetic diseases or related to aging, like Parkinson's or Alzheimer's. But another deadly group of diseases is cancer.
Cancers are when some cells in the body start to multiply uncontrollably, generally due to genetic error. While this is the general pattern, the diversity of cell types in our bodies and the various mechanisms by which this can happen mean that cancer is not just one disease. It is more like 1,000 or 10,000 different diseases wrapped under a common label.
This diversity has made it exceptionally difficult to cure. Treatments are getting better, but it is still an ongoing battle.
Because of its deadliness, cancer is also a type of therapy with a high price tag. This is done to stimulate research, but it also can be highly profitable for the companies that discover successful treatments.
Historically, cancer drugs were molecules able to reduce cell replication or kill cancer cells faster than healthy ones. And while this works for some cancer types, new approaches are now emerging, from modifying immune cells to mRNA and early detection from just a blood sample.
Top 10 Cancer Therapy Stocks
This list overviews the sector and includes leading “Big Pharma” in cancer therapy, diagnostics companies, and clinical-stage startups.
It also tries to keep a balanced view between classical drug-based therapies and more innovative biotech approaches.
Roche has been a long-time leader in oncology (cancer medicine), with blockbuster drugs like Rituxan, Herceptin, and Avastin, even if these products are now getting under pressure from the commercialization of biosimilars (the equivalent of generics for biotech drugs).
The company is active in therapies and diagnostics, with 28 million people treated with Roche's medicines annually and 27 billion Roche tests performed annually. The therapy division represents roughly 3/4th of the company’s revenues.
This presence in diagnostics is important to Roche's position in oncology, as accurate and early oncology diagnosis is probably the most important factor in surviving cancer. Discovering and then testing the proper biomarkers or mutations in patients can mean the difference between life and death, as explained in this article from Roche.
The oncology part of Roche’s portfolio has been steadily growing since 2018, now making around a quarter of the company’s revenues (it includes “AHR”: AHR: Avastin, Herceptin, Rituxan/MabThera), without counting the cancer-related diagnostics sales. Immunology and neurosciences are other segments of importance for Roche.
The company currently has no less than 78 cancer therapies in its R&D pipeline, from a total of 161 therapies in development. Of these 78 oncology therapies in the pipeline, 2 are already approved, and 30 are in phase III of clinical trials.
In September 2023, the oncology portfolio sales had grown by 5% year-to-year.
Roche is a very large pharmaceutical company, which will fit best investors looking for a steady income and a relatively safe stock.
The company stock price has declined somewhat from its peak in March 2022, partially due to a decline in diagnostic/testing with the Covid-19 pandemic slowing down. As a result, the company valuation is rather reasonable, especially considering its size and diversity of revenues.
Merck is another large pharmaceutical company with a historical focus on both infectious diseases/vaccines and oncology. It also has an animal health department.
Merck’s blockbuster drug in oncology is Keytruda, a cancer therapy for multiple cancers, including “head and neck” cancer, breast cancer, lung cancer, melanoma, stomach cancer, and cervical cancer. In Q3 2023, Keytruda brought $6.3B in sales, or a 19% growth year-to-year, with Merck's total sales at $ for that quarter.
The other cancer drugs of the company are less massive in sales, as they focus on more narrow medical applications. Their sales have nonetheless grown well in the last 2 years.
The other large income source for Merck is Gardasil, a vaccine against HPV (human papillomavirus), itself the main cause of cervical cancer. In Q2 2023, Gardasil brought $2.6B in sales, up from $2B 2 years before.
The company pipeline is rich in oncology treatment, with 16 new molecules in the pipeline. In addition, Merck signed a $5.5B deal with Japanese Daiichi Sankyo in October 2023 for the commercialization of 3 cancer therapies developed by Daiichi.
Merck's current revenue relies heavily on Keytruda, for which the patent runs until 2028. While this patent could be maybe extended thanks to new subcutaneous injection deliveries, this is relatively far in the future.
However, the success of Merck also means a quite high valuation, so investors will need to evaluate if the price is reasonable, even for assets of this quality.
BMS is a company with a long-established presence in oncology, which was reinforced by the acquisition of Celgene in 2019.
In October 2023, it also acquired Mirati Therapeutics for $5.8B (all-cash transaction, through cash and debt), accessing the company's portfolio of lung, liver, and pancreatic cancer therapy. The deal should be closed by H1 2024.
BMS's R&D effort combined with this acquisition has strongly boosted the company's portfolio, with its new products growing rapidly, more than tripling since 2021. The “in-line brands” have also grown by 7% year-to-year.
The company's R&D pipeline is dominated by oncology, as 50 out of 71 therapies in development are targeting cancer, with a focus on solid tumors, lymphoma, and myeloma.
Overall, we could say that the company’s focus on immunology and oncology has paid off, with good results from the R&D efforts. It is also feeding the company’s pipeline by providing it with a deep understanding of cancer's cause and possible targets it can aim for new therapies.
This focus also pays off in terms of manufacturing, with new therapies requiring advanced facilities to produce custom cell lines and/or monoclonal antibodies.
BMS has been rising quickly since 2018 to become progressively one of the leading companies in oncology. This position will likely persist for the next few years and be highly profitable for its shareholders.
Most biotech and pharmaceutical firms focus on expanding their existing cancer therapies, relying on small molecules, monoclonal antibodies, or other well-established therapies.
Meanwhile, Moderna is looking to expand the application of mRNA beyond vaccines and into oncology. It now has 2 programs in oncology entering phase III of clinical trials, another one in phase II, and many others in phase I or earlier. Most of these programs are expected to bear fruit by 2028, after a first batch of new mRNA products by 2025 in respiratory vaccines.
Another promising aspect of Moderna is a flurry of acquisitions of ambitious small startups working on entirely new technology platforms. For example, synthetic genome company OriCiro, metagenomics and AI gene discovery Metagenomi, and macrophage therapies Carisma Therapeutics.
Each could potentially have an oncology application, with Carisma explicitly presenting the 6 products in its pipeline as targeting cancer.
The reactivity to the pandemic has proven Moderna's ability to innovate and utilize mRNA at scale quickly. The company focuses on new vaccines for respiratory and other diseases, but its oncology program is equally interesting, especially with the recent acquisitions of new therapeutics concepts.
mRNA, macrophage therapy, and metagenomics are all still the only potential cures for cancer. But this is also the appeal of Moderna, as a company innovating beyond the conventional wisdom of the pharmaceutical industry, with stellar medical and financial results so far.
Moderna is working on multiple possible innovative therapies. Meanwhile, its rival in mRNA vaccine innovation, BioNTech, is doubling down on the technology that forms the core of its business.
The company behind the Covid mRNA vaccine sold by Pfizer is now using the money made during the pandemic to expand its offer widely.
It is now developing mRNA vaccines for shingles, tuberculosis, malaria, HIV, and the herpes virus. This makes it a leading company in the field of mRNA vaccines, with only its competitor Moderna (MRNA) developing more mRNA vaccines than BioNTech.
BioNTech is also exploring the potential of mRNA for cancer, with 12 different candidate products for cancer treatment in its pipeline. ”.
Finally, it also has in its R&D pipeline some cell therapies and other non-mRNA potential cancer treatments.
mRNA has been a revolution in therapy for viral infection. BioNTech is counting on mRNA being an equally massive revolution in oncology. This is by far the leader in this new idea in oncology.
So investors might want to consider which of BioNTech or Moderna they are the most interested in. If they want to bet on the oncology use of mRNA mostly, BioNTech is probably their best choice. But if they are wary of a yet unproven completely new concept, they might prefer Moderna with its greater focus on infectious disease mRNA vaccines.
Cancer is especially deadly because it is a silent disease. Most of the time, symptoms become visible only when it is already too late. This is why early detection can radically improve the survival rate of cancer patients.
For successful monitoring, the technology must be non-invasive and cheap enough to run regular testing. This is the idea behind Exact Sciences, which is using both DNA & RNA data to detect early cancer, which “simple” DNA tests might miss.
The company develops solutions for all stages of cancer detection.
Such cancer detection is done from a simple blood sample and is also called liquid biopsy.
Exact Sciences grew its revenues quickly by 38% CAGR and reached positive EBITDA in 2023.
In the long term, liquid biopsy will likely become routine testing, as early cancer detection is a lot cheaper (and safer) than finding it later, making it a very cost-efficient option for insurance and society at large.
Exelixis is a biotech company solely focused on oncology. It has 2 therapies approved in the USA and 2 partner programs in Japan with Daiichi Sankyo.
The company's flagship product is cabozantinib, which brought $426M in Q3 2023, making most of the company’s $471M revenues. Exelixis is also looking to expand the application of this drug, with 2 ongoing clinical trials, both in phase 2/3.
Cabozantinib has doubled revenues since 2020 and keeps growing, capturing an increasing market share for the relevant cancers (thyroid, kidneys, liver).
In its R&D pipeline, the company has another therapy in phase 2/3, Zanzalintinib. Besides this, it has 4 other therapies in phase 1 for solid tumors and 9 products in discovery/pre-clinical.
The company pipeline is also expanding from licensing agreements, with CBX-12 from Cybrexa Therapeutics and ADU-1805 from Sairopa, as well as an agreement in September 2023 with Insilico Medicine.
Exelixis is, for now, very much a one-product company with aggressive plans for expansion through R&D and licensing of new therapies. The valuation is somewhat expensive at current revenues, but that would dismiss any potential for new therapies or growth of cabozantinib prescription (or new applications).
So, an investment in Exelixis is an investment in the company's continuous success in cabozantinib commercialization and new success in developing cancer therapies.
One of the leading companies in this sector is CRISPR Therapeutics, founded by one of the discoverers of CRISPR-CAs9. For this discovery revolutionizing genetic engineering, they were awarded a Nobel Prize.
CRISPR Therapeutics CAR-T cells are immune cells modified not only to target cancer cells but also to reduce the risk of unwanted side effects (graft versus host disease) as well as to increase the survival time of the modified immune cell in the patient's body, giving it more time to attack cancer cells.
The whole process can also be much quicker, meaning the difference between life and death for some patients.
The company currently has 7 candidates in the pipeline, of which 4 already in clinical trials.
CRISPR is also investing in a CAR-NK therapy, in partnership with Nkarta Therapeutics (NKTX), in the pre-clinical stage. CAR-NK therapies have the potential to be even less likely to trigger side effects and to be more effective against solid tumors (90% of cancer in adults).
Currently, the short-term prospect of CRISPR Therapeutics is a lot more focused on its Sickle Cell Disease therapy, which will potentially be approved by 2024. This therapy is developed in partnership with Vertex, with whom CRISPR Therapeutics also develops a potentially revolutionary diabetes treatment.
So, other potential therapies and clinical trials will likely impact CRISPR stock price in the short term. Nevertheless, the company has demonstrated a talent for leveraging CRISPR technology into new applications, and cancer / CAR-T therapies are some of the most promising ideas of the last few years for improving cancer therapies.
Most cancer-related stocks are focused on innovative therapies. But another key factor in making cancer more survivable is early detection. Until now, it required specific radiography, testing, or biopsy for each cancer type, something often invasive or unpleasant and done too rarely to catch many cancers early on.
This could change thanks to the concept of a liquid biopsy, the idea of replacing traditional biopsy with an analysis of a simple blood sample. This is made possible thanks to much more advanced and sensitive genomics analyzers.
Guardant has developed a liquid biopsy test relying on ctDNA and methylation detection, Guardant Shield.
It also works on complete genomic testing for advanced cancer, allowing for custom therapies/precision medicine. Guardant 360 Cdx is the first FDA-approved blood test for complete genomic testing.
Lastly, Guardant Reveal uses ctDNA to detect early possible cancer recurrence, the ” first liquid-only test to detect minimal residual disease (MRD) in colorectal cancer, now available for breast and lung cancers.”
The next step for Guardant is unifying all its tests under the Smart Liquid Biopsy platform.
Most importantly, it will significantly boost the performance of the Guardant Reveal testing, with the company calling it “a larger blockbuster franchise in its early innings.”
It is also working on a multi-cancer test, with hopes to submit it for FDA approval in 2026.
Revenues have grown 49% CAGR since 2018 and aim for a further 30% CAGR until 2028. The company expects to reach the free cash flow breakeven point in 2028.
It should be noted that Guardant has a strong competitor in the company Grail. However, we decided not to put Grail on this list, as it is currently part of the larger genomics company Illumina, which might be forced to divest Grail in 2024 due to monopoly concerns. These concerns about governance and potential malpractice around the Grail acquisition make the case for Illumina even more complex.
Regarding Illumina, it is also worth noting that Guarant and Illumina have agreed to settle a court case around intellectual properties after Guardant's co-founders, both ex-Illumina employees, were accused of stealing Illumina's patents.
Macrogenics is a biotech company dedicated to developing antibody therapies for cancer. It already has one approved product, Margenza, for breast cancer.
The company has developed 3 different technology platforms and hopes to increase efficiency and reduce toxicity compared to existing monoclonal antibody cancer therapies.
The R&D pipeline is mostly made of products in phase 1 or 2 of clinical trials and 2 molecules in the pre-clinical stage.
MacroGenics has several partner programs with Gilead, Incyte, and Synaffix, for which it received $210M upfront, with up to $2.55B in potential milestones and tiered royalties if the product gets commercialized.
The company has also contributed to creating TZIELD, a “vaccine” used to delay the onset of Stage 3 Type 1 diabetes. The company has already been paid $210M by Sanofi, with $380M remaining potential payment for regulatory and commercial milestones, on top of potential royalties upside.
Like most early-stage biotech companies, MacroGenics must keep delivering on its R&D milestones to stay afloat. So this is a typical biotech high-risk, high-reward type of investment, where success is far from certain but would mean a large jump in the company valuation.