Credit: Shutterstock photoCure is a strong word when it comes to treating cancer and other deadly diseases, but Brad Loncar is among the biotech stock analysts and investors ready to employ the term.
[ibd-display-video id=2326965 width=50 float=left autostart=true]"For the first time, biotech companies are not thinking about these technologies incrementally," said Loncar, portfolio manager of a biotech-focused ETF. "They're not thinking about alleviating the symptoms of the disease, they're thinking about fixing the genetic mutations that cause the disease."
Loncar was speaking of cancer, but those comments could apply to other terrible diseases that claim thousands of lives, including Alzheimer's, Parkinson's, Lou Gehrig's disease, multiple sclerosis and muscular dystrophy.
Thirty-five years after the first FDA-approved biotech drug, the biotech industry is rolling out innovations at a breakneck pace. The new-drug pipeline is bursting with treatments in clinical trials, the industry is growing by leaps and bounds, and many biotech stocks are scoring superior returns for investors.
To recognize the biotechnology industry's contributions to science and to patients' health, Investor's Business Daily has created the IBD Biotech Innovator Awards. In this inaugural edition, we name six award-winning U.S. biotech companies, chosen for their groundbreaking treatments recently introduced to the market or well along in the new-product pipeline.
The six companies are Celgene ( CELG ), Biogen ( BIIB ), Regeneron Pharmaceuticals ( REGN ), Kite Pharma, Incyte ( INCY ) and Loxo Oncology ( LOXO ). The winners aren't ranked in any way; only companies with U.S.-traded shares were considered.
All but Biogen have their sights firmly on curing cancer, among other intractable diseases. Biogen is targeting the likes of Alzheimer's , Parkinson's and MS.
How IBD Chose The Biotech Innovator Award Winners:IBD asked equity analysts, ETF and mutual fund managers and university professors to identify the top biotech companies based on their innovative research. We asked them to focus on companies with pioneering drugs likely to launch in the next several years and reach blockbuster, or near-blockbuster, sales of $1 billion or more a year. The award winners selected by IBD editors are the six most-cited companies. To find profiles of all the award winners and details of their work, go to our full Biotech Innovators special report .)
The six companies are just a few of the players in a huge field closely tracked by investors. IBD counts 453 publicly traded companies in its biotech industry group, which doesn't include the many other companies with biotech operations that aren't their main focus. The 453 have a combined market cap of nearly $900 billion and sales for the most recent 12 months of more than $100 billion.
Thanks to the biotech industry, the pipeline of new drugs of all kinds has exploded. Clinicaltrials.org counts more than 1,480 drugs filed for Phase 3, or late-stage, trials with the U.S. Food and Drug Administration this year, and the FDA has more than 32,000 late-stage studies registered.
IBD's biotech industry stock group has climbed 33% this year, shucking off the pains of the politically charged election season in 2016 and concerns that President Trump will work to lower drug prices. The group on Wednesday hit a 22-month high of 3,128 but is down from its all-time high near 3,900 in July 2015. It currently ranks No. 1 of the 197 groups tracked by IBD in terms of performance in the past six months.
Boosting the group's performance are Celgene and Loxo, which recently hit new highs. Incyte touched a record high this year, while Biogen touched a 27-month high on Friday and Regeneron this year touched a nearly two-year high.
The biotech-focused fund that Brad Loncar heads up is Loncar Cancer Immunotherapy ETF (CNCR), which tracks 30 biotechs working in immunotherapy. The exchange traded fund is nearing its two-year anniversary and is up 26% this year. His comments to IBD came amid a series of regulatory approvals and acquisitions in cancer treatment, including Gilead Sciences ' (GILD) foray into cellular therapy with its August agreement to acquire Kite for nearly $12 billion. (The Kite purchase was completed Oct. 3 and Kite now operates as a wholly owned Gilead unit.)
Count Loncar among the bullish. Today, drugs can teach the immune system to identify, fight and precisely target cancerous cells. Technology can turn off or edit genes to correct genetic conditions.
Some trial data are "jaw-dropping," he said. One example is CAR-T technology, in which Kite is among the leaders. The field is young, but biotech companies "are taking patients who have weeks or months to live and, in some cases, are seeing complete remissions," Loncar said. "I've never seen anything like that."
Chemotherapy Options Emerge
Loncar likens chemotherapy to a bomb - it kills the enemy and everything else in sight. Loxo is using smart bombs. Its precision medicine targets gene fusions in cancer, JMP Securities analyst Mike King explains.
In cancer, some genes are called passengers and others drivers, King told IBD. When a driver becomes fused to a normal cell, that normal cell transforms into a cancerous one. Loxo identifies and targets those fusions.
At the American Society of Clinical Oncology conference in June, Loxo showed the impact of its work with a photo of a sarcoma protruding from a child's chest, King says. By targeting what's called the TRK fusion , Loxo was able to treat the cancer.
The tumor "shrunk away to nothing without surgery or radiation or any other therapy contributing to it," he said. "It was remarkable. It was pretty staggering even for people in the audience who are kind of used to seeing these kind of things."
Among 50 patients, the drug dubbed larotrectinib was able to partly shrink tumors in 64% of them, with all signs of cancer disappearing in 12% of patients. The drug has breakthrough, rare pediatric disease and orphan drug designations with the FDA.
Teaching The Immune System
Also grabbing headlines is immuno-oncology work from Dow component Merck (MRK) as well as Incyte, Bristol-Myers Squibb (BMY), Roche (RHHBY) and AstraZeneca (AZN). Besides Kite, CAR-T therapy is getting its due from the likes of Novartis (NVS), Juno Therapeutics (JUNO) and Bluebird Bio (BLUE).
Immuno-oncology and CAR-T are both methods of teaching the immune system to fight cancer. Immuno-oncology drugs do so by blocking specific interactions that would otherwise prevent an immune response. CAR-T drugs individualize that process by reprogramming a patient's own extracted immune cells.
IBD'S TAKE:CAR-T drugs are snagging major attention after Gilead announced its plan to acquire Kite and Novartis got a major drug approval, opening up the sector for commercialization. Head to the IBD's Industry Snapshot feature for a closer look at the emerging CAR-T sector .
Results have impressed, and immuno-oncology drugmakers are taking it a step further by combining their compounds in the hopes of seeing more robust responses. Merck has had success with its drug Keytruda, which has won approval as a first treatment with chemo in lung cancer.
Incyte drug epacadostat is particularly intriguing, analysts say. It prevents some interactions involving the IDO enzyme. Merck and Bristol are pairing their drugs Keytruda and Opdivo - both belong to a class of drugs known as PD-1 inhibitors - with Incyte's epacadostat.
Regeneron, too, is working on a PD-1 inhibitor , with its REGN2810. It's developing this in partnership with Sanofi (SNY). In June, Regeneron and Sanofi said 46.2% of patients with a form of skin cancer responded to treatment with REGN2810 in a Phase 1 trial.
On the CAR-T side, Novartis gained FDA approval in late August for a drug to treat a form of acute lymphoblastic leukemia in patients up to age 25. Its approval helped spike Gilead, which just two days before had announced its deal to acquire Kite.
Kite is nearing approval for a CAR-T drug to treat an aggressive form of non-Hodgkin's lymphoma. Juno is just behind with its drug called JCAR017, which would treat the same cancer as Kite's drug. Bluebird is working on a multiple myeloma drug.
Juno and Bluebird both have partnered with Celgene on their programs. JMP's King calls it a "best-in-breed" approach, where Celgene will put its money on the line for potential innovation.
Such partnerships are where Celgene excels, Wedbush analyst David Nierengarten told IBD. "They've had these innovative deals across sectors, from small molecules to cell therapy," he said. "They're innovative, and they cast the net widely for new technologies and potential therapies."
Editing And Replacing Genes
Others are reaping the benefits of a decades-old project that mapped the human genome . The first human genome map cost $2.7 billion in 1997 dollars and took almost 15 years to complete. Today, it costs closer to $1,000 to map an individual's entire genetic makeup.
Gene therapies and editing are having a "renaissance," JMP's King said. Analysts point to Crispr Therapeutics (CRSP), which made its IPO a year ago, as a leader in this field.
Crispr is also the name of the technology. Crispr Therapeutics, Audentes Therapeutics (BOLD) and Intellia Therapeutics (NTLA) also are making waves in the sector. The technology makes it much easier to edit genes, Needham analyst Alan Carr told IBD.
BTIG analyst Dane Leone sees some of those companies entering the clinic in 2018.
"This technology uses an enzyme that is actually from a bacterial organism to target areas of the genome or your DNA, where you want to make changes to the DNA," he said. "What you can do using this enzyme complex is give it direction in terms of target, and insert it into a cell."
In the end, the enzyme complex attaches to DNA, where it can make alterations, he told IBD.
JMP analyst King described Crispr technology as having the ability to "repair broken genes, cut out and replace defective genes and insert functional genes where they're desired."
'Turning Off' Genes
On the other side of the gene spectrum, RNA interference and antisense are responsible for cutting-edge drugs from Alnylam Pharmaceuticals (ALNY) and Biogen partner Ionis Pharmaceuticals (IONS). Biogen and Ionis in December won FDA approval for Spinraza, the first drug of its type approved to treat spinal muscular atrophy.
Needham's Carr likened RNA interference as a way of "turning off" a gene. This has the potential to be more robust than gene therapy, which must alter all or most of the cells in the body to be effective.
In September, Alnylam stock spiked 52% in one day after its drug, patisiran, proved effective in treating a rare disease known as hereditary ATTR amyloidosis with polyneuropathy. The disease results in the buildup of abnormal protein causing systemic problems. Patisiran uses RNA interference. Analysts call the late-stage data from Alnylam a "big win" for the concept.
Bluebird is working in gene therapy to treat blood disorders.
The list of innovations goes on and on in this era of biotech, but today's gains have been decades in the making.
"It's usually a steady build and then you have these waves of innovation that kind of collide or emerge at similar points in time," JMP's King said. "It's not like the traditional tech, where things can happen overnight."
RELATED:
Get The Details On All 6 Award-Winning Biotech Innovators And Their Work
Gilead-Kite Deal Boosts Biotech ETF As It Clears Buy Point
How Novartis' Cancer Approval Validates Gilead's $11.9 Billion Kite Deal
The Cure For Cancer? Look At Your Blood
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
