Over the last couple of years, healthcare stocks have been led higher by manias surrounding treatments for hepatitis, gene-based diagnostics, weight loss drugs, diabetes therapies and cardiovascular treatments, just to name a few.
And to be fair, those areas deserved some investor attention. New drug-development technologies meant better drugs and tests were being introduced in rapid-fire fashion, and the FDA was on board with the bulk of them.
Treatments for all those ailments combined have yet to displace cancer as public-health enemy No. 1, however.
In fact, as old and passe as the cancer-treatment industry is, cancer medicine sales still grew faster last year than therapies for any other serious illness. The IMS Institute for Healthcare Informatics reported on Tuesday that spending on cancer medicine grew 10% in 2014 on a global basis, reaching $100 billion.
Even more impressive: The IMS believes the cancer drug market could reach $147 billion by 2018.
The question is, with cancer drugs poised to keep growing their sales and profitability, which healthcare stocks are best positioned to continue riding that wave?
Here are your 10 best bets.
10 Healthcare Stocks Taking Aim at Cancer: Amgen, Inc. (AMGN)
Surprised to see Amgen, Inc. (NASDAQ:AMGN) on a list of healthcare stocks that are poised to make a big splash with their cancer medicine portfolio?
Granted, Amgen isn’t especially well-known for being a cancer drug company. It’s best-selling drug, Enbrel, is a treatment for arthritis. Diving deeper into its portfolio though, you could make the case that it’s second-best-selling drug, Neulasta, is an indirect play on cancer. Neulasta stimulates the production of white blood cells, which tends to be crimped by many cancer therapies.
It’s not even Neulasta, however, that makes Amgen a stealthy cancer play. It’s the company’s late-stage pipeline and recent addition of multiple myeloma drug Kyprolis that makes AMGN a way to play the ongoing explosion.
Specifically, its melanoma vaccine talimogene laherparepvec — T-Vec — recently won an approval recommendation from the FDA’s advisory panel, while recently-acquired drug Kyprolis just began bearing revenue last quarter. Trebananib and Ganitumab are also in Phase 3 trials, nearing an approval request.
In the meantime, Amgen is now exploring the premise of antibody-drug conjugates, or ADCs, to fight cancer. These drugs link an antibody and cancer-killing molecule together to ensure a more potent response.
That’s a fairly new idea that underscores the company’s new commitment to the cancer medicine market.
10 Healthcare Stocks Taking Aim at Cancer: Celgene Corporation (CELG)
It’s been a largely-overlooked piece of information, but Celgene Corporation (NASDAQ:CELG) was the name behind 2014’s fifth-best selling cancer drug, Revlimid.
Better still, Revlimid sales are growing nicely for CELG shareholders. Revlimid revenue reached $4.9 billion last year thanks to a 16% increase in its sales. Even better yet, Celgene is looking for Revlimid sales of at least $5.6 billion this year, and $7.0 billion by 2017.
Granted, CELG is close to being a one-trick pony, with Revlimid making up about two-thirds of the company’s sales. If it’s a great seller though, it’s a great seller.
All the same, investors truly concerned about a lack of oncology diversity for Celgene should know the company has half a dozen or so other late-stage cancer medicine trials in the works for drugs other than Revlimid.
10 Healthcare Stocks Taking Aim at Cancer: ImmunoGen, Inc. (IMGN)
ImmunoGen, Inc. (NASDAQ:IMGN) is neither a big company nor a profitable one. But, it does have an interesting tactic in the war on cancer that could prove fruitful for IMGN shareholders in the foreseeable future.
It’s called an antibody-drug conjugate, or ADC — the same approach Amgen is exploring. In simplest terms, ADC is a way to use an antibody find and bind to cancer cells, and then using that bond to deliver an anticancer agent to kill that cancer cell before it can reproduce.
Although it’s a young approach, it’s not an unproven one. Roche Holding subsidiary Genentech liked it well enough to team up with ImmunoGen to develop Kadcyla — a combination of Genentech’s Herceptin antibody and a cancer-killing agent developed by IMGN.
Many more such combinations are possible, each of which yields revenue for ImmunoGen.
10 Healthcare Stocks Taking Aim at Cancer: Roche Holding Ltd. (ADR) (RHHBY)
Speaking of Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) and its subsidiary, Genentech, there’s no need to ignore the fact that Roche Holding itself drives more cancer drug revenue than any other outfit.
Rituxan, Avastin and Herceptin were the world’s top-three cancer drugs by sales in 2013, generating $21 billion between them, and Roche owns them all. Newcomer drugs Perjeta and the aforementioned Kadcyla — both used to treat breast cancer — also drove better-than-anticipated revenue last year.
Yes, Herceptin’s value to RHHBY is fading fast, as it lost patent protection in Europe in the middle of last year, and will lose U.S. patent protection in 2019.
Roche Holding has more and better cancer medicine candidates in the pipeline than the market may be giving it credit for, however.
10 Healthcare Stocks Taking Aim at Cancer: Advaxis, Inc. (ADXS)
It’s tough to be a committed investor in a company that isn’t producing revenue yet, but if there was ever such a risk worth taking, Advaxis, Inc. (NASDAQ:ADXS) is it.
The company is developing treatments for several HPV-related cancers, most of which have been designated as orphan drugs. One of them is even almost ready to begin Phase 3 trials.
It’s not the pipeline that makes ADXS worth a speculative shot, however. It’s the biotechnology.
Advaxis has bioengineered a strain of the listeria bacteria to target cancer cells. The idea is to infect a tumor cell and make it look like a bacterial infection rather than a cancerous cell.
See, the patient’s immune system is more apt to recognize and attack a bacterial infection. It’s an unusual tactic to be sure, but the company has seen enough success with its ADXS-HPV cancer medicine in early trials to take it to Phase 3 testing.
10 Healthcare Stocks Taking Aim at Cancer: Inovio Pharmaceuticals Inc (INO)
There’s no denying Inovio Pharmaceuticals Inc. (NASDAQ:INO) is a name one would want based on its potential more than its present — the company only generated $10.5 million in revenue last year, and lost $36.1 million for its trouble.
It’s still got a solid pipeline of immunology drugs, however, targeting cancers ultimately caused by the human papillomavirus (HPV).
The game-changer for current or potential INO investors, however, isn’t the company’s pipeline of cancer vaccines. It’s the delivery method.
Inovio Pharmaceuticals has paired up the idea of immunology with a process called electroporation. Electroporation is just the process of applying an mild electrical current to a body to open up a cancerous cells pores, allowing a DNA-based medicine into a cancerous cell in order to kill it or stop its reproduction.
INO isn’t the only company using the approach, but it’s made great strides using the approach in the treatment of HPV-related cancers.
10 Healthcare Stocks Taking Aim at Cancer: Clovis Oncology Inc (CLVS)
If Inovio Pharmaceuticals is a speculative name, then Clovis Oncology Inc (NASDAQ:CLVS) is downright risky. But, with great risk comes great potential.
The biggest risk at hand for would-be CLVS shareholders is the fact that Clovis Oncology is a pre-revenue biopharma name. It’s got two compelling drug candidates in Phase 3 trials, but even so, it could be years before either becomes revenue-bearing.
All the same, when the cancer drug is strong enough, investors are willing to reward progress — and both of the Clovis candidates (rociletinib for NSCLC and rucaparib for ovarian cancer) look plenty promising.
Indeed, rucaparib just lapped — so to speak — its closest competitor. Rucaparib, in simplest terms, disrupts the spread of cancer by blocking ribose polymerases that ultimately spur the replication of mutated genes. Though the approach could be used to treat multiple forms of cancer, for the time being CLVS is using rucaparib to target a sub-set of ovarian cancers.
And well it should. Though AstraZeneca plc (NYSE:AZN) failed to win a so-called “breakthrough” designation for its similar ribose polymerase inhibitor, Clovis Oncology was given this accelerated-review process for rucaparib just last month.
It’s a tacit hint that the FDA may be looking for any decent reason to approve this ovarian cancer treatment, and soon.
10 Healthcare Stocks Taking Aim at Cancer: International Business Machines Corp. (IBM)
No, it’s not a typo, and no, you didn’t get diverted away from the list of healthcare stocks working on game-changing cancer drugs — International Business Machines Corp. (NYSE:IBM) is wading into cancer medicine waters.
Remember Watson, the mega-computer that easily won a game of Jeopardy back in 2011? IBM didn’t build the computer to compete on game shows. That was just a demonstration of how a machine could store and process a massive amount of information.
Now that same technology will be used to match a particular patient’s cancer with the best possible cancer medicine. Fourteen North American cancer institutes will be tapping Watson to complete the task.
Some would say it’s overkill, but it isn’t. The advent of gene-based diagnostic has created a massive amount of medical information to work through.
Humans can’t do it. Computers can. IBM was the first (and so far the best) to the party.
10 Healthcare Stocks Taking Aim at Cancer: Bristol-Myers Squibb Co (BMY)
Like Amgen, Bristol-Myers Squibb Co (NYSE:BMY) isn’t a name often added to a list of healthcare stocks known for being cancer plays.
Its best three selling drugs are blood thinner Plavix, schizophrenia drug Abilify for schizophrenia, and Reyataz, for HIV. Its top cancer drug is the once-ballyhooed cancer medicine Erbitux, but that cancer medicine lost patent protection in Europe last year, and the U.S. and Japan patents will expire in 2016.
So what does Bristol-Myers Squibb have that put it in a position to carve out a bigger piece of the cancer drug market?
Opdivo, as a therapy for lung cancer. Already approved as a treatment for melanoma in December, the drug performed so well in lung cancer trials that in January the company ended its testing two years before planned and went ahead and asked the FDA approve it.
Even more impressive is that the FDA said yes in March.
Some analysts believe Opdivo will drive $3 billion in annual sales by 2017, which puts Bristol-Myers right in the thick of the cancer market.
10 Healthcare Stocks Taking Aim at Cancer: AbbVie Inc (ABBV)
AbbVie Inc (NYSE:ABBV) is another one of those healthcare stocks that isn’t often viewed as a cancer play, but actually has a bigger cancer presence.
The reason ABBV has earned a spot on the top-ten list of cancer medicine stocks, however, mostly has to do with the fact that it’s on the verge of completing an acquisition of Pharmacyclics, Inc. (NASDAQ:PCYC), and Pharmacyclics has quietly turned into a monster over the past three quarters.
At the heart of that growth is Imbruvica, which was approved in the U.S. as a treatment for mantle cell lymphoma in November 2013, approved as a treatment for Waldenstrom’s macroglobulinemia in January of last year, and approved as a therapy for lymphocytic leukemia in February of last year.
Sales picked up immediately for the company, from $260 million in 2013 to $729 million in 2014. That’s just the beginning, however. The company believes Imbruvica sales will reach $1 billion this year, more than doubling last year’s sales.
No wonder AbbVie wanted it.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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