Do you remember the buzz when the calendar rolled over from 1999 to 2000?
Sure, the New Year’s Eve parties were grander than ever, but I’m talking about more than that. There was excitement about what was to come as we stood on the doorstep of not just a new century but a new millennium, and there was plenty of fear, too. The dire predictions about Y2K crashing computer systems all over the world were about as wrong as you could get. Now look where we are 18 years later with computers in our pockets that can connect to just about anything and also serve as phones, cameras, music players, televisions and so much more.
If you were investing at the time, you may also remember the excitement about the future of medicine. Scientists were on the verge of mapping the human genome, and the possibilities that would open up were almost endless. Some of those predictions didn’t come true either – yet.
We’re much closer now to amazing breakthroughs like personalized medicine, which is custom-designed treatment protocols based on your individual genetics. Even more amazing, we’re also on the verge of gene editing, which is exactly what it sounds like – the ability to “edit” our genes. If you have the Alzheimer’s gene, you simply edit it out and poof! The likelihood of getting the disease is greatly reduced if not outright eliminated.
The possibilities are truly mind blowing.
Curing cancer has long been the holy grail of science, and it might be the holy grail of investing, too. That day doesn’t look as far in the future as it once did. I’m reminded of this every year at this same time because of the American Society of Clinical Oncology (ASCO) meeting. This is one of the most important medical conferences of the year. It’s also the largest in the world. In 2018, more than 30,000 cancer experts took over Chicago for the annual event.
I always watch this conference closely for two reasons. First, we get a good look at new discoveries that are happening right now as well as the amazing things that are in the works. This year, there was a lot of focus on a more personalized approach to treatments. Blood tests that will be able to detect certain types of cancers also got a lot of attention, and one study released at the conference showed how a gene test can help some women with the most common type of breast cancer avoid chemotherapy. We’ve all seen the toll chemo takes on a cancer sufferer, so that’s a great development that impacts a lot of women.
The other reason I watch ASCO so closely is that stocks can really move on the news coming out of the event. Here were some of the noteworthy pops and drops this year:
Loxo Oncology (LOXO) was the big winner at last year’s ASCO meeting, so a lot of people were watching it this year. It appeared as though the company would repeat its performance after releasing positive clinical data and receiving a few analyst upgrades, as the stock gapped up 11% at Monday’s open to a new all-time high. But less than an hour later, LOXO was down. It was clearly a “buy the rumor, sell the news” situation that wiped out gains from good news about another cancer therapy. In the big picture, though, the stock is still killing it, up 120% this year and 277% since just before last year’s ASCO announcements.
Immunomedics (IMMU) was indeed a big winner as well. It surged 10% on Monday to an 18-year high after announcing a partnership with Clovis Oncology (CLVS) to develop treatments for bladder cancer and two forms of breast cancer.
On the other side, Nektar Therapeutics (NKTR) took a 40% hit on Monday. Nektar and Bristol-Myers Squibb (BMY) are undertaking a hugely expensive program to run nearly two dozen clinical trials in NKTR-214. The trials span 20 possible uses across nine types of solid tumors. Phase 3 studies (the last stage before seeking FDA approval) are starting soon in melanoma, kidney cancer and urothelial cancer. The combination of BMY’s blockbuster drug Opdivo (which brings in $1.3 billion in annual revenues) and NKTR-214 is expected to increase efficacy. At first it did, but the latest results at ASCO sent investors running. If the combination therapy is ultimately approved, it will bring in billions for both companies, but with the recent trend of less-positive clinical results, NKTR is too risky to invest in at this time.
The moves in these stocks reinforce what we know – companies that advance cancer treatment and make it either more effective or easier on the patient stand to help a lot of people and make a lot of money because of it. We are on the verge of life-changing breakthroughs that can also produce life-changing wealth. The potential with gene editing is out of this world, and I’ll be writing more about that in the future as some attractive long-term buys are setting up nicely for big gains down the road.