The “Curing Cancer Portfolio” (Part One)

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I haven’t written about a biotech teaser pick or about any of the Casey newsletters for quite a while, so this one that many readers sent in recently looked like a fine target for the Thinkolator today …

The pitch is from Alex Daley, the “Chief Technology Investment Strategist” for Casey Research, and he’s trying to get folks to sign up for Casey Extraordinary Technology, which generally focuses on “breakthrough” and “fast moving” biotech and technology stocks (and costs $749 “on sale” at the moment).

And the inducement to subscribe is that he’ll name the four stocks in his “Curing Cancer Portfolio” — which sounds great, of course. Who hasn’t had someone in their family suffer from some variety of cancer? And perhaps more relevantly, what investor doesn’t salivate over the riches that flow to breakthrough cancer drugs? When it comes to building mega-drugs, going after widely-distributed diseases like many cancers is right up there with curing Alzheimer’s in the “unmet need leads to riches” category. Of course, biotech stocks are almost always hyper-risky, too, since most of them on the cutting edge have no revenue yet, and may never have revenue if they don’t get a drug approved or, on the path to approval, a lucrative partnership deal or buyout from big pharma.

Still, the lure of the mega-buyout or the shockingly effective product is always there — not many stocks, other perhaps than junior mining and energy exploration companies, can offer the potential (however far-fetched it may be in some cases) of a stock that could double overnight from one piece of news.

So what, then, are the stocks in this “Curing Cancer Portfolio” that they’re touting? Let’s start looking for ‘em — clues, please!

“Pick #1: A company creating cancer-killing ‘smart bombs’

“Traditional chemotherapy poisons healthy cells along with cancerous cells. But this company is developing biotechnology that utilizes antibodies, a critical part of our own immune systems. What it does is link these antibodies – which are targeted to cancer cells – to potent cancer-killing drugs.

“These antibodies act like ‘smart bombs.’ And once they hit their targets, the cancer-killing drugs they carry are released into malignant cells.

“The result – the cancer is killed while surrounding healthy cells are spared.

“Phase II trials of this drug on 102 Hodgkin’s lymphoma patients have shown great promise:

  • 94% of patients in the trial showed reductions in tumor volume
  • 75% of patients achieved an objective response, including 34% with complete remissions
  • The drug was generally well tolerated, with only mild to moderate side effects

“Another Phase II trial on 58 patients with a different kind of lymphoma (ALCL) was even more impressive. In this trial, 53% of them got complete remissions and 97% showed a reduction in tumor volume.

“Last August, the FDA approved this revolutionary drug, clearing the way for the company to start marketing it as a new treatment for lymphomas.

“This firm also has other programs going for it, including two more cancer-fighting drugs.

“The stock’s already up 20% since we recommended it in March, 2011 but there’s still time to make a tidy profit if you act fast (our three-year target is a quadrupling of prices from our preferred entry point).”

Toss it all into the gaping maw of the Mighty, Mighty Thinkolator and we learn that this drug is brentuximab vedotin, and that it’s being developed under the brand name Adcetris by a company that we’ve seen in these pages before, Seattle Genetics (SGEN)

SGEN is a pretty big biotech company now, with a market cap around $2.5 billion, and Adcetris is their lead product and the only one that has been approved by the FDA (though the approval is still very limited, it was approved for truly desperate situations). Here’s how they list the indications for the drug right now:

“Hodgkin lymphoma (HL) after failure of autologous stem cell transplant (ASCT)
“HL in patients who are not ASCT candidates after failure of at least 2 multiagent chemotherapy regimens
“Systemic anaplastic large cell lymphoma (sALCL) after failure of at least 1 multiagent chemotherapy regimen

“The indications for ADCETRIS are based on response rate. There are no data available demonstrating improvement in patient-reported outcomes or survival with ADCETRIS.”

Adcetris uses SGEN’s proprietary targeting technology, which is what is really supposed to set them apart (they’ve also licensed that technology to Celldex for their new breast cancer drug, which apparently has shown some good results this week).

And beyond that, I quickly get out of my league. They have about a half dozen other trials underway for Adcetris as well (the drug is already partnered, by the way, with Millennium), with some encouraging results that seemed to give the stock a little pop earlier in the month but clearly weren’t considered overwhelming by investors. You can see the whole pipeline here. It’s good to see them with several drugs in development, and with at least “worst case” initial approval for their lead drug, and I do like that they have a number of partners licensing their cancer-targeting technology (they call it ADC, for targeting cancer directly without the toxic impact of chemotherapy on other cells), but valuing such stocks is an art as much as a science. Morningstar indicates them as having a “fair value” at $23 (with high uncertainty) and thinks they’re a buy around this price (near $20), partly because of the solid initial revenue numbers for Adcetris (in the $100 million/year range) under this initial approval.

The stock has just about doubled since a different newsletter touted it about four years ago as a favorite of Bill Gates and the Baker brothers, by the way, but that doubling of the share price came along with a quadrupling of the market capitalization thanks to a lot of dilution of existing shareholders. That’s certainly not unusual among biotech stocks, who almost all sell stock on a regular basis to fund their R&D in the years before they develop a marketable drug (assuming that they ever do). They do have enough cash right now to get by for a while, and revenue from Adcetris and their partnership deals that seems to be enough to keep them going, but I haven’t looked into their expected costs for the ongoing clinical trials (many of them have partners, but late-stage trials for larger indications, with hundreds of patients, get extremely expensive).

Compared to the really tiny one-product biotechs that are nowhere near Phase III trials or approvals, Seattle Genetics looks pretty appealing — but that’s coming from someone who has not studied their financials very closely and understands effectively none of the science. They do still have a large investment from the Baker Brothers, who are well known in biotech investing, and from some well-respected value shops like Wellington, so you would be in decent company if you decided to take a look (though from my quick look, it appears that the Gates Foundation, which owned shares in 2008, no longer does). If you do sniff around this one, and you find some info worth sharing, please shout it out with a comment below.

We’ve run out of time for today, so we’ll move on to the rest of the “Cancer Cure Portfolio” in the days ahead …


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14 Responses to The “Curing Cancer Portfolio” (Part One)


  1. Bought SGEN at just over $12 a year ago. My wife is in the biotech field. Some highly regarded execs from Genentech are at SGEN, and I believe that Genentech is collaborating on this drug with SGEN. SGEN is also collaborating with biotech firms in U.S., Japan, and Europe on other drugs. Good pipeline. This stock is a long-term hold for me. Also, some other execs left Genentech for Exelexis, so I expect progress there. Bought that stock too.

    Like(0)

  2. OH Yeah Let’s cure cancer , just like KOMEN ( for the cure) did over 20 years ago!! Where in the heck is all that money going ,not to investor’s or cancer patients evidently, we should all be blessed with life ever after right now !
    i don’t believe they will let the big Pharma cure anything , where would they make all the money if not from you , and sending you to as many unneeded test site’s and other to poke and prod stations as possible. Russia had several excellent scientist that had a cure. but none of them are alive today , !hmmm. BUT it is a good facade i guess to make money from a 80 some year old grannie, that is scared to death, and hope their Companies are really helping her.

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  3. I am going to say this one more time on here because it is really close to a phase III peek at the data(seriously any day now) which will determine if they can go forward with the second part of the trial and how many more patients they need. Very well designed trial. Over 18 different trials (all different phases) going now covering all cancer indications – and 6(I believe) are sponsored by the NCI. Take a look – the chance of approval of this product is in my opinion about 70%. Product is a oncolytic virus(Reolysin) that kills cancer cells thru a RAS open pathway and leaves normal cells untouched. It also has very minimal side effects – mild flu like symptoms for a day or two(and that is an indication it is working). They already have the manufacturing in place and they are in good shape finacially. Not pumping but I would like to share this with some serious investors. As always do your DD – take a look at it. Ticker is ONCY.

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    • Mike, I also have been looking into ONCY and was hoping it was one of the “Cancer Cures” that was being teased here. Their work is especially interesting because the drug works on numerous of the more common cancers without the hideous side affects of standard chemo drugs. Maybe Travis will be covering it in Part II.

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  4. Cancer is big business. What would happen to all these pharmacuetical and biotech companiies focusing on cancer drugs if someone figured out how to prevent cancer? The British Museum of Natural History studied the 500 mumified bodies known to science. None showed signs of cancer. Conclusion, cancer is a disease of civilization = lifestyle which means chemical toxins, a diet unsuited to the human genome which produces nutritional deficiencies, and stress. In fact, the answer to prevention is already known: 1) return to a paleolithic diet (all grains and sugar essentially eliminated and supplements that are designed to fill the gap between the nutritional content of the available food and that of the diet of our paleolithic ancestors (omega-6 to Omega-3 ratio of 2:1), 2) maintain Vit D blood levels to > 50 ng/ml and preferably 60-70 ng/ml, 3) eliminate as many environmental toxins/carcino-gens/neurotoxins as possible (especially aspartame, Splenda, sacharin, glysophate (Roundup), bisphenyl A, phlalates, fluoride in the water supply, solubilized toxic metals – Hg, Al, Cd, Pb are the most significant – , “lifestyle” drugs such as statins, etc.), See http://www.gnolls.com and http://www.mercola.com for details. The cancer cycle is simple and designed to extract as much money from the average American as possible over their lifespan. after their productive years are over and before they die. Hook the young on sugary, free-fructose containing drinks when young. Fructose raises uric acid levels which induces chronic illnesses and leads to HBP, obesity, diabetes, and liver and kidney damage which impair the body’s ability to eliminate toxins over a 30 yr span of consumption ultimately leading to the bid “C” and making the person a the “revenue generator”, or more plainly, in the positionof being the medical profession’s and pharmacuetical industry’s “cash cow” for the next 30 years. A perfect conspiracy of non-collusional, delusional, self-interest on the part of the the government (principally the FDA, the USDA, the FTC), the AMA and most of the medical professional and their collusional “disease focussed charities”, the pharmacuetical industry – all of whom lifestyle illnesses enrich greatly and all of whom have no interest in true cure since that would eliminate the need for their existence. The first rule of organization’s of course is “grow the organization”. What better way to grow the Cancer Industry. Makes a great investment strategy.

    Like(1)

  5. Cancer is PREVENTABLE more than curable. Ken Shonk is right, cancer is a disease of modern civilization. I know it is difficult for people to believe that there are people who would put PROFIT before truth and transparency, but it is unfortunately true. More people are making a living from cancer than are dying from cancer, it is BIG BUSINESS. Genuine cures by natural means are suppressed, sometimes viciously, and the standard treatments of the medical profession are DESTRUCTIVE, many doctors would not take chemotherapy drugs personally or radiation, which is known to CAUSE cancer. It may take a radical change in lifestyle but cancer is both preventable and reversible without drugs, surgery or radiation, the standard procedures that only enrich the providers. All the foundations for various lifestyle diseases, not just cancer, are merely SCAMS designed to keep druggists in business inventing ever more toxic substances to destroy peoples health. The MYTH of finding some “magic bullet” that kills cancer cells but has no bad side effects is just that, a MYTH that will keep being perpetuated as long as it is profitable to do so.

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  6. Add JonBarron.org to Mercola.com and gnolls.org for in-depth analyses of physiology, nutrient support, and predisposition to diseases from inappropriate diets.
    Also check out: Ten Cancer cures that worked – where are they now? by Daniel Haley
    Consumer Health Organization of Canada Newsletter, vol. 26, no. 9, Sept 2003.
    http://www.consumerhealth.org/articles/display.cfm?ID=20060216161340
    Or search for ‘ten cancer cures that worked’ to get this article plus a variety of alternative cancer prevention and treatment web pages.

    Like(0)

  7. ABC/Diane Sawyer, did piece about Dwarfs in Ecuador not getting cancer.
    Calling Sherlock Holmes & Peter Sellers/”Clue-so”
    The “Human Growth Hormone” is suspected of a causal relationship with C, seriously.
    I’ll guess the deduction (or induction?) is mentioned in the prof literature, or will be.
    Now, I recall the 1950s when “lemon pie” was blamed by way of a tabloid.
    Discontinue HGH supplement/treatment asap?

    Like(0)

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