Cancer is a devastating ailment. While the oncology field has progressed in leaps and bounds over the past couple of decades, there are still many cancer types that come with few solutions and high mortality rates.
The cancer treatment market is a massive one, and the companies that produce these treatments often make strong investment opportunities. By the year 2026, it is expected that the oncology market will be worth $126.9 billion. With so much financial opportunity in the space and several areas with medical need, oncology stocks tend to be met with heavy investor interest.
However, as with any investment, the oncology space can come with risks. It’s important to do due diligence and get a good understanding of the company that is represented by the stock you’re interested in.
While there are risks to consider, the opportunity to earn with the right stock picks is hard to ignore. Here are the five stocks in the oncology space that I believe represent the largest opportunities:
Seattle Genetics (SGEN, Financial)
The oncology stock that deserves to be at the top of my list at the moment is Seattle Genetics. The company’s claim to fame is a product known as Adcetris. The treatment is currently approved in the U.S. and Canada and is indicated for several cancer types.
The product revenue that the company has seen from Adcetris has been high. Net sales in the U.S. and Canada in the year 2018 came in at $476.9 million. That figure represented growth of 55%, showing that the company’s commercialization strategy is working, and the treatment is seeing strong growth in uptake across the various indications that it’s approved for.
Finally, Seattle Genetics has an incredibly strong pipeline. In fact, the company has 13 late-stage clinical programs in the oncology space, not to mention the vast early-stage development programs that the company has in development.
All in all, with a product that is proving to be a success on the market and several late-stage candidates that have the potential to generate compounding revenue growth ahead, Seattle Genetics represents a strong opportunity.
Incyte Corp. (INCY, Financial)
Another stock in the oncology space that’s well worth watching is Incyte Corp. Based in Delaware, the company is the developer behind Jakafi. At the moment, Jakafi is approved in the U.S. for use in patients with intermediate or high-risk myelofibrosis and for patients with polycythemia vera who have had inadequate response to or are intolerant to hydroxyurea.
Jakafi is quickly proving itself to be a blockbuster. In fact, the company is guiding for 2019 sales of between $1.58 billion and $1.65 billion. For a company with a relatively young product to market and a market cap just over $17 billion, that’s a huge number. Looking at the company’s pipeline shows that, considering sales and future opportunities, the stock may be highly undervalued.
The company has 19 clinical candidates under its belt with 17 molecular targets. Moreover, five of the company’s clinical development programs are in the pivotal phases, suggesting that these products may hit the market relatively soon.
With a strong product, an impressive pipeline, and a market cap that doesn’t necessarily match, Incyte Corp. may be one of the strongest opportunities in oncology today.
Cellectar Biosciences (CLRB, Financial)
Cellectar Biosciences is a relatively small company in comparison to its peers, but it packs a big punch when it comes to potential long-term opportunity. The company’s claim to fame is its CLR 131 product candidate.
CLR 131 is a small-molecule, targeted phospholipid drug conjugate that has shown promise in clinical studies. The most interesting part of this opportunity is that the company is not just picking the low-hanging fruit here. The truth is that many in the clinical-stage oncology space look to prove that their candidates work in the first and second lines of treatment. That’s because, as the treatment lines grow, efficacy tends to fall off of a cliff.
Nonetheless, Cellectar is targeting patients that have already received five and six lines of therapy. These are some of the hardest-to-treat patients with grim diagnoses. The move is paying off too. CLR 131 has increased overall survival by 22 months in a clinical trial. Not to mention, due to the highly targeted proprietary PDC delivery method, the company has produced data that shows a meaningful reduction in occurrence of serious adverse events.
Combining the flagship, CLR 131 asset with the strong pipeline and what appears to be a gross undervaluation, Cellectar Biosciences is offering up may be a compelling opportunity.
Celgene Corp. (CELG, Financial)
Celgene makes the list because it is in the midst of a win-win opportunity. The company recently agreed to a deal to be acquired by Bristol-Myers Squibb (BMY) for $70 billion. However, that acquisition has been met with some pressure from the activist hedge fund Starboard Value. Nonetheless, regardless of what happens, Celgene investors are sitting in a pretty nice place.
If the acquisition takes place, investors will receive a strong premium in the deal. Moreover, if it doesn’t happen, investors have plenty that’s worth looking forward to. First and foremost, the company has strong IP protecting Revlimid. But the stock’s price is trading at a discount due to patents being challenged. Based on the company’s strong IP, there’s a good chance that the challenge of its patents with regard to the product will fail.
Nonetheless, the company has multiple assets on the market, and several others in late-stage development. Considering the potential acquisition ahead and the value that the company offers should the acquisition fall through, this is a strong pick in the oncology space.
TG Therapeutics Inc. (TGTX, Financial)
TG Therapeutics is a clinical-stage oncology company, but it’s yet another that presents a potential opportunity. The company recently released positive data from a pivotal trial of Umbralisib, its lead clinical candidate. This asset is key!
One of the most successful cancer drugs seen in recent year is Imbruvica, a tyrosine kinase inhibitor from Bruton. A short while ago, the company’s product became the first chemotherapy-free treatment option for newly diagnosed patients with a common form of leukemia. Unfortunately, about a third of patients discontinued treatment. Umbralisib has shown to only have a 13% discontinuation rate and could prove to be a disruptive force in the market.
Moreover, like the others on the list above, TG Therapeutics has an impressive pipeline. It consists of two late-stage assets in four clinical development programs and six early-stage assets. The strong pipeline and the potential of Umbralisib leads me to believe that TG Therapeutics is a strong opportunity in the market.
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