Novartis Leading in $10 Billion Market for New Cancer Treatment

FDA designates company's radiogland therapy a breakthrough

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Jul 26, 2021
Summary
  • Novartis's targeted radiation therapy has performed well in clinical tests.
  • Company will ask for regulatory approval in the U.S. and EU later this year.
  • Johnson & Johnson and Pfizer are also developing treatments.
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Novartis AG (NVS, Financial) is ahead of the pack of pharma companies developing a new type of cancer treatment that could evolve into a $10 billion market, reported the California News Times.

The Swiss company’s CEO, Vasant Narasimhan, called phase 3 test results of its radiogland therapy “quite remarkable” as the novel treatment achieved a 38% cut in the risk of death versus the standard treatment for prostate cancer.

The company said it plans to request regulatory approval in the U.S. and EU in the second half of this year. It thinks the treatment may also be effective in other types of cancer, including the lungs and brain. The U.S. Food and Drug Administration designated the Novartis treatment a breakthrough therapy.

Narasimhan believes there could be tens of thousands to hundreds of thousands of prostate cancer patients. “We think prostate cancer is the key to really enabling us to get a much wider interest,” he said.

What makes radiogland therapy unique is that it irradiates tumors with targeted injections of radiation therapy. It was discovered by physicists at CERN, the European Organization for Nuclear Research. In 2018, Novartis spent $3.9 billion to acquire the scientist company Advanced Accelerator Applications, a pharmaceutical group that specializes in the field of nuclear medicine

Other companies with radiogland programs are Johnson & Johnson (JNJ, Financial) and Pfizer Inc. (PFE, Financial). Wall Street and large pharmaceutical companies are now aware of the potential of recent innovations in the nuclear medicine field, and investment is expected to continue, according to an article in the Journal of Nuclear Medicine.

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Developers of the therapy are not without their challenges. Treatment requires a complex infrastructure that requires just-in-time provision for radiation therapy and isolated patients while receiving it.

Novartis had other good news for shareholders. The company reported net sales of $13 billion in the second quarter, an increase of 14% from the same period last year and above the consensus forecast of $12.5 billion. Earnings per share also beat analysts’ expectations, coming in at $1.66 compared with an average forecast of $1.52. Net profit was $2.9 billion.

The company reiterated that its full-year 2021 guidance has net sales growing from the low to mid-single digits and core operating income increasing to mid-single numbers, aided by an easing of coronavirus restrictions during the remainder of the year.

At $91, Novartis shares are just a few dollars off its 2021 high.

The 21 analysts offering 12-month price forecasts for the company set a median target of $103.93, with a high estimate of $128.34 and a low of $87.06, reported CNN Money. Shares are rated a buy by 27 investment analysts. The dividend yields about 3.5%.

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