Biotechs With Prostate Cancer Treatments

Terry is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

There are many types of biotech companies out there with tremendous value. Today, I will focus on the ones that target prostate cancer. Investors should look at these types of companies as they are starting to make good progress on their research. Another reason is that there is a huge billion dollar opportunity in this sector.

When I say a billion dollar opportunity, I mean it literally. The sector is set to grow from $1 billion now to $5 billion by the year 2015. I think there is a lot of opportunity, so I will discuss three biotechs that are creating treatments for prostate cancer. 

A new treatment with hope

The first is Johnson & Johnson (NYSE: JNJ), which is a big pharmaceutical company with a diverse range of products. It develops treatments for a number of diseases. The company is a good investment because it has a nice pipeline of drugs such as Velcade and Zytiga.

On Dec. 10, 2012, Zytiga got approval by the FDA to treat men with late-stage metastatic resistant prostate cancer, prior to receiving any type of chemotherapy. This drug is already good as patients do not need to undergo toxic chemotherapy first. Chemotherapy patients have a lot of horrendous side effects, so Zytiga coming into the market is a very good thing for these patients. Zytiga, in 2012, pulled close to $1 billion in revenue. Zytiga should continue to sell well over the coming years. The reason for this claim is that Zytiga, in the second quarter of this year, grew worldwide by 70%, earning $395 million. 

On July 16, 2013, Johnson & Johnson reported sales of $17.9 billion. The company did well in the quarter, and the forward guidance was raised. The company is now expecting to earn $5.40-$5.47 per share for full-year 2013. As for Zytiga, peak sales of $1.8 billion are expected by 2015. So, the company still has growth with the Zytiga drug. 

A good start, but tragic drop

Dendreon (NASDAQ: DNDN) had its first drug approval with Provenge. Provenge was approved on April 29, 2010, for the treatment of men with advanced prostate cancer who are resistant to standard hormone treatment. Dendreon has had Provenge on the market since then, but sales have been slipping lately.

Sales of Provenge have continued to drop considerably over the years. Just recently, on May 9, 2013, Dendreon reported that Provenge earned $67.6 million in the first quarter, analysts were expecting at least $80 million at a minimum. A year prior, Dendreon earned $82 million from Provenge, which is a 17% drop year over year.

I will give one thing to Dendreon, it was the first company to have a therapeutic cancer vaccine to be approved by the FDA in the immunotherapy space. The company still continues to sell Provenge on the market, but struggles against competitors like Johnson & Johnson's Zytiga, which was introduced in December of 2012. 

A new treatment in town

The final biotech I will talk about is Medivation (NASDAQ: MDVN). Medivation also has a drug to treat prostate cancer as well. Medivation's drug is known as Xtandi. Xtandi was approved by the FDA on Aug. 31, 2012, for the treatment of men with prostate cancer who had failed both hormone therapy and chemotherapy. Wall Street analysts have estimated that Xtandi will earn $1.2 billion by 2017. 

The reason for the low guidance is that Xtandi only targets patients who have failed all other therapies. The good news, though, is that the company is evaluating Xtandi in becoming first line therapy treatment for prostate cancer patients before chemotherapy and hormone therapy. This company still looks like a good long-term investment. The reason for this claim is that the prostate cancer market is expected to double by the year 2021 to $9.1 billion. 

It announced on May 9, 2013, that Xtandi had generated sales of $75.4 million. This was substantial revenue, as this was an increase of $18 million over the previous quarter. Going forward, operating expenses are estimated to be around $300 million. The company is looking at expanding Xtandi to earlier prostate cancer treatments and other indications like breast cancer. 

Final thoughts

I have to say that at least patients with prostate cancer have a wide variety of treatments. The more treatments there are, the better, and this sector is set to grow even more in the future to about $5 billion as mentioned above. Each company has its own methods in terms of what treatment can be provided and the efficacy of the drug.

Despite this, I think that these biotechs can continue to develop more treatments for prostate cancer patients, and investors can definitely invest in these biotechs for long-term gains. 

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

 


Terry Chrisomalis has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Dendreon and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus