This Company Has Potential to Grow
usman is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Cancer is the target of a number of different biotech companies. Out of this lot, I consider Seattle Genetics (NASDAQ: SGEN) to be one of the star performers. Why is that? Because the company has one of the best antibody therapeutic study facilities and is one of the most successful in the industry. Its main focus is cancer, which is one of the leading causes of deaths in the U.S. Over the last one year, the company has gone up by over 75%, trading currently at an all-time high of around $40.52. The company has strong pipeline which target various types of cancers.
Adcetris did the trick…
Seattle Genetics is quite well established, because it currently has an FDA approved drug in the market. Adcetris, the flag ship product of the company, got its FDA approval in August 2011 for the treatment of relapsed Hodgkin's Lymphoma and Large Cell Lymphoma patients. Hodgkin's Lymphoma is a type of cancer which attacks the lymph tissue including liver, bone marrow, lymph nodes, and others. The company had a good run in 2012 due to the revenue generated by Adcetris. The company made some $210 million last year, compared to just $95 million in 2011.
Seattle Genetics also has a number of other drugs which would be out in the market after two to three years. The company has more than 15 antibody conjugates in clinical development; some wholly owned by it, and others in collaboration with other companies. Analysts are expecting that in the long term, once one of these drugs reaches its potential, Seattle can generate around $3.5 billion in revenue and royalties payments from its collaborations.
At the end of June, Seattle announced that it’s working on a new antibody drug conjugate in collaboration with Bayer Healthcare. This deal allows Bayer the right to market and sell Seattle Genetics’ cytotoxic agents, i.e. auristatin-based antibody technology with oncology targets worldwide. For these rights, Bayer will have to pay an upfront and option exercise fees of $20 million.
Seattle will also receive $500 million as a milestone payment, including royalties on the worldwide revenue generated by the products under this collaboration. It is also expected that the total royalty income will rise in the long run once the drug gains popularity.
Celldex Therapeutics (NASDAQ: CLDX) is another company working on the antibody conjugate therapeutics for the treatment of cancer. The company went up over 200% in one year due to the buzz being created by its drug candidates. The vaccine for Glioblastoma is the leading drug candidate of the company, currently in phase 3 of clinical trials. Glioblastoma is a brain tumor which can be fatal at times.
Celldex has received an orphan drug status for this drug; both in the U.S. and the European Union. The second drug which is under discussion these days is the antibody drug Conjugate for breast cancer. The trial name of the drug is CDX-011, and it has cleared phase 2 trial with positive results. The drug has been licensed from Seattle Genetics.
Another ADC for the cure of breast cancer has been developed by ImmunoGen (NASDAQ: IMGN), in collaboration with Genetech, a subsidiary of Roche Holding. Kadcyla is approved by the FDA for the treatment of HER2- positive breast cancer. The drug’s sales had a positive impact on the company’s revenue in this quarter, taking them over $25,000 mark. The company also has three other wholly-owned drug candidates for the treatment of small cell lung cancer, ovarian cancer, leukemia, and lymphoma. One of them is in phase II while the other two are in phase I clinical trials.
I would say that these cancer treatments are in demand right now and would remain in demand in the future considering the prevalence of cancer among patients in the U.S. Thus, Seattle Genetics should perform well in the future. As for ImmunoGen and Celldex, they are smaller than Seattle on the basis of market cap, but they too are poised for growth because of the demand for their drugs.
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usman iftikhar has no position in any stocks mentioned. The Motley Fool recommends ImmunoGen and Seattle Genetics. 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!