2 Cancer-Fighting Favorites To Put On Your Watchlist

Genia Turanova's picture

Wednesday, September 4, 2019 - 12:00am

by Genia Turanova

We live in an age of scientific discovery. Investors understand this, of course, but nobody understands this better than cancer survivors.

That's why a new, pioneering cancer treatment called CAR T-cell therapy is so exciting.

For one, there will be many more cancer survivors as the 21st century marches along. That's the important part. Second, it creates a new opportunity for investors who learn about the treatment now and get in early before the rest of the crowd. 


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In short, CAR T-cell therapy is a radically new medical technology that promises hope where there was none. CAR T-cell therapy uses the body's own defenses to fight cancer. It’s built upon the patient's healthy cells, which are the foundation of the treatment. The CAR T-cell method (CAR stands for chimeric antigen receptor) uses a person's own T-cells, which are a part of the human immune system. After being extracted, the T-cells are genetically engineered to attack and destroy cancer cells, and infused back into the patient's body.

Because these therapies are highly specialized and complex, they can get very expensive. And because they are so new, there have been only a few guidelines about how to pay for them. On August 2, these guidelines expanded as the Centers for Medicare and Medicaid Services issued a ruling raising payments for these technologies from 50% of estimated costs to 65%. 

While this might not sound like a big deal, it's a step in the right direction. Right now, the list price for a Medicare lymphoma patient is $373,000 per treatment -- and a 15 percentage-point increase will help improve access to this life-saving treatment. 

And while there is still no single national policy covering CAR T-cell therapies for Medicare patients, the recent coverage decision is an indication that these therapies are on their way to going mainstream -- reconfirming their scientific validity. 

As you can imagine, several companies are working on CAR T-cell therapies -- and they're garnering a lot of interest from growth-minded investors.  Here are two of my favorites... 

bluebird bio logo1. bluebird bio (Nasdaq: BLUE) is better known for Zynteglo, the first gene therapy approved for the treatment of transfusion-dependent beta-thalassemia, a rare genetic blood disorder. The drug, with its $1.8 million price tag, made headlines when it was approved in Europe earlier this year. But BLUE is more than just Zynteglo. The company is working on several other therapies, including ones based on the CAR T-cell technologies in combination with novel proteins. 

allogene logo2. Allogene Therapeutics (Nasdaq: ALLO) is also working on CAR T-cell therapies, but it's working on its own version, which builds on and improves the existing form of this treatment. 

Among the shortcomings that Allogene seeks to overcome are the complexities of the treatment, the time it takes to create a treatment (it might take up to four weeks to reprogram the cells) as well as the need to largely have healthy cells to start with. Allogene's methodology aims to create an "off-the-shelf" version of CAR T therapy. This version -- AlloCAR T -- can be gene-edited/manufactured from an immune cell of a healthy donor, then delivered on-demand to a cancer patient. If it works, it will cut down on the costs, reduce wait and response times, and will also create a more uniform product with more predictable efficacy. 

Other Players
Allogene's novel approach would signify a step forward compared with the existing cancer-fighting therapies. But these products are still in Phase I clinical trials -- which means that they are at least a few years away. Meanwhile, in October 2017, the FDA approved Yescarta, a CAR T-cell therapy from Kite Pharma, for specific types of non-Hodgkin lymphoma. 

It's because of the potential of Yescarta (and prior to its approval) that Kite became an acquisition target: almost exactly two years ago, Gilead (Nasdaq: GILD) announced that it was buying Kite Pharma for $11.9 billion. The transaction valued Kite at $180 per share, a 29% premium to Kite's previous closing price. The potential of CAR T-Cell therapies was specifically quoted as a reason for the purchase. 
In reporting results for the latest quarter on July 31, GILD said that Yescarta was growing strongly, with quarterly sales of $120 million -- up 76% year-over-year and 25% sequentially. Already launched in Germany, the U.K., Spain and France, Yescarta is poised for further growth. Gilead, which runs Kite as a separate business unit, fully expects to maintain its leadership in cell therapies. 

Finally, here's another young but promising company all biotech investors should keep on their watchlist: Autolus Therapeutics PLC (Nasdaq: AUTL). Public for just over a year (since June 2018), this London-based company is small ($480 million in market cap), but its pipeline is not: Autolus has four product candidates in hematology as well as one in solid tumors. 

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Genia Turanova does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.