Here’s a bit of good news. With millions of Americans now taking anticholesterol drugs (known as statins), heart disease may soon lose its status as the leading cause of deaths in the United States. In 2009 (the year for which the most recent data is available), 598,000 Americans died of heart disease, down from 616,000 in 2007 and 636,000 in 2006. That’s the first time the figure has moved below 600,000 in a number of decades, according to the Centers for Disease Control (CDC).

#-ad_banner-#But if the trend continues, then cancer may move into the top spot. About 568,000 Americans died of cancer in 2009, not far below the number of people who died of heart disease. Then again, cancer researchers aim to stop that from happening by leading a commensurate drop in cancer-related mortality. Indeed, a wide number of biotech companies appear to be making solid progress in their bid to stop cancer in its tracks.

For investors, there’s another bit of good news. These oncology-focused firms have seen their shares clobbered in the recent market rout. Here are three newly-discounted oncology stocks that you should be researching right now. The first two are small and quite risky, so owning a basket of them may be wiser than just holding one or two, as not all drugs make it to the clinical finish line.

1. Celsion (Nasdaq: CLSN)
This firm’s scientists discovered that delivering cancer-fighting drugs at an elevated temperature (40° C), the drug is more likely to permeate the walls of cancer cells. Best of all, this technique — known as ThermDox — leaves nearby healthy tissue relatively unharmed.

Clesion’s ThermoDox is currently being tested in Phase III clinical trials using patients in 11 countries. Though this study focuses on liver cancer (which has been spreading in many countries thanks to a spike in cases of Hepatitis B and C), the technology has applications for other cancers as well. Colorectal cancer appears to be the next area of focus.

Yet it’s the liver-cancer trial, known as HEAT, which remains the biggest near-term catalyst for shares. The company has taken longer than expected to enroll at least 600 patients in the trial. Now that the process is complete, interim data should be reported by year-end, and the final results of the study by next summer. Celsion raised cash earlier this summer, which will probably tide it over until the final data are released in 2012, at which time the company will likely need to pursue a strategic investor to help it launch the drug.

This, of course, assumes further testing data are as robust as the data we’ve seen thus far. If so, then this could be a potential blockbuster opportunity because liver cancer is expected to be the leading form of cancer by 2020, as the ranks of Hepatitis-infected patients continues to swell. Meanwhile, this summer’s market rout has taken this stock down from $4 in early July to a recent $2.40.

2. Threshold Pharma (Nasdaq: THLD)
A key problem in treating cancer tumors is that they emerge from areas that have little oxygen, or are in “hypoxic” environments. These hypoxic regions of the tumor are thought to provide the cancer stem cells that proliferate upon withdrawal of chemotherapy and are a factor in disease recurrence. Threshold’s key drug, TH-302, is inactive until it reaches hypoxic regions of tumors, where it then releases its cancer-fighting molecules. As is the case with Celsion’s approach, nearby healthy tissue is unaffected.

Threshold’s Phase II trials targeting pancreatic cancer have yielded strong results, so the company aims to start Phase III trials in 2012. If all goes well, TH-302 could hit the market by 2014. The company has also embarked on Phase I trials using TH-302 to fight leukemia and expects to report top-line results by the end of this year. More than likely, Threshold will need to raise money in 2012 — its cash will run out by next summer at current burn rates. Threshold’s $70 million market value sharply discounts the size of the potential for TH-302, which could represent a $300 million to $500 million market opportunity if successful.

3. Medivation (Nasdaq: MDVN)
This had been a well-known biotech stock looking to establish a strong presence in the market for the treatment of Alzheimer’s Disease with it’s treatment, known as Dimebon. Unfortunately, it proved to be fairly ineffectual in clinical trials, and when tepid Phase III data were released on March 13, 2010, shares quickly plunged from $40 to $13 in just one day. (Shares trade today under $16.)

At that point, management had no choice but to shift its focus to a prostate cancer drug that had been in clinical development, known as MDV3100. Lucky for Medivation, it had brought in large sums of money Pfizer (NYSE: PFE) and Japan’s Astellas, which wanted a piece of the Alzheimer’s drug. (Medivation currently has $182 million in net cash.)

MDV 3100 appears to be fairly effective in clinical trials, and unlike many biotech stocks, investors may not have to wait much longer to get a sense of whether this stock will turn out to be a home run or a dud. Some time before the end of this year, Medivation is expected to release interim results from its AFFIRM study. “If the results are positive over the pre-specified hurdle and safety is not an issue,” Medivation can move quickly to file a New Drug Application (NDA) with the Food & Drug Administration, according to analysts at Citigroup. (The hurdle that they describe entails a complex calculus that measures safety and efficacy in various time frames, relative to a placebo.)

They assign the likelihood of a positive outcome at 75% to 80%, and figure shares would move up to the $30-$35 range. On the other hand, if the interim trial results don’t yield favorable data — a 20% to 25% probability — then shares would quickly move down to the low teens, according to the analysts.

Risks to consider: Beyond the obvious risk that clinical trials fail to yield robust measures of efficacy and safety, Celsion and Threshold also have balance sheet risk. Each firm will likely need to refill its coffers in 2012 with another equity raise. And if shares remain at currently-depressed levels, then the dilution could be significant.

Action to Take –> Even though biotechs represent considerable risk, and investors are quite risk-averse right now, many of these stocks are trading at absurdly low valuations in terms of the potential market opportunity they face. Few stocks represent as much significant upside as biotech stocks, assuming their drugs continue to deliver on the promises they hold.

If you can stomach it, then you might want to take a flier on one of these stocks with a small chunk of cash sitting around. Otherwise, if you’re still interested, you could always take a basket approach and buy a few shares of each stock. Sometimes, as my friend Andy Obermueller, editor of Game-Changing Stocks, likes to say: “All it takes is one home-run to make it worthwhile.”