A number of promising cancer treatments were presented this week by key global pharmaceutical players at the 2014 Annual Meeting of the American Society of Clinical Oncology (ASCO) - which is why this is a key time of year to watch a specific group of biotech stocks.
The event, which this year took place May 30-June 3, is attended by thousands of renowned oncologists, researchers, analysts, and investors. It is unquestionably the most highly anticipated and most news-generating cancer research meeting of the year.
ASCO can deliver a blockbuster, breakout drug that will not only lead to better cancer treatments, but will also bring in billions of dollars in revenue. Moreover, there's also the potential of a drug's developer becoming a profitable takeover target.
As Money Morning Executive Editor William Patalon III has explained, some stocks start surging in price and volume after the companies present at the event.
Sometimes the post-ASCO pops are short-lived - but huge.
"Each May, just ahead of the crucial gathering, a select group of oncology stocks take investors on a pretty wild ride - almost like clockwork," Patalon said. "That's the 'ASCO Effect.'"
Just look at what ASCO did to OXiGENE Inc. (Nasdaq: OXGN).At the beginning of May 2011, OXGN was a relatively unremarkable biotech stock. It was trading at less than $2 a share.
"You might even say that OXiGENE was deeply troubled," said Patalon. "The company faced questions about management turnover and its cash position. Its investors were worried about its cancer-drug pipeline. In fact, the stock was one of the biotech sector's worst performers in 2010, and the company had to endure the ignominy of a reverse stock split in February 2011."
Then came the "ASCO Effect."
Over a nine-trading-day stretch that started the first day of May, OXiGENE shares soared 218% - on a massive spike in volume. If you include the intraday high, the stock gained as much as 245%.
But it's not just the short pops that come out of ASCO...
Some companies deliver potentially game-changing news about their cancer treatment developments. The updates trigger analyst upgrades and the start of steady share-price gains.
One stock on our list is up about 9% since presenting at ASCO. These stocks will continue to climb in 2014 and beyond as their cancer treatments come further along.
Check out these seven biotech stocks to watch post-ASCO.
AbbVie Inc. (NYSE: ABBV) impressed with its experimental drug, ABT-199/GDC-0199. Patients with relapsed/refractory chronic lymphocytic leukemia (CLL) treated with the drug showed an overall response rate of 84%. AbbVie also presented promising preliminary results from an ongoing phase 1 study on ABT-414, for glioblastoma multiforme, the most common and aggressive type of malignant brain tumor. ABBV stock is up about 1.8% since ASCO, trading around $55.
This next stock has seen one of the biggest jumps since ASCO, up about 8% in a week...
Pharmacyclics Inc. (Nasdaq: PCYC) demonstrated its approved leukemia drug, Imbruvica, was shown to help patients live longer than GlaxoSmithKline Plc's (NYSE ADR: GSK) Arzerra in a clinical trial published online by the New England Journal of Medicine. The study showed that Imbruvica reduced patients' risk of death by 57% compared with Arzerra. Nomura Securities analyst Ian Somaiya said he found the detailed data "even stronger than initial impressions" and recommended investors buy shares of PCYC ahead of the presentation. PCYC was trading around $85 before ASCO and is now nearly 9% higher at $92.54.
AstraZeneca Plc (NYSE ADR: AZN) Chief Executive Officer Pascal Soriot said the company's cancer drug pipeline is progressing faster than he had expected. In fact, that lucrative pipeline was the major reason behind AstraZeneca's decision to rebuff a recent $120 billion takeover offer from Pfizer Inc. (NYSE: PFE). Those drugs form a crucial part of AstraZeneca's effort to increase sales some 75% by 2023. "We remain resolute in our ambition to bring these next-generation cancer medicines to patients as fast as possible," Soriot said. AstraZeneca presented favorable data at ASCO on a treatment for lung cancer. And, in what Lerrink Swan analyst Seamus Fernandez called "the biggest upside surprise among all data presented at ASCO," two experimental AstraZeneca drugs were shown to help ovarian cancer patients live longer without their disease progressing than one of the drugs alone. The data suggest the combination "has the potential to replace chemotherapy in patients with ovarian cancer," Fernandez wrote. Additionally, AstraZeneca's global biological research and development arm, MedImmune, presented positive results from MEDI4736, a new class of drugs that fights a range of cancer tumor types by unleashing the body's immune system. AZN stock is up slightly (about 2%) since the start of ASCO.
Celgene Corp. (Nasdaq: CELG) announced updated overall survival results from its phase 3 study of Abraxane, in combination with gemcitabine (used to treat a range of cancers), in the treatment for patients with metastatic pancreatic cancer. The study showed that Abraxane, plus gemcitabine, demonstrated an improvement in overall survival rates than in patients receiving gemcitabine alone. CELG is trading around $160, up more than 9% over the past month and 5% since ASCO.
Clovis Oncology Inc. (Nasdaq: CLVS) reported its CO1686 treatment shrunk tumors in lung cancer patients with mutation known as T790M by 58%. This was greeted with excitement as T790M is linked to resistance to existing treatments for this kind of lung cancer, causing patients' disease to progress on other therapies. CLVS was upgraded to "Buy" from "Hold" on Thursday by Stifel Nicolaus analysts. They have a $50 price target on the stock, about 25% higher than where CLVS shares are trading now.
Bristol-Myers Squibb Co. (NYSE: BMY) showed its latest evidence that patients with the skin cancer melanoma, who received a combination of two BMY immunotherapies in a clinical trial, lived an average of more than three years. In a separate study, about 70% of advanced melanoma patients receiving a Merck & Co. Inc. (NYSE: MRK) immunotherapy were still alive after one year. Doctors were widely impressed with the findings because until recently, most patients with advanced melanoma could be expected to live for less than a year. "The melanoma stuff is a game changer," Derek Raghavan, president of the Levine Cancer Institute at the Carolinas Healthcare System in Charlotte, N.C., told The Wall Street Journal.
Roche Holding Ltd. (OTCMKTS ADR: RHHBY) reported excellent progress with its immunotherapy anti-PDL1, MPDL3280A, which reduced tumors in 43% of patients suffering from a specific type of metastatic bladder cancer. The Swiss drug company has received Breakthrough Therapy designation from the FDA for MPDL3280A, which is likely to speed up development time for the clinical drug.
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