ASCO 2014 Puts These Biotech Stocks in Focus - Analyst Blog

It has been a busy few days in the health care sector with several companies presenting data on their approved as well as experimental oncology drugs at the annual meeting of the American Society of Clinical Oncology (ASCO). The meeting, held in Chicago from May 30 – Jun 3, provides companies with a platform to showcase their data to scientists, physicians, the investment community and others.

This year, a main area of focus was immuno-oncology which has been attracting a lot of interest. Immuno-oncology therapies have the potential to change the treatment paradigm for cancer -- they basically use the natural capability of the patient's own immune system to fight the cancer.

Major players in this field include Bristol-Myers Squibb BMY, Merck MRK, and Roche (RHHBY) – all three companies came out with data on their immuno-oncology candidates at ASCO 2014. Merck seems to have a head start with pembrolizumab (MK-3475) currently under FDA review for advanced melanoma (a response is due by Oct 28).

Bristol-Myers presented encouraging early-stage data on a combination of its investigational PD-1 immune checkpoint inhibitor, nivolumab and Yervoy. The one-year and two-year overall survival (OS) rates in advanced melanoma patients were 94% and 88%, respectively. This data looks good -- according to the company, average survival rate in the late-stage of this aggressive cancer has historically been just 6 months with a one-year mortality rate of 75%. But toxicity remains an issue. This combination is already being evaluated in phase II and phase III studies.

Meanwhile, Roche has been making good progress with its immunotherapy anti-PDL1, MPDL3280A, which reduced tumors in 43% of patients suffering from a specific type of metastatic bladder cancer. Plus, the company got Breakthrough Therapy Designation from the FDA for MPDL3280A, which could cut short the development time.

Outside the immuno-oncology area, impressive data was presented by companies like Pharmacyclics PCYC and AbbVie ABBV.

AbbVie's experimental leukemia drug, ABT-199/GDC-0199, continues to impress. An overall response rate of 84% was seen in relapsed/refractory chronic lymphocytic leukemia (CLL) patients treated with ABT-199/GDC-0199 plus Rituxan in a phase Ib study. AbbVie also presented preliminary results from an ongoing phase I study on ABT-414, which is being evaluated for glioblastoma multiforme, the most common and most aggressive type of malignant primary brain tumor.

Meanwhile, Pharmacyclics continues to generate strong data on Imbruvica. Biotech major, Amgen AMGN, was also at ASCO 2014 with data on AMG 337, rilotumumab and talimogene laherparepvec.

Biotech Stocks in Focus

Armed with data presented at ASCO 2014, this seems like a good time to pick a few biotech stocks that look poised for growth.

First on our list is Foster City, CA-based Gilead Sciences Inc. GILD Gilead, which is known for its drugs targeting HIV, hepatitis B virus infections, chronic hepatitis C virus (HCV) infections, oncology/inflammation and serious cardiovascular and respiratory conditions, presented encouraging data on idelalisib at ASCO 2014. 

A second interim analysis of a phase III study evaluating idelalisib and Rituxan for relapsed CLL showed significant improvement in progression free survival PFS and overall response rate (ORR) compared to placebo plus Rituxan, with acceptable safety. Idelalisib is under priority review for this indication with a response expected by Aug 6.

Chances of gaining approval look high considering the data on the candidate. Idelalisib is also under review for the treatment of refractory indolent non-Hodgkin's lymphoma (PDUFA date: Sep 11).

The strong performance of HCV drug, Sovaldi, potential catalysts and an attractive pipeline make this Zacks Rank #1 (Strong Buy) stock a solid pick.

Next on our list is North Chicago, IL-based AbbVie. AbbVie has a presence in the rheumatoid arthritis, psoriasis, Crohn's disease, HIV, cystic fibrosis, testosterone, thyroid disease, Parkinson's disease, ulcerative colitis, and chronic kidney disease markets. However, with flagship drug, Humira accounting for a major part of revenues, the company has been working on reducing its dependence on Humira and is working steadily on building a strong pipeline.

ABT-199/GDC-0199 is currently in pivotal phase II and phase III studies for several types of cancer. The ASCO data looks good and bodes well for the continued development of the candidate.

Our third pick is Pharmacyclics. Sunnyvale, CA-based Pharmacyclics is best known for its recently approved cancer treatment, Imbruvica. Imbruvica is approved for previously-treated chronic lymphocytic leukemia and mantle cell lymphoma. Pharmacyclics was there at ASCO 2014 with data on Imbruvica from several studies. But the standout data was from the phase III RESONATE study – a head-to-head comparison between Imbruvica and GlaxoSmithKline's Arzerra. Patients with previously treated chronic lymphocytic leukemia or small lymphocytic lymphoma (CLL/SLL) experienced a significant improvement in PFS, overall survival (OS) and ORR when treated with Imbruvica.

Imbruvica, which has blockbuster potential, delivered sales of $56.2 million in its first full quarter on the market. It is being developed for a wide range of tumor types and label expansion would bring in additional revenues.

We would also like to mention New York-based biopharma company Bristol-Myers, which focuses on the discovery and development of medicines targeting serious diseases in the field of oncology, neurosciences, immunology, cardiovascular and virology.

With the buzz surrounding immuno-oncology, Bristol-Myers is an obvious choice. It is one of the lead players in the field of immuno-oncology with nivolumab being evaluated for different types of cancer. Nivolumab has the potential to bring in multi-billion dollar sales for the company, if approved.

All these companies made waves at ASCO 2014 and sport strong fundamentals.