Some of the most exciting investing opportunities in the world of biotech exist within the field of oncology. The global cancer therapy market was valued at $158 billion in 2020 and is expected to increase to a revenue of $268 billion in 2026. The monumental size of this industry leaves opportunities for budding biotech companies to experience meteoric rises through the success of their innovative therapies. The majority of this market is dominated by large pharmaceutical companies and well-established biotech’s such as Pfizer, AstraZeneca, and Johnson and Johnson to name a few. These biopharmaceutical giants reap massive profits through their oncology drugs and treatments that are already in the market and serving an important purpose. Most of these giants are seen as safe investments because they have an established presence in the world of medicine but they lack the blockbuster appeal that many investors are searching for when it comes to biotech companies. As the market for oncology continues to grow, investors can look for substantial value in companies that have yet to release a commercial product and are still in the stages of clinical development. These companies are publicly traded based on their potential and their current progress towards developing medicines that could eventually lead to profit. When it comes to these pre-clinical and clinical stage companies, it is impossible to use traditional metrics to measure their worth. Their revenue and earnings will be substantially less than their market cap but this is no reason to shy away from their low share prices.
Kronos Bio ($KRON)
One of the most exciting names in the oncology industry right now is Kronos Bio ($KRON). Kronos has set out to develop drugs that address dysregulated transcription in cancer. This basically means that they are trying to develop treatments to amend proteins which do not have obvious pockets that traditional small molecule treatments can bind to and were previously thought to be undruggable. Kronos has three major drugs that are under development, one of which, Entospletinib, has recently launched its phase 3 clinical trial which is meant to evaluate its ability to treat patients with NPM1-mutated acute myeloid leukemia (AML). Like all oncology drugs, this drug has huge potential if it can survive the process of FDA approval. Kronos just began trading shares in October of 2020 and its price is currently nearing its all-time low. This low price is attractive to potential investors who have identified the potential value that can be recognized given the results of entospletinib’s stage 3 testing. Kronos has an experienced Board of Directors and Scientific Advisory Board who have found success all throughout the biotech industry and have helped this company build a healthy fund through their investors. The President and CEO of this company, Norbert Bischofberger, was formally employed at Gilead Sciences and has helped Kronos Bio develop a sturdy relationship with this biotech giant. Kronos Bio is set up for a fruitful future considering their position within the biotech industry and their journey towards FDA approval.
Agenus Inc. ($AGEN)
Another exciting company that is working to develop treatments for cancer is Agenus Inc. ($AGEN). Agenus is a biotech company that is focused on the treatment of cancer through immunotherapy and immuno-oncology. With a current market cap of $1.23 billion, Agenus is a well-funded clinical stage biotech company, but it has yet to explode within its expanding industry. This is subject to change in the near future as Agenus is searching for the approval of numerous cancer drugs that will open their commercial services to a massive market. One of Agenus’s most promising drugs, Balstilimab, has been granted fast track status by the FDA for its use to treat cervical cancer. Agenus’s product pipeline is rich with numerous drugs in phase 2 of development, any of which could catapult the company to considerable revenue.
When looking for the next cash cow of the oncology industry, it is important to research how well each company is funded and will finance their plans for the future. The executives and partners involved with these companies can often be indicators of the legitimacy and potential that exists within their operations. In the case of Agenus, their current partnerships as well as their plans for the future indicate a great confidence in their future ability to earn profit. Agenus has just purchased a 120-acre parcel of land in Vacaville California which will house its new 400,000 square foot facility. Agenus has also just struck a deal with one of the largest biotech companies in the world for its promising drug, AGEN1777, that improves anti-tumor activity within the immune system. As a part of this deal, Bristol Myers Squibb has paid Agenus $200 million up front with $1.36 billion in biobucks and royalty sales still on the table. These types of deals are what can help smaller biotech’s to break into the upper echelon of their industry. Garo Armen, PhD, Chairman and Chief Executive Officer of Agenus summarized his thoughts and satisfaction with this deal by stating, “Through such transactions we are able to balance between advancing our portfolio with highly qualified collaborators, while retaining our other innovations for speedy development and commercialization by Agenus.” Agenus looks towards a promising future and could be a worthwhile long-term investment.
Argenx ($ARGX) is already a relatively big name in the biotech industry despite being a clinical stage company. Argenx is working to develop antibody-based therapies for the treatment of severe auto-immune diseases and cancer and has already been valued with a market cap of $13.44 billion. This high evaluation is worlds ahead of Argenx’s 2020 revenue of $36 million. Argenx has a lot of catching up to do if it wants to live up to its current evaluation, but if it is awarded some crucial FDA approvals it could quickly exceed this lofty price. In 2021, Argenx will likely be transitioning from the clinical to commercial stage as it awaits its FDA approval for some of its leading drugs. Similarly to Agenus, Argenx has drawn interest from some of the world’s most successful pharmaceutical companies. In 2018, Johnson and Johnson signed a deal that was centered around the drug cusatuzumab, which is meant for the treatment of acute myeloid leukemia. This deal provided Argenx with $1.6 billion in funds at the time. The process of development and approval for this drug has been slow but has seen recent strides. In the past month, Argenx has regained the global rights to cusatuzumab which could become a blockbuster drug barring FDA approval. Having sole rights to this drug increases the potential for this company’s stock in the future.
Not only is Argenx an upcoming star in the oncology industry, it has also made progress in developing drugs that combat autoimmune diseases. Partnering this industry with the oncology industry could be their key to success. If they are able to bring their autoimmune treatment, Efgartigimod, to the commercial stage in 2021, this company could finally begin recognizing revenue that is relevant to their overall worth. This company appears to be a daunting investment considering its high share price and market cap despite its low revenue, but its potential to evolve into a biotech giant makes this stock interesting.
Most of the big money that exists within biotech is in the oncology industry. As cancer cases continue to rise along with our aging population, markets for these kinds of drugs grows even more valuable. Finding the next blockbuster cancer drug is a difficult task but is not based on complete luck. Tracking the milestones throughout the approval process as well as identifying companies with strong ties to successful corporations can help classify a company as a potential success. Each of these three companies have shown commitment to their future as well as promising results in the testing of their products. Investing in these companies before their approvals could provide massive returns on these investments.