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Biotech Industry Companies and Cancer

A $50 Trillion Windfall

By Steve Christ
Thursday, May 20th, 2010

If you listen to the bears, the concept of "the future" is not what it used be...

Dark, grim, and brutish, it's a place where even half-empty glasses could shatter into a million pieces.

But the truth is that it's never as bad as the scaremongers would have you believe... and long term, it's usually just the opposite — thanks to the invisible hand of the free market.

But the "experts" grandstand and scaremonger the public, while the entrepreneurs of the world go quietly about their business, wrecking one dire long-range prediction after another in pursuit of their profits.

If you really want to know what your future is going to look like, simply keep your eye on those same entrepreneurs. They're the people that will be shaping it.

That's one of the reasons I'm still bullish on the biotech industry. A faltering Europe aside, this is one sector where the right disruptive discovery can earn you a small fortune.

If you have your doubts, just check out the price action in Dendreon Corporation (NASDAQ: DNDN) shares over the last 14 months:

dndn
On the strength of just one product, the company's stock soared by 900%; an FDA-approved cancer vaccine called Provenge proved to be a breakthrough product for both patients and investors alike. 

A $50 Trillion Dollar Windfall

That has helped to make biotech a hot sector as not only investors but venture capital firms try to track down "the next Dendreon."

In fact according to a recent report by PriceWaterhouseCoopers and the National Venture Capital Association, the biotech industry raised almost $825 million in 99 venture capital deals in the first quarter of 2010 alone.

Notes Tracy Lefteroff, managing partner of the venture capital practice PricewaterhouseCoopers:

Life sciences continues to be the number one sector for VC investing, with biotechnology being the absolute single-industry leader in dollars invested over the past four quarters...

But let's be honest... While $825 million dollars may seem like a pretty big number, it's nothing compared to the dollar value that the market will someday place on the cure for cancer.

Cancer kills about 1,500 people a day in the United States, more than other illness aside from heart disease.

According to a study presented by the Chicago Graduate School of Business four years ago, a cure for cancer would have an economic value of $50 trillion for Americans alone — about four times the U.S. GDP!

Factor in the rest of the industrialized world, and that figure exceeds $100 trillion.

Even small advancements would have a significant impact. According to the same study, a mere 1 percent reduction in mortality rates from cancer would be worth nearly $500 billion.

That's why companies like Dendreon can see their market caps skyrocket, despite the fact that Provenge doesn't prevent cancer; the drug has the ability to add four months of survival for advanced prostate cancer patients.

With 192,000 men a year diagnosed with prostate cancer, the potential market for Provenge is huge — especially at $93,000 a treatment.

A Cancer Cure?

Then there's imetelstat sodium, otherwise known as GRN163L — Geron Corporation's (NASDAQ: GERN) answer to cancer.

A current Phase 2 candidate, GRN163L is an early stage cancer fighter that targets the process that causes cells to die off or stop dividing naturally. In cancer patients, it is this short-circuited process that allows the cells to continue grow uncontrollably.

Instead, GRN163L disrupts the telomeres enzymes responsible for the process, suppressing both tumor growth and metastasis.

"This is really a completely different way of trying to tackle the problem that hasn't been tested in the clinic before," said Kathy Miller, M.D., an associate professor of medicine involved in the research.

Meanwhile, early results have been promising.

"Whether it actually prevents the cells from spreading or they spread but can't grow to make clinically apparent tumors we don't know, but I can tell you my patients don't care," Miller said last year.

The magic, in this case, is provided by embryonic stem cells — an often controversial approach.

Nonetheless, in a more permissive environment, Geron scientists now manufacture seven different types of potential treatments from embryonic stem cells, including:

  • Neural cells to treat spinal cord injury

  • Cardiomyocytes to treat heart disease

  • Pancreatic islet cells to treat diabetes

  • Dendritic cells for cancer therapy

  • Chondrocytes for arthritis

  • Osteoblasts to rebuild bone

  • Hepatocytes for drug discovery and liver failure

That pipeline makes Geron one of the top companies in the growing stem cell industry, where one success story is all it is going to take to reward investors.

With that in mind, consider what Dr. Paul Knopfler wrote last month of Geron's stem cell research. Knopfler is an assistant professor at UC Davis School of Medicine in the Department of Cell Biology and Human Anatomy, as well as a member of the CIRM-funded UC Davis Institute for Regenerative Cures.

Geron and another stem cell-based company, Advanced Cell Technology, which I will blog on in the future, are pioneers in the biotech field working toward producing stem cell products...

In the long run, I believe a number, but not all of these products will be proven successful, make it to the clinic, and help patients. I am very excited about this work. But note I said "long run" because I think there is no short path here. I think the FDA is being extremely cautious and rightly so. The big issue is safety and there is no doubt that they and Geron are taking this very seriously. I applaud them for that.

So while the bears may have the upper hand these days, keep in mind that it is never as bad they make it seem.

Longer term, the biotech sector is undoubtedly going to emerge eventually as one of the biggest winners. 

After all, disruptive technologies move the markets in ways that a bear never sees.

Your bargain-hunting analyst,

steve sig 

Steve Christ
Editor, Wealth Daily

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