Image via Novocuretrial.com
Novocure Ltd. (NVCR) is gaining strength this week on the back of news that it is set to present at an upcoming conference. The conference in question is the 39th Annual International Conference of the IEEE Engineering in Medicine and Biology Society, which, as far as the industry’s event calendar is concerned, isn’t a particularly closely watched event. For a company like Novocure, however, which bridges the gap between physics and biology (and in turn, engineering and biotechnology). It’s a major opportunity to get word of its lead asset to industry decision-makers.
With this in mind, here’s a look at the technology that underpins the presentation and why it could play a key role in the company’s near to medium term growth prospects.
Before getting into the tech, and for those not familiar with this company, Novocure is a Channel Islands-based biotechnology company that currently trades for (subsequent to the recent run) a share price of a little over $19 a piece and a market capitalization of more than $1.7 billion. The vast majority of this valuation is rooted in one core piece of technology (the technology mentioned above and an asset that we will get to in more detail shortly), which the company has already gained approval for in the US as a treatment for glioblastoma multiforme (GBM), a common and aggressive form of brain cancer, and is now allocating resources towards expanding this approval into a variety of other cancer types.
So, in its already approved form, the technology is called Optune and it’s rooted in what are called TT Fields. These are low intensity, alternating electronic fields that interrupt cell division through physical interaction with key molecules during a process called mitosis. Mitosis is the part of the cell cycle where replicated chromosomes are separated into two new nuclei and it’s central to the division and replication of all cells. In cancer cells, this replication often goes unchecked (as a result of the ability of cancer cells to hide from the immune system and – by proxy – their ability to avoid the standard processes through which cells normally die), leading to the unchecked proliferation commonly associated with the condition. By interrupting mitosis, the low-frequency electronic fields serve as a sort of surrogate to the process of apoptosis (the cell death process that cancer cells lack) and are able to inhibit cancer progression to a degree.
This technology isn’t going to cure cancer, but when used in line with standard of care treatment (things like immunotherapies and chemotherapy) it can slow progression down considerably and – in turn – result in months added to the survival time of patients in the GBM population. Months may not sound a lot, but for these patients, it’s a 30-40% improvement over expected survival time.
It’s the GBM indication for which the technology is already approved, but real growth potential on this one is rooted in expanded indications based on the same mechanism of action (MOA). The nature of replication inhibition using low intensity electronic fields is such that it can apply to any type of cancer, so long as said cancer is a solid tumor form of the disease. This includes things like lung cancer, pancreatic cancer, melanoma; essentially, any cancer that isn’t a form of blood cancer or bone cancer.
As I write this, Novocure is conducting trials in an attempt to demonstrate a similar degree of efficacy in mesothelioma, pancreatic cancer, and non-small-cell lung cancer as it is able to induce in GBM. Data from these trials is expected over the coming 12 months, with the mesothelioma trial a Phase 3 that is set to read out during 2018 and enrollment in a phase 3 study of the technology in pancreatic cancer slated to complete later this year.
There is also second quarter financials set to hit press at the end of this month, within which markets will be looking for a continuation of the impressive uptake of Optune in the GBM field. Uptake since its late 2015 approval has been strong, with Novocure reporting revenues at $35 million during the first quarter of 2017, up close to 170% on revenues recorded during the same period in 2016. If second-quarter financials continue in line with this trend, the company should appreciate on speculative loading ahead of the fundamental, trial driven, catalysts.
Bottom line: the upcoming conference is an opportunity for the company to both demonstrate the efficacy of this technology in the GBM population and, at the same time, increase awareness in the industry of its potential across the entire solid tumor spectrum.
In anticipation of strong second-quarter financials hitting press are being this month, this added awareness could translate to some speculative loading near to medium term.
I have no positions in any of the stocks mentioned in the article and do not intend to open any positions near term.
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