Equity Research Analyst Mara Goldstein on the Evolving Immuno-Oncology Sector

Jim Gorman
Jim Gorman Director
July 29, 2019

Pharmaceutical prescription growth continues to moderate, while oncology – the branch of medicine specializing in the treatment of cancer – is experiencing growth driven, in part, by new discoveries and medicines, and an increasingly elderly demographic.  With scientific breakthroughs in genomics, antibody discovery, and cell and gene therapies, oncology is expected to attract a bigger R&D spend globally than ever before.

Mizuho Equity Research Analyst Mara Goldstein recently initiated coverage on oncology companies focused on immuno-therapy, an area of cancer treatment that leverages properties of the immune system to fight many types of cancer.

Among its defining features, immuno-therapy includes the ability to kill microscopic cancer throughout the body, which is a key limitation of traditional therapies. Studies have shown that immuno-oncology (I/O) can have added advantages, when used in combination with other treatments such as chemotherapy or targeted drugs, as well as radiation and surgery. On the downside, immuno-therapy is costly and carries a higher risk of severe immune-related toxicities. Immuno-oncology drug trials have surged in the past few years, and now make up roughly 43 percent of the cancer treatments currently in development.

Immuno-therapies can be broadly categorized into three treatment modalities: 1) bispecifics, which bind two cellular targets simultaneously and can bring immune cells in closer proximity to the cancer cells; 2) cellular therapies, which are genetically modified T cells programmed to target cancer cells; and 3) checkpoint inhibitors, which negate the molecular “camouflage” that cancer cells utilize to avoid immune recognition (and hence elimination). Checkpoint inhibitors are the dominant part of the treatment landscape, accounting for 34 percent of growth in market spending in the US since 2013, and are now considered the backbone of immuno-therapy.  

The market opportunity for oncology drugs is vast with approximately 43 percent of drugs in development designed to modulate the immune system. Combine this with an 89 percent increase in the average cost of oncology drugs from 2013-18, the regulatory tailwind of decreasing trial time over the past eight years, and a rise in I/O drug sales from $1 billion in 2013 to $17 billion in 2018 (with a forecast to grow to $44 billion by 2023 according to Pharma Intelligence), immuno-therapy is an important area for biotech investors.

Mara describes her research coverage prior to Mizuho as heavily weighted in oncology, but agnostic toward therapeutic modalities. However, her team now plans to focus exclusively on oncology, regardless of market cap, and specializing in I/O. “We believe that being an expert in a specific therapeutic area and producing high quality research is how we provide value to our clients,” Mara said.


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