NEW YORK ( TheStreet) -- The goals of antibody drug conjugates (ADC) have a certain eloquence and simplicity. These cancer therapies seek to move treatment away from "carpet bombing" all rapidly dividing cells toward a "smart bomb" approach that only hits cancer cells. ADCs can be more potent with decreased side effects. It's no wonder the development of ADCs -- and related small molecule drug conjugates (SMDCs) -- has become quite popular with large pharmaceutical companies and their smaller cousins in biotech such as Seattle Genetics ( SGEN), ImmunoGen ( IMGN), Progenix ( PGNX) and Endocyte ( ECYT). I believe ADCs and SMDCs will take on a significantly larger role in the treatment of cancer, but the simplicity of their mechanism belies the considerable technical hurdles required to develop them. I see five critical challenges for an ADC or SMDC to be effective. Investors should understand each of these challenges in order to separate the good therapies from the bad. 1. Keeping It Together An ADC or SMDC is composed of three basic parts: The targeting monoclonal antibody or small molecule, the cytotoxic payload and a linker. The linker, which connects the antibody/small molecule to the payload, is critical. It needs to maintain the integrity of the drug in the blood and eventually let go once inside the cancer cell. If the linker breaks down too early, the cytotoxic payload is released in the blood causing the destruction of healthy cells and unacceptable side effects. Conversely, if the linker is too tight, the chemotherapy payload won't release once inside a cancer cell, causing diminished efficacy. 2. Having the Right Address Smart bombs don't work unless they can direct their firepower to the proper location with precision. The same goes for ADCs and SMDCs, which means having a target that is preferentially expressed on cancer cells. The targeting monoclonal antibody or small molecule is designed to link with specific cell-surface receptors. These receptors are usually expressed on both healthy and cancer cells so the key is to find receptors that have a higher rate of expression on cancer cells versus healthy cells. It would be nice if a receptor could be discovered that is only located on cancer cells but not healthy cells. No such luck (so far) so it's important the receptor target used by ADCs and SMDCs is more abundant on cancer cells than healthy cells.