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.
3. Having Enough Entrances Even if a cell receptor is exclusively on cancer cells, it still may not matter. There has to be a sufficient number of receptors on each cell to get enough drug into the cell to kill it. In other words, if there are not a lot of a given receptors on a cell surface, they will easily get saturated regardless of how much drug actually gets to the cell. This is often overlooked but is critical because the rate of expression on the cancer cell can essentially determine how much ADC/SMDC actually gets into the cancer cell. 4. Breaking the Link If the ADC/SMDC has the right address and enough entrances, the linker still has to break down to release the cytotoxic agent. Unless the ADC/SMDC is actually taken into the cell and releases the payload, it is all for naught as the drug will eventually be cleared leaving the cancer cells alive. 5. Potency of the Payload I hope you're getting the idea that a lot of steps need to go right in order for an ADC or SMDC to kill cancer cells. Let's add one more challenge: Selecting the correct chemotherapeutic payload. Think about it this way: A smart bomb without sufficent "boom!" isn't much of a weapon. ADCs and SMDCs use exceptionally toxic chemotherapy agents that could never be used in traditional systemic chemotherapy treatment. One reason for this is to overcome some of the challenges listed above, including the relatively small number of cell-surface receptors which limit the amount of cancer-killing drug that can enter the cell. The development of ADCs and SMDCs is increasing but despite the early successes of Adcetris and Kadcyla, investors should not underestimate the difficult in successful development of these new cancer smart bombs. Investors wanting to find the next big ADC or SMDC should proceed cautiously but the winners are out there. Disclosure: Sobek is long Seattle Genetics, Progenics and Endocyte.