NEW YORK (TheStreet) -- Oncology biotech stocks were among the best performers in the market in 2013. Even as the year drew to a close, stocks such as Galena Biopharma (GALE), CytRx (CYTR), and Northwest Biotherapeutics (NWBO) delivered triple digit returns in just a few weeks' time. Now that they have risen sharply, it is more important than ever to understand what has been driving the share prices and what will continue to influence their directions going forward.
Here we'll is an overview of what these companies provide in terms of onco-drug technology. At present I have no position in any of these stocks and I am deliberately refraining from expressing any bull or bear opinions on any of these stocks. But I continue to focus on all three quite closely.
Galena is noteworthy because it is attempting to bring to market a pain relief treatment ("Abstral") as well as a cancer intervention. Abstral launched in October 2013 and the company projects revenue of $40 million to $60 million within five years.
Galena also has a pipeline of oncology drugs that have piqued investor interest, all centered on key technology Neuvax.
Neuvax is a novel cancer immunotherapy which targets the HER2 protein, and has potentially promising results in Phase I and Phase II FDA trials. What makes Neuvax and other immunotherapies different from chemotherapy drugs is that instead of killing cancer cells with the HER2 protein directly, Neuvax trains the body's immune system to identify and kill cancer cells with the HER2 protein. Galena is currently running a phase III FDA multinational trial with 700 patients for the use of Neuvax in breast cancer.
Galena is also running a phase IIb trial that combines Neuvax with Herceptin by Roche.
Galena has other products further away from FDA approval including a controlled release formulation of anagrelide and a folate binding protein treatment for ovarian cancer.
Since early November 2013, Galena is up more than 100 % from roughly $2.25. There have been a number of recent developments. The company brought Abstral to market, it bought Mills pharmaceuticals, it signed several deals such as this one, and obtained equity research coverage from Oppenheimer.
Northwest's key technology, DCVax, is also immunotherapy based. However, unlike Galena's Neuvax, it relies on dendritic cells (where the DC comes from), a key part of the immune system that initiates and shapes the adaptive response. With a vaccine that modifies the behavior of dendritic cells, Northwest's technology uses more of the immune system to target cancer than Galena's Neuvax. Whereas Neuvax focuses on using T cells to target cancer, by interacting with dendritic cells, DCVax uses T cells but also mobilizes a much broader range of the agents in the immune system.
Northwest's current focus is applying DCVax to glioblastoma multiforme (the most prevalent form of brain cancer) and prostate cancer. The company is in phase III trials for each indication. In addition to its mechanism of action, a further selling point of DCVax is that it will ostensibly cost less than similar available drugs for glioblastoma multiforme.
Several factors have contributed to a roughly 50% rise in shares of Northwest. Similarly to Galena, Oppenheimer initiated coverage of the company in October. Then, on Nov. 8, DCVax was featured on both Fox News and Fox Business News. Also, on Nov. 29th, Capital Ventures disclosed a 7% passive stake in the company.
In contrast to immunotherapy focused Galena and Northwest, CytRx is taking a modified approach to an established chemotherapy drug, doxorubicin. "Dox" has been around for a while and is already used in a wide variety of cancers. It works by blocking a key enzyme that allows tumors to grow.
CytRx's version, aldoxorubicin, relies on exactly the same mechanism of killing cancer cells as Dox, but includes an additional molecule that binds the drug to albumin, a key component of blood.
The goals of aldoxorubicin are as follows: First, to reduce the toxicity that doxorubicin would normally cause (particularly heart damage). Second, it concentrates the drug at the site of the tumor, as tumors "feed" off albumin. Finally, aldoxorubicin can cross the blood brain barrier, whereas doxorubicin alone cannot.
CytRx's approach to oncology is noteworthy to CytRx bulls because it potentially could entail lower risk. Not only is CytRx's aldoxorubicin essentially just an improved delivery mechanism for an existing chemotherapy drug, but this delivery mechanism itself has been proven by Abraxane, which also combined an existing chemotherapy drug with an albumin binding molecule.
The drug is currently in a phase III trial for second line treatment of soft tissue sarcoma and a phase IIB trial as a second line treatment for glioblastoma multiforme.
Like Galena, CytRx's stock price recently jumped more than 100%. On Dec. 11, CytRx announced strong results from its phase IIb trail of aldoxorubicin as a second line treatment in soft tissue sarcoma. The drug demonstrated superior performance to its predecessor doxorubicin in all endpoints. The stock also jumped roughly 10% Tuesday when the FDA provided the company with more flexibility in its administration of aldoxorubicin in its ongoing phase III trial.
Don't forget the risks
It is easy to get excited about the tremendous potential from hot biotech stocks, but it is important to remain cautious and conduct extra thorough research. In December, shares of ImmunoCellular (IMUC) had quickly risen as much as 50% to close in on its high for the year. But disappointing Phase II results quickly sent the stock plunging by more than 70% to well below $1.00. So again, caution is key.
I am currently evaluating each of these stocks above to determine what has been and what will continue to drive the stocks going forward. Until then I am withholding my investment views.
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.