Immunotherapy: new hope in the battle against cancer

Cancer is the world's second-biggest killer. The disease is responsible for around one in six deaths globally; 9.6 million people succumbed to it in 2018, while 18.1 million new cases were diagnosed. In 2025 there will be more than 20 million new cases, according to the World Health Organisation's International Agency for Research on Cancer, and 29.5 million in 2040. To reduce cancer deaths we need new treatments beyond the conventional options of surgery, radiotherapy, chemotherapy and drugs discovered years ago. Fortunately, the last few years have seen a breakthrough in cancer treatments as a new field of research has developed: immunotherapy.

A new approach

Cancer immunotherapy is a new method of fighting cancer that uses the body's own immune system to kill cancer cells where they are growing. This doesn't happen naturally. The immune system is wired to conduct safety checks that prevent it attacking normal body cells. Cancer cells cleverly use these checks to fool the immune system into thinking tumour cells are just like normal cells in other words, the cancer cells make themselves invisible to the body's T-cells (white cells tasked to deal with disease carriers). That means T-cells cannot recognise cancer cells and therefore cannot attack them. The techniques of immunotherapy are all based on various ways of removing this cloak of invisibility from cancer cells and helping the immune system work better at destroying them.

The first immunotherapy drug to consistently improve survival, Yervoy (from Bristol-Myers Squibb), was approved in 2010 for treating metastatic melanoma (one that has spread to other parts of the body) and there are now at least ten immunotherapies approved for treating cancer with several approved for many different cancers. The fast pace of research is clear from the 2,000 or so ongoing clinical trials of new immunotherapy drugs. That will drive growth of the global cancer immunotherapy market from $40bn in 2017 to $170bn by 2028.

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Miraculous results with some cancers

Immunotherapy can have miraculous results for particular kinds of cancer. One famous case is Philadelphia's Stefanie Joho. Her colon cancer was raging out of control, with a massive tumour appearing in her abdomen despite surgery and chemotherapy. Her oncologist said there were no more treatment options left. However, Stefanie's sister Jess discovered a clinical trial at Johns Hopkins University and Stefanie joined it. It was a trial of Keytruda, a drug not then approved for colon cancer, but which had helped treat former president Jimmy Carter's brain and liver cancer. The results on Stefanie were remarkable: her tumour shrank and then disappeared, leaving her free from all signs of cancer. Further investigation showed that Stefanie had a genetic glitch called MMR deficiency; her cancer had many more mutations than usual and it was therefore more likely her immune system would recognise it and attack it with the assistance of Keytruda. In 2017, America's Food and Drug Administration (FDA) approved Keytruda to treat colon cancers of Stefanie's type. There are many similar stories of patients with advanced cancer whose lives have been saved by immunotherapy drugs.

Three key types of immunotherapy

There are three important types of immunotherapy. The first is antibody checkpoint inhibitor therapy (ACIT). ACIT uses monoclonal antibodies (a type of protein produced in a laboratory) to target immune checkpoints, which regulate pathways in the immune system that stimulate or inhibit its action. Checkpoint therapy blocks checkpoints that tumours use to protect themselves from the immune system. This blocking flags up tumour cells so that the immune system can recognise and attack them. The second sort of immunotherapy is known as T-cell therapy, of which CAR-T cell TCR are the best known examples. T-cells are taken from the patient and genetically modified to add a chimeric antigen receptor (CAR), which specifically recognises cancer cells. The resulting modified CAR-T cells are multiplied outside the body and then reintroduced into the patient to attack tumours. CAR-T therapy in the US famously treated the leukaemia contracted by Zac Oliver, a young man from Shropshire, after a Daily Mail fund-raising campaign. He was declared cancer-free last month.

Mixing and matching

One of the frustrations of many early immuno-oncology drugs is that they work very well on only some patients and with only some types of cancer. This is why a lot of effort is now being put into the third approach: combination therapies (CT). They aim to enhance the immuno-stimulatory response by combining two different antibody therapies, or an antibody therapy with a conventional pharmaceutical one. Bristol-Myers Squibb's mix of Opdivo and Yervoy, for instance, combines two ACIT antibody therapies, each targeting one of the body's two main proteins critical to the immune system's ability to control cancer growth. The Opdivo+Yervoy combination is the first treatment for metastatic melanoma with a better-than-50/50 chance of patients responding. Another example is the combination of Keytruda with chemotherapy for lung cancer, which is more effective than either alone.

New lines of enquiry

Two further categories of immunotherapy exist, but here drugs are only just beginning to emerge. Oncolytic virus therapies (OVT) are being pioneered by Amgen. A virus is injected into the tumour, enters the cancer cells (but not healthy ones) and makes copies of itself so the cancer cells burst and die. Amgen's Imlygic uses modified herpes viruses to do this. Cancer vaccines, meanwhile, expose the immune system to an antigen that the immune system then recognises and destroys in this case, cancer cells.

With more and more immuno-oncology drugs and other treatments for cancer being approved, doctors need to find out which drug is most suitable for a particular cancer in any specific patient. This is particularly important for certain cancers, such as Stephanie Joho's, where immunotherapy can produce a miraculous cure. The answer lies in genomic testing, an area covering people's genetic predispositions to certain types of cancer as well as the genetic make-up of tumours, which can help discern how they might develop.

There are now several genetic tests for tumours on the market that can indicate the most effective treatment. This helps to make targeted precision cancer treatment a reality. Examples of such tests are Oncofocus from Oncologica and FoundationOne from Roche. Given the range of cancers treatable with the checkpoint inhibitors Opdivo, Keytruda and Opdivo+Yervoy, a test called the Tumour Inflammation Signature (TIS) has been developed to help predict whether patients will respond to these drugs.

Since the first effective cancer immunotherapy was approved in 2010, many other single and combination immunotherapies from major biopharma companies have been approved for various types of cancer. Their 2018 sales vary from less than $100m to $7bn.

Opdivo: another miracle cure

The only two super-blockbusters boasting sales of over $5bn are Opdivo and Keytruda, which both have sales of around $7bn and have at least nine approvals each for different types of cancer. Stefanie Joho's colon cancer was cured with Keytruda, and Opdivo has had similarly miraculous effects. The US Cancer Research Institute cites Maureen O'Grady, 62, who in 2009 was diagnosed with stage-four (the final stage) lung cancer that had spread to her liver and heart. She was given a year to live by her doctors. She tried chemotherapy, which had horrendous side effects and merely slowed the growth of the cancer, and also Tarceva, a conventional lung-cancer drug.

She stopped both chemotherapy and Tarceva after discovering a clinical trial of Opdivo at Yale. She joined the trial in early 2010 and found she had almost no side effects from Opdivo. Her first scan after eight weeks on Opdivo showed she was responding dramatically to treatment. The tumours shrank to almost nothing after two years and Maureen was alive and well six years after original diagnosis. Dr Herbst, chief of medical oncology at Yale, said: "In 25 years I've never seen anything like it." The FDA approved Opdivo for lung cancer in 2015. The potential of these drugs, then, is enormous and small biotechs as well as giant pharmaceuticals are getting in on the act. Below, we look at how investors can profit.

The stocks and funds to consider now

There are four main ways for investors to participate in the success of immunotherapies. The first is to back large biopharma companies that make a substantial proportion of sales from immunotherapies and have promising new ones in the pipeline. Two of these companies Bristol-Myers Squibb (NYSE: BMY)and Merck (NYSE: MRK) stand out, with super-blockbusters Opdivo and Keytruda. No other firms at present have even a blockbuster (sales more than $1bn a year) to their name.

The FDA approval history of Opdivo shows how its range of application has expanded following first approval for advanced melanoma in 2014. Approvals for lung cancer and kidney cancer followed in 2015, hepatocellular cancer in 2017 and expanded kidney and colorectal cancer indications in 2018. Opdivo/Yervoy combinations have been approved for melanoma (2015 and 2016) and for kidney and colorectal cancer in 2018. Keytruda has a comparable approval history to Opdivo.

Bristol-Myers Squibb had immunotherapy sales of more than $8bn in 2018, or 35.5% of total 2018 sales, making cancer immunotherapy a substantial proportion of revenue. It is taking over Celgene, a blood-cancer specialist, which in turn has bought Juno Therapeutics, a firm with a pipeline of CAR-T therapies. The combined companies would have had 2018 revenues of $37.9bn.

For Merck, Keytruda's $7.2bn of 2018 sales made up 17% of total revenue (of $42.3bn). A small immunotherapy portfolio should therefore contain Bristol-Myers Squibb and Merck.

Many smaller firms have pipeline immunotherapies, but no approved drugs on the market; only a few, such as Tocagen (Nasdaq: TOCA) have Phase-III trials (the final stage of clinical tests) in progress. Most are based in the US, which has 30 of the top 46 immunotherapy start-ups; four are from the UK. Investment success depends on the smaller company either being acquired or partnering its key drug with a large biopharma. Brave investors willing to do a great deal of research may wish to explore this sub-sector.

Another approach to the immunotherapy boom is to invest in the industry's suppliers: companies making things needed to diagnose or develop immunotherapies. Enter Illumina (Nasdaq: ILMN), a world leader in genomic testing used for deciding which drug is likely to be most effective for any particular combination of tumour and patient.

Grail, a company spun out of Illumina and soon to be floated, is developing a DNA-based blood test for the very early detection of cancer. Consider also MorphoSys (Frankfurt: MOR), a supplier of antibodies, many of which are used for cancer drugs.

A fourth way to gain exposure is through funds, although the main biotech and healthcare-orientated trusts do not have especially large proportions of their top-ten portfolio holdings in cancer immunotherapy companies. The Biotech Growth Trust (LSE: BIOG) has Celgene, Illumina, Gilead Sciences and Amgen accounting for 26.1% of its portfolio, while the BB Healthcare trust (LSE: BBH) contains Illumina, Celgene and Bristol-Myers Squibb, jointly contributing 32.6% of the overall portfolio's value.

Given that most cancer immunotherapy companies are in the US, another option is to track the Nasdaq Biotech index directly. This can be done with the iShares Nasdaq US Biotech ETF (LSE: BTEC), which charges 0.35%. Illumina and immunotherapy groups Gilead Sciences, Amgen, Incyte and Celgene jointly comprise 30% of the index.