(CapitalWatch, Nov. 19, New York) If you're going to get cancer, you're going to want to detect it early. While we've come a long way, baby, when it comes to treating terrible maladies like lung cancer, the best treatment—and where the future of cancer treatment lies—is in early detection. You'd be better off detecting lung cancer in stage 1 and be treated by a shaman than you would detecting lung cancer at stage 2 and be treated at Sloan Kettering. (I possess zero medical knowledge whatsoever, but I think this is about right.)
The Big, Killer Market
Cancer is a big killer and a big market—and treating it incurs a huge cost, both in terms of money and in terms of lives. National costs for cancer care were estimated to be $190.2 billion in 2015 and $208.9 billion in 2020, an increase of 10% that is only due to the aging and growth of the U.S. population as reported on the progress report from National Cancer Institute. These cost estimates include cancer-attributable costs for medical services and oral prescription drugs.
Early detection of cancer offers the best way to save both lives and livelihoods. To wit, a patient has an over 90% chance of being cured through surgery at early-stage detection. Five-year survival rates are over 90% at such early stages, as compared to around 80% if detected at stage 2.
Now, even when you narrow it down to early detection there are a lot of cancers and a lot of cancer stocks. But while there are big safe choices like Roche (OTC: RHHBY) making headway in the liquid biopsy space (the subset of early cancer treatment on which we will focus here) the only way to make real money in the early cancer detection space is to detect these companies at an early stage. (Liquid biopsy is the difference experientially between something as noninvasive as giving blood versus big needles that Gregory House would constantly order.)
As a comparison, just think of the difference between investing in Moderna (Nasdaq: MRNA) or Pfizer (NYSE: PFE) in early 2020.
So, forget Roche for now. Here are a two potentially early cancer detection stocks with more risk but more upside that investors would be wise to consider adding to any healthy portfolio.
A Liquid, Liquid Biopsy Stock
Now, Guardant Health (Nasdaq: GH) is by no means some undiscovered small-cap stock. If you've read about any liquid biopsy stocks, you've read about this $10 billion-plus mid-cap stock. In fact, the stock has received enough attention this year to trade with this kind of volatility. Still up from a year ago, the stock is now at around its 12-month low, after hitting a high of over $179 per share in early February. Then again, what stock didn't hit its high this year in February?
The company's biggest focus is on liquid biopsies to help fight cancer through its blood tests; management says the company could potentially help more than 100 million people help catch their cancer early.
In October 2020, the company's Guardant 360CDx became the first liquid biopsy test of its kind (one that looks for multiple-related changes) to receive FDA approval.
Founded in 2012, GH went public via IPO in 2018 and has yet to turn a profit. But they do have sales—and they're growing. The company posted $94.8 million in revenue for the third quarter of 2021, an increase of 27% over the corresponding period of 2020. It also reported 22,806 tests to clinical customers and 4,839 tests to biopharmaceutical customers for the same quarter, representing an increase of 35% and 58%, respectively, over the same period last year.
For the full year, Guardant Health expects full year 2021 revenue to be in the range of $360 million to $370 million, representing 26% to 29% growth over last year. Considering the pandemic's effect on non-Covid related medical visits, this growth should pick up steam as the Covid-19 nightmare completely subsides.
An Illiquid, Liquid Biopsy Stock
Biomark (OTC: BMKDF) is a Canadian microcap stock that is about as liquid as its native country's famed maple syrup. Indeed, the stock barely moves, trading only about 4,000 shares per day and hovering around 17 cents. That gives this company a paltry $14 million market cap. But what did I say about getting in on an early cancer detection stock early?
This under-the-radar company might be on investors' radar very soon. Focusing on early detection of lung cancer, the company's cancer diagnostics technology is a metabolomics-based liquid biopsy assay designed to detect, measure response to treatment and help monitor for recurrence in cancers—especially cancers like lung, brain, ovarian, and pancreatic. All of which are notoriously hard to detect and even harder to treat. These cancers typically have high recurrence rates.
So, how far along is Biomark and just how good is its early cancer detection tech? The company holds eight patents currently, with more expected to be filed in the upcoming quarters. The company's studies have been featured in Cancer Journal in August 2019 and March 2020, and more peer-reviewed articles are forthcoming. At its lab in Quebec, the company is expediting a larger-sample, early-cancer detection trial. The sample analysis is planned for late 2021 and results are expected in early 2022.
Thus far, the company's early detection tech has managed to win over the Canadian government, with the company securing $1 million in no-dilutive funding from the government to date. More non-dilutive funding, management says, is forthcoming.
Unlike so many small companies in this space, revenue may not be that far off. According to CEO and founder Rashid Ahmed, Biomark should be posting revenue by early 2023 through commercialization and licensing. The company has applied for a multi-million funding with leading institutions and eight hospitals for a comprehensive and integrated clinical study in lung cancer screening that would involve 4,000 patients. According to management, the study is expected to commence by end of 2021.
Sooner Rather Than Later
Looking back 20 years from now, there are some big trends that are no-brainers. Electric vehicles or blockchain or AI are just a few of the market segments that will obviously benefit long-term. When it comes to medical science, early detection of cancer is just another no-brainer-type space. And while such features as the virtual doctor visits offered by companies like Teladoc (NYSE: TDOC) are intriguing–-as is MRNA technology—the most obvious winner long-term in the medical space is early detection of disease.
Don't wait until these stocks hit stage 4. If you are looking to buy, buy sooner rather than later.
Information provided is for educational purposes only and does not constitute financial, legal, or investment advice. While the author has no official business relationship with any company covered in this article (and received no compensation for this coverage), the author does have associates working with BioMark Diagnostics; the report therefore is not wholly without bias.