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Novocure Ltd (NASDAQ:NVCR) Is a Strong And Pertinent Biotech Play

Novocure Ltd (NASDAQ:NVCR) Is a Strong And Pertinent Biotech Play
Written by
Chris Sandburg
Published on
July 21, 2017
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Brain cancer, specifically glioblastoma multiforme (GBM) is very much a hot topic at the moment. With news hitting press that Senator McCain has GBM this week, mainstream news media is picking up on various treatment options he might consider going forward. In a condition like this, however, the list of options is small. GBM is an aggressive and tough to treat cancer and the standard of care therapies, while somewhat effective, are legacy treatments in that they haven’t been subject to any substantial degree of update over the last decade.Well, that's not strictly true.There is one company that has brought what looks like a novel therapy type to market, one that a large portion of the market (and the healthcare space) hasn’t really paid that much attention to since its approval. With GBM hitting headlines, however, the company (and its treatment) are attracting plenty of attention. At the smaller end of the biotechnology space, attention almost always brings speculative volume.This situation is no different.The company in question is Novocure Ltd (NASDAQ:NVCR) and its GBM therapy is called Optune.It's a bit of an unusual one – the treatment involves putting a mesh cap on a patient's head, which is designed to surround the tumor with what are called Tumor Treating Fields, or TTFields. It's a sort of electric field designed to interrupt cell division and – in turn – inhibit the growth of the tumor in question.Data collected across an initial trial (which lasted two years) and a follow up study (which extended this to five years) suggested that the treatment works, although it's pretty important to note that nobody really knows why. The electric fields disrupting cell division and replication is the best guess, but that's all it is.Anyway, in these sorts of situations, how it works isn’t overly important, so long as it extends survival and its safe. And it's got both of these boxes checked. As per the initial study, patients that added Optune to chemotherapy had an overall survival of 21 months as compared to the 15 months of the patients that underwent chemotherapy on its own.After two years, 41% of patients treated with Optune were still alive versus just 31% of those who weren’t. When extended to five years, these numbers change to 13% and 5% respectively.These may not seem like huge numbers but, in this indication, they really are.So we said that this stock is drawing speculative volume right now but that's probably being a bit unfair. It's actually up more than 140% year to date and 63% in the last three months. In other words, there's plenty of momentum behind this one as it moves into any potential boost from the added interest in the GBM space that's sure to hit markets over the coming few months.So what's our take on this? We fully expect this one to continue appreciating throughout the remainder of 2017. It's lead technology might not be a cure, and it's not going to eliminate GBM entirely, but as an adjuvant to standard of care it's been shown to be significantly effective in improving overall survival and that's more than any other drug or therapy has been able to do since what basically amounts to the turn of the century.It's also selling well. Quarterly revenues hit $34.88 million during the first quarter of this year, up from the $30 million recorded during the final quarter of last. Cash on hand at last count (end March 2017) came in at $85 million, removing and near term dilution risk. Take into consideration that these numbers come with what amounts to a relatively small market penetration, and there's plenty of room for growth (and revaluation) going forward.We will be updating our subscribers as soon as we know more. For the latest updates on NVCR, sign up below!Image courtesy of FlickrDisclosure: We have no position in NVCR and have not been compensated for this article.

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