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Bristol Myers Squibb Co. (BMY), Ariad Pharmaceuticals, Inc. (ARIA): ASCO Investment Ideas

The American Society of Clinical Oncology annual meeting kicks off today. The scientific conference is the premier place for oncology companies to present data on their cancer drugs. Here are a couple of investment ideas for cancer stocks to watch during the meeting.

Big pharma, big movers
We don’t usually associate ASCO investment ideas with big pharma. Sure, they present data each year, but it’s hard to identify an investment idea that will actually move a pharma’s stock, given their large size. It takes a lot to move the needle.

Bristol Myers Squibb Co. (NYSE:BMY)

This year looks like it’ll be different. Bristol Myers Squibb Co. (NYSE:BMY) and Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) both have drugs that look like they can be mega blockbusters because their compounds can potentially be used to treat multiple types of cancer.

Rather than attacking the cancer directly, where different types of cancer require different targets, Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY)’s MPDL3280A and Bristol Myers Squibb Co. (NYSE:BMY)’s nivolumab remove a molecular switch that holds back the immune system from attacking the cancer. Both drugs turn off the switch, allowing the immune system to attack the cancer.

I don’t necessarily think this mechanism is the cure for cancer, but it does appear to help in a wide range of tumors that all use the same switch to tell the immune system not to attack.

Expanding possibilities
Exelixis, Inc. (NASDAQ:EXEL) announced today that it started a phase 3 trial for Cometriq for patients with kidney cancer  The trial will enroll patients who have failed a first-line treatment such as Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX)‘s  Nexavar or Pfizer Inc. (NYSE:PFE)‘s Sutent. Going for the second-line indication is less risky although it cuts down on the market size a bit.

I doubt the timing of the announcement is a coincidence. Exelixis, Inc. (NASDAQ:EXEL) has nine different presentations at ASCO covering Cometriq in different indications. The drug is already approved to treat medullary thyroid cancer that has spread to other parts of the body, but that’s a small indication that only affects 500 to 700 patients in the U.S. each year.

Exelixis really needs to expand Cometriq into other indications. Kidney cancer is a good choice and Exelixis is also testing it in prostate cancer. One of the presentations featured at ASCO is an update from its phase 2 prostate cancer trial.

A blood cancer
ASCO is typically about solid tumors while the American Society of Hematology annual meeting focuses on blood cancers like leukemia and lymphoma, but Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is out in full force with seven presentations for Iclusig.

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