The life science industry recently gave folks diagnosed with pancreatic cancer the best news this group has received in a very long time. A new treatment option that significantly raises their chances for long-term survival could become widely available next year.
Novocure (NVCR -4.20%) and its international partner Zai Lab (ZLAB -6.13%) announced successful top-line results from the Panova-3 study on Dec. 2, 2024. In a nutshell, it showed that the company’s electric field-generating devices can improve pancreatic cancer patients’ odds of survival. Uptake could be significant because the relatively benign device produces nearly zero side effects.
From the beginning of 2024 through Dec. 3, shares of Novocure rose 112% higher. They’ve been soaring because, in addition to positive pancreatic cancer results, its Optune Lua device earned approval to treat lung cancer patients in October.
Can new patient groups push Novocure’s bottom line into profitability and drive its stock price even higher? Here’s what everyday investors need to know about the road ahead for this unique medical-device business.
Tumor-treating fields aren’t just for brain cancer anymore
Novocure’s devices apply an electric field that interferes with cell division. Tumor treating fields won’t destroy a tumor singlehandedly but can slow down their growth rate. The Food and Drug Administration (FDA) first approved Optune, now called Optune Gio, for treating brain cancer in 2011.
In October, the FDA approved Optune Lua for the treatment of advanced-stage non-small cell lung cancer patients after it significantly improved their odds of survival in a clinical trial. Unfortunately, the trial that supported the approval, called Lunar, included patients treated with immunotherapies and standard chemo. The subgroup of patients given immunotherapies survived significantly longer but, unfortunately, the improvement measured for patients given chemo wasn’t strong enough to be considered statistically significant.
Another FDA approval to treat pancreatic cancer is most likely in the cards for 2025. The Panova-3 trial enrolled 571 newly diagnosed pancreatic cancer patients with advanced-stage disease and randomized them to receive standard chemotherapy plus tumor-treating fields or just chemo. Patients who received tumor-treating fields were 33% more likely to survive 24 months than patients given standard chemo on its own.
Novocure will ask the FDA to approve its device to treat locally advanced pancreatic cancer based on Panova-3 results. Given the lack of side effects associated with its relatively benign devices, a green light seems highly likely.
What’s next for Novocure
During the three months that ended this September, Novocure reported revenue that rose 22% year over year to $155.1 million. With just 4,113 patients on therapy, cocktail-napkin math suggests the company receives about $151,000 per patient per year. Lots of intellectual property and a lack of competitors offering similar devices means Novocure could maintain its incredible pricing power for many years to come.
The number of patients using Optune devices could start rocketing higher. Only around 15,000 Americans per year are diagnosed with glioblastoma multiforme, the form of brain cancer Optune Gio is approved to treat, each year.
In 2025, around 67,000 Americans are expected to receive their first pancreatic cancer diagnosis. A lack of effective treatment options makes it one of the more lethal malignancies, with a five-year survival rate of about 13%.
Pancreatic cancer represents a large underserved population, but it’s small, compared to the non-small cell lung cancer (NSCLC) indication Optune Lua was approved to treat in October. Around 193,000 Americans are diagnosed with NSCLC each year.
Novocure is still pursuing regulatory approvals for Optune Lua outside of the U.S. If Optune Lua and a new device aimed at pancreatic cancer earn approvals abroad, the company’s addressable patient population could rise roughly 18-fold over the next several years.
Zai Lab, Novocure’s partner in China, currently contributes less than 3% of total revenue. With a large population of cancer patients, though, this region could become one of the company’s largest revenue streams.
Time to buy?
Novocure stock has more than doubled in 2024, but it doesn’t look like the market is anticipating much in the way of sales to lung cancer and pancreatic cancer patients. Its market cap of about $3.3 billion at recent prices seems extremely light for a company with a new lung cancer therapy that carries a six-figure price tag.
The company has been investing heavily to expand from the limited glioblastoma indication to include lung and pancreatic cancer. It was able to report positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the third quarter but is still losing money on a GAAP basis.
Novocure isn’t a low-risk stock. If it doesn’t start reporting GAAP earnings soon, investors who buy at recent prices could suffer heavy losses. That said, a successful launch for Optune Lua could generate heaps of profits that the stock market doesn’t expect. Adding some shares to a diversified portfolio now could be a smart move for investors who can tolerate the risk.
