The oncology market in the United States is expanding rapidly, driven by a growing need for oncology diagnostics and treatment amid a rising prevalence of various types of cancer due to increasing lifestyle diseases and an aging population. The oncology market also benefited from new opportunities created by the COVID-19 pandemic, including a shift to telemedicine and telehealth, and AI-based analytics.
According to a report by Precedence Research, the global oncology market is projected to reach $581.25 billion by 2030, growing at an 8.2% CAGR. The growing awareness regarding the availability of various drugs and diagnostics related to oncology is expected to boost the market's growth.
Given these factors, Wall Street analysts expect the stocks of fundamentally sound oncology companies Guardant Health, Inc. (GH), Elevation Oncology, Inc. (ELEV), Compass Therapeutics, Inc. (CMPX), Surface Oncology, Inc. (SURF), and Cardiff Oncology, Inc. (CRDF) to surge in price in the coming months.
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Guardant Health, Inc. (GH)
GH in Redwood City, Calif., is a leading precision oncology company that provides blood tests, data sets, and analytics in the U.S. and internationally. It has developed its Guardant 360, Gaurdant360 CDx, and GuardantOMNI liquid biopsy-based tests for advanced-stage cancer. In addition, it offers development services that include companion diagnostic development and regulatory approval, clinical study setup, testing development, support, and kit fulfillment-related services to biopharmaceutical companies and medical institutions.
On May 25, GH and the Vall d'Hebron Institute of Oncology (VHIO), Europe's leading cancer research organization, announced that GH's first health liquid biopsy testing services in Europe are operational at the VHIO liquid biopsy testing facility in Barcelona. This partnership is expected to extend the company's global reach and boost its revenue streams.
Last month, GH partnered with Epic to integrate the company's broad portfolio of cancer tests with Epic. This collaboration will simplify the process for clinicians to order tests and make Guardant Health Cancer Tests available to more than 250 million patients with a record in Epic. This might increase GH's offerings' scale and adoption in both community practices and large health systems.
In its fiscal year 2022 first quarter, ended March 31, 2022, GH's total revenue grew 22.2% year-over-year to $96.10 million, and its revenue from precision oncology testing increased 32% year-over-year to $84.14 million. Its cash and cash equivalents came in at $573.60 million as of March 31, 2022, compared to $492.20 million as of Dec. 31, 2021.
Analysts expect GH's revenue for its fiscal 2022, ending Dec.31, 2022, to come in at $466 million, indicating a 24.7% increase from the previous year. Also, analysts expect GH's EPS for the current year to improve 9% year-over-year. It is no surprise that it has topped the consensus revenue estimates in each of the trailing four quarters and the consensus EPS estimates in three of the trailing four quarters.
Shares of GH have gained 18.9% in price over the last five days and closed Friday's trading session at $43.00.
Each of the five Wall Street analysts that rated GH, rated it Buy. The 12-month median price target of $102.50 indicates a 138.4% potential upside. The price targets range from a low of $85.00 to a high of $125.00.
Elevation Oncology, Inc. (ELEV)
New York City-based ELEV is a clinical-stage biopharmaceutical company. It develops therapeutics for cancer treatment in genomically defined patient populations in the U.S. Its lead program is seribantumab, an anti-HER3 monoclonal antibody in the Phase II CRESTONE trial for the treatment of advanced solid tumors harboring a neuregulin-1 fusion.
On May 25, ELEV announced that the U.S. Food and Drug Administration (FDA) had granted Fast Track Designation to seribantumab for the tumor-agnostic treatment of solid tumors harboring NRG1 gene fusions. "NRG1 fusions are a type of genomic alteration that causes unregulated cell growth and proliferation in a variety of solid tumors, and we look forward to working closely with the FDA as we continue exploring the potential of seribantumab to improve outcomes for patients whose tumor harbors this unique oncogenic driver," said Shawn M. Leland, Founder, and CEO of ELEV.
ELEV's cash, cash equivalents, and marketable securities were $132.06 million as of March 31, 2022. In addition, its working capital and total assets amounted to $115.86 million and $134.31 million, respectively, as of March 31, 2022.
Analysts expect ELEV's EPS for its fiscal year 2023, ending Dec. 31, 2023, to increase 11% year-over-year. The stock has increased 17.9% in price over the past month and closed Friday's trading session at $3.03.
Each of the four Wall Street analysts that rated ELEV rated it Buy. The 12-month median price target of $11.50 indicates a 279.5% potential upside. The price targets range from a low of $11.00 to a high of $12.00.
Compass Therapeutics, Inc. (CMPX)
CMPX in Boston is a clinical-stage oncology-focused biopharmaceutical company. It develops proprietary antibody-based therapeutics for the treatment of multiple human diseases. The company's product candidates include CTX-009, an investigational bispecific antibody in Phase II clinical trial that treats biliary tract cancers. It is also developing CTX-471, a monoclonal antibody product candidate in Phase I clinical trial for small cell lung cancer and melanoma, and CTX-8371, a bispecific inhibitor.
On May 4, CMPX reported positive interim phase 2 data of CTX-009 combined with paclitaxel in patients with biliary tract cancers. CTX-009 demonstrated a 42% overall response rate (ORR) based on 10 patients with Partial Responses (PRs) and an anti-tumor activity in previously treated patients with a clinical benefit rate (CBR) of 92%, based on 22 patients with a PR or stable disease (SD) out of 24 patients enrolled. These developments are expected to accelerate the company's growth.
In March, CMPX completed enrollment in the CTX-471 Phase 1b monotherapy study and reported three partial responses in patients with advanced solid tumors, and those were dosed with CTX-471 following progression on a prior PD-1/PD-L1 checkpoint blocker.
As of March 31, 2022, CMPX's cash and cash equivalents and total current assets came in at $136.38 million and $130.28 million, respectively. The company's other income amounted to $20,000 for its fiscal 2022 first quarter, ended March 31, 2022.
The Street expects CMPX's EPS for its fiscal year 2022 to rise 72.9% from the last year. The stock has improved 92.4% over the past month and closed Friday's trading session at $3.02.
Each of the four Wall Street analysts that rated CMPX, rated it Buy. The 12-month median price target of $10.00 indicates a 231.1% potential upside. The price targets range from a low of $7.00 to a high of $12.00.
Surface Oncology, Inc. (SURF)
SURF is a clinical-stage immune-oncology company that develops cancer therapies in the U.S. The Cambridge, Mass.-based company develops various antibodies, including NZV930, a monoclonal antibody to produce extracellular adenosine, SRF617, a fully human IgG4 monoclonal antibody to produce adenosine, GSK4381562 targeting CD112R, SRF388 targeting interleukin 27, and SRF114, an antibody targeting the chemokine receptor CCR8.
On May 26, SURF presented its new clinical data on SRF388, a potential IL-27 antibody, at the 2022 American Society of Clinical Oncology (ASCO) Annual Meeting. "In the ongoing SRF388 Phase 1 trial, we observed three confirmed partial responses across three different indications with multiple other patients experiencing durable clinical benefit in the form of disease stabilization. While still early, these findings are compelling and support our view that SRF388 holds exciting potential in the treatment of a variety of tumor types, particularly in combination with other immuno-oncology therapies," stated Alison O'Neill, M.D., Chief Medical Officer at SURF.
In March, SURF announced that the first patient had been dosed by GlaxoSmithKline PLC (GSK) in the Phase 1 study of GSK4381562, a fully human IgG1 antibody targeting PVRIG, an inhibitory protein expressed on natural killer cells (NK cells) and T cells, in patients with solid tumors. As a result, SURF is entitled to a $30 million milestone payment. It is eligible to receive an additional $700 million in potential future milestone payments and tiered royalties on global net sales.
In its fiscal 2022 first quarter, ended March 31, 2022, SURF's license-related revenue grew 1,745% year-over-year to $30 million, and its income from operations increased 147% year-over-year to $6.84 million. The company's net income and net income per share amounted to $6.20 million and $0.13, respectively, registering a rise of 139.8% and 135.1% from the year-ago value.
Analysts expect SURF's revenue for its fiscal 2022 fourth quarter, ending Dec. 31, 2022, to be $3.08 million, representing a 1,887.1% improvement from the same period in 2021. The Street expects the company's EPS for the same quarter to increase 20.4% year-over-year. The company has an impressive earnings history; it has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has declined 10.3% in price over the past month and closed Friday's trading session at $1.91.
However, the 12-month median price target of $11.25 indicates a 489% potential upside. The price targets range from a low of $10.00 to a high of $12.00. Each of the four Wall Street analysts that rated SURF rated it Buy.
Cardiff Oncology, Inc. (CRDF)
CRDF is a clinical-stage oncology company that develops medical treatments for cancer patients in California and serves pharmaceutical manufacturers. The San Diego, Calif., company's lead drug candidate is onvansertib, an oral selective Polo-like Kinase 1 Inhibitor for anti-cancer therapeutics, CY140, an inhibitor of PLK1, PLK2, and PLK3 in phase 1/2 studies for solid tumors and leukemias, and TROV-054 for FOLFIRI and bevacizumab. Its TROV-053 is also in Phase II clinical trials combined with Zytiga for metastatic castration-resistant prostate cancer.
On April 8, CRDF announced updated clinical and new biomarker data from the phase 2 metastatic castration-resistant prostate cancer trial at AACR Annual Meeting. The trial evaluated onvansertib with abiraterone and prednisone in metastatic castration-resistant prostate cancer (mCRPC) patients showing initial abiraterone resistance. With an increased dose density of onvansertib, it observed an increase in disease control rates with both PSA stabilization and stable radiographic disease.
CRDF's royalty revenue increased 2.8% year-over-year to $74,000 in its fiscal year 2022 first quarter, ended March 31, 2022. Its net interest income grew 128.1% year-over-year to $130,000. As of March 31, 2022, the company's cash and cash equivalents were $20.05 million, compared to $11.94 million as of December 31, 2021. Its total current assets amounted to $135.81 million as of March 31, 2022.
The company has an impressive revenue and earnings history; it has topped the consensus revenue and EPS estimates in three of the trailing four quarters. Over the past five days, CRDF has gained 3.2% in price and closed Friday's trading session at $1.30.
Each of the four Wall Street analysts that rated CRDF, rated it Buy. The 12-month median price target of $11.75 indicates an 803.9% potential upside. The price targets range from a low of $7.00 to a high of $22.00.
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GH shares were unchanged in premarket trading Tuesday. Year-to-date, GH has declined -57.01%, versus a -12.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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