Deerfield Beach, FL / September 18, 2014 / A report from BCC Research titled "Prevention and Treatment of Prostate Cancer: Technologies and Global Markets" notes that the worldwide market for the prevention and treatment of cancer was valued at $26.1 billion in 2011 and is expected to cross $50 billion in 2017. The research report noted that the prostate cancer treatment market is expected to register a five-year compound annual growth rate (CAGR) of 11.4%.
In the U.S., prostate cancer is the second most common cancer in men. According to estimates from the American Cancer Society, in 2014, about 233,000 new cases of prostate cancer will be diagnosed and around 29,480 men will die from the disease. Prostate cancer generally occurs in older men, with around 60% of the cases diagnosed in men aged over 65. Prostate cancer is the second leading cause of cancer death in American men after lung cancer.
While prostate cancer is one of the most dreaded forms of cancer, there is a variety of treatment options available now. One of the treatment options for prostate cancer is radiotherapy. In this therapy, high energy rays are used to treat the cancer. Radiotherapy can be given externally or internally. Internal radiotherapy is more commonly known as brachytherapy.
External radiotherapy is a very effective way to control cancer; however, it also poses a great deal of risk as the powerful radiation beam can also affect healthy tissues surrounding the targeted area. Internal radiotherapy or brachytherapy cuts this risk and is a very effective treatment. In brachytherapy, radioactive seeds are placed in or near the tumor, allowing for a high dosage to be delivered while at the same time not exposing healthy tissues to radiation.
Initially, Iodine-125 was used as an isotope for brachytherapy. Later on, Palladium-103 was developed and is still widely used in brachytherapy. However, over the last few years Cesium-131 has emerged as a better alternative for brachytherapy seeds. The sole producer of Cesium-131 is IsoRay, Inc. (NYSEMKT: ISR), a Richland, Washington-based medical technology company.
The U.S. Food and Drug Administration (FDA) gave a clearance to IsoRay to market Cesium-131 back in 2003. While Cesium-131 has been mainly used in prostate cancer treatment, however, as IsoRay's CEO, Dwight Babcock told us an interview, it is the best for fasting advancing cancers. As Babcock explained in the interview, Cesium-131 has the shortest half-life-9.7 days-compared to Iodine-125 (half-life of 60 days) and Palladium-103 (half-life of 17 days). In addition, Cesium-131 also has superior energy compared to other brachytherapy products. This has meant that Cesium-131 is starting to gain wider acceptance among the medical community.
IsoRay's Cesium-131 will gain further acceptance as several institutions continue to report impressive results from the study using the product for treatment of cancer. Recently, reports include the publication of the first major peer reviewed study showing improved results using its Cesium-131 seeds in the treatment of gynecologic cancer and this month a published peer review showing superior results in the treatment of metastatic brain cancer. Radiation Oncologist Dr. A. Gabriella Wenicke and Neurosurgeon Dr. Theodore H. Schwartz of Weill Cornell were the two co-authors of the publication. They noted that in the publication that the use of post resection permanent Cesium-131 brachytherapy resulted in no local recurrences and no radiation necrosis.
The study included 24 patients, who were enrolled between 2010 and 2012. The median follow-up period was 19.3 months. According to a statement from IsoRay, "During the follow-up period, study participants had 100% local (resection cavity) freedom from progression (FFP) and 93.8% one-year regional FFP."
"The study results are important and highlight the effectiveness of Cesium-131. These studies are part of IsoRay's strategy as Babcock told us. The company's goal is to get as many peer reviews done from different institutions in order to create awareness about Cesium-131," he added.
When asked whether more study results can be expected before the end of this year, Babcock said that he hoped so, however, it depends upon the institutions that are conducting the study. But one thing is clear, Cesium-131 does appear to be an effective treatment option not just for prostate cancer but for other aggressive cancers throughout the body, and as the latest study results have shown even for metastatic brain cancer.
While medical community is certainly becoming more aware about the potential of Cesium-131, the developments have also been noticed by Wall Street. Year-to-date, IsoRay shares have gained almost 400%, making them one of the top performers in the healthcare sector this year. With more published peer reviews anticipated, this seems to be the beginning of good things to come.
When it comes to emerging companies like IsoRay one major obstacle though is funding. But here again, IsoRay is in a solid position. Babcock told us that the company has around $20 million in cash on its balance sheet, which at the current burn rate is sufficient to last for eight years. When asked whether the company will look to capitalize on the surge in share price this year by coming out with a secondary offering, Babcock said that there is no immediate need for such an offering. However, he added that the company would always like to be in a strong cash position, especially if it considers a synergistic acquisition in the future.
One concern for IsoRay has been the continued market weakness for all prostate treatment modalities. While Cesium-131 has shown positive results in all forms of cancer, IsoRay still generates more than 80% of its revenue from prostate treatment. While the ongoing weakness is a concern, Babcock told us that the market is starting to show signs of turnaround.
The rally in IsoRay shares this year has caught the attention of investors in the healthcare sector. The big question for them is whether such a rally is justified and if there is any further upside in the stock. Based on Cesium-131's potential in cancer treatment, the rally is justified. More importantly, as Cesium-131 continues to gain acceptance among medical community, there is further upside in IsoRay shares. The company is on the right track with its strategy of getting as many peer reviews as it can. It has a strong cash position and with no immediate need for cash, there is not likely to be any dilution. Even if the company goes for a secondary offering to take advantage of the surge in stock price, it will be for a synergistic acquisition. This means that move will be eventually accretive.
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SOURCE: Emerging Equities