What You Must Know Before Investing in Prostate Cancer Stocks
Understanding how urologists think and how the cancer is treated is critical for investors.
MINYANVILLE ORIGINAL I'm currently attending the American Urology Association (AUA) annual meeting in Atlanta. This meeting doesn't get as much attention as the big American Society of Clinical Oncology (ASCO) meeting in a couple of weeks. In the eight straight years I've attended AUA, I almost never see the typical Wall Street crowd here.
That's unfortunate because investors are throwing a ton of money at prostate cancer stocks. Understanding what happens in urology is critical for understanding the space.
The prostate cancer space has been a hot one for investors for most of the last decade. There have been some successes (Dendreon (DNDN) depending on your timing, Cougar (OTCBB:CGRB) bought by Johnson & Johnson (JNJ), and Medivation (MDVN). There have been many failures: Cell Genesys (CEGE), Novacea (NOVC), the companies trying to get satraplatin approved, AstraZeneca's (AZN) double failure, and several more).
I believe you cannot understand the prostate cancer space until you understand how urologists think. Skipping AUA and only going to ASCO and talking to oncologists about prostate cancer will lead you astray. Dendreon is learning this the hard way. Exelixis (EXEL) is having valuation problems because of this. Cell Genesys and Novacea lost their companies because of it (though GVAX wasn't going to work regardless).
To understand why this is true, I have to back up and explain how prostate cancer patients are treated. This treatment paradigm is different from all other cancers, with the possible exception of bladder cancer. Unless you understand what the differences mean for your investments in prostate cancer stocks, you're not making investing decisions with the best information.
In the US, urologists diagnose and perform initial treatment of around 90% of all prostate cancer cases. The disease is usually detected via PSA screening or after investigation of urinary complaints. The urologist does the biopsy. The urologist does the primary treatment.
An oncologist is almost never involved.
The urologist continues to "own" the patient going forward. Seventy to 80% of the patients die with prostate cancer, not of prostate cancer. The remainder start seeing their PSA rise some number of years after their primary therapy. Urologists prescribe hormone therapy to rob prostate cells of the androgen fuel they need to thrive. This therapy suffices for most men and they remain under management of the urologist.
Oncologists are still not involved in the treatment of these patients.
Any of these patients who don't die of something else first eventually see their hormone therapy stop working. At this point, the patients are classified as having Castrate Resistant Prostate Cancer (CRPC). CRPC is the target disease for Dendreon, Johnson & Johnson, Medivation, Exelixis, and several others so this is where all the action is. The urologist continues to monitor the patient as their PSA rises. The increase can be slow, lasting months. Urologists continue to "own" this patient.
Oncologists are still not involved.
A small minority of urologists will perform regular scans on their patient to monitor the spread of the disease. Most do an initial scan after the PSA starts upward and only do additional scans when the patient complains of symptoms. Urologists engage in "watchful waiting" to see how the disease develops.
Oncologists are still typically not involved.
Prostate cancer usually spreads first to bone. At some point, the patient's condition deteriorates enough that the urologist knows additional therapy is necessary. This is usually due to pain. If the pain is isolated, the urologist will refer the patient out for radiation treatment to "quiet" spot pain caused by tumor growth. The radiologists return those patients to the urologist's control after that procedure.
Only when the patient is broadly metastatic and symptomatic will the urologist refer the patient to an oncologist. Once that happens, the urologist "loses" the patient and the oncologist takes over.
Who "owns" the patient is important. From the patient perspective, they have a multi-year relationship with the urologists so there is a comfort level there. From the urologist perspective, the patient is a revenue source.
I acknowledge some of this is changing. There are integrated urology/oncology practices, but they are smaller in number. Younger and/or more forward-thinking urologists will consult oncologists when the patient first enters the CRPC stage. One of the biggest change agents is the availability of new drugs to be used instead of "watchful waiting." But for perhaps 70-80% of all prostate cancer patients, they never see an oncologist until they have widespread, symptomatic disease.
I also should say I don't necessarily fault urologists for their reticence in releasing patients to oncologists. Setting Provenge aside for a moment, most guys aren't going to take chemotherapy anyway, and then only when they are symptomatic. At this moment in time, and again setting aside Provenge, the behavior of the urologist generally matches with the treatments available.
The ownership of prostate patients by the urologist has significant implications for companies and investors.
In Part 2 tomorrow, I'll work through what this pathway means for Dendreon's Provenge, Medivation's MDV3100, Johnson & Johnson's Zytiga, and Exelixis' cabozantinib.
(See also the follow up to this article: Prostate Cancer Companies Suffer When They Ignore Urologists.)
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