Novocure: A New Way to Target Tumors?

12/02/2019 5:00 am EST

Focus: HEALTHCARE

Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Medical stocks look like the early leaders of this market advance, and Novocure (NVCR) is one that had a nice run earlier this year and is now shaping up a great-looking launching pad, explains growth stock expert Mike Cintolo, editor of Cabot Top Ten Trader.

The main attraction here is the firm’s Optune system, which looks like a potentially revolutionary way to treat certain cancers — the system uses electrical fields (dubbed tumor treating fields) to non-invasively disrupt cancer cell division and growth. (The fields are low intensity and the generator is less than three pounds so can be carried around.)

This tactic has shown positive clinical results in some cancers (greater survival rates, etc.); right now, it’s used in concert with chemo for glioblastoma (a type of brain tumor) and mesothelioma (first approved treatment in 15 years), but studies are ongoing in many other cancers (brain, lung, pancreatic, ovarian and liver) with key readouts likely in 2021 and 2022.

If all goes well, the firm’s target market could quadruple in three years and grow more beyond that. As for the here and now, the Q3 report did contain a couple of sub-par figures (patient totals actually slipped a touch quarter-over-quarter), but sales and earnings topped expectations and analysts still see solid growth going forward (sales up 30% in 2020, earnings in the black).

Overall, Novocure has a great combination of solid growth today and the potential for massive expansion in the years ahead if it gets approval for new indications.

NVCR broke out of a nine-month base back in June and rallied nine weeks in a row, nearly tagging the century mark. Then came a steep 30% correction as growth stocks struggled, but the stock found support near its 30-week line and has rebounded strongly to within a few percent of its old highs. We’re OK nibbling on dips — ideally the stock tightens up for a bit and then breaks out.

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