Few words strike fear into the heart more than cancer.

The disease kills with such proficiency that it is not particularly shocking when someone develops cancer, instead being more significant when cancer is actually defeated. Which, unfortunately, does not happen as often as patients, doctors and biotechnology companies would like.

In the United States, HIV and AIDS in the late 1980s and early 1990s equaled cancer's level of fear inducement, perhaps achieving its apex when noted celebrity Magic Johnson announced to the world that he had contracted HIV. Like cancer, having AIDS meant looking death in the face.

But here it is, more than 10 years after Johnson made that announcement sending fans, colleagues and adoring, basketball-holding kids into tears and he looks as good as ever. Healthy, robust, same big smile. Although AIDS is still an international epidemic, the man is a walking testament to what biotechnology drugs can do. He is, quite simply, living with the disease, as are many others who have access to treatment.

That has yet to happen with cancer. In the United States, cancer is the second leading cause of death, behind cardiovascular disease. For all the progress, most cancers remain mostly a death sentence.

But there is hope. Jason Zhang, analyst for Stephens Inc. in Little Rock, Ark., and colleagues authored a detailed look at the cancer biopharmaceutical industry. In it, they point to the 402 anticancer drugs in clinical trials and the more than 100 companies that have developed them as reasons not only for optimism in the fight against the disease but also as a reason for investing.

Medicinally, the cancer standout in 2001 was Gleevec, developed by Novartis AG, of Basel, Switzerland. Gleevec targets platelet-derived growth factor receptor (PDGFR) and inhibits the Bcr-Abl kinase, which is present in chronic myeloid leukemia. The drug was first approved in that indication but now also is approved for gastric cancer, in which PDGFR is highly expressed. The drug has garnered mainstream coverage and notoriety, was approved in record time by the FDA and represents what could be a shift in cancer drug development because it is a molecular-targeted drug, Zhang said. But Gleevec, for all the fanfare and high hopes, he said, is "likely just the tip of the iceberg, as many new cancer drugs entering [the clinic] are molecular based."

In his report, Zhang names the cancer drugs he feels are the ones to watch for the year. The list includes Avastin, developed by Genentech Inc., of South San Francisco, in Phase III for kidney and colorectal cancer; Bexxar, developed by Corixa Corp., of Seattle, for which a biologics license application is on file for Rituxan-refractory non-Hodgkin's lymphoma; ISIS 3521, developed by Isis Pharmaceuticals Inc., of Carlsbad, Calif., in Phase III for non-small-cell lung cancer; Theratope, developed by Biomira Inc., of Edmonton, Alberta, in Phase III for advanced breast cancer; Erbitux, developed by ImClone Systems Inc., of New York, with a BLA filed for refractory colorectal cancer; and Zevalin, developed by IDEC Pharmaceuticals Corp., of San Diego, approved for Rituxan-refractory non-Hodgkin's lymphoma.

"This year, we are paying very close attention to what is going to happen to Zevalin first," Zhang told BioWorld Financial Watch. "Basically, because it is approved and the first radiolabeled drug [on the market]. We will see how it is accepted and adopted by doctors. Oftentimes, drugs can do very well in an academic setting but when they go to doctors and they become used in a community setting, they have toxicity problems."

Zhang also has his eye on London-based AstraZeneca plc's Iressa, for which the new drug application has been filed for non-small-cell lung cancer. If approved, Iressa would become the first epidermal growth factor receptor inhibitor on the market and "could be a landmark paradigm shift in how cancer drugs are used," Zhang said.

ImClone's Erbitux, battle-scarred but alive at this point, is "worth watching," Zhang said. Although the company hit snags with the filing (the refusal-to-file letter), its business conduct (allegations of insider trading), and Erbitux's development process (accusations of falsified data), the "general consensus is that the company will use the European data [and Phase II data] and file a BLA by the end of the year."

The FDA's decision on Erbitux "is going to tell a lot about how the FDA works," Zhang said. "It will tell whether the FDA is going to take into consideration that a lot of doctors and patients are pushing for this drug. We know, as a fact, that when Gleevec was approved, patient activists played a very important role."

Considering biotechnology portfolios, Zhang said in the report, "We believe that investors in the anticancer and biotech spaces should enjoy above-average investment returns," adding the caveat, "if big pharma continues to send its votes of confidence by licensing more cancer products from small biotech companies."

Zhang and Stephens break the biotechnology industry into four tiers, with tier 1 being companies with more than $1 billion in market capitalization, and tier 4 being companies with less than $100 million. Within that system, Zhang finds the best performers in 2001 a down year, granted were tier 3 and tier 4 companies, saying there's "an indirect relationship between market capitalization and stock performance: the smaller the market capitalization, the better the stock performance."

When selecting individual firms, Zhang said in his report, "A balanced and well-diversified product pipeline [is] the most valuable asset of an anticancer biotech company," and stressed that while good science doesn't guarantee results, a "lack of it should be alarming." Like with most businesses, good management is important, as is sufficient money. Of course, money. Developing drugs is not cheap.

That's where the pharmaceutical companies come in.

"In 2000 and 2001, many biotech companies had a lot of cash and they could do a lot on their own," Zhang said. "We saw that running a clinical trial is so different from discovery and preclinical work, even Phase I or II. But when it comes to Phase III [trials], a lot of companies really lack experience in this area. The quickest and cheapest way [to get experience] is to get a pharmaceutical company's help. And, I think in general, pharma has a better relationship with the FDA and probably more credibility with the FDA, so I think [pharmaceutical companies] are extremely important for biotech."

And although biotechnology companies need pharmaceutical help, that street is beginning to run both ways.

"There are many late-stage [cancer] drugs to be licensed and most pharmaceutical companies really want to have a cancer drug," Zhang said. A prime example would be Bristol-Myers Squibb Co., of New York, partnering with ImClone for Erbitux in a $2 billion deal. That agreement brought Bristol-Myers a series of headaches, but pharmaceutical companies are still hungry for cancer drugs, leaving Zhang with the impression that "the competition [for the drugs] is going to be very high."

"In a few cases, I think the biotech companies can demand a pretty good term not outrageous but a good term," he said. "Two billion dollars was a good deal for ImClone and they did a good job in their negotiation, but I don't see another deal like that on the horizon."

Back to the patients. Of the 402 drugs in the clinic, Zhang suggested "20 to 30" might eventually be approved. With that many potential approvals, the deck might seem stacked against cancer. But what research is teaching us, among other things, is that while cancer kills, it is hard to kill.

"We may never get a cure," Zhang said. "What a lot of oncologists are preaching today is the control of cancer, keeping it at a localized level so it doesn't spread. If it can't spread, then it really doesn't do any harm to our body. Prostate cancer is a good example. It is estimated that [of men who live] to be 90 or 95, 100 percent will have prostate cancer. And they won't die from it, because the course is slow."

Living with the disease. Discovering it and then keeping it at bay.

"That would be an achievable goal, I think, to identify cancer earlier and treat it as a chronic disease so it doesn't cost people their lives," Zhang said.