What Is It Going to Take to Get to the End of Cancer, and Who Is Investing in It?
How investors can participate in the fight against cancer.
Art by Simone Virgini
There are people who believe that once cancer is defeated, there will be a health dividend for society and investors, much like the peace dividend after the end of the Cold War. Hundreds of billions of dollars have been invested in cancer research over the past few decades, and billions are invested every year in the field.
Worldwide, 22 million cases of cancer were identified in 2022, with 9 million deaths, according to the World Health Organization. The National Cancer Institute estimates that two million Americans will be diagnosed with cancer this year, they estimate that 611,000 will die from the disease, which is second only to heart disease among the things killing Americans most.
With billions of dollars going into cancer research and treatment, investors could pose to benefit from a number of discoveries.
Cost of Cancer
Cancer is expensive, treatments, medical costs related to cancer, medicine and research all cost in the hundreds of billions a year. According to data from Statista, global spending on oncology was $61 billion in 2013, which is forecasted to reach $253 billion in 2024.
In 2015, cancer-related health care costs reached $183 billion, according to the National Cancer Institute, which projects that these costs could inflate to $246 billion by 2030, a result of both an aging population and population growth, as well as an increase in the projected medical costs of cancer treatment.
According to research from the IQVIA Institute for Human Data Science, global spending on cancer drugs totaled $223 billion in 2023. The group, a global provider of analytics, technology and clinical research services to the life sciences industry, forecasts this amount will rise as high as $409 billion by 2028. A major driver of the increase comes from the volume of new cancer drugs available on the market.
“The outlook for oncology medicine spending includes an incremental 83% increase in spending over five years driven by innovation as more patients around the world get access to better medicines,” the report states.
Investments Themes in Cancer
Oncology has become a favorite of biotech private equity investors. According to research from the Journal of the American Medical Association, between 2000 and 2020, 724 oncology clinics, roughly 10% of all the oncology clinics in the U.S. were bought by a private equity firm.
In 2021 alone, oncology companies received $44 billion in private equity financing, more than any other field in biotech or health care according to Biotechgate, a biotech information provider. The field attracted more than triple the investment by private equity investors of the second- and third-most popular biotech and pharma fields, infectiology and parasitology; and neurology, which each attracted $13.4 billion.
Venture investment in oncology peaked in 2021, at $10 billion, with just over $5 billion in venture funding going into the field in , according to data from Statista.
Morgan Stanley points to smart chemotherapy as an emerging investment theme in cancer treatment. The bank predicts that smart chemo, which is a super-targeted approach to destroying cancer cells, can grow into a $140 billion market over the next 15 years, from around $2 billion in 2022.
“Add to that the potential for AI to speed the biotech and pharma innovation cycle, which could lead to an additional 50 novel therapies over a 10-year period, translating to a more than $50 billion opportunity” wrote Morgan Stanley’s Michael Zezas, global head of fixed income research, in a report earlier this year.
The bank refers to the treatment as a “heat seeking missile” against cancer cells; targeting harmful cells while leaving healthy ones untouched.
“The ultimate goal would be to replace traditional chemotherapy, which would culminate in a considerable drop in cancer mortality,” said Mark Purcell, head of Morgan Stanley’s European Pharmaceutical team in a report. “We believe the future of [antibody–drug conjugates] is now and that smart chemotherapy could become one of the biggest growth areas in biopharmaceuticals, with revenue reaching $55 billion in the U.S. over the next 15 years.”
One of the biggest barriers for startups in the field of oncology is getting the most innovative and promising ideas in front of investors early enough, says Dr. Allison Betof Warner, director of the Melanoma program at the Stanford Cancer Institute.
“Investors are looking to work with groups and investigators who have a long track record of success. While that’s understandable, that often neglects new and novel ideas from talented young investigators or projects that are higher risk but potentially higher reward,” Warner says. “Those same projects face similar challenges to get federal funding for research, so too often, these ideas don’t translate into progress for our patients because they don’t get the funding they need.”
AI Driving Cancer Treatment Innovation
Recent innovations in generative artificial intelligence have made their way into cancer research. Many innovations have been made in the field.
According to IQVIA, large language models are reshaping some aspects of the drug discovery and research and development processes. As AI tools become more advanced and as adoption spreads, IQVIA expects that the speed and efficiency of the R&D process will increase, and costs associated with drug discovery will decrease.
“R&D activity in oncology represents one of the most complex, longest duration, and risky areas of biopharma research, and yet remains a key area driving innovation in trial designs, locations, interactions with regulators, and the use of AI and machine learning,” the IQVIA report states.
“AI is advancing cancer research by analyzing vast amounts of data to identify patterns and uncover new insights that were previously beyond reach. In detection, AI algorithms are improving the accuracy of early cancer screenings by identifying subtle signs in medical imaging that might be missed by the human eye,” says Thomas Fuchs, dean for artificial intelligence and human health at the Icahn School of Medicine at Mount Sinai.
Cancer treatment is a very personalized process, something that artificial intelligence could assist in in cancer treatment is providing personalized treatments for individuals.
“In treatment, AI is enabling personalized approaches by predicting how different patients will respond to various therapies, optimizing treatment plans to maximize efficacy and minimize side effects. Overall, AI is driving significant progress in understanding and combating cancer, ultimately improving patient outcomes,” Fuchs continues.
At Mount Sinai, Fuchs and his team are using artificial intelligence to develop multi-modal predictors of cancer outcomes, based on data from 100,00 cancer patients, including pathology images, radiology images and clinical notes.
The use of artificial intelligence in cancer research and treatments is just one of many tools that will aid clinicians. “AI is an adjunct tool, not the primary diagnostic tool,” remarked Stanford Cancer Institute’s Dr. Ruijiang Li. “A main advantage is that it can reduce diagnostic errors and improve cancer detection rate.”
Indeed, many startups working on artificial intelligence tools for cancer treatment have raised tens, if not hundreds of millions in recent months. In May, Zephyr AI, a healthcare startup which aims to develop precision treatments with the use of AI raised $111 million from investors including Eli Lilly & Co.
Another startup, Valar Labs, raised $22 million in a funding round co-led by VC investors DCVC and Andreessen Horowitz to develop AI-powered precision oncology tools that aim to predict treatment outcomes for patients. Other startups, such as Pi Health, Triomics and Manifold, have raised rounds in the tens of millions of dollars this year to develop AI tools for cancer care.
“Recent innovations in generative AI have absolutely driven novel and exciting breakthroughs in cancer research,” says Warner, who points to a number of AI-driven innovations being made at the Stanford Cancer Institute, such as the Translational AI in Dermatology program, which utilizes AI to improve diagnostic capability for skin cancer, particularly in darker skinned people, which is an area of large unmet need.
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