In this article, we will look at the 10 Most Promising Cancer Stocks According to Hedge Funds.
According to the World Health Organization (WHO), cancer remains one of the leading causes of death globally, responsible for nearly 10 million deaths in 2020, or about one in six deaths worldwide. Moreover, the World Cancer Research Fund reports that approximately 18.1 million cancer cases were diagnosed that year, with the age-standardized rate, when considering all cancers except non-melanoma skin cancer and combining data for both men and women, came in at 190 cases per 100,000 individuals. This rate was notably higher in men, with 206.9 cases per 100,000, compared to 178.1 per 100,000 in women.
Cancer drugs are usually aimed at slowing cell replication or selectively killing cancer cells at a faster rate than healthy cells. While this approach has been effective for certain cancers, innovative strategies are now emerging. These include modifying immune cells, harnessing mRNA, and improving early detection through simple blood tests. Advancing our understanding, prevention, screening, and treatment of cancer is essential for reducing its global impact, yet it comes with escalating costs—global oncology spending is expected to exceed $250 billion this year.
In response, biotech and pharmaceutical companies are in a competitive race to develop cutting-edge technologies and therapies for major cancers like lung, breast, and prostate. In that vein, targeting tumors directly with radiation is poised to be a significant breakthrough in cancer treatment. Leading pharmaceutical companies have invested around $10 billion in acquisitions and partnerships with radiopharmaceutical developers, often acquiring smaller, innovative companies to access this promising technology. Though still in its early stages, radiopharmaceuticals hold the potential to treat a wide range of cancers. The first such drugs were approved in the early 2000s, but only recently have major pharmaceutical companies shown substantial interest.
Reflecting on this trend, Guggenheim Securities analyst Michael Schmidt remarked, “Any large company that has a business presence in oncology or for whom oncology is an important therapeutic category will probably need exposure in this area one way or another.” Schmidt projects that if radiopharmaceuticals remain focused on treating specific cancers, like prostate and neuroendocrine tumors, the sector could generate at least $5 billion in revenue. However, if proven effective in treating a broader range of cancers, this figure could rise to tens of billions.
Since there is no universal cure for cancer, developing a drug capable of treating multiple cancer types is incredibly lucrative. This dynamic fuels continuous breakthroughs in the oncology market, significantly boosting its growth potential. On that front, the oncology pipeline is expanding rapidly, with over 2,000 products currently in development. Notably, 71% of these are being developed by mid-sized, high-growth biopharmaceutical firms, which have significantly increased their investment in cancer treatment innovations from 51% in 2017.
Over the past two decades, 237 new active substances for cancer have been introduced globally, with approximately 115 launched in the last five years alone. Moreover, the global oncology market was valued at approximately $201.75 billion in 2023 and is projected to exceed $518.25 billion by 2032, growing at a compound annual rate (CAGR) of 11.3% from 2024 to 2032, according to Fortune Business Insights. This expansion is fueled by rising prevalence of the disease, the introduction of new therapies, regulatory approvals, and advancing research in the field.
Photo by National Cancer Institute on Unsplash
Our Methodology
To compile our list of the 10 most promising cancer stocks to buy according to hedge funds, we started by evaluating companies in the cancer therapy sector using ETF holdings and media analysis. We then narrowed down the list to notable stocks with an average analyst upside of at least 30% and favorable analyst ratings. From this selection, we identified the top cancer companies with the most hedge fund investors, based on Insider Monkey’s database of 900 hedge funds, as of Q3 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Immunitybio Inc. (NASDAQ:IBRX)
Average Analyst Upside: 162.92%
Number of Hedge Fund Holders: 8
ImmunityBio, Inc. (NASDAQ:IBRX) is a biotechnology firm dedicated to pioneering new cancer therapies through cellular immunotherapy, an approach that harnesses the body’s immune system to target cancer cells.
In October, EF Hutton initiated coverage of ImmunityBio, Inc. (NASDAQ:IBRX) with a Buy rating and a $30 price target, an upside of over 600%, reflecting confidence in the company’s potential. ImmunityBio’s lead product, Anktiva, is central to its innovative cancer treatment strategy. Anktiva is an interleukin-15 (IL-15) superagonist designed to activate natural killer (NK) cells and generate CD8+ memory T cells, which are essential for identifying and eradicating tumor cells, particularly those that evade immune detection by suppressing MHC molecules. This mechanism enables Anktiva to convert “cold” tumors, which are typically resistant to immune attacks, into “hot” tumors, making them more vulnerable to the immune system.
Additionally, ImmunityBio, Inc. (NASDAQ:IBRX) recently secured an exclusive global partnership with the Serum Institute of India to produce Bacillus Calmette-Guerin (BCG) for use with Anktiva. This combination therapy, targeting non-muscle invasive bladder cancer, recently gained U.S. FDA approval.
9. Tango Therapeutics Inc. (NASDAQ:TNGX)
Average Analyst Upside: 372.54%
Number of Hedge Fund Holders: 17
Tango Therapeutics Inc. (NASDAQ:TNGX) is a clinical-stage biotech company focused on developing precision cancer therapies using synthetic lethality to discover new drug targets.
In its Q3 report, Tango Therapeutics Inc. (NASDAQ:TNGX) announced a solid cash position of $293 million, $11.6 million in collaboration revenue, and a net loss of $29.2 million. With this strong cash reserve, the company plans to fund operations through Q3 2026, prioritizing clinical trial programs aimed at transforming cancer treatment.
The company has made significant progress in its pipeline, advancing its candidate TNG462 into full development after promising early trial results, particularly for non-small cell lung cancer (NSCLC) and pancreatic cancer. Meanwhile, it decided to halt enrollment for TNG908 to reallocate resources to TNG462 and TNG456, which targets glioblastoma, NSCLC, and other solid tumors.
In late October, Leerink Partners reaffirmed its Outperform rating on Tango Therapeutics Inc. (NASDAQ:TNGX) with a price target of $19, ahead of the company’s year-end clinical update for its PRMT5 inhibitor programs, TNG462 and TNG908. The data release was anticipated to be a key catalyst for the stock, with Tango Therapeutics Inc. (NASDAQ:TNGX) expected to present data on approximately 30-35 patients treated with TNG462, including about 20 at the expansion doses, and data on 60-65 patients for TNG908, featuring at least 10 at the 600mg BID dose and 15-20 glioblastoma patients.
8. Guardant Health, Inc. (NASDAQ:GH)
Average Analyst Upside: 44.9%
Number of Hedge Fund Holders: 28
Guardant Health, Inc. (NASDAQ:GH) is a prominent company in precision oncology, providing advanced cancer-related services like blood tests, data analysis, and global insights.
In the third quarter, Guardant Health, Inc. (NASDAQ:GH) reported $191.5 million in revenue, a 34% year-over-year increase that surpassed expectations of $170.4 million. Precision oncology revenue surged by over 35%, while development services grew by 34%. The company also raised its full-year revenue forecast to a range of $720 million to $725 million, reflecting a nearly 4% increase at the midpoint from its previous guidance. Looking ahead to next year, Guardant Health, Inc. (NASDAQ:GH) anticipates a 20% growth in clinical test volume, driven by Shield and a pivotal growth phase for Guardant Reveal.
On November 7, Leerink Partners raised its price target for Guardant Health, Inc. (NASDAQ:GH) to $60 from $50, maintaining its Outperform rating. This update followed Guardant’s strong quarterly performance mentioned above, which addressed investor concerns around potential slowing in the core G360 business and the outlook for the Shield LBx CRC screening assay. The G360 segment showed modest sequential growth, with expectations for further acceleration into 2025. Additionally, the Shield LBx CRC screening assay garnered attention after receiving a $920 Medicare reimbursement rate this quarter, with an Advanced Diagnostic Laboratory Test (ADLT) rate of $1,495 anticipated in 2025.
7. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA)
Average Analyst Upside: 103.78%
Number of Hedge Fund Holders: 30
Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), headquartered in San Carlos, California, specializes in cell therapies using autologous tumor-infiltrating lymphocytes to treat metastatic melanoma and other solid tumors.
On October 24, UBS began coverage of Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) with a Buy rating and a $17 price target, highlighting confidence in the company’s commercial product, Amtagvi, and its market potential, particularly in second-line and later (2L+) melanoma treatment. UBS projects Amtagvi revenue to exceed expectations in 2024, estimating $121 million versus the consensus of $114 million.
In Q3 2024, Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) generated $42.1 million from Amtagvi sales and $16.5 million from Proleukin, bringing year-to-date revenue to $90.4 million. The company forecasts total product revenue of $160-$165 million for FY24 and $450-$475 million for FY25. Iovance is also expanding manufacturing capacity and advancing regulatory submissions in Europe and Canada to grow its global market presence.
Artisan Small Cap Fund stated the following regarding Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) in its Q2 2024 investor letter:
“Among our top detractors for the quarter were Lattice Semiconductor and Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). Iovance Biotherapeutics is a biotechnology company focused on innovating, developing and delivering novel polyclonal tumor-infiltrating lymphocyte (TIL) cell therapies for cancer patients. The stock rallied significantly in Q1 after announcing that the FDA approved AMTAGVI™ (lifileucel) for advanced melanoma. Now that the scientific risk is behind the company, investor focus has shifted to the company’s commercial execution, and shares experienced weakness after the company reported earnings results. It announced the enrollment of more than 100 patients for therapy; however, this was not enough to alleviate investor concerns about patient attrition. In our view, there is no issue with the efficacy of its life-saving treatment. Headwinds have been caused by challenges in ramping production, which is understandable in the early days. We view these concerns as overblown and remain invested.”
6. Moderna Inc. (NASDAQ:MRNA)
Average Analyst Upside: 95.47%
Number of Hedge Fund Holders: 34
Moderna, Inc. (NASDAQ:MRNA) is a leading biotech company focused on developing messenger RNA (mRNA) therapeutics and vaccines. Its diverse portfolio includes treatments for systemic conditions, cancer vaccines, immuno-oncology therapies, and other specialized therapeutics.
In September, Moderna, Inc. (NASDAQ:MRNA) announced encouraging phase-one trial results for its new cancer vaccine, mRNA-4359. Built on the same mRNA technology as its COVID-19 vaccine, the cancer vaccine is designed to help the immune system distinguish healthy cells from cancerous ones. Among 19 patients with advanced solid tumors in the trial, eight saw no tumor progression, and no new tumors appeared. According to the biotech company, the vaccine was well tolerated, with no serious side effects reported.
Moderna, Inc. (NASDAQ:MRNA) also reported strong financial results for Q3 2024, largely driven by its COVID-19 vaccine, Spikevax, which exceeded revenue expectations by 50%. Overall, the company reported $1.9 billion in revenue and a net income of $13 million. Moderna projects its annual product sales to remain between $3 billion and $3.5 billion.
Baron Health Care Fund made the following comment about Moderna, Inc. (NASDAQ:MRNA) in its Q1 2023 investor letter:
“Moderna, Inc. (NASDAQ:MRNA) is a leader in the emerging field of mRNA-based vaccines and therapeutics and was one of the three main producers of the COVID vaccine. Shares fell during the quarter. We believe as COVID shifts away from pandemic status and becomes an increasingly commercial market (rather than government funded), there is increasing investor uncertainty around what a booster market could look like, which is pressuring shares. Looking beyond COVID, we think Moderna has the potential to disrupt the biopharmaceutical industry, from infectious disease vaccines to oncology, and we remain shareholders.”
5. Kura Oncology, Inc. (NASDAQ:KURA)
Average Analyst Upside: 63.27%
Number of Hedge Fund Holders: 36
Kura Oncology, Inc. (NASDAQ:KURA) is a clinical-stage biopharmaceutical company dedicated to developing precision medicines for cancer treatment, with a particular emphasis on small-molecule inhibitors that target specific genetic and epigenetic abnormalities in cancer cells.
H.C. Wainwright recently reaffirmed its Buy rating for Kura Oncology shares, setting a price target of $32. The firm’s analyst highlighted the potential of Kura’s menin inhibitor, ziftomenib, in treating advanced gastrointestinal stromal tumors (GIST). At the 2024 EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics, preclinical data demonstrated promising results for ziftomenib in this application. Kura Oncology, Inc. (NASDAQ:KURA) plans to initiate a Phase 1 clinical trial in the first half of 2025 to evaluate ziftomenib in combination with imatinib, a KIT inhibitor, for patients with advanced GIST. The company has already received IND clearance, allowing it to proceed with human trials.
Looking forward, Kura Oncology, Inc. (NASDAQ:KURA) anticipates significant milestones, including the presentation of updated data at the American Society of Hematology Annual Meeting in December 2024 and the launch of new studies in early 2025. Management remains optimistic about the potential of its menin inhibitor programs and broader pipeline, advancing its mission in precision oncology.
4. AstraZeneca PLC (NASDAQ:AZN)
Average Analyst Upside: 45.76%
Number of Hedge Fund Holders: 42
AstraZeneca PLC (NASDAQ:AZN), a global biopharmaceutical company known for its prescription medicines, became widely recognized during the COVID-19 pandemic for its vaccine efforts. The company is also a leader in oncology, with key products like Tagrisso for lung cancer, Farxiga for diabetes and heart failure, and Imfinzi for various cancers.
Following stronger-than-expected Q3 results, AstraZeneca PLC (NASDAQ:AZN) raised its 2024 sales and profit forecasts, driven by robust demand across its product portfolio and expected sales milestones for its cancer treatments. Q3 product sales exceeded forecasts by 4%, with EPS rising 2% above expectations, despite anticipated R&D cost increases. Key contributors included Symbicort, which surpassed sales expectations by 20%, and Tagrisso, which outperformed by 3%. These gains were offset by slight shortfalls in Imfinzi, Imjudo, and Enhertu, which collectively underperformed by 2%.
On November 6, TD Cowen reaffirmed its Buy rating on AstraZeneca PLC (NASDAQ:AZN) with a price target of $95.00. The firm noted AstraZeneca’s ongoing investigation involving some employees in China, comparing it to a past investigation of market competitor GSK. AstraZeneca’s larger operational scale in China could imply different stakes, but the firm suggests that AstraZeneca may manage the situation with limited long-term impact on its Chinese business.
3. Merus NV (NASDAQ:MRUS)
Average Analyst Upside: 61.05%
Number of Hedge Fund Holders: 48
Merus NV (NASDAQ:MRUS) is a biotechnology firm focused on developing antibody-based therapies to treat cancer, with multiple programs in its pipeline, including Zenocutuzumab and Petosemtamab (MCLA-158).
On October 24, UBS initiated coverage on Merus NV (NASDAQ:MRUS) with a Buy rating, spotlighting the potential of its lead candidate, petosemtamab. UBS projects petosemtamab’s risk-adjusted peak sales at $880 million and anticipates favorable Phase 2 results in 2024.
In its Q3 earnings report, Merus NV (NASDAQ:MRUS) reported a net loss of $99.9 million, a significant increase from the $23 million net loss in the same quarter last year, driven by higher research and administrative expenses. Despite these losses, Merus NV (NASDAQ:MRUS) strengthened its financial position, reporting $433 million in cash and cash equivalents, up from $204 million at the end of 2023, fueled by successful public offerings and strategic partnerships.
TimesSquare Capital Management U.S. Small Cap Growth Strategy stated the following regarding Merus N.V. (NASDAQ:MRUS) in its Q2 2024 investor letter:
“Our preferences among Health Care stocks are those companies providing novel therapies for unmet needs that deserve premium pricing, or specialized service providers. A new addition this quarter is Merus N.V. (NASDAQ:MRUS), a clinical-stage immune-oncology biotechnology company. Their pipeline consists of several programs targeting solid tumors with various bispecific antibodies.”
2. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Average Analyst Upside: 33.32%
Number of Hedge Fund Holders: 62
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is a leading biopharmaceutical company focused on discovering, developing, and commercializing therapies for a range of diseases, including cancer, eye disorders, and allergic conditions. Currently, the company is advancing around 40 clinical programs, with interim results from a Phase II lung cancer study and pivotal data for itepekimab in COPD expected by 2025.
In its third-quarter 2024 results, Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) surpassed analyst expectations, with notable revenue growth across its product lines. The company reported adjusted earnings per share of $12.46, beating the consensus estimate of $11.72, and revenue of $3.72 billion, up 11% year-over-year, exceeding the anticipated $3.66 billion. Sales of its blockbuster drug Dupixent, developed in collaboration with Sanofi, rose 23% year-over-year to $3.82 billion globally. Regeneron’s eye care franchise, led by Eylea HD and Eylea, posted U.S. sales growth of 3% to $1.54 billion, with Eylea HD alone generating $392 million. Libtayo, an immunotherapy for cancer, achieved a 24% increase in global sales, totaling $289 million.
On November 4, TD Cowen maintained its Buy rating and $1,230 price target for Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), reflecting strong third-quarter results and a discussion with CEO Len Schleifer. The analyst noted confidence in Eylea HD’s long-term growth prospects, despite a potential dip in Q4, and emphasized Dupixent’s status as one of the sector’s most promising launches for treating inflammatory conditions.
Baron Health Care Fund stated the following regarding Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) in its Q3 2024 investor letter:
“We purchased Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), a biopharmaceutical company that was built on a foundation in basic scientific research and antibody development. The company has successfully developed several blockbuster medicines, including Eylea and Eylea HD for retinal diseases (such as wet age-related macular degeneration, diabetic macular edema, and diabetic retinopathy) and Dupixent for immunological and inflammatory diseases (such as atopic dermatitis, asthma, and COPD). While Eylea is nearing the end of its patent life and faces potential biosimilar competition, the company has been transitioning patients to Eylea HD, which is a higher dose, longer-acting formulation of Eylea, and Dupixent is growing rapidly through indication expansion. Beyond the current product portfolio, Regeneron has an exciting new product pipeline with over 35 candidates in various stages of development, including a novel treatment for treating severe food allergy, a combination checkpoint inhibitor therapy for melanoma, lung cancer and other solid tumors, biospecific antibodies for blood cancers, and Factor XI antibodies for blood clot prevention, among others. Based on Regeneron’s track record of success discovering and developing new drugs, we are optimistic the pipeline will deliver some successes, which we think will drive upside in the stock.”
1. Merck & Co., Inc. (NYSE:MRK)
Average Analyst Upside: 32.47%
Number of Hedge Fund Holders: 86
Merck & Co., Inc. (NYSE:MRK), based in Rahway, New Jersey, is a leading American multinational pharmaceutical company, historically linked to the original Merck Group established in Germany in 1668. Known internationally as Merck Sharp & Dohme (MSD), the company is highly respected for its significant advancements in pharmaceuticals and vaccines.
In its third-quarter 2024 report, Merck & Co., Inc. (NYSE:MRK) posted a 4% increase in revenue, totaling $16.7 billion, largely driven by robust sales of its cancer treatment, Keytruda, and the recent launch of Winrevair. The company also reported significant clinical advancements and recent FDA approvals, contributing to the expansion of its oncology portfolio.
On November 1, Leerink Partners reiterated an Outperform rating on Merck’s shares, noting that investor sentiment remains cautious around Gardasil’s performance. Despite recent challenges, Merck’s management expressed confidence in Gardasil’s revenue sustainability, particularly due to growth in regions outside China, positioning it as a key component of the company’s growth strategy.
Oakmark Equity and Income Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its Q3 2024 investor letter:
“Merck & Co., Inc. (NYSE:MRK) is a global pharmaceutical firm with leading oncology, vaccine and animal health franchises. Premier products in Merck’s portfolio include Keytruda, Gardasil, Winrevair and Bravecto. Outsized contributor Keytruda is an immuno-oncology drug that treats several cancers and tumors. Keytruda is an astounding clinical and commercial success that is on track to become one of the best-selling prescription drugs to date. Investor angst surrounding Keytruda’s pending U.S. patent expiration in 2028 presented a chance to buy shares at a discounted valuation. We believe opportunities to extend Keytruda’s duration through life cycle management are underappreciated. More importantly, discounted cash flows from products already on market cover today’s entire stock price, meaning there is minimal value ascribed to a promising pipeline with strong sales potential. We believe Merck is led by a capable management team that looks to reinvest these cash flows in an accretive manner.”
While we acknowledge the potential of MRK, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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