Disclosure: I am long CLSN. I wrote this article m

Disclosure: I am long CLSN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Every once in a while, there is a sector and/or industry that captivates the investment market. During the 1990s, the computer and software sector created a windfall of profits for investors. In the early part of the 21st century, the dot com era helped to score a large payday for those who were fortunate enough to get in early. Over the past couple of years, emerging market and commodity stocks have proven to be a wise move. And now investors are wondering what is next? Look no further than biotechnology, specifically stocks that focus on cancer treatments.

2013 is poised to be a breakthrough year for several biotechnology companies, especially in the cancer treatment space. These biotechnology companies will have major catalysts that will not only cause a jump in their share prices but will have ripple affects across the biotechnology space. As the industry becomes more competitive with more companies looking to find that mythical cure, the biotechnology space will continue to be a driver of both medicine and investor return for years to come. 2013 will be just the beginning and the following three companies are poised to benefit.

Of course, these companies and the industry in general are not without risks. The biotechnology industry is perhaps the most rewarding industry to be involved with since investor profits usually mean a medical breakthrough for those who are suffering. However, the industry is perhaps the riskiest with companies constantly facing make or break decisions. Additionally, the industry has intense competition. Many companies are trying to develop a drug and/or treatment for various diseases but the fact of the matter is that very few will succeed. The steps facing a start-up biotechnology company are daunting. Companies must face Phase I, Phase II, and Phase III drug trials, demonstrating both efficacy and safety control. The companies must navigate these trials over several years while being able to have cash on hand to fund the trials. Normally this means a series of fundraising efforts which dilute the ownership of the existing shareholders. Should the company be able to navigate through these muddy waters, they must face a critical FDA decision, which are never easy. Considering all the risks involved, I still think the three companies below are poised to breakout.

1) Celsion Corporation (CLSN) - The company will release Phase III trials of ThermoDox, a potential breakthrough in the treatment of liver cancer. The release of these results is expected by the end of January 2013. Should the results be favorable, and many think they will, the stock has the potential to climb by several hundred percent before the expected FDA decision by the end of 2013.



The stock is not without risk though. As you can see in the stock chart above, Celsion has had an incredible run since the beginning of the summer. The early investors are most likely riding free shares at this point while new investors will have to pay a high premium to get in. There is also the chance that Phase III trials could prove unsuccessful. If this were to occur, the stock would likely fall below 2, and probably 1. Because the company was able to jump directly from Phase I to Phase III, there is a lot of mystery surrounding the results that are due in just a few weeks.

2) Cellceutix Corporation (CTIX.OB) - An emerging bio-pharmaceutical company, the company received widespread attention with its promising results from the early development of a compound for the treatment of autism, KM-391. Additionally, Phase I clinical trials for Kevetrin, the company's compound for the treatment of drug-resistant cancers, are about to begin. While most cancer treatments are derived from another compound, Kevetrin is completely unique. Add to this is the fact that several industry goliaths are backing Kevetrin, most notably Best Israel and the Dana Farber cancer center. This company might revolutionize the cancer industry.



Cellceutix is not without risk however. First, the company trades on the OTCBB. This is the wild wild west of trading and pretty much anything goes. Investors should be aware of this and understand that there may be wild swings in the share price until the company is able to uplist to the NYSE or Nasdaq. Second, the company is a developmental biotechnology company that has not even begun Phase I trials yet. With already 90 million outstanding shares, the company may need to raise funds in the future which will dilute the original investors. Given these risks, it is important to manage one's risk and only put a portion of one's funds in this company.

3) Threshold Pharmaceuticals (THLD) - A development staged company, focused on the discovery and development of drugs for the treatment of various forms of cancer. Its primary clinical development product is TH-302, which has already successfully passed Phase I and Phase II trials. During 2013, the company will release the final Phase III trial results. With the backing of Merck, and a very small float, the rewards could be off the chart for those investors willing to jump in now. Threshold has had a rough few months because of concerns that competitors will get their competing drugs to market first. I think this concern is overblown as Threshold has shown that its trial results put its drug at or near the top in terms of efficacy.