U.S. regulators this week approved the first drug for a new type of cancer treatment, confirming a theme some stock pickers have found in biotech.

“There is a revolution taking place in the practice of medicine, particularly cancer therapy, and most of that innovation is taking place in the biotech companies,” said Chris Sassouni, health care specialist and co-portfolio manager of the mid-cap growth investment team at Eagle Asset Management.

On Wednesday, the U.S. Food and Drug Administration approved Novartis’ Kymriah, the first drug for a new kind of cancer treatment called CAR-T cell therapy.

Michael Bailey, director of research and investment committee chair at FBB Capital Partners, called the drug “another step in a gradual launch of a new drug class.”

CAR-T cell therapy is a form of immunotherapy, a rapidly developing cancer treatment that uses patients’ own immune cells to attack tumors. In contrast, the typical, less efficient method of treating cancer uses combinations of surgery, chemotherapy and radiation to kill cancer cells.

The iShares Nasdaq Biotechnology ETF (IBB) rose more than 2 percent Thursday to its highest level since January 2016. One of the top contributors to the gain was bluebird bio, which is also working on CAR-T cell therapy. The stock was up 10 percent Thursday afternoon.

Juno Therapeutics, another company working on CAR-T, spiked 6 percent but settled back and was up 3.4 percent Thursday, while Nektar Therapeutics, which is developing similar immunotherapy drugs, rose nearly 8 percent.

An estimated 1.7 million people were diagnosed with cancer in the U.S. last year, according to the National Cancer Institute, and almost 600,000 people died from the disease.

However, treatments appear to be improving. The overall cancer death rate in the U.S. fell 13 percent from 2004 to 2013, according to the SEER Cancer Statistics Review from September 2016.

Nektar is the largest holding in Oppenheimer’s Global Opportunities Fund, which is up 26 percent this year.

“The Fund seeks to invest in businesses that still have exponential growth ahead of them. I’ve been excited to discover that there are quite a few companies like this at the forefront of the fight against cancer,” Portfolio Manager Frank Jennings said in an Aug. 18 note.

The Oppenheimer fund also holds EXACT Sciences, H. Lundbeck and Denmark-based large-caps Genmab and Novozymes, according to the fund’s website.

A few of the larger pharmaceutical companies are also working in immunotherapy.

Merck and Bristol-Myers Squibb each have approved immunotherapy drugs, while Gilead Sciences announced Monday it plans to acquire Kite Pharma for $11.9 billion, just a few months before the FDA is expected to approve Kite’s CAR-T drug for lymphoma on Nov. 29.

An FDA spokeswoman told CNBC in a statement that the FDA “generally cannot confirm or deny the existence of pending product applications.”

In addition to the potential for medical breakthrough, most analysts who spoke with CNBC also noted that cancer drugs are not subject to increased political pressure to lower prices. For example, Novartis’ Kymriah will cost $475,000 for a one-time treatment.

Although they’re “one of the more expensive areas” in biopharmaceuticals, since “you are literally saving people’s lives, the payers have a harder time pushing back and lowering the price,” said Michael Rich, who provides health-care coverage for Eagle Asset Management’s Equity Income team. “It’s hard to say no, we’re not going to cover this with your insurance.”

Some of the smaller companies developing immunotherapy drugs could be acquired by the pharmaceutical giants, analysts said.

Eagle’s Sassouni pointed out that since the big drug companies are losing billions of dollars every year to generic versions and have little to spend on their own research and development, they are looking to buy smaller biotechnology companies that are developing their own products.

Potential new legislation to encourage companies to return profit from overseas operations to the U.S. could give these large drug companies more available cash to acquire another company.

Pharmaceutical companies have the highest percentage of unrepatriated profit by industry group at roughly more than 15 percent, UBS said in a May 3 report. S&P 500 health-care companies overall had $541 billion in profit held overseas in 2016, second only to technology, the report said. The UBS report also listed Bristol-Myers Squibb as the top beneficiary to repatriation. Amgen, Pfizer and Merck were also on the 10-stock list.

To be sure, immunotherapy is still in the very early stages of development.

“This CAR-T approach is a sub-segment within that [and] at this point, a bit unproven,” Bailey said. Investors need to take a “higher risk-return approach within this immunotherapy theme.”

Disclaimer