With just a few weeks left on the calendar before the world’s largest oncology annual meeting, investors are already gearing up their portfolios for equities that could see exponential gains based on their potentially new research abstracts. The American Society of Clinical Oncology (ASCO) will begin on June 3rd and will feature everything from investigational new drugs to well developed late-stage products. While many companies have seen strong share appreciation leading up to their presentations, the real key lies in finding companies like Oxigene (NASDAQ:OXGN) which has yet to experience this momentum and mass media coverage.
At a market cap of only 10M, Oxigene remains the cheapest and most undervalued of all phase 3 late-stage oncology companies worldwide, with its flagship product, ZYBRESTAT targeting Tanaplastic Thyroid Cancer. The company has stated that they will be presenting the final phase 2/3 (FACT study) data for the drug at the ASCO, and many experts seem to be leaning towards highly positive results based on its previous clinical trials. Currently there exists no treatments available for this form of cancer other than radiation therapy and surgery which is usually combined with chemotherapy.
Just a few months ago, the company reported positive data from the FACT study of ZYBRESTAT plus chemotherapy in patients with Anaplastic thyroid cancer (ATC). At the 14th International Thyroid Congress, the company’s investigators reported that patients receiving ZYBRESTAT had a median overall survival (OS) time of 5.1 months, compared with a median survival time of 4.1 months for patients receiving chemotherapy alone. Furthermore, 48% of patients treated with ZYBRESTAT and chemotherapy were alive at six months, compared with 37% percent of patients treated with only chemotherapy and at one year, 23% of patients treated with ZYBRESTAT and chemotherapy were alive compared to 9% of patients treated with chemotherapy alone. These are some of the best results of any late-stage Aanaplastic thyroid cancer drugs seen worldwide, and this improvement in OS is meaningful, both clinically and on a personal level for patients. With no currently approved drugs in the market for treatment, the doors are wide open for Oxigene to step in and dominate it. The company also reported on March 21st that they had spoken with the FDA and received very positive type C meeting minutes stating that the trial data was highly suggestive of regulatory approval given an additional clinical trial with a suvival endpoint.
The Thyroid cancer market was estimated to be worth $55M in 2010, and is expected to grow at a CAGR (Compound Annual Growth Rate) of 27.34% to reach $298M by 2017.
Oxigene will also be presenting their additional phase 2 (FALCON study) data also for ZYBRESTAT for the treatment of Non-small cell lung cancer at the ASCO. The FALCON study is the first randomized, controlled study of a vascular disrupting agent (VDA) in combination with an anti-angiogenic agent, and combined both bevacizumab and chemotherapy. In mid-2010, the company reported that to date, the drug was well-tolerated, and the clinical activity they are seeing indicates a trend toward clinical benefit. These data are still interim; and the final overall survival data from this study will be presented at the ASCO.
According to a new report by Global Industry Analysts, the global Non-small cell lung cancer therapeutics market is slated to reach $13.3 billion by 2015. This is largely fueled by rising incidence of lung cancer, improved understanding of non-small cell lung cancer, and the development of new treatments targeted at growth factor pathways.
Additionally, the company features a diverse pipeline with a total of 7 indications, potentially targetting a market of $5 billion or more, should a few of these meet FDA marketing approval. With mergers and acquisitions being a hot topic within the biotech industry as larger companies look to strengthen their portfolios, the expectation of a partnership also remains highly probable in 2011, and according to the CEO’s open letter, Mr. Langecker, “The feedback we’ve gathered from potential partners is that we now have a stronger collection of data validating proof of concept. We believe that there is meaningful interest among potential partners in pursuing a possible collaboration.”
The recent decline in price can be attributed to and equity offering agreement with McNicoll, Lewis & Vlak LLC, or MLV, that saw the company raise approximately $8,776,000 in order to strengthen its balance sheet from July 21, 2010 to date. The company has stated that as the current ongoing trials proceed to completion, they expect the per quarter cash requirement to continue to decline to the $2,500,000 to $3,000,000 range over the course of 2011, thus it can be assumed that based on the previous financing, a healthy state on its balance sheet has now been achieved for the time being. All information per the 10-K filing as of 3/16/2011.
Since the start of 2011, Oxigene’s shares have been stuck in a constant downtrend that saw a minor attempt and failure to breakout during early February and late March. Despite positive clinial developments, shares were hit by the financing news which took the stock down from the mid $5 range all the way to the present mid $1, presenting a highly favourable risk versus reward ratio. The stock seems to be basing as the downtrend looks to finish, and a break past the $2.25 resistance could mark a reversal of the price action towards the upside.
The first resistance lies at the 50-day moving average of $2.25, which also incidentally conicides with a previous basing attempt, and should this be broken, there is clear break to the $4-4.50 level which is also the 200-day moving average. The RSI seems to be gaining momentum as buying pressure once again resumes in the equity, which is also supported by a positive MACD divergence currently engaged in a bullish cross. Look for stock to gain momentum as anticipation builds in the coming weeks ahead of highly anticipated positive developments during ASCO conference.
Disclosure: Long OXGN