The Play, The PloyThe investment play with Oncolytics is the success of Reolysin becoming a commercial success in the fight against cancer causing the stock to jump on news of partnership agreements and ultimately a possible buyout. On a conservative basis the stock should be trading in the $20 and $30 range within 1-2 years. The buyout could be in the $50 range. Oncolytics is a buy and hold play. Oncolytics is not a day trading stock. Oncolytics is not a management cyclical stock. Oncolytics is not a timing stock with the end game in play. If you do not own your position when the good news hits the streets, a retail investor will not have the cash or time to build one. Institutional investors will push them out of the market with their 100,000 share orders.
Cardu and Sharkfood complain about the time it took to get here. Cardu took advantage of the delay by accumulating his position over 8 years. Getting FDA approval for a viral therapy in a sterile hospital environment is an up hill battle that needs to be factored into the time line to market. The important point is to look forward and consider the remaining time. Analysts covering the stock expect partnership announcements by mid 2011. It is a reasonable expectation given the head & neck pivotal trial, and NSCLC trials. The US NCI also strongly endorses Reolysin by currently funding trials for ovarian and pancreatic cancer.
The investment ploy by large buyers of Oncolytics is to deceive the market by managing the stock price. Encourage retail investors into selling. Keep the stock well below its 52 week high. Have the stock price fall since its year end close. There was no news to support these declines but the decline happened. Buyers have more control over the stock price due to cash being king and tricks of the trade.
As of 10:50, ONCY is down 14 cents at $6.27 on 28,455 shares traded. There was a large trade of 12,000 shares that dropped the price to the current daily low of $6.25. The rationale to sell over $75,000 in shares is not to capture a gain but to depress the stock price. The practise is called seeding. I suspect the seller is trolling on the bid price to recover the sold stock. The bid is 2200 shares at $6.26 while 100 shares are being offered on the ask at $6.28. A similar story exists on the TSX for ONC. ONC is down 15 cents at $6.18 on 16,095 shares. Trades of 6,000 and 8,000 shares caused the decline. A ceiling has been created on the ask side with 1,700 shares being offered at $6.19 with 100 shares being on the bid at $6.18.
Someone has gone to the effort of discounting Oncolytics’ stock price today by over a dime. It is a good day to buy. Below $10, it is never a good day to sell with a partnership announcement pending. Don’t be deceived.