Premarket Biotech Digest: Oncolytics Worth A Look,
Summary
Oncolytics looks undervalued.
FDA to decide on Relypsa's Patiromer FOS.
Synta sees huge sell-off on termination of GALAXY-2.
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Focus Ticker: Oncolytics Biotech
Oncolytics Biotech (NASDAQ:ONCY) is a Canada-based company focusing on the research and development of its cancer therapeutic Reolysin. On Tuesday, ONCY announced that following submission to the U.S. FDA for review, the IND for Phase 1b study of Merck & Co.'s (NYSE:MRK) Keytruda in combination with Reolysin and chemotherapy in patients with advanced pancreatic cancer is now active.
I had initiated coverage on ONCY three months ago, discussing Reolysin. ONCY is currently conducting number of clinical trials with its Reolyisn but it is behind Amgen's (NASDAQ:AMGN) T-Vec. In my opinion, ONCY's Reolysin had an edge over T-Vec since the latter needs to be injected right into the tumor for it to work. Reolysin, on the other hand, can traverse the vascular system. As a result, ONCY's lead product can be developed for multiple cancer types provided that the Ras pathway be present in targeted cancer cells.
Reolysin also has multiple Orphan Drug designations from the FDA and the EMA. Despite the potential of Reolysin, ONCY shares are struggling. Since I covered ONCY, the stock has fallen more than 31%. While the sell-off in the biotech sector has contributed to the losses, another problem with ONCY, as I had pointed out in my article, is that that their enthusiasm for research has made them lose focus on the market sometimes. As I discussed in my article, in the best case scenario, we can expect Reolysin to be in the market for at least one indication by 2019.
At the end of the second quarter, ONCY had $32.08 million in cash and cash equivalents on its balance sheet, which translates to roughly $0.30 per share. On Tuesday, ONCY closed at $0.44 per share so Reolysin is currently being valued at just $0.14 per share. Although Reolysin is still a few years away from potential commercialization even in the best case scenario, current valuation means that ONCY merits a look.