Oncothyreon's Stimuvax is Back in Business Print E-mail
By Vinny Cassano   
Thursday, 17 June 2010 12:30

Shares of Oncothyreon were back to trading for above four dollars late last week after the company announced that the US FDA has partially lifted the clinical hold that was placed on the Stimuvax trials in March after a patient in the multiple myeloma trial contracted encephalitis.

Merck KGaA, Oncothyreon's Stimuvax partner, will resume the START and INSPIRE Phase III trials testing the Stimuvax vaccine in the treatment of non-small cell lung cancer (NSCLC). T

he Phase III STRIDE trial for breast cancer remains on hold, although Merck KGaA will continue to work with the FDA to get that trial resumed also, according to Thursday's PR. The fact that the trials are resuming, partially, is good news for ONTY and shareholders of the company, and I still like this one as a mid to long term DNDN-type accumulation play.

Updates from the Stimuvax trials have been encouraging, the company has a solid partner in Merck KGaA and cancer immunotherapy treatments may have gained some momentum in the mainstream with the recent approval of Provenge. After seeing the reaction of the DNDN stock upon positive Phase III results and subsequent FDA approval, ONTY - with a market cap of just over one hundred million - could realize some huge gains later on down the road if the current trials turn out positive.

Any potential spike may not be as dramatic as the one realized by DNDN, however, because Oncothyreon only stands to rake in royalties on sales in the partnership agreement with Merck KGaA, whereas Dendreon developed Provenge without the help of a partner, plans to market the product themselves (in North America) and does not need to pay out royalties to another entity.

I continue to believe that immunotherapeutic treatments such as Stimuvax and Provenge will be the next big thing in the treatment of cancer, although it's also important to keep in mind that many of these treatments have failed in their development, so there is - of course - inherent risk with an investment in ONTY.

That said, I think that the potential rewards far outweigh the risks while the stock is trading for its current levels or below.

Investors continue to look for the next DNDN, and ONTY could turn out to be that big winner later on down the road.

Disclosure: Long ONTY.

Vinny also authors the popular stock investing blog VFC's Stock House.



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