Onconova Therapeutics Inc (NASDAQ: ONTX)
Onconova Therapeutics, a company founded in 1998, emerged onto the NASDAQ trading market in 2013 after completing an IPO and has maintained a fixation on developing novel and proprietary therapeutics.
Currently, ONTX is intently focused upon the treatment of myelodysplastic syndromes, often referred to as MDS. More specific to MDS, the company is driven to bring treatments and drugs to market that meet unmet medical needs associated with the disease.
ONTX Global Phase III Trial For IV Rigosertib (intravenous)
Rigosertib, ONTX’s proprietary compound, is proving to be Onconova’s most promising clinical candidate. The drug is building a respectable data set from its current phase III trial, registering data that certainly puts the drug on track to replace its decade old competitor, a drug that has not been improved upon since the early part of the second millennium.
Rigosertib is patent-protected through 2026, and its combination drug formulation is protected through 2028. Rigosertib has been granted Orphan Drug designation in the United States, Japan, and the E.U., justifiably, based on its novel mechanism of efficacy in targeting a reaction in RAS pathways, the junction that controls the transcription of genes formed to regulate cell growth and differentiation.
The phase III “INSPIRE” trial has been active and is in the process of enrolling additional higher-risk MDS patients, with interim analysis from the trial expected to be released in the second half of 2017. Top line trial data is expected to be released in 2018. The Rigosertib trial is robust, compiling and analyzing data from a patient group in excess of 1000 participants. The INSPIRE trial data, to this point, has demonstrated a superior safety profile and has also shown interim efficacy results that are superior to a control study.
ONTX is also conducting a simultaneous study of oral Rigosertib, with an end of phase II meeting anticipated to take place prior to the end of 2016. To date, the data has suggested Rigosertib, in both formulations, to be safe and effective in treating MDS.
The Promise Of Rigosertib
ONTX has been focused, primarily, on developing Rigosertib, intended to be for the specific management of myelodysplastic syndromes, or MDS. MDS is a bone marrow disorder characterized by ineffective hematopoiesis that often develops into acute myeloid leukemia. Hematopoiesis is the process of creating new blood cell’s in the body.
ONTX is developing Rigosertib in two formulations – intravenous and oral. The intravenous version is already in late stage trial and is targeting high-risk MDS. The oral version, which is being developed as a single agent formulation, is intended to treat lower-risk MDS. The company has treated in excess of 1000 patients to date, with enrollment continuing in order to complete the INSPIRE trial, in which patients are treated with the intravenous formulation.
The phase III trial is comparing the overall survival rate of patients receiving intravenous Rigosertib compared to the overall survival rate of patients being treated with their physicians’ choice of therapy. To be included in the trial, all of the patients must have MDS. Additionally, each patient must have failed to respond to a prior treatment with current therapeutic options that include hypomethylating agents, azacitidine, or decitabine. The primary endpoint of the INSPIRE trial is overall survival rates.
To that point, interim results, which have been published in The Lancet, show that the INSPIRE trial is delivering a median survival increase of 2.5 months compared to the control arm. The p-value is an impressive .0008, which shows that the results can likely be replicated, and the science can be relied upon for causing the endpoint.
In addition to Rigosertib, ONTX has three other compounds that are actively seeking partnerships. They include briciclib, recilisib, and ON 123300. Including these three additional compounds, ONTX has multiple shots on goal.
2017 – Year Of The Onconova?
I get inquiries from investors on a regular basis that want to find stocks that are ready to explode higher tomorrow. While those are certainly out there, chances are that employing the dart method of stock selection might prove to be as successful a predictor. Good stocks, ones that explode higher on merit, are not necessarily hard to find, but they do require an investor to have a realistic time horizon as well as the intestinal fortitude to remain committed to an investment. Stocks that go straight up often come back down just as quickly. Gravity is non-prejudicial, it eventually pulls everything down.
While 2017 may sound far off to many investors, it is actually right around the corner. And, with interim data expected to be released by ONTX prior to the end of 2016 for its combination phase II trial of Rigosertib, the stock may become positioned to react positively to a double shot of good news, providing the first catalyst at the end of 2016, followed by an additional catalyst in mid-2017. With the first update anticipated in less than sixty days, it is likely that ONTX can begin to catch a bid once investors trade through this early stage of tax selling and wash rule sales.
Once the trial data is digested in mid-2017, investor’s should then be treated to additional top line data in 2018, and, if the interim data is strong in 2016 and 2017, the stock should be treated to a far higher multiple than it is trading at today. At that point, the 2018 top line data can be a huge catalyst to the upside, dependent on strong efficacy results.
ONTX investors should keep in mind that the last drug developed to treat MDS was approved by the FDA over a decade ago. At this point, the market is ripe for a better medication. Add to the equation that if Rigosertib continues to demonstrate statistically significant benefits on opening the RAS pathways, ONTX can consider advancing Rigosertib’s viability for additional therapeutic indications. With both an intravenous and oral formulation of Rigosertib, the opportunities for ONTX are broad and offer diversification for the product.
Can ONTX Deliver?
The ingredients for success are in place for ONTX in the near term. If investors are willing to be forward-looking and somewhat patient, they may enjoy an opportunity to capitalize on the pending milestones guided for by ONTX.
ONTX is currently well-funded, having enough cash to see each of its studies develop through the end of the anticipated 2017 milestones. The company is further seeking partnerships for its additional pipeline candidates, which can further add cash liquidity to the balance sheet.
The company lists just 6.3 million shares outstanding and runs an average trading volume of approximately 85K shares per day, based on a recent 50-day average. With the company being adequately funded to develop through 2017, and with several pending milestones already teed up, investors may fare well during the next six to nine months.
Although data dependent, ONTX is targeting a critical and unmet medical need, which can provide some latitude from the FDA. Both Rigosertib formulations are Orphan Drug designated, with both holding an opportunity to provide a significant boost to current treatment, which has not been incrementally improved for over a decade.
As part of a diversified portfolio of small cap stocks, ONTX is positioned to be a winner in the next six to nine months. I base that opinion on published data, cash position, and the short-term pending milestones. At current prices, the downside is somewhat limited, and, with the low float, the stock can appreciate quickly on a strong data release.
For now, keep ONTX on your radar. If you miss a small move higher, don’t sweat it. Missing the first leg of a multi-year journey is not a huge sacrifice to make, and, if ONTX reports successful data, the company might have more legs than a centipede, so missing the first leg won’t be hard to forget.
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