Assigning a value to a development-stage biotech company is a
questionable task, and generally requires more intangible
assumptions (market potential, clinical trial progress, partnership
implication) than tangible assumptions (balance sheet, income
statement, various financial strength indicators). However,
the merit in such an assessment is that biotech investments have a
more pronounced value inflection point that could, if things go
well, represent a significant return on investment in multiples
instead of percentages. In that scope, I would like to
present Oncothyreon Inc. (ONTY), a biotech
company developing cancer therapies; its lead product is Stimuvax,
a cancer vaccine.
Cancer vaccines are designed to treat cancer by stimulating the
immune system to fight the cancer. The general public is more
aware of this class of medicine due to recent milestone
achievements by Dendreon (DNDN) in developing
Provenge. Stimuvax is a more traditional biologic approach to
what Dendreon is attempting to achieve through Provenge (ex vivo
cell therapy). Biologic cancer vaccines target a specific
tumor cell antigen (antigens are markers that allow the immune
system to recognize non-self entity such as tumor), but this is a
technical disadvantage against cellular products: tumor antigens
can differ from patient to patient, and tumor to tumor, because
cancer is a mutative disease. However, from a commercial
product perspective, biologics are cheaper to produce, and can be
off-the-shelf, which makes them more compatible to a traditional
pharmaceutical business model; this is probably the reason
Oncothyreon was able to partner its cancer vaccine earlier in the
development timeline compared to competitors such as
Dendreon.
Stimuvax is partnered with Merck, and Merck initiated a Phase 3
clinical trial for non-small cell lung cancer (START…