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Oncothyreon Inc. - A Long Shot Or Surefire Bet?


There has been a renewed interest in the field of immune-mediated cancer therapies since the approval of Provenge - Dendreon Corp.'s (DNDN) prostate cancer immunotherapy, in April 2010. Dendreon, which was trading below $5 in January 2009, reached an all-time high of more than $57 in the following year, subsequent to the FDA approval of its immunotherapy.

The next home run opportunity in the field of immune-based cancer therapies for investors willing to take on a lot of risk is Oncothyreon Inc. (ONTY), a biotechnology company dedicated to the development of oncology products.

The company's lead product candidate is Stimuvax that is being evaluated in two phase III clinical trials for the treatment of non-small cell lung cancer, or NSCLC.

Stimuvax is a therapeutic vaccine designed to induce an immune response to cancer cells that express MUC1, a protein antigen widely expressed on common cancers. MUC1 is over expressed on many cancers such as lung cancer, breast cancer, prostate cancer and colorectal cancer. Stimuvax is thought to work by stimulating the body's immune system to identify and destroy cancer cells expressing MUC1 in order to increase the survival of cancer patients.

Oncothyreon has licensed its Stimuvax lung cancer vaccine to German drug maker Merck KgaA. The clinical development and commercialization rights for Stimuvax rest with Merck KgaA. Oncothyreon is entitled to receive milestones of up to $90 million upon the occurrence of certain specified events, in addition to royalties on sales in the mid-teens to high single digit percentage range.

In March 2010, the FDA imposed a clinical hold on the entire Stimuvax program after a patient enrolled in an exploratory phase II trial of the vaccine in patients with multiple myeloma developed encephalitis. Apart from non-small cell lung cancer, Stimuvax was also being evaluated in the indication of breast cancer then.

However, in June 2010, the Stimuvax clinical program in patients with non-small cell lung cancer was allowed to resume after Merck KgaA addressed the questions raised by the FDA on the safety of the vaccine in NSCLC patients.

The clinical hold on the Stimuvax trial in breast cancer remains in effect and Merck KGaA has discontinued the phase III trial in breast cancer.

The two phase III clinical trials of Stimuvax in NSCLC patients, which are underway, are dubbed START and INSPIRE.

The START trial is a multi-center, randomized, double-blind, placebo-controlled study that is evaluating Stimuvax in patients with documented unresectable stage III NSCLC who have had a response or stable disease after at least two cycles of platinum-based chemo-radiotherapy.

The study, which is designed with two interim looks, has completed enrollment of 1,514 patients. Based on the interim looks, the trial is allowed to continue or curtail sampling. The primary endpoint of the trial is overall survival.

The first interim look in the START trial was in December 2010, and the independent Data Monitoring Committee allowed the trial to continue. The second interim look is anticipated this quarter. (1Q). If the trial is allowed to continue, top-line data is expected mid-2012 or sooner.

The second phase III trial - INSPIRE, is similar in design to the START study. But this study evaluates Stimuvax in Asian patients with advanced non-small cell lung cancer. The trial is targeted to enroll 420 patients in Asian countries, and is currently recruiting participants.

Non-small cell lung cancer is the most common type of lung cancer, accounting for 80% -85% of all lung cancer cases. About 1.2 million new cases of NSCLC are diagnosed per year worldwide and more than 1 million deaths are reported annually due to this disease. Global Data, an independent research company, estimates that the current NSCLC market exceeds $4 billion.

The standard of care for advanced non-small cell lung cancer patients is platinum-based chemotherapy while non-platinum-based regimens are frequently administered in patients with relapse. The median survival time for NSCLC patients with standard of care is roughly 12-18 months. In a phase II trial, Stimuvax had a median survival of 30.6 months, compared to control group's median survival of 13.3 months. That represents a 17.3 month mean survival advantage.

Currently, there are no approved immunotherapies for non-small cell lung cancer.

Yet another investigational therapeutic vaccine of Oncothyreon is ONT-10. This product candidate is fully owned by Oncothyreon, and a right of first negotiation in connection with any contemplated collaboration or license agreement with respect to the development of commercialization of ONT-10 is with Merck KgaA.

The Investigational New Drug Application for ONT-10 was filed by Oncothyreon last December, and a phase I trial is expected to be initiated this quarter. (1Q).

The small molecule compounds in the company's pipeline include, PX-866 and ONT-701.

The development program of PX-866 includes, phase I/II and phase II clinical trials currently underway, in multiple tumor indications, evaluating PX-866 both alone and in combination with other therapies.

ONT-701, a pan-inhibitor of B-cell lymphoma-2, is in preclinical development. Over-expression of Bcl-2 is common in many types of cancer.

A quick look at Oncothyreon's balance sheet...

Incorporated in 1985 in Canada under the name Biomira Inc., Oncothyreon, as it is now known, is the successor corporation to Biomira that was formed by way of a plan of arrangement effected pursuant to Canadian law.

The company has incurred substantial losses since inception, and as of September 30, 2011, had an accumulated deficit of $378.4 million. Cash at the end of the period was $62.2 million.

Oncothyreon is scheduled to report its full year and fourth quarter 2011 financial results and provide a review of its pipeline of products in development on March 6.

The company is also scheduled to make presentations at Cowen and Company 32nd Annual Healthcare Conference on March 6 in Boston and at Barclays Capital Global Healthcare Conference on March 14 in Miami.

ONTY has thus far touched a 52-week low of $3.10 and a 52-week high of $11.59. The stock lost 1.60% on Tuesday to close at $8.60. Over the past month, the shares have gained more than 27%.

by RTTNews Staff Writer

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