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Oncothyreon rises as analyst starts coverage

NEW YORK (AP) -- Shares of biotechnology company Oncothyreon Inc. jumped Friday after a Stifel Nicolaus analyst said the cancer drug developer's shares are trading at an attractive price.

THE SPARK: Analyst Joel Sendek began covering the stock with a "Buy" rating and a target price of $10 per share. Clinical trial results for the company's cancer treatment Stimuvax will be reported in early 2013, and while Sendek thinks the drug's odds of success are only about 50-50, he said the stock will triple or quadruple in value if the trial is successful and the shares won't fall much further if the results are unimpressive.

THE BIG PICTURE: Stimuvax is in late-stage clinical testing. It is designed to work by stimulating the body's immune system so that it can identify and destroy cancer cells. Early next year Oncothyreon and its partner Merck KGaA will report late-stage study results of the drug as a treatment for non-small cell lung cancer. Sendek said Oncothyreon stock could reach $15 to $20 if the drug meets its goal in the trial, and sales of Stimuvax could reach more than $1 billion per year.

If the drug fails, he said the stock would fall to around $3 based on the company's other drug candidates.

SHARE ACTION: Oncothyreon stock rose 47 cents, or 10.8 percent, to $4.84 in afternoon trading. The shares fell 40 percent on March 6, when Merck KGaA announced that it could not end a trial of Stimuvax early. The trial would have ended early if Stimuvax had met effectiveness targets. Oncothyreon shares have lost 48 percent of their value since March 5.