Precision cancer treatments using gene or cell-based therapies have rapidly become two of the fastest-growing markets within all of biotech. So it's not surprising that the bulk of companies developing these cutting-edge therapies have seen their valuations soar over the last few years.
Interestingly enough, though, Ziopharm Oncology, Inc. (NASDAQ: ZIOP), a small-cap company with both gene and cell-based therapy assets under its roof, has turned out to be one of the rare laggards within this red-hot group of biotechs. So far this year, Ziopharm's shares have fallen by more than 5% and have now shed over 41% of their value in just the last 12 months.
Is now the perfect time to catch this falling knife? Let's dig deeper to find out.
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Ziopharm's value proposition centers around two immuno-oncology platforms broadly designed to enhance safety and efficacy, along with the resolution of outstanding manufacturing issues that have plagued the first generation of chimeric antigen receptor T-cell therapies (CAR-T).
Turning to the specifics, Ziopharm's most advanced platform is its gene therapy, Ad-RTS-hIL-12, which delivers controlled IL-12 to patients with an aggressive form of brain cancer known as recurrent glioblastoma (rGBM).
The basic idea is to deliver the powerful T-cell stimulating factor IL-12 to tumor cells in the brain using a deactivated adenoviral vector in order to ramp up a patient's immune system in a controlled manner. To achieve the controlled part of the response, Ziopharm has incorporated the RheoSwitch Therapeutic System, a molecular switch mechanism, into this gene therapy. This can be triggered by the small molecule veledimex, which can be taken orally, as it can cross the blood-brain barrier.
Although rGBM has proven to be a particularly tough nut to crack, Ad-RTS-hIL-12 has shown some impressive signs of efficacy in an early-stage study by extending median overall survival compared to historical norms and reducing tumor burden. As a result, Ziopharm is presently gearing up to advance this promising gene therapy into a pivotal trial later this year. The company is also exploring the therapy's potential in combination with other immuno-oncology agents, such as Bristol-Myers Squibb's Opdivo.
In collaboration with Intrexon Corporation, Ziopharm's second major platform focuses on developing CAR-T therapies that can be manufactured on-site within just two days. At present, Gilead Sciences (NASDAQ: GILD) and Novartis' Food and Drug Administration (FDA)-approved CAR-T products require extensive manufacturing processes that have slowed their commercial uptake. This so-called "point-of-care" CAR-T program is ramping up to enter multiple early-stage trials later this year.
The first major risk facing Ziopharm is its anemic cash position. At the end of the most recent quarter, the company's cash position sat at a paltry $70.9 million. With numerous clinical trials in the works, Ziopharm is obviously going to need a lot more cash going forward. The biotech, after all, is already burning through over $18 million per quarter, and that figure is almost certainly going to rise as its broad clinical program matures.
Next up, Ziopharm is not the only company attempting to develop more user-friendly CAR-T products. Gilead, for instance, has been investing heavily in its adoptive cell-therapy program to possibly bring an off-the-shelf CAR-T to market, and several other companies are currently in the process of pursuing similar lines of research. Gilead's resources outstrip Ziopharm's by a wide margin, so there's a pretty good chance that Gilead will win this race.
Is this stock a buy?
Although Ziopharm's anti-cancer platforms are indeed cutting edge, the company desperately needs a large upfront licensing deal to solve its underlying cash problem. That's not a knock against Ziopharm, in particular, but rather an inherent problem facing nearly every clinical-stage biotech at some point in their life cycles. At this point, Ziopharm comes across as an intriguing watchlist candidate, but not an outright buy.
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George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has the following options: short May 2018 $85 calls on Gilead Sciences. The Motley Fool has a disclosure policy.