Onconova Therapeutics: The Power Of The Number 75

  • As noted in my previous article covering $ONTX, the market eventually responded the same way to adding patients to (INSPIRE) as they would have to outright failure.
  • I’ll explain why I passed on an easy opportunity to exit with a 25% profit.
  • The market isn’t smart but it sure is stupid when it comes to assessing the meaning of this Data Monitoring Committee (DMC) adjudication and the value of CEO Ramesh Kumar’s partnering hand.
  • The critical importance of the need for 75 high-risk patients in the original (INSPIRE) study population may explain the DMC decision to add more patients – not falling short of statistical significance.

Declaration: I am long Onconova Therapeutics (ONTX) 15.3k shares.

Full Disclosure: I have not, and will not, receive compensation from any corporate entity for this or any other article I author and publish on this platform at my own expense and for the sole benefit of the retail investor.

Monday, January 22nd, 2018 – Always do your own due diligence and consult a professional financial advisor before making any investment decision.

I almost never quote myself in an article that I compose but, in this instance, I just can’t resist. From the concluding remarks of my previous post entitled; Onconova Therapeutics – The Destroyer of Happy Holidays we have this warning.

There is one other possibility I didn’t address in this missive – the trial continuing with added patients. At this point, however, that’s equal to outright failure as the company would be unable to fund the trial’s progression to completion.

That sums it up nicely, doesn’t it? I did not, however, fully entertain the possibility enough to consider all of the implications tethered to it. Therefore, allow me to do so now by addressing two issues.

  1. What adding patients means to this study which is, in fact, different from other pivotal studies that require enhanced power to reach statistical significance.
  2. If a partnership can be reached to avoid cancellation of the study, bankruptcy or massive dilution and what that agreement might look like.

(INSPIRE) Is Now Deficient In The Required Number Of High-Risk Patients

Adding power to a study usually means that while the candidate arm has not crossed the futility boundary and remains capable of acheiving its objectives, it is underperforming and requires added patients to turn the tide in its favor against control. But because (INSPIRE) is two studies in one – assessing rigosertib in both high and higher risk patients separately, it’s impossible to apply a standard assessment of what the DMC’s intentions actually were.

For example, we know from the press release that over 170 of the previously required 225 patients had been enrolled prior to January 17th 2018. We know from the conference call that over 70% of those patients numbering 119 were from the “very high risk” population. Therefore, it’s entirely possible that the DMC found that only 51 patients from the “high risk” population was entirely insufficient to rule out chance even if that group was ostensibly on track to reach stat-sig.

Before you preemptively laugh off this analysis understand that the original trial size was loosely targeted to 75 patients in control (physician’s choice) and the remaing 150 to be split evenly between the high and higher risk groups. We know that the trial size has been elevated to 360 patients – 120 in control and 240 total in both rigo arms. So, if the revised trial continues to enroll at a 70/30 clip of higher-risk to high-risk patients respectively, then the total number of high-risk patients enrolled in the study arm by trial’s end will be 72 – a number ironically close to the originally intended number of 75 which was deemed sufficient to power the study. Think about it!

Were (INSPIRE) to have continued as planned only 45 evaluable patients in the high-risk study group would have been accrued – a number insufficient to rule out chance. Of course, it could be that both candidate arms are falling short of the primary and secondary endpoints originally established. Were that the case, then the market’s reaction would be justified. But what if only one arm is difficient? Consequently, as I see it, we have four distinct possibilities.

  • Both rigosertib arms are underperforming and in need of added patients.
  • Only one arm is underperforming and in need of added patients.
  • One arm is underperforming and the other short of the requisite number of evaluable patients.
  • Neither arm is underperforming but the high-risk arm needs more patients to rule out chance.

This is a smart assessment that the market is generally incapable of making. It won’t, however, be lost on Ramesh Kumar when he begins soliciting potential partners to see this trial through to completion. Convincing them of the potential viabilities at hand won’t be difficult but holding onto Europe at anything beyond a single digit sales royalty will be. Therefore, he and everyone associated with this equity should resign themselves to lower expectations.

Beggars Can’t Be Choosers

Onconova Therapeutics has had the smell of desperation about it since Baxter walked away from their previous deal following the (ON-TIME) debacle. Things aren’t any better now. Looking for favorable terms when one is days from running out of cash and in need of more money to finance a trial taxiing to a longer runway of completion is not possible. That’s right! Not possible.

Neither is there a way to execute a public offering that would generate enough cash to reach the (INSPIRE) readout now projected into 2019. The company will need in excess of $30m to accomplish that. How will they get it?

Ramesh Kumar Has Several Hole Cards To Play In The Partnering Game.

Mr. Market is as dumb as a rock to believe that Onconova has only two options remaining following the interim review  – bankruptcy or dilution. These two death rattles are as obvious as the black eyes on a domestic abuse victim’s face. But Kumar holds the prized jewel found in any therapeutic candidate’s treasure chest – Europe – still in his hands. Any commercial pharma company that wants to compete cheaply in the blood disease space might be irresistibly drawn to Onconova at this time. The price of entry will be cheap and the rewards of success gigantic when placed in perspective.

Any hypothetical outcome to follow is predicated on the absolute nature of this “data firewall” that Kumar spoke of at the Interim Conference Call.  If he’s able to communicate to a prospective partner confidentially that the study is on track to succeed but that the high-risk study arm needed more patients then the terms could be far better than what I’m about to indicate. That’s an important if/then scenario that doesn’t necessarily mitigate the partner’s obvious advantages but I needed to raise the point nonetheless.

An Upfront Payment Is Not Required

It’s highly unusual for a partner not to offer an upfront payment. Baxter posted a non-refundable $50m when last Kumar struck a rigosertib ex-U.S. commercial and developmental deal. That likely won’t happen this time around. Instead, a partner will likely offer to buy an ownership share of the company. Onconova has already indicated an intention to raise $15m through dilution but now will need $15m more to remain viable.

A deal could be structured so that the partner bought a 7-14% share of the company by purchasing 1m common shares at $15 each or 2m shares at $7.50 each respectively. Either way, Onconova would likely be able to exercise approximately 3m outstanding warrants at an average price of $5 each for an additional $15m totaling $30m.

A partner would love this because if they at any time felt uncertain about the prospects of (INSPIRE) success they could sell those shares on the open market incurring only an incidental fee for admittance into the rigosertib bonanza.

The Dreaded 6% Sales Royalty Is Likely On Offer

A fixed single digit sales royalty is all Kumar could reasonably expect to get in my estimation but, then again, I’m not the master negotiator that he historically has been. Kumar has the option to place both IV and frontline rigosertib on the bargaining table and likely has done so. He could ask for the prospective partner to fund the frontline study. The prospective partner could then make that contingent upon (INSPIRE) success before writing a check.

In Conclusion

Nowhere in the blogosphere have you read an analysis of the DMC’s decision to increase the power of (INSPIRE) remotely like that which you’ve encountered here. There are two other distinct possibilities other than underperformance of the study arm which remain in play. In and of themselves, these possibilities kick open the door to a prospective partnership and I fully expect a suitor to walk through any day now. And while bankruptcy and massive dilution remain the likely scenarios implied by the falling stock price, I hold fast to my own insight and every share I’ve accumulated over the past many months.

Always be well…

Thaumaturgical Disclaimer: As a practicing person of magic and aspiring warm-hearted wizard, I’ve utilized tarot cards as a basis for the sub-analysis of biotech equities for the past three years and in my personal life for nearly four decades. These readings sometimes play a role in my ideational constructs but must be consistent with the facts at hand and not run counter to a logical assessment of the equity considered.
Mental Illness Disclaimer: I’ve been diagnosed as suffering from manic depression. Therefore, my reactions to events can sometimes be more pronounced than the facts warrant. I owe investors complete transparency and am the only ideator in biotech to provide that. Please focus on the ideas presented and don’t hesitate to contact me with any factual errors found in the article text.
General Disclaimer: Any information or opinion expressed herein may not be true, accurate or correct and it does not constitute a suggestion to buy, sell, hold or adopt any investment strategy for this stock or any stock that may be mentioned. Reliance upon information in this article is at the sole discretion of the reader. The sole purpose of my article is to entertain by providing an opinion and information the accuracy of which is as good as the public sources it was derived from. For example, KOL’s often utilize exaggerative terminolgy to describe a product or asset they are promoting on behalf of a biotechnology company they’re associated with. Do not act on anything I have written, a CEO has spoken of, or a sell side analyst has stated. Rather, do your own due diligence and consult a professional investment advisor before making any investment decision. Acting on what any one writer has imparted to you is foolish at best. I have no better access to resources than you do. I sometimes make mistakes. And there are a myriad of things, which can happen in lieu of any forward-looking statement I have made. Any stock featured or mentioned in an article I compose is subject to all manner of influences, which can change its value in dramatic fashion both higher and lower. These events can be of a wide variety – news related; managerial decisions; trial failures; stock manipulations; and so on. I make every effort to declare positions I have in stocks I cover or mention in an article but reserve the right to move in and out of said investments at my own discretion based upon the wisdom of doing so. I implore you to do your own due diligence and invest at your own considerable risk attaining the just reward your efforts have wrought. Additionally, if you are aware of any misstatements of fact contained in this or any article I have written, you are encouraged to email me immediately at the link given in the header above or address them in the comments section.

CYCC And ONTX: Intertwined By Destiny

I/we are long CYCC and ONTX.

The spirit of wickedness in high places is now so powerful and so many headed in its incarnations there seems nothing more to do personally than to refuse to worship any of the hydras heads. The world seems little better than a new Tower of Babel – all noise and confusion.

1969 J. R. R. Tolkien

It’s been very difficult for me over the past several years to have steered close friends toward investment in German biotech, Pieris Pharmaceuticals (PIRS) while refraining to mention my clandestine love for the two step-children of developmental oncology – Onconova Therapeutics (ONTX) and Cyclacel Pharmaceuticals (CYCC).  You see, I believed then, as I do now, that Pieris is the safer bet to appreciate over time.  But safety comes at a price.  And since I’ve never been a big fan of turtle racing, preferring faster paced adventures, I’m betting on the two unattractive step-sisters of failed Phase-3 endeavors instead.  That now stated, Onconova and Cyclacel have much more in common than the high-minded reproval of sector elites relative to their Phase-3 flops.

Both Company’s Lead Drug Candidates Still Have Life

You wouldn’t know it by observing Onconova’s paltry market-cap of $26m but rigosertib is in yet another and far more promising Phase-3 study entitled; INSPIRE.  More promising because it is structured upon culled data from 116 of the 299 patients in the ONTIME study that fell nicely into a category labeled “high risk” and responded brilliantly to rigosertib therapy administered intravenously.  Had this population of patients been the focus of a large Phase-2 trial with an over all survival benefit of 7.9 mos. vs. 4.3 mos. in control (p = 0.0008) the market-cap of ONTX heading into Phase-3 would be in excess of $300m.  Alas, it wasn’t.  And Onconova is teetering on the brink of insolvency or, at least, crippling financial impairment.

Meanwhile, Cyclacel has moved on from the unraveled SEAMLESS pivotal study mentioning sapacitabine only as an aside in their corporate presentations.  Their second generation CDK2/9 Inhibitor now stands atop the pipeline depth chart.

Make no mistake, though, CEO Spiro Rombotis has his eyes pinned on the results of Onconova’s INSPIRE study as it will become a referendum on the future of sapacitabine.  You see, SEAMLESS had one very significant feature – a substantial increase in the amount of Complete Remissions (CR) in targeted elderly AML patients age seventy and above.  Rombotis, to this very day, alludes to submission for regulatory approval in the EU for sapacitabine on the basis of this one secondary endpoint in conjunction with Dacogen approval given on a failed, Phase-3 registration effort.  And while on its face that seems laughable, his case could be bolstered by INSPIRE success because Onconova CEO Ramesh Kumar will then take to plugging the frontline trial of oral rigosertib in combination with azacitidine which will highlight a primary endpoint of…wait for it…Complete Remissions.  How long will it take Spiro Rombotis to begin referencing rigsertib’s pathway as a model for sapacitabine regulatory approval?  And whether the comparison is valid or not, the market of easily influenced retail investors will lap it up driving CYCC’s stock price higher and higher.

Concluding Remarks

While rigosertib is pulsating with life in a promising pivotal fight, sapacitabine rests on the sideline ready to awaken if rigosertib rises from the dead.  Cyclacel, with its bloated $40m market-cap, sea of warrants and preferred shares, at a glance, seems less attractive than Onconova.  But its financial position, by comparison, is enviable.  Both companies have late generation CDK Inhibitors to develop if the door closes on those earlier assets.  But the play here is to bet that there’s more than a crack in the opening to relevance for both rigosertib and sapacitabine forming a widening wedge of investment light.

Always be well…

Thaumaturgical Disclaimer: As a practicing person of magic and aspiring warm-hearted wizard, I’ve utilized tarot cards as a basis for sub-analysis of biotech equities for the past three years and in my personal life for nearly four decades.

Mental Illness Disclaimer: I’ve been diagnosed as suffering from manic depression. Therefore, my reactions to events can sometimes be more pronounced than the facts warrant.  I owe investors complete transparency and am the only ideator in biotech to provide that.  Please focus on the ideas presented and don’t hesitate to contact me with any factual errors found in the article text.

General Disclaimer: Any information or opinion expressed herein may not be true, accurate or correct and it does not constitute a suggestion to buy, sell, hold or adopt any investment strategy for this stock or any stock that may be mentioned. Reliance upon information in this article is at the sole discretion of the reader. The sole purpose of my article is to entertain by providing an opinion and information the accuracy of which is as good as the public sources it was derived from. For example, KOL’s often utilize exaggerative terminolgy to describe a product or asset they are promoting on behalf of a biotechnology company they’re associated with. Do not act on anything I have written, a CEO has spoken of, or a sell side analyst has stated. Rather, do your own due diligence and consult a professional investment advisor before making any investment decision. Acting on what any one writer has imparted to you is foolish at best. I have no better access to resources than you do. I sometimes make mistakes. And there are a myriad of things, which can happen in lieu of any forward-looking statement I have made. Any stock featured or mentioned in an article I compose is subject to all manner of influences, which can change its value in dramatic fashion both higher and lower. These events can be of a wide variety – news related; managerial decisions; trial failures; stock manipulations; and so on. I make every effort to declare positions I have in stocks I cover or mention in an article but reserve the right to move in and out of said investments at my own discretion based upon the wisdom of doing so. I implore you to do your own due diligence and invest at your own considerable risk attaining the just reward your efforts have wrought. Additionally, if you are aware of any misstatements of fact contained in this or any article I have written, you are encouraged to email me immediately at the link given in the header above or address them in the comments section.

Onconova Therapeutics: I Am Inspired!

Warning: This article covers a nano-cap equity (a stock trading at a market-cap below $50m).  At this level of capitalization the word “gambling” is more appropriate than the word “investing” where taking a position is concerned.
Disclosure: I am long Onconova Therapeutics (ONTX) and Cyclacel Pharmaceuticals (CYCC).

Blogging in relative anonymity on my own website is appealing to me on so many levels.  The greatest benefit, however, is the ability to be completely honest about the equity I’m covering.  Too many times, I would be accused by readers of being a “secret short” – someone who wasn’t really invested in the company but was cleverly trying to drive the share price lower for profit.  That never happened!  And it’s not going to happen!  Rather, I will continue to be brutally honest because that’s the only way I can sleep soundly at night knowing that I have a secure grasp on the risk I’m taking.

The purpose of this article is to give the reader insights into the equity known as ONTX that they won’t find anywhere else.  I’ll discuss the following topics in detail.

  • Why I believe the (INSPIRE) Phase-3 trial is destined to succeed.
  • Why the FDA is supportively working with Onconova CEO Ramesh Kumar.
  • The particulars of the SymBio developmental and commercial agreement with Onconova and why it matters.
  • How the strained financials of the Company could lead to an investor unfriendly merger or ruthless dilution.
  • And why a beaten down equity with sound science represents the best value in developmental biotech.

The Gruesome Cause For (INSPIRE) Success

I wish I could tell you that it is the awesome power of rigosertib in high-risk MDS patients that is fueling my optimism for a positive outcome in the registration trial known as (INSPIRE) but it’s not.  Yes, intravenously administered rigosertib was proven to be more beneficial than best supportive care in patients with excess blasts in the failed (ONTIME) study, although, not in a statistically significant way.  And in a large subset of high-risk patients mostly unresponsive to hypomethylating agents (azacitidine (AZA) or decitabine (DAC)) it performed slightly less well.  But it was the control group of best supportive care (BSC) in this corralled subgroup that folded like a $10 tent in a 10 mph windstorm that has my profit meter pegged green.  The following Company graphic from the Pioneers Conference held on May 2nd explains it better than words can.

The (INSPIRE) inclusion protocol is based upon this 131 patient subset depicted on the right.  When we compare the median overall survival of patients in both intent to treat (ITT) populations, we see that rigosertib patients in the larger (ONTIME) venue lived approximately 8.2 months compared to 7.9 months in the (INSPIRE) subset – a falloff of approximately 9 days.  In the BSC arm, we see patients surviving approximately 5.9 months in the larger (ONTIME) study group compared to 4.1 months in the (INSPIRE) subset – a decline of 1.8 months or 55 days.  Analysts will naturally look to see an improvement in the active arm which they won’t find and will be inclined to dismiss degradation of performance in the control arm as an aberration that will be corrected in a larger study.  While this usually makes sense, in this particular instance, it doesn’t make any sense at all.

  • This subgroup of 131 patients is comprised of those who did not respond to HMA therapy.  And they will most likely be given HMA therapy again plus BSC in control.  If it didn’t work once, it likely won’t work twice.
  • On the battlefield of cancer psychology a positive attitude is predicated upon an intelligent body communicating with a cooperative mind.

Now, I know that a lot of you will jump in and say, gobbledygook Mike, gobbledygook.  Not over the first bullet point, which is fairly self-explanatory.  The notion of an intelligent body, however, is an affront to the Western mindset, although, it shouldn’t be.  Most illnesses are cured not through the administration of active therapies but, rather, by allowing the body to heal itself through rest and the quieting of the mind.  Most of the healing in instances of trauma takes place by sedating the patient so that their mind induced panic doesn’t inhibit that  process.  And while the mind can work against the body’s natural ability to regain equilibrium, it can also aid in that process.  Visualizations, for instance, that are at once relevant and detailed have been shown to do this.  And if the body is communication something positive to the mind regarding a change for the better, the mind will be inspired by that information to reinforce that direction.  Conversely, if the body is saying, “we’ve been down this pathway before and it didn’t work” then the mind will reinforce that direction by acquiescing.

Given these two truths, I expect that patients in the control arm of the (INSPIRE) study will perform at the same diminished rate as they did in the subgroup defined above.  Active arm patients, however, will be given a new drug – rigosertib and their bodies will be stimulated to fight their cancer in a new manner that will also serve to trigger patient optimism.  Having already failed one round of HMA therapy, they won’t perform as well as they did in patients from that larger population, many of whom had success, but they will engage their disease with more vigor.  Consequently, I expect almost the same performance in the (INSPIRE) setting as we saw in that subgroup of 131 (ONTIME) patients.  That being the case, in my estimation, (INSPIRE) will be a raging success.

For specificity on the inclusion criteria, we find the following information from page 3 of the 2016 Annual Report (10K).

The INSPIRE trial will enroll higher-risk MDS patients under 82 years of age who have progressed on, or failed to respond to, previous treatment with HMAs within nine months or nine cycles over the course of one year after initiation of HMA therapy, and had their last dose of HMA within six months prior to enrollment in the trial.

The Fukushima Effect

In a curious connection made only on this platform, the FDA and SymBio Pharmaceuticals are operating from the same realization – instances of leukemia in Japan and the United States are going to rise rapidly over the next decade.  I’ve already extensively addressed this phenomenon in an article you’ll find here on my website but rates of AML, MDS and lymphomas of all kinds will rise exponentially in Japan.  When news of this finally hits the shores of this country, the U.S. government will have some explaining to do.  It will be very important at that time for the FDA to be able to say that they’ve been approving new therapies to treat these swelling patient populations.  From SymBio’s perspective, it’s all about profit.

Listen to Onconova CEO Ramesh Kumar speak at various presentations and, if you have ears to hear, you will understand that the FDA is doing everything possible to drag rigosertib across the regulatory finish line.  It is a drug that helps patients.  And there hasn’t been an approved therapy for over a decade.  But the FDA isn’t known for coddling companies that aren’t in that large-cap club.  They are known, however, for cudgeling them along to near death.  Few expected that the FDA and Onconova would agree to another registration effort let alone so quickly.  And even now, we find them exhibiting a degree of flexibility I haven’t encountered since the agency’s interactions with Vanda Pharmaceuticals (VNDA) over tasimelteon development in 2013.  Just listen to Ramesh Kumar at the recent Q1 Conference Call talk about statistical assessment of the trial.

Our statistical analysis plan, now under review by the FDA and EMA, will provide the basis for data analysis at the interim and top-line intervals. We expect this review to be completed in the second quarter.

In this analysis, the INSPIRE study design permits two looks into the study populations, ITT, as well as a predefined IPSS-R very-high-risk subgroup, providing two shots on goal with the data.

From this quotation, we can surmise two important aspects of the FDA’s involvement with Onconova management regarding this trial.

  1. That (INSPIRE) was allowed to enroll and progress prior to the completion of a statistical plan of analysis.
  2. That the FDA is so willing to approve rigosertib that they are providing an additional pathway involving a smaller, very-high risk subset of patients.

I’ve only been around the biotech sector for a scant four years but this is unprecedented in my experience.  And, from the investor perspective, it provides a second catalyst, or, at least, a second lifeline of hope where the issue of ultimate approval is concerned.

We Know A Lot About The SymBio Agreement

But like anything worth having, you have to dig for it!  We find the following details on page 7 and 8 of the previously referenced and linked 2016 Annual report.

Under the terms of the SymBio license agreement, we received an upfront payment of $7,500,000.  We are eligible to receive milestone payments of up to an aggregate of $22,000,000 from SymBio upon the achievement of specified development and regulatory milestones for specified indications. Of the regulatory milestones, $5,000,000 is due upon receipt of marketing approval in the United States for rigosertib IV in higher-risk MDS patients, $3,000,000 is due upon receipt of marketing approval in Japan for rigosertib IV in higher-risk MDS patients, $5,000,000 is due upon receipt of marketing approval in the United States for rigosertib oral in lower-risk MDS patients, and $5,000,000 is due upon receipt of marketing approval in Japan for rigosertib oral in lower-risk MDS patients.  Furthermore, upon receipt of marketing approval in the United States and Japan for an additional specified indication of rigosertib, which we are currently not pursuing, an aggregate of $4,000,000 would be due. In addition to these pre-commercial milestones, we are eligible to receive tiered milestone payments based upon annual net sales of rigosertib by SymBio of up to an aggregate of $30,000,000.

Further, under the terms of the SymBio license agreement, SymBio will make royalty payments to us at percentage rates ranging from the mid-teens to 20% based on net sales of rigosertib by SymBio.

While the details here are somewhat unexciting given the fact that leukemia rates in Japan are, as of 2012, roughly half that of those in the United States; the U.S. population is nearly 2.5 times larger than Japan (324m to 127m respectively) and drug pricing there is significantly lower; rates of leukemia are going to climb due to the ongoing catastrophe we now know as Fukushima Daiichi.  The press isn’t telling you this.  The governments of Japan and the United States aren’t telling you this.  But I am.  And I’m not going to be wrong.  It takes roughly 5 years for blood cancers to bubble up to the surface following severe exposure to radioactive particulates.  And the Japanese people, once made healthier by their predominantly seafood diets, are now in further trouble due to the daily drenching of the Pacific Ocean in hundreds of tons of radioactive water.

Why do you think SymBio happily signed this agreement in 2012 one year after the calamity, and stayed in it while Baxter backed out in 2015 after the (ONTIME) failure?  Why do you suppose that of the 169 (INSPIRE) sites worldwide there are 44 active in the U.S. and 33 in Japan?  Think about the stats that I gave you above.  Twice as many instances of leukemia in the U.S..  Two and one-half times the population.  But only a third more U.S. sites?  There should be at least 5 times as many sites in the United States.  One could attribute the disparity to the fact that SymBio is underwriting some of the associated costs thereby saving Onconova precious resources.  But the only other causal factor that I could imagine would be that sites are set up where patient demand is the greatest.

Think about it!

“Climb god damn it!  Climb!”

When the antihero of the movie, Swordfish clearly sees there won’t be enough runway to accommodate his airborne bus before it slams into an old fashion neon sign, he barks out the desperate order to climb.  What appears to be an unfortunate inability to avoid a catastrophic outcome is, in reality, just enough to accomplish the plan at hand.  And that’s precisely the position Onconova finds itself in today – a shortening runway in front of a lengthening need for cash.  Whether Ramesh Kumar is as resourceful as the mastermind in this fictional tale has yet to be determined but he’ll need to be every bit as savvy.

I’ve already addressed Onconova’s financial predicament in a cautionary video entitled; ONTX Nearing the Fiscal Cliff.  This production dispels the notion that the planned Phase-3 trial of oral rigosertib in conjunction with azacitidine is being delayed due to ongoing discussions with regulatory bodies.  It’s not!  It’s being delayed because they don’t have the money to run these trials in parallel.  It’s also why promising preclinical candidates remain bound in the out-of-clinic domain.  There’s just no money.

The Company spent $8.3m last quarter alone and had roughly $20m in pro forma cash and cash equivalents at the end of that quarter.  I’d like to think that newly published data at ASCO in June from the (ONTIME) study subset of patients would cause the stock to rally enough to allow for another, perhaps, more substantial equity raise.  But that notion is doubtful since retail investors are still licking their wounds from that $2.49 per share $5m gouge back in April.

There might be other means of seeing (INSPIRE) through to the 2H of 2018 topline data readout.  A partnership could be struck on those preclinical candidates.  Or, perhaps, one could be sold outright.  A commercial and developmental agreement could be struck for rigosertib in the U.S. or ex-U.S. territories other than Japan and Korea.  But I’m not too sure how the Baxter agreement impedes upon those aspirations.  Loans, at this stage of the game, are unlikely.  Although, if Ramesh Kumar is buying his own rhetoric as I am, he might be able to collateralize such a loan to keep the ball moving forward.  Tapping the notorious Lincoln Park agreement at these prices seems too little in a situation that is rapidly becoming too late.

An Unfavorable Merger Seems Increasingly Likely

The only method of obtaining cash that makes sense to me at this point would be a merger with a company that has cash but no existent commitment to a compound in hand.  That fallback outcome could prove disastrous to current shareholders unless, of course, you own shares in that equity as well.  I, for instance, would love to see Onconova merge with Cyclacel Pharmaceuticals (CYCC).  The latter has money, although, not much of it.  They attractively carry a comparatively miniscule burn rate.  The new company would prioritize the (INSPIRE) trial and sport two of the most promising CDK Inhibitors to hit the clinic in 2018.  The combined market-caps would be less than $40m but would rocket higher given the derisking of the (INSPIRE) trial and synergies relative to their hematological platforms.

I know that biotech executives read my articles even here on this lowly side road of equity analysis.  I also know that they’re not alone.  Hedge fund managers and other contributors from established platforms peruse my ideas.  They shudder to think how they missed out on that Cyclacel double earlier this year.  Maybe they’ll feel better knowing that the run-up took place too near to my publishing an article for me to sell into that strength.  I have principles where others do not.  Another, ah shucks moment for me.  But if, per chance, you, Ramesh Kumar, are reading this now, please know that you are always in the care of heaven above even when the waters below are aflame in doubt.  Trust in this trial.  Trust in what you have fashioned.  It’s real.  And it’s good.

Investing In What Others Throw Away

If you haven’t noticed already, I like investing in companies that have been abandoned by other investors.  Not because I feel sorry for them.  I don’t!  Not because they remind me of me.  They do!  But mostly because as the value proposition changes for the better lazy investors fail to recognize that the change has taken place.  And that becomes a very, very profitable realization as long as you make it early enough to get in before their reawakening takes place.

Always be well…

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