Can Upcoming Catalysts Help Onconova Therapeutics Stock Rebound?

Posted on February 03, 2020 by Medtech[y] Staff

Onconova Therapeutics (Nasdaq: ONTX) has had a rough start to the year with their stock down 35% so far in 2020. The company announced a $10 million stock offering at the end of December, which has continued weighing on the stock even after closing in early January.

The stock had a nice rebound on January 23 when it was announced that Onconova regained the rights to rigosertib, its lead Phase 3 drug candidate, in the key pharmaceutical markets of Greater China. However, it was short-lived and is currently trading at $0.32.

According to the company's most recent investor presentation, they have enough cash to fund operations through the first half of 2021. With any biotech stock of this size, there is always concern for an offering when positive news is released, or shortly after.

Obviously this could change at any time, but it is a positive that Onconova management is confident in their cash position for the next 12 months.

Ontx Corporate Presentation 20190110 Finalv2 1 P027
ONTX Corporate Presentation

With many biotech stocks at a similar stage as Onconova, the stock can nosedive until the next set of data is released or a positive press release is published. If you believe in a company's science, then timing an entry isn't as important. However, if you are looking for the best time to "catch the falling knife" then it typically comes down to when the next catalyst is released.

The Phase 3-stage biopharma company has an initial focus on myelodysplastic syndromes (MDS) and has several other milestones to look forward to in 2020.

According to the company's investor presentation, the next catalyst is expected to be the Phase 3 INSPIRE Pivotal readout of data in the first half of 2020.

Aside from the US IND submission, which is anticipated by the third quarter of 2020, a Phase 2/3 combination therapy randomized study with an azacitdine control arm is scheduled to start in the second half of 2020. The company expects rapid enrollment and a response endpoint can be achieved in ~6 to 9 months after patients are enrolled.

Ontx Corporate Presentation 20190110 Finalv2 1 P026
ONTX Corporate Presentation

This is a consistent story with biotech stocks. Does the stock fall into the $0.20's or teens? No one knows. However, if the data and press releases are positive, there is a good chance to make a substantial profit on the trade.

From there, the question becomes: is Onconova a trade or an investment. The story along the way will help shape that decision. In the meantime, ONTX is shaping up for a nice trade towards the end of the first quarter and into the middle of the year.