Ziopharm Oncology: Step by Step

In my last article I pondered what was next for Ziopharm (ZIOP). In early September the company completed a small PIPE for approximately $5MM plus warrants for a like amount. I believe they were trying to put enough gas in the tank to safely make it to the next leg of the race.

The next leg may be upon them. On Friday, the company reported some very encouraging randomized Phase II data on its Sarcoma drug , palifosfamide (ZIO-201).The data was presented at the annual meeting of the Connective Tissue Oncology Society in Miami Beach.

While Ziopharm has yet to land a partner for any of its programs, that may soon change. Speaking from the conference, CEO Dr. Jonathan Lewis, cited "many considerations and options" for partnering. "The ideal thing would be to do a regional deal in Europe first, with someone who's very good at manufacturing, retaining rights in the U.S. and then go from there," he told BioWorld Today (here). "The clinical-development part we're quite good at."

Many experts in the field believe that palifosfamide holds promise.

George Demetri, director of Center for Sarcoma and Bone Oncology and Ludwig Center at Dana-Farber Cancer Institute and Harvard Medical School, said:

These interim results are very promising, indicating a potentially new drug to help control this life-threatening disease with acceptable safety and quality of life.

Lawrence Einhorn, professor at Simon Cancer Center of Indiana University Medical Center, said:

These data are not only encouraging for sarcoma but hopefully palifosfamide may also work in treating other cancers. This is particularly interesting if the oral form is successful in the clinic.

My bull thesis on Ziopharm remains intact. The company has 2 mid-stage drugs and one early stage compound and a market cap of just $75MM.Darinaparsin (ZIO-101) the other mid-stage drug was given much attention at ASCO this June.

I believe it likely that Ziopharm will be able to partner one(or both) of its mid stage programs short term. This will hopefully strengthen the company's balance sheet and cause a few more Wall Street analysts to take a serious look at this interesting micro-cap play.

Disclosure: Author holds a long position in ZIOP

Comments

[willydo:]

I have held ZIOP for about 1.5 years and try to keep up with any news and the news has been encouraging lately.
I would be interested to know opinions on what value the stock should or could have going forward. I don't know much about these smaller biotecs but they are looking to partner and have 3 different drugs in the pipeline. The stock is in the 3-4$ range now. Could it go to 6? 8? 12? or more ? (I know it can go anywhere, but based on historical trends for companies involved in this sort of thing, what could be expected?
Thanks,
Willydo

Nov 12 08:59 PM

[Wall Street...:]

Very tough to speculate on that one. It depends on the type and timing of ny potential partnering arrangement and if they will need to do any additional money raises.

My gut says if they have a legitimate program in PHIII next year with some cash in the bank from a partnering deal, this could be a 200MM market cap. If they partner both you could easily see the valuation north of 300MM.

The numbers above assume upfront payments to finance PH III of the ZIO-101/201 programs. ZIO301 is very early stage . Movement there with MSK could also add a bit of incremental value.


On Nov 12 08:59 PM willydo wrote:

> I have held ZIOP for about 1.5 years and try to keep up with any
> news and the news has been encouraging lately.
> I would be interested to know opinions on what value the stock should
> or could have going forward. I don't know much about these smaller
> biotecs but they are looking to partner and have 3 different drugs
> in the pipeline. The stock is in the 3-4$ range now. Could it go
> to 6? 8? 12? or more ? (I know it can go anywhere, but based on historical
> trends for companies involved in this sort of thing, what could be
> expected?
> Thanks,
> Willydo

Nov 14 12:30 PM

[willydo:]

Thanks for the information, Teacher. I at least have a bit of an idea what could be expected.

Regards,

Willydo

Nov 14 07:33 PM