Cancer Vaccines and Oncothyreon: Flying Higher as Market Sinks

| About: Cascadian Therapeutics, (CASC)

It was only a couple of weeks ago that Oncothyreon (ONTY) made headlines for spiking through the $6 mark on news that the company had initiated the Phase II portion of the Phase I/II for the anti-cancer agent PX-866. Since that time the market has taken a relative dive, with respect given to a Tuesday rebound, but ONTY shares continued trading higher, breaking through the seven dollar and topping out at $7.55 before stalling.

The only recent blip in the ONTY trading scheme came when immediately following a stock offering earlier this year, but the real catalyst that everyone is eyeballing right now revolves around Stimuvax. Partnered with Germany's Merck KGaA (OTCPK:MKGAF), Stimuvax is being tested as an immunotherapeutic treatment for non-small cell lung cancer. Trials are currently winding down, with results expected to be released next year. It's also possible that some interim results will be released later this year, as the data is compiled and finalized for a 2012 release.

Oncothyreon doesn't begin and finish with Stimuvax. The company has put its cancer-fighting technology of kinase inihibitors behind multiple Phase II trials. Indications for which the kinase inhibitors are being tested are glioblastoma, head & neck and colorectal cancers. The rapid rise to a $7 share price -- a three-month double in price -- and $300 million market cap are solid indications that the market is starting to take notice of the potential value of this company and its treatments.

Dendreon (NASDAQ:DNDN) is an example of what a successful cancer vaccine can do for a small company, and Oncothyreon looks to follow in those lofty footsteps set by DNDN. More importantly, the stage is being set for a huge breakthrough in the way we treat cancer, in my opinion. Did Dendreon open the floodgates for cancer vaccines? I wouldn't say there will be a "flood" of cancer vaccine approvals any time soon, but Provenge certainly set the standard by being the first to market in the United States.

The patient communities had long been looking for the likes of Provenge and other experimental vaccines to be approved, if only to have an alternative to the vicious side effects that chemotherapy and radiation treatments inflict on a patient's body and immune system. Now it looks like the immunotherapeutic approach to fighting cancer is catching on with the medical community as well.

Oncothyreon, with late-stage trials winding down and a big-named partner, looks to be among the better candidates to follow in the path set by Dendreon. Should the Stimuvax trial results prove to be successful, then expect a huge increase in ONTY share price.

While ONTY may be among the more solid late-stage picks, let's not forget about a couple of mid-stage picks that are looking to make a splash in the field of cancer immunotherapeutic medicine.

Cel-Sci Corp. (NYSEMKT:CVM) is one one that cannot be ignored. CVM's treatment for head and neck cancer, Multikine, is currently involved in a global Phase III trial and has blockbuster written all over it, should the trial come to a successful conclusion.

Watching ONTY shares fly higher in the midst of a market setback just shows the strength that could be had by a good cancer stock with products in mid-to-late stage trials, regardless of market conditions. Other cancer stocks to keep an eye on are Keryx Pharmaceuticals (NASDAQ:KERX) (perifisone), Agenus (NASDAQ:AGEN) (Prophage) and Biovest International (OTC:BVTI) (BiovaxID).

Watch this sector; when one runs, there's always the possibility of a "sympathy run" for others in the sector as well.

Disclosure: I am long CVM, AGEN.