Investors Show Confidence in Cancer Immunotherapy Stocks

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Includes: AGEN, CASC
by: VFC's Stock House

News of positive survival data in a long term follow-up study of a previously concluded mid-stage Stimuvax trial on Monday sent shares of Onconthyreon (ONTY) smashing through the previous 52-week high to set a new mark of $6.62. The patients involved in the long term study were among those treated with Stimuvax during a mid-stage trial that tested the vaccine's effectiveness in treating non small cell lung cancer [NSCLC]. The positive results help to confirm what is becoming apparently clear with the new breed of cancer vaccines, that the longer time goes on, the more we see that they work.

Merck KGaA (NYSE:MRK) has taken over the clinical development of Stimuvax in a partnership with Oncothyreon and is also testing the vaccine against other cancer types.

Shareholders of the company demonstrated their approval of the news by sending shares of ONTY over forty percent higher on Monday, but the ride may be far from over if Stimuvax continues to demonstrate its vast potential. With a market cap of 127 million, ONTY can go as high as ten dollars, in my opinion, before seeing a significant pullback; but that's not to say that we won't see any volatility on the way there. Long term, if news continues to be released at this rate and Merck KGaA can take Stimuvax to market, then ONTY could generate substantial gains from this point. For a better analysis of how high this could go, I'll wait to see what happens with Dendreon's (NASDAQ:DNDN) Provenge.

Monday's ONTY news combined with the recent attention lavished on Antigenics (NASDAQ:AGEN), it looks like investors are becoming more confident in the cancer immunotherapy stocks, and long term, patient shareholders are being heavily rewarded.

It was tough buying these stock when they dropped to below a dollar during the market crash last year, but AGEN, like ONTY, has long been one of my picks to become the next Dendreon (DNDN).

I completely understand if some long time shareholders take some profits at this point, especially those that are averaged in for under a buck, but I'm going to hold for the long term and see how high this stock could go. At this point, it would take some drastic negative news to kill the Stimuvax hype, but as the positive data keeps getting released, it's looking less likely that that is going to happen.

Before we get too carried away, let's bring a perspective check: Dendreon continues to be the wild card with the cancer immunotherapy stocks. If the FDA does come through and approve the prostate cancer treatment, then the whole 'sector' will soar as a result. However, the FDA is highly unpredictable and an 'approvable' letter for Provenge could send the sector reeling. The FDA has been hesitant before to accept the successes of cancer vaccines in the past, but in my opinion, the FDA will approve Provenge based on the Phase III results that demonstrated the vaccine's ability to prolong life.

I don't think that the FDA will turn away Provenge, but it is the FDA, a body of government employees that can be heavily influenced or lobbied, and in order to maintain levity we've got to entertain any possible negatives.

Like Rocky Balboa said in Rocky Six, "Life ain't all sunshine and rainbows, kid." Neither is stock investing.

This year's ASCO conference was a key indicator that big things were ahead for companies producing the cancer vaccines and their respective stocks, but let's not forget that the biggest benefit comes the patients that need the treatment.

Antigenics

Shares of Antigenics (AGEN) jumped over seventeen percent on Monday, the first trading day after the stock was called a "ten-bagger" in Sunday's Wall Street Journal.

As is the same with Oncothyreon Inc (ONTY), long term I'm confident that we have a winner in both, but we've got to expect some volatility to the up and downside as the swing / momentum / day traders flock to the action.

With both stocks, if you're late to the game, watch the trading at the open and gauge your buying accordingly. I always suggest buying a position with about half as much as you want to put in the stock and then trying to average down from that point. If you sit around waiting for the stock to drop to where you want it to before you get in, you could end up missing a nice run in a volatile stock such as this one.

On the other hand, if you leave some of your money on the sidelines, you'll be able to add more shares if the stock drops after your initial buy. It feels worse to go 'all in' right away and watch the stock drop after you buy than it does to go 'half in' and have the opportunity to buy cheaper shares in case it drops.

That being said, if you're invested for the long term, don't worry about the fifty to sixty cent swings in the two dollar range.

It looks like shareholders of both AGEN and ONTY are going to be living happily for a quite a while.

Disclosure: VFC is long AGEN, ONTY.