Oncothyreon and OncoGenex: Room to Rise

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

In "Readers Respond" I do my best to answer readers' questions, but keep in mind that my responses to these questions are my opinions and personal speculation that I have based on my own research and DD.

Also, I will try to respond to a number of requests that I've received via email or comments to the board asking for 'VFC's Take' on stocks that readers have found. While I'll do my best to address as many as I can, please take a few things into into consideration while reading:

  • I have not thoroughly researched all of the stocks that I'm about to comment on. I've done the initial DD but my opinions are mostly based on my first impressions of the stock. I'm merely providing VFC's Take, as requested. Use that as a starting point to do your own DD.
  • Don't get testy if I don't like your stock. Remember, this is just my initial impression and I take into consideration some variables that other people don't, that's why 'VFC's Take' is not always the mainstream impression.
  • I appreciate all the recent feedback, and keep the stock tips coming; this is a great forum for all investors of all levels to share tips and insights. There's a whole lot of stocks out there, but there's only a few gems. Let's keep trying to find those gems.

ONTY, OGXI: A comment from Muhammad regarding Oncothyreon (ONTY) and OncoGenex (OGXI):

Dear VFC,

This is the third time a send to you and I am hoping I will be lucky this time and get some feedback from you. I know you are very busy, get a lot of emails and this blog is just hobby. I am an overseas investor and really need your help. In your opinion, which pick is better; ONTY or OGXI.

Thanks in advance,

Muhammad

VFC's Take: Sorry it has taken me so long to get back, sometimes it's tough to keep up for the reasons that I've mentioned before and Muhammad re-iterated in his comment.

As for ONTY and OGXI, I'll offer my opinion on the two stocks, but your own DD should be the deciding factor as to which stocks you invest in.

I think that a speculative investment into either one has the potential to pay off in the mid to long term, even after the humongous run enjoyed by OGXI already this year. However, I like ONTY just a bit better at this point and I'll explain my reasons why; however, also keep in mind that I am long ONTY and have no position in OGXI - although like anyone else out there I would have liked to have been along for the ride with other OGXI investors earlier this year.

The first reason I like ONTY just a bit better is because of the price. This is more of a psychological factor because market cap is what is really important, not price, but many small investors look at the quantity of shares that they hold rather than considering the quality. The fact that you can buy 100 shares of ONTY for the same price as 15 shares of OGXI does come into play with the small investor because an investor may be inclined to spend more speculative money than they should in an attempt to boost their overall number of shares. For instance, a small investor using the Sharebuilder automatic investing plan may put five hundred dollars towards OGXI in order to see a nice boost in the number of shares when in reality that investor should only be putting two fifty in the plan.

I say this because I've made that mistake myself before I started to trade with a little bit more discipline. You can't ignore the psychological factor of a lower price, but all investors should keep in mind that it is market cap that matters, not price.

Another thing that I like about ONTY is that Stimuvax is on the back end of Phase III trials while the most advanced product candidate in the Oncogenex pipeline is still looking to commence Phase III. That tells me that ONTY has the more immediate chance to post the higher percentage gains. Since the Oncogenex pipeline - which I consider to be superior to the Oncothyreon pipeline when it's all said and done - is still awaiting a Phase III trial, I don't see a double or a triple in price from the current levels anytime soon while I do think that ONTY has the chance to double or triple in the short to mid term - based on any updates or interim Phase III data for Stimuvax.

As for overall pipelines, I think that Oncogenex has the better potential for a long term payoff because of the amount of product candidates in the pipeline and the number of indications for which they are being investigated, but that is not to say that Stimuvax and the small molecule pipeline of Oncothyreon is any slouch either.

ONTY is currently in my buy zone - below five bucks - while I'll need to keep OGXI on my watch list for a little while to see how it trades before coming up with my buy price.

After the huge run in OGXI this year, I think that from this point moving forward for the short to mid term, ONTY has the better potential to post the higher percentage gains, but I also think that OGXI is still trading at a market cap low enough that allows for a continued move to the upside, but don't expect the monumental gains of earlier in the year.

For those that rode OGXI up from three dollars - congrats.

Disclosure: Long ONTY, no position OGXI.