When I first wrote about Ziopharm in March of 2015, when it was trading over $13 USD per share I was inundated with comments asking for "facts". Investors leaving their thoughts were convinced that "the facts" pointed toward ZIOP being a solid investment, one that would continue climbing to an oft repeated $21 target and beyond.
But there were no hard facts to support that opinion. In fact there are no facts that can be used to justify the current price of around $8.
Merriam Webster offers up this definition of the word fact:
- Something that has actual existence
- An actual occurrence
I live in Canada, where for some hockey is a religion. One team, the Toronto Maple Leafs, hasn't won a Stanley Cup championship for almost 50 years, not since 1967. That is a fact. This year the team has won 23 games and lost 45, that's another fact. They are the last placed team overall in the NHL, yet one more fact.
Those are the facts. Now....someone might tell me that the Leafs are going to win the Cup next year, and that's certainly a legitimate opinion, but its not a fact. In reality, using the available "facts" it would be hard to put forward an argument that the Leafs will even make the playoffs next year.
But that's enough hockey, I've justified my Canadian citizenship.
So what are the facts with Ziopharm?
They have an accumulated deficit of almost $500,000,000.00 as reported in their most recent 10K, to wit:
"At December 31, 2015, our accumulated deficit was approximately $492.7 million"
Also in the same 10K it says this:
"As of December 31, 2015, we have approximately $140.7 million of cash and cash equivalents. Given our development plans, we anticipate cash resources will be sufficient to fund our operations into the fourth quarter of 2017. This forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our expenses could vary materially and adversely as a result of a number of factors...".
This second point contains two things, fact and conjecture. The company doesn't say it "WILL" have enough money to fund operations for another 15-18 months....but they "anticipate" that they will. One could say that they "might" have enough cash to last until late 2017, or they might not.
So are there no "facts" to support a bullish stance on Ziopharm? I am going to argue that no, there are not. However, as with my example of the Maple Leafs, some might look past the facts and engage in conjecture to come up with a bullish opinion, and I would have no issue with that whatsoever.
What about Sleeping Beauty I hear you asking? Is SB not a "fact"?
Yes, SB is a fact. What it might or might not do however has yet to be proven scientifically. Even the company itself says in the same 10K:
"The translation of the SB system and AaPC for use in clinical trials has the potential to show how a nimble and cost-effective approach to developing genetically modified T cells can be used to implement clinical trials infusing next-generation T cells with improved therapeutic potential".
Sleeping Beauty (or SB) has the "potential" to do what they say...but as of yet they haven't proven it. If they succeed in proving it then you will have a fact. Until then, its conjecture.
Potential is an interesting word, and if you Ctrl F search the 10K you'll find it 54 times. Every parent of an underperforming student has probably heard it many times:
"Billy has a lot of potential, if he'd just get more serious".
But let's leave the 10K for 2015 now and delve into more recent developments. Ziopharms most recent PR came out on March 9th 2016 with this subject line:
Molecular Therapy Publication Highlights Sleeping Beauty Potential in Personalized TCR Gene Therapy
Again, the word "potential". Not what has been done but what might or might not, be done.
In the body it says this:
"The DNA plasmids from the Sleeping Beautyplatform provide a customizable solution to personalized TCR gene therapy, which is needed to open the door to safely target solid tumors," said Laurence Cooper, M.D., Ph.D., Chief Executive Officer of ZIOPHARM and an author of the paper. "There is growing consensus that a non-viral approach to gene therapy will be essential to targeting individual neoantigens. In Sleeping Beauty,we have the only clinically validated non-viral gene transfer platform. This compels us to bring this important technology to patients."
So does Ziopharm have something? Yes they do, they have Intrexon Corporation's Sleeping Beauty system which was exclusively licensed to them. And they're bringing this technology to patients. Those are facts....which brings me to the next fact. FDA approval.
To succeed Ziopharm will have to conduct and complete both phase I and phase II clinical trials. If the potential they speak of so often is proven as fact, then they'll have to conduct a more rigorous phase III trial.
And if that succeeds and they get FDA approval, then they will have achieved success. And I will join in with everyone who's been watching companies try for decades to cure cancer and cheer Ziopharm's success.
But as things stand right now they have what might prove a promising approach to cancer treatment....but one that is still scientifically unproven. And as of Dec 31 2015 they only had enough money to last another 18 months at most according to the company's own forecasts....and even in that forecast they allow that it might not last that long.
Phase III trials take an average of 3 years to complete. And Ziopharm doesn't yet have a completed and successful phase II trial. Obviously this is going to be a marathon and not a sprint. Despite being in their second decade of existence Ziopharm hasn't moved very far from the starting line....there are miles yet to go.
So what do they do when the cash runs out?
They'll have a number of options to consider. Perhaps they'll look for traditional financing from a lending institution if they're able to secure it. Or they could opt for a bond offering or convertible debentures. Or they could go back to the markets like they did in early 2015 and engage investment bankers to underwrite more dilution.
The facts, from a financial investment position are not rosy from where I sit. The science however does look promising, but I'm not a scientist. The science probably looked good in 2013 too when Ziopharm actually got a drug to phase III, but the results weren't there....the proof, the facts. meant they had to start over.
I hope they succeed this time, but as an investment vehicle with a market cap of anything close to $1 Billion USD, its far too rich when there are profitable dividend paying companies out there with lower market caps and much less risk.
Links to information and facts presented in this post:
10K filing: secfilings.nasdaq.com/filingFrameset.asp...;pdf=
March 9 PR: finance.yahoo.com/news/molecular-therapy...
Article on how long it takes for clinical trials: www.medicinenet.com/script/main/art.asp?...
My March 6th 2015 blog posting:
One last note on "the facts". There are countless longs, (actually I believe many of them are industry hacks and shameless promoters) who will prattle on endlessly about facts supporting the potential here. But touting buyouts and mergers while ignoring the harsh financial realities does retail investors a gross diservice in my opinion. Not that stock promoters care.
This is strictly an opinion piece, and my opinion could very well turn out to be wrong. This instablog post is intended strictly for informational and entertainment purposes and should not be used as a basis for any investment decisions. Investing in stocks or options involves significant risks. For investment advice you should seek the input of a professional investment advisor.
Disclosure: I am/we are short ZIOP.
Additional disclosure: You can find me in numerous forums where I use the names krill66 (yahoo) growacet (stocktwits) and ledrog (stockhouse).