ZIOPHARM Oncology Inc. (NASDAQ: ZIOP) has been working on a treatment for metastatic soft tissue sarcoma for the past several months. A breakthrough was reached when the Phase 3 study conducted for the drug Palifosfamide produced the required number of progress-free survival (NYSE:PFS) events. This means that the drug trials could be accelerated and testing be taken to the next phase therefore bringing it closer to being ready for use.
In the wake of the announcement about the Phase 3 study, the stock price of the company went up by close to 25 percent. The event is without a doubt a major one for the company which is developing the drug to be used as a first-line treatment against the disease. With the targeted PFS events reached, the results and data collected will now be reviewed by an independent committee. The committee will determine whether the data is accurate and effective enough to be relied on. The process of reviewing the data will take a few weeks, which means that ZIOPHARM will be able to report the results of the findings by the end of March. Once it is cleared by the committee, ZIOPHARM can move forward to conduct clinical trials for Palifosfamide.
Even though the stock has increased in value because, this does not provide enough evidence for prospective investors to jump in. Rather, they would be better off waiting for the share prices to stabilize before making a final buying decision. The situation will be much clearer once the data review committee publishes its decision. Also, expecting the market capitalization of the company to increase as a result of this recent event is not prudent. After all, the final impact hinges on the review of the data provided by the company to the committee. The verdict could go either way even though ZIOPHARM is optimistic. The situation will become clearer over the next few weeks as news from the company reveals what committee has decided.
The bottom-line is that the company will benefit from Palifosfamide only if the drug is cleared by the relevant authorities and the company can conduct placebo trials in the near future. If the decision of the data review committee does not go in their favor, ZIOPHARM Oncology Inc. could see their stock prices plummet as the event would surely lead to a significant drop in investor confidence. The immediate future of the company hinges on the decision to come in a few weeks.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.