Martin Tsvetkov

Onconova Therapeutics Inc (NASDAQ:ONTX) En Long Route For Eventual FDA Clearance

by Martin Tsvetkov September 3, 2015

Onconova Therapeutics Inc (NASDAQ:ONTX, ONTX message board) is a clinical-stage biotech which, like hundreds of others, seeks to provide novel solutions for cancer treatment and it has a hefty pipeline of drug candidates aimed at addressing just that. What the company does not have yet is an actual drug on the market, which seems to be the basic rationale behind the stock's current chart positions.

As a result, ONTX's most recent quarterly report for the period ended June 30 showed no significant improvement over the comparable period in 2014. Revenue streams remained stuck at the $120 thousand mark and Onconova closed the quarter in the red. However, the company managed to almost slice its expenses in half as its R&D and administrative costs in Q2 clocked in at $9 million, a 47% improvement on a year-over-year basis and this has resulted in a much lower loss per share of $0.41 as opposed to $0.77 incurred in Q2 2014. When it comes to the balance sheet, ONTX seems to have lost a meaty portion of its short-term assets as they are down to $27 million as compared to $47 million in the comparable quarter. As for the liabilities, they have pretty much remained unchanged, both on a short- and a long-term basis.

Considering the cash burn rate mentioned above, ONTX will most likely need additional financing to keep its slew of trials going until its lead candidate, rigosertib, eventually gets the long-coveted FDA clearance for at least one of the studies it is currently deployed into. Speaking of rigosertib, ONTX announced yet another possible application for its leading drug candidate in mid-August when it effected an IND (investigational new drug) application to the FDA, this time for an IV (intravenous) formulation of rigosertib. The market reacted immediately and ONTX's value immediately headed north by jumping 22% on Aug. 14 triggering a gargantuan volume avalanche which resulted in a record-breaking turnover of 17 million – a feat that could only be surpassed if the FDA actually approves the IND application in due course (which it hasn't yet).

Anyway, it only took one day and this day was Aug. 14 for the vast majority of the stock's shorters to close out their positions before incurring increasingly greater losses, which is why ONTC's days-to-cover ratio shrank considerably and so did the number of investors with a bearish sentiment to the stock. We have yet to see how they have reacted after the news cooled off when the short interest for the second half of August comes to light.

Over the long term, Wall Street analysts see some potential in ONTX and this is evident from their 'buy' recommendations, as well as their expectations of gradually dwindling losses through 2018. Yet, how the stock will perform on the charts in the short term seems far more difficult to predict in the current state of affairs.

Comments 0

Type the characters that you see in the box (5 characters).