LIG - I see it this way.
At 13/31/99, ONXX had 14.5MM in the bank - cash and short term securities. To over-simplify, at that point it was a goner - it did not have the cash to fund large cohort trials no matter how promising the pipe-line. Through a stroke of luck, the prospect of financing for small biotechs such as ONXX went from dim to dazzling almost overnite; ONXX took advantage of that reversal, and now has nearly $40MM cash and securities.
Okay, we're now a bit more comfortable, but $40MM leaves very little cushion no matter how promising ONYX-015 may be. With this new secondary ONXX will have a war chest of $100MM, and now the company is in a position to face many quarters of cash burn. In a word, it is now in a position to fund the testing of its pipeline, including of course ONYX-015.
Does this mean ONXX is now a slam dunk? of course not. Many things could happen, but the main ones are -
ONXX management turn out to be lousy businessmen and strategic managers. Happens to so many small biotechs that it has to rank high on the list of possibilities.
Phase III of ONYX-015 bombs. VERY possible, given the track record of promising candidates that fail in phase III.
If that happens, I don't think we're looking at a 10 dollar stock. more like 2 or 3. But at least they now have the financial resources to fund a well designed Phase III
And if the trials are successful, then it's hard to calculate how high ONXX can go.
So, like everything else in the biotech world you have to make a leap of faith. I happen to think that the balance, because of this latest secondary, favors the upside.
(Disclosure : I have a very small position in ONXX but tried to add today at 20 3/16, only got 100 shares) |
