Cascadian Therapeutics, Inc. (NASDAQ:CASC)

This is a good time of year to start cataloguing cheap oncology stocks for potential ASCO run-ups. Of course, solid winners like Agios and the CAR-T crew are good bets for a bump, but the real money will likely come where it's least expected. I've already marked Celsion as one of those potential unlikely winners, and after slogging through the transcript of the quarterly CC I'm going to add Oncothyreon to my little list.

Like Celsion, Oncothyreon belongs in the doghouse because of a history of extending false hopes with a dubious phase III trial and then dashing them to the ground. I'd never suggest parking a chunk of cash in one of these stocks and not looking at it for ten years. This trade is purely for ASCO run-up purposes. Oncothyreon has reinvented themselves with the exclusive licensing of Array's HER2 inhibitor ONT-380, for which they've now paid Array 30M upfront and will owe substantial milestones and royalties. It's very unusual for a smaller company to license a drug from a larger company on those kind of terms. Smaller companies generally try to acquire new pipeline compounds much more cheaply and then hype them up in order to facilitate dilution. Oncothyreon's willingness to pony up for ONT-380 at the expense of significant dilution at a low stock price indicates to me that management at least thinks the drug is the real thing.

Oncothyreon reported some preliminary data from single arm phase I trials of ONT-380 in combination with commercialized HER2 antibody drugs for heavily pretreated metastatic breast cancer in December. The data was limited but encouraging in terms of both efficacy and tolerability, and Oncothyreon has stated they will be presenting updated data from the trials at ASCO.

In addition to the ASCO catalyst, Oncothyreon has also acquired a nanoparticle platform called protocell through the purchase of Alpine Biosciences. Oncothyreon plans to develop protocell to deliver cytotoxic payloads to cancer cells, nucleic acids encoding deficient proteins in congential diseases, and for in vivo transfection of T cells with CAR-T. While all of this may be pie-in-the-sky, these are all very buzzworthy topics that could bring addditional attention to the stock. Oncothyreon has acquired an additional platform of Chk1 inhibition through a collaboration, and plans to submit an IND for a Chk1 inhibitor for oncologic indications before the end of 2015.

Historically, Oncothyreon has been a poor choice for a long term investment but this particular moment may be an opportune time to open a position. The share price seems to have recently plateaued with a floor of 1.5 and the painful dilution is likely out of the way for the time being. It will be important to remember going forward that there are now two series of preferred stock adding invisible shares and market cap to the numbers visible on financial portals.

yep.