Oncolytics Biotech (NASDAQ: ONCY) has made significant progress in two major markets, specifically breast cancer and pancreatic cancer treatment using their drug called pelareorep. What sets this drug apart is its compatibility with other drugs and its tolerable safety profile. That opens up two exciting avenues for further development.
The first opportunity lies in using pelareorep in combination with paclitaxel to treat HR+/HER2- metastatic breast cancer patients. In a phase 2 study called BRACELET-1, they achieved positive results with this combination. They conducted the study with three different cohorts, and the pelareorep + paclitaxel group showed the most promising outcome. The overall response rate was an impressive 31.3%, compared to just 20% for those who received paclitaxel alone.
Breast cancer is a significant market, and it’s estimated to reach a whopping $85.5 billion by 2032. What makes this combination even more appealing is that approximately 74% of all breast cancer cases fall into the HR-positive and HER2-negative category. So, there’s still a considerable market opportunity for Oncolytics to pursue.
Given the positive results from the phase 2 study, it’s highly likely that Oncolytics will advance the pelareorep + paclitaxel combination to phase 3 clinical testing. We can expect an update on the registration pathway for this combination in the second half of 2023. The unique mechanism of action of pelareorep, which enhances the immune system over time, is what makes it so promising. By replicating viruses within cancer cells, it can infect nearby cancer cells upon their death. This boosts both the innate and adaptive immune system, leading to an improved overall response rate over time, which reached 37.5% in the study.
Moving on to the second opportunity, Oncolytics Biotech is targeting first-line metastatic pancreatic ductal adenocarcinoma (PDAC) patients with a combination regimen. This includes pelareorep, chemotherapies, and a checkpoint inhibitor. In a phase 1/2 study called GOBLET, they demonstrated proof of concept with an impressive 69% objective response rate (ORR). This ORR is nearly three times higher than the historical control rate of 25%. The phase 3 study for this combination is part of the Precision Promise program and is expected to commence in early 2024.
Financially, Oncolytics Biotech seems to be in a decent position. As of March 31, 2023, they had around $29.7 million in cash and marketable securities. They have funded their operations through a U.S. ATM, and they expect this funding to last for at least the next 12 months. However, to support their late-stage programs and pipeline, they may need to raise additional capital. The Precision Promise program offers cost savings of up to 50% for their phase 3 study, which is a positive development. They also have the option to raise additional capital through a renewed Base Shelf prospectus, which allows them to distribute up to $150 million worth of securities.
Of course, it’s crucial to consider the risks associated with investing in this biotech company. The phase 3 studies for both breast cancer and pancreatic cancer treatments involve larger patient populations, and there’s no guarantee of successful outcomes. Additionally, their financial position may necessitate further dilution to maintain their operations.
Oncolytics Biotech shows great potential as a speculative biotech play. With proof of concept established in two significant market indications and several late-stage programs in progress, the company is certainly worth considering. The positive results achieved in clinical studies and the unique mechanism of action of pelareorep make it an intriguing investment opportunity. Just keep in mind the potential risks and the need for additional funding in the future.
