BOSTON (TheStreet) -- Every spring, a few cancer-related biotech stocks catch fire in a momentum-fueled sprint to the big American Society of Clinical Oncology (ASCO) annual meeting in June.
Oxigene (OXGN), rocketing more than 300% in the past month, is the hot ASCO stock of 2011. But can it last?A quick run up followed by an equally speedy run down is what often happens to biotech stocks gripped by the "ASCO effect." For a growing segment of investors, the ASCO annual meeting is a trading event that comes and goes every spring. It's fun and profitable while it lasts, but the festive atmosphere retreats as quickly as it starts. Oxigene is a small, cash-strapped drugmaker that isn't expected to make much of a splash at the big cancer research meeting. But the stock is nonetheless performing exceedingly well because traders like Oxigene's penny-stock market cap of just under $30 million, the low float of 5 million shares and the simple fact that Oxigene will have a presence at ASCO. The same can be said for Vical (VICL), Oncothyreon (ONTY), Cyclacel Pharmaceuticals (CYCC), Synta Pharmaceuticals (SNTA) and Sunesis Pharmaceuticals (SNSS). All are similar micro-cap biotech stocks that have traded higher in advance of the ASCO meeting. A new crop of biotech stocks may also run up now that ASCO released cancer drug research abstracts Wednesday night. No other drug stocks, however, have moved like Oxigene, which was trading in relative obscurity just one month ago. Shares were worth about $1.50, and daily volume rarely exceeded 250,000 shares. All that changed on April 18, the day ASCO released on its Web site the titles of research abstracts to be presented at its June annual meeting. Those abstract titles included two from Oxigene related to its cancer drug Zybrestat. On May 2, Oxigene closed at $2.25 on volume of 2.2 million shares. On May 6, Oxigene closed at $3.56, doubling its price in two weeks of trading. Oxigene zoomed past $4 a share on May 11 with volume exceeding 16 million shares or more than three times its float. Two days later, Oxigene hit an intraday high of $6.38 before closing at $5.24, again on extraordinarily high volume. The stock closed Wednesday at $5.14. A remarkable performance by any measure, especially considering Oxigene was one of the worst-performing biotech stocks in 2010, beset by concerns about its cancer drug pipeline, management turnover and a paucity of cash on its books. Oxigene was forced into a reverse stock split in February. Oxigene's experimental drug Zybrestat belongs to a class of cancer drugs known as vascular disrupting agents (VDAs) that are designed to target and destroy blood vessels within tumors, thereby depriving them of oxygen and nutrients. VDAs are supposed to work against existing or more mature tumor blood vessels, compared to anti-angiogenesis inhibitors like Roche's Avastin, which work by preventing tumors from developing new blood vessels. At this year's ASCO meeting, a final survival analysis will be presented from the "FACT" phase II/III study of Zybrestat in patients with anaplastic thyroid cancer (ATC). The median overall survival for patients treated with Zybrestat and chemotherapy is 5.2 months compared to 4 months for patients treated with chemo alone. This equates to a 35% reduction in the risk of death favoring Zybrestat, although the survival benefit is not statistically significant, according to a research abstract released Wednesday evening. While the survival trend is positive, the Zybrestat result is no different than what Oxigene reported from an earlier survival analysis from the same thyroid cancer trial last September. These data are not good enough to allow Oxigene to seek regulatory approval for Zybrestat. In March, Oxigene said it must conduct a new clinical trial of Zybrestat in thyroid cancer following a meeting with the U.S. Food and Drug Administration. When it comes to ASCO-related stock trading, however, the data aren't as important as the speculation about the data. On that latter score, Oxigene and the investors who traded the stock have done very well. -- Written by Adam Feuerstein in Boston.
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