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Biotech Stock Mailbag: Ziopharm, Oncolytics, Sarepta

But once again, Oncolytics missed its own deadline for reporting results from the trial.

Finally, in September, investors got news, but it was far from what anyone expected. Oncolytics blew up the head-and-neck cancer trial by radically changing its design and purpose.

The company claimed that while keeping the overall trial blinded, it discovered a significant difference in response and PFS between two groups of head-and-neck cancer patients within the study -- those with loco-regional disease (tumors primarily restricted to the head and neck) and those with metastatic disease (where cancer had spread to distant parts of the body.) Reolysin appeared to be working much better in patients with metastatic disease compared to patients with loco-regional disease, therefore the study needed to be modified to analyze PFS results for these two "distinct" groups of patients separately, Oncolytics claimed. Oh, and the company also said the separate PFS analyses couldn't be done until additional patients were enrolled to increase the statistical power, meaning actual results from the study would be delayed again.

At this point, if you're a sentient biotech investor, you should be seeing red flags flying all over the place.

We've all witnessed instances of dubious post-hoc data-mining i.e. when companies sift through the detritus of a failed clinical trial to find a subgroup of patients where their drug appears to work. Oncolytics is engaged in a twist on this questionable strategy. I call it "prospective data mining."

Instead of announcing what are probably negative results overall from the Reolysin head-and-neck cancer study and then claiming a benefit in the sub-group of metastatic patients, Oncolytics is keeping the overall results hidden but "prospectively" changing the rules of the study to focus only on the metastatic patients.

With all the delays to this point, Oncolytics has lots of PFS data to report, but it refuses to do so. That's just not a credible way of conducting business. There's no way this head-and-neck cancer trial can be used to approval purposes anyway, so the company should just show us the data and make whatever case it wants for Reolysin working better in metastatic patients, then move on to designing and conducting another study.

Frankly, I'll be surprised if Reolysin demonstrates a benefit in any head-and-neck cancer patient but we won't know that for sure until Oncolytics stops playing games.

Unfortunately, there's seems to be no end to the shenanigans. This week, during a Q&A session at the RBC Capital Markets HealthCare Conference, Oncolytics COO Matt Coffey moved the goalposts on the head-and-neck cancer trial once again. Now, we're not going to get PFS data in the first quarter or the second quarter, as previously promised. Instead, the company is waiting for overall survival data before disclosing results.

When will we see overall survival data? Coffey demurs, but of course hints that the longer the trial remains blinded, the better it looks for Reolysin (because patients must be living longer. Nudge, nudge, wink, wink.)

Quickly, one more reason to distrust Oncolytics management. Last year, they told investors and analysts to expect the announcement of interim results from an open-label study of carboplatin plus paclitaxel with and without Reolysin in first-line metastatic pancreatic cancer. Again, this study is open label, so doctors and patients know if they're receiving Reolysin or not.

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