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Onconova Weakness Improves Risk-Reward Heading Into Pivotal Study Results

Stocks in this article: ONTX

ONTX Chart
ONTX data by YCharts


The past six weeks have not been kind to Onconova Therapeutics, as the chart above shows quite clearly. The company is expected to release top-line results from a phase III study of rigosertib in myelodysplastic syndrome (MDS) in December or the beginning of next year, so it's natural for investors to view the sharp sell off as a sign that negative data may have leaked.

Speculation about the possible failure of the rigosertib MDS study escalated further after Onconova posted a description of a new phase III study in MDS.

It's unlikely Onconova has bad rigostertib data in hand or planned the new study because it believes the current one will fail, so the only thing that's changed with the recent sell off is the risk/reward of being long the stock heading into the data announcement.

An objective look at the new rigosertib study should calm jangled nerves. The new study is designed to enroll only 90 MDS patients, compared to 270 patients in the ongoing study. The FDA and its counterparts in Europe aren't likely to approve a drug based on a study that is smaller than an older one that failed.  If Onconova was planning a second pivotal study of rigosertib in MDS, it would more likely enroll a similar number of patients as the current study.

The new study is also described as a phase IIIb, which is different from a phase III study. A phase IIIb is meant to supplement regulatory submissions in an attempt to either expand a drug's label or obtain insurance reimbursement. This is the most likely reason for Onconova to conduct the new rigosertib study. The company noted on their most recent quarterly conference call that the new study is intended to provide patient access to rigosertib after completion of the phase III trial.

I still put the odds of a successful rigosertib phase III study in the high risk MDS population at around 60%. A close call but more likely to succeed than fail.  

Onconova will have data from its low-risk MDS trial at the American Society of Hematology (ASH) annual meeting next month.  Positive data from this trial can go a long way in changing sentiment towards the high-risk MDS trial. While the endpoints and patient populations are different, a positive phase II trial in the low-risk MDS population will provide confidence that rigosertib is an active drug.

We got a first look at the data when the ASH abstracts were released November 7. Onconova continues to see responses with little myelosuppression.  In addition, the abstract notes that there are particular genomic methylation status that is correlated with response to treatment, which means the company could enrich a phase III trial with patients more likely to respond.  This analysis is early but encouraging.

In general, I suspect the full data presented at ASH will confirm rigosertib is active in low-risk MDS and this might be enough to alter investor sentiment heading into the more important phase III data in high-risk MDS.  From a trading perspective, Onconova's sell off has improved the risk/reward going into the end of the year.

Sobek is long Onconova.

David Sobek has been writing on biotech for a number of years through various outlets with a general focus on small cap oncology and antibiotics companies. He received his PhD in political science from Pennsylvnia State Univeristy in 2003 and a BA in international relations from The College of William and Mary in 1997.

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