Vaccine for cancer as oncology treatment.
Biotech investing can be tricky. Often, the drugs that these fledgling companies produce don’t pan out, and shareholders take a drubbing. But at OSE Immunotherapeutics, which aims to prevent cancers via vaccines, the news is encouraging.
The French company recently announced that it has launched a global Phase 3 trial for its cancer vaccine, Tedopi, which is taking place in the U.S., United Kingdom, Canada and Europe. The trial brings OSE a step closer to regulatory approval for cancer immunization treatment. (There are four phases in the approval process.) OSE in April secured a $9.3 public funding for Tedopi.
Meanwhile, the firm has forged a partnership with pharma giant AbbVie to develop a treatment for chronic inflammation, which came with a $48 million investment from the major drug outfit, a sum that could expand to as much as $665 million if the project meets certain progress milestones. Plus, OSE has expanded its partnership with another big pharma player, Boehringer Ingelheim, centered on therapies for cancer and cardio renal metabolic diseases.
Over the past 12 months, Paris-traded OSE stock has increased 66%. That’s almost triple what the S&P 500 gained. The gamble for investors is whether it will continue to rise. Odds are OSE will, as its product is vitally needed and stands to be in the vanguard of cancer treatments.
“Every day, the immune system is fighting and eliminating cancer cells,” said Nicolas Poirier, OSE’s CEO, in an interview. “Immunotherapies have revolutionized cancer treatment, offering cures for some, but not all types of cancer. We must continue to push on the gas pedal.”
Overall, biotech stock has had uninspiring results lately, which frankly is typical for this volatile investment class. The last time the SPDR S&P Biotech exchange-traded fund, the benchmark for the sector, had a good year was in 2020, when it logged a 48% advance amid the launch of vaccines to thwart Covid. It was in the red in 2021 and in the single digits ever since. Higher interest rates are partly to blame, yet so is over-exuberance.
Still, maybe the trend is turning for biotech. Thus far this year, the index ETF is up 2.7%, ahead of the broad-market S&P 500’s 2.3%. Sure, these early numbers are hardly a blowout. But the outlook for biotech overall is positive, if not dazzling.
The pattern for small biotech outfits releasing big news is for a huge vault in stock price, then a falloff. If the post-excitement stock slide leaves it significantly higher than its pre-news price, that usually is a good sign. Such was the case with Viking Therapeutics, whose obesity drug showed good data last February, coming out of trials. The shares more than tripled for the full year, and now have backed off. They still, however, are higher than the pre-news level.
“The biotech landscape has experienced significant volatility over the past few years but now appears to be moving into a more normalized environment,” noted Wellington Asset Management’s Nilesh Kumar and William Craig, in a research piece. In their view, broadly speaking, “companies that have unique assets with derisked and understood biology should continue to find favor among public investors and succeed regardless of market conditions.”
That seems to encompass the likes of OSE. As with other small biotechs, OSE (market cap: $149 million) is not profitable. Nonetheless, investment firm Edison Group projected in a research note that its earnings per share should turn positive for 2024, once it reports, and continue in the black for 2025.
“We are very well positioned,” said CEO Poirier.
