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$ONCT - Now that #biopick2021 submissions have been announced, I would like to share the reasons why I do not agree with the $ONCT bull thesis (NOTE: I do not short biotechs are a rule and have no position in $ONCT).
Four Primary Reasons:
Four Primary Reasons:
1. Significant reason to believe ADC is more efficacious than naked antibody: VLS-101 showed multiple monotherapy CRs during DE whereas $ONCT appears to see CRs only in combination with BTKi. VLS-101’s 40% CR rate and 40% PR rate (caveat N=5 in DE) of r/r DLBCL patients should...
(1. cont) scare the heck out of $ONCT. Also, $ONCT CRs are in low dose patients at ASH ’19, not in the high dose. NOTE: Same issue with $ALXO. BP is OBSESSED with PR/CR rates when comparing drugs and this comparison makes both $ONCT and $ALXO unpurchaseable by most of smart BP.
2. Individual investors are at a disadvantage compared to large healthcare investors in this name. Remember, the vast majority of $ONCT investors have never seen the detailed VelosBio deck or the full preclinical and clinical data on which the Series B and Merck buyout was based.
(2. cont) If Dave Johnson (CEO VelosBio) only saw fit to license the ADC and bispecific, I would bet huge amounts of money that his Series B deck made a strong case for efficacy of ADC vs. antibody. Why would I bet that? See point 3.
3. VelosBio’s Series B was PACKED with smart, sophisticated, large healthcare investors, many of whom are known for doing very good diligence on pre-IPO assets. By my count, NONE of them have invested in $ONCT despite the Velos buy-out and seeing Velos preclinical + clinical data
(3. cont) And there were multiple offerings that would have allowed them to buy-in if they wanted. BIG RED FLAG considering cheap oncology assets with efficacy data are few and far between. People who know this target the best want nothing to do with $ONCT.
4. Last, and most important, I do not like their merger with $GTXI and the situation surrounding the three most recent raises. Companies like this always seem to me more focused on raising cash to burn than on maximizing IRR.
(4. cont) $ONCT likely to burn huge amounts of cash in large heme trials only to be even later to $MRK's party. And don't forget $MRK already has a very good BTKi.
