Fighting against cancer is the highest objective of clinical-stage biopharmaceutical company Onconova Therapeutics (NASDAQ:ONTX). If you’re on board with this goal and believe that the company has a bright future, then you might consider taking a position in ONTX stock.
Incorporated in 1998, Onconova has been trading publicly on the Nasdaq Exchange for a while. However, skeptical investors may raise questions about whether the stock can remain on that exchange for much longer.
On the other hand, Onconova has been productive in raising capital and advancing its clinical anti-cancer programs.
So, it’s a tough decision to make: should investors buy the stock or not? We’ll sift through the facts and see if we can come to an informed conclusion.
A Closer Look at ONTX Stock
One fact that immediately stands out to me is that ONTX stock’s trailing 12-month earnings per share is a loss of around 14 cents.
That might not sound like much to worry about. However, bear in mind that this is a stock that traded at $1.18 as of March 22.
Therefore, the shareholders should definitely want to see Onconova’s earnings turn positive on a per-share basis.
Another concern is that ONTX stock has shown a tendency to pop and drop. We saw this occur in 2020, when the share price went from 28 cents in April to $1.39 in July, only to fall back to 21 cents in September.
There was also a recent attempt at a rally in early 2021, when the stock ran up to a 52-week high of $1.93 in February. But again, the stock couldn’t sustain the upward trajectory as it sank below $1 in early March.
The $1 level is significant on a technical level as well as psychologically. Yet, that price point is important for an additional reason – one which every prospective investor should be aware of.
Unfortunately, in October, Onconova received a letter from the Nasdaq Capital Market bearing bad news.
Generally speaking, Nasdaq requires that listed securities must maintain a minimum closing bid price of at least $1 per share. ONTX stock may have failed to meet that requirement.
Nasdaq did provide Onconova with a grace period in which to regain compliance with the aforementioned listing requirement.
And thankfully, in February, Onconova did receive notification from Nasdaq that the company had regained compliance with the minimum-bid-price requirement.
The problem here is that this isn’t a permanent fix. At any given moment, ONTX stock could fall below $1 again, thereby triggering another notice from Nasdaq.
Consequently, Onconova investors will have to deal with not just the volatility of the stock shares, but also the possibility of another warning from Nasdaq at some point in the future.
Making Steady Progress
As I alluded to earlier, Onconova specializes in developing products for patients with cancer. The company has three product programs in the pipeline:
- ON 123300, a multi-kinase inhibitor targeting solid tumors (in Phase 1).
- Oral rigosertib, a rat sarcoma pathway inhibitor for Kirsten rat sarcoma positive recurrent non-small cell lung cancer (Phase 1/2).
- An intravenous/oral rigosertib rat sarcoma pathway inhibitor for Covid-19 (pre-clinical).
In the fourth quarter of 2020, Onconova received clearance from the Food and Drug Administration (FDA) to begin Phase 1 studies with ON 123300.
Moreover, the company received Institutional Review Board (IRB) approval at one U.S. clinical trial site for ON 123300.
In addition to those significant clinical milestones, Onconova raised net proceeds totaling $35.2 million through two equity offerings during the fourth quarter.
It could also be argued that Onconova is in a fairly solid capital position, as the company reported cash and cash equivalents of approximately $49.5 million as of Feb. 28.
The Bottom Line
Onconova’s progress in advancing its anti-cancer clinical programs is certainly encouraging.
Yet, investors may be concerned about share-price volatility as well as the possibility of future de-listing threats from Nasdaq.
Thus, investors should only take a small position if they choose to own shares of ONTX stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.