Australian biotech company Kazia Therapeutics (NASDAQ:KZIA) stock rocked the market after reporting encouraging results from a Phase II/III trial for its glioblastoma brain cancer therapy Paxalisib. 

The positive results extended the life of patients by over three months compared to the current standard of care. Because the patients were a difficult-to-treat population, the results gave the oncology biotech developer cause to arrange a meeting with the Food & Drug Administration (FDA) to pursue an accelerated pathway for approval.

As a result, Kazia Therapeutics stock surged 730% on the news, jumping from 19 cents per share to as high as $1.58 before eventually tumbling lower. Shares stand 110% above where they traded before it posted the results.

Because glioblastoma treatment is seen as a $10 billion market opportunity according to some estimates, producing a treatment that is better than the current level of care is a major achievement. 

As such, there are numerous avenues for Kazia Therapeutics to exploit this market if Paxalisib gains approval. What can’t be ignored is the possibility a pharmaceutical giant that is looking to bolster its portfolio of oncology drugs could step up and acquire Kazia Therapeutics stock.

A New Lease on Life

Glioblastoma (GBM) is reportedly one of the most common and aggressive forms of brain cancer. It represents nearly half of all brain cancers. Tumors form in the brain or spinal cord though they most often occur in the frontal and temporal lobes. Left untreated, GBM can be fatal in six months or less.

Kazia Therapeutics’ Paxalisib is its lead drug candidate and has been the subject of 10 clinical trials for this disease. The FDA previously granted the therapy Orphan Drug status in 2018 and it gained fast-track designation in 2020. It has received various other designations from the regulatory authorities for various diseases.

In the Phase II/III study, Paxalisib resulted in a median survival rate of over 15.5 months compared to 11.9 months under the current standard of care. This is in line with an earlier Phase II study that found similar longevity by administering Paxalisib.

A Hotbed of M&A Activity

According to analysts at White & Case, the field of oncology is setting a fire underneath mergers and acquisitions. Dealmaking will reach $375 billion in 2027 as demand for treatments grows.

In less than a year, Bristol Myers Squibb (NYSE:BMY) acquired Mirati Therapeutics for $5.8 billion to gain possession of its lung cancer treatment. It also paid $800 million upfront to China’s SystImmune for its signal-blocking therapy for cancer cells. It could be worth up to $8.4 billion.

AbbVie (NASDAQ:ABBV) also acquired ImmunoGen for $10 billion and Johnson & Johnson (NYSE:JNJ) bought Ambrx Biopharma for $2 billion. Previously, AstraZeneca (NYSE:AZN), Gilead Sciences (NASDAQ:GILD) and Merck (NYSE:MRK) all made acquisitions in the cancer space to shore up their portfolios.

As patent expirations approach a critical stage for pharmaceutical stocks, Kazia Therapeutics could gain attention for Paxalisib.

Still a Risky Bet

Kazia Therapeutics stock has now traded in the 40-cent per share range for several days. Most of the gains were wrung out of the stock immediately after the results were published.

There could be a more massive upside in KZIA shares. Yet it still has the late-stage trials to go through, gaining permission from the FDA for fast-track approval and ultimately getting marketing approval.

Each step could excite the stock market again if the results are just as positive. Arguably staking a small claim to Kazia Therapeutics stock isn’t a bad idea. I wouldn’t go all-in because biotech investing is risky and full of unknowns. But for the speculative portion of your portfolio, buying a small tranche of the stock might not be a bad idea.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.