July 26, 2007

Too early to call on Ziopharm

Last week, I blogged about Ziopharm Oncology, which was featured is Business Week's Inside Wall Street. This week, I'll take a look at the company and its potential for investors.

Ziopharm has three clinical trial-stage drugs that are being tested to treat various cancers from myeloma, liver cancer, and sarcoma. Its drugs ZIO-101 and ZIO-201 are currently in Phase II testings. The company believes it will complete its current Phase II trials for ZIO-101 in myeloma, liver tumors, and hematological cancers by the end of this year. It also thinks it will be able to complete its Phase II trials for sarcoma with ZIO-201 by the end of the year.

This should be encouraging to investors. The end of these trials could create catalysts for the stock to move, which it needs, as the stock has been stuck in neutral ever since going public. However, the data that has been made available so far has been very limited. The company appears to be having success in its trials, but I'm afraid it is too early to make a call on this stock. The end of the current trials should give us a better idea of the direction this company is headed.

I am not currently comfortable making a investment or recommendation on this stock. I am cautiously optimistic about the future though. In looking at the potential value of this firm, I came up with a fair value of about $6, which only takes into account part of ZIO-101's potential, and ZIO-201, it doesn't include ZIO-301, which is in Phase I trials. I feel like I'll be able to get a better idea of the company's potential value later in the year, when more data comes out. I am also cautiously optimistic because the two analysts that follow the company have buy ratings on the stock with price targets of $10 and $20. I will be following this stock as we get closer to year-end. There is potential for Ziopharm, I just feel we can take our time and do the proper research before investing in this risky biotech.

Disclosure: I have no position in ZIOP



The stocks a little pricy.

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