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ONCYF: Oncolytic Viruses Emerging as Effective Cancer Treatment

By John Vandermosten, CFA


Oncolytic Viruses (OVs) have come to the forefront in recent years following the approval of Amgen’s (NASDAQ:AMGN) IMLYGIC in late 2015.  IMLYGIC was indicated for the treatment of unresectable melanoma recurrent after initial surgery and further trials are currently underway for sarcoma, liver and other cancers.  Deals have also taken place to expand large pharma’s role in the OV space with Bristol-Myers Squibb’s (NYSE: BMY) €850 million deal for NG-348, an oncolytic virus developed by PsiOxus (Private).  In Europe, Boehringer Ingelheim (Private) teamed up with ViraTherapeutics (Private) in a €210 million deal to develop a next-generation oncolytic virus therapy platform late last year.  Several small-cap companies such as Australia’s Viralytics (ASX:VLA) and the Canadian BriaCell Therapeutics (CVE:BCT.V) are also developing this class of drug for use with a wide variety of cancer types.

The mechanism of action of oncolytic viruses is complementary to chemotherapy and checkpoint inhibitors, which are being used widely in combination with oncolytic viruses by many in the space.  The agents have a multi-pronged approach where the virus attacks and destroys the tumor cells.  The debris from the lysed cells then activates the innate and adaptive immune system to complete the elimination of the cancer.

One of the more exciting participants in the space is the Calgary, Canada-based Oncolytics (OTC:ONCYF) (TSX:ONC) which is working on a compound named REOLYSIN in several key cancer indications including metastatic breast, pancreatic, myeloma, colorectal and others.  Oncolytics’ collaborator, the Canadian Clinical Trials Group (CCTG), submitted an abstract to American Academy of Cancer Research (AACR) that will be available the afternoon of Friday, March 31st and will be presented in early April to the scientific community.  The abstract will discuss the final results from a phase 2 study of REOLYSIN plus standard weekly paclitaxel as therapy for metastatic breast cancer.  The company is also expected to publish results for two pancreatic trials in the near future.  If any of these are able to show substantial efficacy in addition to the safety that has already been observed in the completed trials, we think this US$60 million market capitalization participant has substantial upside.  We are excited to see new results from Oncolytics and others in the space and are looking forward to seeing additional details regarding REOLYSIN at AACR next month.

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