Top Picks 2016: Ziopharm

01/18/2016 7:00 am EST


Our Top Pick for 2016 is a great example of the recent disconnect between a Company’s fundamentals and its stock price, observes John McCamant, editor of The Medical Technology Stock Letter.

In our view, 2015 has seen Ziopharm (ZIOP) transform itself into one of, it not the leader in gene therapy for the treatment and possible cure(s) for certain cancer. 

The MD Anderson partnership opened the flood gates at ZIOP as it led to Dr. Cooper joining as CEO (from MD Anderson) and the subsequent Merck KGaA and NIH partnerships. 

ZIOP’s key technologies are the patented Sleeping Beauty non-viral gene delivery system and the RheoSwitch that controls (on, off, or titrates) a gene’s expression in vivo. 

The company has a broad list of potential gene therapies in development as both mono and combination therapies including cytokines (IL-2, IL-12, IL-15), first- and second-generation CAR-Ts, Natural Killer (NK) cells, and T-cell receptor (TCR) cells. 

In our view, Dr. Cooper is the ideal CEO to execute, leverage, and deliver value to ZIOP shareholders.

His unparalleled, encyclopedic knowledge of immune-oncology will allow ZIOP to mix and match the various technologies that will be required to deliver off-the-shelf gene therapy solutions for both blood and solid tumors.

One of the keys to unlocking ZIOP’s tremendous potential this year will be the formation of several value-added partnerships (academic and corporate).

In addition, Dr. Cooper knows intimately every single I/O program in development (when he was at MD Anderson earlier last year every company in the world was trying woo him to do a deal with his labs by showing him their respective I/O platforms). 

Not only did ZIOP win the prize in the MD Anderson collaboration, the company’s technology platform is so attractive that it lured Dr. Cooper out of academia.  As a result, in our view Dr. Cooper now has the upper hand with all corporate business development transactions.

2016 should be a transformative year as ZIOP and their partner Intrexon (XON) unveil their plans and data at scientific symposia to tackle a broad spectrum of solid tumor types including GBM (brain), neuroblastoma, breast, prostate, colorectal, head & neck, and gastric cancers. 

Futhermore, the results and advantages using the RheoSwitch and Sleeping Beauty should really begin to differentiate ZIOP from the rest of the pack.

In our view, the company has built an impressive industry leading armamentarium of gene therapy tools enabling the development of off-the-shelf gene therapies that will allow ZIOP to cost efficiently tackle virtually all the major cancer markets listed above, not just niche indications.

Phase II data and corporate partnerships have significant potential to serve as strong catalysts for ZIOP’s share price. ZIOP is a buy under $12 with a target price of $18.

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