Seems like a smart guy; we just think he is wrong.
ZIOP’s first drug targets brain cancer. Ziopharm expressed enthusiasm for this based on treated patients surviving longer than historical controls, however, according to expertise we trust and rely upon, historical controls are rarely a good benchmark. Patients in clinical trials tend to be healthier than historical controls and tend to receive the most up-to-date care available…one of the benefits of being in a clinical trial.
Ziopharm has two programs, one of which is based on arguably questionable data, the other which is undifferentiated and likely not commercially viable. Ziopharm has consistent needs to raise cash, has done so by selling shares to a small investor base (see filings and holders), as well as an oddball transaction with a broker / dealer back in 17 or 18. While some of these participants are well regarded in general business and securities analysis, as a group, they would appear to have less expertise in life science. trial.
ZIOP’s enthusiasm is based on opportunistically chosen data...The ZIOP trial evaluated 31 patients, yet they discussed only 15 of these. The remaining not-discussed patients received various other doses of drug. Typically, higher doses of drug have higher efficacy. In this case, patients who received higher doses had survival times half of ZIOP’s highlighted patients and in-line with historical controls. In evaluating clinical trials, it is often a glaring red flag when companies cherry-picks patients who do well and exclude others. It is the aggregate of all patients that usually tells the entire story. As was related to us by a medical doctor / very successful biotech and life-sci investor : If data is tortured enough, it will confess to anything...That person believes this is what ZIOP has done. With "happy" data in hand, ZIOP approached the FDA to determine if they could seek approval for their therapy. The FDA answered that a controlled trial was required. The company has not yet announced plans to conduct such a controlled trial, notwithstanding the evidence indicates to us this drug does not work.
ZIOP’s second focus is its CAR-T program, which is genetically modifying immune cells to fight cancer, and is all the rage, if not yesterday's news. ZIOP licensed their genetic modification approach in January 2015, promising faster manufacturing times. Unfortunately, ZIOP could not get their approach to work reliably...Almost five years later, ZIOP will soon start human clinical trials. Unfortunately for ZIOP, there is more competition than in 2015, with over 100 companies developing similar or better CAR-T therapies. Further, the start of human trials requires an acceleration of spending. Along with our informed opinion that ZIOP is unlikely to ever have commercial success, ZIOP will continue to have needs to raise cash.
ZIOP’s most recent financing led by MSD and others at $3 per share gives them some time, but we think is indicative of problems, rather than a positive :
In comparison, companies that are at similar stages of development but that have promising technology tend to have market valuations of $175 million to $500 million. Given ZIOP’s underwhelming programs coupled with a need to raise cash outside of recognized biotech sponsors, we believe this is a good short at the current valuation.