Positive response for Oncolytics' cancer virus program spurs share spike

Shares of Canada's Oncolytics ($ONCY) surged again this morning after the biotech reported out a final analysis on its tumor virus Reolysin, showing a 92% response rate among a small group of 25 patients enrolled in a Phase II study.

Out of that 25, all but two of the patients demonstrated a reduction in tumor size. The mean shrinkage rate was 32.7% with 10 patients seeing a partial response and 13 showing signs of stable disease. And its stock quickly spiked 20% on the news, which followed a report on interim data back in February. Final progression-free survival and safety data for the study will be reported later in 2013.

Oncolytics also has a Phase III study of Reolysin underway for head and neck cancer, which has attracted considerable interest in the small-investor crowd drawn to the high-stakes world of drug development. Some analysts, including TheStreet's Adam Feuerstein, have been critical of the company's data so far, questioning the data's accuracy and its ultimate usefulness in gaining a possible regulatory approval. Small cap biotechs in general have a miserable record at gaining approvals for cancer drugs.

But none of that skepticism, of course, was on display in the company's release.

"We are thrilled to have demonstrated 92% overall tumour shrinkage in this group of patients," said Oncolytics CEO Brad Thompson. "Squamous cell carcinoma of the lung is notoriously difficult to treat, and these results support further investigation of Reolysin in randomized clinical trials for this indication."

Investigators for the biotech took a common respiratory virus and in this case added a pair of chemotherapies. According to the biotech, this approach allows the virus to infect cancer cells and essentially force it to self destruct. It's one of several cancer viruses in the clinic, including Amgen's ($AMGN) work on talimogene laherparepvec--the oncolytic virus known as T-Vec--which is being studied as a treatment for melanoma.

- here's the press release

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