Ziopharm Oncology (ZIOP) is a cancer biotech with pivotal P3 results expected during Q1 2013 for lead pipeline product, ZYMAFOS, in addition to several other compounds in early-mid stages of clinical development and another ongoing P3 trial for ZYMAFOS that began this past summer.
Yesterday,a Jeffries analyst lowered their price target for the company's stock to $4 from $7, cutting the stock from a buy to a hold. The Jefferies analysts wrote in Wednesday's note:
Downgrading to Hold from Buy on what we view as low likelihood of clinical & regulatory success for its lead drug palifosfamide in metastatic STS and SCLC. Based on our experts discussions, we are lowering our probability-adjusted success for palifosfamide in mSTS to 60% (vs. 85% previously) and in 1st-line SCLC to 40% (vs. 65% previously).
I think different opinions in the market are a good things for investors and traders to consider, but I also think there are some pretty poor opinions out there as well. This is why it is imperative for traders and investors to do their own due diligence, weigh each and every opinion equally, and make an informed decision.
With shares down sharply yesterday on a Jeffries downgrade from buy to hold, I believe a rebound is highly likely going into key Phase III results next quarter -- similar to the trade and recent move up in the share price of Oncothyreon (ONTY).
The company appears to have adequate cash into the 2nd half of 2013, so I do not believe dilution is a near-term risk. With the stock trading near 52-week lows, any dilution is much more likely to occur in 2013 at higher share prices.
Yesterday's knee-jerk selling might provide an excellent entry point for this potential catalyst trade.
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Because of some recent negative coverage, the stock price has been hit hard, but at its current price point, there are 3 major trendlines of support which are all intersecting at the same point. The blue down channel is too steep and should not sustain itself. I anticipate a snap back to the brown channel to $4.80, and perhaps even a test of the upper green channel resistance and 200 ma at $5.11.
