On March 10, 2025, Leede Financial Inc. analyst Dr. Douglas Loe lowered his target price for Oncolytics Biotech Inc. (ONCY:NASDAQ; ONC:TSX) from CA$8.50 to CA$5.25 while maintaining a Speculative Buy rating, citing revised timelines for the company's clinical testing, regulatory review, and potential commercial launch of its oncolytic reovirus formulation pelareorep in breast cancer.
Oncolytics reported FQ424 financial results with operating expenses of CA$8.4 million and an EBITDA of negative CA$7.1 million, both comparable to trailing quarters in F2024. The company ended the quarter with a cash balance of CA$15.9 million, after raising CA$3.5 million through its at-the-market financing instrument. The company exited the quarter with 80.0 million basic shares outstanding and 95.7 million fully-diluted shares outstanding.
The primary focus for Oncolytics is advancing pelareorep into a pivotal Phase III cancer trial targeting advanced metastatic HER2-negative/hormone receptor (HR)-positive breast cancer. The company plans to commence a 180-patient breast cancer study by the first half of 2025, building on promising results from a Phase II 74-patient study that demonstrated superior survival benefit in women with HER2-negative/HR-positive disease. The study will test pelareorep in combination with paclitaxel in one arm, compared to patients treated with paclitaxel monotherapy alone.
The competitive landscape in HER2-negative/HR-positive breast cancer has evolved significantly with the introduction of kinase-targeted agents, including CDK4/6 inhibitors like Pfizer's palbociclib (Ibrance), Novartis' ribociclib (Kisqali), and Eli Lilly's abemaciclib (Verzenio). Oncolytics will likely target patients with more advanced disease, potentially those who have relapsed after prior treatment with these newer therapies. The company estimates there are up to 55,000 HER2-negative/HR-positive breast cancer patients in the U.S. alone who are either unresponsive to or have relapsed from current standard treatments.
Beyond breast cancer, Oncolytics continues to explore pelareorep's potential in advanced pancreatic cancer. In the ongoing GOBLET trial, pelareorep administered in combination with gemcitabine, paclitaxel-albumin nanoparticle, and atezolizumab has shown a 62% objective response rate. The company is also investigating the therapy's potential in anal cancer, multiple myeloma, and head and neck cancer.
Dr. Loe's valuation is based on the average of net present value (35% discount rate) and multiples of projected EBITDA and fully-diluted EPS forecasts for F2031 (CA$161.9 million and CA$1.21 per share, respectively). The analyst will be monitoring the commencement of the 180-patient Phase II breast cancer trial and the ongoing results from the GOBLET trial in pancreatic cancer.
With the share price at the time of the report at CA$0.99, the CA$5.25 target price represents a potential return of 430%.
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Disclosures for Leede Financial Inc., Oncolytics Biotech, March 10, 2025
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