What happened

Over the course of the first half of 2018, the clinical-stage immuno-oncology company Ziopharm Oncology (NASDAQ:ZIOP) lost a staggering 27% of its value, according to S&P Global Market Intelligence. What went wrong for the biotech?

Ziopharm's shares have struggled this year for three reasons:

  1. The company decided to hit the pause button on the the launch of a phase 3 study assessing the gene therapy Ad-RTS-hIL-12 combined with veledimex as a treatment for the extremely aggressive form of brain cancer known as recurrent glioblastoma. 
  2. In mid-June, the Food and Drug Administration (FDA) placed a clinical hold on the company's point-of-care CD19-targeted chimeric antigen receptor T cell therapy program. 
  3. Lastly, Ziopharm's dwindling cash position, which stood at $51 million at last count, has sparked concerns that the company is gearing up for a massive secondary offering soon. 
A man holding a holographic image of a DNA molecular in his outstretched hand.

Image Source: Getty Images.

So what

Ziopharm is attempting to play catch up in the increasingly crowded adoptive cell therapy market, so these two major clinical setbacks couldn't have come at a worse time. The fact that management has also failed to stay ahead of the company's cash needs is a second major issue that needs to be addressed sooner rather than later. In fact, it's hard to imagine Ziopharm carrying out all of these planned clinical trials without a hefty infusion of cash. 

Now what

The good news is that both the delay for Ad-RTS-hIL-12's pivotal-stage trial and the clinical hold on the company's point-of-care cell therapy platform should be resolvable issues. That said, Ziopharm desperately needs to find a partner to help out with funding these clinical activities or it's going to have to dilute shareholders on an epic scale.

To be fair, Ziopharm's management did note in their last quarterly earnings release that the company's cash position should be sufficient to fund operations into the second quarter of 2019. But that estimate looks overly optimistic based on the biotech's current cash burn rate, along with its anticipated cash needs as its clinical program matures. So, shareholders should probably brace themselves for a sizable offering within the next three months, as well as additional weakness in the biotech's shares as a result.