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OvaScience Inc (NASDAQ:OVAS) Is A Potentially Rewarding Biotech Play

OvaScience Inc (NASDAQ:OVAS) Is A Potentially Rewarding Biotech Play
Written by
Chris Sandburg
Published on
June 24, 2017
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OvaScience Inc (NASDAQ:OVAS) is an interesting one. At the end of last week, the company traded for just $1.32 dollars a share, coming off the back of a long-term depreciation that saw the company lose more than 97% of its valuation subsequent to 2015 highs. It's had a couple of fresh CEO hires throughout its life to date, but hasn't had much luck in terms of marketing its portfolio of fertilization aid products globally.Over the last few months, however, certain steps have been taken to turn things around, and as action this week demonstrates, it looks as though these steps are starting to have the desired effect.At last count, the company traded for $1.91 a share – a more than 46% appreciation on it end of last week pricing. It's nothing spectacular and it's far, far from a full recovery, but it's a start.A start, that is, and we think there's plenty more run-room left on this one, with this thesis driven by the fact that, from the perspective of risk reward ratios, it's incredibly attractive.Here is what we are looking at.For those familiar with this company's legacy operations, namely its Augment fertility boosting product, the easiest thing would be to forget what you know. As per the recent pivot, the company is now focusing on the development of two new fertility products altogether, with one serving as the primary and one as a sort of secondary, follow-up pipeline asset. It may offload Augment near term, which could mean a nice capital injection, but operationally it's discontinued.Going forward, the majority of this company's valuation is rooted in the former of these two assets, what's called OvaPrime.Last week, OvaScience announced that it had completed enrollment in an ongoing clinical study of the treatment. It's a tolerability study right now, designed to assess the safety of OvaPrime in women with either primary ovarian insufficiency (POI) or poor ovarian response (POR). To explain briefly how it works, women have what are called egg precursor (EggPCSM) cells in the lining of their ovaries, which are a sort of immature egg cell. With OvaPrime, OvaScience is attempting to convert the cells into mature and fertile egg cells and – in doing so – overcome issues associated with the two above conditions, POI and POR in female patients.From a near-term catalyst perspective, we should get data from at least 20 of these patients hitting press before the end of 2017. The company also expects to complete biopsies in all 70 patients by the end of this year, and have topline available on all 70 by the end of the first half 2018.Fertility science is an incredibly large market. It's also one that is crying out for new options. If OvaScience can prove this treatment's safety as part of this ongoing study, it can carry forward into an efficacy study, and that's where the real catalysts will come.As per a fresh CEO appointment early this month, the guy at the helm is Christopher Kroeger, who is perhaps best well known for his role overseeing the sale of Cardioxyl to Bristol-Myers Squibb (NYSE:BMY) for $2.1 billion in 2015. He took a sabbatical, then, in his own words (in relation to wanting to find a new biotech CEO role), "looked at a number of companies, a key focus was good people and science that I think is transformational."He chose OvaScience.This is as good an endorsement as any in our eyes, and his compensation at the company is very much tied to OvaScience's success, as illustrated by this inducement grant announced earlier this week.Perhaps most interestingly, aside from the science, that is, is that this company recently restructured and freed up around $10 million of operating capital annually. Combined with cash on hand, it's this will see it through first quarter 2020, removing any near to medium term valuation risk for shareholders looking to pick up an exposure at current levels.Sure, it's not a great idea to try and catch a falling knife, but in this instance, this company really could be at an inflection point and – as a speculative exposure – is well worth a look.We will be updating our subscribers as soon as we know more. For the latest updates on OVAS, sign up below!Image courtesy of E Life via FlickrDisclosure: We have no position in OVAS and have not been compensated for this article.

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