Assigning a value to a development-stage biotech company is a questionable task, and generally requires more intangible assumptions (market potential, clinical trial progress, partnership implication) than tangible assumptions (balance sheet, income statement, various financial strength indicators).  However, the merit in such an assessment is that biotech investments have a more pronounced value inflection point that could, if things go well, represent a significant return on investment in multiples instead of percentages.  In that scope, I would like to present Oncothyreon Inc. (ONTY), a biotech company developing cancer therapies; its lead product is Stimuvax, a cancer vaccine.

Cancer vaccines are designed to treat cancer by stimulating the immune system to fight the cancer.  The general public is more aware of this class of medicine due to recent milestone achievements by Dendreon (DNDN) in developing Provenge.  Stimuvax is a more traditional biologic approach to what Dendreon is attempting to achieve through Provenge (ex vivo cell therapy).  Biologic cancer vaccines target a specific tumor cell antigen (antigens are markers that allow the immune system to recognize non-self entity such as tumor), but this is a technical disadvantage against cellular products: tumor antigens can differ from patient to patient, and tumor to tumor, because cancer is a mutative disease.  However, from a commercial product perspective, biologics are cheaper to produce, and can be off-the-shelf, which makes them more compatible to a traditional pharmaceutical business model; this is probably the reason Oncothyreon was able to partner its cancer vaccine earlier in the development timeline compared to competitors such as Dendreon. 

Stimuvax is partnered with Merck, and Merck initiated a Phase 3 clinical trial for non-small cell lung cancer (START…