Here's Why Ziopharm Rose as Much as 15.8% Today

By Maxx Chatsko Markets Fool.com

What happened

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Shares of clinical stage biopharma Ziopharm (NASDAQ: ZIOP) rose nearly 16% Monday after announcing that it received positive guidance from the U.S. Food and Drug Administration regarding plans to move forward with its lead gene therapy candidate. The treatment being tested is the company's Ad-RTS-hIL-12 (technically licensed from Intrexon) combined with orally administered veledimex for recurrent glioblastoma, an aggressive form of brain cancer with few treatment options.

While management told investors of the meeting's existence in February when announcing full-year 2016 financial results, this is still an interesting development. That's because Ziopharm completed a phase 1 trial, but was able to skip a phase 2 trial altogether and will now have the opportunity to proceed directly to phase 3.

Image source: Getty Images.

So what

Ziopharm received "positive guidance" from the FDA about how to proceed with a pivotal phase 3 program, which the company noted could begin in 2017. It was likely able to skip ahead thanks to the fact that recurrent glioblastoma is a very rare disease with few treatment options, and the company's treatment has shown median overall survival greater than 12 months.

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This is certainly encouraging and the ability to skip phase 2 is remarkable. That's especially true considering that the phase 1 data included just 11 patients and was a single-arm study, meaning that there was no control. Ziopharm also told investors that three of those patients died after receiving treatment.

Despite all that, the FDA clearly thinks that moving ahead in a phase 3 trial is worth it for the patient population.

Now what

Monday's announcement is a good development for investors. If Ziopharm can replicate earlier data in a larger, controlled phase 3 trial, then it deserves to get to market sooner to help patients and be rewarded for its innovative approach. However, investors shouldn't discount the fact that the treatment's clinical history leaves more questions than answers about what is needed to achieve success in the upcoming pivotal trial. We'll need to await further updates from management later this year to know for sure.

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Maxx Chatsko has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.