So a new week is about to kick off in the biotech space, and there are already some companies grabbing early week headlines. Here’s a look at who’s moving, what’s moving them and where we expect things to go moving forward.

The two companies we’ve got in our scope today are XBiotech Inc. (NASDAQ:XBIT) and Onconova Therapeutics, Inc. (NASDAQ:ONTX).

First up then, XBiotech.

This one’s not good news. The company is a development stage biotech that’s trying to get a drug called Xilonix approved in Europe. It’s an oncology drug, with a specific target focus indication of colon cancer, and markets have been watching this European effort closely for a couple of reasons. First, the obvious implications of an approval in Europe – colon cancer is a deadly condition and one that’s crying out for a fresh treatment to hit the space. The second, because it’s also up for approval in the US (well, it will be near term – we’ll get to this shortly) and the European decision promises to serve as something of a bell weather as to the chances of approval in the States.

So the latest news is that a meeting between XBiotech and the EMA has concluded pretty unfavorably for the former. The company announced that there’s no real chance of the EMA approving the drug based on the evidence that underpins the application. We didn’t get too much detail, but there are certain conclusions we can draw from the announcement. Primarily, that the reason behind the reluctance of the regulators in Europe to green light Xilonix is rooted in the failure of the company to show it can improve survival rates in colon cancer patients. Well, failure is perhaps a bit strong here. There wasn’t even really an attempt made – the trial on which the application is based went after an endpoint targeting pain, fatigue and anorexia, as opposed to extended survival.

There’s a chance that XBiotech might appeal the decision, but whatever happens it looks like there’s going to be a delay on any approval, if an approval happens at all, and the company is down close to 40% on the news.

So what does this say about the chances of approval in the US?

Well, it’s a bit of a different scenario in the States. Unlike the European application, XBiotech is aiming to submit an application that focuses on survival (overall survival is a primary endpoint) and this could (should) make all the difference if and when the application is submitted. Of course the company has to demonstrate an endpoint hit, and that’s what we’re looking at next as indicative of the potential for a turnaround. The trial isn’t going to wrap up before the end of 2017, but there’s a chance we’ll get some interim data in a couple of months (June, if all goes to plan) and this release should offer some insight into clinical benefit, as measured against the above mentioned survival endpoint.

Now, a look at Onconova.

Again, this one’s not great news for either the company or its shareholders. At the end of last week, Onconova put out a release detailing the pricing of a public offering, which should see the company raise a little over $5 million.

As many reading will already be aware, these sorts of announcements are generally seen as negative, because of their impact on current shareholders. When a company raises cash, it’s got to issue equity to do it (in this sort of raise, that is) and the addition of shares to the outstanding base dilutes the proportional value of the currently held shares.

The question that has to be asked post raise, is whether the dilution is justifiable; or in other words, can the cash raised be put to use in such a way that it adds value above and beyond the value lost through the dilution?

In this instance, then, we’ve got to look at how Onconova intends to use the cash. The company has stated that it’s going to go towards the continued development of its lead investigatory asset – a drug called Rigosertib, which Onconova is currently investigating as a potential treatment for Myelodysplastic Syndromes (MDS). It’s a phase III asset, and there’s some pretty strong early stage data supportive of its efficacy. As such, if this cash funds to phase III completion, and said completion comes with an indication of clinical benefit, we should see the stock recover above and beyond the hit it’s taken on the news of this raise.