Cascadian Therapeutics Inc (USA) (NASDAQ:CASC) has received a huge vote of confidence from value investor Seth Klarman. The investor recently acquired 25 million shares in the company. The investment came only a day after Cascade announced that the FDA has granted “Fast Track” designation to its lead drug candidate ONT-380.
Klarman acquired the 25 million shares of Cascadian Therapeutics at a price of $0.94 apiece. With that investment, Klarman now owns 18.5% of Cascadian. You can see that Klarman took advantage of a recent pullback in the shares of Cascadian to grab the stock at a lower price. Shares of Cascadian immediately spiked after news reached the market that Klarman had invested in the stock. But the stock of Cascadian is still down more than 52% YTD.
The stock of Cascadian nosedived after the company changed its name from Oncothyreon. In addition to renaming itself, the company also said that it would focus more on developing cancer treatments than vaccines.
What could be making Cascadian attractive?
The question that some analysts and investors are now asking is why Klarman decided to put his millions of dollars in Cascadian Therapeutics. The investor, one of the most followed, did not reveal what attracted him to the stock. But you can see that he could be betting positively on Cascadian’s breast cancer drug candidate ONT-380.
Following the FDA’s granting of Fast Track designation to ONT-380, it means that it could take a shorter time to bring the drug to market than previously possible. Fast Track designation grants a drug accelerated regulatory review, which should shorten the time required to complete development of a candidate. Shorter development duration should also come with cost advantages.
Cascadian’s ONT-380 is in Phase 2 trial, which began in 1Q2016. Besides ONT-380, Cascadian has another cancer candidate in preclinical stage.
Cascadian Therapeutics finished 1Q2016 with cash of $13.9 million against a debt of $527.5 million. Before the disclosure of Klarman’s investment in the company, Cascadian had announced securities fundraiser through which the management hoped to generate $41.8 million in net proceeds.