Oncolyze

I am surprised by Oncolyze’s $30 million valuation. Given the massive market upside, I would not have batted an eye if the valuation had been double. This is because Onocolyze is in a capital intensive industry. Preclinical pharmaceutical companies need major amounts of funding in order to get through the FDA approval process. Therefore, valuations tend to be much higher for these types of companies. At $30 million, I believe that this valuation is a steal.

Oncolyze will initially target an indication for acute myeloid leukemia (AML), a form of cancer with a 75% mortality rate. According to founder Steven Evans, this is a $2 billion market in the U.S. alone. However, the drug that Oncolyze has developed can potentially treat more than 25 types of cancer. All of these are massive, multibillion-dollar industries. Therefore, there is almost no ceiling on Oncolyze’s addressable market size. And that’s just in the U.S. Oncolyze plans to get approval in Europe too, which will add to the already massive market upside.

Oncolyze founder and CEO Steven Evans is a former cardiovascular medical doctor who has since succeeded in multiple entrepreneurial endeavors. He founded a medical device company called ImaCor Medical Technologies that he brought through FDA trials and secured venture capital investments for. He also served as CEO of a company with a unique radiation treatment for solid cancers. After having a conversation with Dr. Evans, I believe he has the know-how, personality, and expertise to not only lead the company through successful FDA trials, but also continue raising the funds required to give the company enough runway to get to market. 

The rest of the Oncolyze team is full of experienced medical doctors and consultants with deep expertise in the pharmaceutical and medical technology industries. 

When it comes to drug development companies, differentiation is often the easiest part to explain. Usually companies are developing new and unique drugs that help treat diseases in more effective ways. That is certainly the case with Oncolyze. Its method of “exploding” cancer cells is not currently being publicly developed by any other companies. Of course, other companies could be developing similar technologies incognito. However, Oncolyze has orphan drug designation from the FDA for the acute myeloid leukemia (AML) indication. This means that no other company can bring this type of drug to market for treating AML.

Oncolyze has extremely promising preclinical data on mice. The company has conducted the highest form of animal trials possible: transplanting live leukemia cells from human patients and injecting them into mice. And the drug worked perfectly in the mice that received it, killing the cancer cells and leaving healthy cells unharmed. This type of efficiency trial is as close as you can get to testing out the drug without actually giving it to humans. When investing in a pharmaceutical company, this is truly as good as it gets. 

Let’s not lose sight of the space that Oncolyze is in. Pharmaceuticals are notoriously capital intensive, requiring millions of dollars to get to commercialization. Therefore, Oncolyze carries major funding risk. The company estimates it will take $15 million to get the drug through the first clinical trial. The first step in that process will be to complete safety trials in mice, which will cost an initial $5 million (with human trials costing $10 million). 

Additionally, there is always a chance that another pharma company (big or small) is developing the same type of drug. However, this risk is somewhat reduced since Oncolyze has orphan drug designation, which gives the drug market protection for the specific indication of acute myeloid leukemia for seven years. There’s also a risk that the clinical trials don’t go well, which could really derail the company and its prospects. 

As startup investors, we love pharmaceutical companies because of the major world-changing upside that is baked into the opportunity. If Oncolyze can successfully commercialize this drug, more than 25 forms of cancer could potentially be CURED. That would change the world. CEO Steven Evans thinks that getting this product to market would be worthy of a Nobel Prize in Medicine. I couldn’t agree more. 

The company has also had multiple meetings with the FDA regarding manufacturing practices and preliminary data findings. These have all gone very well, and the company is confident it will be able to quickly bring the drug to market once approved. With extremely deadly diseases like acute myeloid leukemia (which has a 75% mortality rate), the FDA is typically far more lenient with the clinical data required to get a drug approved. This can mean a number of things, from smaller (and less expensive) trials to expedited timelines. 

All the pieces are in place for Oncolyze to be successful. If the trials do happen to go poorly, the company told us that there are a number of ways to recalibrate the drug and even immediately switch focus to other indications. 

Oncolyze represents a once-in-a-lifetime opportunity to invest in a potentially world-changing drug that could cure 25 different forms of cancer. Companies like this typically don’t have much clinical data at this stage and are rarely smart investments. However, Oncolyze has extremely promising animal trial data with absolutely zero unexpected toxicity so far. If the company gets the funding it needs, signs are pointing to Oncolyze being a home run investment opportunity. 

Report written by KingsCrowd Senior Investment Analyst Teddy Lyons on May 9, 2023.