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Oncolytics Biotech Inc.’s (ONCY - Snapshot Report) shares gained 2.7% following the company’s announcement that it has finished enrolling patients in an open-label, multi-institution, two-arm randomized phase II study (OSU-10045) on its oncology candidate, Reolysin. Shares jumped a further 7.8% in the subsequent trading session. Shares are up 8% since the company’s announcement.

The study (n=70) will evaluate Reolysin plus carboplatin and Taxol (Arm A) in comparison with carboplatin and Taxol alone (Arm B) as a first-line treatment of patients with recurrent or metastatic pancreatic cancer. The primary endpoint of this study is progression-free survival.

This study is sponsored by the U.S. National Cancer Institute.

We note that Reolysin is the main candidate in Oncolytics’ pipeline and is being studied for different indications. Later this year, data from a randomized phase II study for ovarian cancer should be available.

According to the American Cancer Society, 46,420 people in the U.S. are expected to be diagnosed with pancreatic cancer in 2014, with approximately 39,590 deaths expected due to the disease. The prognosis for pancreatic cancer patients, according to Oncolytics, is poor, irrespective of the stage of illness.

Given the five-year survival rate of about 6%, we believe there is need for new treatments in the pancreatic cancer market.

Some drugs approved for the treatment of pancreatic cancer are Celgene’s (CELG - Analyst Report) Abraxane and Eli Lilly’s (LLY - Analyst Report) Gemzar.

Oncolytics carries a Zacks Rank #2 (Buy). A better-ranked stock in the biotech sector is Biogen Idec Inc. (BIIB - Analyst Report), carrying a Zacks Rank #1 (Strong Buy). Celgene holds a Zacks Rank #2.

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