UPDATE AND BUY RECOMMENDATION
U.S. Research: Biotechnology/Pharmaceuticals
June 9, 2009
CHRYSTYNA BEDRIJ
MARK MERRILL
KEITH A. MARKEY, PHD
ZIOPHARM ONCOLOGY, INC. (NASDAQCM:ZIOP)
ZIOPHARM SCORES A HAT TRICK AT ASCO 2009
1.
(PALIFOSFAMIDE, ZIO-201) – POSITIVE FINAL PHASE I COMBINATION (DOXORUBICIN)
DATA FURTHER SUPPORTS ONGOING IV PHASE II RANDOMIZED TRIAL (PALIFOSFAMIDE +/ZYMAFOS
DOXORUBICIN).
ZYBULIN™ (INDIBULIN, ZIO-301) – FAVORABLE ORAL INDIBULIN TRANSLATIONAL AND DOSE
SCHEDULING DATA SET STAGE FOR PHASE I/II STUDY IN SUBSET OF BREAST CANCER PATIENTS.
3. ZINAPAR™ (DARINAPARSIN, ZIO-101) – IV PHASE II STUDY RESULTS DEMONSTRATE OVERALL
RESPONSE RATE OF 37% IN LYMPHOMA AND 60% IN PERIPHERAL T-CELL LYMPHOMA PATIENTS;
ORAL PHASE I DATA IN ALL CANCERS SUPPORT IV SAFETY AND DEMONSTRATES EARLY ACTIVITY.
2.
ZIOPHARM Oncology, Inc. (NasdaqCM: ZIOP)
is a biopharmaceutical company engaged in the
in-licensing, development, and commercialization
of a diverse portfolio of proprietary cancer drugs
that address unmet medical needs. Currently, the
Company has three product candidates –
Zymafos™ (palifosfamide), Zybulin™ (indibulin),
and Zinapar™ (darinaparsin).
Share Price (6/08/09)
52-Week Price Low / High
$1.87
$0.50 – $2.56
Mkt. Capitalization (issued)
$41.1 MM
Shares Outstanding (issued)
21.85 MM
12-month Target Price
$3.00
Website
www.ziopharm.com
ZIOPHARM presented data results for all three of the Company’s product candidates – Zymafos™,
Zybulin™, and Zinapar™ – at the 45th American Society of Clinical Oncology (ASCO) annual
meeting:
 Zymafos (Palifosfamide, ZIO-201) – is a novel DNA-alkylating molecule advancing in a
randomized Phase II controlled trial for the treatment of metastatic or unresectable soft
tissue sarcoma as front- or second-line therapy in combination with doxorubicin
(Adriamycin™, Doxil™); Phase II results expected in 2H „09. Highly favorable Phase I
palifosfamide/doxorubicin combination data was presented at ASCO 2009. Phase III pivotal
registration trial to initiate as early as 1H „10.
 Zybulin™ (Indibulin, ZIO-301) – Zybulin™ is a novel tubulin-binding molecule in Phase I
trials expected to enter Phase I/II breast cancer trial in 2H „09 with mathematically-derived
dosing schedule developed by Dr. Larry Norton, a leading breast cancer thought leader
from Memorial Sloan Kettering. Encouraging Phase I safety and efficacy data of Zybulin™
in combination with capecitabine (Xeloda™) in patients with advanced solid tumors and
data from mathematical modeling studies were presented at ASCO 2009.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
Please Review Disclosures on Page 18 of this Research Report
1
ZIOPHARM Oncology, Inc.
June 9, 2009
 Zinapar™ (Darinaparsin, ZIO-101) – Zinapar™, a novel, mitochondrial-targeted molecule
was showcased at a high-profile session at ASCO 2009. Phase II studies demonstrate
activity in several lymphoma subtypes, good tolerability, and the potential for easy
combination with other therapies. Given that the peripheral T-cell lymphoma (PTCL)
patients had an impressive overall response rate of 60%, we expect ZIOPHARM to pursue
a formal registration trial in patients with relapsed/refractory peripheral T-Cell lymphoma
(PTCL), a straightforward registration pathway and highly unmet medical need, and later to
expand its clinical utility in other sub-types of non-Hodgkin‟s lymphoma.
We believe ZIOP shares continue to offer an attractive investment as progress in the clinic
remains superior for all three clinical programs. We are reiterating our BUY recommendation on
ZIOPHARM Oncology, Inc. (NasdaqCM: ZIOP) and our 12-month price target of $3.00 per share.
ASCO 2009 REVIEW
ZYMAFOS™
 HIGHLY FAVORABLE ZYMAFOS™ PHASE I DATA STRONGLY SUPPORT ONGOING PHASE II
RANDOMIZED TRIAL. Dr. Sant Chawla, co-principal investigator of Zymafos™ and a pioneering
physician whose work in sarcoma oncology has brought him recognition as one of the world‟s
foremost experts of sarcomas and sarcoma therapy, stated that “These highly favorable Phase I
data of palifosfamide in combination with doxorubicin established the foundation for the now
ongoing Phase II randomized trial in front and second-line setting. Data has previously been
reported on the activity of palifosfamide as a single agent in advanced sarcoma, as well as the
established synergy of palifosfamide with doxorubicin preclinically. With so few treatment
options, I look forward to ZIOPHARM initiating the final phase of the drug development
program that could establish the first new front-line sarcoma therapy in decades and as well
to advancing into the clinic an oral form for much expanded patient access”. It is expected that
Zymafos™ will demonstrate superiority to ifosfamide, the current standard of care in treating
sarcoma, without the side effects from the toxic metabolites of ifosfamide. Ifosfamide is regularly
included in combination regimens for the treatment of sarcomas, testicular cancers, head and neck
cancer, certain types of non-Hodgkin‟s lymphomas, and other solid tumors. The Company believes
1
that palifosfamide may be able to replace ifosfamide in any or all of these combination protocols.
BACKGROUND: The Phase I trial of palifosfamide in combination with doxorubicin was fully
enrolled with 13 patients, predominantly with soft tissue sarcoma and non-small cell lung cancer,
and who had received a median of two prior therapies. Of 12 evaluable patients, there were 3
partial responses. Of the 8 patients with soft tissue sarcoma (STS) 75 percent had stable disease
or better, with 2 having partial responses and 4 having prolonged stable disease. The median
progression free survival (PFS) was 19 weeks. The combination was easily administered and was
well tolerated with no-dose limiting toxicities during a total of 73 cycle of treatment. There were no
reported events of encephalopathy, hemmorragic cystitis, or renal toxicity often associated with
some current treatments for STS. Adverse events were primarily hematologic, including
neutropenia and thrombocytopenia, and were managed easily. The pharmacokinetic evaluation in
this trial indicated that palifosfamide exposure is comparable to that seen in murine models that
2
resulted in marked synergy with doxorubicin.
1
ZIOPHARM Oncology, Inc. press release dated May 31, 2009. “ZIOPHARM Presents Positive Data from Phase I Study of
Palifosfamide in Combination with Doxorubicin at ASCO.
2
Brd. S2 “A Phase I study of palifosfamide in combination with doxorubicin: Safety and preliminary efficacy. (Abstract #10577), L.H.
Camacho, S.P. Chawla, V. Chua, G. Abbadessa, P.B. Komarnitsky, and J. Lewis.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
2
ZIOPHARM Oncology, Inc.
June 9, 2009
CONCLUSIONS: Final Phase I data reported at ASCO of palifosfamide in combination with
doxorubicin established the foundation of the now ongoing Phase II randomized trial in the front
and second line setting. Initial results from a Zymafos™ Phase II randomized controlled trial
comparing Adriamycin® (doxorubicin) plus palifosfamide to doxorubicin alone in patients with
front- and second-line metastatic or unresectable soft tissue sarcoma are expected to be
announced in late 2009, likely at the Connective Tissue Oncology Society (CTOS) conference
during the first week of November. A Pivotal Registration Phase III trial in the same setting is
expected to be initiated as early as the first half of 2010.
ZYBULIN™
 ZYBULIN™: POSITIVE DATA PRESENTED IN SOLID TUMORS. Dr. Larry Norton, a leading breast
cancer thought leader from Memorial Sloan Kettering and senior author of the ASCO presentation of
Zybulin™, stated that “Indibulin is not only an interesting drug because it is active against
taxane resistant cells without the neurotoxicity seen with all the other tubulin binding agents,
but also because mathematical modeling has revealed a novel dose-schedule that promises to
maximize efficacy and minimize toxicity in the clinic. Also, it is oral, so it is potentially of value
3
to the entire world’s population”. We believe that given the prevalence of solid tumors, the
commercial opportunity of such an anti-mitotic in an oral formulation and with no neurotoxicity is
significant.
BACKGROUND: Zubulin™ (indibulin) is a novel, unique targeted tubulin binding agent, one of the
essential proteins for chromosomal segregation, and targets mitosis like the taxanes and vinca
alkaloids, among the most widely used anti-cancer drugs in oncology today. The development
program for indibulin continues to progress with potential application possible in a wide variety of
cancer types. In The Phase Ib study, oral indibulin was administered with oral capecitabine
(Xeloda™) in patients with advanced solid tumors. Trial results presented at ASCO were for 7
patients who had received a median of three prior therapies. All 7 patients were evaluable for
safety, and 4 for efficacy. Three patients had stable disease for a minimum of 6 cycles with 1
th
patient ongoing in their 11 cycle of treatment. There were no dose limiting toxicities and
therefore no maximum tolerated dose was established. Adverse events included hand-and-foot
syndrome (capecitabine), fatigue, vomiting, loss of appetite and headaches, and were easily
managed. There was no reported neurotoxicity, consistent with other Phase I and preclinical data
with indibulin. There was early activity seen in breast, colon, bladder, and prostate cancers with
this sub-optimal dose level and schedule, which is encouraging with regard to further study using
mathematically-optimized dose scheduling, the subject of the preclinical data also presented.
CONCLUSIONS: Oral indibulin in combination with capecitabine is very well tolerated with no
neurotoxicity. Formal analyses of the data utilizing Norton-Simon Modeling reveals that the major
effect of therapy occurs in five days of exposure, which is not manifest on gross inspection until
one week thereafter. Hence, an intermittent schedule based on five days of drug administration
preserves full activity while minimizing toxicity. This may also minimize acquired resistance. A
4,5
Phase I-II study in breast cancer using this novel scheduling strategy is in development. It is
expected that the Company will, with additional funding, initiate a Phase I Oral Zybulin™ trial
3
ZIOPHARM Oncology, Inc. press release dated May 30, 2009. “ZIOPHARM Presents Positive Indibulin Translational and Dose
Scheduling Data at ASCO.
4
Indibulin, a Novel Tubulin Targeting-Agent, in Combination with Capecitabine, is Suitable for Mathematically-Optimized Dose
Scheduling. J. J. Lewis, M.D. Galsky, L. H. Camacho, D.M Loesch, P.B. Komarnitaky, B. Wallner, J. Stevens, L. Norton.
5
“ZIOPHARM Presents Positive Indibulin Translational and Dose Scheduling Data at ASCO”, Press Release, May 30, 2009.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
3
ZIOPHARM Oncology, Inc.
June 9, 2009
6,7,8
using a novel administration schedule in breast cancer in the 2H „09.
We further expect that a
randomized Phase II trial could be initiated as a single agent or in combination in the 2H „10
following further definition of dose limiting toxicity and scheduling from the Phase I trial.
ZINAPAR™
 ZINAPAR™ SELECTED FOR PRESTIGIOUS ASCO CLINICAL SCIENCE SYMPOSIUM SPOTLIGHT.
PHASE II RESULTS PROVIDE CLEAR REGISTRATION PATHWAY FOR REGISTRATION TRIAL.
Zinapar™ Phase II results were presented at a high-profile session at ASCO attended by several
thousand people. Dr. Izidore S. Lossos, a lymphoma expert and lead investigator for the Phase II trial
(M.D., Chief of the Lymphoma program, and professor of Medicine at the University Of Miami Miller
School Of Medicine) who presented the study results, stated that “This drug is active in highlyrefractory lymphoma patients and well tolerated. Interestingly, a lot of patients I and others
have treated with this drug report feeling the best they have felt since first getting lymphoma,
having been on many different treatments. The oral data are also promising, and darinaparsin
could well be effective in treating other cancers as well.” 9 In summary, Phase II studies
demonstrated activity in several lymphoma subtypes, good tolerability, and the potential for easy
combination with other therapies.
BACKGROUND: Zinapar™ (darinaparsin) is a novel organic arsenic molecule being developed for
the treatment of various hematologic and solid cancers. Pre-clinical, Phase I, and Phase II results
to date demonstrate that darinaparsin is much less toxic than other forms of arsenic. The Phase II
intravenous (IV) study is fully enrolled with 29 heavily pretreated lymphoma patients. Of the 19
evaluable patients, the initial findings are 7 objective responses for an overall response rate of 37
percent (the fraction 7/19 rounds to 37%, the result presented in ZIOPHARM‟s press releases)
with 3 complete responses (CRs) and 4 partial responses (PRs). Four additional patients had
prolonged stable disease (SD). There are 5 peripheral T-cell lymphoma (PTCL) patients included
in the 19 patients, and in this group there were 3 objective responses, for an overall response
rate of 60 percent, of which there were 2 CRs and 1 PR. Of the patients with stable disease, 1
patient had PTCL. Darinaparsin was very well tolerated with neutropenic fever as a severe
adverse event in 1 patient. Treatment with darinaparsin has no evidenced any QT prolongation in
either the IV or oral studies. QT prolongation has been problematic with inorganic arsenic and is a
“black box” side effect warning in the labeling.
CONCLUSIONS: Given that the peripheral T-cell lymphoma (PTCL) patients had an impressive
overall response rate of 60% percent, we expect ZIOPHARM to pursue a formal registration trial
in patients with relapsed/refractory peripheral T-Cell lymphoma (PTCL), a clear registration
pathway and high unmet medical need, and later to expand its clinical utility in other sub-types of
non-Hodgkin‟s lymphoma. The Company continues dialogue regarding partnering and other
initiatives regarding the further clinical development of Zinapar™ (both IV and oral capsule) to
10 11
maximize the value of this franchise. .
6
The Breast Cancer Research Foundation. “William S. McGuire Memorial Lectureship Award given to Larry Norton, MD, at San
Antonio Breast Cancer Conference, December 11-14, 2008. “ December 2008.
7
Dr. Larry Norton powerpoint lecture at the San Antonio Breast Cancer Conference, December 2008.
8
“ZIOPHARM reports Fourth Quarter and Full Year 2008 Financial Results”, Press Release, March 24, 2009
9
ZIOPHARM‟s abstract on Darinaparsin entitled, “Novel Organic Arsenic Molecule Darinaparsin: Development of IV and oral forms”
will be discussed at a Clinical Science Symposium discussing New Agents for Lymphoma at ASCO on June 1, 2009. (Abstract
#8501) at ASCO‟s Annual Meeting (May 29-June 2 2009).
10
ZIOPHARM‟s ASCO presentation on Darinaparsin entitled, “Novel Organic Arsenic Molecule Darinaparsin: Development of IV and
oral forms” will be discussed at a Clinical Science Symposium discussing New Agents for Lymphoma at ASCO on June 1, 2009.
(Abstract #8501) at ASCO‟s Annual Meeting (May 29-June 2 2009).
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4
ZIOPHARM Oncology, Inc.
June 9, 2009
KEY NEAR-TERM MILESTONES
ZIOPHARM‟s three oncology programs, Zybulin™ (indibulin), Zymafos™ (palifosfamide), and Zinapar™
(darinaparsin), are expected to provide the following data and news flow in the near future:
ZYMAFOS™ (PALIFOSFAMIDE)
Q4, 2009
1H, 2010
Report initial results from randomized, controlled Phase II soft-tissue sarcoma
trial;
Initiate Pivotal Phase III soft-tissue sarcoma trial;
ZYBULIN™ (INDIBULIN)
2H, 2009
Initiate a Phase I/II oral formulation trial in Zybulin™ in breast cancer utilizing Dr.
Larry Norton‟s mathematically optimized dose scheduling;
ZINAPAR™ (DARINAPARSIN)
2H, 2009
2H, 2009
Establish strategic partnership for Zinapar™ or otherwise secure funding; and
Pursue a formal Phase III, registration trial in patients with relapsed/refractory
peripheral T-Cell lymphoma (PTCL).
(Intentionally left blank)
11
ZIOPHARM Oncology, Inc. press release dated June 1, 2009. “ZIOPHARM Presents Positive Darinaparsin Clinical Data at
ASCO‟s Prestigious Clinical Science Symposium.”
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5
ZIOPHARM Oncology, Inc.
June 9, 2009
ABOUT ZYMAFOS™
Palifosfamide (Zymafos™ or ZIO-201) references a novel composition (tris formulation) that comprises
the functional active metabolite of ifosfamide, a standard of care for treating sarcoma, testicular and other
cancers. Palifosfamide delivers only the cancer fighting component of ifosfamide. It is expected to
overcome the resistance of ifosfamide and cyclophosphamide in certain cancers. It does not have the
toxic metabolites of ifosfamide that cause the debilitating side effects of "fuzzy brain" (encephalopathy)
and severe bladder inflammation. Intravenous (IV) palifosfamide is currently in a Phase II randomized trial
12
to treat soft tissue sarcoma. An oral form of palifosfamide has been developed pre-clinically. Initial
results from a Zymafos™ Phase II randomized controlled trial comparing Adriamycin® (doxorubicin) plus
palifosfamide to doxorubicin alone in patients with front- and second-line metastatic or unresectable soft
tissue sarcoma are expected to be announced in late 2009, likely at the Connective Tissue Oncology
Society (CTOS) conference during the first week of November. A Pivotal Registration Phase III trial in the
same setting is expected to be initiated as early as the first half of 2010.
ABOUT ZYBULIN™
Indibulin (Zybulin™ or ZIO-301) is a novel, oral tubulin binding agent that targets both mitosis and cancer
cell migration. Indibulin is expected to have several potential benefits, including oral dosing, application in
multi-drug resistant tumors, no neuropathy and minimal overall toxicity. Indibulin has shown early activity
in Phase I study as a single agent in many types of solid tumors. A Phase I-II study in breast cancer using
13,14
this novel scheduling strategy is in development.
It is expected that the Company will, with additional
funding, will initiate a Phase I Oral Zybulin™ trial using a novel administration schedule in breast cancer
15,16,17
in the 2H „09.
(this is a Phase I/II trial, and where the Company would go from here would be
dictated by the study results).
ABOUT ZINAPAR™
TM
Darinaparsin (Zinapar or ZIO-101) is a novel organic arsenic being developed for the treatment of
various hematologic and solid cancers. Preclinical and Phase I and II results to date demonstrate that
darinaparsin is much less toxic than other forms of arsenic. Intravenous darinaparsin is nearing
completion of study in a Phase II hematology trial with favorable treatment activity in certain lymphomas
18
and in Phase I study with oral administration. Darinaparsin has been well tolerated in all trials to date.
Given that Phase II results demonstrated that peripheral T-cell lymphoma (PTCL) patients had an
impressive overall response rate of 60%, we expect ZIOPHARM to pursue a formal registration trial in
patients with relapsed/refractory peripheral T-Cell lymphoma (PTCL), a clear registration pathway and
high unmet medical need and later to expand its clinical utility in other sub-types of non-Hodgkin‟s
lymphoma. The Company continues dialogue regarding partnering and other initiatives regarding the
further clinical development of Zinapar™ (both IV and oral capsule) to maximize the value of this
.19 20
franchise.
12
ZIOPHARM Oncology, Inc. press release, “ZIOPHARM Reports Fourth Quarter and Full Year 2008 Financial Results.” 03/24/09.
Indibulin, a Novel Tubulin Targeting-Agent, in Combination with Capecitabine, is Suitable for Mathematically-Optimized Dose
Scheduling. J. J. Lewis, M.D. Galsky, L. H. Camacho, D.M Loesch, P.B. Komarnitaky, B. Wallner, J. Stevens, L. Norton.
14
“ZIOPHARM Presents Positive Indibulin Translational and Dose Scheduling Data at ASCO”, Press Release, May 30, 2009.
15
The Breast Cancer Research Foundation. “William S. McGuire Memorial Lectureship Award given to Larry Norton, MD, at San
Antonio Breast Cancer Conference, December 11-14, 2008. “ December 2008.
16
Dr. Larry Norton powerpoint lecture at the San Antonio Breast Cancer Conference, December 2008.
17
“ZIOPHARM reports Fourth Quarter and Full Year 2008 Financial Results”, Press Release, March 24, 2009
18
ZIOPHARM Oncology, Inc. press release, “ZIOPHARM Reports Fourth Quarter and Full Year 2008 Financial Results.” 03/24/09.
19
ZIOPHARM‟s ASCO presentation on Darinaparsin entitled, “Novel Organic Arsenic Molecule Darinaparsin: Development of IV and
oral forms” will be discussed at a Clinical Science Symposium discussing New Agents for Lymphoma at ASCO on June 1, 2009.
(Abstract #8501) at ASCO‟s Annual Meeting (May 29-June 2 2009).
13
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
6
ZIOPHARM Oncology, Inc.
June 9, 2009
FINANCIAL REVIEW
INCOME STATEMENT: Q1 2009
ZIOPHARM decreased its R&D investments by 74%, to $1.6 million in the first quarter, versus the yearearlier expenditure level.
General & administrative costs also decreased, by 37%, to $1.7 million, as the Company spent less for
financial consulting fees, payroll and compensation, and patent and legal expenses.
BALANCE SHEET: Q1 2009
The March quarter closed with $6.8 million of cash on the balance sheet and current liabilities of $4.0
million, resulting in a Quick ratio of 1.70. (See next page.)
ZIOPHARM did not undertake any financings during the period.
12-MONTH BUDGET
Over the past 12 months, ZIOPHARM has made great strides to advance its drug candidates through
clinical development, while assessing their strengths relative to changes in the marketplace. The
Company has extended its cash runway while continuing to advance selectively a portfolio approach as
evidenced by all three products with clinical results to be reported at ASCO. ZIOPHARM‟s current cash
position ($6.8 million as of Q1:09) should see the Company well into 2010 as the Company seeks further
funding and/or collaborative efforts.
(Intentionally left blank)
20
ZIOPHARM Oncology, Inc. press release dated June 1, 2009. “ZIOPHARM Presents Positive Darinaparsin Clinical Data at
ASCO‟s Prestigious Clinical Science Symposium.”
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
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ZIOPHARM Oncology, Inc.
June 9, 2009
BALANCE SHEET
$ in thousands, except per share data
FY ending December 31
ASSETS
3/31/2009
Current Assets
Cash & equivalents
6,768
Other
238
Total Current Assets
Property & equipment
$
7,006
$
489
Other
378
Total Assets
$
7,873
$
1,621
LIABILITIES
Current Liabilities
Accounts payable
Other
2,335
Total Current Liabilities
Long-term debt
$
$
Other
3,956
180
Total Long-Term Liabilities
$
180
$
22
Shareholders Equity
Common Stock, par value
Additional Paid-In Capital
71,683
Accumulated Deficit
(67,968)
Total Shareholders Equity
$
3,737
Total liabilities & equity
$
7,873
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ZIOPHARM Oncology, Inc.
June 9, 2009
FINANCIAL FORECASTS & ASSUMPTIONS
The following assumptions refer to ZIOPHARM’s revenue model and discounted cash flow (DCF)
valuation analysis. The revenue estimates are for potential Zymafos™ (palifosfamide) sales in advanced
sarcoma and breast cancer, Zybulin™ (indibulin) sales in post hormone refractory prostate cancer, breast
cancer, and ovarian cancer, and Zinapar™ (darinaparsin) sales in peripheral T-cell lymphoma and other
Non-Hodgkin’s Lymphomas.
REVENUE MODEL ASSUMPTIONS
ZYMAFOS™ (PALIFOSFAMIDE)
1st & 2nd Line Sarcoma
Year penetration starts
Starting penetration rate
Years between penetration start and peak
Peak penetration
Duration of peak penetration in years
Retention rate in decline years
Stage of development
2014
15.0%
Incidence
24000
Percent addressable
5
60%
Market growth rate
Price per patient
3
100%
Phase II
75%
1%
$30,000
Treatment price growth
1%
Royalty rate
15%
Probability of commercialization
50%
2nd and 3rd Line Breast Cancer
Year penetration starts
2016
Incidence
Starting penetration rate
2.0%
Percent addressable
Years between penetration start and peak
Peak penetration
Duration of peak penetration in years
Retention rate in decline years
Stage of development
5
12%
Phase II
80%
Market growth rate
Price per patient
3
90%
203528
2%
$30,000
Treatment price growth
1%
Royalty rate
15%
Probability of commercialization
50%
Zymafos™
Currently, Zymafos™ is in a randomized Phase II clinical trial in soft-tissue sarcoma. Other studies are in
the advanced planning stage. We assume the following:
Soft-Tissue Sarcoma:
The patient population is estimated to be 24,000 patients. This includes approximately 8,000 in
21
the U.S., approximately 12,000 in Europe, and approximately 4,000 in Japan.
75% of the patient population is considered eligible for chemotherapy, based upon their general
health status.
The patient population is expected to grow roughly in line with the world‟s population.
We assume that the first marketing approval for this indication in the U.S. is received in early
2014 and that a good therapeutic index of the drug results in 15% of the patient population
treated in its first year. We also assume that European and Japanese launches will trail by 6 and
12 months, respectively.
21
Global Cancer Facts & Figures 2008. Published by the American Cancer Society.
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ZIOPHARM Oncology, Inc.
June 9, 2009
Five years after Zymafos™‟ approval, its sales peak, with a market penetration of 60%. This
takes into account the drug‟s favorable efficacy and side effect profiles, and an established
market based on the use of ifosfamide.
Sales remain stable after peaking.
The average patient‟s cost of therapy is $30,000 per annum, and each patient is treated for only
one year.
ZIOPHARM outlicenses all marketing rights to Zymafos™ in exchange for milestone payments
and a 15% royalty rate.
The probability of commercialization is 50%, reflecting Zymafos™‟ stage of clinical development
and historical drug development success rates.
nd
rd
2 and 3 Line Breast Cancer:
The patient population reflects the estimated number of deaths related to breast cancer in
22
developed countries.
80% of the patient population is considered eligible for chemotherapy, based upon their general
health status.
The patient population is expected to grow faster than the total population, due to an age-related
onset of the disease.
We assume that the first regulatory approval for this indication is received in 2016.
We look for a good therapeutic index to result in 5% of the patient population being treated in its
first year on the market. Five years later, Zymafos™‟ sales peak, with a total market penetration
of 15%. The drug‟s acceptance takes into account its favorable efficacy and side effect profiles,
and an established market based on the current use of ifosfamide and cyclophosphamide.
Sales remain stable for three years after peaking and then enter a period of slow decline, due to
competition.
The average patient‟s cost of therapy is $30,000 per annum, and each patient is treated for only
one year.
ZIOPHARM outlicenses all marketing rights to Zymafos™ in exchange for milestone payments
and a 15% royalty rate.
The probability of commercialization is 50%, reflecting Zymafos™‟ stage of clinical development
and historical drug development success rates.
ZYBULIN™ (INDIBULIN)
2nd Line Hormone Refractory Prostate Cancer
Year penetration starts
2014
Incidence
Starting penetration rate
1.0%
Percent addressable
Years between penetration start and peak
Peak penetration
Duration of peak penetration in years
Retention rate in decline years
Stage of development
22
5
8%
Phase I
75%
Market growth rate
Price per patient
3
90%
143834
2%
$30,000
Treatment price growth
1%
Royalty rate
15%
Probability of commercialization
10%
Global Cancer Facts & Figures 2008. Published by the American Cancer Society.
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ZIOPHARM Oncology, Inc.
June 9, 2009
2nd and 3rd Line Breast Cancer
Year penetration starts
2015
Incidence
Starting penetration rate
1.0%
Percent addressable
Years between penetration start and peak
Peak penetration
Duration of peak penetration in years
Retention rate in decline years
Stage of development
203528
5
10%
Market growth rate
Price per patient
3
90%
Phase I
90%
2%
$30,000
Treatment price growth
1%
Royalty rate
15%
Probability of commercialization
10%
2nd and 3rd Line Ovarian Cancer
Year penetration starts
2015
Incidence
Starting penetration rate
1.0%
Percent addressable
Years between penetration start and peak
Peak penetration
Duration of peak penetration in years
Retention rate in decline years
Stage of development
5
10%
Phase I
80%
Market growth rate
Price per patient
3
90%
190000
1%
$30,000
Treatment price growth
1%
Royalty rate
15%
Probability of commercialization
10%
Zybulin™
On November 3, 2006, ZIOPHARM acquired Zybulin™ from Baxter Healthcare Corporation for an upfront
cash payment of $1.25 million, and has agreed to pay future milestones totaling approximately $7 million
plus an undisclosed royalty based on net sales. We assume the royalty payable to Baxter to be 6%.
Currently, Zybulin™ is in clinical trials in various solid tumors; however, we have modeled the financials
nd
based on the assumption that the Company will pursue post hormone refractory prostate cancer, 2 and
rd
nd
rd
3 line breast cancer, and/or 2 and 3 line ovarian cancer as its approval indications. We assume the
following:
Post Hormone Refractory Prostate Cancer:
We estimate that Zybulin™ will be launched in 2014 in the U.S. for hormone refractory prostate
cancer. The incidence rate is based on the approximate number of patients who will die in 2008 in
developed countries of the world, since the drug will be used for patients who have failed initial
treatment regimens that include platinum chemotherapeutic agents, radiation seed implants, and
23
surgical intervention.
The market‟s rate of growth is 2%, slightly faster than that of the world‟s population since prostate
cancer typically strikes men older than 60 years of age and the baby boom generation is just
beginning to enter that age bracket.
The percentage of the market that is addressable is 75%, given the age of disease onset and
general health-related treatment limitations.
The initial penetration rate is 1%, reflecting competition and a gradual rollout into major markets.
The peak penetration rate, achieved 5 years after launch, is 8%, due to a high level of
competition.
Peak penetration is sustained for three years before gradually declining due to competition.
23
Global Cancer Facts & Figures 2008. Published by the American Cancer Society.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
11
ZIOPHARM Oncology, Inc.
June 9, 2009
Ziopharm outlicenses Zybulin™ to a marketing partner(s) for global distribution in exchange for
milestone payments and a 15% royalty rate.
The average patient‟s therapy costs $30,000 per year.
The probability of commercialization is 10%, reflecting Zybulin™‟s stage of clinical development
and historical drug development success rates.
nd
rd
2 & 3 Line Breast Cancer:
The patient population reflects the estimated number of deaths related to breast cancer in
24
developed countries.
90% of the patient population is considered eligible for chemotherapy, based upon their general
health status.
The patient population is expected to grow roughly in line with the total population.
We assume that the first regulatory approval for this indication is received in 2015 and that the
drug is used by 1% of the patient population in its first year.
Five years after Zybulin™‟s approval for breast cancer, its sales peak, with a total market
penetration of 10%. This takes into account the drug‟s good side effect profile and the readymade market based on use of other taxanes, notably docetaxel.
Sales remain stable for three years after peaking and then enter a period of slow decline, due to
new competition.
The average patient‟s cost of Zybulin™ therapy is $30,000 per annum, and each patient is
treated for only one year.
ZIOPHARM outlicenses all marketing rights to Zybulin™ in exchange for milestone payments and
a 15% royalty rate.
The probability of commercialization is 10%, reflecting Zybulin™‟s stage of clinical development
and historical drug development success rates.
nd
rd
2 & 3 Line Ovarian Cancer:
The patient population reflects the estimated number of deaths related to ovarian cancer in
25
developed countries.
90% of the patient population is considered eligible for chemotherapy, based upon their general
health status.
The patient population is expected to grow roughly in line with the total population.
We assume that the first regulatory approval for this indication is received in 2015 and that the
drug is used by 1% of the patient population in its first year.
Five years after Zybulin™‟s approval for ovarian cancer, its sales peak, with a total market
penetration of 10%. This takes into account the drug‟s good side effect profile and the readymade market based on use of other taxanes, notably docetaxel.
Sales remain stable for three years after peaking and then enter a period of slow decline, due to
new competition.
The average patient‟s cost of Zybulin™ therapy is $30,000 per annum, and each patient is
treated for only one year.
ZIOPHARM outlicenses all marketing rights to Zybulin™ in exchange for milestone payments and
a 15% royalty rate.
The probability of commercialization is 10%, reflecting Zybulin™‟s stage of clinical development
and historical drug development success rates.
24
25
Global Cancer Facts & Figures 2008. Published by the American Cancer Society.
Global Cancer Facts & Figures 2008. Published by the American Cancer Society.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
12
ZIOPHARM Oncology, Inc.
June 9, 2009
ZINAPAR™ (DARINAPARSIN)
Peripheral T-Cell Lymphoma
Year penetration starts
2014
Incidence
19000
Starting penetration rate
25%
Percent addressable
100%
Years between penetration start and peak
Peak penetration
Duration of peak penetration in years
Retention rate in decline years
Stage of development
4
85%
Market growth rate
Price per patient
4
90%
Phase II
1%
$20,000
Treatment price growth
1%
Royalty rate
15%
Probability of commercialization
25%
Other Non-Hodgkin's Lymphomas
Year penetration starts
2014
Incidence
Starting penetration rate
1.0%
Percent addressable
Years between penetration start and peak
Peak penetration
Duration of peak penetration in years
Retention rate in decline years
Stage of development
5
10%
Phase II
50%
Market growth rate
Price per patient
3
90%
125120
2%
$20,000
Treatment price growth
1%
Royalty rate
15%
Probability of commercialization
10%
Zinapar™
Currently, Zinapar™ is in clinical trials for peripheral T-cell lymphoma and other Non-Hodgkin‟s
Lymphomas. Other studies are in the advanced planning stage. We assume the following:
Refractory Peripheral T-cell lymphoma:
The population is estimated at 19,000 patients in developed countries. All patients are considered
eligible for Zinapar™ therapy, given the aggressiveness of the disease and the lack of alternative
therapies.
The patient population is expected to grow roughly in line with the total population.
We assume that the first regulatory approval for this indication in the U.S. is received in 2014, and
that the drug‟s efficacy and minimal competition enable it to penetrate 25% of the market in its
first year and to reach 85% of the patient population four years later.
The drug‟s sales remain at their peak for four years before declining with the advent of additional
therapies.
The price of treating a patient for one year is $20,000 in its initial year on the market, followed by
1% annual price increases.
ZIOPHARM outlicenses Zinapar™ to a marketing partner(s) for global distribution in exchange for
milestone payments and a 15% royalty rate.
The probability of commercialization is 25%, reflecting Zinapar™‟s stage of clinical development
and historical drug development success rates.
Other Non-Hodgkin‟s lymphoma
The new incidence is estimated at 125,120, including Non-Hodgkin‟s Lymphoma, B-cell
lymphoma, T-cell lymphoma, cutaneous T-cell lymphoma, and marginal zone lymphoma in
26
developed countries, with peripheral T-cell lymphoma treated as a separate indication.
26
Global Cancer Facts & Figures 2008. Published by the American Cancer Society.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
13
ZIOPHARM Oncology, Inc.
June 9, 2009
The addressable market is considered to be 50% of the patient population, since non-Hodgkin‟s
lymphoma is comprised of a wide variety of lymphoid malignancies, some of which, including
marginal zone lymphoma and diffuse large B-cell lymphoma, are more responsive to
chemotherapy than others.
The market is expected to grow faster than the world‟s population, as recent incidence rates have
been accelerating. The disease is most common in the United States, Europe, and Australia, and
27
less common in Asia.
We assume that the first regulatory approval for this indication is received in 2014, and that the
initial penetration rate is 1%, reflecting the current level of competition and the drug‟s gradual
introduction into major markets.
Sales peak five years after approval of the non-Hodgkin‟s lymphoma indication and remain at
peak levels for three years before declining with the entry of new therapies.
The price of treating a patient for one year is $20,000 in its initial year on the market, followed by
1% annual price increases.
ZIOPHARM outlicenses Zinapar™ to a marketing partner(s) for global distribution in exchange for
milestone payments and a 15% royalty rate.
The probability of commercialization is 10%, reflecting Zinapar™‟s stage of clinical development
and historical drug development success rates.
(Intentionally left blank)
27
DeVita, VT, TS Lawrence, SA Rosenberg. Cancer: Principles & Practice of Oncology. Philadelphia: Lippincott Williams & Wilkins,
2008.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
14
ZIOPHARM Oncology, Inc.
June 9, 2009
INCOME STATEMENT
$ in thousands, except per share data
FY ending December 31
2009
Total revenue
2010
2011
2012
2013
$
600
$
3,600
$
17,600
$
35,600
$
104,600
$
7,500
$
12,000
$
15,000
$
10,000
$
10,000
Operating expenses
R&D
Selling & marketing
General & administrative
Total expense
Operating profit
$
-
-
-
1,000
1,203
4,000
4,100
4,250
4,500
4,500
11,500
16,100
19,250
15,500
15,703
20,100
(10,900) $
(12,500) $
(1,650) $
1000
2150
1900
$
88,897
Non-operating income/expense
Interest income
Total non-operating
Pretax profit
1,000
$
Income tax
Net income
Earnings (loss) per share
Diluted shares outstanding
(9,900) $
-
2,150
(10,350) $
-
1400
1,900
250
1400
1,400
$
-
21,500
1,400
$
2,580
90,297
34,313
$
(9,900) $
(10,350) $
250
$
18,920
$
55,984
$
(0.28) $
(0.23) $
0.01
$
0.42
$
1.22
35000
45000
45250
45500
45750
NOTES TO EARNINGS MODEL
Assumes a partner will assume all the drug manufacturing costs related to Zymafos™, Zybulin™,
and Zinapar™.
Assumes Research and Development (R&D) expenses of $7.5 million in 2009, $12 million in
2010, and $15 million in 2011. Assumes Zymafos™, Zybulin™, and Zinapar™ are partnered by
2012, reducing R&D to $10 million in 2012 and 2013 as new candidates are advanced.
Assumes General and Administrative (G&A) expenses of $4 million in 2009, $4.1 million in 2010,
$4.25 million in 2011, $4.5 million in 2012, and $4.5 million in 2013. We assume G&A expense of
$4.75 million growing at an annual rate of 5% thereafter.
Assumes the company books tax liabilities at a rate of 38% for financial reporting purposes. For
the first year of profitability, we‟ve assumed that the effective rate is 12%.
The Company currently has 21.85 million common shares outstanding. We assume equity
financings occur in 2009 and 2010 consisting of 10 million new shares for each financing,
resulting in approximately 45 million fully-diluted shares outstanding by the end of 2010. Our
share estimates take into account new shares issued in financings and through the exercise of
options and warrants.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
15
ZIOPHARM Oncology, Inc.
June 9, 2009
DISCOUNTED CASH FLOW
$ in thousands, except per share data
FY ending December 31
2009
Revenue
$
2010
600
Operating income
Net income
$
2011
3,600
(10,900)
(12,500)
(9,900)
(10,350)
Depreciation/amortization
Stock-based compensation
$
35,600
(1,650)
$
104,600
20,100
88,897
250
18,920
55,984
350
350
350
350
1,600
1,600
1,700
1,700
1,800
-
2,580
-
-
(400)
Total cash flow adjustments
17,600
2013
350
Tax loss carryforwards
Capital gain (expenditures)
$
2012
(400)
1,550
1,550
(425)
(425)
1,625
(800)
1,625
3,930
Free cash flow
$
(8,350) $
(8,800) $
1,875
$
20,545
$
59,914
Risk-adjusted free cash flow
$
(8,350) $
(8,800) $
312
$
2,802
$
9,088
PV of Terminal Value at a
Discounted
Cash Flows
(2008 - 2023)
Discount Rate
Perpetual growth rate of rFCF
2.0%
3.0%
Enterprise Value
4.0%
2.0%
3.0%
4.0%
10.0%
$133,591.78
$
126,186
$
145,626
$
171,547
$259,778
$279,218
$305,139
12.5%
$102,353.25
$
68,630
$
76,598
$
86,441
$170,983
$178,951
$188,794
15.0%
$78,783.08
$
39,864
$
43,609
$
48,036
$118,647
$122,392
$126,819
17.5%
$60,831.53
$
24,215
$
26,139
$
28,348
$85,047
$86,971
$89,180
20.0%
$47,038.25
$
15,205
$
16,258
$
17,442
$62,244
$63,296
$64,480
Total Equity Value
Discount Rate
Net Debt
Value per Diluted Share
2.0%
3.0%
4.0%
(6,768)
$266,546
$279,218
$311,907
$
5.86
$
6.14
$
6.86
(6,768)
$177,751
$185,719
$195,562
$
3.91
$
4.08
$
4.30
(6,768)
$125,415
$129,160
$133,587
$
2.76
$
2.84
$
2.94
17.5%
(6,768)
$91,815
$93,739
$95,948
$
2.02
$
2.06
$
2.11
20.0%
(6,768)
$69,012
$70,064
$71,248
$
1.52
$
1.54
$
1.57
10.0%
$
12.5%
15.0%
–
2.0%
Terminal Value as % Enterprise Value
Discount Rate
3.0%
4.0%
Implied EBITDA Multiple
2.0%
3.0%
4.0%
2.0%
3.0%
4.0%
10.0%
48.6%
52.2%
56.2%
7.93
9.16
10.79
12.5%
40.1%
42.8%
45.8%
6.04
6.75
7.61
15.0%
33.6%
35.6%
37.9%
4.88
5.34
5.88
17.5%
28.5%
30.1%
31.8%
4.09
4.42
4.79
20.0%
24.4%
25.7%
27.0%
3.53
3.77
4.04
Our DCF model suggests a value of $2.84 for ZIOP shares using a 15% discount rate. Annual cash flows
are probability weighted, according to the proportionate annual revenue contributions from each
drug/indication and the probability of commercialization, based on each drug‟s stage of development.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
16
ZIOPHARM Oncology, Inc.
June 9, 2009
INVESTMENT CONCERNS AND RISKS
For a complete description of risks and uncertainties related to ZIOPHARM’s business, see the
“Risk Factors” section in ZIOPHARM’s SEC filings, which can be accessed directly from the SEC
Edgar filings at www.sec.gov. Potential risks include:
 Stock risk and market risk: There is a limited trading market for the Company‟s common stock.
There can be no assurance that an active and liquid trading market will develop or, if developed, that
it will be sustained, which could limit one‟s ability to buy or sell the Company‟s common stock at a
desired price. Investors should also consider technical risks common to many small-cap or micro-cap
stock investments, such as small float, risk of dilution, dependence upon key personnel, and the
strength of competitors that may be larger and better capitalized.
 New and rapidly changing field: The pharmaceutical and biotechnological markets are rapidly
evolving, and research and development are expected to continue at an accelerated pace with
increased frequency. Other companies are also actively engaged in the development of therapies to
directly or indirectly treat those disorders being pursued by ZIOPHARM. These companies may have
substantially greater research and development capabilities, as well as significantly greater
marketing, financial, and human resources abilities than ZIOPHARM.
 Products still in development phases: Although the Company intends to continue with clinical
development of darinaparsin for various indications, palifosfamide for advanced sarcoma and other
indications, and indibulin in solid tumors, the successful development of the Company‟s product
candidates is highly uncertain. Product development costs and timelines can vary significantly for
each product candidate and are difficult to accurately predict. In addition, products in development
that appear to be promising may not reach commercialization for various reasons, including failure to
achieve regulatory approvals, safety concerns, and/or the inability to be manufactured at a
reasonable cost.
 Funding requirements: It is difficult to predict the Company‟s future capital requirements. The
Company may need additional financing to continue funding the research and development of its
products and to expand its business. There is no guarantee that it can secure the desired future
capital or, if sufficient capital is secured, that current shareholders will not suffer significant dilution.
 Regulatory risk: Various statutes and regulations also govern or influence the manufacturing, safety,
labeling, storage, record keeping and marketing of each product. The lengthy process of seeking
approval and the subsequent compliance with applicable statutes and regulations require the
expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory
approvals could materially adversely affect ZIOPHARM‟s business. There is no guarantee that
ZIOPHARM‟S products will be approved by the U.S. Food and Drug Administration (FDA) or
international regulatory bodies for marketing in the U.S. or abroad.
 The Company may need to raise additional capital, which may not be available on terms
acceptable to them, if at all: As the Company continues to expand their research and development
activities, they may need to raise additional capital, which may not be available on terms acceptable
to them, if at all. If the Company cannot raise necessary additional capital on acceptable terms, they
may not be able to increase sales, develop or enhance their products and services, take advantage of
future opportunities, or respond to competitive pressures or unanticipated requirements, any of which
could cause their business to suffer.
 Competitive risk: The biotechnology industry is extremely competitive, mainly due to its large market
potential. Many companies are developing products for the same therapeutic indications targeted by
ZIOPHARM. These companies may have substantially more resources than ZIOPHARM, which could
adversely affect the Company‟s position in the market place.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
17
ZIOPHARM Oncology, Inc.
June 9, 2009
DISCLOSURES
ANALYST(s) CERTIFICATION: The analyst(s) responsible for covering the securities in this report certify that the
views expressed in this research report accurately reflect their personal views about ZIOPHARM Oncology, Inc. (the
“Company”) and its securities. The analyst(s) responsible for covering the securities in this report certify that no part
of their compensation was, is, or will be directly or indirectly related to the specific recommendation or view contained
in this research report.
MEANINGS OF RATINGS: Our rating system is based upon 12 to 36 month price targets. BUY describes stocks that
we expect to appreciate by more than 20%. HOLD describes stocks that we expect to change plus or minus 20%.
SELL describes stocks that we expect to decline by more than 20%. SC describes stocks that Griffin Securities has
Suspended Coverage of this Company and price target, if any, for this stock, because it does not currently have a
sufficient basis for determining a rating or target and/or Griffin Securities is redirecting its research resources. The
previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon.
NR describes stocks that are Not Rated, indicating that Griffin Securities does not cover or rate this Company.
DISTRIBUTION OF RATINGS: Currently Griffin Securities has assigned BUY ratings or NO RATINGS on all of the
companies it covers. The Company has provided investment-banking services for 20% of companies in which it has
had BUY ratings in the past 12 months, 0% for companies in which it has had NR or no coverage in the past 12
months or has suspended coverage (SC) in the past 12 months.
MARKET MAKING: Griffin Securities does not maintain a market in the shares of this Company or any other
Company mentioned in the report.
COMPENSATION OR SECURITIES OWNERSHIP: The analyst(s) responsible for covering the securities in this
report receive compensation based upon, among other factors, the overall profitability of Griffin Securities, including
profits derived from investment banking revenue. The analyst(s) that prepared the research report did not receive any
compensation from the Company or any other companies mentioned in this report in connection with the preparation
of this report. The analysts responsible for covering the securities in this report currently do not own common stock in
the Company, but in the future may from time to time engage in transactions with respect to the Company or other
companies mentioned in the report. However, an account in which a member of an analyst‟s household has a
financial interest holds warrants to purchase shares of the Company common stock. Griffin Securities from time to
time in the future may request expenses to be paid for copying, printing, mailing and distribution of the report by the
Company and other companies mentioned in this report. Griffin Securities expects to receive, or intends to seek,
compensation for investment banking services from the Company in the next three months.
PRICE CHART
BUY
BUY
BUY
BUY
BUY
BUY
BUY
Source: Bigcharts.com
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
18
ZIOPHARM Oncology, Inc.
June 9, 2009
6/26/2006 – Initiating coverage: share price: $5.05; rating: BUY; 12-month price target: $18.00. 12/07/2006 –
Research update: share price $6.36; rating: BUY; 12-month price target: $20. 5/03/2007 – Research update: share
price $5.80; rating: BUY; 12-month price target: $20.00. 3/13/2008 – Research update: share price: $2.52; rating:
BUY; 12-month price target: $15.00. 7/02/2008 – Research update: share price: $1.87; rating: BUY; 12-month price
target: $15.00. 5/18/2009 – Research update: share price: $0.77; rating: BUY; 12-month price target: $3.00.
6/09/2009 – Research update: share price: $1.87; rating: BUY; 12-month price target: $3.00.
FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements, which involve risks and uncertainties. Actual results may differ
significantly from such forward-looking statements. Factors that might cause such a difference include, but are not
limited to, those discussed in the “Risk Factors” section in the SEC filings available in electronic format through SEC
Edgar filings at www.SEC.gov on the Internet.
GENERAL: Griffin Securities, Inc. (“Griffin Securities”) a FINRA member firm with its principal office in New York,
New York, USA is a full-service, integrated investment banking, investment management, and brokerage firm. The
analyst(s) are employed by Griffin Securities. Our research professionals provide important input into our investment
banking and other business selection processes. Our salespeople, traders, and other professionals may provide oral
or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions
expressed herein, and our proprietary trading and investing businesses may make investment decisions that are
inconsistent with the recommendations expressed herein.
Griffin Securities may from time to time perform corporate finance or other services for some companies described
herein and may occasionally possess material, nonpublic information regarding such companies. This information is
not used in preparation of the opinions and estimates herein. While the information contained in this report and the
opinions contained herein are based on sources believed to be reliable, Griffin Securities has not independently
verified the facts, assumptions and estimates contained in this report. Accordingly, no representation or warranty,
express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or
correctness of the information and opinions contained in this report.
The information contained herein is not a complete analysis of every material fact in respect to any company, industry
or security. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in
any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this
material. It is for the general information of clients of Griffin Securities. It does not take into account the particular
investment objectives, financial situations, or needs of individual clients. Before acting on any advice or
recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if
necessary, seek professional advice. Certain transactions - including those involving futures, options, and other
derivatives as well as non-investment-grade securities - give rise to substantial risk and are not suitable for all
investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or
complete, and it should not be relied on as such. The information contained in this report is subject to change without
notice and Griffin Securities assumes no responsibility to update the report. In addition, regulatory, compliance, or
other reasons may prevent us from providing updates.
DISCLOSURES FOR OTHER COMPANIES MENTIONED IN THIS REPORT: To obtain applicable current
disclosures in electronic format for the subject companies in this report, please refer to SEC Edgar filings at
www.SEC.gov. In particular, for a description of risks and uncertainties related to subject companies‟ businesses in
this report, see the “Risk Factors” section in the SEC filings.
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
19
ZIOPHARM Oncology, Inc.
June 9, 2009
© Griffin Securities, Inc., 2009. All rights reserved.
ZIOPHARM Oncology, Inc.’s common stock trades on the NASDAQ Capital Market, symbol “ZIOP”
ZIOPHARM Oncology website:
www.ZIOPHARM.com
ZIOPHARM Oncology address:
1180 Avenue of the Americas,
19th Floor
New York, New York 10036
Griffin’s New York office:
Griffin Securities, Inc.
17 State Street
New York, New York 10004
Tel: 212-509-9500
Fax: 212-509-9501
www.griffinsecurities.com
Chrystyna Bedrij
Director of Research
CBedrij@GriffinSecurities.com
Mark Merrill
Research Analyst
MMerrill@GriffinSecurities.com
Keith A. Markey, Ph.D., M.B.A.
Scientific Director
KMarkey@GriffinSecurities.com
Griffin Securities, Inc., 17 State Street, New York, NY, 10004 (212) 509-9500
20