Cancer immunotherapy company ZIOPHARM Oncology (ZIOP) disclosed on July 15^th that a patient in one of its brain cancer trial groups died after being treated with its experimental drug treatment, and two other patients also passed away for reasons unrelated to this form of therapy. As we noted earlier this month while commenting on a similar situation with Juno Therapeutics, patient deaths are not uncommon when suffering from the types of severe cancer that these trial programs are designed to address.

But the way in which ZIOPHARM handled disclosing these deaths to the FDA raised concern that it was being less than transparent, causing one media outlet to report that a major investment banking firm was backing out of a deal to raise $50 million in a secondary stock offering for ZIOP. While the bevy of class-action lawsuit announcements that surfaced immediately after the announcement was entirely expected, the revelation that the company might lose out on a sizable capital infusion did come as a surprise pushing ZIOP shares down nearly 20%.

To further muddy the waters, on July 20^th ZIOPHARM issued a press release to address the rumored collapse of its secondary offering: “The Company currently has no plans to access the capital markets in a securities offering. As it builds upon its broad and diverse set of cancer immunotherapy programs and platforms under development, ZIOPHARM will continue to manage its financial strategy in a way that is consistent with the best interests of its shareholders and the long-term value of the Company.”

Quite frankly, this statement strikes me as both woefully incomplete and extraordinarily vague. One would hope every publicly traded company always intends to manage its financial strategy in the best interests of its shareholders, so that portion of the statement is superfluous. And stating that it “currently” is not planning to access the capital markets does not speak to the specific question of whether it did have plans to do so until this recent turn of events.

Although we do not yet see any reason to change our long term outlook on ZIOPHARM, the opaque manner in which the company has communicated with investors over the past two weeks stands in stark contrast to Juno’s forthright acknowledgement of the events surrounding its patient deaths. In the long run this may turn out to be nothing more than a poorly executed media disclosure by the company’s investor relations team, but in the short run it raises unnecessary concerns if there is no real merit to it.

The good news is ZIOPHARM is in solid financial shape, reporting over $140 million in cash at the end of 2015 resulting in a Current Ratio of more than eight times short term liabilities. And the company has no long term debt to service, so there does not appear to be an immediate need for a secondary stock offering. That being the case, the company could have simply said that it has all the cash it needs so it never was considering raising more cash via a secondary offering to begin with.

With ZIOP now trading below $5, it presents an intriguing low-cost play on the burgeoning cancer immunotherapy sector. As recently as last November its share price was above $12, and with a little good news we think it could quickly escalate above $8 before the end of this year representing a 50% gain in less than six months. It’s a risky bet, but at its current price ZIOP offers the opportunity to buy into this market at a unusually low entry point.