Company Overview: OncoSil Medical Limited is a late-stage medical device company, which is focused on localized treatments for patients with pancreatic and liver cancer. The Company is engaged in the development of its lead product candidate, the OncoSil localized radiation therapy, for the treatment of pancreatic cancer. The Company's lead product, OncoSil, is a brachytherapy device that emits beta radiation and is implanted directly inside the cancerous tumor. OncoSil is a silicon and phosphorus (p32) beta emitter, able to be implanted intra-tumorally via endoscopic ultrasonography in localized solid tumors of patients with pancreatic cancer. The Company focuses on an application for Conformite Europeene (CE) Mark to enable commercial sales of OncoSil in the European Union and an application for an Investigational Device Exemption (IDE) from the United States Food and Drug Administration (FDA) to enable commencement of the United States pivotal clinical study, known as OncoPac-1.


OSL Details

OncoSil Medical Limited is a medical device company focused on localised treatments for patients with pancreatic and liver cancer. It is a clinical-stage medical device company seeking to advance radiation for cancer patients and its lead product, OncoSil™ is a targeted radioactive isotope (Phosphorus-32), implanted directly into a patient’s pancreatic tumours via an endoscopic ultrasound. OncoSil Medical has conducted four clinical trials with encouraging results on tolerability, safety and efficacy. The U.S Food and Drug Administration has granted an Investigational Device Exemption (IDE) in July 2016 with approval to conduct a clinical study of the OncoSil™ device and the main aim of the study was to collect safety and effectiveness data required to support a Premarket Approval (PMA) application. Now, the recently provided planned clinical update at week 16 of the trial, indicated for sustained reduction of tumour volume with good disease control rate and these collectively are indicative of efficacy. The group is also tracking well on its timing for CE Mark. The data trends positively and is expected to enable the group to move ahead with the commercialisation plans in the EU this year. Overall, the recent findings can attract sharks of the Pharma sector in oncology, given the latest consolidation seen the industry.
 

Partnering with leading cancer centres (Source: Company Reports)

Decent Quarterly Activities (31 March 2018): The Company released its Quarterly Cashflow report for the quarter ended 31 March 2018 and reported highly encouraging progress in Global Clinical Study. It was reported that 5 of the initial 20 study participants have undergone surgical resection with curative intent and 44 patients have now enrolled in PanCO clinical study, with 33 successful implants completed to date with the OncoSil™ device and strong clinical performance achieved across multiple metrics. First study participants in the US and in Belgium were successfully implanted with the OncoSil™ device as screening and recruitment efforts in both geographies continued to progress and 3 US patients are now enrolled in OncoPaC-1. The key clinical performance and safety findings for the OncoSil™ device reported Excellent Local Disease Control Rate (DCR) of 100% for week 8 and 87% for week 16. A substantial tumour volumetric reduction of up to 73% for week 8 and up to 72% for week 16 was reported. During the Quarter, the Company had cash outflows from operations of $2.7 million, and a cash balance as at 31 March 2018 of $10.7 million. The Company also received an additional cash refund of $0.6 million in January 2018 following lodgement of the 2016/17 amended tax return. The cash rebate related to the expenditure on eligible overseas R&D activities conducted during 2016/17 financial year. This cash refund was in addition to the $2.9 million R&D refund announced on 25 September 2017.


Tumour volumetric reduction (Source: Company Reports)

Successful completion of Share Purchase Plan: The Group announced that the take-up from shareholders in the Share Purchase Plan (SPP) announced to the market on 22 March 2018 has been strong. The purpose of the SPP was to provide the Company’s existing holders the opportunity to increase their shareholding in the Company, on the same terms as the recently announced oversubscribed placement to sophisticated and institutional investors. The terms and conditions of the SPP (circulated to shareholders on 28 March 2018) allow the Company to scale back the number of shares to be allotted to applicant shareholders in its absolute discretion. In fairness to all applicants and based on shareholdings as at the Record Date (Tuesday, 20 March 2018), a pro-rata scale back was applied in line with applicants’ shareholding. Accordingly, 33.3 million new shares were allotted and issued under the SPP at A$0.12 per share, raising A$4.0 million. This amount was an addition to the A$12.7 million raised through the recent share placement to institutional and sophisticated investors (A$4.0 million of which remains subject to shareholder approval at the Company EGM to be held on May 14 while SPP shares were allotted on 20 April 2018).

Financial Performance: The Group released its Half-Year Interim Financial Report. The Company’s focus during the six-month period has been to continue recruitment into its OncoPac Global Pancreatic Cancer Clinical Study Programme and to collate the required 20 patients’ supplemental data necessary for its application for CE Mark of the OncoSil™device in the European Union. During the half-year period, in October 2017, the Company provided an overview of promising early study results, indicating excellent local disease control and safety, at the European Association of Nuclear Medicine (EANM) Congress. The Loss for the Group after providing income tax amounted to $4,533,345 (31 December 2016: $3,111,923) and it reported an increase in revenue ($1,824,191) that is by 72.7 per cent as compared to the same period in the prior year. Cash and financial assets balance as at 31 December 2017 was $5.2 million and the group received R & D Tax Refund of $3.4 million for FY17 (2016: $2.3 million). Early positive study data results have been consistent with previously completed studies. The group expects to receive a refund of $4.0 million in FY18.

Clinical Programme Update: The surgical resection findings to date represent an important milestone, as this demonstrates an improved outcome in a patient study group who were deemed inoperable when enrolled and additional patients continued to be assessed by their clinical teams for surgical resection and a total of 3 patients out of the initial 20 patients enrolled had undergone surgical resection with curative intent. Surgical resection is the only potential cure for pancreatic cancer, with less than 15% of all pancreatic cancer patients at initial diagnosis being eligible for resection.


Target Markets (Source: Company Reports)

Although surgical resection rate is not a pre-specified trial endpoint, these findings suggested the potential for ‘down-staging’ selected patients from an initially inoperable to a surgically resectable state when the OncoSil™ device is used in combination with optimum chemotherapy. It was observed that no Serious Adverse Events (SAEs) were attributed to device or implantation procedure and no other safety concerns were identified to date. In addition to the MD Anderson Cancer Centre, Johns Hopkins, Moffit Cancer Centre and Cedars Sinai Hospital are all also actively screening patients for entry into the OncoPaC-1 clinical study and Oncosil continues to progress recruitment of the PanCO clinical study, with 40 patients now enrolled, and with 31 having successfully completed their implants to date.

CY18 Catalysts (Source: Company Reports)

Positive Outlook: It is expected that the group will submit 16-week data for the first 20 patients to the EU Notified Body, BSI by the end of May. Based on strong emerging clinical data to date, the Company is now seeking to secure strategic partnerships and licensing agreements in key geographies to optimise early market commercialisation. Recruitment and screening efforts for additional global patients are progressing well with recruitment efforts continued at leading US cancer centres. The Company will be presenting study data at two major upcoming international congresses; The 12th World Congress of the Federation of Nuclear Medicine and Biology in Melbourne in late April and the Digestive Disease Weekly (DDW) Conference in Washington in early June. It is planning to recruit additional US subjects into its trial across its network of activated sites in the US, UK and Australia.

Other Key Updates: It successfully recruited its first US subject to the Company’s Global Pancreatic Cancer Clinical Study Programme bringing the number of subjects recruited in the global clinical programme to 34. Of these 34 subjects, 25 have been successfully implanted with the OncoSil™ device, and OSL is in the process of compiling data to be submitted to BSI. It successfully bought back 7,000,000 fully paid ordinary shares through Employee Share Plan. Regal Funds Management Pty Limited changed its substantial holding since 28 March 2018 from 7.51 per cent of the voting power to 10.62 per cent. Webinvest Pty Ltd ceased to be a substantial holder of the Group since 28 March 2018. Martin George Cross acquired 125,000 shares through share purchase plan (an indirect interest) and now holds 1,125,000 shares in the Company and similarly Daniel Kenny and Chris Roberts, both having direct interest acquired 41,667 shares and 125,000 shares, respectively. This inside buying speaks for some potential in the positive direction.


Realising the value of OncoSil™ device (Source: Company Reports)

Stock Performance: Two Independent Safety Review Committee meetings, in September and November 2017, confirmed the safety profile of the OncoSil™ device and reported that no evidence of radiation toxicities was found. It is worth noting that OncoSil^TM (single-use brachytherapy device) is a first in class medical device for the treatment of unresectable locally advanced pancreatic cancer and the related patents have been secured in all major geographies. It has a significant opportunity to become a standard care in combination with Chemotherapy. With the examples of over A$2bn of acquisitions unearthed in February 2018, the attraction of early-stage Australian biotech to global pharmaceutical players stays strong. One example is that of Sirtex being acquired by Varian. This can surface a good future for the company. The group is also banking on its network of strategic partners for paving the path to market. It is well positioned for commercialisation with broad technology platform, excellent clinical results, and EU regulatory approval. OncoSil’s potential pricing of US$25,000 per patient (in-line with other on-market devices) implies more than 2 billion of global market opportunity. It leverages potential for broader distribution, capital and market support and exposure. While ROE for 2017 was (56.3 per cent) against (43.8 per cent) of 2016, the stock’s movement is subject to positive outcomes of its clinical trials. Since past one year, the share prices were up by 3.85 per cent; and as on 27 April 2018, shares were up by 3.7 per cent. OSL will be holding a conference call on May 01, 2018 to discuss the quarterly financial results and business outlook. Looking at the developments and risks, we give a “Speculative Buy” recommendation at the current market price of $ 0.140.

 
OSL Daily Chart (Source: Thomson Reuters)

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