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 Ltd is a Sydney-based medical device company focused on developing a novel form of brachytherapy (single-use based) for the treatment of pancreatic and liver cancer. The company particularly has come up with a medical device called the OncoSil System and is progressing towards the commercialization of the product. The device is currently undergoing clinical studies in leading academic sites at a global level. The group intends to use the clinical data for regulatory submissions within targeted markets including Europe, United States, Australia and Asia. The company has raised adequate capital through institutional Placement and Share Purchase Plan (SPP) to pursue European approval, initiate commercial sales and to launch a pivotal trial aimed at US product registration. The company has plans to scale-up its business operation with the help of innovation, partnership with leading cancer centres, excellent results of its clinical trials, efforts for securing licencing agreements, broader distribution, and capital and market support. We expect that 2018 can be a transformative year that seems to be marking the start of the journey in terms of commercialization of OSL medical devices into the market with the help of its strategic approach.

Focus on commercialisation of the radiation treatment: The company focuses on localized treatments for patients with pancreatic and liver cancer through its product, OncoSil, which is known to be a targeted radioactive isotope (Phosphorus-32) that can be implanted directly into a patient’s pancreatic tumour. This can be done through an endoscopic ultrasound, and recently, the company has submitted a detailed clinical report outlining its emerging performance and safety data for the OncoSil device to the British Standards Institute (BSI). This report provides BSI with the safety data for all study participants enrolled (N=46). Further, the performance (efficacy) data for 25 patients who have been implanted with the OncoSil device was reported to have reached the 8 and 16-week Radiological (CT) assessments. The Group has progressed remarkably over the past 12 months towards patient recruitment and the excellent early trial data. It continues its focus to commercialize the breakthrough OncoSil treatment with the support of its shareholders towards recent capital raising. 


Implantation Procedure (Source: Company Reports)

Rise in demand for new pancreatic cancer therapies: With around 45,000 Americans, 3,350 Australians and 85,000 European flagged to be diagnosed with pancreatic cancer, the demand for treatment in the sector is high. The median overall survival after treatment of Chemotherapy (i.e., Gemcitabine plus Abraxane) for pancreatic cancer patients is nearly 8.5 months. Hence, there appears a significant opportunity for OncoSil to become standard of care in combination with Chemotherapy.  There is particularly, a demand for new products that can increase the life expectancy and provide an opportunity to enter into the potential market which is estimated to be over US 2.0 billion for pancreatic cancer and under US 1.5 billion for liver cancer.


Target Market (Source: Company Reports)

Splendid Management: The company is loaded with the highly experienced management team, which is currently headed by Dr. Chris Roberts – the Chairman who was initially appointed to the Board as an Independent Non-Executive Director in 2016.  He has a rich exposure in medical devices sector which spans over 40 years, including 11 years as CEO of Cochlear Limited where he was responsible for growth in sales from $350 Mn to $ 1 Bn. Besides this, Mr. Daniel Kenny joined to the Board in January 2015 with more than 30 years of rich experience in the Global Pharmaceutical and Medical Device sector. During 2016, the company had appointed David James as a Head of Manufacturer as he is a highly experienced pharmaceutical manufacturing operations executive with more than 25 years’ experience in this field, including six years with leading cancer treatment company Sirtex Medical as Global Operations Manager. Hence, we expect that the team will continue to work towards refining the manufacturing and supply chain processes in order to prepare for commercial and clinical needs. This includes running hot calibration runs with key trial centres and hospitals.

Clinical Pathway – positive results to date: The company has recently reported an important update regarding the progress of its Global Pancreatic Cancer clinical programme for the treatment of advanced pancreatic cancer. It was reported that 5 of the initial 20 study participants have undergone surgical resection with curative intent and 47 patients have now enrolled in PanCO clinical study, with 36 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 80% for week 16 was reported. The positive current trials are said to be informing future trials wherein the company can explore its clinical study options in resectable, borderline resectable and locally advanced pancreatic cancer indications. The final decision on future studies is to be taken based on data received from ongoing studies and feedback from US FDA.


Substantial tumour volumetric reduction (Source: Company Reports)

Decent Quarterly Activities (31 March 2018): 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.

Capital Raising and Strategic Partnership: During the year, the company has completed an institutional Placement which was supported by both major existing shareholders and a number of new institutional investors and closed as oversubscribed status. The placement raised the capital of $12.7 million at an issue price of $0.12. Further, the company also conducted a share repurchase plan (SPP) under which all eligible shareholders were invited to invest up to $ 15,000 per shareholder at the issue price of $ 0.12. In the response, the company exceeded the aggregated capped amount of A$4 million and created 33.3 million new share units. The purpose of the SPP was to provide an opportunity to its existing shareholders to enhance their shareholding in the company. Funds raised through Institutional Placement and Share Purchase Plan will be used for business development such as innovation, licences, CE Mark certification, strategic partnership, etc. Considering vital clinical information identified to date, the Company is presently trying to secure strategic partnerships and licensing agreements in key geographies to improve early market commercialisation.

Financial Performance: The group’s half year revenue was up 72.7% for the period ended December 31, 2017, but loss amounted to about $4.5 million against $3.1 million of prior corresponding period. It posted consolidated revenue growth at a significant CAGR (close to 150%) over FY13 to FY17. However, profit marked a negative CAGR impacted by the rise in R&D and selling, general and administrative (SGA) expenses. In terms of financial activity, the cash outflow from operations for FY17 resulted in a cash balance as at 30 June 2017 of $8.0 million. Moreover, the company enjoys debt-free status along with cash & cash equivalent reserve of 5.19 Mn as at 30 December 2017. The current ratio stood at 4.47x in 1HFY18, representing adequate liquidity to fulfill any shortcoming liability in near future.

Other key Updates: The group successfully bought back 7,000,000 fully paid ordinary shares through Employee Share Plan (ESS). Moreover, 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. Director, 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 reflects for some potential in the positive course. On the other hand, the Company had been awarded ISO 13485 Certification for the design, development, and control of the manufacture of radioactive implantable medical device in the area of oncology.


Clinical Pathway and Regulatory Focus (Source: Company Reports)

Positive Outlook: We expect that there is a bright outlook for the company at the back of continued trials to produce high-quality data as the group is heading towards new license partners in unique geographies. Further, the company is on track to make OncoSil commercially available in the EU later this year, pending regulatory clearances. Besides this, disease control rates and volumetric tumour reduction look superior to standard of care alone. This sets for a growing demand of its products.

Stock Performance: The company seems to be poised for exponential growth in the forthcoming years at the back of balance sheet position, secured strategic partnerships and licensing agreements in all key geographical regions, broader distribution channel, capital and market support and exposure, de-risking events i.e., CE Mark, pivotal trial success, FDA approval, and corporate activities. Meanwhile, the share price of OSL has risen 95.0% in the past one year and further up by 25.8% in past one month as at June 07, 2018. Itis worth noting that the stock was up by 490.91 per cent in last five years. Based on aforesaid facts and expectations, and current trading scenario, we give a “Speculative Buy” recommendation on the stock at the current market price of $ 0.215 (up 10.3% on June 08, 2018) as the group is looking forward to seeking some strategic partnerships and license agreements in key geographies to unveil more potential in years to come.
 

OSL Daily Chart (Source: Thomson Reuters)

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