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 (ASX: OSL) is a late stage medical device company that is now gearing up to promote its key product for broad adoption, particularly for penetration outside U.S. Lately, it engaged IQVIA as Market Access and Reimbursement advisor for commercialisation of the Oncosil therapy. It is believed that the group will have first launch of Oncosil in the UK and Germany, and commercial revenues can start pouring in post January 2019. Oncosil’s cash and receivables of about $20 million as at 30 June 2018 seem to be sufficient for next one year or so for the operating requirements as moderation may be achieved post the recruitment in clinical trials gets completed. The strategic moves can help the company report double digit revenues and earnings from the current level. ROE which is currently around -60% is expected to be in positive zone in FY19, subject to success of on-track developments and CE mark approval. The group’s Free cash flow yield is also expected to move from negative three digit percentage to a positive zone depending on the revenues expected in FY19, particularly from Europe.


Financial and other Parameters (Source: Company Reports and Thomson Reuters)

Eligible for the research and development tax incentive scheme: Oncosil Medical Ltd (ASX: OSL), a late stage medical device company, focuses on the development of localized treatments for cancer in Australia. The company’s lead product is OncoSil, a class III brachytherapy device that includes OncoSil Phosphorous-32 Microparticles and OncoSil Diluent, which implants a pre-determined dose of beta radiation emitting isotope directly into cancerous tissue for the treatment of pancreatic and liver cancer. The company’s focus is on an application for Conformite Europeene (CE) Mark required for the 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. Meanwhile, OSL’s ongoing research and development activities that comprise of components of the global pancreatic clinical study programme (PanCo & OncoPaC-1 studies), are eligible for the research and development tax incentive scheme. As a result, OSL has received a cash refund from the Australian Taxation Office of $4.3m after the lodgement of the FY 18 tax return. This cash rebate is related to the expenditure on eligible Australian and international R&D activities conducted during the FY 18. After the receipt of these funds, the company has approximately $16.0m in cash and cash equivalents.

Appointed IQVIA as EU Market Access and Reimbursement Advisor: OSL stock had witnessed price rise, after the company’s appointment of IQVIA in Europe as part of commercialisation strategy. IQVIA will be its Market Access and Reimbursement advisor for the OncoSil device in multiple EU markets including France, UK, Germany and the Nordic countries. IQVIA is a NYSE-listed global provider of advanced analytics, technology solutions, and contract research services to the health care industry. IQVIA will work with OSL to undertake detailed feasibility assessments, pathway specifications, and market penetration activities in the lead up to OncoSil Medical receiving CE Mark Certification and first commercial use of the OncoSil device in patients. After IQVIA’s appointment, the company has already undertaken lot of work and will be focusing on early and special reimbursement options, private paying alternatives for patients, special funding for treatment of challenging cancers and reimbursement options at local, regional and national or governmental level. Through this move, a strategic and effective approach to commercialize OncoSil is being developed. IQVIA will bring deep experience commercialising breakthrough technologies as it is a globally recognised leader in the provision of information, technology solutions and contract research services in the healthcare sector.

Well positioned to realise value from OncoSil device: OSL has received US FDA IDE approval and has commenced PanCO & OncoPac-1 clinical studies. The company possesses highly positive early safety, efficacy and implant delivery data that was consistent with results from previously completed studies. Moreover, the company has planned to secure strategic partnerships and licensing agreements in all key geographies after 2018. Particularly, the company after 2018 has planned to secure licensing agreements in unique geographies and to leverage potential for broader distribution, capital and market support and exposure.


Strategic Plan (Source: Company Reports)

Positive results to date from PanCO study: The company has successfully completed the patient enrolment for PanCO study across all participating sites in Australia, UK and Belgium and 50 patients were enrolled per study protocol in July 2018. Of these 50 patients, 42 patients were successfully implanted with the OncoSil device. 6 patients have so far successfully undergone surgical resection with curative intent, which reflects the down-staging potential of the company’s OncoSil device, in combination with chemotherapy. Further,  the company got encouraging progress with OncoPaC-1 study in US, where 7 patients were recruited, and 7 patients were successfully implanted with OncoSil device. The submission of detailed report to the British Standards Institute (BSI) outlining emerging performance and safety data for the OncoSil device and fulfilling BSI’s request to provide supplemental data regarding the Company’s CE Mark application was expected in May 2018. Moreover, the clinical performance shows that up to 73% and 80% tumor volumetric reduction at Week 8 and 16, respectively. The median  volumetric reduction is of 25% (at week 8) and 33% (as week 16).

Remarkable opportunity for OncoSil: Currently, the treatment that are available are surgery (resection), based on early detection; Chemotherapy (Gemcitabine &Abraxane, FOLFIRINOX); and External radiation therapy. There are issues that are related to the current standard of care. These include symptoms going unnoticed until cancer has metastasized, and poor prognosis even with therapy with the median survival approximately 8 months and 5 year survival less than 5%. The surgery is not feasible in 85% of patients, Chemotherapeutic treatments limits the  effectiveness and are very toxic and the radiation therapy is toxic to the patient’s GI tract. Therefore, there appears a great opportunity for OncoSil. This is due to the fact that only two drugs have made significant improvements in pancreatic cancer in over 20 years. The median overall survival has increased by only 2 months (to 8.5 months) over the past 20 years. Therefore, there is a significant opportunity for OncoSil to become standard of care in combination with Chemotherapy.

Global Commercial opportunity in excess of $2bn: It is found that there are more than 70,000 relevant patients in EU and US alone. The company is exploring clinical research options in resectable & borderline resectable patients. Further, OncoSil’s potential pricing of US$25,000 per patient, which is in-line with other on-market devices, shows that there is more than $2bn global market opportunity. Moreover, OncoSil is the provider of a suitable treatment to control the growth of the primary tumor and to provide meaningful reductions in pain. OncoSil is expected to be used to downstage tumors prior to surgery to improve surgical outcomes.

Update on CE Mark application: OncoSil in FY 18 has submitted a detailed clinical report outlining emerging performance and safety data for the OncoSil device to the British Standards Institute (BSI), which is the regulatory body overseeing the Company’s CE Mark application, on 11 May 2018.This submission had fulfilled the BSI’s previous request to provide them 20 patient supplemental data in order to support the previously submitted safety and clinical performance data. Currently, BSI is undertaking the detailed review necessary for granting the CE Mark as is required by the relevant EU laws and regulations. As the OncoSil device is an implanted radioactive medical device, BSI requires time to undertake the necessary due diligence of the detailed report submitted by the Company. Moreover, the report provided to BSI sets out comprehensive safety data relating to both the device and the implantation procedure for all study participants enrolled at that date (N=46), as well as performance data for 25 patients who had been implanted with the OncoSil device and had reached the 8 and 16 week Radiological (CT) assessments.


FY18 Performance (Source: Company Reports)

Stock Analysis and Recommendation: Meanwhile, OSL stock has fallen 7.14% in three months as on September 27, 2018 but rose about 5.4% in last five days. The stock is trading at the level of A$0.20, has resistance at $0.25 and support at $0.17. The stock trend depicts that the moving average convergence divergence indicates for crossing of the bullish signal line. The upper Bollinger Band is seen around $ 0.22 (indicative of overbought zone), which is still below the current market price. Meanwhile, the company is commercialising a breakthrough implantation radiation treatment for Pancreatic cancer. Further, the company is targeting for more than $2bn market opportunity to improve the standard of care. Its U.S. FDA-approved IDE is in place, and safety run-in underway. The company is expecting EU regulatory approval CE Marking in near-term. OSL has highly experienced management team with strong clinical and commercial pedigree and this will help the group going forward. OSL has already optimized manufacturing and logistics for supply of commercial quantities. We give a “Speculative Buy” recommendation on the stock at the current price of $ 0.200.

 
OSL Daily Chart (Source: Thomson Reuters)
 
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