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 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 has been on an application for Conformite Europeenne (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) for United States pivotal clinical study, known as OncoPac-1. The group is now giving clear signals on commercialization of the technology with IQVIA being appointed as Market Access and Reimbursement advisor. Further, launch in the UK and Germany is expected to be on the cards. As of now the cash position looks sufficient for about next two years and FY20 might indicate requirement for further funding. The strategy for sale of rights might play a role then. With revenues (based on potential commercialization of the product) and EPS falling in positive zone in FY19 and a Forward price to earnings ratio of about low to mid double digit, a stock price upside of double digit (%) is expected in medium term (subject to meeting the commercialization and regulatory requirements).


Opportunity for OSL (Source: Company Reports)

Highly encouraging clinical results from an Interim Analysis conducted on OncoSil’s PanCO study:  OSL has received highly encouraging clinical results from the Interim Analysis conducted on OSL’s PanCO study, and has recorded strong clinical performance across the multiple metrics. The PanCO study is currently running over at variuos sites in Australia, the UK and Belgium, and in July 2018, the company had closed recruitment globally after the successful enrolment of 50 patients per study protocol. OSL continues to make progress with its OncoPaC-1 study in the US that is open for recruitment across all activated trial sites. From an Interim Analysis conducted on OSL’s PanCO study, 42 patients were implanted with the device. Local Disease Control Rate (LDCR) is of 88% at Week 16 in the implanted population (N=42, P<0.0001). There is a strong evidence of target tumour regression, with statistically significant and in some cases substantial volumetric reduction (29.7% mean tumour volume reduction by Week 16; maximum reduction 90%; P<0.0001). Till now, nine patients have undergone surgical resection (tumour removal) with curative intent (21.4% resection rate) and 8 out of the 9 resections have reported R0 surgical margins. The company had submitted Interim Analysis to British Standards Institute (BSI) as additional evidence of the clinical performance and safety profile of the OncoSil device. The resection data reflects the potential to “convert” selected patients from an initially inoperable status to a surgically resectable and potentially curative state when OSL is used in combination with chemotherapy. This finding  has provided the support for future studies of the OSL device as part of a neoadjuvant treatment strategy in resectable and/or borderline pancreatic cancer. Moreover, the Interim Analysis has compared results by using two patient populations for the analysis, that comprises of the Intention-to-Treat population (ITT Population), including all 50 patients enrolled regardless of whether they were implanted with the OncoSil device or not. The Per Protocol population comprised of all 42 patients enrolled and implanted with the OncoSil device (Per Protocol Population).


Financial Performance (Source: Company Reports and Thomson Reuters)

Likely developments and expected results of operations: OncoSil in FY 18 had 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. Additionally, to further support BSI’s diligence, the company has submitted the full PanCo Interim Analysis data as an additional evidence of the clinical performance and safety profile of the OncoSil device. The Company is encouraged by the constructive engagement with BSI. Furthermore, OSL’s continued progress is towards achieving a CE Mark for the OncoSil device so that the company will be able to plan future commercial sales in the European Union as well as the Global Pivotal OncoPac-1 Clinical Study, which is aimed to support a Pre Marketing application in the United States in future years. However, there are risks associated with the company achieving these regulatory approvals, or on the basis sought by the Company, and there are no guarantees of the rate of enrolment of the OncoPac-1 Clinical Study or the outcome of clinical results including for the first 20 patient run-in in the Study. Manufacturing capabilities, supply chain and sales and marketing infrastructure is planned to be progressed to support both planned commercial and clinical activities.

Funds Raised in FY 18: In FY 18, OSL had successfully completed the oversubscribed institutional placement and raised approximately $12.7m and has completed an oversubscribed Share Purchase Plan (SPP), by raising approximately $4.0m.

Eligible for the research and development tax incentive scheme: 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 its commercialization 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. Further, both will develop strategic and effective approach for the commercialization of the OncoSil. IQVIA will bring deep experience commercializing breakthrough technologies as it is a globally recognized leader in the provision of information, technology solutions and contract research services in the healthcare sector. Overall, this is a significant milestone in the company’s commercialization strategy in expectation of securing CE Mark approval and moving into early commercialization of the company’s device over the coming months.

Planned to secure strategic partnerships and licensing agreements in all key geographies: OSL has received US FDA IDE approval. Moreover, the company has planned to secure strategic partnerships and licensing agreements in all key geographies after 2018. Further, the company after 2018 has planned to secure licensing agreements in unique geographies and is leveraging potential for broader distribution, capital and market support and exposure.


Strategic Plan (Source: Company Reports)

Global Commercial opportunity in excess of $2bn: It is found that more than 70,000 relevant patients are 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 tumour and to provide meaningful reductions in pain. OncoSil is expected to be used to downstage tumours prior to surgery to improve surgical outcomes. Unlikely to benefit overall survival but OncoSil may be used to control tumour growth, reduce pain and improve quality of life.


Margins and Ratios (Source: Company Reports and Thomson Reuters)

Stock Recommendation: Meanwhile, OSL stock has fallen 20.45% in three months as on October 25, 2018. The stock is trading at the level of $0.175, and has resistance at $0.25 and support at $0.13. Over the past twelve months, the company’s primary focus has been to advance its Global Pancreatic Clinical Study Programme in order to generate and submit the required supplemental safety and performance data for its CE Mark application to market the OncoSil device in the European Union. Moreover, OSL’s continued progress is towards achieving a CE Mark for the OncoSil device so that the company will be able to schedule future commercial sales in the European Union as well as the Global Pivotal OncoPac-1 Clinical Study. However, there can be no guarantees that in the future the company will be able to achieve these regulatory approvals, or on the basis sought by the Company, and there are no guarantees of the rate of enrolment of the OncoPac-1 Clinical Study or the outcome of clinical results including for the first 20 patient run-in in the Study. Further, the company needs to improve on financial performance. Therefore, currently we give a “Speculative Buy” recommendation on the stock at the current price of $ 0.175.
 

OSL Daily Chart (Source: Thomson Reuters)

 
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