OncoSil Medical Ltd

OSL Details

Positive Status 1 to Oncosil^TM Device: OncoSil Medical Ltd (ASX: OSL) is engaged in oncology research and development. As announced on 3 February 2022, the German institute for the Hospital Remuneration System (InEK) has granted the OncoSil™ device with a “Positive Status 1” classification under the innovation funding (NUB) program.

Q2FY22 Summary: During the quarter ended 31 December 2021, the company announced the publication of the final results of the PanCO clinical study. The company is currently in discussion for Osprey Registry from APAC. OSL closed Q2FY22 with a cash balance of $6.66 million.

Cash Balance Trend (Source: Analysis by Kalkine Group)

Key Risks: The company’s business model is exposed to a more complex regulatory approval. Any failure in receiving approval could impact its operational and financial performance. OSL’s operational performance could be impacted due to failure in clinical trials.

Outlook: Looking forward, OSL is working on progressing its manufacturing capabilities, supply chain and sales and marketing infrastructure in order to obtain first commercial sales in the European Union and the UK.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative) 

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: The stock of OSL has a 52-week low and high levels of $0.035 - $0.133, respectively. The stock has been valued using EV/Sales multiple-based illustrative relative valuation and arrived at a target price with a correction of high-single-digit upside (in % terms). The company can trade at a slight discount to its peers’ average EV/Sales multiple, considering the rising losses and lower margins. For the purpose of valuation, peers such as AVITA Medical Inc (ASX: AVH), Mesoblast Ltd (ASX: MSB), and Telix Pharmaceuticals Ltd (ASX: TLX) have been considered. Considering the expected correction, rising losses, current trading levels, and key risks associated with the business, we give a ‘Sell’ rating on the stock at the current market price of $0.046 as on 03 February 2022, 3:55 PM (GMT+10), Sydney, Eastern Australia.

OSL Weekly Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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