OncoSec Medical (ONCS.OB) has had a tumultuous year as evident from the company's 2012 stock chart. January 1 opening price was $0.25, and the stock touched $0.75 numerous times in February before returning back to earth in mid-March where it has traded in the $0.15 to $0.25 range pretty much every since. The company's novel electroporation platform for cancer treatment has far-reaching implications as it is showing early stage success. Two Phase III trials of OncoSec's NeoPulse therapy (using bleomycin as its chemotherapy agent of choice) for head and neck cancer trial were already complete when the company licensed the platform from Inovio Pharmaceuticals (INO) in March of 2011. However, the company probably didn't purchase the license due to these trials as it had been discontinued in 2007 after an independent data monitoring committee review citing efficacy and safety concerns. A subsequent data reevaluation by OncoSec as presented on July 23 yielded different results with CEO and president, Punit Dhillon, noting "Interim analysis of these two Phase III studies, and the recently released data from the Phase IV study carried out in Europe, has demonstrated that the primary endpoint of maintaining quality of life was achieved. In addition, OMS ElectroChemotherapy appears to provide a potentially important treatment alternative to surgery that may address hard-to-treat tumors where there exists a particular need to preserve function and quality of life. These data strongly support our partnering efforts for the OMS ElectroChemotherapy program."
Although the presentation garnered a lot of shareholder attention as evident by the 7.29 million shares of the company's common stock that traded hands on that Monday, the company closed in the red to the dismay of many. The author believes that the reevaluation, although likely legitimate, will need to be evaluated by an independent third party entity in order to truly gain shareholder support. The company is currently evaluating its options as to the best regulatory path forward, and additional catalysts via these decisions are likely in the coming weeks. Trading in the low $0.20's with a market capitalization of only $18 million, investors seem to have priced in failure for the Phase III trial already which could be to the benefit of new shareholders as the downside risk certainly seems heavily outweighed by the upside potential.
Pertinent to the scope of the article, OncoSec currently has three Phase II trials underway with two of them set to release interim data in Q4, 2012. These trials, although still utilizing an electroporation administration platform, are being utilized to evaluate the company's ImmunoPulse platform with an IL-12 DNA construct as its immunotherapy agent of choice rather than a chemotherapy agent. Once inside the targeted cancer cells, the construct instructs the cell to produce the IL-12 cytokine. This induces an immune response from the patient's body, which targets and destroys the IL-12 expressed cells via circulating macrophages and cytotoxic T-cells. The company should be presenting Phase II data from its metastatic melanoma (the largest market targeted) and Merkel cell carcinoma trials by the end of the year, either of which could be huge share price movers. Success in these trials would be huge as not only would it indicate success going forward for these indications, but it could also help to validate the company's entire OMS platform and open the door for other indications using IL-12 and other interleukin DNA constructs. Like PPHM earlier in the year, OncoSec is trading at consolidation levels in the low levels and could see similar gains with Phase II trial success. This could particularly be true if the metastatic melanoma trial indicates early stage success, as the market potential is great with over 70,000 new cases of melanoma diagnosed annually with it being the deadliest of the skin cancers.
Earlier dose-escalated Phase I data indicated that the ImmunoPulse administration of the IL-12 DNA construct was safe and well tolerated. In patients with metastatic melanoma, 52% of patients treated had either complete or partial responses. If Phase II data, which is based on trials with optimal levels of IL-12 as determined by the Phase I trial, yield comparable or better results, shareholder value should become evident quickly. Like CPRX, OncoSec is also presenting at Rodman and Renshaw on Monday, September 10th (at 3:15 pm). Although data from either of the phase two trials is unlikely, the company may be better able to give shareholders an idea of exactly when the data might become available. Additionally, the company may be able to shed additional light on the data reevaluation of its two completed Phase III trials for head and neck cancer. A clear regulatory path forward, third party data review or partnership going forward could also be huge catalysts for this fledgling biotech. As mentioned, Phase III failure seems to have been already priced in, so downside risk is minimal but still exists. The bigger catalysts, either upward or downward, rests in the two Phase II trial data presentations sets to be unveiled in Q4.
Zalicius, Inc. (ZLCS) is slated to present topline data for its Phase IIb SYNERGY trial of Synavive for amplified immuno-inflammatory benefits in patients with rheumatoid arthritis in 3Q. At the time of publication of this article, data is still pending for this large market indication therapy. With a 52-week range of $0.71 to $1.62, the upside potential could still be great for this small cap pharma currently valued at $176 million. Recent financing secured the company another $75 million, which should minimize the risk of additional dilution for new shareholders through the next year while the company irons out its finances and further develops its promising pipeline. Synavive's Phase IIa data was promising with statistically significant efficacy of DAS28 and ACR20 (measurements of disease activity and change over time in such activity scores, respectively) relative to a placebo.
Like many small capitalization pharmaceuticals, even those which are at least partly generating revenue with marketed products, Zalicus' true value does not lie in its current financials but rather in its potential growth due to a promising and growing pipeline. The rheumatoid arthritis indication is a huge market potential with up to 1% of the U.S. population being affected. Synavive's mechanism is unique by enhancing the anti-inflammatory benefits of glucocorticoids (steroids) without the associated dose-dependent side effects. Success in this Phase IIb trial is significant not only due to the immediate ramifications of a large market potential indication of rheumatoid arthritis, but it also could also legitimize the drug for many indications in which glucocorticoids are commonly prescribed such as Crohn's disease, lupus, bursitis, allergic rhinitis, asthma or any of many conditions in which these steroids may be part of the long-term treatment regimen.
Presented are three small capitalization pharmaceuticals with significant Phase II catalysts scheduled in late 3Q and 4Q 2012. There is obviously upside potential and downside risks in each of these companies due to their financials and upcoming data. Shareholders are advised to perform additional research to determine which, if any, positions are suitable for their portfolios. Peregrine pharmaceuticals should be commended for their success in second-line NSCLC and its upcoming additional successes. Bavituximab's approval is still not set in stone, as there are additional trials and regulatory barriers coming. However, it is giving the healthcare sector and patients hope for its difficult-to-treat targeted indication. CPRX, ONCS.OB and ZLCS could each offer shareholders, the healthcare sector and most importantly patients hope with their Phase II data coming in the waning days of 2012. Rodman and Renshaw presentations may catalyze CPRX and ONCS.OB on Monday, while ZLCS can also present data via a press release anytime between now and the end of September.