More exposure: ONCS focus piece on MARKET PLAYGROUND
OncoSec Medical Inc. (OTC:ONCS) has rallied by more than 70% in the last month, and over 100% during the previous six months. The company has a very promising platform that could lead to very large returns in the next five years. I was very impressed with its recent data from its ongoing phase II trial, and what it could ultimately mean for the company’s future.
Much of the company’s share price gains during the last month have been in anticipation of data. A couple weeks ago the company announced it was going to present data for its two ongoing Phase II trials for Merkel cell carcinoma and metastatic melanoma at two different conferences in October and November. Both trials are based on the company’s ImmunoPulse treatment, which is a DNA-based immunotherapy that uses electricity to increase the uptake and delivery of an immunotherapy product. This technology is a form of electroporation which is being used by OncoSec Medical, Inovio Pharmaceuticals, Inc. (NYSEAMEX:INO) and even Merck & Co., Inc. (NYSE:MRK) (although the latter has not updated investors on its work for quite some time in electroporation).
On Tuesday, OncoSec announced the data for its Merkel cell carcinoma (MCC) study, which has the least upside of the two in terms of market size. Merkel cell carcinoma is a rare but aggressive form of cancer, with just 1,500 new cases per year in the U.S. Therefore, despite hopeful results, this indication does not provide the upside potential of its metastatic melanoma trial. For comparative purposes, about 70,000 new cases of melanoma are diagnosed annually in the U.S. Of those patients, 8,000 will die of the disease due to its metastases or complications therein.
The Phase II multicenter study on Merkel cell carcinoma patients found that the company’s technology increased the levels of IL-12 in the tumor microenvironment without serious adverse safety events. The goal of this study is to evaluate the ability of the company’s electroporation platform, ImmunoPulse, to increase the uptake of a DNA-based cytokine coded to make targeted cells produce IL-12 in the tumor and to demonstrate safety. This production of IL-12 by the targeted cells triggers an immune response against cells with the IL-12 expression. Contributing to the therapy’s safety profile, it is believed that the company’s system can increase uptake of the previously-injected IL-12 precursor agent by up to 4,000 times and can be used with virtually any immunotherapy/chemotherapy product in lower doses (approximately one-twentieth) than typically administered. This reduces side effects and increases efficacy, according to the company’s website. As a result, if effective, the technology could be in high demand due to it being non-invasive, cheaper, and compatible with many immunotherapy or chemotherapy agents.
Since Merkel cell carcinoma is a rare disease, the preliminary results only represented three patients who received at least one treatment cycle. But of these three, all demonstrated an increase in the expression of IL-12 (the goal) in the tumor biopsy performed three weeks post-treatment. Additional analysis also demonstrated that at least one subject saw increased levels of killer T-cells in the tumors, which is a sign of the body’s immune response against the cells producing the IL-12 protein.
The overall collection of data from the study is still ongoing, as more detailed analysis is still being accumulated. There are five total patients enrolled, but all are at different stages in the study. One patient who is further along in the study had major reductions in cancer throughout his body despite other treatments having no effect. As an investor, this is encouraging, and further shows that the product may have a lasting effect in the treatment of this disease.
For a small company the data from OncoSec’s first preliminary MCC study is enticing, but more importantly it suggests good results for its upcoming metastatic melanoma data in early November. As I noted, the MCC trial is small, it’s a rare disease, and doesn’t present the same level of potential as metastatic melanoma. However, both studies are using the exact same technology, the same product, and the same theory of treatment. Therefore, a success in MCC should indicate that the company will present favorable results for its melanoma trial, especially since the company has seen success in earlier stage melanoma trials.
Typically, a developmental-stage biotechnology stock trades at a certain price level, because investor’s expectations, in terms of clinical results are inline with potential of its future. However, from the moment that OncoSec announced the presentation of data its stock has been on fire! It doesn’t make sense. It almost seems as though the company had a large following, but because of its performance investors were putting their money elsewhere. Now that the first round of data has been presented with a more significant indication being presented in a couple of weeks, investors have been buying back shares.
Here’s where this stocks gets really tricky, it actually fell by 17% on Tuesday after the preliminary data was announced. It essentially began the day flat, but then traded with modest losses for the majority of the day. However, the stock then sold off with heavy volume in the final two hours before recovering at the close. The fall wasn’t a result of disappointing data, but rather the fact that it had traded with such large gains in the month prior to data, and positive results were already priced into the stock. This often occurs in small-cap biotechnology stocks.
My advice if you own shares or are considering buying, and believe in the long-term prospects of the company, is to buy and hold for the long term. Now that the company has announced the first preliminary data, its stock will most likely trade with higher volume and more volatility in the coming days. But, with the most important data from its melanoma study to be announced in the next couple weeks, I would not be surprised to see the stock more than double in anticipation of positive data for the much larger targeted group of metastatic melanoma.