Posted 12 Sep 2013
The Rodman & Renshaw Investment Conference this week highlighted several of biotechnology’s most exciting companies such as Verastem Inc. (NASDAQ:VSTM), Keryx Biopharmaceuticals (NASDAQ:KERX) and Galena Biopharma Inc. (NASDAQ:GALE), all of which have been Wall Street favorites in recent months. Yet, one of the more exciting presentations that I heard came from a tiny biotech company named OncoSec Medical (OTCMKTS:ONCS), a company with a tremendous volume of catalysts that could spark a massive year-end rally.
Who Is OncoSec?
OncoSec is developing an extensive immunotherapy based pipeline for aggressive skin cancers based on electroporation as the delivery and DNA based cytokines as the active agents – appropriately named ImmunoPulse. Electroporation was pioneered and made popular by Inovio Pharmaceuticals Inc. (NYSEMKT:INO). OncoSec is delivering DNA based IL-12 using electroporation with its proprietary device – OncoSec Medical System (OMS) – directly into the tumor and eliciting a systemic immune response and targeting several types of cancer. The company’s treatment, ImmunoPulse, consists of injecting DNA IL-12 into a solid tumor, in order to trigger the immune system to seek and kill cancer cells. Brief electrical pulses are applied using the OMS device, which opens up the cell membrane, allowing the agent to get inside of the cell.
IL-12 is considered to be a very strong immunomodulator, but by using a synthetic approach with DNA IL-12 combined with OMS, side effects of recombinant forms of cytokines such as IL-2, IFN (approved for melanoma) alone are eliminated – the OMS increases uptake of the agent, requiring a smaller dose – while its therapeutic effect is realized. This is achieved with the use of electrical pulses, which then create pores for the agent to be injected.
OncoSec’s ImmunoPulse, which is a combination of its OMS and injection of DNA IL-12, is being tested in Phase 2 trials to treat metastatic melanoma, cutaneous T cell lymphoma, and Merkel cell carcinoma (MCC). Already, the company has released positive preliminary interim results from both its melanoma and MCC study, which was presented earlier this year.
In the current Phase II melanoma study, there have been some key data trends in the first 13 patients, discussed in more detail below. To date the company has primarily highlighted improved local response rate with 95% of tumors responding to the DNA IL-12 therapy. In addition, at the time of the initial interim analysis, 2 subjects were evaluable at Day 180 for objective response of target and non-target lesions. One subject had stable disease and the other subject had a complete response.
Moreover, the results from the first 13 patients in the Phase 2 study were even better for DRR than what we saw with Amgen’s (NASDAQ:AMGN) T-VEC earlier this year. Let’s keep in mind the difference in trial size and phase of study, but we cannot deny the numbers. Amgen reported a durable response rate of 16% for its Phase III trial, compared to OncoSec’s durable response rate of 45% for its Phase 2 trial. In the MCC study DNA IL-12 uptake increased in all patients by 100-1,000 fold, thus showing that OMS does in fact increase the uptake of the drug.
The process and data itself sounds interesting, but after listening to the company’s presentation, its future looks promising.
What Was Presented?
While the data above is encouraging, is not why I thought the presentation was impressive, instead it was because of some new information and tables that made it even more intriguing for showing a trend in the current studies that some would argue is better than we have seen by other melanoma products, I was impressed with the level of clarity in the presentation and the consistency and confidence the company has shown with data thus far. Of the 13 subjects analyzed in the Phase II melanoma trial, additional local response data was presented:
73% of target lesions demonstrated at least 30% decrease in size by Day 90
49% of target lesions had a complete response by Day 90
6/13 (46%) of patients had a complete response to treatment of their target lesions
11/13 (85%) of patients had an objective response (PR +CR) to target lesions by Day 90
21/31 (68%) of the lesions had a durable response rate (DRR) at 3 months
14/31 (45%) of the lesions had a DRR at 6 months
9 of 13 (69%) of patients had a DRR of treated lesions at 3 months.
4 of 13 (38%) of patients had a DRR of treated lesions at 6 months
For one, I wondered how OncoSec could compete with the likes of Yervoy in the melanoma space even if proven to be successful. OncoSec answered that question: They showed that Stage IIIB & IIIC have no treatment options outside of surgery and radiation, which are too aggressive. Yervoy and other promising clinical products target patients in the more advanced stages of the disease. So a patient is potentially greatly sacrificing their quality of life by taking a treatment meant for someone with a much more advanced stage of disease.
OncoSec has now outlined a strategy for targeting both segments of the advance disease patient population, those that fall between Stage IIB and Stage IVA as well as having a combination or adjuvant based approach with ImmunoPulse and frontline therapy for more advanced disease. By increasing the melanoma target population, OncoSec becomes a targeted partner with large pharma and solidifies its future as being relevant in the space.
The melanoma development plan is coming along very aggressively and it is positioning itself with key inflection points as well as broadening its pipeline by utilizing the ImmunoPulse platform for additional targets and evaluating combination based approaches such as the research ongoing with DNA IL-12 combined with different checkpoint inhibitors.
Next, enrollment is coming along nicely. The company disclosed that 25 patients are now enrolled in their melanoma study and will shortly finish enrollment in their 15 patient Merkel Cell Carcinoma (MCC) study study, both of which are Phase II trials.
In particular, there is no other ongoing Phase II studies or treatments for MCC besides ImmunoPulse. And with a 100-1,000 fold increase in uptake of the drug as their studies have shown to date, along with a 20% overall response, investors should be optimistic about this program. Moreover, MCC is an orphan indication, and the company disclosed that the market potential for ImmunoPulse in this indication is over $100 million annually. Given the fact that no large studies will be required, there are no current treatments, and really no comparable standard of care, an FDA approval in this indication is highly likely.
With that said, the company’s market outlook for each of its three products further suggest significant upside. MCC with $100 million, cutaneous t-cell lymphoma over $100 million, and metastatic melanoma over $500 million, paint a pretty picture for the future. Especially, when you consider that OncoSec is a $30 million company! If successful in all studies, OncoSec’s upside could be unprecedented, but if only successful in one study, the company could still see great upside in an industry that trades at four times sales.
Finally, the milestone update! This is the big one, and is why I am so optimistic.
In 2013, or the remaining months of this year, we will receive interim data from OncoSec’s melanoma and MCC Phase 2 studies. In addition, the company will present progression-free-survival data from its Phase I melanoma study. Also, findings from their combination therapy research study are expected soon. If the interim data is positive, this will provide a good signal of what’s to be expected when the company announces final data for its melanoma and MCC program next year.
After viewing the company’s website of upcoming milestones I feel that looking ahead, it could be a good six months for OncoSec. The company is yet to produce any negative data on ImmunoPulse, but has flown under-the-radar with small pieces of data. Due to what we know, there are many reasons to be optimistic, and I think investors should watch it closely, especially considering this illogical pullback, as it might present a golden opportunity.
Hey Bob, if you find something in the future, try copying it to word in the simplest formate, no pics or highlights, Save it, then copy and paste from your word file....and see if that helps.
Sentiment: Strong Buy