By Amy Baldwin
Dec 9, 2013 5:58:46 AM
OncoSec Medical (ONCS.OB) is best known for its Stage 3 melanoma treatment platform, ImmunoPulse. The company recently provided an update on its melanoma trial, showing that 54% of the 25 observed patients had an objective response with 15% yielding a complete response. This data is some of the most promising we’ve seen in treating melanoma, making ImmunoPulse a therapy solution to watch. However, it’s the progress surrounding another program that could make OncoSec the next great Orphan Drug Company.
Treating Cancer with a Successful Approach
Those who follow OncoSec are familiar with the company’s technology. OncoSec combines two important pieces of effective treatment together: It uses a strong immunotherapy compound (IL-12) with a delivery (via electroporation) that both increases the uptake of a drug while decreasing its side effects.
This effect is achieved by using applied electrical pulses, which then create temporary pores in tissue, allowing for drug delivery that is not possible with the norm. Consequently, OncoSec has solidified its place atop those developing melanoma treatments.
While OncoSec’s data is remarkable, the company must still compete with the likes of Amgen (AMGN), Bristol-Myers (BMY), and other large pharma if successful. The most likely of scenarios is that, as the melanoma battle intensifies, OncoSec will one day be bought out. Though shall this prove not to be the case, OncoSec has another successful program that could support a billion-dollar market cap with or without its melanoma indication.
An Under-the-Radar Value Driver
OncoSec is also testing its ImmunoPulse platform to treat a very rare and deadly cancer called Merkel cell carcinoma (MCC). This is a disease with no current treatments and without a single clinical study underway for a cure, other than ImmunoPulse. According to OncoSec, this indication alone presents a market potential of $300 million, and OncoSec stands a very good chance at success in treating the disease.
One reason OncoSec has a good shot at success is because there are no current standard of care treatments and no viable options to treat the disease. Obviously, if the company shows any kind of success the FDA will likely give OncoSec marketing approval early.
Currently, OncoSec is in a Phase 2 trial of 15 patients. In a recent update, the company announced that all patients in the study experienced the uptake of IL-12 (the agent being used) increase by at least 100 fold, and some as high as 1,000 fold. This data suggests that ImmunoPulse did its job of increasing the uptake with a smaller and less potent dose, still allowing IL-12 to effectively fight the disease.
How Much Upside?
OncoSec Medical is currently trading with a market cap of $52 million; but surprisingly many of the market’s best-performing biotechs were also just microcap stocks prior to clinical success. Among these companies is Pharmacyclics (PCYC), a biotech whose blood cancer drug is deemed by many to be the most innovative drug ever.
Moreover, successful Orphan Drugs always produce top market performers, as the companies responsible have longer years of product exclusivity and the drugs can often be developed to treat other diseases. OncoSec has proved that its technology can be used to treat different diseases; but it has also been one of the first companies to successfully cross-treat a disease as common as melanoma, and as rare as MCC.
With OncoSec, you have the best of both worlds; you have a cancer development company with good data and low expectations; and you also have an orphan company with no clinical or commercial competition. Overall, this combination suggests that OncoSec Medical could be the next big-time multi-year biotech performer… and the signs couldn’t be more evident.
Sentiment: Strong Buy
I am currently employed by a Fortune 20 company, on any given day I am assessing risk management and the financial health of various companies. My time is spent looking at charts and numbers all day and I specialize in statistical analysis. I use the writers of various finance sites for my investing ideas, then do my own research prior to investing.
Sentiment: Strong Buy