Wilson HTM Research Paper

OncoSil Medical Ltd: Thoughts on OncoSil's regulatory situation

Friday, June 17, 2016 by Proactive Investors



OncoSil Medical Ltd (ASX:OSL) has received a WilsonHTM Research Update, with the broker maintaining a Speculative Buy with a 12 month price target $0.48 per share.

OncoSil last traded at $0.14. The following is an extract from the report.

Thoughts on OncoSil's regulatory situation

The Report says:

We maintain a SPECULATIVE BUY rating with a 12 month price target $0.48

Regulatory Status:

American and European regulatory agencies are still working with Oncosil Medical to map out the safest means of bringing the OncoSilTM medical device to market.

While the program is delayed, both regulators have likely added much value to the asset.

Improvements to study design and the clinical protocol may mean faster patient recruitment and higher quality evidence development at the back end of the trial.

Trial approval by US FDA remains the most important near-term catalyst for the stock.

Key Points:

IDE approval remains the most important near-term catalyst; The US FDA is reviewing Oncosil’s Investigational Device Exemption (IDE) proposal to conduct a large clinical trial of OncoSilTM for the treatment of pancreatic cancer.

In Europe, regulators have spent almost a year assessing Oncosil’s application to market its product for treating pancreatic and liver cancers.

The IDE approval from the FDA significantly outweighs European approval from a valuation perspective, in our view.

Oncosil’s US trial sets out a pathway to obtaining higher level evidence for the device, which ultimately is the only basis for clinical adoption and reimbursement expectations in the major markets.

What does not kill development programs, makes them stronger:

Both regulators appear to be making significant intellectual investments in assessing the safest means of testing OncoSilTM and making it available to patients.

The review phase has taken longer than we expected, devoting much time to understanding and controlling the risks associated with the intended endoscopic delivery system, defining how best to stratify potential patients and tumour types, managing potential procedural complications and satisfying the regulators on other “what if” scenarios.

Balance sheet:

Oncosil reported ~$14m cash as 31 March. The regulatory delay will defer first revenues, but also delay the upfront R&D expenses associated with the US trial.

We remain comfortable that Oncosil has sufficient capital to obtain its respective approvals, commence European sales and support its US trial, as we have modelled, from the first half of calendar 2017.

Valuation:

Our revised target price of 48cps reflects the delay impact.

Catalyst profile post-FDA approval:

If the FDA allows Oncosil’s IDE study in the coming months, then that should correspond to more regular positive new flow over the balance of 2016.

We understand that the target trial sites comprise high impact cancer centres, whose association may further validate the OncoSilTM technology.