MarketExclusive.com: OncoSec offers great opportunities but investors are wary
(Thomson Reuters ONE) -
OncoSec offers great opportunities but investors are wary
Direct Link: http://marketexclusive.com/news/details/4500-OncoSec-offers-great-
opportunities-but-investors-are-wary
Side effects are a main problem when it comes to treatments for solid tumor
cancers. Extreme nausea, fatigue, skin discoloration and hair loss are among the
more prevalent results associated with the most widely used treatments. In fact,
in many cases, these side effects produced more traumatic and debilitating
results than the disease itself.
Standard treatment such as chemotherapy, radiation, surgery and immunotherapy
techniques required large doses of the necessary drug to get the desired result,
whereas smaller amounts were ineffective. Depending upon the drug, the
treatments could produce anything from mildly toxic to outright fatal
consequences. To solve this problem researchers are concentrating on delivery
systems to help cancer patients get proper treatment with minimal side effects.
OncoSec Medical (OTCBB:ONCS), a biotech company listed on the NASDAQ Bulletin
Board, is one of them. OncoSec has developed a new delivery technology that
vastly reduces the necessary drug dosage. Since over 120,000 new cases of
melanoma are diagnosed each year in the U.S., and 50 million people worldwide
suffer from the decease, the benefit from new technologies can be huge.
OncoSec developed a proprietary process called the OncoSec Medical System (OMS)
that uses electroporation to deliver cancer-fighting drugs. Electroporation uses
a series of brief but intense electrical impulses that open pores in cancer
cells. Once the pores are open, chemotherapeutics (cytokines) are injected into
the cancer tumors. Electroporation allows to use with the same effect much lower
dose that has much smaller side effects. Thus, cytokines were not considered a
viable anti-cancer therapy due to their high toxicity. But electroporation
(OncoSec's OMS system) allows to use a much smaller dosage of cytokines, thus
making them a more feasible therapy for cancer treatment.
OncoSec developed two clinical applications for two separate treatments.
ImmunoPulse delivers a plasmid DNA that instructs cells to produce the IL-12
protein that stimulates immune system to eliminate the cancer cells. ImmunoPulse
therapy also forces the immune system to eradicate cancer cells outside of the
treatment range. Before application of OncoSec's electroporation technology,
administration of IL-12 could be lethal since it required too high a dose. This
technology significantly reduces the required quantity of IL-12; FDA Phase I
trials for efficacy against metastatic melanoma proved successful and
ImmunoPulse was moved to Phase II confirmatory studies.
The second OncoSec platform, NeoPulse, delivers a chemotherapy drug, bleomycin,
straight into the cancer cells. Bleomycin is an already approved antibiotic that
has undesirable side effects. NeoPulse's electroporation opens the cell
membranes and enhance absorption of Bleomycin into cancer cells by a factor of
4,000. Moreover, soon after administration of Bleomycin the pores close,
trapping it inside the cells. This procedure greatly increases the effectiveness
of the treatment so that 5% of a standard chemotherapy dose is enough.
Nevertheless, the company's prospects are not clear. The price of the stock is
similar to a venture capital investment: market capitalization of OncoSec is $20
million. Similar companies at this stage have market capitalization at least ten
times as large. Thus, Celsion (NASDAQ:CLSN), used a similar approach that apply
microwave, radio-wave or focused ultrasound to heat the affected areas before
injecting drugs. Celsion, however, teamed up with Oxford University to raise
capital and conduct its next clinical trial, and at the same time partnered with
Philips NV (NYSE:PHG) to use ultrasound technology. It took 60 days for Celsion
to close these partnerships, propelling a $50 million market cap company into a
$300 million enterprise in less than a year.
How investors can profit from OncoSec's advancements is not that clear. OncoSec
have approached 25 to 30 companies, made a presentation to about half of these
and only six companies signed a confidentiality agreement. Only one of them
moved to term sheet. OncoSec didn't go through initial public offering process.
During this process investment community becomes acquainted with a company and
banking firms do analytical reporting on an ongoing basis. Thus investors are
updated on the company's development. OncoSec chose reverse merger to get public
but the price was smaller investor awareness. This comes at the time of
intensive competition in cancer drug development. Investors deal with barrages
of the investment stories describing success of hundreds of various biotech
companies. Competition in cancer drug development is very intense. It is very
difficult to discern competitive advantages of every product in development.
Thus, investors prefer familiar technologies; on other side, they are not
acquainted with electroporation.
In addition, ImmunoPulse data are based on a small number of patients. Phase I
data are encouraging but for biotechnology investors skepticism is warranted
since too often in larger phase III trials these results are not replicated. The
NeoPulse clinical data have larger base, but the sample size is still small.
There are still no partnering deals, and, thus, OncoSec's results are not
validated by a sophisticated third party. Furthermore, OncoSec has very limited
cash position that can become the biggest impediment for further expansion.
Nevertheless, OncoSec reached two important milestones: it got EU regulatory
approval for its OMS electroporation device and has made an agreement with
institutional investors to buy $7.2 million of securities in a public offering.
OncoSec has agreed to sell to institutional investors an aggregate of
28,800,000 shares of its common stock at $0.25 per share. In addition, investors
will get warrants to buy up to 14,400,000 shares of common stock at $0.26 per
share for a term of four years. The offerings are expected to bring about
approximately $7.2 million ($6.5 million net). OncoSec will use proceeds for
clinical trial expenses as well as research and development expenses. In
addition, clinical trials for NeoPulse are now at Phase IV and already shown
that it is safe and effective in the treatment of melanoma, basal cell
carcinoma, squamous cell carcinoma, and liver and pancreatic cancers. These
developments suggest that commercialization of the OncoSec's treatments is in
sight.
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Datum: 02.01.2013 - 20:01 Uhr
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