OncoSec Medical Inc (ONCSQ)

[Titan V]

My musings on OncoSec’s mystery investor

OncoSec has raised close to $40M in cash from an institutional investor (“healthcare dedicated fund” as they call it) in exchange for stocks and warrants in the last three years:

June 2014: $16M
June 2015: $13.6M
May 2016: $10M
Total: $39.6M

Musing #1: Given the anonymity of the fund, is it reasonable to assume that this is a venture capital fund? I think so, because VC funds are not required to disclose their investments. If this fund were a hedge fund like Sabby or Ridgeback, we would have seen it listed on the institutional investors page on financial websites, but it is not.

If it is a VC fund, I find it odd that it wants to remain anonymous as VC funds like to list their investments to the public as doing so is generally in their best interest from a publicity and valuation standpoint. But OncoSec's VC investor wants to remain anonymous. Why so?

Musing #2: Sometimes VC fund employees sit on the boards of their investments. While this specifically has not been the case at OncoSec, there has been a person linked to a major biotech VC fund, in OncoSec's senior management. Earlier this year, he hopped on to another of this possible VC fund’s possible investments.

I am talking about David Meininger.

From his LinkedIn profile:

Executive Director, Business Development & Licensing
Merck
October 2013 – September 2015 (2 years) Palo Alto, California
Member of Bay Area BD&L group. Responsibilities include in- and out-licensing of therapeutic assets, initiating and maintaining collaborations with external partners and advising the Merck Research Venture Fund team on selected investment opportunities

So, is it possible that Merck Research Venture Fund is OncoSec’s “healthcare dedicated fund” that has been funding them all along?

It is interesting to note that Meininger does the same work he did at OncoSec (Business Development) at Trianni, Inc. Like OncoSec, Trianni also seems to have a collaboration without monetary partnership with Merck at this time.
http://trianni.com/partnering-licensing/
http://oncosec.com/industry-collaborators/

Is Meininger doing gigs of a VC guy going into his fund's investments to make sure things are being set up properly for business development and licensing? Could that explain his 10 month stint at OncoSec and silent departure (with no external replacement for this position)?

Musing #3: H.C. Wainwright has been the sole placement agent in all of OncoSec’s three big direct placements. Why did they have a $25 price target on ONCS when other analysts covering ONCS (Maxim, Nobel, etc.) had it lower? What is the reason behind Wainwright's confidence in ONCS stock? Maybe being the direct placement agent, Wainwright knows who has been investing in ONCS over the years?

Musing #4: Besides equity investment (if that happens to be true that is), key talent from Merck have come straight to tiny OncoSec to guide R&D (Dr. Robert H. Pierce was in the Keytruda development team at Merck; Sheila Mohan-Peterson was a senior patent counsel at Merck; David Meininger was in BD&L at Merck). Below are some articles that I have come across during my due diligence:

Merck Joins the Big Pharma VC Party, Setting Up $250M Biotech Investment Fund
http://www.xconomy.com/national/2011/09/15/merck-joins-the-big-pharma-vc-party-setting-up-250m-biotech-investment-fund/

According to In Vivo, the Merck Research Venture Fund will enable Merck to invest in early-stage startups, offer its scientists up as advisors to the smaller companies, and provide Merck’s dealmakers with an inside track in negotiations when it’s time for the small company to strike a co-development partnership.

Merck Looks to Startups
https://www.technologyreview.com/s/428064/merck-looks-to-startups/

In another recent move, Merck said this March it would spend up to $90 million creating a nonprofit institute in San Diego to translate basic research projects into conceptual proofs for a new drug or therapy. External researchers will be able to tap Merck’s expertise and laboratory resources. In return, they give the company the first option for an exclusive commercial license.

- Lab resources? As in free Keytruda for OncoSec’s ongoing p2b investigator sponsored combo trial?
- Exclusive license requirement – Hence OncoSec has no Opdivo combo, current or planned?

*** PLEASE NOTE that this is speculative musing on my part based on these clues that I think are reasonable. I am NOT suggesting that Merck Research Venture Fund is OncoSec's "healthcare dedicated fund." Rather, I am asking if MRVF is OncoSec's VC investor given these clues.***

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Merck Research Venture Fund
Corporate Arm: Merck
Website: http://www.merck.com/licensing/our-partnership/Flagship-Ventures-partnership.html
Established: 2011
Address: Room 1504, 1 Corporate Avenue Shanghai 200021 China [phone]
Address: 115 W. Washington Street Suite 1680 Indianapolis IN 46204 USA [phone]
Fund Size: $250 million fund, 80% invested in other funds (Flagship, East Coast, West Coast, and China fund), 20% in direct company investments.
Investment Amount: Not Specified
Current Portfolio: Not Available
Investment mission: The Merck Research Ventures Fund is an investment vehicle through which Merck will help to shape the diversity and quality of external innovation, which may be captured through future partnerships and acquisitions. MRVF is jointly governed by an Investment Committee and a Scientific Management Approval Committee, each made up of senior Merck employees.
Investment stage/criteria: Early Stage
Technology areas of focus:
• Life Sciences: not specified

http://researchpark.illinois.edu/sites/researchpark.illinois.edu/files/documents/Corporate%20VC%20Fund%20Profiles.pdf