FULL MAXIM REPORT for April 2017:
OncoSec Medical Inc Buy
Next-Gen DNA-Based IL-12- Positive Preclinical Data
Presented at AACR
Summary
• Oncosec presented positive preclinical data for a next-gen DNA-based IL-12
at the ongoing AACR meeting (American Association of Cancer Research)
demonstrating improved systemic anti-tumor responses.
• The data were presented as an abstract titled "Intratumoral delivery of a P2Alinked
bicistronic IL-12 construct leads to high intratumoral expression and
systemic anti-tumor responses." (ABSTRACT LINK).
• Recall that "first-gen" Immunopulse IL-12 (pIL-12-EP), which is the subject of
the upcoming registration trial (PISCES) in melanoma, has demonstrated high
levels of IL-12 and systemic CD8 responses (i.e. intratumoral delivery induced
killing of distal tumors). The next-gen plasmid incorporates modifications that
improve IL-12 protein expression, driving more enhanced tumor-specific CD8
T cell responses.
• Conclusion. The next-gen plasmid will become the backbone for Oncosec's
pipeline combination molecules, which we expect to be announced in 2017.
The focus for us remains on the first-gen IL-12 and the upcoming PISCES
study, which should initiate soon. Positive data could support registration,
potentially in late 2019.
Details
Phase 2b Study in Melanoma. The PISCES Study (Anti-PD-1 IL-12 Stage III/IV
Combination Electroporation Study) is an open-label study in patients with stage III/
IV metastatic melanoma evaluating Immunopulse IL-12 + Keytruda or Opdivo. The
study will enroll 48 patients that have progressed or are progressing within 24 weeks
of receiving available checkpoint therapies. The primary endpoint of the study will
be overall response rate (ORR) after 24 weeks, with secondary endpoints of best
overall response rate (BORR), duration of response (DOR), progression free survival
(PFS) and overall survival (OS). The study should start in 2Q17. Oncosec is targeting
completion of enrollment by YE17 and top-line data in early 2019. If positive Oncosec
could file for approval in 2019.
Targeting the non-responders. Over 60% of cancer patients are not responsive
to checkpoint therapy (Keytruda, Opdivo),Oncsec has demonstrated that DNAbased
IL-12 turns cold tumors (non-immunogenic) hot (immunogenic) to drive tumor
targeting T cells into tumors. This provides the rationale for combination therapy with
a checkpoint (PD-1/PD-L1). In addition, the company recently published a study, led
by Dr. Adil Daud, demonstrating that a novel biomarker assay may predict likely nonresponders
from responders by measuring the amount of T cells in the tumors that
are "high expressors" of both PD1 and CTLA-4 (Dr. Daud also developed an assay
for monitoring PD-L1 expression). The threshold for a responder is ~30% of T cells
expressing high levels of PD-1/CTLA-4; non-responders are defined as having 22%
or less. The ongoing phase II study in melanoma used this assay to enroll 22 patients
(25% or less expression), including six patients that were exposed to up to 30 cycles
of either Keytruda, Opdivo, Yervoy, or combinations of them. Of the responders, five
had TIL high expressers less than 20%, and two had ~21%. The ORR response rate
in the study was 43% (9/21), including patients in the checkpoint failure population.
What is important to note, in addition to the ORR of 43%, is that converting checkpoint
failures to CR and PR is significant. Patients that fail checkpoints are not retreated,
there is no point, thus they are definitive "non-responders."
Valuation Methods
ONCS: We provide detailed models for the opportunity in melanoma, merkle cell, and breast cancer. Our current assumption is for commercialization
beginning in 2022. Using these metrics, we model the market potential and discount back using a 30% rate in our FCF, discounted-EPS, and sumof-
the-parts models, which are equally weighted and averaged to arrive at our price target; these metrics are dependent on our clinical assumptions.
Price Target and Investment Risks
ONCS: Aside from general market and other economic risks, risks particular to our price target and rating for OncoSec Medical include: (1) clinical
data (will it work?); (2) the execution of the clinical trial; (3) regulatory interactions; and (4) the ability to raise capital and commercialize products.
RISK RATINGS
Risk ratings take into account both fundamental criteria and price volatility.
Speculative – Fundamental Criteria: This is a risk rating assigned to early-stage companies with minimal to no revenues, lack of earnings, balance
sheet concerns, and/or a short operating history. Accordingly, fundamental risk is expected to be significantly above the industry. Price Volatility:
Because of the inherent fundamental criteria of the companies falling within this risk category, the price volatility is expected to be significant with the
possibility that the investment could eventually be worthless. Speculative stocks may not be suitable for a significant class of individual investors.
High – Fundamental Criteria: This is a risk rating assigned to companies having below-average revenue and earnings visibility, negative cash
flow, and low market cap or public float. Accordingly, fundamental risk is expected to be above the industry. Price Volatility: The price volatility of
companies falling within this category is expected to be above the industry. High-risk stocks may not be suitable for a significant class of individual
investors.
Medium – Fundamental Criteria: This is a risk rating assigned to companies that may have average revenue and earnings visibility, positive cash
flow, and is fairly liquid. Accordingly, both price volatility and fundamental risk are expected to approximate the industry average.
Low – Fundamental Criteria: This is a risk rating assigned to companies that may have above-average revenue and earnings visibility, positive
cash flow, and is fairly liquid. Accordingly, both price volatility and fundamental risk are expected to be below the industry.
