OncoSec's Licensing Of CAR-T Tech For Solid Tumors Opens Up A New Door For The Future
Summary
OncoSec Medical announced that it has licensed a CAR-T product from Dana-Farber Cancer Institute, specifically from The Marasco Laboratory.
The most notable item I can see about the licensed CAR-T is its bi-specific approach, in that it is able to target more than one antigen to prevent tumor escape.
OncoSec has several catalysts approaching in the 2nd half of 2019, the two most notable being the pre-FDA meeting for TAVO in metastatic melanoma and results from KEYNOTE-890.
The company had about $34.1 million in cash as of May 28, 2019 but a recent proxy SEC filing of wanting to increase the amount of authorized shares, leads me to believe that further dilution can possibly be expected towards the end of this year.
OncoSec Medical (ONCS) announced that it had licensed CAR-T cell therapy for Triple-negative breast cancer (TNBC) and other solid tumors. The goal is to break through with the use of CAR-T therapies beyond liquid tumors. The latest license has a few advantages that OncoSec could exploit to get a leg up in the CAR-T space. The greatest potential lies in combination therapy, in which both entities can combine both technologies together to make a more solid treatment option for these patients. There are several catalysts expected in the 2nd half of 2019, which could provide the stock a much-needed boost.
Potential Game Changing CAR-T Technology OncoSec had entered into a licensing agreement with Dana-Farber Cancer Institute. Specifically, the deal was made with The Marasco Laboratory, which is led by a prominent immunology researcher Wayne Marasco, M.D., Ph.D. OncoSec will have an exclusive option to license rights to CAR-T cell products and all associated IP. Why license this CAR-T technology now? This is probably one of the most key questions one can ask. Judging by the technology being deployed I see there are several reasons why it was a good idea to license this technology. The technology being deployed makes use of engineered single-chain variable fragment (scFv) antibodies in a dual-targeted bi-specific CAR-T cell approach. Being that this CAR-T treatment has a dual-targeting mechanism, I believe it has a solid foundation to change the scope of treatment for solid tumors. There are a couple of problems that I see with current CAR-T therapies and why this newly licensed one from OncoSec might possibly end up being better. The first problem with current CAR-T therapies is that a majority are developed to target only one antigen. In the case of a bispecific CAR-T the dual-targeting mechanism has a better way of stopping tumor antigen escape. The second problem with most CAR-T therapies is that they suffer greatly with toxicity when applied to solid tumors. This new CAR-T technology may possibly provide a way to limit/avoid such toxicity. This point can be noted IN a quote from Daniel J. O'Connor, President and Chief Executive Officer of OncoSec:
This partnership has the potential to deliver novel, next-generation, dual-targeted CAR T-cell therapy for solid tumors, an achievement that has eluded researchers due to the toxicity of current CAR-T cell therapies. Prior research suggests that Dr. Marasco's approach may hold the key to unlocking the safe and effective use of CAR T-cell therapies in solid tumors"
The ability to find a CAR-T treatment that can still achieve similar efficacy, while at the same time avoiding toxicity when being applied to the treatment of tumors, would be a highly ideal option. Which brings me to the second point, which is that the solid tumor market for CAR-T therapies is open right now:
CAR T-cell treatment of solid tumors is an early stage market with no approved products at the present time, and thus represents a considerable unrealized market opportunity. We believe the barriers preventing the advancement of CAR T-cell technology in the solid tumor setting are surmountable by Dr. Marasco and his team's expertise"
With such a wide open market, this opens the door for a lot of potential for this program. It will need to be tested thoroughly, but the technology does seem quite promising. Then the CEO makes an excellent point, one which I have been saying on many occasions. That being the future treatment of cancer therapies will mainly come in the form of combination therapies. This is where it gets interesting. I believe the final reason why OncoSec chose to go with this CAR-T product is that it has a goal to combine its TAVO (IL-12) together with it. TAVO along with electroporation might enhance the efficacy of the CAR-T treatment for solid tumors.
Financials
OncoSec Medical had $34.1 million in cash as of May 28, 2019. It believed that this cash would be enough to fund its operations for more than 12 months. However, it is important to note that the biotech recently filed a Schedule 14A SEC document with multiple measures for investors to vote on. One of those measures involves increasing the amount of authorized shares of common stock from 16 million to 45 million. What that means is that the company is just setting up the possibility of being able to sell shares of common stock to raise cash, but it has not yet done so. The thing is that even if the proposal is passed by shareholders, it's tough to estimate exactly when the biotech will implement a cash raise. In my opinion, I believe a cash raise could possibly be done towards the end of this year.
Conclusion
OncoSec Medical offers a compelling pipeline with the use of its DNA IL-12 based immunotherapy known as TAVO. The potential to license the CAR-T technology from the Marasco Laboratory should bring in a new product into the pipeline that could diversify its pipeline. Having said that, there are several risk factors that investors must be concerned about. The first and foremost is the proxy of wanting to increase the amount of AS. That indicates that OncoSec has plans to raise cash soon enough. A second risk would be the low stock price of $2.26 per share. It had completed a reverse stock split back in May of 2019. With the low share price, any negative news item could cause the stock to trade below $1 per share again. That would put the biotech back in the risk of possibly eventually needing another reverse stock split. The final risk is the low market cap of the company which is at $24 million. Being as such, this type of scenario creates the ability to easily manipulate the stock. Especially, when the average trading volume stands at only 180,000 shares. That means the stock is not liquid at all. On the flip side, there are several catalysts that are approaching. The first of which is TAVO plus Keytruda treating patients with triple-negative breast cancer (TNBC) in the phase 2 KEYNOTE-890 study. Results from this study are expected in the 2nd half of 2019. The other catalyst later in the year would be a pre-IND meeting with the FDA for TAVO plus Keytruda in metastatic melanoma. This meeting is set to take place at the end of the year and if everything goes according to plan, then OncoSec can file for accelerated approval for the metastatic melanoma indication in the 1st half of 2020. I am neutral on this stock, because management still has to prove that it can deliver on the upcoming catalysts. Being that share price is low, it is key to find a good entry point based on substantial progress going forward.
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