Oncosil Medical Ltd (ASX:OSL) has received a Buy recommendation from broker Bell Potter, and a valuation of $0.33, more than double the current price.
The following is an extract from the report.
Commercial Revenues Closer
Earlier today OncoSil announced that it had received an Investigational Device Exemption (IDE) from the US FDA. The company will now initiate a pivotal clinical trial for OncoSil for the treatment of inoperable pancreatic cancer.
The first patient in this 300 patient study is expected to be enrolled in early 2017. The primary endpoint is localised progression free survival. The secondary endpoints include progression free survival and overall survival.
As per our previous research on the likely trial design, the FDA’s acceptance of the localised progression free survival primary endpoint is a significant boost to the prospects of success in this trial.
The randomised study will compare OncoSil+Chemotherapy to chemotherapy alone.
In earlier studies (conducted nearly a decade ago) the vast majority of patients (83%) showed a response to the treatment, hence the decision by the FDA to approve the study in this first in class treatment for the disease is exciting news.
This open label study will report regularly beginning with the first cohort of 20 patients where the FDA will focus primarily on safety. Following this, we expect a significant acceleration in recruitment due to the absence of competing clinical trials.
OSL had $13.3m in cash at 30 June 2016 which we believe is ample to commence the trial. We expect the cost of the pivotal clinical trial to be in the range of US$24m – US$26m over the next two to three years.
Maintain Buy Recommendation, Valuation raised to $0.33
The awarding of the IDE is a major step forward for this first in class therapy, consequently the valuation is raised by 10% to $0.33.
Overall changes to earnings in the forecast period are not material in absolute terms. We maintain our Buy recommendation.
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