OncoSil Medical Ltd (ASX:OSL) has received a Buy rating and $0.42 per share price target from Wilsons Research.
OncoSil shares last traded at $0.12. The following is an extract from the report.
Our valuation of the OncoSilTM product supports our valuation and investment view. We maintain our BUY rating with a revised price target of 42cps.
OncoSil Redux
OncoSil is working to initiate US clinical trial sites ahead of launching its OncoPac-1 study early next year.
We see that clinical trial as the major set piece that can underwrite valuation development over the next few years. OncoPac-1 comprises a short ‘run-in’ phase to assess safety in the first 20 patients.
The European regulators may also seek to review that data, in which case OncoSil’s wait for ‘CE Mark’ may extend to mid-2017.
Execution of the OncoPac-1 project and obtaining marketing authorisation in Europe next year can get the stock back on track after a tough but successful year pushing hard for the US trial approval.
Key points
OncoPac-1 trial. OncoSil is moving towards initiating its first clinical sites in the USA and Australia.
This clinical trial is designed to demonstrate that adding OncoSilTM treatment to chemotherapy can delay pancreatic tumour progression, compared with chemotherapy alone.
We see OncoSilTM as potentially practice changing if it can deliver an ablative radiation dose to the tumour in one procedure, with good safety.
OncoPac-1 data may resolve CE Mark impasse. OncoSil has been working with the European regulator for more than a year, seeking marketing authorisation.
Although approval could be granted at any time, the EU regulator may elect to wait for initial safety data from OncoPac-1.
In that trial, a short, 20-patient safety component is planned, with results due H1, 2017.
Balance sheet remains in reasonably good shape with ~$14m in cash and equivalents (Oct, 16).
Valuation
Our risked DCF model implies a 42cps target price on a fully diluted basis.
Key variables in the valuation are the terms on which OncoSil can partner the asset for major market access (upfront fees, milestone payments, royalties, territories).
Equity value is ‘due’ a re-rating as company moves into US pivotal trial. Our un-risked valuation for OncoSil is $2.20 per share on a 2-3 year view.