OncoSil Medical Ltd (ASX:OSL) is viewed by analysts at Bell Potter as substantially undervalued based on Tuesday’s closing price of 13 cents.
The broker has a buy recommendation on the stock with a 12-month price target of 39 cents.
OncoSil is a medical device company focused on localised treatments for patients with pancreatic and liver cancer.
The global target market for pancreatic and liver cancer is estimated to be about US$3.5 billion.
Clinical study delivering promising results
John Hester from Bell Potter highlighted the fact that the company has just received further encouraging news regarding the progress of global pancreatic clinical study program.
He noted that 40 patients have now been recruited with 31 successful implants completed to date.
Of the 20 who have reached the first evaluation point, the response rate is 20%.
Previously inoperable patients undergoing curative surgery
Providing further justification for confidence was the fact that three of the 20 have undergone potentially curative surgery.
It is believed that another three patients are likely surgical candidates following down-staging in their disease.
OncoSil chief executive officer Daniel Kenny said: “The surgical resection findings to date represent an important milestone, as they demonstrate an improved outcome in a patient study group who were deemed inoperable when enrolled.
“Additional patients continue to be assessed by their clinical teams for surgical resection, and we look forward to providing further updates.”
Funded through to European Union commercialisation
In March, OncoSil completed an institutional placement raising $12.7 million.
This was accompanied by a share purchase plan capped at $4 million.
Funds raised from the institutional placement and share purchase plan are expected to see the company through to European Union commercialisation of the OncoSil™ device.
This includes achieving the key milestone of CE Mark certification.
Jump in revenues in fiscal 2019
Hester is forecasting revenues to increase from $3.5 million in fiscal 2018 to $44.8 million in fiscal 2019.
His projections point to a net profit of $27 million in 2019, representing underlying earnings per share of 4.4 cents.
Hence, his target price which implies share price upside of 200% to the company’s current trading range, implies a PE multiple of less than 10.