Market Overview

ONCOSEC MEDICAL:Multiplying The Immune Response


OncoSec Medical(OTCQB:ONCS) is a young company that focuses on the field of Oncology research. Punit Dhillon, the company CEO, believes his company has what it takes to be the industry leader in the field of Immunotherapy, and has repeatedly referred to his company as "the Goose that laid the Golden Egg." This may seem a bit rash, but when you consider the talent and experience associated with this company and the results they have seen so far (including three active Phase 2 trials: Merkel Cell Carcinoma, Cutaneous T-Cell Lymphoma and Melanoma, and two therapies in development, and 2 different delivery systems, NeoPulse and ImmunoPulse), if they can convert Anti-PD-1 non responders as they believe, they may well have the "Golden Egg".

OncoSec's approach to the field of immunotherapy has them in a place where a partnership with a large pharmaceutical company is more than just a possibility; it is part of their overall strategy. Immunotherapy has found a spotlight in Oncology with Bristol-Meyer (NYSE:BMY), Astra-Zeneca(NYSE:AZN), Merck(NYSE:MRK), and Roche (all producers of Anti-PD-1 or Anti-PDL-1) vying for the top position, and the competition is fierce. Each of these companies is looking for an opportunity to make their drug more marketable and effective, and none of them can afford to let a key ingredient for success get away. That is where OncoSec holds a unique opportunity.

OncoSec seems to have found the ability to greatly enhance the response rate of these new standard of care drugs. With ImmunoPulse, a new and novel treatment, they may have found the key to converting Anti-PD-1 non-responders into responders. Unique, groundbreaking and yet even with all this potential few people have heard of them. While slowly achieving their milestones, their quiet approach has seen the stock price fall to its year low of $0.42 from $0.88 just 2 months ago. After presenting positive Phase 2 Melanoma interim data at ASCO this past June, the stock price saw a quick boost followed by the announcement of a 10 percent dilution leading to uncertainty, and retail investor sell off. Though this may not be the best time to buy, OncoSec may be an excellent stock to add to your watch list, especially as we enter the last quarter of this year when a Phase 2B trial is expected to begin.

NeoPulse, the delivery system for bleomycin, a chemotherapy drug, has often been criticized as a failure, it was a technology acquired from Inovio Pharmaceutical that OncoSec has not shown any apparent interest in developing further. Though the company has stated that they have not written NeoPulse off, from the investor's view they appear to have. I believe it will most likely go down in history as the precursor to ImmunoPulse. In Phase 3 studies NeoPulse was unsuccessful at showing a significant improvement over conventional therapies. Although it is ready for marketing in Europe, without a partner it is unlikely to ever see the market. In the U.S. Oncosec has so far not pursued the further development of NeoPulse as that would require additional clinical studies. It would seem that OncoSec is choosing not to pursue this path, as it would be fiscally irresponsible to invest in an unmarketable therapy. Instead they have turned their focus toward the development of Immunopulse.

ImmunoPulse, (Dr. Fong discusses in this 2 min video) is the term OncoSec uses for the process of electroporation when combined with IL-12, and is the therapy the company is currently basing its future on. It uses an electric current to deliver a plasmid DNA, called IL-12 (interleukin-12), at a cellular level. Dr. Robert Pierce, OncoSec's Chief Medical Officer, believes Immunopulse to be the key to converting Anti-PD-1 non-responders into responders. This is why, after successfully leading the development of Merck's Anti-PD-1 drug, pembrolizumab (MK-3475), he left Merck moving to OncoSec. In combination with Anti-PD-1, ImmunoPulse is the next logical step in Immunotherapy. (Watch this video, starting at the 17 min mark, where the Phase 1 melanoma trial is discussed by Dr. Adil Daud.)

How Immunopulse works: By design, cells possess a membrane that protects the cells from external elements, much like skin protects our bodies. Electroporation circumvents the nature of that membrane; by passing an electric current through the cell microscopic pores are opened, allowing access to the cell itself. Researchers are then able to insert a substance, such as a drug, DNA molecule, plasmids, or other foreign substance, into the cell. What makes electroporation superior to other methods of delivering these substances is two fold: It does not trigger the immune system to attack the delivery method, and it causes only mild local adverse effects (AE's).

IL-12 is a naturally occurring cytokine found in dendritic cells, macrophages and lymphoblastoid cells; and has been used in cancer research for decades. It stimulates the growth of T-Cells, the production of interferon-gama, and tumor necrosis factor-. IL-12 is vital to natural killer cells (NK) as well as CD8+ tumor infiltrating lymphocytes(TIL). This lays the groundwork for the theory that IL-12 may increase the immune response and efficacy of Anti-PD-1. In addition IL-12 has been shown to block the formation of new blood vessels, this anti-angiogenesic effect may assist in hindering the growth of tumors, since the formation of new blood vessels is crucial to a tumors' ability to thrive.

To date, IL-12 has been used in multiple studies as a cancer-fighting agent, however at dosing levels high enough to stimulate the desired response toxicity causes serious side effects, including: nausea, vomiting, and some life threatening conditions. As a result IL-12 has never been successfully used in an approved treatment. However, it and other forms of interleukin remain a very tempting and promising source for new development.

Dr. Adil Daud and Dr. Robert Pierce are working with OncoSec to develop a safe therapeutic way to use IL-12 while avoiding serious adverse effects (SAE's); ImmunoPulse has successfully done this by avoiding systemic treatment and using a local administration. OncoSec has treated roughly 50 Melanoma patients in Phase 1 and Phase 2 trials with no class 3 or 4 AE's. These trials have shown that IL-12 has a powerful effect on the immune system, triggering an unexpected systemic response causing up to 60% objective response rates in untreated lesions. Furthermore, Immunopulse has the strong potential of producing a change in the micro-tumor environment, which increases the response rates of other immunotherapies, particularly Anti-PD-1, Anti-PDL-1 and Anti CTLA4. With a Phase 2B trial planned to begin this year to validate this theory, OncoSec could very well be on the way to becoming powerhouse in the field of immunotherapy.


Incidents of Melanoma are on the rise in this country. The National Cancer Institute estimates 76,000 new cases will be diagnosed in the U.S. during 2014, and of those approximately 9,710 will die. Although Melanoma has a high survival rate current treatments leave much to be desired. These include: surgery, chemotherapy, and immunotherapy, the latter of which offer patients a better quality of life and higher success rate. Because Melanoma has the potential to metastasize, a treatment with a systemic effect could have significant benefit over other available therapies.

OncoSec has reported interim data from their Phase 2 Melanoma trial, admittedly highly selective and lacking a control group, this data presents fairly good results. The small trial size may bring some legitimate criticism, however taking into account that OncoSec is not focused on the production of a monotherapy, but rather on developing Immunopulse as a key element in a combination therapy, a large sample size is not necessary to prove efficacy and complete a Phase 2 trial.

Here is the released Phase 2 Interim data on 29 out of 30 patients:

"Interleukin-12 (IL-12) promotes anti-tumor activity through multiple mechanisms, including augmentation of adaptive and innate immune responses. Intratumoral delivery of IL-12 via electroporation (EP) avoids systemic toxicity while promoting systemic antitumor immunity. This phase 2 study explores the systemic efficacy, clinical response and safety of IT plasmid IL-12 injection (pIL-12) followed by EP in patients (pts) with advanced melanoma. Methods: This single-arm, open-label phase 2 study plans to enroll 30 pts with in-transit or M1a melanoma. One treatment cycle consists of IT pIL-12-EP on days 1, 5, 8 in up to four lesions per cycle. A maximum of four cycles at 12-week intervals are allowed. ORR was assessed by a modification of RECIST for cutaneous lesions with restaging performed every 12 weeks. The primary endpoint is best ORR within 24 weeks of first treatment. Pre- and post-treatment tumor biopsies were obtained in all patients. Ongoing analyses to assess safety and emerging efficacy data are being utilized to inform future studies. Results: 29 pts have been enrolled and have received at least one treatment cycle. The ORR is 33% (9/27), with 11% CR (3/27). Regression of non-injected lesions was seen in 62% (13/21) of pts with evaluable lesions. Transient pain (56.5%) and inflammation (17.4%) at the treatment site were the most common grade 1/2 drug-related adverse events AE's, with no grade 3/4 drug-related AEs. Exploratory analyses indicate a doubling of intratumoral NK cells from pre-treatment through day 11 and at day 39, and increased frequency in activated circulating NK cells. Conclusions: Local treatment with pIL-12-EP is well tolerated without severe systemic side effects. Regression of treated and non-treated tumors suggests successful induction of systemic anti-tumor response. Local and systemic increases in NK cells are consistent with the expected pharmacodynamic effect of IL-12. Based on these data, an expansion protocol to evaluate increased treatment frequency is planned for melanoma patients."

Notice the complete lack of SAE's and that reported AE's were only grades 1 or 2, (from company presentation slide 17)with 69% reporting pain, 20% reporting inflamation, 17% fatigue, 14% soreness at site, 10% bruising, 10% discoloration, 10% rash, 10% prutitus, 10% erethema, 2% cellulitis, and 2% discharge. The most frequent side effect was pain, reported on a 1-10 scale with the following results: Ranging from 0-10 immediately following treatment with a median of 2 and a mean of 2.5, ranging 0-8 five minutes after treatment with a median of 0 and a mean of 1, the median reported pain duration was approx. 5 min.

Dr. Hauschild, at ASCO this year, reviewed OnocoSec's previously reported interim data from Phase 2 Melanoma and had this to say:

"One study looked at IL-12 given intralesionally by electroporation, which involves injection of the plasmid into tumors. Electrodes are then inserted and create a more porous environment to allow for distribution of the drug. IL-12 is thought to upregulate interferon gamma. Nine out of 28 patients were found to have objective responses and three patients had a complete response in the lesion. Additionally, 13 out of 22 patients demonstrated regression of non-injected lesions.

One limitation seen in this intralesional therapy was that the standard RECIST criteria were difficult to use for measuring response. For example, very small lesions may be difficult to assess using RECIST criteria, despite the fact that a clinical response might be noted. It was proposed that another way to characterize response in these lesions other than using RECIST criteria would be to use soft tissue sonography or MR sonography. The strength of IL-12 intralesional therapy was the very low toxicity reported-mainly consisting of injection site pain and inflammation. This was a very small study with a highly selected group of patients and without a control arm, which makes it difficult to draw conclusions from it. However, the reported overall response rates were reasonable; several patients had a complete response; and some of the untreated lesions demonstrated regression."

On April 7th, OncoSec expanded their Phase 2 study of Melanoma to include an additional 21 patients on a more frequent dosing schedule. This expanded trial provides each patient with up to 12 treatments over the course of six 28 day cycles with doses delivered on days one and eight of each cycle. (The initial Phase 2 trial consisted of up to four 12-week cycles with delivery on days one, five and eight of each cycle for a total of up to 12 doses over 48 weeks.) Interim data from the expanded trial could be released any day upon complete enrollment. In the initial Phase 2 data there were several documented cases of tumors beginning to re-grow at the 4-6 week mark after seeing an initial reduction in size. The purpose of the expanded study is to determine whether optimal dosing can be achieved preventing this re-growth without worsening AE's. If this is achieved it is likely that this expanded study will demonstrate higher response rates.

Merkel Cell Carcinoma

Merkel Cell Carcinoma, is a rare skin cancer with an incidence of about 1500 cases a year in the U.S., and this number is continuing to increase. MCC will prove fatal in roughly 1 out of 3 patients even with immediate treatment. People with severe defects in T Lymphocytes have a 10-30 times greater chance of developing MCC and twice the chance of losing the battle with MCC compared to people with a normal immune system. OncoSec released some preliminary data from the ongoing Phase 2 trial last year showing: 3 out of 3 subjects treated with at least one cycle of ImmunoPulse had an increased level of IL-12 expression in tumor biopsies done three weeks post-treatment. Correlative analysis of limited samples demonstrated that at least one subject had increased CD8+ T-cells (also referred to as killer T-cells) in the tumors. Of the first five subjects enrolled, the overall response rate is 20% (1 in 5). One patient with baseline progressive MCC, despite multiple prior therapies has had a confirmed partial response of greater than 70 percent regression that persisted for approximately eight months. As the trial nears its 15 patient enrollment, interim data is expected at any time.

Cutaneous T Cell Lymphoma (CTCL)

CTCL is a rare cancer that affects 1500 people in the U.S. each year. There is no cure for this disease, and treatments consist of managing symptoms. T-cell lymphomas that originate in the skin, known as primary cutaneous T cell lymphomas, these malignant cells usually remain in the skin but have been found throughout the body. Normally, the body regulates the population of lymphocytes, like it does with other cells, allowing new cells to be created only to replace dying cells. With CTCL white blood cells produce abnormally and uncontrollably. CTCL patients have a higher survival rate and better prognosis than other T-cell lymphomas. In the most common form of CTCL the survival rate has been found to be highly dependent upon when the disease is discovered. For early-stage disease, 5-year survival rates can be as high as 97%. In the second most common CTCL, patients can look forward to an excellent prognosis, with 5-year survival rates landing somewhere between 80-90%.

On April 7th this year OncoSec voluntarily re-launched their CTCL Phase 2 trial after deciding that the initial trial was not designed to meet ideal endpoints. Dr. Robert Pierce, OncoSec's Chief Medical Officer had this to say:

"Plasmid IL-12 delivered without electroporation in this patient population has provided evidence of preliminary efficacy, but has shown to be severely toxic. We believe the safety profile observed thus far with using electroporation to deliver plasmid IL-12, along with the preliminary evidence of local and systemic anti-tumor activity observed in our Phase II melanoma study, suggest that this treatment might offer similar evidence of safety and activity in patients with CTCL."

A previous IL-12 study with CTCL

Interim data is not expected from the CTCL Phase 2 trial this year.

According to the company there are five planned milestones for 2014 (an update to be announced shortly):

  • Phase 1 Melanoma study for long term survival data

  • Phase 2 Merkel Cell Interim Phase 2 data

  • Phase 2B Melanoma combination study strategy / start

  • Initiation of new Phase 1 and 2 clinical study in non skin cancer indication (Breast or Head/Neck cancers are probable)

  • Final Melanoma Phase 2 data and expanded Phase 2 interim

  • Early Next year they are hoping to get 2 new IDO pathway drugs into a Phase 1 trial.

With a market cap just barely over $100m, OncoSec has a large number of shares for a small company, 244m outstanding shares and another 15m shares authorized under a 2011 incentive plan. In addition, 29m shares are reserved for the issuance of outstanding warrants. Dilution has dragged the share price down from recent highs. The most recent S-3 filed early this year was for up to $75m of common stock, which at today's price would be another 120 million shares (a recent offering mentioned in the annual share holder letter closed on June 6th). OncoSec through their Articles of Incorporation are authorized to issue 3.2 billion shares of common stock. Like all Biotechnology companies which lack a source of revenue, additional dilution is always a risk factor which needs to be considered.

OncoSec recently expanded its R&D capabilities with dedicated laboratory space at the Icogenex Bioincubator in Seattle, WA. They have doubled their staff and are developing new and novel IDO pathway drugs. As of April OncoSec employed six scientists between Seattle and San Diego, along with research assistants and engineers to design and build a new electroporation device for which they recently applied for a patent.

Current financial statements show the company well funded for at least a year, if not longer. I believe this makes the risk of dilution within that time frame minimal, and with the achievement of milestones the share price should improve significantly as well. Company officials have stated they are funded sufficiently to complete a Phase 2B Melanoma trial slated to start this year. However, I believe at the current rate of expansion OncoSec may see another dilution if an expected partnership does not happen prior to the start of that trial.


OnocSec's last 10Q filing (April 2014) shows:







Current assets






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Prepaid expenses and other current assets






Total Current Assets






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Total Assets














Liabilities and Stockholders' Equity


















Current and long-term liabilities






Accounts payable and accrued liabilities








Acquisition obligation, current






Accrued other






Total Liabilities






The recent share offering added $14m to this total, and if we subtract 3 months of operating expenses (at an estimated burn rate of $1m a month) we can project that they have around $35m in cash, or about $0.15 per share. As long as the burn rate stays consistent they should be able to operate for 30-35 months. If the holders of the remaining warrants chose to redeem their warrants an additional $13m would be added to the cash reserves.

OncoSec has raised capital through dilution a total of six times since its inception in 2011. The most recent being a 10% dilution that went into effect on June 6, for $0.71 a share, adding 22m shares in a direct placement. Previous dilutions were as follows:

  • Sep, 2013 - adding 48m shares

  • Dec, 2012 - adding 29m shares

  • Mar, 2012 - adding 31m shares

  • Jun, 2011 - adding 4m shares

  • Mar, 2011 - adding 1.5m shares

Discounting the first two offerings there is a dilution approximately every 9 months. (click here for more information from the recent prospectus)

As with any biotech stock there are risk factors which need to be considered, including the general failure rate of biotech companies in various Phases of development.

Without reported revenues they can be difficult to valuate, and it is always possible that another company will develop a better more marketable therapy before they bring a product to market. There is also the ever-present risk of key figures leaving the company, due to lack of funding, progress or other circumstances. Though I do not believe OncoSec could survive the loss of their key figures, for now these scientists have shown no indication that they intend to leave, to the contrary they have shown great enthusiasm for the progress they are making. This association with leading researchers in the field of Immunology is one of OncoSec's strongest selling points. Some names you may recognize include:

  • Dr. Robert H. Pierce (Chief Medical Officer, Executive Director of Merck's Anti PD-1 development team)

  • Adil I. Daud, M.D. (Professor of medicine at the University of California San Francisco, and a nationally recognized expert in early phase drug development in skin cancer and solid tumors, OncoSec Chief Clinical Strategist)

  • Axel Hauschild, M.D., Ph.D. (Professor and Head of the Interdisciplinary Skin Cancer Center at the Department of Dermatology, University Hospital Schleswig-Holstein in Kiel, Germany, Member of OncoSec Scientific Advisory Board)

  • SOLDANO FERRONE, MD, Ph.D. (often referred to as the Father of Immuno-therapy, member of OncoSec Scientific Adviosry Board)

The next major step for this company is likely a partnership in preparation for running Phase 2B trials, expected to begin this year. The three most likely partners: Merck, Bristol-Meyers, and AstraZeneca. Each of these companies have an Anti-PD-1 or Anti PDL-1 drug that would benefit from OncoSec's unique work with IL-12 and electroporation. The ability to convert the non-responders of Anti PD-1 treatments into responders is an advantage that no major pharmaceutical company can ignore. This makes a partnership a potential win-win for OncoSec and any one, or all, of these well-known pharmaceutical giants.

Other options available to the company, if a partnership does not happen, would include purchasing an approved Anti-PD-1 drug (most likely BMY's Nivolumab) on the market and running the trial themselves or using an independent lab with access to both drugs to supervise a trial. Though these latter two options are not beyond OncoSec's ability, a partnership would be ideal, and is what many investors are expecting.

The Theory Behind Combination Trials

(Click to Learn about Anti-PD-1 Mario Sznol, MD)

IL-12 stimulates the immune system generating CD8+TIL and converting Low TIL tumors into High TIL tumors. Considering 60% of tumors are low TIL, and thus non-responders, this conversion factor is a door that must be unlocked in the future development of immunology. Anti-PD-1 protects the immune systems T-Cells from the tumor defense system so when used with IL-12 to increase the immune system's cancer fighting effects, you have a highly immunogenic environment, that should result in significantly higher response rate for Anti-PD-1 drugs.

Bristol-Meyers, as an example, has clearly demonstrated that big pharmaceutical companies are trying to increase their efficacy in Anti PD-1 drugs. BMY is currently looking at trials of IL-21 combined with Nivolumab or Ipilimumab. It may be important to note ZymoGenetics, acquired by BMY in 2010, did a Phase 2 study with IL-21, showing worse side effects and less efficacy than Oncosec's interim data on IL-12.

Comparing IL-21 with ImmunoPulse and IL-12 based on Phase 2 results we find:


ImmunoPulse with IL-12

40 Patients

30 Patients

5% Complete Response

10% CR

23% Overall Response

33% OR

0%Systemic Response

60% Reported SR

IV Treatments 5 times a week alternating weeks for 8 week cycle

Outpatient treatment using Immunopulse injection 3 times over a twelve-week cycle for up to 4 cycles.

AE: Fever, Rash, Fatigue and Nausea

AE: Five minutes of mild pain

Using OncoSec's unique electroporation therapy with IL-12 to boost the immune system and combining it with an Anti-PD1, Anti-PDL-1 or Anti-CTLA4 (like Ipilimumab) should show a conversion of non-responders into responders. (As stated here)

Bristol-Meyers is currently looking at trials of IL-21 combined with Nivolumab or Ipilimumab. Mouse trial results showed:

  • With IL-21 alone treatment led to 30% median tumor growth inhibition, TGI

  • With PD-1 alone 60% TGI and 1/10 complete response.

  • Combining the 2, 7 out of 10 (70%)CR and 99.9% median TGI

  • CTLA-4 alone 34% CR

  • CTLA-4/IL21 resulted in 6 out of 8 mice with CR and 86% TGI

OncoSec's interim results (final results have never been made publicly available) from their mouse study:

"Dr. Richard Heller, professor at Old Dominion University, summarized the initial results of this study at the Cancer Vaccines and Gene Therapy Meeting in Philadelphia, Pennsylvania. The study was conducted using a single tumor model where a total of forty mice (eight treatment groups) were treated with either ImmunoPulse alone, or in combination with anti-CTLA4, anti-PD1 or both at varying concentrations. Safety and anti-tumor activity were assessed. Results indicate that all treatment groups showed 100% regression of treated lesions in all mice, and that no mice died as a result of toxicity from treatment. The results from this initial study demonstrate that ImmunoPulse in combination with anti-CTLA4 or anti-PD1 is safe, effective and does not have any contraindicated outcomes. Based on these positive results the company intends to continue testing combination approaches in more aggressive melanoma models that will support further evaluation of this approach in humans"

Unfortunately due to different methods of data reporting by these two companies it is hard to do a side-by-side comparison. As I showed in the chart above, human Phase 2 trials with IL-12 demonstrated a higher response rate, systemic effects, required fewer treatments, and produced less severe AE's. Though mouse trials for both combinations were impressive OncoSec is not reporting complete regression (nor final data) and BMY is using TGI, which is different from an objective response. Further comparison would require some objective reasoning.

Combination therapy with an Anti-PD-1 drug is the future of Immunotherapy. OncoSec is perfectly positioned with the opportunity, the talent, and the ability to dominate this industry with a successful Phase 2B trial. There are risks, and it is important to balance the challenges faced by a small-cap Biotechnology company against its potential.

Currently there are 4 analysts covering OncoSec: H.C. Wainwright, Maxim Group, Noble Financial, and Zacks. Each of these lists a buy rating with a price target ranging from $1.50 to $3.

Disclosure: The author is long ONCS. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have no intention to alter my positions in the near term future

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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