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Buy OncoSec Medical's 'Shocking Solution,' HC Wainwright Says


In a report published Monday, HC Wainwright analyst Mark Breidenbach initiated coverage of OncoSec Medical Inc (NASDAQ: ONCS) with a Buy rating and a price target of $25.

The target price reflects the recent 20-for-1 reverse stock split, which reduced the total outstanding shares of common stock to about 14.8 M, as well as "a comparables analysis of similarly staged biotech companies in the immuno-oncology space."

In the report HC Wainwright noted, "OncoSec's ImmunoPulse platform utilizes electroporation to efficiently transfect plasmid DNA encoding the pro-inflammatory cytokine IL-12 into patients with injectable tumors, and is currently being evaluated in patients with melanoma and squamous cell carcinoma of the head and neck (SCCHN)."

OncoSec reported its FY3Q15 earnings at a net loss of ($6.0) M, or ($0.48) per share, higher than the HC Wainwright estimate of a net loss of ($4.7) M. The shortfall was mainly due to higher-than-expected operating expenses, including R&D and G&A spend. "Going forward, we anticipate the company to maintain an approximate $6 M quarterly burn rate," Breidenbach said.

Earlier this month, OncoSec raised $12.6 M in a public offering of 2,469,091 shares of common stock. Breidenbach estimated the company's current pro forma cash at $32.1 M, which is likely to aid the company "sustain operations until mid-2017."

"The funds may be used mainly to continue clinical development of the IL-12 program, primarily for Phase 2 trials in metastatic melanoma and SCCHN. The company plans to conduct Phase 2b IST of IL-12 electroporation in combination with Keytruda in metastatic melanoma starting in 2Q15," the report stated.

Breidenbach believes that OncoSec represents "an attractive player with significant upside for the long-term investor."


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