Why OncoSec Medical (ONCS) Stock Crashed Today

Some investors might love biotech stocks for their lottery ticket-like returns when a company strikes medical gold. A lottery ticket, however, costs only a buck or two, while getting a biotech company wrong can hurt a lot more than that. Case in point: OncoSec Medical (ONCS) closed down 50% on Tuesday, after presenting disappointing clinical data at the Society for Immunotherapy of Cancer (SITC) annual meeting.

OncoSec reported preliminary data from KEYNOTE-695, a global, multicenter Phase 2b, open-label trial of intratumoral delivery of TAVO™ (tavokinogene telseplasmid / IL-12) with intravenous KEYTRUDA® (pembrolizumab) in patients with unresectable, advanced melanoma. Eligible patients had refractory, locally advanced or metastatic disease defined as unresectable Stage III/IV metastatic melanoma that had definitively progressed on a full-course of anti-PD-1 treatment with KEYTRUDA® (pembrolizumab) or OPDIVO® (nivolumab).

As of September 1, 2018, 21 patients had been enrolled in the study.  Out of the 21 patients, nine patients had completed 12 weeks of treatment and reached the first tumor evaluation point at approximately 12 weeks, while the remaining 12 patients had not yet reached the first tumor evaluation.  All nine patients were previously treated and definitively progressed on anti-PD-1 therapies with 56% (5/9) having had more than one prior line of therapy.  All enrolled patients had exceedingly low frequencies of intratumoral CD8+ peCTL (PD-1+/CTLA-4+) at screening with a notable increase in TIL density following treatment.

Two of the nine patients experienced a partial response and one patient had stable disease (22% BORR and 33% DCR) by RECIST v1.1.  Tumor responses were noted in both treated and untreated lesions.  Of the two responding patients, both had multiple prior rounds of anti-PD-1 therapy, with no response, and one had also progressed after 4 cycles of OPDIVO® and YERVOY® (ipilimumab), an FDA-approved anti-CTLA4 / anti-PD-1 antibody combination.  Tumor responses were associated with treatment-related upregulation of immune-based transcripts in the tumor microenvironment, as well as increased frequencies of intratumoral T cells within three weeks of therapy.

Maxim analyst Jason McCarthy commented, “Let’s see what the data looks like at 24 weeks which is the endpoint. Twelve other patients had already been treated but had not reached 12 week followup yet. Enrollment is continuing and targeting ~80 patients (by mid-2019) which is in-line with trial sizes for single arm studies aiming for potential registration.”

McCarthy reiterates a Buy rating on ONCS stock, with a $5.00 price target, which implies over 470% upside from Tuesday’s closing price. (To watch McCarthy’s track record, click here)

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