Due to a Notice of Concern issued under s14(2) of the Defamation Act 2005 (NSW) by Oncosil Limited (ASX : OSL) this post has been removed. Sorry.

defamation sad face




10 thoughts on “Oncosil-ly

  1. I enjoyed your blog post about Oncosil and I don’t necessarily disagree with your comments, but how do you reconcile them with the results from the study quoted on OSL website which showed almost a doubling of survival from 5.7 months to 10+ months and a reduction of pain of 35%. Assuming these results are a true reflection of the treatment do the results not justify using this treatment as the preferred option? I do own OSL so I have an interest in this company’s success but I am more interested in not losing money so I am more interested in getting the facts rather than justifying my purchase. Thanks for any reply. Cheers. Roman Lohyn

    Liked by 1 person

    • Hi Roman,

      I try not to make a habit of “buy” or “sell” recommendations, it’s not really the point of this blog. But you ask a very fair question, I appreciate it. I think the answer has a few parts to it:

      1) The pancreatic cancer patient journey is pretty tough and by the time you end up with an experimental therapeutic like Oncosil, you have probably been diagnosed with late stage disease, probably had a whack of chemo (at the very least) and the extent of your disease is likely to be under-diagnosed. Pancreatic cancer patients that are deemed suitable for surgical resection are very often opened up and then closed again without resection (so-called “peek and shriek” patients) – as high as 40% of notionally resectable patients. The point is that when you run a panc cancer clinical trial, you have to deal with a very heterogeneous patient population and it means that numbers matter.

      2) Oncosil simply hasn’t done enough patients to make any kind of claim. In the most complete summary of clinical data I have seen (http://www.asx.com.au/asxpdf/20150305/pdf/42x2j9xhrpc0gp.pdf) the “proof-of-concept” studies are described in terms of a very small numbers of patients, usually single arm (no randomisation) and “open label” (which harks back somewhat to point #1). Therefore I would argue (and for full disclosure I am not a biostatistician) that any headline numbers that Oncosil has published are probably meaningless, possibly even misleading. I think the publication of their data has also been a bit underwhelming. The only way to know if there is a real median survival benefit is to make sure you screen enough patients to get a tight cohort and to compare against a strict standard of care (gemcitibine + chemo). This actually requires taking a rather large number of patients = $$$s and I don’t think that you save a whole lot of money by going down the device route vs a drug (more on that in a minute). I think the only thing that Oncosil can really claim at this stage is a safety signal.

      3) I look at the clinical study plan for their pivotal study and it looks a bit light-on to me. I just don’t think it’s enough patients to shift the standard of care to include Oncosil. We have to remember that commercial success is not just about getting a regulatory approval, it’s about getting the procedure reimbursed. If you take a look at what MSAC did back in 2005 for SIR-Spheres and HCC and transpose the kind of data that Oncosil has, I think you are going to struggle to get a payer recommendation ANYWHERE. I fear that Oncosil will spend a few years and a fair bit of dosh doing this pivotal study (and it WILL take time because these are a tough patient population as I have already mentioned, plus immuno-oncology is going gang-busters so there is a lot of competition for patients) and even if they got marketing clearance, it might simply not get reimbursed.

      4) Given that this is a localised disease treatment strategy, I also don’t fully understand why the company is trying to do a head-head with what is effectively end of life chemo. Very few clinical trials have actually succeeded with this strategy. If pain and tumor volume reduction (and possibly something like rPFS – incredibly tough to ascertain with pancreatic cancer, by the way) are the end-points then why not simply go up against external beam radiation? But, hey – I am not a radiation oncologist (but then neither is anyone on the Oncosil team…) and so I might be clutching at straws on this one.

      I suppose as a final comment, let’s look at the market potential. If we allow that Oncosil is currently at the IDE “equivalent” of a Phase IIb study (generous given the number of patients) and we apply some basic and pretty industry-standard math, let’s discuss valuation.

      – Probability of device registration (60%)
      – Probability of reimbursement (75%)
      – % of the patient population eligible : 15%
      – Market penetration in year 1 : 5% of eligible patients
      – Time to market peak of 25% market penetration : 5 years (linear, generous – most consulting firms would use 8 years)
      – Unit dose price : $16,000 (based on SIR-Sphere proxy, http://www.asx.com.au/asxpdf/20150218/pdf/42wp3kq5n3cnt4.pdf)
      – Annual # of patients (US) : 40,000 (we don’t need to separate incidence from prevalence because of the speed of mortality)

      (as an aside note, I have based this model on the market growth / penetration rate that Sirtex experienced). I’ve popped this into a very simple excel spreadsheet that you can find here : https://asxlongtail.files.wordpress.com/2015/04/20150425-simple-oncosil-model-panc-us.xlsx).

      This means that if everything goes according to plan with the IDE, the product gets reimbursed and enjoys good uptake, this company is worth somewhere between $100m and $200m if it accomplishes the US market. This model doesn’t look at anything more sophisticated like price erosion or the competitive impact of some of the very significant innovations that are happening in oncology at present. In my opinion these kinds of standard probability weightings also don’t fully reflect the challenge that Oncosil is going to have in recruiting patients.

      So, to conclude.

      I personally don’t plan to own this equity anytime soon and my honest opinion is that the movement toward HCC fundamentally reflects the fact that it has dawned on the company that the probability of success for pancreatic cancer is far less likely than even my “pragmatic” (and admittedly rather simple) back-of-the-envelope model. I do have some personal experience of how difficult it is to develop radiopharmaceuticals and the commercialisation pathway is brutal. You don’t have to look much further than Sirtex to see a case study in point. Finally, I think when articulating the probability of success, Oncosil’s management team needs to stop defining commercialisation as “FDA marketing clearance.” For this product, reimbursement is going to be the killer issue and therefore they had better make damned sure that their little bitty registration trial not only convinces the FDA, but convinces insurance companies as well.

      Otherwise the company is worth $0.

      Hope this helps,



      • Hi Chris,

        I appreciate and thank you for your detailed explanation. It’s an insight lacking from the Baillieu Holst March 2014 report on the OSL website, which originally influenced me to buy OSL, after I’d bought Sirtex some time earlier. Obviously oil’s ain’t oils and my thinking that OSL was the pancreatic SRX needs revision. You’ve also made me think seriously about stepping back and just keeping a watch on this company while my funds are used elsewhere. It’s true that time to commercialization almost always is longer than expected and your valuation scenario seems quite reasonable. I must admit I wondered about the sudden addition of liver cancers to the proposed treatment possibilities when the pancreatic option was still in its early stages.

        Out of curiosity what would you want to see from OSL to make you think they were on to something worthwhile?

        I’ve added my email to your blog and look forward to your future blogs.

        Roman Lohyn


      • Hi Roman,

        Firstly – I suspect you are a medic. You write like one, and you are clearly an informed shareholder. My opinion is not intended to usurp a medical viewpoint and I am, at the end of the day, a mere Ph.D. I wasn’t cut out for med school so the clinical perspective is something I generally defer to.

        I don’t think your decision to buy OSL based on the BH report was wrong. The problem – and in fact it is an issue that prompted me to start this blog – is that the broker analyst work is all about making a market. They are never going to tell you not to buy a stock. I know quite a few very bright guys in Australian brokerage firms that are tasked with producing “research” as part of marketing a security and I know they look at themselves very hard in the mirror every day. The quality of equity research in the life sciences in Australia is extremely poor and I believe it is one of the greatest rate-limiting reasons why our biopharma industry isn’t more successful.

        I should also note that NONE of these firms have any staying power for the stocks they spruik, precisely because they are poor quality. A recent example is Forrest Capital and Cynata. My understanding is that those guys are already out. Do a deal, make 5-10x, sell out. If you haven’t lost a boatload of money on OSL, then living to fight another day is probably not a bad idea.

        By the way, as a side comment, a lot of people sent me abusive emails regarding my dig at Stuart Roberts in a previous post. I LIKE Stuart – I think he is one of the best life sciences equities analysts we have had in the last few years (and a very nice guy as well). I didn’t always like everything he wrote but give the man some credit, sometimes he had to tell a story about a company when even the management team didn’t know how to articulate a value proposition. That takes real talent.

        … but I digress.

        Back to OSL. The liver cancer story isn’t a real one because, as you would probably appreciate, to get traction it will have to show that it is better than SIR-Spheres. That’s going to be an extremely tough clinical trial to do. My take on that story is that it was just a strategy to pump up the stock and nothing more. It even, arguably, worked briefly but then a lot of punters started to feel sour about it.

        I personally don’t believe OSL can really do anything to convince me that they are onto something worthwhile. I am reasonably adept at PubMed and I haven’t been able to find a single publication that really helps me to explain why P-32 encapsulated in a silica shell is better than P-32 colloid, something that the nuc med industry has know about for a pretty long time. My honest opinion is that it is a story and nothing more. The only thing I can think of that would be a differentiation is ease of product handling and distribution (stability, transport, etc.).

        Another little data point to consider is their relationship with Eckert & Ziegler. Quality firm, I know those guys. They have a lot of commercial nous and know the nuclear medicine space extremely well. If OSL was a great company with a very bright future, at their current valuation I think they would just take them out. E&Z is conservative and doesn’t have vast financial resources but there are a few players that are looking at new growth opportunities (E&Z, AAA, Monrol) and if there was really something there, people would act.

        That’s a rather circuitous way of saying I don’t think they are onto anything worthwhile. I think it is “puff”.


    • I have. I sort of like the idea and I am generally a big fan of anything that “digitises” aged care. It’s not exactly an unobtrusive product and it probably has still got some product development ahead but it’s a nice idea. Especially since there are also a lot of devices coming out to better control incontinence.

      Good story, good team – but still very early revenues and although aged care is a huge market with an appetite for services that differentiate/tier care offerings, there are a LOT of products and services that compete for this headroom. Therefore the cost of service (note, I do not say cost of device because I think this is about building a big recurrent revenue stream from building service partnerships with aged care providers) needs to be carefully considered.

      Good luck with investing! Devices are sometimes a little less harrowing than biotech. You probably felt your cortisol levels decrease today, which means you are less likely to need the actinogen drug as well 😉

      Warm regards – and thanks for reading.


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