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Oncimmune Holdings Plc

Oncimmune Holdings plc Considerable potential for long term out-performance say Zeus Capital

Oncimmune Holdings plc (LON:ONC), a pioneering UK-based biotech developing and commercialising blood tests for early cancer detection, today released its Interim results for the 6 months to November 30, 2016 highlighting that its operational developments are progressing on plan. ONC’s technology has been extensively tested and validated in clinical trials and since 2012 over 150,000 lung cancer tests (EarlyCDT®-Lung) have been sold in the USA and elsewhere. In high-risk individuals the test can detect lung cancers up to 4 years earlier than other tests, including the recommended low-dose CT scans (with their high false-positive rate). ONC is poised for substantial growth as management continues to deliver on its operational plans i.e. expanding its portfolio of cancer detection tests, developing a ‘kit’ version of EarlyCDT®-Lung, and entering additional global markets. Our forecasts for the full year are unchanged and our risk-adjusted fair value estimate remains £78m (153p).

Platform – ONC’s technology exploits the normal immune response, whereby antibodies are produced against certain biomarkers, tumour-associated antigens (TAAs), made by cancer cells. The antibodies produced against these TAAs can be detected in the blood long before (~4yrs) the appearance of symptoms of cancer. This early detection provides huge clinical benefit to patients with cancer due to the vastly improved survival outcomes when cancers are detected early, particularly lung cancer (which is generally diagnosed at a late stage).

Operations – Oncimmune Holdings plc first half saw the company establish 14 new distributor agreements in the USA for its EarlyCDT®-Lung test, and all are now fully operational. ONC received the European CE-Mark for EarlyCDT®-Lung and has also progressed development and validation of the kit version of its EarlyCDT®-Lung test which remains on-track to have the kit ready in Q2 2017. We expect these developments to enable ONC to broaden its commercial profile in other territories, particularly in Asian markets. ONC’s product pipeline includes new blood tests being developed for the early detection of Liver and Ovarian cancers, among others, a cancer autoantibody ‘fingerprint’ being validated and exploratory work on companion diagnostics. The company expects that its EarlyCDT®-Liver test will be ready for commercialisation before the end of 2017.

Financials & Valuation – Revenues during the period were £0.1m (down slightly compared to £0.3m in FH1 2016 as multiple new distributor arrangements were put in place), total costs were £2.4m (FH1 2016: £2.5m), and the operating loss was £2.4m (FH1 2016: £2.2m). Cash at the end of the period was £7.6m reflecting the addition of new funds raised at the time of the IPO. Our forecasts for the full year to May 31st, 2017, remain unchanged and our risk-adjusted DCF-based valuation stands at £78m. We believe that as management continues to deliver on its operational plans there is considerable potential for long term out-performance based on the strengths of the EarlyCDT® platform and its products.

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